Explanation of the Proposed Final Judgment. The proposed Final Judgment will preserve competition in the sale of mobile wireless services in the relevant geographic markets by requiring the defendants to execute a complete divestiture of the Sprint PCS stock. This divestiture will eliminate the change in market structure caused by the merger; after this divestiture, AT&T would be unable to recapture any of the revenues that might be diverted from AT&T to Sprint PCS as a result of an increase in the price of AT&T’s mobile wireless telephone services. In merger cases in which the Department seeks a divestitute remedy, the Department requires completion of the divestiture within the shortest time period reasonable under the circumstances. In this case, the proposed Final Judgment requires that Liberty’s holdings of Sprint PCS be reduced to 10 % or less of the outstanding Sprint PCS stock by May 2002, approximately three years from the expected date of entry of the decree, and that the holding be divested completely by May 2004, approximately five years from the expected entry of the decree. These time periods for divestiture are significantly longer than the Department ordinarily would accept. The Department believes they are appropriate in this case, however, because of concerns that a more rapid divestiture might harm competition by adversely affecting Sprint’s ability to raise capital to complete the build out of its wireless network. Sprint anticipates that it will have near-term needs for a substantial amount of capital, both debt and equity, in order to purchase and deploy additional infrastructure for its wireless network. A complete divestiture in the time period required by the Department in the typical case (e.g., six months) potentially could adversely affect the value of new stock that would be issued by Sprint, thereby increasing its cost of raising additional capital and potentially delaying or limiting the completion of Sprint’s wireless network construction efforts. 10 Sprint’s wireless business has recently been restructured through transactions in which XXX’s former partnership interest in the business was converted to TCI’s current holding of Sprint PCS stock. In connection with that restructuring, Sprint, TCI, and others negotiated contractual limitations on the ability of TCI to sell its Sprint PCS shares during the period in which Sprint would be seeking to raise capital for its build out. The proposed Final Judgment will not interfere in any way with TCI’s compliance with its con...
Explanation of the Proposed Final Judgment. The divestiture requirement of the proposed Final Judgment will eliminate the anticompetitive effects of the acquisition in the markets for ladle shrouds and stopper rods by establishing a new, independent, and economically viable competitor. The proposed Final Judgment requires defendants, within 90 days after the filing of the Complaint, or five days after notice of the entry of the Final Judgment by the Court, whichever is later, to divest, as a viable ongoing business, the Divestiture Business, which includes Foseco’s CBC plant in Saybrook, Ohio and related tangible and intangible assets.1 The assets must be divested in such a way as to satisfy the United States, in its sole discretion, that the Divestiture Business can and will be operated by the purchaser as a viable, ongoing business capable of competing effectively in the relevant markets. Defendants must take all reasonable steps necessary to accomplish the divestiture quickly and shall cooperate with prospective purchasers. In the event that defendants do not accomplish the divestiture within the period 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 divestiture. If a trustee is appointed, the proposed Final Judgment provides that defendants 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 divestiture is accomplished. After his or her appointment becomes effective, the trustee will file monthly reports with the Court and the United States setting forth his or her efforts to accomplish the divestiture. At the end of six months, if the divestiture has not been accomplished, the trustee and the United States 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.
Explanation of the Proposed Final Judgment. The proposed Final Judgment provides for the divestiture of Abitibi’s Snowflake, Arizona, newsprint mill to a buyer acceptable to the United States, in its sole discretion, to preserve competition for newsprint in the United States. Snowflake is located in northeastern Arizona. In 2006, Snowflake produced over 330,000 metric tonnes of newsprint on two machines. Snowflake is one of the most efficient and profitable newsprint xxxxx in North America. Plans to improve the Snowflake mill’s efficiency in coming years with investments in energy and machinery are already underway. Snowflake’s size and cost position ensure that its divestiture to a competitor of the merged firm will preserve competition in the North American newsprint market. As part of its investigation, the United States considered market shares, costs of production, the extent of industry excess capacity, and future reductions in newsprint demand in analyzing whether the merger would cause an anticompetitive increase in newsprint prices. As discussed in Section II.B.3, if Defendants were allowed to merge without a divestiture, the merged firm would be able to close its capacity strategically, allowing the merged firm to raise newsprint prices and recoup its lost profits on its combined output. Divesting Snowflake, however, will reduce the capacity over which the merged firm could profit to a level at which it would not have the ability to close capacity strategically. Snowflake uses 100 percent recycled fiber and Abitibi currently supplies the snowflake mill with approximately 25 to 30 percent of its fiber requirements. At the option of the Acquirer, the proposed Final Judgment requires Defendants to enter into a supply contract for up to 25 percent of Snowflake’s old newsprint requirements at the prevailing market price for up to three years from the date of the divestiture. Similarly, at the option of the Acquirer, and upon the approval of the United States, the proposed Final Judgment also requires Defendants to provide certain transition services for up to twelve (12) months as part of the divestiture. In merger cases where the United States seeks a divestiture remedy, it requires completion of the divestiture within the shortest time period reasonable under the circumstances. Section IV of the proposed Final Judgment requires Defendants to complete the divestiture within 120 days after the filing of the Complaint in this matter. The assets must be divested in such a way as to satisfy the Un...
