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[Federal Register Volume 60, Number 246 (Friday, December 22, 1995)]
[Notices]
[Pages 66557-66565]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31054]

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DEPARTMENT OF JUSTICE

Antitrust Division

United States and State of Texas v. Kimberly-Clark Corporation 
and Scott Paper Company; 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 Northern District of 
Texas, Dallas Division in United States and State of Texas v. Kimberly-
Clark Corporation and Scott Paper Company, Civil No. 3:95 CV 3055-P, as 
to both defendants.
    On December 12, 1995, the United States and the State of Texas 
filed a Complaint alleging that the proposed merger of Kimberly-Clark 
Corporation (``Kimberly-Clark'') and Scott Paper Company (``Scott'') 
would violate Section 7 of the Clayton Act, 15 U.S.C. Section 18. The 
Complaint further alleges that the merger of Kimberly-Clark and Scott 
would lessen competition substantially and tend to create a monopoly in 
the sale of consumer facial tissue and baby wipes in the United States. 
The proposed Final Judgment, filed the same time as the Complaint, 
requires Kimberly-Clark to divest the Scott baby wipes brands, Baby 
Fresh and Wash A Bye Baby and 

[[Page 66558]]
the Scott facial tissue brand, Scotties, along with certain tangible 
and intangible assets.
    Public comment is invited within the statutory 60-day comment 
period. Such comments and responses thereto will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to Anthony V. Nanni, Chief, Litigation I Section, Antitrust Division, 
United States Department of Justice, 1401 H Street, N.W., Suite 4000, 
Washington, D.C. 20530 (telephone: 202/307-6694).
Constance K. Robinson,
Director of Operations.

United States District Court, Northern District of Texas, Dallas 
Division

    United States of America and State of Texas, Plaintiffs, v. 
Kimberly-Clark Corporation and Scott Paper Company, Defendants. 
Civil Action No.: 3:95 CV 3055-P. Filed: December 12, 1995.

Stipulation

    It is stipulated by and between the undersigned parties, by their 
respective attorneys, that:
    1. The Court has jurisdiction over the subject matter of this 
action and over each of the parties hereto, and venue of this action is 
proper in the Northern District of Texas.
    2. The parties consent that a Final Judgment in the form hereto 
attached may be filed and entered by the Court, upon the motion of any 
party or upon the Court's own motion, at any time after compliance with 
the requirements of the Antitrust Procedures and Penalties Act (15 
U.S.C. Sec. 16(b)-(h)), and without further notice to any party or 
other proceedings, provided that either plaintiff has not withdrawn its 
consent, which either or both may do at any time before the entry of 
the proposed Final Judgment by serving notice thereof on defendants and 
by filing that notice with the Court.
    3. The parties shall abide by and comply with the provisions of the 
proposed Final Judgment pending entry of the Final Judgment, and shall, 
from the date of the filing of this Stipulation, comply with all the 
terms and provisions of the Final Judgment as though they were in full 
force and effect as an order of the Court.
    4. In the event either plaintiff withdraws its consent, or if the 
proposed Final Judgment is not entered pursuant to this Stipulation, 
this Stipulation shall be of no effect whatever and the making of this 
Stipulation shall be without prejudice to any party in this or any 
other proceeding.

    Dated: December 12, 1995.

    For Plaintiff United States:
Anne K. Bingaman
Assistant Attorney General, District of Columbia #369900.
Lawrence R. Fullerton,
Deputy Asst. Attorney General, District of Columbia #251264.
Constance K. Robinson,
Director of Operations, District of Columbia #244800.
Charles E. Biggio, Sr. Counsel,
State of New York (no bar no. assigned)
Anthony V. Nanni, Chief,
Litigation I Section State of New York (no bar number assigned).
Anthony E. Harris, Attorney,
State of Illinois #01133713, Antitrust Division, U.S. Department of 
Justice, 1401 H Street, N.W., Suite 4000, Washington, D.C. 20530, (202) 
307-6583.
    For Plaintiff State of Texas:
Dan Morales,
Attorney General of Texas
Jorge Vega,
First Assistant Attorney General
Laquita A. Hamilton,
Deputy Attorney General
Thomas P. Perkins, Jr.,
Assistant Attorney General, Chief, Consumer Protection Div.
Mark Tobey,
Assistant Attorney General, Antitrust Section, State of Texas 
#22082960, P.O. Box 12548, Austin TX 78711-2548, (512) 463-2185.
    For Defendant Kimberly-Clark Corp.:
William O. Fifield, Esquire,
State of Illinois #0080332, Sidley & Austin, One First National Plaza, 
Chicago, Illinois 60603, (312) 853-7474
    For Defendant Scott Paper Company:
Michael L. Weiner, Esquire,
State of New York (no bar number assigned) Skadden, Arps, Slate, 
Meagher & Flom, 919 Third Avenue, New York, New York 10022-3897, (212) 
735-2632
    Executed on: December 11, 1995.

United States District Court, Northern District of Texas, Dallas 
Division

    United States of American and State of Texas. Plaintiffs, v. 
Kimberly-Clark Corporation and Scott Paper Company, Defendants. 
Civil No.: 3:95 CF 3055-P. Filed: December 12, 1995.

Final Judgment

    Whereas, plaintiffs, the United States of American and the State of 
Texas, having filed their Complaint herein on December 12, 1995, and 
plaintiffs and defendants, by their respective attorneys, having 
consented to the entry of this Final Judgment without trial or 
adjudication of any issue of fact or law herein, and without this Final 
Judgment constituting any evidence against or an admission by any party 
with respect to any issue of law or fact herein;
    And whereas, defendants have agreed to be bound by the provisions 
of this Final Judgment pending its approval by the Court;
    And whereas, prompt and certain divestiture of certain rights and 
assets to assure that competition is not substantially lessened are the 
essence of this agreement;
    And whereas, plaintiffs require defendants to make certain 
divestitures for the purpose of establishing viable competitors in the 
sale of baby wipes and facial tissue;
    And whereas, defendants have represented to plaintiffs that the 
divestitures required below can and will be made and that defendants 
will later raise no claims of hardship or difficulty as grounds for 
asking the Court to modify any of the divestiture provisions contained 
below;
    New, therefore, before the taking of any testimony, and without 
trial or adjudication of any issue of fact or law herein, and upon 
consent of the parties hereto, it is hereby Ordered, Adjudged, and 
Decreed as follows:

I. Jurisdiction

    This Court has jurisdiction over each of the parties hereto and the 
subject matter of 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. ``Kimberly-Clark'' means defendant Kimberly-Clark Corporation, a 
Delaware corporation with its headquarters in Dallas, Texas, and 
includes its successors and assigns, and its subsidiaries, directors, 
officers, managers, agents, and employees.
    B. ``Scott'' means defendant Scott Paper Company, a Pennsylvania 
corporation with its headquarters in Boca Raton, Florida, and includes 
its successors and assigns, and its subsidiaries, directors, officers, 
managers, agents, and employees.
    C. ``Relevant Wet Wipes Assets'' means:
    (1) The Dover, Delaware plant of Scott, including all tangible 
assets used by Scott in connection with its business of researching, 
developing, making, having made, packaging, distributing, or selling 
products of the Dover plant, including but not limited to: the 
manufacturing plant and associated web making, converting, packaging 
and distributing equipment and facilities, inventory, real property, 
and any other interests, or tangible assets or 

[[Page 66559]]
improvements, associated with the Dover plant;
    (2) A twenty-five year, exclusive, royalty-free and assignable 
license, perpetually renewable at the licensee's option, to make, have 
made, use or sell in the United States any label of any baby wipes 
product currently produced at the Dover, Delaware plant, including but 
not limited to the Baby Fresh, Wash-a-Bye Baby, Baby Fresh Gentle 
Touch, and Kid Fresh labels, and any improvement to or line extension 
of those labels; and
    (3) All intangible assets, wherever located, that relate in any way 
to the tangible assets and labels described above (including but not 
limited to: manufacturing, converting, packaging and distribution know-
how); exclusive, assignable rights to all patents, proprietary 
technology, supply contracts, and business information solely dedicated 
to the tangible assets or the labels described above; rights in real 
and personal property; and nonexclusive, assignable rights to all 
related patents, proprietary technology and business information used 
in connection with, but not solely dedicated to the tangible assets or 
the labels described above.
    D. ``Relevant Facial Tissue Assets'' means:
    (1) A twenty-five year, exclusive, royalty-free and assignable 
license, perpetually renewable at the licensee's option, to make, have 
made, use or sell in the United States any facial tissue under the 
Scotties label, and a covenant that defendants shall not make, have 
made, use or sell in the United States any facial tissue under the 
Scott or Scotties label;
    (2) Any two of the following four tissue mills: the Scott tissue 
mill in Marinette, Wisconsin; the Scott tissue mill in Ft. Edward, New 
York; the Kimberly-Clark Lakeview tissue mill in Neenah, Wisconsin; and 
the Kimberly-Clark Badger-Globe tissue mill in Neenah, Wisconsin; 
provided, however, that in the event a purchaser elects to purchase the 
Marinette, WI tissue mill of Scott, defendants shall not be required to 
divest the DRC tissue machine and associated converting assets, located 
in an adjacent facility on the Marinette tissue mill site and not 
currently used for making facial tissue, in which case defendants 
shall, at the option of the purchaser, enter into an arrangement with 
respect to the measures necessary to separate the DRC tissue machine 
from the rest of the Marinette tissue mill, including but not limited 
to a long-term agreement to provide, on a nondiscriminatory basis, 
shared utilities, such as water, electric, steam, and treatment of 
waste or effluent;
    (3) At the purchaser's option. (a) a commitment by defendants to 
enter into up to a three-year agreement to sell to purchaser, at such 
rates as to which purchaser and defendants may agree, as much as 25,000 
metric tons/year of tissue parent rolls; and (b) a commitment by 
defendants to enter into up to a three-year agreement to buy from the 
purchaser, at such rates as to which purchaser and defendants may 
agree, as much as 25,000 metric tons/year of tissue parent rolls;
    (4) All tangible assets used solely in connection with the business 
of making, having made, using, converting, packaging, distributing, or 
selling any product from any of the tissue mills identified in Section 
II(D)(2), including but not limited to: the tissue mill and associated 
papermaking, converting, packaging and distribution equipment and 
facilities; real property; or tangible assets or improvements, 
associated with the tissue mill; and
    (5) All intangible assets, not otherwise addressed above, wherever 
located, that relate in any way solely to the tangible assets described 
above or the Scotties label (including but not limited to: papermaking, 
converting, packaging and distributing know-how); exclusive, assignable 
rights to all patents, proprietary technology, supply contracts, and 
business information and rights in real and personal property solely 
dedicated to the tangible assets or the Scotties label; and 
nonexclusive, assignable rights to all related patents, proprietary 
technology and business information used in connection with, but not 
solely dedicated to the tangible assets or the Scotties label.
    E. ``Label'' means all legal rights associated with a brand's 
trademarks, trade names, copyrights, designs, and trade dress (and any 
improvements, extensions or modifications); the brand's trade secrets; 
know-how or other proprietary information for making, having made, 
using and selling the brand, including, but not limited to, packaging, 
sales, marketing and distribution know-how and documentation, such as 
customer lists.

III. Applicability

    A. The provisions of this Final Judgment apply to the defendants, 
their successors and assigns, their subsidiaries, directors, officers, 
managers, agents, and employees, and all other persons in active 
concert or participation with any of them who shall have received 
actual notice of this Final Judgment by personal service or otherwise.
    B. Defendants shall require, as a condition of the sale or other 
disposition of all or substantially all of the Relevant Wet Wipes 
Assets and Relevant Facial Tissue Assets, that the purchaser or 
purchasers agree to be bound by the provisions of this Final Judgment.

IV. Divestitures

    A. Defendants are hereby ordered and directed, within 150 days 
after filing of the Final Judgment, to divest to a purchaser the 
Relevant Wet Wipes Assets, in accordance with the procedures specified 
in this Final Judgment.
    Defendants are ordered and directed, within 180 days after filing 
of the Final Judgment, to divest to one or more purchasers the Relevant 
Facial Tissue Assets, in accordance with the procedures specified in 
this Final Judgment.
    B. Defendants agree to take all reasonable steps to accomplish the 
divestitures as expeditiously and timely as possible. Plaintiffs may, 
in their sole discretion, extend the time period for any divestiture 
for an additional period of time not to exceed two months.
    C. In accomplishing the divestitures ordered by this Final 
Judgment, defendants promptly shall make known, by usual and customary 
means, the availability of the Relevant Wet Wipes Assets and Relevant 
Facial Tissue Assets. Defendants shall provided any person making an 
inquiry regarding a possible purchase with a copy of the Final 
Judgment. Defendants shall also offer to furnish to all bona fide 
prospective purchasers, subject to customary confidentiality 
assurances, all reasonably necessary information regarding the Relevant 
Wet Wipes Assets and the Relevant Facial Tissue Assets, except such 
information subject to attorney-client privilege or attorney work 
product privilege. Defendants shall make available such information to 
plaintiffs at the same time that such information is made available to 
any other person. Defendants shall permit prospective purchasers of the 
Relevant Wet Wipes Assets and Relevant Facial Tissue Assets to have 
access to personnel and to make such inspection of physical facilities 
and any and all financial, operational, or other documents and 
information as may be relevant to the divestitures required by this 
Final Judgment.
    D. Unless plaintiffs otherwise consent in writing, divestitures 
under Section IV(A), or by the trustee appointed pursuant to Section V, 
shall include the Relevant Wet Wipes Assets and Relevant Facial Tissue 
Assets and be 

[[Page 66560]]
accomplished in such a way as to satisfy plaintiffs, in their sole 
discretion, that the Relevant Wet Wipes Assets and Relevant Facial 
Tissue Assets can and will be used by the purchaser or purchasers as 
part of viable, ongoing businesses engaged in the selling of baby wipes 
and facial tissue at wholesale to retail stores. Each divestiture shall 
be made to a purchaser or purchasers for whom it is demonstrated to 
plaintiffs' satisfaction that (1) the purchase or purchases are for the 
purpose of competing effectively in making and selling branded baby 
wipes and/or facial tissue at wholesale to retail stores and other 
customers; and (2) the purchaser or purchasers have or soon will have 
the managerial, operational, and financial capability to compete 
effectively in making and selling branded baby wipes and/or facial 
tissue at wholesale to retail stores; and (3) none of the terms of any 
agreement between the purchaser or purchasers and defendants give 
defendants the ability artificially to raise the purchaser's or 
purchasers' costs, lower the purchaser's or purchasers' efficiency, or 
otherwise interfere in the ability of the purchaser or purchasers to 
compete effectively. Although Sections II(D)(2) and IV(A) require a 
sale of any two of four tissue mills, plaintiffs can, in their sole 
discretion, approve a divestiture involving a sale of less than two 
tissue mills listed in Section II(D), if convinced that such 
divestiture is sufficient to satisfy their competitive concerns.
    E. Defendants shall exercise any residual right in any label 
licensed pursuant to this Final Judgment solely for the purpose of 
protecting their lawful intellectual property rights. Defendants shall 
not, in any circumstance, exercise any such right to impair or inhibit 
in any way a licensee's ability to compete, and they shall not exercise 
such right, directly or indirectly, to obtain competitively-sensitive 
information pertaining to any licensee.

V. Appointment of Trustee

    A. If defendants have not accomplished any divestiture required by 
Section IV within the time specified therein, defendants shall notify 
plaintiffs of that fact in writing. Within ten (10) calendar days of 
their receipt of such written notice, plaintiffs shall provide 
defendants with written notice of the names and qualifications of not 
more than two (2) nominees for the position of trustee for the required 
divestiture. Defendants shall notify plaintiffs within five (5) 
calendar days thereafter whether either or both of such nominees are 
acceptable. If either or both of such nominees are acceptable to 
defendants, plaintiffs shall notify the Court of the person upon whom 
the parties have agreed and the Court shall appoint that person as the 
trustee. If neither nominee is acceptable to defendants, they shall 
furnish to plaintiffs, within ten (10) calendar days after plaintiffs 
provide the names of their nominees, written notice of the names and 
qualifications of not more than two (2) nominees for the position of 
trustee for the required divestiture. If either or both of such 
nominees are acceptable to plaintiffs, plaintiffs shall notify the 
Court of the person upon whom the parties have agreed and the Court 
shall appoint that person as the trustee. If neither nominee is 
acceptable to plaintiffs, plaintiffs shall furnish the Court the names 
and qualifications of its and defendants' proposed nominees. The Court 
may hear the parties as to the nominees' qualifications and shall 
appoint one of the nominees as the trustee.
    B. If defendants have not accomplished either of the divestitures 
required by Section IV of this Final Judgment at the expiration of the 
time period specified therein, subject to the selection process 
described in Section V(A), the appointment by the Court of the trustee 
shall become effective. The trustee shall then take steps to effect the 
divestiture(s) specified in Section IV(A).
    C. After the trustee's appointment has become effective, only the 
trustee shall have the right to sell the Relevant Wet Wipes Assets or 
Relevant Facial Tissue Assets. The trustee shall have the power and 
authority to accomplish the divestiture(s) to a purchaser acceptable to 
plaintiffs at such price and on such terms as are then obtainable upon 
the best reasonable effort by the trustee, subject to the provisions of 
Section IV of this Final Judgment, and shall have such other powers as 
this Court shall deem appropriate. Defendants shall not object to the 
sale of the Relevant Wet Wipes Assets or Relevant Facial Tissue Assets 
by the trustee on any grounds other than the trustee's malfeasance. Any 
such objection by defendants must be conveyed in writing to plaintiffs 
and the trustee no later than fifteen (15) calendar days after the 
trustee has notified defendants of the proposed licensing and sale in 
accordance with Section VI of this Final Judgment.
    D. The trustee shall serve at the cost and expense of defendants, 
shall receive compensation based on a fee arrangement which provides an 
incentive based on the price and terms of the divestiture and the speed 
with which it is accomplished, and shall serve on such other terms and 
conditions as the Court may prescribe; provided however, that the 
trustee shall receive no compensation, nor incur any costs or expenses 
(other than related to the selection process), prior to the effective 
date of his or her appointment. The trustee shall account for all 
monies derived. After approval by the Court of the trustee's 
accounting, including fees for its services, all remaining monies shall 
be paid to defendants and the trust shall then be terminated.
    E. Defendants shall take no action to interfere with or impede the 
trustee's accomplishment of the divestiture of the Relevant Wet Wipes 
Assets or Relevant Facial Tissue Assets and shall use its best efforts 
to assist the trustee in accomplishing the required divestiture. 
Subject to a customary confidentiality agreement, the trustee shall 
have full and complete access to the personnel, books, records, and 
facilities related to the Relevant Wet Wipes Assets or the Relevant 
Facial Tissue Assets, and defendants shall develop such financial or 
other information necessary to the divestiture of the Relevant Wet 
Wipes Assets and Relevant Facial Tissue Assets.
    F. After its appointment becomes effective, the trustee shall file 
monthly reports with the parties and the Court setting forth the 
trustee's efforts to accomplish divestiture of the Relevant Wet Wipes 
Assets and Relevant Facial Tissue Assets as contemplated under this 
Final Judgment; provided however, that 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 
Relevant Wet Wipes Assets and Relevant Facial Tissue Assets, and shall 
describe in detail each contact with any such person during that 
period. The trustee shall maintain full records of all efforts made to 
divest these operations.
    G. Within six (6) months after its appointment has become 
effective, if the trustee has not accomplished the divestiture required 
by Section IV of this Final Judgment, the trustee shall promptly file 
with the Court a report setting forth (1) the trustee's efforts to 
accomplish the required divestiture, (2) the reasons, in the trustee's 
judgment, why the required divestiture has not been accomplished, and 
(3) the trustee's recommendations; provided however, 

[[Page 66561]]
that 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 
reports to the parties, who shall each have the right to be heard and 
to make additional recommendations consistent with the purpose of the 
trust. The Court shall thereafter enter such orders as it shall deem 
appropriate in order to carry out the purpose of the trust, which 
shall, if necessary, include augmenting the assets to be divested, and 
extending the trust and term of the trustee's appointment.

VI. Notification

    Within two (2) business days following execution of a definitive 
agreement, contingent upon compliance with the terms of this Final 
Judgment, to effect, in whole or in part, any proposed divestiture 
pursuant to Sections IV or V of this Final Judgment, defendants or the 
trustee, whichever is then responsible for effecting the divestiture, 
shall notify plaintiffs of the proposed divestiture. If the trustee is 
responsible, it shall similarly notify defendants. The notice shall set 
forth the details of the proposed transaction and list the name, 
address, and telephone number of each person not previously identified 
who offered to, or expressed an interest in or desire to, acquire any 
ownership interest in the assets that are the subject of the finding 
contract, together with full details of same. Within fifteen (15 ) 
calendar days of receipt by plaintiffs of such notice, plaintiffs may 
request additional information concerning the proposed divestiture and 
the proposed purchaser. Defendants and the trustee shall furnish any 
additional information requested within twenty (20) calendar days of 
the receipt of the request, unless the parties shall otherwise agree. 
Within thirty (30) calendar days after receipt of the notice or within 
twenty (20) calendar days after plaintiffs have been provided the 
additional information requested (including any additional information 
requested of persons other than defendants or the trustee), whichever 
is later, plaintiffs shall proved written notice to defendants and the 
trustee, if there is one, stating whether or not it objects to the 
proposed divestiture. If plaintiffs provided written notice to 
defendants and the trustee that it does not object, then the 
divestiture may be consummated, subject only to defendant's limited 
right to object to the sale under the provisions in Section V(C). 
Absent written notice that the plaintiffs do not object to the proposed 
purchaser, a divestiture proposed under Section IV shall not be 
consummated. Upon objection by either plaintiff, a divestiture proposed 
under Section IV shall not be consummated. Upon objection by either 
plaintiff, or by defendants under the proviso in Section V(C), a 
divestiture proposed under Section V shall not be consummated unless 
approved by the Court.

VII. Affidavits

    Within ten (10) calendar days of the filing of this Final Judgment 
and every thirty (30) calendar days thereafter until the divestiture 
has been completed or authority to effect divestiture passes to the 
trustee pursuant to Section V of this Final Judgment, defendants shall 
deliver to plaintiffs an affidavit as to the fact and manner of 
compliance with Section IV and V of this Final Judgment. Each such 
affidavit shall include, inter alia, the name, address, and telephone 
number of each person who, at any time after the period covered by the 
last such report, 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 Relevant Wet Wipes 
Assets or Relevant Facial Tissue Assets, and shall describe in detail 
each contact with any such person during that period. Defendants shall 
maintain full records of all efforts made to divest these operations.

VIII. Financing

    With prior written consent of the plaintiffs, defendants may 
finance all or any part of any purchase made pursuant to Sections IV or 
V of this Final Judgment.

IX. Preservation of Assets

    Until the divestitures required by the Final Judgment have been 
accomplished:
    A. Defendants shall take all steps necessary to ensure that the 
Relevant Wet Wipes Assets will be maintained as an independent, 
ongoing, economically viable and active competitor in the sale of baby 
wipes in the United States, with proprietary technology, management 
operations, books, records and competitively-sensitive sales, marketing 
and pricing information and decision-making kept separate and apart 
from, and not influenced by, that of Kimberly-Clark's Huggies baby 
wipes business.
    B. Defendants shall operate the Relevant Facial Tissue Assets to 
ensure a distinct and economically viable product line, which actively 
competes in the sale of facial tissue in the United States, with 
competitively-sensitive sales, marketing and pricing information and 
decision-making kept separate and apart from, and not influenced by, 
that of Kimberly-Clark's Kleenex facial tissue business.
    C. Defendants shall use all reasonable efforts to maintain and 
increase sales of baby wipes under any label required to be divested 
pursuant to Sections II(C) and IV(A) and facial tissue under the 
Scotties label, and they shall maintain at 1995 or previously approved 
levels, whichever is higher, promotional, advertising, marketing and 
merchandising support for baby wipes under labels in the Relevant Wet 
Wipes Assets and facial tissue under the Scotties label.
    D. Defendants shall take all steps necessary to ensure that the 
Relevant Wet Wipes Assets and Relevant Facial Tissue Assets are fully 
maintained inoperable condition at their current capacity 
configurations, and shall maintain and adhere to normal repair and 
maintenance schedules for such assets.
    E. Defendants shall not, except as part of a divestiture approved 
by plaintiffs, sell any Relevant Wet Wipes Assets or Relevant Facial 
Tissue Assets, other than in the ordinary course of business.
    F. Defendants shall take no action that would jeopardize the sale 
or license of the Relevant Wet Wipes Assets or the Relevant Facial 
Tissue Assets. Within 21 days after filing of the Final Judgment, 
defendants shall discontinue making and selling facial tissue under the 
Scott label and make and sell facial tissue under the Scotties label; 
provided, however, that defendants may sell inventory of facial tissue 
produced under the Scott Label until such inventory is depleted.

X. Compliance Inspection

    Only for the purposes of determining or securing compliance with 
the Final Judgment and subject to any legally recognized privilege from 
time to time.
    A. Duly authorized representatives of the United States Department 
of Justice, upon written request of the Attorney General or of the 
Assistant Attorney General in charge of the Antitrust Division, or of 
the Attorney General of the State of Texas, and on reasonable notice to 
defendants made to their principal offices, shall be permitted:
    (1) Access during office hours of defendants to inspect and copy 
all books, ledgers, accounts, correspondence, memoranda, and other 
records and documents in the possession or under the control of 
defendants, who may have counsel present, relating to enforcement of 
this Final Judgment; and
    (2) Subject to the reasonable convenience of defendants and without 

[[Page 66562]]
restraint or interference from them, to interview officers, employees, 
and agents of defendants, who may have counsel present, regarding any 
such matters.
    B. Upon the written request of the Attorney General or of the 
Assistant Attorney General in charge of the Antitrust Division, or of 
the Attorney General of the State of Texas, made to defendants' 
principal offices, defendants shall submit such written reports, under 
oath if requested, with respect to enforcement of this Final Judgment.
    C. No information or documents obtained by the means provided in 
this Section X shall be divulged by a representative of either 
plaintiff to any person other than a duly authorized representative of 
the Executive Branch of the United States or of the State of Texas, 
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 plaintiffs, 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)(7) 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)(7) of the 
Federal Rules of Civil Procedure,'' then ten (10) calendar days notice 
shall be given by plaintiff to defendants prior to divulging such 
material in any legal proceeding (other than a grand jury proceeding).

XI. Retention of Jurisdiction

    Jurisdiction is retained by this Court for the purpose of enabling 
any of the parties to this Final Judgment to apply to this Court at any 
time for such further orders and directions as may be necessary or 
appropriate for the construction or carrying out of this Final 
Judgment, for the modification of any of the provisions hereof, for the 
enforcement of compliance herewith, and for the punishment of any 
violations hereof.

XII. Termination

    Unless this Court grants an extension, this Final Judgment will 
expire on the tenth anniversary of the date of its entry.

XIII. Public Interest

    Entry of this Final Judgment is in the public interest.

Dated: ---------------------------------------------------------------

----------------------------------------------------------------------
United States District Judge

United States District Court, Northern District of Texas, Dallas 
Division

    United States of America and State of Texas, Plaintiffs, v. 
Kimberly-Clark Corporation and Scott Paper Company, Defendants. 
Civil No. 3:95 CV 3055-P. Filed December 12, 1995.

Competitive Impact Statement

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

I. Nature and Purpose of the Proceeding

    The United States and the State of Texas filed a civil antitrust 
Complaint on December 12, 1995, which alleges that Kimberly-Clark 
Corporation's proposed acquisition of Scott Paper Company (``Scott'') 
would violate Section 7 of the Clayton Act, 15 U.S.C. Sec. 18. 
Kimberly-Clark and Scott are the nation's first and third leading 
sellers of facial tissue, and its leading sellers of baby wipes.
    The Complaint alleges that the combination of these rivals would 
substantially lessen competition in production and distribution, and 
raise prices to consumers in retail sale, of facial tissue and baby 
wipes in the United States. The prayer for relief seeks: (1) A judgment 
that the proposed acquisition would violate Section 7 of the Clayton 
Act; and (2) a permanent injunction preventing Kimberly-Clark from 
acquiring control of Scott's facial tissue and baby wipes businesses or 
otherwise combining them with its own business in the United States.
    At the time the suit was filed, the United States and State of 
Texas also filed a proposed settlement that would permit Kimberly-Clark 
to complete its acquisition of Scott's other assets, but require 
divestitures of baby wipes and facial tissue assets in a way that will 
preserve competition in the markets. This settlement consists of a 
Stipulation and a proposed Final Judgment.
    The proposed Final Judgment orders defendants to divest to one or 
more purchasers Scott's Scotties facial tissue label, any two 
or four United States tissue mills currently operated by Kimberly-Clark 
or Scott, all of Scott's baby wipes labels, and Scott's wet wipes plant 
used to produce baby wipes and other products. Certain tangible and 
intangible assets that relate to these assets and labels must also be 
divested. Defendants must complete the divestiture of the Scott facial 
tissue business within 180 days, and the divestiture of the wet wipes 
business within 150 days, after December 12, 1995, in accordance with 
the procedures specified in the proposed Final Judgment.
    The Stipulation and Final Judgment require Kimberly-Clark to ensure 
that, until the divestitures mandated by the Final Judgment have been 
accomplished, Scott's facial tissue and baby wipes businesses and 
associated assets will be held separate from, and operated 
independently of, other, competing Kimberly-Clark facial tissue and 
baby wipes businesses. Kimberly-Clark must preserve and maintain these 
assets as saleable and economically viable, ongoing concerns, with 
competitively-sensitive business information and decision-making 
divorced from that of competing Kimberly-Clark businesses.
    The United States, the State of Texas, Kimberly-Clark, and Scott 
have also 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
    Kimberly-Clark, based in Dallas, Texas, is a leading producer of 
consumer paper products, including disposable diapers, feminine care 
products, facial tissue and baby wipes. In 1994, Kimberly-Clark 
reported total sales of $7.3 billion. Kimberly-Clark makes 
Kleenex facial tissue and Huggies brand baby wipes.
    Scott, based in Boca Raton, Florida, is also a leading producer of 
consumer paper products, including bath tissue, facial tissue and baby 
wipes. In 1994, Scott reported total sales of $3.5 billion. Among its 
other brands, Scott makes and sells Scotties facial tissue 
(recently renamed Scott and Baby Fresh and Wash A 
Bye Baby baby wipes.
    On July 16, 1995, Kimberly-Clark agreed to acquire Scott for cash 
and stock in a transaction that would create a firm with global sales 
of about $12 billion. This transaction, which would combine leading 
competitors in two major markets, precipitated the governments' suit.

[[Page 66563]]

B. The Transaction's Effects in the Facial Tissue Industry
    Facial tissue is a soft, thin, pliable and absorbent sheet of 
paper, typically folded and packed in a box. It is primarily used to 
catch a sneeze, blow a nose, or remove make-up. There are no good 
substitutes for facial tissue.
    For all practical purposes, the retail facial tissue market is 
dominated by three major firms--Kimberly-Clark, Scott and Procter & 
Gamble--which together account for nearly 90 percent of sales of facial 
tissue, a $1.34 billion dollar market. Kimberly-Clark's popular 
Kleenex is by far the leading brand of facial tissue sold, 
commanding 48.5 percent of all sales.
    Scott's Scotties facial tissue, a value brand offering 
consumers more product for the money, has a 7 percent share of sales, 
but significantly greater presence and consumer acceptance in the 
Northeast, where the brand was first introduced. Procter & Gamble, the 
only other significant firm, makes Puffs, which has about a 
30 percent market share.\1\

    \1\ The approximate post-merger Herfindahl-Hirschman Index 
(``HHI'') for the facial tissue market, based on 1994 dollar sales, 
would be 4031, with an increase in the HHI as a result of the merger 
of 705 points.
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    Scott's market share, however, understates its competitive 
significance. As a value brand, Scotties has, in the past, 
imposed a significant constraint on Kimberly-Clark's prices for facial 
tissue. Kimberly-Clark's Kleenex likewise has been a 
significant constraint on prices of Scotties facial tissue.
    The Complaint alleges that Kimberly-Clark's acquisition of Scott 
would remove these constraints, and provide Kimberly-Clark both the 
power and the incentive to increase unilaterally and profitably the 
price of either, or both, brands of facial tissue. Kimberly-Clark's 
acquisition of Scott would also increase the likelihood of cooperative 
increases in the price of consumer facial tissue, since the merger 
would leave Kimberly-Clark with a single significant rival, Procter & 
Gamble's Puffs, in the facial tissue market.
    Because entry into the facial tissue market is difficult, requiring 
a significant investment in plant equipment and brand building, 
successful new entry or repositioning after the merger is unlikely to 
restore the competition lost through Kimberly-Clark's removal of Scott 
from the marketplace.
C. The Transaction's Effect in the Baby Wipes Industry
    Baby wipes are soft, moist and absorbent sheets of paper substrate, 
about the size of a wash cloth, that are packaged in a plastic tub or 
canister. Consumer use baby wipes to clean babies, especially during a 
diaper change. Stronger, softer and more convenient or sanitary than 
any alternative product, baby wipes are a popular staple of families 
with babies, and are bought by 95 percent of such households. There are 
no good substitutes for baby wipes.
    Kimberly-Clark and Scott are the nation's two largest and most 
significant manufacturers of baby wipes. Scott's Baby Fresh 
and Wash A Bye Baby baby wipes account for about 31 percent 
of all baby wipes sold, while Kimberly-Clark's Huggies baby 
wipes command nearly 25 percent of all sales. They are each other's 
primary competitor and most significant constraint on prices for baby 
wipes. Kimberly-Clark and Scott aggressively compete in pricing, 
promotion, and product innovation.
    Following its acquisition of Scott, Kimberly-Clark would control 
nearly 60 percent of all baby wipes sold,\2\ and leave it seven times 
larger than its next largest competitor in a market with $500 million 
in annual sales. By eliminating Scott, the Complaint alleges, Kimberly-
Clark would acquire market power that would enable it unilaterally to 
increase prices to consumers of either, or both, Huggies, 
Baby Fresh and Wash A Bye Baby wipes. New market 
entry is difficult, time-consuming and unlikely, and hence cannot be 
expected to constrain the unlawful effects of Kimberly-Clark's 
acquisition of Scott.

    \2\ The approximate post-merger HHI for the relevant market 
based on 1994 dollar sales would be over 3137, with a change in the 
HHI concentration index resulting from the merger of 1501 points.
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D. Harm to Competition as a Consequence of the Acquisition
    The Complaint alleges that the transaction would have the following 
effects, among others: competition generally in the facial tissue and 
baby wipes markets will be substantially lessened; actual and potential 
competition between Kimberly-Clark and Scott in the market for facial 
tissue and baby wipes will be eliminated in the United States; prices 
for facial tissue and baby wipes in the United States are likely to 
increase; and product innovation in facial tissue and baby wipes in the 
United States will suffer.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment would preserve competition in 
production and retail sale of branded baby wipes and facial tissue in 
the United States. Within 150 days after filing the proposed Final 
Judgment, defendants must divest Scott's wet wipes plant in Dover, 
Delaware; grant a 25-five year, royalty-free, exclusive and assignable, 
perpetually renewable license for the baby wipes labels produced at 
that plant; and divest other associated assets--sell, in essence, the 
entire Scott baby wipes business and brands. Within 180 days after 
filing the proposed Final Judgment, defendants must similarly divest 
Scott's Scotties brand facial tissue business, grant a 25-
year, royalty-free, exclusive and assignable, perpetually renewable 
license for the Scotties facial tissue label, and divest any 
two of four tissue mills specified in the Final Judgment and associated 
assets. These businesses must be sold to a purchaser or purchasers who 
demonstrate to the sole satisfaction of the United States and the State 
of Texas that they will be an economically viable and effective 
competitor, capable of maintaining or surpassing Scott's market 
performance in the sale of branded baby wipes and consumer facial 
tissue in the United States.
    Until the ordered divestitures take place, defendants must take all 
reasonable steps necessary to accomplish the divestitures, and 
cooperate with any prospective purchaser. If defendants do not 
accomplish the ordered divestitures within the specified 150 and 180 
day time periods, the Final Judgment provides for procedures by which 
the Court shall appoint a trustee to complete the divestitures. 
Defendants must cooperate fully with the trustee.
    If a trustee is appointed, the proposed Final Judgment provides 
that Kimberly-Clark will pay all costs and expenses of the trustee. The 
trustee's compensation will be structured so as to provide an incentive 
for the trustee to obtain the highest price for the assets to be 
divested, and to accomplish the divestiture as quickly as possible. 
After the effective date of his or her appointment, the trustee shall 
serve under such other conditions as the Court may prescribe. After his 
or her appointment becomes effective, the trustee will file monthly 
reports with the parties and the Court, setting forth the trustee's 
efforts to accomplish divestiture. At the end of six months, if the 
divestiture has not been accomplished, the trustee shall promptly file 
with the Court a report setting forth the trustee's efforts to 
accomplish the divestiture, explaining why the divestiture has not been 
accomplished, and making recommendations. The trustee's report will be 
furnished to the parties and shall 

[[Page 66564]]
be filed in the public docket, except to the extent the report contains 
information the trustee deems confidential. The parties will each have 
the right to make additional recommendations to the Court. The Court 
shall enter such orders as it deems appropriate to carry out the 
purpose of the trust.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act (15 U.S.C. Sec. 15) provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act (15 U.S.C. 
Sec. 16(a)), the proposed Final Judgment has no prima facie effect in 
any subsequent private lawsuit that may be brought against defendants. 
The proposed Final Judgment provides that nothing therein contained 
shall be construed to provide any rights to any third party.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and the 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 United States has 
not withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register. The United States will 
evaluate and respond to the comments. All comments will be given due 
consideration by the Department of Justice, which remains free to 
withdraw its consent to the proposed Final Judgment at any time prior 
to entry. 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: Anthony V. Nanni, Chief, 
Litigation I Section, Antitrust Division, United States Department of 
Justice, 1401 H Street, N.W., Suite 4000, Washington, D.C. 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 United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits of its Complaint against 
defendants Kimberly-Clark and Scott. The United States is satisfied, 
however, that the divestiture of the assets and other relief contained 
in the proposed Final Judgment will preserve viable competition in the 
production and sale of facial tissue and baby wipes that would 
otherwise be adversely affected by the acquisition. Thus, the proposed 
Final Judgment would achieve the relief the governments would have 
obtained through litigation, but avoids the time, expense and 
uncertainty of a full trial on the merits of the governments' 
Complaint.

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

    The APPA requires that proposed consent judgments in antitrust 
cases brought by the United States be subject to a sixty-day comment 
period, after which the court shall determine whether entry of the 
proposed Final Judgment ``is in the public interest.'' In making that 
determination, the court may consider--

    (1) the competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration or relief sought, anticipated effects of 
alternative remedies actually considered, and any other 
considerations bearing upon the adequacy of such judgment;
    (2) the impact of entry of such judgment 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) (emphasis added). As the DC Circuit recently held, this 
statute permits a court to consider, among other things, the 
relationship between the remedy secured and the specific allegations 
set forth in the government's complaint, whether the decree is 
sufficiently clear, whether enforcement mechanisms are sufficient, and 
whether the decree may positively harm third parties. See United States 
v. Microsoft, 1995-1 Trade Cas. (CCH) para.71,027, at ____ (Slip op. 
26) (DC Cir. June 16, 1995).
    In conducting this inquiry, ``the 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.'' \3\ Rather,

    \3\ 119 Cong. Rec. 24598 (1973). See United States v. Gillette 
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest'' 
determination can be made properly on the basis of the Competitive 
Impact Statement and Response to Comments filed pursuant to the 
APPA. Although the APPA authorizes the use of additional procedures, 
15 U.S.C. Sec. 16(f), those procedures are discretionary. A court 
need not invoke any of them unless if believes that the comments 
have raised significant issues and that further proceedings would 
aid the court in resolving those issues. See H.R. Rep. 93-1463, 93rd 
Cong. 2d Sess. 8-9, reprinted in (1974) U.S. Code Cong. & Ad. News 
6535, 6538.
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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.

United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. para. 
61,508, at 71,980 (W.D. Mo. 1977).
    Accordingly, with respect to the adequacy of the relief secured by 
the decree, a court may not ``engage in an unrestricted evaluation of 
what relief would best serve the public.'' United States v. BNS, Inc., 
858 F.2d 456, 462 (9th Cir. 1988) quoting United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083 
(1981); see also Microsoft, 1995-1 Trade Cas. at ____ (Slip. op. 22). 
Precedent requires that

the 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.\4\

    \4\ United States v. Bechtel, 648 F.2d at 666 (citations 
omitted) (emphasis added); see United States v. BNS, Inc., 858 F.2d 
at 463; United States v. National Broadcasting Co., 449 F. Supp. 
1127, 1143 (C.D. Cal. 1978); United States v. Gillette Co., 406 F. 
Supp. at 716. See also Microsoft, 1995-1 Trade Cas. at ____ (Slip 
op. 23) (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.' '') (citations omitted).

[[Page 66565]]

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    The proposed Final Judgment, therefore, should not be reviewed 
under a standard of whether it is certain to eliminate every 
anticompetitive effect of a particular practice or whether it mandates 
certainty of free competition in the future. Court approval of a final 
judgment requires a standard more flexible and less strict than the 
standard required for a finding of liability. ``[A] proposed decree 
must be approved even if it falls short of the remedy the court would 
impose on its own, as long as it falls within the range of 
acceptability or is `within the reaches of public interest.' (citations 
omitted).'' \5\

    \5\ United States v. American Tel. and Tel Co., 552 F. Supp. 
131, 150 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 
460 U.S. 1001 (1983) quoting United States v. Gillette Co., supra, 
406 F. Supp. at 716; United States v. Alcan Aluminum, Ltd., 605 F. 
Supp. 619, 622 (W.D. Ky 1985).
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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: December 12, 1995.

      Respectfully submitted,
Anthony E. Harris,
Attorney, State of Illinois # 01133713, Antitrust Division, U.S. 
Department of Justice, 1401 H. Street NW., suite 4000, Washington, DC 
20530, (202) 307-6583.
[FR Doc. 95-31054 Filed 12-21-95; 8:45 am]
BILLING CODE 4410-01-M
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