[Federal Register Volume 75, Number 106 (Thursday, June 3, 2010)]
[Notices]
[Pages 31465-31477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13394]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States, State of Illinois, State of Colorado, and State of 
Indiana v. AMC Entertainment Holdings, Inc. and Kerasotes Showplace 
Theatres, LLC Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Section 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 of America, State of Illinois, State of Colorado, and 
State of Indiana v. AMC Entertainment Holdings, Inc. and Kerasotes 
Showplace Theatres, LLC, Civil Action No. 1:10-cv-00846. On May 21, 
2010, the United States and co-plaintiffs filed a Complaint alleging 
that the proposed acquisition of most of the assets of Kerasotes 
Showplace Theatres, LLC by AMC Entertainment Holdings, Inc. would 
violate Section 7 of the Clayton Act, 15 U.S.C. 18 by lessening 
competition for theatrical exhibition of first-run films in the 
Chicago, Denver and Indianapolis metropolitan areas. The proposed Final 
Judgment, filed at the same time as the Complaint, requires AMC 
Entertainment Holdings, Inc. to divest first-run, commercial movie 
theatres, along with certain tangible and intangible assets, in those 
three cities in order to proceed with the proposed $275 million 
transaction.
    Copies of the Complaint, proposed Final Judgment and Competitive 
Impact Statement are available for inspection at the Department of 
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth 
Street, NW., Suite 1010, Washington, DC 20530 (telephone 202-514-2481), 
on the Department of Justice's Web site at http://www.usdoj.gov/atr, 
and at the Office of the Clerk of the United States District Court for 
the District of Columbia, Washington, DC. Copies of these materials may 
be obtained from the Antitrust Division upon request and payment of the 
copying fee set by Department of Justice regulations.
    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 John R. Read, Chief, Litigation III Section, Antitrust Division, 
United States Department of Justice, 450 Fifth Street, NW., Suite 4000, 
Washington, DC 20530 (telephone: 202-307-0468).

Patricia A. Brink,
Deputy Director of Operations, Antitrust Division.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    UNITED STATES OF AMERICA, U.S. Department of Justice, Antitrust 
Division, 450 Fifth Street, NW., Suite 4000, Washington, DC 20530, 
STATE OF ILLINOIS, Office of the Attorney General, State of 
Illinois, 100 West Randolph Street, 13th Floor, Chicago, Illinois 
60601, STATE OF COLORADO, Office of the Colorado Attorney General, 
1525 Sherman St., Seventh Floor, Denver, Colorado 80203, and STATE 
OF INDIANA, Consumer Protection Division, Office of the Indiana 
Attorney General, Indiana Government Center South, 302 W. 
Washington, 5th Floor, Indianapolis, IN 46204, Plaintiffs, v. AMC 
ENTERTAINMENT HOLDINGS, INC., 920 Main Street, Kansas City, Missouri 
64105 and KERASOTES SHOWPLACE THEATRES, LLC, 224 North Des Plaines, 
Suite 200, Chicago, Illinois 60661, Defendants.

Civil Action No: 1:10-cv-00846
Judge: Kennedy, Henry H.
Filed: 5/21/2010.

Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, and the States of Illinois, 
Colorado, and Indiana, acting through their Attorneys General, bring 
this civil antitrust action to prevent AMC Entertainment Holdings, Inc. 
(``AMC'') from acquiring most of the assets of Kerasotes Showplace 
Theatres, LLC (``Kerasotes''). If the acquisition is permitted, it 
would combine under common ownership the two leading, and in some cases 
only, mainstream movie theatres showing first-run commercial movies in 
certain parts of the metropolitan areas of Chicago, Denver, and 
Indianapolis. The transaction would substantially lessen competition 
and tend to create a monopoly in mainstream theatres in these markets 
in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.

I. Jurisdiction and Venue

    1. This action is filed by the United States pursuant to Section 15 
of the Clayton Act, as amended, 15 U.S.C. 25, to obtain equitable 
relief and to prevent a violation of Section 7 of the Clayton Act, as 
amended, 15 U.S.C. 18. The States of Illinois, Colorado and Indiana 
bring this action under Section 16 of the Clayton Act, 15 U.S.C. 26, to 
prevent the defendants from violating Section 7 of the Clayton Act, as 
amended, 15 U.S.C. 18.
    2. Defendants have consented to personal jurisdiction in this 
District. In addition, defendant AMC, through its subsidiary, AMC 
Entertainment, Inc., operates theatres in this District. The licensing 
and exhibition of first-run, commercial films is a commercial activity 
that substantially affects, and is in the flow of, interstate trade and 
commerce. Defendants' activities in purchasing equipment, services, and 
supplies as well as licensing films for their theatres substantially 
affect interstate commerce. The Court has jurisdiction over the subject 
matter of this action and jurisdiction over the parties pursuant to 15 
U.S.C. 22, 25, and 26, and 28 U.S.C. 1331, 1337(a), and 1345.
    3. Venue in this District is proper under 15 U.S.C. 22 and 28 
U.S.C. 1391(c).

II. Defendants and the Proposed Transaction

    4. Defendant AMC is a Delaware corporation with its headquarters in 
Kansas City, Missouri. It is the holding company of AMC Entertainment, 
Inc. AMC owns or operates 304 theatres containing 4,574 screens in 
locations throughout the United States and four foreign countries. 
Measured by number of screens, AMC is the second-largest theatre 
circuit in the United States.
    5. Defendant Kerasotes is a Delaware corporation with its principal 
place of business in Chicago, Illinois. It owns or operates 96 theatres 
with 973 screens in various states. Kerasotes is the sixth-largest 
theatre circuit in the United States.
    6. On January 19, 2010, AMC and Kerasotes signed a purchase and 
sale agreement, under which AMC acquired Kerasotes (with the exception 
of three theatres that will be retained by the Kerasotes family) for 
approximately $275 million.

III. Background of the Movie Industry

    7. Theatrical exhibition of feature length motion picture films 
(``movies'') provides a major source of out-of-home entertainment in 
the United States.

[[Page 31466]]

    8. Viewing movies in the theatre is a popular pastime. Over 1.4 
billion movie tickets were sold in the United States in 2009, with 
total box office revenue exceeding $10.6 billion.
    9. Companies that operate movie theatres are called ``exhibitors.'' 
Some exhibitors own a single theatre, whereas others own a circuit of 
theatres within one or more regions of the United States. Established 
exhibitors include Regal, Carmike, and Cinemark, as well as AMC and 
Kerasotes.
    10. Exhibitors set ticket prices for each theatre based on a number 
of factors, including the presence and competitive decisions of nearby 
comparable theatres.

IV. Relevant Markets

A. Product Market

    11. Movies are a unique form of entertainment. The experience of 
viewing a movie in a theatre differs from live entertainment (e.g., a 
stage production), a sporting event, or viewing a movie in the home 
(e.g., on a DVD or via pay-per view).
    12. Home viewing of movies is not a reasonable substitute for 
viewing movies in a theatre. When consumers watch movies in their 
homes, they typically lose several advantages of the theatre 
experience, including the size of screen, the sophistication of sound 
systems, the opportunity to watch in 3-D, and the social experience of 
viewing a movie with other patrons. Additionally, the most popular, 
newly released or ``first-run'' movies are not available for home 
viewing.
    13. Differences in the pricing of various forms of entertainment 
also reflect their lack of substitutability in the eyes of consumers. 
Ticket prices for movies are generally different from prices for other 
forms of entertainment. Tickets for most forms of live entertainment 
are typically significantly more expensive than movie tickets. Renting 
a DVD for home viewing is usually significantly less expensive than 
viewing a movie in a theatre.
    14. AMC and Kerasotes operate movie theatres that exhibit first-
run, commercial movies (``mainstream theatres''). Mainstream theatres 
typically are multi-plex movie theatres that show a wide variety of 
first-run, commercial movies in order to attract all ages of 
moviegoers, from children to seniors. Mainstream theatres typically 
offer basic concessions, such as popcorn, candy and soft drinks.
    15. Mainstream theatres do not compete significantly with ``sub-
run'' theatres specializing in exhibiting movies after the four-to-
five-week first run has ended, with theatres specializing in art movies 
or foreign language movies, or with ``premiere'' theatres which 
typically offer full-service dining, alcoholic beverages, an adults-
only environment, and other luxury services and amenities not found in 
mainstream theatres.
    16. Tickets at mainstream theatres usually cost significantly more 
than tickets at sub-run theatres. Movies exhibited at sub-run theatres 
are no longer new releases, and moviegoers generally do not regard sub-
run movies as adequate substitutes for first-run movies.
    17. Theatres that show art movies and foreign language movies are 
also not reasonable substitutes for mainstream theatres. Commercial 
movies typically appeal to different patrons than other types of 
movies, such as art movies or foreign language movies. For example, art 
movies tend to appeal more universally to mature audiences. Theatres 
that primarily exhibit art movies often contain auditoriums with fewer 
seats than mainstream theatres. Typically, art movies are released less 
widely than commercial movies.
    18. Premiere theaters do not typically serve as a competitive 
constraint on mainstream theaters. Premiere theatres often show first-
run, commercial movies, but typically have more restrictive admission 
policies (e.g., minors must be accompanied by adults for all movies), 
charge higher ticket prices (sometimes as much as double the admission 
charged by typical first-run theatres), serve alcoholic beverages, and 
often offer full-service restaurants or in-service dining. Premiere 
theatres also differ from mainstream theatres in the luxury items and 
amenities they offer to their guests. For instance, in addition to 
expanded food and beverage offerings, premiere theatres often feature 
reserved seating, leather and reclining seats, wait service, and 
complimentary refills of popcorn and sodas. Because of these 
differences, premiere theatres attract an audience that is distinct 
from the audience for mainstream theatres.
    19. The relevant product market within which to assess the 
competitive effects of this transaction is the exhibition of first-run, 
commercial movies in mainstream theatres.

B. Geographic Markets

    20. Moviegoers typically are not willing to travel very far from 
their homes to attend a movie. As a result, geographic markets for 
mainstream theatres are relatively local.
Chicago, Illinois Area
    21. AMC and Kerasotes account for a substantial portion of the 
mainstream theatre screens and ticket sales in three areas of the 
Chicago metropolitan area--the North Suburban Chicago area, the Upper 
Southwest Suburban Chicago area, and the Lower Southwest Suburban 
Chicago area.
    22. The North Suburban Chicago area, in and around the communities 
of Glenview and Skokie, encompasses AMC's Northbrook Court 14, 
Kerasotes' Glen 10, AMC's Gardens 13, Kerasotes' Village Crossing 18, 
and Kerasotes' Showplace 12 (Niles) theatres. There are no other 
mainstream theatres in this North Suburban Chicago area.
    23. The Upper Southwest Suburban Chicago area, in and around the 
city of Naperville, encompasses AMC's Cantera 30 and Kerasotes' 
Showplace 16 (Naperville) theatres. There are no other mainstream 
theatres in this Upper Southwest Suburban Chicago area.
    24. The Lower Southwest Suburban Chicago area, in and around the 
village of Bolingbrook, encompasses AMC's Woodridge 18 and Kerasotes' 
Showplace 12 (Bolingbrook) theatres. There is only one other non-party 
mainstream theatre in this Lower Southwest Suburban area--a 16-screen 
Cinemark.
    25. Moviegoers who reside in these three suburban Chicago, Illinois 
areas are reluctant to travel significant distances out of each of 
these areas to attend a movie except in unusual circumstances. The 
relevant geographic markets in which to assess the competitive effects 
of this transaction are the North Suburban Chicago, Upper Southwest 
Suburban Chicago, and Lower Southwest Suburban Chicago areas.
Denver, Colorado Area
    26. AMC and Kerasotes account for a substantial portion of the 
mainstream theatre screens and ticket sales in two areas of the Denver 
metropolitan area.
    27. The Upper Northwest Denver area, in and around the cities of 
Louisville and Broomfield, encompasses Kerasotes' Colony Square 12 and 
AMC's Flatiron Crossing 14 theatres. There are no other mainstream 
theatres in this Upper Northwest Denver area.
    28. The Lower Northwest Denver area, in and around the cities of 
Westminster and Arvada, encompasses AMC's Westminster Promenade 24 and 
Kerasotes' Olde Town 14 theatres. There are no other mainstream 
theatres in this Lower Northwest Denver area.
    29. Moviegoers who reside in these two Denver, Colorado areas are 
reluctant

[[Page 31467]]

to travel significant distances out of each of these areas to attend a 
movie except in unusual circumstances. The relevant geographic markets 
in which to assess the competitive effects of this transaction are the 
Upper Northwest Denver and Lower Northwest Denver areas.
Indianapolis, Indiana Area
    30. AMC and Kerasotes account for a substantial portion of the 
first-run movie screens and ticket sales in two areas of the 
Indianapolis metropolitan area.
    31. The North Indianapolis area, in and around the community of 
Glendale, encompasses AMC's Castleton Square 14 and Kerasotes' Glendale 
Town 12 theatres. There is only one other non-party mainstream theatre 
in this North Indianapolis area--a Regal theatre with 14 screens.
    32. The South Indianapolis area, in and around the city of 
Greenwood, encompasses AMC's Greenwood 14 and Kerasotes' Showplace 16 
and IMAX. There are no other mainstream theatres in this South 
Indianapolis area.
    33. Moviegoers who reside in these Indianapolis, Indiana areas are 
reluctant to travel significant distances out of each of these areas to 
attend a movie except in unusual circumstances. The relevant geographic 
market in which to assess the competitive effects of this transaction 
are the North Indianapolis and the South Indianapolis areas.

C. The Relevant Markets

    34. A small but significant post-acquisition increase in movie 
ticket prices at mainstream theatres in the relevant geographic markets 
would not cause a sufficient number of customers to shift to other 
alternatives, including to other forms of entertainment, to non-
mainstream theatres, or to mainstream theatres outside the relevant 
geographic markets described above in sufficient numbers to make such a 
price increase unprofitable for the newly combined entity. Therefore, 
the relevant markets in which to assess the competitive effects of this 
transaction are the mainstream theatres in the North Suburban Chicago, 
Upper Southwest Suburban Chicago, Lower Southwest Suburban Chicago, 
Upper Northwest Denver, Lower Northwest Denver, North Indianapolis, and 
South Indianapolis areas.

V. Competitive Effects

    35. Exhibitors compete on multiple dimensions to attract moviegoers 
to their theatres over the theatres of their rivals. They compete over 
the quality of the viewing experience. They compete to offer the most 
sophisticated sound and viewing systems, best picture clarity, nicest 
seats with best views, and cleanest floors and lobbies for moviegoers. 
Exhibitors also compete on price, knowing that if they charge too much 
(or do not offer sufficient discounted tickets for matinees, seniors, 
children, etc.), moviegoers might visit rival theatres.
    36. In the geographic markets of the North Suburban Chicago area, 
the Upper Southwest Suburban Chicago area, the Lower Southwest Suburban 
Chicago area, the Upper Northwest Denver area, the Lower Northwest 
Denver area, the North Indianapolis area, and the South Indianapolis 
area, AMC and Kerasotes compete head-to-head for moviegoers. These 
geographic markets are concentrated, and in each market AMC and 
Kerasotes are the other's most significant competitor, given their 
proximity to one another and similarity in size and quality of viewing 
experience. Competition between AMC and Kerasotes spurs each to improve 
its quality and keeps prices in check.
Chicago, Illinois Area
    37. In the North Suburban Chicago area, the proposed transaction 
would give the combined entity control of all five mainstream theatres 
in that area, with 83 out of 83 total screens and a 100% share of 2009 
box office revenues, which totaled approximately $24.9 million. Using a 
measure of market concentration called the Herfindahl-Hirschman Index 
(``HHI''), explained in Appendix A, the transaction would yield a post-
transaction HHI of approximately 10,000, representing an increase of 
4,856.
    38. In the Upper Southwest Suburban Chicago area, the proposed 
transaction would give the newly combined entity control of the only 
two mainstream theatres in that area, with 46 out of 46 total screens 
and a 100% share of 2009 box office revenues, which totaled 
approximately $16.4 million. The transaction would yield a post-
transaction HHI of approximately 10,000, representing an increase of 
4,875.
    39. In the Lower Southwest Suburban Chicago area, the proposed 
transaction would give the newly combined entity control of two of the 
three mainstream theatres in that area, with 30 out of 46 total screens 
and a 53.0% share of 2009 box office revenues, which totaled 
approximately $12.3 million. The transaction would yield a post-
transaction HHI of approximately 5,017, representing an increase of 
1,221.
Denver, Colorado Area
    40. In the Upper Northwest Denver area, the proposed transaction 
would give the newly combined entity control of the only two mainstream 
theatres in that area, with 26 out of 26 total screens and a 100% share 
of 2009 box office revenues, which totaled approximately $5.3 million. 
The transaction would yield a post-transaction HHI of approximately 
10,000, representing an increase of 4,356.
    41. In the Lower Northwest Denver area, the proposed transaction 
would give the newly combined entity control of the only two mainstream 
theatres in that area, with 38 out of 38 total screens and a 100% share 
of 2009 box office revenues, which totaled approximately $13.3 million. 
The transaction would yield a post-transaction HHI of approximately 
10,000, representing an increase of 3,669.
Indianapolis, Indiana Area
    42. In the North Indianapolis area, the proposed transaction would 
give the newly combined entity control of two of the three mainstream 
theatres in that area, with 26 out of 40 total screens and a 76.1% 
share of 2009 box office revenues, which totaled approximately $9.3 
million. The transaction would yield a post-transaction HHI of 
approximately 6,357, representing an increase of 2,689.
    43. In the South Indianapolis area, the proposed transaction would 
give the newly combined entity control of the only two mainstream 
theatres in that area, with 30 out of 30 total screens and a 100% share 
of 2009 box office revenues, which totaled approximately $10.1 million. 
The transaction would yield a post-transaction HHI of approximately 
10,000, representing an increase of 4,838.
    44. The proposed transaction would likely lessen competition 
significantly in the relevant markets. Today, if AMC or Kerasotes were 
to increase its prices at a theatre in one of the relevant markets, and 
the other did not follow, the theatre that increased its prices might 
lose business to the other. The proposed transaction would eliminate 
this pricing constraint and is therefore likely to lead to higher 
prices for moviegoers, which could take the form of a higher adult 
evening ticket price or reduced discounting, e.g., for matinees, 
children, seniors, and students.
    45. The proposed transaction would also eliminate competition 
between AMC and Kerasotes over the quality of the viewing experience in 
each of the geographic markets at issue. The combined entity would have 
reduced

[[Page 31468]]

incentives to maintain, upgrade, and renovate its theatres in the 
relevant markets, and to improve those theatres' amenities and 
services, thus reducing the quality of the viewing experience for a 
moviegoer.
    46. The presence in some of the relevant geographic markets of 
other non-party mainstream theatres would be insufficient to replace 
the competition lost due to the transaction and thus render 
unprofitable post-transaction increases in ticket prices or decreases 
in quality by the newly combined entity.

VI. Entry

    47. Sufficient and timely entry that would deter or counteract the 
anticompetitive effects alleged above is unlikely. Exhibitors are 
reluctant to locate new mainstream theatres near existing theatres 
unless the population density, demographics, or the quality of existing 
theatres makes new entry viable. Those conditions do not exist in any 
of the relevant geographic markets.

VII. Violation Alleged

    48. The plaintiffs hereby reincorporate paragraphs 1 through 47.
    49. The effect of the proposed transaction would be to lessen 
competition substantially in the relevant geographic markets in 
violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
    50. The transaction would likely have the following effects, among 
others: (a) Prices for first-run, commercial movie tickets in 
mainstream theatres would likely increase to levels above those that 
would prevail absent the transaction; and (b) the quality of mainstream 
theatres and the mainstream theatre viewing experience in the relevant 
geographic areas would likely decrease below levels that would prevail 
absent the transaction.

VIII. Requested Relief

    51. The plaintiffs request: (a) Adjudication that the proposed 
transaction would violate Section 7 of the Clayton Act; (b) permanent 
injunctive relief to prevent the consummation of the proposed 
transaction; (c) an award to each plaintiff of its costs in this 
action; and (d) such other relief as is proper.

Dated: May 21, 2010.

For Plaintiff United States of America

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Christine A. Varney,
Assistant Attorney General, Antitrust Division

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Molly S. Boast,
Deputy Assistant Attorney General

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William F. Cavanaugh, Jr.,
Deputy Assistant Attorney General

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Patricia A. Brink,
Deputy Director of Operations

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John R. Read,
Chief

David Kully,
Assistant Chief
Litigation III

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Gregg I. Malawer, (DC Bar No. 481685)
Nina B. Hale
Bennett J. Matelson, (DC Bar No. 454551)
Creighton J. Macy,
U.S. Department of Justice, Antitrust Division, 450 5th Street, NW., 
Suite 4000, Washington, DC 20530, Telephone: (202) 616-5943, Fax: 
(202) 514-7308, E-mail: <a href="/cdn-cgi/l/email-protection#4027322527276e2d212c21372532003533242f2a6e272f36"><span class="__cf_email__" data-cfemail="2e495c4b494900434f424f594b5c6e5b5d4a414400494158">[email protected]</span></a>, Attorneys for 
Plaintiff the United States

Dated: May 21, 2010.

For Plaintiff State of Illinois:
Lisa Madigan,
Attorney General

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By: Robert Pratt, Chief, Antitrust Bureau, Office of the Attorney 
General, State of Illinois, 100 West Randolph Street, 13th Floor, 
Chicago, Illinois 60601, Telephone: (312) 814-3722, Fax: (312) 814-
4209, E-mail: <a href="/cdn-cgi/l/email-protection#c29092b0a3b6b682a3b6a5ecb1b6a3b6a7ecabaeecb7b1"><span class="__cf_email__" data-cfemail="84d6d4f6e5f0f0c4e5f0e3aaf7f0e5f0e1aaede8aaf1f7">[email protected]</span></a>

For Plaintiff State of Colorado:
John Suthers,
Attorney General

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By: Devin Laiho, Assistant Attorney General, Antitrust Enforcement, 
Office of the Colorado Attorney General, 1525 Sherman St., Seventh 
Floor, Denver, Colorado 80203, Telephone: (303) 866-5079, Fax: (303) 
866-5691, E-mail: <a href="/cdn-cgi/l/email-protection#4e0a2b38272060022f2726210e3d3a2f3a2b602d21603b3d"><span class="__cf_email__" data-cfemail="82c6e7f4ebecaccee3ebeaedc2f1f6e3f6e7ace1edacf7f1">[email protected]</span></a>

For Plaintiff State of Indiana:
Greg Zoeller,
Attorney General

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By: Abigail Lawlis Kuzma, Director and Chief Counsel, Consumer 
Protection Division, Office of the Indiana Attorney General, Indiana 
Government Center South, 302 W. Washington, 5th Floor, Indianapolis, 
IN 46204, Telephone: (317) 234-6843, Fax: (317) 232-7979, E-mail: 
<a href="/cdn-cgi/l/email-protection#2c6d67595659414d6c4d584b024542024b435a"><span class="__cf_email__" data-cfemail="e8a9a39d929d8589a8899c8fc68186c68f879e">[email protected]</span></a>

Appendix A

Definition of HHI and Calculations for Market

    ``HHI'' means the Herfindahl-Hirschman Index, a commonly 
accepted measure of market concentration. It is calculated by 
squaring the market share of each firm competing in the market and 
then summing the resulting numbers. For example, for a market 
consisting of four firms with shares of thirty, thirty, twenty and 
twenty percent, the HHI is 2,600 (30\2\ + 30\2\ + 20\2\ + 20\2\ = 
2,600). The HHI takes into account the relative size and 
distribution of the firms in a market and approaches zero when a 
market consists of a large number of firms of relatively equal size. 
The HHI increases both as the number of firms in the market 
decreases and as the disparity in size between those firms 
increases.
    Markets in which the HHI is between 1,000 and 1,800 points are 
considered to be moderately concentrated, and those in which the HHI 
is in excess of 1,800 points are considered to be concentrated. 
Transactions that increase the HHI by more than 100 points in 
concentrated markets presumptively raise antitrust concerns under 
the Merger Guidelines. See Merger Guidelines 1.51.

 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    UNITED STATES OF AMERICA, STATE OF ILLINOIS, STATE OF COLORADO 
and STATE OF INDIANA, Plaintiffs, v. AMC ENTERTAINMENT HOLDINGS, 
INC., and KERASOTES SHOWPLACE THEATRES, LLC, Defendants.

Civil Action No: 10-0846
Judge:
Filed: 5/21/2010.

Final Judgment

    Whereas, Plaintiffs, United States of America, State of Illinois, 
State of Colorado, and State of Indiana, filed their Complaint on May 
21, 2010, the Plaintiffs and Defendants, AMC Entertainment Holdings, 
Inc. (``AMC'') and Kerasotes Showplace Theatres, LLC (``Kerasotes''), 
by their respective attorneys, have consented to the entry of this 
Final Judgment without trial or adjudication of any issue of fact or 
law, and without this Final Judgment constituting any evidence against 
or admission by any party regarding any issue of fact or law;
    And Whereas, Defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    And Whereas, the essence of this Final Judgment is the prompt and 
certain divestiture of certain rights or assets by the Defendants to 
assure that competition is not substantially lessened;
    And Whereas, Plaintiffs require Defendants to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    And Whereas, Defendants have represented to the Plaintiffs that the 
divestitures required below can and will be made and that Defendants 
will later raise no claim of hardship or difficulty as grounds for 
asking the Court to modify any of the divestiture provisions contained 
below;
    Now Therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ordered, adjudged and decreed:

[[Page 31469]]

I. Jurisdiction

    This Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against Defendants under Section 7 of the Clayton 
Act, as amended (15 U.S.C. 18).

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' or ``Acquirers'' means the entity or entities to 
which AMC divests the Divestiture Assets.
    B. ``AMC'' means defendant AMC Entertainment Holdings, Inc., a 
Delaware corporation with its principal place of business in Kansas 
City, Missouri, its successors and assigns, and its subsidiaries, 
divisions, groups, affiliates, partnerships and joint ventures, and 
their directors, officers, managers, agents, and employees.
    C. ``Kerasotes'' means defendant Kerasotes Showplace Theatres, LLC, 
a Delaware corporation with its principal place of business in Chicago, 
Illinois, its successors and assigns, and its subsidiaries, divisions, 
groups, affiliates, partnerships and joint ventures, and their 
directors, officers, managers, agents, and employees.
    D. ``Landlord Consent'' means any contractual approval or consent 
that the landlord or owner of one or more of the Divestiture Assets, or 
of the property on which one or more of the Divestiture Assets is 
situated, must grant prior to the transfer of one of the Divestiture 
Assets to an Acquirer.
    E. ``Divestiture Assets'' means the following theatre assets:

 
------------------------------------------------------------------------
                            Theatre                     Address
------------------------------------------------------------------------
1...............  AMC Cantera 30............  28250 Diehl Road,
                                               Warrenville, IL 60555.
2...............  Kerasotes Showplace 12      1221 West Boughton Road,
                   (Bolingbrook).              Bolingbrook, IL 60440.
3...............  Kerasotes Glen 10.........  1850 Tower Drive,
                                               Glenview, IL 60026.
4...............  AMC Gardens 13............  4999 Old Orchard Shopping
                                               Center, Skokie, IL 60077,
5...............  Kerasotes Colony Square 12  1164 West Dillon Road,
                                               Louisville, CO 80027.
6...............  Kerasotes Olde Town 14....  5550 Wadsworth Boulevard,
                                               Arvada, CO 80002.
7...............  Kerasotes Showplace 12      6102 N. Rural Street,
                   (Glendale 10) OR AMC        Indianapolis, IN 46220.
                   Castleton Square 14.       6020 East 82nd Street,
                                               Indianapolis, IN 46250.
8...............  AMC Greenwood 14..........  461 South Greenwood Park
                                               Drive, Greenwood, IN
                                               46142.
------------------------------------------------------------------------

    The term ``Divestiture Assets'' includes:
    1. All tangible assets that comprise the business of operating 
mainstream theatres that exhibit first-run, commercial movies, 
including, but not limited to, real property and improvements, research 
and development activities, all equipment, fixed assets, and fixtures, 
personal property, inventory, office furniture, materials, supplies, 
and other tangible property and all assets used in connection with the 
Divestiture Assets; all licenses, permits, and authorizations issued by 
any governmental organization relating to the Divestiture Assets; all 
contracts (including management contracts), teaming arrangements, 
agreements, leases, commitments, certifications, and understandings 
relating to the Divestiture Assets, including supply agreements; all 
customer lists (including loyalty club data at the option of the 
Acquirer(s), copies of which may be retained by AMC at its option), 
contracts, accounts, and credit records; all repair and performance 
records and all other records relating to the Divestiture Assets;
    2. All intangible assets used in the development, production, 
servicing, and sale of the Divestiture Assets, including, but not 
limited to, all patents, licenses and sublicenses, intellectual 
property, copyrights, trademarks, trade names, service marks, service 
names, technical information, computer software (except Defendants' 
proprietary software) and related documentation, know-how, trade 
secrets, drawings, blueprints, designs, design protocols, 
specifications for materials, specifications for parts and devices, 
safety procedures for the handling of materials and substances, all 
research data concerning historic and current research and development 
relating to Divestiture Assets, quality assurance and control 
procedures, design tools and simulation capability, all manuals and 
technical information Defendants provide to their own employees, 
customers, suppliers, agents, or licensees, and all research data 
concerning historic and current research and development efforts 
relating to the Divestiture Assets; provided, however, that this term 
does not include assets that the Defendants do not own or that AMC is 
not legally able to transfer.

III. Applicability

    A. This Final Judgment applies to AMC and Kerasotes, as defined 
above, and all other persons in active concert or participation with 
any of them who receive actual notice of this Final Judgment by 
personal service or otherwise.
    B. If, prior to complying with Sections IV and V of this Final 
Judgment, Defendants sell or otherwise dispose of all or substantially 
all of their assets or of lesser business units that include the 
Divestiture Assets, they shall require the purchaser to be bound by the 
provisions of this Final Judgment. Defendants need not obtain such an 
agreement from the acquirers of the assets divested pursuant to this 
Final Judgment.

IV. Divestitures

    A. AMC is ordered and directed, within sixty (60) calendar days 
after the filing of the Complaint in this matter, or five (5) calendar 
days after notice of the entry of this Final Judgment by the Court, 
whichever is later, to divest the Divestiture Assets in a manner 
consistent with this Final Judgment to one or more Acquirer(s) 
acceptable to the United States in its sole discretion (after 
consultation with the State of Illinois, the State of Colorado, and the 
State of Indiana, as appropriate). The United States, in its sole 
discretion, may agree to one or more extensions of this time period, 
and shall notify the Court in such circumstances. AMC agrees to use its 
best efforts to divest the Divestiture Assets as expeditiously as 
possible.
    B. In accomplishing the divestitures ordered by this Final 
Judgment, AMC promptly shall make known, by usual and customary means, 
the availability of the Divestiture Assets. AMC shall inform any person 
making inquiry regarding a possible purchase of the Divestiture Assets 
that they are being divested pursuant to this Final Judgment and 
provide that person with a copy of this Final Judgment. AMC shall offer 
to furnish to all prospective Acquirers, subject to customary 
confidentiality assurances, all

[[Page 31470]]

information and documents relating to the Divestiture Assets 
customarily provided in a due diligence process except such information 
or documents subject to the attorney-client privilege or work-product 
doctrine. AMC shall make available such information to the Plaintiffs 
at the same time that such information is made available to any other 
person.
    C. AMC shall provide the Acquirer(s) and the United States 
information relating to the personnel involved in the operation of the 
Divestiture Assets to enable the Acquirer(s) to make offers of 
employment. Defendants will not interfere with any negotiations by the 
Acquirer(s) to employ any Defendant employee whose primary 
responsibility is the operation of the Divestiture Assets.
    D. AMC shall permit prospective Acquirer(s) of the Divestiture 
Assets to have reasonable access to personnel and to make inspections 
of the physical facilities of the Divestiture Assets; access to any and 
all environmental, zoning, and other permit documents and information; 
and access to any and all financial, operational, or other documents 
and information customarily provided as part of a due diligence 
process.
    E. AMC shall warrant to Acquirer(s) of the Divestiture Assets that 
each asset will be operational on the date of sale.
    F. Defendants shall not take any action that will impede in any way 
the permitting, operation, or divestitures of the Divestiture Assets. 
At the option of the Acquirer(s), AMC shall enter into an agreement for 
products and services, such as computer support services, that are 
reasonably necessary for the Acquirer(s) to effectively operate the 
Divestiture Assets during a transition period. The terms and conditions 
of any contractual arrangements meant to satisfy this provision must be 
commercially reasonable for those products and services for which the 
agreement is entered and shall remain in effect for no more than three 
months, absent approval of the United States, in its sole discretion 
(after consultation with the State of Illinois, the State of Colorado, 
and the State of Indiana, as appropriate).
    G. AMC shall warrant to the Acquirer(s) that there are no material 
defects in the environmental, zoning, or other permits pertaining to 
the operation of each asset. Following the sale of the Divestiture 
Assets, Defendants will not undertake, directly or indirectly, any 
challenges to the environmental, zoning, or other permits relating to 
the operation of the Divestiture Assets.
    H. Unless the United States (after consultation with the State of 
Illinois, the State of Colorado, and the State of Indiana, as 
appropriate) otherwise consents in writing, the divestitures made 
pursuant to Section IV, or by trustee appointed pursuant to Section V 
of this Final Judgment, shall include the entire Divestiture Assets, 
and shall be accomplished in such a way as to satisfy the United 
States, in its sole discretion (after consultation with the State of 
Illinois, the State of Colorado, and the State of Indiana, as 
appropriate) that the Divestiture Assets can and will be used by the 
Acquirer(s) as part of a viable, ongoing business of operating 
mainstream theatres that exhibit first-run, commercial movies. 
Divestitures of the Divestiture Assets may be made to one or more 
Acquirers, provided that in each instance it is demonstrated to the 
sole satisfaction of the United States (after consultation with the 
State of Illinois, the State of Colorado, and the State of Indiana, as 
appropriate) that the Divestiture Assets will remain viable and the 
divestitures of such assets will remedy the competitive harm alleged in 
the Complaint. The divestitures, whether pursuant to Section IV or 
Section V of this Final Judgment.
    (1) Shall be made to Acquirers that, in the United States' sole 
judgment (after consultation with the State of Illinois, the State of 
Colorado, and the State of Indiana, as appropriate) have the intent and 
capability (including the necessary managerial, operational, technical, 
and financial capability) of competing effectively in the business of 
mainstream theatres exhibiting first-run, commercial movies; and
    (2) Shall be accomplished so as to satisfy the United States, in 
its sole discretion (after consultation with the State of Illinois, the 
State of Colorado, and the State of Indiana, as appropriate) that none 
of the terms of any agreement between Acquirers and Defendants give the 
ability unreasonably to raise the Acquirers' costs, to lower the 
Acquirers' efficiency, or otherwise to interfere in the ability of the 
Acquirers to compete effectively.

V. Appointment of Trustee

    A. If AMC has not divested the Divestiture Assets within the time 
period specified in Section IV(A), AMC shall notify the United States 
of that fact in writing. Upon application of the United States, the 
Court shall appoint a trustee selected by the United States and 
approved by the Court to effect the divestitures of the Divestiture 
Assets.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the Divestiture Assets. The 
trustee shall have the power and authority to accomplish the 
divestitures to Acquirer(s) acceptable to the United States (after 
consultation with the State of Illinois, the State of Colorado, and the 
State of Indiana, as appropriate) at such price and on such terms as 
are then obtainable upon reasonable effort by the trustee, subject to 
the provisions of Sections IV, V, VI, and VII of this Final Judgment, 
and shall have such other powers as this Court deems appropriate. 
Subject to Section V(D) of this Final Judgment, the trustee may hire at 
the cost and expense of AMC any investment bankers, attorneys, or other 
agents, who shall be solely accountable to the trustee, reasonably 
necessary in the trustee's judgment to assist in the divestiture.
    C. Defendants shall not object to a sale by the trustee on any 
ground other than the trustee's malfeasance. Any such objections by 
Defendants must be conveyed in writing to the United States and the 
trustee within ten (10) calendar days after the trustee has provided 
the notice required under Section VII.
    D. The trustee shall serve at the cost and expense of AMC, on such 
terms and conditions as the United States approves, and shall account 
for all monies derived from the sale of the assets sold by the trustee 
and all costs and expenses so incurred. After approval by the Court of 
the trustee's accounting, including fees for its services and those of 
any professionals and agents retained by the trustee, all remaining 
money shall be paid to AMC and the trust shall then be terminated. The 
compensation of the trustee and any professionals and agents retained 
by the trustee shall be reasonable in light of the value of the 
Divestiture Assets and based on a fee arrangement providing the trustee 
with an incentive based on the price and terms of the divestitures and 
the speed with which it is accomplished, but timeliness is paramount.
    E. Defendants shall use their best efforts to assist the trustee in 
accomplishing the required divestitures. The trustee and any 
consultants, accountants, attorneys, and other persons retained by the 
trustee shall have full and complete access to the personnel, books, 
records, and facilities of the business to be divested, and Defendants 
shall develop financial and other information relevant to such business 
as the trustee may reasonably request, subject to reasonable protection 
for trade secret or other confidential research, development, or 
commercial information. Defendants shall take no action to interfere 
with or to impede the

[[Page 31471]]

trustee's accomplishment of the divestitures.
    F. After its appointment, the trustee shall file monthly reports 
with the parties and the Court setting forth the trustee's efforts to 
accomplish the divestitures ordered under this Final Judgment. To the 
extent such reports contain information that the trustee deems 
confidential, such reports shall not be filed in the public docket of 
the Court. Such reports shall include the name, address, and telephone 
number of each person who, during the preceding month, made an offer to 
acquire, expressed an interest in acquiring, entered into negotiations 
to acquire, or was contacted or made an inquiry about acquiring, any 
interest in the Divestiture Assets, and shall describe in detail each 
contact with any such person. The trustee shall maintain full records 
of all efforts made to divest the Divestiture Assets.
    G. If the trustee has not accomplished the divestitures ordered 
under this Final Judgment within six (6) months after its appointment, 
the trustee shall promptly file with the Court a report setting forth 
(1) the trustee's efforts to accomplish the required divestitures, (2) 
the reasons, in the trustee's judgment, why the required divestitures 
have not been accomplished, and (3) the trustee's recommendations. To 
the extent such reports contain information that the trustee deems 
confidential, such reports shall not be filed in the public docket of 
the Court. The trustee shall at the same time furnish such report to 
the United States, which shall have the right to make additional 
recommendations consistent with the purpose of the trust. The Court 
thereafter shall enter such orders as it shall deem appropriate to 
carry out the purpose of the Final Judgment, which may, if necessary, 
include extending the trust and the term of the trustee's appointment 
by a period requested by the United States.

VI. Landlord Consent

    A. If AMC is unable to effect the divestitures required herein due 
to the inability to obtain the Landlord Consent for any of the 
Divestiture Assets, AMC shall divest alternative theatre assets that 
compete effectively with the theatres for which the Landlord Consent 
was not obtained. The United States shall, in its sole discretion 
(after consultation with the State of Illinois, the State of Colorado, 
and the State of Indiana, as appropriate) determine whether such 
theatre assets compete effectively with the theatres for which landlord 
consent was not obtained.
    B. Within five (5) business days following a determination that 
Landlord Consent cannot be obtained for the Divestiture Assets, AMC 
shall notify the United States and propose an alternative divestiture 
pursuant to Section VI(A). The United States shall have then ten (10) 
business days in which to determine whether such theatre assets are a 
suitable alternative pursuant to Section VI(A). If AMC's selection is 
deemed not to be a suitable alternative, the United States shall in its 
sole discretion select the theatre assets to be divested (after 
consultation with the State of Illinois, the State of Colorado, and the 
State of Indiana, as appropriate).
    C. If the trustee is responsible for effecting the divestitures, it 
shall notify both the United States and AMC within five (5) business 
days following a determination that Landlord Consent cannot be obtained 
for the Divestiture Assets. AMC shall thereafter have five (5) business 
days to propose an alternative divestiture pursuant to Section VI(A). 
The United States shall have then ten (10) business days in which to 
determine whether such theatre assets are suitable alternative pursuant 
to Section VI(A). If AMC's selection is deemed not to be a suitable 
competitive alternative, the United States shall in its sole discretion 
select the theatre assets to be divested (after consultation with the 
State of Illinois, the State of Colorado, and the State of Indiana, as 
appropriate).

VII. Notice of Proposed Divestitures

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, AMC or the trustee, whichever is then 
responsible for effecting the divestitures required herein, shall 
notify the United States (and, as appropriate, the State of Illinois, 
the State of Colorado, and the State of Indiana), of any proposed 
divestitures required by Sections IV or V of this Final Judgment. If 
the trustee is responsible, it shall similarly notify Defendants. The 
notice shall set forth the details of the proposed divestitures and 
list the name, address, and telephone number of each person not 
previously identified who offered or expressed an interest in or desire 
to acquire any ownership interest in the Divestiture Assets, together 
with full details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States (the State of Illinois, the State of Colorado, and the State of 
Indiana) of such notice, the United States may request from Defendants, 
the proposed Acquirer(s), any other third party, or the trustee, if 
applicable, additional information concerning the proposed 
divestitures, the proposed Acquirer(s), and any other potential 
Acquirer(s). Defendants and the trustee shall furnish any additional 
information requested within fifteen (15) calendar days of the receipt 
of the request, unless the parties shall otherwise agree.
    C. Within thirty (30) calendar days after receipt of the notice or 
within twenty (20) calendar days after the United States has been 
provided the additional information requested from Defendants, the 
proposed Acquirer(s), any third party, and the trustee, whichever is 
later, the United States shall provide written notice to Defendants and 
the trustee, if there is one, stating whether or not it objects to the 
proposed divestitures. If the United States provides written notice 
that it does not object, the divestitures may be consummated, subject 
only to Defendants' limited right to object to the sale under Section 
V(C) of this Final Judgment. Absent written notice that the United 
States does not object to the proposed Acquirer(s) or upon objection by 
the United States, a divestiture proposed under Section IV or Section V 
shall not be consummated. Upon objection by Defendants under Section 
V(C), a divestiture proposed under Section V shall not be consummated 
unless approved by the Court.

VIII. Financing

    Defendants shall not finance all or any part of any purchase made 
pursuant to Section IV or V of this Final Judgment.

IX. Hold Separate

    Until the divestitures required by this Final Judgment have been 
accomplished, Defendants shall take all steps necessary to comply with 
the Hold Separate Stipulation and Order entered by this Court. 
Defendants shall take no action that would jeopardize the divestitures 
ordered by this Court.

X. Affidavits

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestitures have been completed under Sections IV or V, AMC shall 
deliver to the United States an affidavit as to the fact and manner of 
its compliance with Sections IV or V of this Final Judgment. Each such 
affidavit shall include the name, address, and telephone number of each 
person who, during the preceding thirty (30) calendar days, made an 
offer to acquire, expressed an interest in acquiring, entered into 
negotiations to acquire, or was contacted or made an

[[Page 31472]]

inquiry about acquiring, any interest in the Divestiture Assets, and 
shall describe in detail each contact with any such person during that 
period. Each such affidavit shall also include a description of the 
efforts AMC has taken to solicit buyers for the Divestiture Assets, and 
to provide required information to prospective purchasers, including 
the limitations, if any, on such information. Assuming the information 
set forth in the affidavit is true and complete, any objection by the 
United States to information provided by AMC, including limitation on 
information, shall be made within fourteen (14) calendar days of 
receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, AMC shall deliver to the United States an affidavit 
that describes in reasonable detail all actions Defendants have taken 
and all steps Defendants have implemented on an ongoing basis to comply 
with Section IX of this Final Judgment. AMC shall deliver to the United 
States an affidavit describing any changes to the efforts and actions 
outlined in AMC's earlier affidavits filed pursuant to this section 
within fifteen (15) calendar days after the change is implemented.
    C. Defendants shall keep all records of all efforts made to 
preserve and divest the Divestiture Assets until one year after such 
divestitures have been completed.

XI. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of determining whether the Final Judgment should be 
modified or vacated, and subject to any legally recognized privilege, 
from time to time duly authorized representatives of the United States 
Department of Justice Antitrust Division (``DOJ''), including 
consultants and other persons retained by the United States, shall, 
upon written request of an authorized representative of the Assistant 
Attorney General in charge of the Antitrust Division, and on reasonable 
notice to Defendants, be permitted:
    (1) Access during Defendants' office hours to inspect and copy, or 
at plaintiffs' option, to require Defendants to provide hard copy or 
electronic copies of, all books, ledgers, accounts, records, data, and 
documents in the possession, custody, or control of Defendants, 
relating to any matters contained in this Final Judgment; and
    (2) To interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by Defendants.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
Defendants shall submit written reports or response to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), or for the 
purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. If at the time information or documents are furnished by 
Defendants to the United States, Defendants represent and identify in 
writing the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(1)(G) of the 
Federal Rules of Civil Procedure, and Defendants mark each pertinent 
page of such material, ``Subject to claim of protection under Rule 
26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the 
plaintiffs shall give Defendants ten (10) calendar days notice prior to 
divulging such material in any legal proceeding (other than a grand 
jury proceeding).

XII. Notification

    Unless such transaction is otherwise subject to the reporting and 
waiting period requirements of the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''), 
AMC, without providing advance notification to the DOJ, shall not 
directly or indirectly acquire any assets of or any interest, including 
any financial, security, loan, equity or management interest, in the 
business of theatres exhibiting first-run, commercial movies in Cook 
County, Illinois; Dupage County, Illinois; Adams County, Colorado; 
Boulder County, Colorado; Jefferson County, Colorado; Marion County, 
Indiana; and Johnson County, Indiana during a ten year period.
    Unless such transaction is otherwise subject to the reporting and 
waiting period requirements of the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''), 
Kerasotes, without providing advance notification to the DOJ, shall not 
directly or indirectly acquire any assets of or any interest, including 
any financial, security, loan, or equity interest, in the business of 
theatres exhibiting first-run, commercial movies in Cook County, 
Illinois during a ten year period. Notwithstanding the preceding 
sentence, in no event shall Kerasotes be required to provide advance 
notification under this provision of any of the following activities: 
(i) engaging in a sale/leaseback, developer-financed or similar 
transaction, or developing internally using its own or third-party 
financing, in each case with respect to a newly developed theatre; or 
(ii) making an acquisition of not more than two percent of the 
outstanding voting securities of a publicly-traded company with 
theatres exhibiting first-run, commercial movies where such investment 
is made ``solely for the purpose of investment'' as that term is 
construed under 15 U.S.C. 802.9.
    Such notification shall be provided to the DOJ in the same format 
as, and per the instructions relating to the Notification and Report 
Form set forth in the Appendix to Part 803 of Title 16 of the Code of 
Federal Regulations as amended, except that the information requested 
in Items 5 through 9 of the instructions must be provided only about 
mainstream theatres that exhibit first-run, commercial movies. 
Notification shall be provided at least thirty (30) calendar days prior 
to acquiring any such interest, and shall include, beyond what may be 
required by the applicable instructions, the names of the principal 
representatives of the parties to the agreement who negotiated the 
agreement, and any management or strategic plans discussing the 
proposed transaction. If within the 30-day period after notification, 
representatives of the DOJ make a written request for additional 
information, Defendants shall not consummate the proposed transaction 
or agreement until thirty (30) days after submitting all such 
additional information. Early termination of the waiting periods in 
this paragraph may be requested and, where appropriate, granted in the 
same manner as is applicable under the requirements and provisions of 
the HSR Act and rules promulgated thereunder. This Section shall be 
broadly construed and any ambiguity or uncertainty regarding the filing 
of notice under this Section shall be resolved in favor of filing 
notice.

XIII. No Reacquisition

    AMC may not reacquire any part of the Divestiture Assets divested 
under

[[Page 31473]]

this Final Judgment during the term of this Final Judgment.

XIV. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XV. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire ten (10) years from the date of its entry.

XVI. Public Interest Determination

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

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

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    UNITED STATES OF AMERICA, STATE OF ILLINOIS, STATE OF COLORADO, 
and STATE OF INDIANA, Plaintiffs, v. AMC ENTERTAINMENT HOLDINGS, 
INC., and KERASOTES SHOWPLACE THEATRES, LLC, Defendants.

Civil Action No.: 1:10-cv-00846
Judge Kennedy, Henry, H.
Filed: 5/21/2010.

Competitive Impact Statement

    Plaintiff, United States of America, pursuant to Section 2(b) of 
the Antitrust Procedures and Penalties Act (``APPA'' or ``Tunney 
Act''), 15 U.S.C.16(b)-(h), files this Competitive Impact Statement 
relating to the proposed Final Judgment submitted for entry in this 
civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On January 19, 2010, Defendant AMC Entertainment Holdings, Inc. 
(``AMC'') agreed to acquire most of the assets of Defendant Kerasotes 
Showplace Theatres, LLC (``Kerasotes''). Plaintiffs filed a civil 
antitrust complaint on May 21, 2010, seeking to enjoin the proposed 
acquisition and to obtain equitable relief. The Complaint alleges that 
the acquisition, if permitted to proceed, would combine under common 
ownership the two leading, and in some cases, only mainstream movie 
theatres exhibiting first-run, commercial movies in parts of the 
metropolitan areas of Chicago, Denver, and Indianapolis. The likely 
effect of this acquisition would be to lessen competition substantially 
for exhibition of first-run, commercial movies in mainstream theatres 
in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
    At the same time the Complaint was filed, the Plaintiffs also filed 
a Hold Separate Stipulation and Order (``Hold Separate'') and a 
proposed Final Judgment, which are designed to eliminate the 
anticompetitive effects of the acquisition. Under the proposed Final 
Judgment, which is explained more fully below, AMC and Kerasotes are 
required to divest eight theatres located in the Chicago, Denver, and 
Indianapolis areas to acquirer(s) acceptable to the Plaintiffs.
    Under the terms of the Hold Separate, Defendants will take certain 
steps to ensure that the eight theatres to be divested are operated as 
competitively independent, economically viable and ongoing business 
concerns, that they will remain independent and uninfluenced by the 
consummation of the acquisition, and that competition is maintained 
during the pendency of the ordered divestiture.
    The Plaintiffs and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. Description of the Events Giving Rise to the Alleged Violation

A. The Defendants and the Proposed Transaction

    AMC is a Delaware corporation with its headquarters in Kansas City, 
Missouri. It is the holding company of AMC Entertainment, Inc. AMC owns 
or operates 304 theatres containing 4,574 screens in locations 
throughout the United States and four foreign countries. Measured by 
number of screens, AMC is the second-largest theatre exhibitor in the 
United States and had revenues of approximately $2.26 billion in 2009.
    Kerasotes is a Delaware corporation with its principal place of 
business in Chicago, Illinois. It owns or operates 96 theatres with 973 
screens in various states. Kerasotes is the sixth-largest theatre 
exhibitor in the United States and earned revenue of approximately 
$327.7 million in 2009.
    On January 19, 2010, AMC and Kerasotes signed a purchase and sale 
agreement under which AMC will acquire all the outstanding membership 
units of Kerasotes, with the exception of three theatres which will be 
retained by the Kerasotes family, for approximately $275 million.
    The proposed transaction, as initially agreed to by Defendants on 
January 19, 2010, would lessen competition substantially as a result of 
AMC's acquisition of Kerasotes. This acquisition is the subject of the 
Complaint and proposed Final Judgment filed by the Plaintiffs on May 
21, 2010.

B. The Competitive Effects of the Transaction on the Exhibition of 
First-Run, Commercial Movies in Mainstream Theatres

    The Complaint alleges that the exhibition of first-run, commercial 
movies in mainstream theatres in areas the Complaint defines as North 
Suburban Chicago, Upper Southwest Suburban Chicago, Lower Southwest 
Suburban Chicago, Upper Northwest Denver, Lower Northwest Denver, North 
Indianapolis, and South Indianapolis constitute lines of commerce and 
relevant markets for antitrust purposes.
1. The Relevant Product and Geographic Markets
    The exercise of defining a relevant market helps analyze the 
competitive effects of a horizontal transaction. Market definition 
identifies an area of competition and enables the identification of 
market participants and the measurement of market shares and 
concentration. This exercise is useful to the extent it illuminates the 
transaction's likely competitive effects.
    The Complaint alleges that the relevant product market within which 
to assess the competitive effects of this transaction is the exhibition 
of first-run, commercial movies in mainstream theatres. Mainstream 
theatres are movie theatres that exhibit a variety of first-run, 
commercial movies to attract moviegoers of all ages and offer basic 
concessions, such as popcorn, candy and soft drinks. According to the 
Complaint, the experience of viewing a film in a theatre is an 
inherently different experience from other forms of entertainment, such 
as a live show, a

[[Page 31474]]

sporting event, or viewing a movie in the home (e.g., on a DVD player 
or via pay-per-view). Reflecting the significant differences between 
viewing a movie in a theatre and other forms of entertainment, ticket 
prices for movies are generally very different from prices for other 
forms of entertainment. Live entertainment is typically significantly 
more expensive than a movie ticket, whereas renting a DVD for home 
viewing is usually significantly cheaper than viewing a movie in a 
theatre.
    The Complaint alleges that moviegoers generally do not regard 
theatres showing ``sub-run'' movies, art movies, or foreign language 
movies as adequate substitutes for mainstream theatres showing first-
run movies. The Complaint also alleges that ``premiere'' theaters do 
not typically serve as competitive constraints on mainstream theaters. 
Although premiere theatres show first-run, commercial movies, they 
typically have more restrictive admission policies (e.g., minors must 
be accompanied by adults for all movies), charge higher ticket prices, 
serve alcoholic beverages, and often have full-service restaurants or 
in-service dining.
    The Complaint defines seven relevant geographic markets in the 
Chicago, Denver, and Indianapolis areas in which to measure the 
competitive effects of this transaction. Each geographic market 
contains a number of mainstream theatres--most of which are owned by 
the Defendants--at which consumers can view first-run, commercial 
movies. The Complaint identifies the relevant geographic markets as 
follows: North Suburban Chicago, Upper Southwest Suburban Chicago, 
Lower Southwest Suburban Chicago, Upper Northwest Denver, Lower 
Northwest Denver, North Indianapolis, and South Indianapolis.
Chicago, Illinois Area
    According to the Complaint, the North Suburban Chicago area, in and 
around the communities of Glenview and Skokie, encompasses AMC's 
Northbrook Court 14, AMC's Gardens 13, Kerasotes' Glen 10, Kerasotes' 
Village Crossing 18, and Kerasotes' Showplace 12 (Niles) theatres. 
There are no other mainstream theatres in the North Suburban Chicago 
area.
    The Upper Southwest Suburban Chicago area, in and around the city 
of Naperville, encompasses AMC's Cantera 30 and Kerasotes' Showplace 
Naperville 16 (Naperville) theatres. There are no other mainstream 
theatres in the Upper Southwest Suburban Chicago area.
    The Lower Southwest Suburban Chicago area, in and around the 
village of Bolingbrook, encompasses AMC's Woodridge 18 and Kerasotes' 
Showplace 12 (Bolingbrook) theatres. There is only one non-party 
mainstream theatre in the Lower Southwest Suburban Chicago area--a 16-
screen theatre operated by Cinemark.
Denver, Colorado Area
    The Upper Northwest Denver area, in and around the cities of 
Louisville and Broomfield, encompasses AMC's Flatiron Crossing 14 and 
Kerasotes' Colony Square 12 theatres. There are no other mainstream 
theatres in the Upper Northwest Denver area.
    The Lower Northwest Denver area, in and around the cities of 
Westminster and Arvada, encompasses AMC's Westminster Promenade 24 and 
Kerasotes' Olde Town 14 theatres. There are no other mainstream 
theatres in the Lower Northwest Denver area.
Indianapolis, Indiana Area
    The North Indianapolis area, in and around the community of 
Glendale, encompasses AMC's Castleton Square 14 and Kerasotes' Glendale 
Town 12 theatres. There is only one other non-party mainstream theatre 
in the North Indianapolis area--a Regal theatre with 14 screens.
    The South Indianapolis area, in and around the city of Greenwood, 
encompasses AMC's Greenwood 14 and Kerasotes' Showplace 16 and IMAX. 
There are no other mainstream theatres in the South Indianapolis area.
    According to the Complaint, the relevant markets in which to assess 
the competitive effects of this transaction are the mainstream theatres 
in the above-mentioned areas: North Suburban Chicago, Upper Southwest 
Suburban Chicago, Lower Southwest Suburban Chicago, Upper Northwest 
Denver, Lower Northwest Denver, North Indianapolis, and South 
Indianapolis areas. A small but significant post-acquisition increase 
in movie ticket prices by a hypothetical monopolist of mainstream 
theatres in those areas would not cause a sufficient number of 
customers to shift to other alternatives, including to other forms of 
entertainment, to non-mainstream theatres, or to mainstream theatres 
outside the relevant geographic markets described above to make such a 
price increase unprofitable.
2. Competitive Effects in the Relevant Markets
    The Complaint alleges that exhibitors that operate mainstream movie 
theatres compete on multiple dimensions. Exhibitors compete over the 
quality of the viewing experience. They compete to offer the most 
sophisticated sound and viewing systems, best picture clarity, nicest 
seats with the best views, and cleanest floors and lobbies for 
moviegoers. Such exhibitors also compete on price, knowing that if they 
charge too much (or do not offer sufficiently discounted tickets for 
matinees, seniors, children, etc.), moviegoers will choose to view 
movies at rival theatres.
    According to the Complaint, the proposed transaction is likely to 
eliminate these multiple dimensions of competition between AMC and 
Kerasotes. In each of the relevant markets, AMC and Kerasotes are each 
other's most significant competitor, given their close proximity to one 
another and to moviegoers, and the similarity in their theatres' size 
and quality of viewing experience. Their competition spurs each to keep 
its prices in check and improve its quality. For example, Kerasotes 
expanded its discounts on matinees at its Bolingbrook 12 theatre, in 
Lower Southwest Suburban Chicago, after AMC opened its Woodridge 18 
theatre nearby. Kerasotes retrofitted its Bolingbrook 12 theatre, in 
Lower Southwest Suburban Chicago, in response to AMC's opening its 
Woodridge 18 theatre nearby.
    As alleged in the Complaint, each of the relevant markets would see 
a significant increase in market concentration under a measure called 
the Herfindahl-Hirschman Index (``HHI''), explained in Appendix A of 
the Complaint. In the area with the least change in concentration--the 
Lower Southwest Suburban Chicago area--the proposed transaction would 
give the newly combined entity control of two of the only three 
mainstream theatres in that area. In that market the post-transaction 
HHI would rise to roughly 5,017, representing an increase of 1,221 
points. In other markets, the proposed acquisition would place all of 
the mainstream theatres under AMC's control, creating a local monopoly 
and yielding a post-transaction HHI of 10,000--the maximum.
    In the seven relevant markets today, were AMC or Kerasotes to 
increase ticket prices and the other were not to follow, the exhibitor 
that increased price would likely suffer financially, as a substantial 
number of its customers would patronize the other exhibitor's theatre. 
After the transaction, the newly combined entity would recapture such 
losses, making profitable price increases that would have been 
unprofitable before the transaction. Likewise, the proposed transaction 
would eliminate competition between AMC and Kerasotes over the quality 
of the viewing experience at their theatres in each of the geographic 
markets at issue.

[[Page 31475]]

After the transaction, the newly combined entity would have a reduced 
incentive to maintain, upgrade, and renovate its theatres in the 
relevant markets, and to improve its theatres' amenities and services, 
thus reducing the quality of the viewing experience.
    The Complaint alleges that the presence of the other mainstream 
theatres in certain of the relevant geographic markets would be 
insufficient to replace the competition lost due to the transaction, 
and thus render unprofitable post-transaction increases in ticket 
prices or decreases in quality by the newly combined entity.
    Finally, the Complaint alleges that the entry of a mainstream 
theatre that would deter or counteract an increase in movie ticket 
prices or a decline in theatre quality is unlikely in all of the 
relevant markets. Exhibitors are reluctant to locate new theatres near 
existing theatres unless the population density and demographics makes 
new entry viable or the existing theatres do not have stadium seating. 
Those conditions do not exist in any of the relevant markets. All of 
these markets currently have mainstream theatres with stadium seating. 
Given the number of existing comparable theatres, population density 
and demographics in the relevant markets, demand for additional 
mainstream theatres in the areas at issue is not likely to support 
entry of a new theatre.
    For all of these reasons, the Plaintiffs have concluded that the 
proposed transaction would lessen competition substantially in the 
exhibition of first-run, commercial movies in mainstream theatres in 
the North Suburban Chicago area, Upper Southwest Suburban Chicago area, 
Lower Southwest Suburban Chicago area, Upper Northwest Denver area, 
Lower Northwest Denver area, North Indianapolis area, and the South 
Indianapolis area, eliminate actual and potential competition between 
AMC and Kerasotes, and likely result in increased ticket prices and 
lower quality theatres in those markets. The proposed transaction 
therefore violates Section 7 of the Clayton Act.

III. Explanation of the Proposed Final Judgment

    The divestiture requirement of the proposed Final Judgment will 
eliminate the anticompetitive effects of the acquisitions in each 
relevant geographic market, establishing new, independent, and 
economically viable competitors. The proposed Final Judgment requires 
AMC, within sixty (60) calendar days after the filing of the Complaint, 
or five (5) days after the notice of the entry of the Final Judgment by 
the Court, whichever is later, to divest, as viable ongoing businesses, 
a total of eight theatres in the seven relevant geographic markets in 
the Chicago, Denver, and Indianapolis areas: Kerasotes Glen 10 and AMC 
Gardens 13 (North Suburban Chicago), AMC Cantera 30 (Upper Southwest 
Suburban Chicago), Kerasotes Showplace 12 (Bolingbrook) (Lower 
Southwest Suburban Chicago), Kerasotes Colony Square 12 (Upper 
Northwest Denver), Kerasotes Olde Town 14 (Lower Northwest Denver), 
Kerasotes Showplace 12 or AMC Castleton Square 12 (North Indianapolis), 
and AMC Greenwood 14 (South Indianapolis). The assets must be divested 
in such a way as to satisfy the Plaintiffs that the theatres can and 
will be operated by the purchaser as viable, ongoing businesses that 
can compete effectively in the relevant markets as mainstream theatres 
exhibiting first-run, commercial movies. AMC must take all reasonable 
steps necessary to accomplish the divestiture quickly and shall 
cooperate with prospective purchasers.
    Until the divestitures take place, AMC and Kerasotes must maintain 
the sales and marketing of the theatres, and maintain the theatres in 
operable condition at current capacity configurations. Until the 
divestitures take place, AMC and Kerasotes must not transfer or 
reassign to other areas within the company their employees with primary 
responsibility for the operation of the theatres, except for transfer 
bids initiated by employees pursuant to Defendants' regular, 
established job-posting policies.
    In the event that AMC does not accomplish the divestitures within 
the periods prescribed in the proposed Final Judgment, the Final 
Judgment provides that the Court will appoint a trustee selected by the 
United States to effect the divestitures. If a trustee is appointed, 
the proposed Final Judgment provides that AMC will pay all costs and 
expenses of the trustee. The trustee's commission will be structured so 
as to provide an incentive for the trustee based on the price obtained 
and the speed with which the divestitures are accomplished. After his 
or her appointment becomes effective, the trustee will file monthly 
reports with the Court and the parties, setting forth his or her 
efforts to accomplish the divestiture. At the end of six (6) months, if 
the divestitures have not been accomplished, the trustee and the 
plaintiffs will make recommendations to the Court, which shall enter 
such orders as appropriate, in order to carry out the purpose of the 
trust, including extending the trust or the term of the trustee's 
appointment.
    If AMC is unable to effect the divestitures required herein due to 
their inability to obtain the landlords' consent, Section VI of the 
proposed Final Judgment requires AMC to divest alternative theatre 
assets that compete effectively with the theatres for which the 
landlord consent was not obtained. This provision will insure that any 
failure by AMC to obtain landlord consent does not thwart the relief 
obtained in the proposed Final Judgment.
    The proposed Final Judgment also prohibits AMC from acquiring any 
other theatres in counties that correspond to the relevant geographic 
markets and Kerasotes from acquiring any other theatres in Cook County, 
Illinois, without providing at least thirty (30) days notice to the 
United States Department of Justice. Such acquisitions could raise 
competitive concerns but might be too small to be reported under the 
Hart-Scott-Rodino (``HSR'') premerger notification statute.
    The divestiture provisions of the proposed Final Judgment will 
eliminate the anticompetitive effects of AMC's acquisition of 
Kerasotes.

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 
attorney's fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
16(a), the proposed Final Judgment has no prima facie effect in any 
subsequent private lawsuit that may be brought against Defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The Plaintiffs and Defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the Plaintiffs have not withdrawn 
their consent. The APPA conditions entry upon the Court's determination 
that the proposed Final Judgment is in the public interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written

[[Page 31476]]

comments regarding the proposed Final Judgment. Any person who wishes 
to comment should do so within sixty (60) days of the date of 
publication of this Competitive Impact Statement in the Federal 
Register, or the last date of publication in a newspaper of the summary 
of this Competitive Impact Statement, whichever is later. All comments 
received during this period will be considered by the United States 
Department of Justice, which remains free to withdraw its consent to 
the proposed Final Judgment at any time prior to the Court's entry of 
judgment. The comments and the response of the United States will be 
filed with the Court and published in the Federal Register.
    Written comments should be submitted to: John R. Read, Chief, 
Litigation III, Antitrust Division, United States Department of 
Justice, 450 5th Street, NW., Suite 4000, Washington, DC 20530.

The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The Plaintiffs considered, as an alternative to the proposed Final 
Judgment, a full trial on the merits against Defendants. The Plaintiffs 
could have continued the litigation and sought preliminary and 
permanent injunctions against AMC's acquisition of Kerasotes. The 
Plaintiffs are satisfied, however, that the divestiture of assets 
described in the proposed Final Judgment will preserve competition for 
the provision of exhibition of first-run, commercial movies in the 
relevant markets identified by the United States. Thus, the proposed 
Final Judgment would achieve all or substantially all of the relief the 
Plaintiffs would have obtained through litigation, but avoids the time, 
expense, and uncertainty of a full trial on the merits of the 
Complaint.

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

    The Clayton Act, as amended by 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, in accordance with the statute as amended in 2004, is 
required to consider:

    (A) The competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration of relief sought, anticipated effects of 
alternative remedies actually considered, whether its terms are 
ambiguous, and any other competitive considerations bearing upon the 
adequacy of such judgment that the court deems necessary to a 
determination of whether the consent judgment is in the public 
interest; and
    (B) The impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.

15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors, 
the court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (DC Cir. 1995); see generally United States v. SBC 
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public 
interest standard under the Tunney Act); United States v. InBev N.V./
S.A., 2009-2 Trade Cas. (CCH) ]76,736, 2009 U.S. Dist. LEXIS 84787, No. 
08-1965 (JR), at *3, (D.D.C. Aug. 11, 2009) (noting that the court's 
review of a consent judgment is limited and only inquires ``into 
whether the government's determination that the proposed remedies will 
cure the antitrust violations alleged in the complaint was reasonable, 
and whether the mechanism to enforce the final judgment are clear and 
manageable.'') \1\
---------------------------------------------------------------------------

    \1\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for court to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns, 
489 F. Supp. 2d at 11 (concluding that the 2004 amendments 
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------

    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA a court considers, among other things, 
the relationship between the remedy secured and the specific 
allegations set forth in the government's complaint, whether the decree 
is sufficiently clear, whether enforcement mechanisms are sufficient, 
and whether the decree may positively harm third parties. See 
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the 
relief secured by the decree, a court may not ``engage in an 
unrestricted evaluation of what relief would best serve the public.'' 
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (citing 
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see 
also Microsoft, 56 F.3d at 1460-62; United States v. . Alcoa, Inc., 152 
F. Supp. 2d 37, 40 (D.DC 2001). InBev, 2009 U.S. Dist. LEXIS 84787, at 
*3. Courts have held that:

    [t]he balancing of competing social and political interests 
affected by a proposed antitrust consent decree must be left, in the 
first instance, to the discretion of the Attorney General. The 
court's role in protecting the public interest is one of insuring 
that the government has not breached its duty to the public in 
consenting to the decree. The court is required to determine not 
whether a particular decree is the one that will best serve society, 
but whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\ In 
determining whether a proposed settlement is in the public interest, a 
district court ``must accord deference to the government's predictions 
about the efficacy of its remedies, and may not require that the 
remedies perfectly match the alleged violations.'' SBC Commc'ns, 489 F. 
Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461 (noting the need 
for courts to be ``deferential to the government's predictions as to 
the effect of the proposed remedies''); United States v. Archer-
Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.DC 2003) (noting that the 
court should grant due respect to the United States' prediction as to 
the effect of proposed remedies, its perception of the market 
structure, and its views of the nature of the case).
---------------------------------------------------------------------------

    \2\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest''').
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is `within the 
reaches of public interest.' '' United States v. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.DC 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland

[[Page 31477]]

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). To meet this standard, the United States ``need only provide a 
factual basis for concluding that the settlements are reasonably 
adequate remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp. 
2d at 17.
    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its Complaint, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also InBev, 2009 
U.S. Dist. LEXIS 84787, at *20 (``the `public interest' is not to be 
measured by comparing the violations alleged in the complaint against 
those the court believes could have, or even should have, been 
alleged''). 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. Microsoft, 56 F.3d at 1459-60. 
As this Court recently confirmed in SBC Communications, courts ``cannot 
look beyond the complaint in making the public interest determination 
unless the complaint is drafted so narrowly as to make a mockery of 
judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
    In its 2004 amendments, Congress made clear its intent to preserve 
the practical benefits of utilizing consent decrees in antitrust 
enforcement, adding the unambiguous instruction that ``[n]othing in 
this section shall be construed to require the court to conduct an 
evidentiary hearing or to require the court to permit anyone to 
intervene.'' 15 U.S.C. 16(e)(2). The language wrote into the statute 
what Congress intended when it enacted the Tunney Act in 1974, as 
Senator Tunney explained: ``[t]he court is nowhere compelled to go to 
trial or to engage in extended proceedings which might have the effect 
of vitiating the benefits of prompt and less costly settlement through 
the consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement 
of Senator Tunney). Rather, the procedure for the public interest 
determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11.\3\
---------------------------------------------------------------------------

    \3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 (D. 
DC 2000) (noting that the ``Tunney Act expressly allows the court to 
make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade Cas. (CCH) & 
61,508, at 71,980 (W.D. Mo. 1977) (``Absent a showing of corrupt 
failure of the government to discharge its duty, the Court, in 
making its public interest finding, should * * * carefully consider 
the explanations of the government in the competitive impact 
statement and its responses to comments in order to determine 
whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, 93d Cong., 1st Sess., at 6 
(1973) (``Where the public interest can be meaningfully evaluated 
simply on the basis of briefs and oral arguments, that is the 
approach that should be utilized.'')
---------------------------------------------------------------------------

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: May 21, 2010.

Respectfully submitted,
/s/--------------------------------------------------------------------
Gregg I. Malawer (DC Bar No. 481685),
Nina Hale,
Bennett Matelson (DC Bar No. 454551),
Creighton J. Macy,

U.S. Department of Justice Antitrust Division 450 5th Street, NW., 
Suite 4000, Washington, DC 20530, Telephone: (202) 616-5943, Fax: 
(202) 514-7308, E-mail: <a href="/cdn-cgi/l/email-protection#98ffeafdffffb6f5f9f4f9effdead8edebfcf7f2b6fff7ee"><span class="__cf_email__" data-cfemail="5235203735357c3f333e33253720122721363d387c353d24">[email protected]</span></a>, Attorneys for 
Plaintiff the United States

[FR Doc. 2010-13394 Filed 6-2-10; 8:45 am]
BILLING CODE 4410-11-P


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