Notice2021-23205
United States v. Wieneberger AG, et al.; Proposed Final Judgment and Competitive Impact Statement
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 25, 2021
Issuing agencies
Justice DepartmentAntitrust Division
Full Text
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[Federal Register Volume 86, Number 203 (Monday, October 25, 2021)]
[Notices]
[Pages 58924-58940]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-23205]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Wieneberger AG, et al.; Proposed Final Judgment
and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation, and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America v. Wienerberger AG, et al., Civil Action No. 1:21-cv-
02555. On October 1, 2021, the United States filed a Complaint alleging
that General Shale's proposed acquisition of Meridian's manufacturing
and distribution assets would violate section 7 of the Clayton Act, 15
U.S.C. 18. The proposed Final Judgment, filed at the same time as the
Complaint, requires General Shale to divest three
[[Page 58925]]
manufacturing plants and 14 distribution yards.
Copies of the Complaint, proposed Final Judgment, and Competitive
Impact Statement are available for inspection on the Antitrust
Division's website at <a href="http://www.justice.gov/atr">http://www.justice.gov/atr</a> and at the Office of
the Clerk of the United States District Court for the District of
Columbia. 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, including the name of the submitter, and
responses thereto, will be posted on the Antitrust Division's website,
filed with the Court, and, under certain circumstances, published in
the Federal Register. Comments should be submitted in English and
directed to Jay Owen, Acting Chief, Defense, Industrials, and Aerospace
Section, Antitrust Division, Department of Justice, 450 Fifth Street
NW, Suite8 700, Washington, DC 20530 (email address:
<a href="/cdn-cgi/l/email-protection#0a606b7324657d6f644a7f796e6560246d657c"><span class="__cf_email__" data-cfemail="761c170f581901131836030512191c58111900">[email protected]</span></a>).
Suzanne Morris,
Chief, Premerger and Division Statistics, Antitrust Division,
Department of Justice.
United States District Court for the District of Columbia
United States of America, United States Department of Justice,
Antitrust Division, 450 Fifth Street NW, Suite 8700, Washington, DC
20530, Plaintiff, v. Wienerberger AG, Wienerbergerplatz 1, 1100
Wien, Austria, General Shale Brick, Inc., 3015 Bristol Hwy., Johnson
City, Tennessee 37601, LSF9 Stardust Super Holdings, L.P.,
Washington Mall, 7 Reid Street, Suite 304, Hamilton, Bermuda HM 11,
Boral Limited, Level 18, 15 Blue Street, North Sydney, NSW 2060,
Australia, and Meridian Brick LLC, 6455 Shiloh Rd., Alpharetta,
Georgia 30005, Defendants.
Civil Action No.: 1:21-cv-02555 (CRC)
Complaint
The United States of America (``United States''), acting under the
direction of the Attorney General of the United States, brings this
civil antitrust action against Defendants Wienerberger AG, its North
American subsidiary General Shale Brick, Inc. (``General Shale''),
Meridian Brick LLC (``Meridian''), and Meridian's parent companies
Boral Limited and LSF9 Stardust Super Holdings, L.P. to enjoin General
Shale's proposed acquisition of Meridian. The United States alleges as
follows:
I. Nature of the Action
1. General Shale's proposed acquisition of its rival, Meridian,
would combine two of the largest residential brick manufacturers in
numerous markets across the midwestern and southern United States.
General Shale and Meridian compete daily to supply a variety of
residential brick to customers ranging from local homebuilders to
national construction companies. As a result of the transaction,
homebuilders of all types likely will pay higher prices, face reduced
innovation, and receive lower quality products for their residential
brick supply.
2. In numerous markets across the United States, General Shale and
Meridian are the two most significant suppliers of residential brick or
two of only a few such suppliers. Homebuilders, particularly in certain
areas of Alabama, Indiana, Kentucky, Michigan, Ohio, and Tennessee
depend on competition between General Shale and Meridian to ensure a
supply of quality brick at competitive prices.
3. Not only has competition between General Shale and Meridian
driven residential brick prices down, it has also fostered product
innovation that has resulted in new products and the broad portfolio
that each firm offers today. For example, competition between these
firms has resulted in the introduction of new color mixes, textures,
and facing styles, as well as more efficient and environmentally
sustainable production processes.
4. By eliminating competition between General Shale and Meridian,
the proposed acquisition would result in higher prices, reduced
innovation, and lower quality in the markets for the design,
manufacture, and sale of residential brick. Accordingly, General
Shale's acquisition of Meridian would violate Section 7 of the Clayton
Act, 15 U.S.C. 18, and therefore should be enjoined.
II. The Parties and the Transaction
5. General Shale is a Delaware corporation headquartered in Johnson
City, Tennessee. It is a leading U.S. producer of building material
solutions and one of North America's largest brick, stone, and concrete
block manufacturers. General Shale operates 11 production facilities in
10 states and provinces. It also has a network of 21 sales locations
and more than 200 affiliated distributors in North America.
6. Wienerberger AG, an Austrian corporation, is General Shale's
parent company. Based in Vienna, Austria, it is one of the world's
largest building materials manufacturers. Wienerberger AG operates
manufacturing and distribution facilities for brick and other
construction materials in three continents, including in North America
through General Shale. In 2020, Wienerberger AG's North American
business generated revenues of approximately $370 million, 78% of which
was derived from brick sales, including residential brick sales.
7. Meridian is a Delaware limited liability company. Headquartered
in Alpharetta, Georgia, Meridian manufactures and sells construction
materials, including commercial and residential brick and masonry
materials. Meridian is the largest brick supplier in the United States.
During fiscal year 2020, it generated revenues of over $400 million,
which primarily came from brick sales, including residential brick
sales. Meridian and its sister company Meridian Brick Canada Ltd. make
up the Meridian Group, which operates 20 manufacturing facilities and
27 distribution centers throughout North America. The Meridian Group is
directly and indirectly owned by Boral Limited (``Boral'') and LSF9
Stardust Super Holdings, L.P. Boral is an Australian public company
that produces and supplies building and construction materials
primarily in North America and Australia. Boral and LSF9 Stardust Super
Holdings, L.P. formed Meridian as a joint venture in 2016.
8. On December 18, 2020, General Shale announced its intention to
acquire Meridian from Boral and LSF9 Stardust Super Holdings, L.P. as
part of a total transaction valued at approximately $250 million.
III. Jurisdiction and Venue
9. The United States brings this action under Section 15 of the
Clayton Act, 15 U.S.C. 25, as amended, to prevent and restrain
Defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18.
10. Defendants' activities substantially affect interstate
commerce. They manufacture and sell residential brick directly to
customers and through third-party distributors throughout the southern
and midwestern United States. This Court has subject matter
jurisdiction over this action pursuant to Section 15 of the Clayton
Act, 15 U.S.C. 25, and 28 U.S.C. 1331, 1337(a), and 1345.
11. Defendants have consented to venue and personal jurisdiction in
this judicial district. Venue is proper in this district under Section
12 of the Clayton Act, 15 U.S.C. 22, and under 28 U.S.C. 1391(b)(3) and
(c)(2) for Meridian and
[[Page 58926]]
General Shale, and venue is proper for LSF9 Stardust Super Holdings,
L.P., Boral Limited, and Wienerberger AG under 28 U.S.C. 1391(c)(3).
IV. Relevant Markets
A. Product Market: Residential Brick
12. Residential brick is a type of exterior cladding that is used
to protect homes and other buildings from weather and the elements. It
comes in various sizes and colors and is primarily comprised of shale
or red clay that has been fired in a kiln. Residential brick of each
color and size is manufactured in a substantially similar process, with
minor adjustments in the amount of clay or type of color additives used
to make a particular brick model. Indeed, although residential brick
comes in varying sizes (e.g., modular, queen, and king) and colors
(e.g., red, white, or grey), all residential brick volumes are measured
in Standard Brick Equivalents (``SBE'').\1\
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\1\ The American Society for Testing and Materials has
established a standard brick size for construction uses, which is
referred to as the standard brick equivalent or ``SBE.'' Residential
brick of different sizes is converted to SBE units when sold for
purposes of measuring the volume sold.
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13. Residential brick is distinct from commercial brick.
Residential brick is less expensive than commercial brick due to
different manufacturing processes. In particular, commercial brick is
made by a process called through-body extrusion. Through-body extrusion
entails a rigorous coloring process that ensures uniform coloring
throughout the body of the brick. This achieves the higher color
quality required of commercial brick. By contrast, residential brick is
often colored only on the outer portion of the brick, and the
residential brick manufacturing process requires fewer additives and
other costly inputs.
14. Residential brick must meet standard specifications for
residential use that are set by the American Society for Testing and
Materials (``ASTM''). These standards require certain durability and
load capabilities that differentiate residential brick from decorative
paving brick as well as ``thin'' brick, which is a fraction of the
thickness of residential brick and has lower structural requirements
because it is ornamental.
15. Residential brick is distinct from other types of exterior
cladding. It has both performance characteristics (such as durability
and structural integrity) and aesthetic traits that distinguish it from
products such as siding and other exterior claddings. Customers who
prefer the look of residential brick, or whose projects require the
unique properties of residential brick, cannot reasonably turn to
alternative exterior cladding solutions.
16. Because of these unique characteristics, substitution away from
residential brick in the event of a small but significant increase in
price by a hypothetical monopolist of residential brick would be
insufficient to make such a price increase unprofitable. Accordingly,
residential brick is a line of commerce, or relevant product market,
for purposes of analyzing the effects of the proposed acquisition under
Section 7 of the Clayton Act.
B. The Relevant Geographic Markets Are Local
17. Residential brick is generally transported by truck.
Transportation costs can be substantial and typically range from 15% to
30% of the total price of residential brick. As a result, the
geographic markets for residential brick tend to be local, with the
specific geographic boundaries of any local market also determined by
road infrastructure, traffic conditions, and natural conditions, such
as mountain ranges that impose significantly higher fuel costs on the
transportation of residential brick to customers in local markets.
18. The transaction would likely harm competition for residential
brick in the following Metropolitan Statistical Areas (``MSAs'') \2\:
(1) Nashville, Tennessee; (2) Memphis, Tennessee; (3) Huntsville,
Alabama; (4) Lexington, Kentucky; (5) Louisville, Kentucky; (6)
Indianapolis, Indiana; (7) Detroit, Michigan; and (8) Cincinnati, Ohio.
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\2\ An MSA is a geographical region defined by the Office of
Management and Budget for use by federal statistical agencies, such
as the Census Bureau. It is based on the concept of a core area with
a large concentrated population, plus adjacent communities having
close economic and social ties to the core. For the purposes of this
Complaint, it includes the dense central business districts in the
named cities as well as the adjacent, connected communities.
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19. In each of these relevant markets, a small but significant
increase in price by a hypothetical monopolist of residential brick
would not be defeated by substitution to commercial brick or other
claddings, other construction materials, or by arbitrage--i.e., a buyer
cannot purchase outside the MSA and transport the residential bricks
itself without incurring prohibitive transportation costs. Accordingly,
the sale of residential brick in each of these MSAs constitutes a
relevant market for purposes of analyzing the effects of the
acquisition under Section 7 of the Clayton Act.
V. Anticompetitive Effects
20. The proposed transaction would significantly increase
concentration in the relevant markets and harm consumers by eliminating
the substantial head-to-head competition that currently exists between
General Shale and Meridian.
21. For each relevant market, General Shale and Meridian are among
the top suppliers of residential brick by volume sold and have a
competitive advantage because of the proximity of their manufacturing
facilities to customers in each relevant market. Further, only two or
three significant competitors, including General Shale and Meridian,
supply each relevant market. Other residential brick suppliers face
significantly higher transportation costs to serve these markets and
thus have limited competitive significance. Competition between General
Shale and Meridian has also spurred product innovation that has yielded
higher quality and a variety of innovative residential brick products,
including new colors, textures, and facing styles.
22. Homebuilders and other customers in the relevant markets thus
rely on competition between General Shale and Meridian to supply a
variety of quality residential brick at competitive prices. By
eliminating this competition, the proposed transaction would likely
lead to higher prices and reduced investment in innovation and quality.
A. The Nashville, Tennessee MSA
23. In 2020, Tennessee was the second-largest brick consuming state
in the United States. General Shale and Meridian supplied approximately
54% of the total brick volume sold in Tennessee in 2020. General Shale
and Meridian are particularly important suppliers for the Nashville
MSA, where they are the top two suppliers of residential brick by
volume and face only each other as significant competitors. General
Shale and Meridian are the only significant suppliers of residential
brick that operate brick manufacturing facilities located within 150
miles of Nashville, and no other significant supplier has a
manufacturing facility located within 200 miles.
B. The Memphis, Tennessee MSA
24. General Shale and Meridian are also important suppliers of
residential brick for the Memphis MSA, where they face only one other
significant competitor. These three firms are the only significant
suppliers that operate brick manufacturing facilities within
[[Page 58927]]
200 miles of Memphis, and no other significant supplier of residential
brick has a facility located within 350 miles.
C. The Huntsville, Alabama MSA
25. Alabama consumed the fifth most bricks of any state in the
nation in 2020. General Shale and Meridian are two of the top three
residential brick suppliers in Alabama and combined supplied over 43%
of the total brick volume sold in Alabama in 2020. General Shale and
Meridian are particularly important suppliers for the Huntsville MSA,
where they are two of the top three residential brick suppliers by
volume and face only one other significant competitor. These three
firms are the only significant suppliers that operate a residential
brick manufacturing facility located within 125 miles of Huntsville.
D. The Lexington, Kentucky MSA
26. General Shale and Meridian supplied over 50% of the total brick
volume sold in Kentucky in 2020. General Shale and Meridian are
particularly important suppliers for the Lexington MSA, where they are
the two largest suppliers of residential brick by volume and face only
each other as significant competitors. General Shale and Meridian are
the only significant residential brick suppliers located within 50
miles of Lexington; the next closest residential brick manufacturer is
over 230 miles away.
E. The Louisville, Kentucky MSA
27. General Shale and Meridian are also important residential brick
suppliers for the Louisville MSA. In the Louisville MSA, the proposed
acquisition would reduce the number of significant competitors for
residential brick from three to two, as the merging parties own two of
the three brick manufacturing facilities located within 200 miles of
Louisville. Following the transaction, the third-closest significant
residential brick manufacturer would be located over 300 miles away.
F. The Indianapolis, Indiana MSA
28. General Shale and Meridian are the top two suppliers of
residential brick to customers in Indiana. In 2020, they combined to
supply over 45% of the total brick volume sold in the state. General
Shale and Meridian are particularly important suppliers of residential
brick for the Indianapolis MSA, where they face only one other
significant competitor. These three firms are the only significant
suppliers that operate a residential brick manufacturing facility
located within 100 miles of Indianapolis, with the next closest
competitor located almost 350 miles away.
G. The Detroit, Michigan MSA
29. General Shale and Meridian are the first and third largest
suppliers of brick to customers in Michigan. In 2020, General Shale and
Meridian supplied 45% of the total brick volume sold in the state.
General Shale and Meridian are particularly important suppliers for the
Detroit MSA, where they are the top two competitors for residential
brick by volume. In this market, the proposed acquisition would reduce
the number of significant suppliers for residential brick from three to
two with these three firms being the only significant suppliers that
operate residential brick manufacturing facilities within 375 miles of
Detroit.
H. The Cincinnati, Ohio MSA
30. General Shale and Meridian are the top two residential brick
suppliers to customers in Ohio. In 2020, General Shale and Meridian
supplied 28% of the total brick volume sold in the state. General Shale
and Meridian are particularly important suppliers for the Cincinnati
MSA, where they are the top two competitors for residential brick by
volume and face only one other significant supplier. These three firms
are the only significant suppliers with residential brick manufacturing
facilities located within 200 miles of Cincinnati, and no other
significant manufacturer has a facility within 350 miles.
VI. Entry
31. Entry into the relevant markets would be costly and time-
consuming and is unlikely to prevent the harm to competition that is
likely to result from the proposed transaction. The time and expense
required to construct manufacturing facilities, acquire necessary
equipment, develop product formulas, and overcome regulatory obstacles,
such as obtaining building and usage permits and ensuring environmental
and workplace safety compliance, would take years of planning and
significant financial investment.
32. Additionally, repositioning by a commercial brick manufacturer
is unlikely to mitigate the harm that would result from the proposed
transaction. Switching from producing commercial brick to producing
residential brick would come at a significant opportunity cost as
commercial brick sales generally yield a higher profit margin than
residential brick. Accordingly, it is unlikely that a manufacturer of
commercial brick would be incentivized to switch to supplying
residential brick.
VII. Violations Alleged
33. General Shale's proposed acquisition of Meridian is likely to
substantially lessen competition in each of the relevant markets for
the design, manufacture, and sale of residential brick set forth above
in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
34. Unless enjoined, the acquisition likely would have the
following anticompetitive effects, among others, in the relevant
markets:
(a) Actual and potential competition between General Shale and
Meridian would be eliminated;
(b) competition generally would be substantially lessened; and
(c) prices for the relevant products would likely increase, and
innovation and the quality of those products likely would decline.
VIII. Request for Relief
35. The United States request that this Court:
(a) Adjudge and decree General Shale's proposed acquisition of
Meridian to be unlawful and in violation of Section 7 of the Clayton
Act, 15 U.S.C. 18;
(b) preliminarily and permanently enjoin Defendants and all persons
acting on their behalf from consummating the proposed acquisition by
General Shale of Meridian or from entering into or carrying out any
other contract, agreement, plan, or understanding, the effect of which
would be to combine Meridian with the operations of General Shale;
(c) award the United States the costs for this action; and
(d) grant the United States such other relief as the Court deems
just and proper.
Dated: October 1, 2021.
Respectfully Submitted,
For Plaintiff United States:
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Richard A. Powers,
Acting Assistant Attorney General, Antitrust Division.
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Kathleen S. O'Neill,
Senior Director of Investigations and Litigation, Antitrust
Division.
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Jay D. Owen,
Acting Chief, Defense, Industrials, and Aerospace Section, Antitrust
Division.
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Soyoung Choe,
Acting Assistant Chief, Defense, Industrials, and Aerospace Section,
Antitrust Division.
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Daniel J. Monahan, Jr.*
Stephen A. Harris,
[[Page 58928]]
Matthew C. Fellows (D.C. Bar #1736656),
Trial Attorneys, United States Department of Justice, Antitrust
Division, Defense, Industrials, and Aerospace Section, 450 Fifth
Street NW, Suite 8700, Washington, DC 20530, Telephone: (202) 598-
8774, Facsimile: (202) 514-9033, Email: <a href="/cdn-cgi/l/email-protection#85c1e4ebece0e9abc8eaebe4ede4ebc5f0f6e1eaefabe2eaf3"><span class="__cf_email__" data-cfemail="662207080f030a482b0908070e070826131502090c48010910">[email protected]</span></a>.
*Lead Attorney to be Noticed.
United States District Court, for the District of Columbia
United States of America, Plaintiff, v. Wienerberger AG, General
Shale Brick, Inc., Boral Limited, LSF9 Stardust Super Holdings,
L.P., Meridian Brick LLC, Defendants.
Civil Action No.: 1:21-cv-02555 (CRC)
Proposed Final Judgment
Whereas, Plaintiff, United States of America, filed its Complaint
on October 1, 2021;
And whereas, the United States and Defendants, Wienerberger AG,
General Shale Brick, Inc., Boral Limited, LSF9 Stardust Super Holdings,
L.P., and Meridian Brick LLC, have consented to entry of this Final
Judgment without the taking of testimony, 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 relating to
any issue of fact or law;
And whereas, Defendants agree to make a divestiture to remedy the
loss of competition alleged in the Complaint;
And whereas, Defendants represent that the divestiture and other
relief required by this Final Judgment can and will be made and that
Defendants will not later raise a claim of hardship or difficulty as
grounds for asking the Court to modify any provision of this Final
Judgment;
Now therefore, it is ordered, adjudged, and decreed:
I. Jurisdiction
The 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 (15 U.S.C. 18).
II. Definitions
As used in this Final Judgment:
A. ``Boral'' means Defendant Boral Limited, an Australian public
company with its headquarters in North Sydney, Australia, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships, and joint ventures, and their directors,
officers, managers, agents, and employees.
B. ``General Shale'' means Defendant General Shale Brick, Inc, a
subsidiary of Wienerberger and a Delaware corporation with its
headquarters in Johnson City, Tennessee, its successors and assigns,
and its subsidiaries, divisions, groups, affiliates, partnerships, and
joint ventures, and their directors, officers, managers, agents, and
employees.
C. ``Meridian'' means Defendant Meridian Brick LLC, a joint venture
between Boral and LSF9 and a Delaware limited liability company with
its headquarters in Alpharetta, Georgia, its successors and assigns,
and its subsidiaries, divisions, groups, affiliates, partnerships, and
joint ventures, and their directors, officers, managers, agents, and
employees.
D. ``LSF9'' means Defendant LSF9 Stardust Super Holdings, L.P., a
Bermuda limited partnership with its principal place of business in
Hamilton, Bermuda, its successors and assigns, and its subsidiaries,
divisions, groups, affiliates, partnerships, and joint ventures, and
their directors, officers, managers, agents, and employees.
E. ``Wienerberger'' means Wienerberger AG, an Austrian corporation
with its headquarters in Wien, Austria, its successors and assigns, and
its subsidiaries, divisions, groups, affiliates, partnerships, and
joint ventures, and their directors, officers, managers, agents, and
employees.
F. ``RemSom'' means RemSom LLC, a South Carolina limited liability
company with its headquarters in Columbia, South Carolina, its
successors and assigns, and its subsidiaries (including US Brick, LLC),
divisions, groups, affiliates, partnerships, and joint ventures, and
their directors, officers, managers, agents, and employees.
G. ``Acquirer'' means RemSom or another entity approved by the
United States in its sole discretion to which Defendants divest the
Divestiture Assets.
H. ``Divestiture Assets'' means all of Defendants' rights, titles,
and interests in and to:
1. The manufacturing facilities and mines listed in Appendix A;
2. the distribution yards and stores listed in Appendix B;
3. all property and assets, tangible and intangible, wherever
located, relating to or used in connection with the manufacturing
facilities and mines listed in Appendix A or the distribution yard and
stores listed in Appendix B, including:
a. All other real property, including fee simple interests, real
property leasehold interests and renewal rights thereto, improvements
to real property, and options to purchase any adjoining or other
property, together with all buildings, facilities, and other
structures;
b. all tangible personal property, including fixed assets,
machinery and manufacturing equipment, tools, vehicles, inventory,
materials, office equipment and furniture, computer hardware, and
supplies;
c. all contracts, contractual rights, and customer and distributor
relationships, and all other agreements, commitments, and
understandings, including supply agreements, teaming agreements,
leases, and all outstanding offers or solicitations to enter into a
similar arrangement;
d. all licenses, permits, certifications, approvals, consents,
registrations, waivers, and authorizations issued or granted by any
governmental organization, and all pending applications or renewals;
e. all records and data, including (a) customer and distributor
lists, accounts, sales, and credits records, (b) production, repair,
maintenance, and performance records, (c) manuals and technical
information Defendants provide to their own employees, customers,
distributors, suppliers, agents, or licensees, (d) records and research
data concerning historic and current research and development
activities, including designs of experiments and the results of
successful and unsuccessful designs and experiments, and (e) drawings,
blueprints, and designs;
f. all intellectual property owned, licensed, or sublicensed,
either as licensor or licensee, including (a) patents, patent
applications, and inventions and discoveries that may be patentable,
(b) registered and unregistered copyrights and copyright applications,
and (c) registered and unregistered trademarks, trade dress, service
marks, trade names, and trademark applications; and
g. all other intangible property, including (a) commercial names
and d/b/a names, (b) technical information, (c) computer software and
related documentation, know-how, trade secrets, design protocols,
specifications for materials, specifications for parts, specifications
for devices, safety procedures (e.g., for the handling of materials and
substances), quality assurance and control procedures, (d) design tools
and simulation capabilities, and (e) rights in internet websites and
internet domain names.
Provided, however, that the assets specified in Paragraphs
II.H.3.a-g above do not include the assets identified in Appendix C or
any trademarks, trade names, service marks, or service names containing
the names ``General Shale,'' ``Meridian,'' ``Watsontown,''
[[Page 58929]]
``Columbus,'' ``Arriscraft,'' or ``Wienerberger''.
I. ``Divestiture Date'' means the date on which the Divestiture
Assets are divested to Acquirer pursuant to this Final Judgment.
J. ``Including'' means including, but not limited to.
K. ``Relevant Personnel'' means all full-time, part-time, or
contract employees of General Shale or Meridian, located at one of the
facilities, mines, yards, or stores included in the Divestiture Assets
at any time between January 1, 2019, and the Divestiture Date.
Provided, however, Relevant Personnel does not include employees of
Defendants that the United States, in its sole discretion, deems to be
primarily engaged in human resources, legal, or other general or
administrative support functions. The United States, in its sole
discretion, will resolve any disagreement relating to which employees
are Relevant Personnel.
L. ``Transaction'' means the proposed acquisition of Meridian by
General Shale.
III. Applicability
A. This Final Judgment applies to Boral, General Shale, Meridian,
LSF9, and Wienerberger, as defined above, and all other persons in
active concert or participation with any Defendant who receive actual
notice of this Final Judgment.
B. If, prior to complying with Section IV and Section V of this
Final Judgment, Defendants sell or otherwise dispose of all or
substantially all of their assets or of business units that include the
Divestiture Assets, Defendants must require any purchaser to be bound
by the provisions of this Final Judgment. Defendants need not obtain
such an agreement from Acquirer.
IV. Divestiture
A. Defendants Wienerberger, General Shale, and Meridian are ordered
and directed, within 30 calendar days after the Court's entry of the
Asset Preservation Stipulation and Order in this matter, to divest the
Divestiture Assets in a manner consistent with this Final Judgment to
RemSom or another Acquirer acceptable to the United States, in its sole
discretion. The United States, in its sole discretion, may agree to one
or more extensions of this time period not to exceed 60 calendar days
in total and will notify the Court of any extensions.
B. Defendants Wienerberger, General Shale, and Meridian must use
best efforts to divest the Divestiture Assets as expeditiously as
possible. Defendants must take no action that would jeopardize the
completion of the divestiture ordered by the Court, including any
action to impede the permitting, operation, or divestiture of the
Divestiture Assets.
C. Unless the United States otherwise consents in writing,
divestiture pursuant to this Final Judgment must include the entire
Divestiture Assets and must be accomplished in such a way as to satisfy
the United States, in its sole discretion, that the Divestiture Assets
can and will be used by Acquirer as part of a viable, ongoing business
of the design, manufacture, and sale of residential bricks and that the
divestiture to Acquirer will remedy the competitive harm alleged in the
Complaint.
D. The divestiture must be made to an Acquirer that, in the United
States' sole judgment, has the intent and capability, including the
necessary managerial, operational, technical, and financial capability,
to compete effectively in the design, manufacture, and sale of
residential bricks.
E. The divestiture must be accomplished in a manner that satisfies
the United States, in its sole discretion, that none of the terms of
any agreement between Acquirer and Defendants Wienerberger, General
Shale, and Meridian gives those Defendants the ability unreasonably to
raise Acquirer's costs, to lower Acquirer's efficiency, or otherwise
interfere in the ability of Acquirer to compete effectively in the
design, manufacture, and sale of residential bricks.
F. In the event Defendants Wienerberger, General Shale, and
Meridian are attempting to divest the Divestiture Assets to an Acquirer
other than RemSom, Defendants Wienerberger, General Shale, and Meridian
promptly must make known, by usual and customary means, the
availability of the Divestiture Assets. Defendants Wienerberger,
General Shale, and Meridian must inform any person making an inquiry
relating to a possible purchase of the Divestiture Assets that the
Divestiture Assets are being divested in accordance with this Final
Judgment and must provide that person with a copy of this Final
Judgment. Defendants Wienerberger, General Shale, and Meridian must
offer to furnish to all prospective Acquirers, subject to customary
confidentiality assurances, all information and documents relating to
the Divestiture Assets that are customarily provided in a due diligence
process; provided, however, that Defendants Wienerberger, General
Shale, and Meridian need not provide information or documents subject
to the attorney-client privilege or work-product doctrine. Defendants
Wienerberger, General Shale, and Meridian must make all information and
documents available to the United States at the same time that the
information and documents are made available to any other person.
G. Defendants Wienerberger, General Shale, and Meridian must
provide prospective Acquirers with (1) access to make inspections of
the Divestiture Assets; (2) access to all environmental, zoning, and
other permitting documents and information relating to the Divestiture
Assets; and (3) access to all financial, operational, or other
documents and information relating to the Divestiture Assets that would
customarily be provided as part of a due diligence process. Defendants
Wienerberger, General Shale, and Meridian also must disclose all
encumbrances on any part of the Divestiture Assets, including on
intangible property.
H. Defendants Wienerberger, General Shale, and Meridian must
cooperate with and assist Acquirer in identifying and, at the option of
Acquirer, in hiring all Relevant Personnel, including:
1. Within 10 business days following the filing of the Complaint in
this matter, Defendants Wienerberger, General Shale, and Meridian must
identify all Relevant Personnel to Acquirer and the United States,
including by providing organization charts covering all Relevant
Personnel.
2. Within 10 business days following receipt of a request by
Acquirer or the United States, Defendants Wienerberger, General Shale,
and Meridian must provide to Acquirer and the United States additional
information relating to Relevant Personnel, including name, job title,
reporting relationships, past experience, responsibilities, training
and educational histories, relevant certifications, and job performance
evaluations. Defendants Wienerberger, General Shale, and Meridian must
also provide to Acquirer and the United States information relating to
current and accrued compensation and benefits of Relevant Personnel,
including most recent bonuses paid, aggregate annual compensation,
current target or guaranteed bonus, if any, any retention agreement or
incentives, and any other payments due, compensation or benefit
accrued, or promises made to the Relevant Personnel. If Defendants
Wienerberger, General Shale, and Meridian are barred by any applicable
law from providing any of this information, those Defendants must
provide, within 10 business days following receipt of the request, the
requested information to the full extent
[[Page 58930]]
permitted by law and also must provide a written explanation of the
inability of Defendants Wienerberger, General Shale, and Meridian to
provide the remaining information, including specifically identifying
the provisions of the applicable laws.
3. At the request of Acquirer, Defendants Wienerberger, General
Shale, and Meridian must promptly make Relevant Personnel available for
private interviews with Acquirer during normal business hours at a
mutually agreeable location.
4. Defendants must not interfere with any effort by Acquirer to
employ any Relevant Personnel. Interference includes offering to
increase the compensation or improve the benefits of Relevant Personnel
unless (a) the offer is part of a company-wide increase in compensation
or improvement in benefits that was announced prior to the December 18,
2020, or (b) the offer is approved by the United States in its sole
discretion. Defendants' obligations under this Paragraph will expire
180 days after the Divestiture Date.
5. For Relevant Personnel who elect employment with Acquirer within
180 days of the Divestiture Date, Defendants must waive all non-compete
and non-disclosure agreements; vest and pay to the Relevant Personnel
(or to Acquirer for payment to the employee) on a prorated basis any
bonuses, incentives, other salary, benefits or other compensation fully
or partially accrued at the time of the transfer of the employee to
Acquirer; vest any unvested pension and other equity rights; and
provide all other benefits that those Relevant Personnel otherwise
would have been provided had the Relevant Personnel continued
employment with Defendants, including any retention bonuses or
payments. Defendants may maintain reasonable restrictions on disclosure
by Relevant Personnel of Defendants' proprietary non-public information
that is unrelated to the design, manufacture, and sale of residential
bricks and not otherwise required to be disclosed by this Final
Judgment.
6. For a period of 12 months from the Divestiture Date, Defendants
Wienerberger, General Shale, and Meridian may not solicit to rehire
Relevant Personnel who were hired by Acquirer within 180 days of the
Divestiture Date unless (a) an individual is terminated or laid off by
Acquirer or (b) Acquirer agrees in writing that Defendants
Wienerberger, General Shale, and Meridian may solicit to re-hire that
individual. Nothing in this Paragraph prohibits Defendants
Wienerberger, General Shale, and Meridian from advertising employment
openings using general solicitations or advertisements and re-hiring
Relevant Personnel who apply for an employment opening through a
general solicitation or advertisement.
I. Defendants Wienerberger, General Shale, and Meridian must
warrant to Acquirer that (1) the Divestiture Assets will be operational
and without material defect on the date of their transfer to Acquirer;
(2) there are no material defects in the environmental, zoning, or
other permits relating to the operation of the Divestiture Assets; and
(3) all encumbrances on any part of the Divestiture Assets, including
on intangible property, have been disclosed. Following the sale of the
Divestiture Assets, Defendants must not undertake, directly or
indirectly, challenges to the environmental, zoning, or other permits
relating to the operation of the Divestiture Assets.
J. Defendants Wienerberger, General Shale, and Meridian must
assign, subcontract, or otherwise transfer all contracts, agreements,
and customer and distributor relationships (or portions of such
contracts, agreements, and relationships) included in the Divestiture
Assets, including all supply and sales contracts to Acquirer; provided,
however, that for any contract or agreement that requires the consent
of another party to assign, subcontract, or otherwise transfer,
Defendants Wienerberger, General Shale, and Meridian must use best
efforts to accomplish the assignment, subcontracting, or transfer.
Defendants must not interfere with any negotiations between Acquirer
and a contracting party.
K. Defendants Wienerberger, General Shale, and Meridian must use
best efforts to assist Acquirer to obtain all necessary licenses,
registrations, and permits to operate the Divestiture Assets. Until
Acquirer obtains the necessary licenses, registrations, and permits,
Defendants Wienerberger, General Shale, and Meridian must provide
Acquirer with the benefit of the licenses, registrations, and permits
of Defendants Wienerberger, General Shale, and Meridian to the full
extent permissible by law.
L. At the option of Acquirer, and subject to approval by the United
States in its sole discretion, on or before the Divestiture Date,
Defendants Wienerberger, General Shale, and Meridian must enter into a
contract to provide transition services for back office, human
resources, accounting, employee health and safety, and information
technology services and support for a period of up to 12 months on
terms and conditions reasonably related to market conditions for the
provision of the transition services. Any amendment to or modification
of any provision of a contract to provide transition services is
subject to approval by the United States, in its sole discretion. The
United States, in its sole discretion, may approve one or more
extensions of any contract for transition services, for a total of up
to an additional six months. If Acquirer seeks an extension of the term
of any contract for transition services, Defendants Wienerberger,
General Shale, and Meridian must notify the United States in writing at
least three months prior to the date the contract expires. Acquirer may
terminate a contract for transition services, or any portion of a
contract for transition services, without cost or penalty at any time
upon commercially reasonable written notice. The employee(s) of
Defendants Wienerberger, General Shale, and Meridian tasked with
providing transition services must not share any competitively
sensitive information of Acquirer with any other employee of Defendants
Wienerberger, General Shale, and Meridian.
M. If any term of an agreement between Defendants Wienerberger,
General Shale, and Meridian and Acquirer, including an agreement to
effectuate the divestiture required by this Final Judgment, varies from
a term of this Final Judgment, to the extent that Defendants
Wienerberger, General Shale, and Meridian cannot fully comply with
both, this Final Judgment determines the obligations of Defendants
Wienerberger, General Shale, and Meridian.
V. Appointment of Divestiture Trustee
A. If Defendants Wienerberger, General Shale, and Meridian have not
divested the Divestiture Assets within the period specified in
Paragraph IV.A, Defendants Wienerberger, General Shale, and Meridian
must immediately notify the United States of that fact in writing. Upon
application of the United States, which Defendants may not oppose, the
Court will appoint a divestiture trustee selected by the United States
and approved by the Court to effect the divestiture of the Divestiture
Assets.
B. After the appointment of a divestiture trustee by the Court,
only the divestiture trustee will have the right to sell the
Divestiture Assets. The divestiture trustee will have the power and
authority to accomplish the divestiture to an Acquirer acceptable to
the United States, in its sole discretion, at a price and on terms
obtainable
[[Page 58931]]
through reasonable effort by the divestiture trustee, subject to the
provisions of Sections IV, V, and VI of this Final Judgment, and will
have other powers as the Court deems appropriate. The divestiture
trustee must sell the Divestiture Assets as quickly as possible.
C. Defendants Wienerberger, General Shale, and Meridian may not
object to a sale by the divestiture trustee on any ground other than
malfeasance by the divestiture trustee. Objections by Defendants
Wienerberger, General Shale, and Meridian must be conveyed in writing
to the United States and the divestiture trustee within 10 calendar
days after the divestiture trustee has provided the notice of proposed
divestiture required by Section VI.
D. The divestiture trustee will serve at the cost and expense of
Defendants Wienerberger, General Shale, and Meridian pursuant to a
written agreement, on terms and conditions, including confidentiality
requirements and conflict of interest certifications, approved by the
United States in its sole discretion.
E. The divestiture trustee may hire at the cost and expense of
Defendants Wienerberger, General Shale, and Meridian any agents or
consultants, including investment bankers, attorneys, and accountants,
that are reasonably necessary in the divestiture trustee's judgment to
assist with the divestiture trustee's duties. These agents or
consultants will be accountable solely to the divestiture trustee and
will serve on terms and conditions, including confidentiality
requirements and conflict-of-interest certifications, approved by the
United States in its sole discretion.
F. The compensation of the divestiture trustee and agents or
consultants hired by the divestiture trustee must be reasonable in
light of the value of the Divestiture Assets and based on a fee
arrangement that provides the divestiture trustee with incentives based
on the price and terms of the divestiture and the speed with which it
is accomplished. If the divestiture trustee and Defendants
Wienerberger, General Shale, and Meridian are unable to reach agreement
on the divestiture trustee's compensation or other terms and conditions
of engagement within 14 calendar days of the appointment of the
divestiture trustee by the Court, the United States, in its sole
discretion, may take appropriate action, including by making a
recommendation to the Court. Within three business days of hiring an
agent or consultant, the divestiture trustee must provide written
notice of the hiring and rate of compensation to Defendants
Wienerberger, General Shale, and Meridian and the United States.
G. The divestiture trustee must account for all monies derived from
the sale of the Divestiture Assets sold by the divestiture trustee and
all costs and expenses incurred. Within 30 calendar days of the
Divestiture Date, the divestiture trustee must submit that accounting
to the Court for approval. After approval by the Court of the
divestiture trustee's accounting, including fees for unpaid services
and those of agents or consultants hired by the divestiture trustee,
all remaining money must be paid to Defendants Wienerberger, General
Shale, and Meridian and the trust will then be terminated.
H. Defendants Wienerberger, General Shale, and Meridian must use
best efforts to assist the divestiture trustee to accomplish the
required divestiture. Subject to reasonable protection for trade
secrets, other confidential research, development, or commercial
information, or any applicable privileges, Defendants Wienerberger,
General Shale, and Meridian must provide the divestiture trustee and
agents or consultants retained by the divestiture trustee with full and
complete access to all personnel, books, records, and facilities of the
Divestiture Assets. Defendants Wienerberger, General Shale, and
Meridian also must provide or develop financial and other information
relevant to the Divestiture Assets that the divestiture trustee may
reasonably request. Defendants must not take any action to interfere
with or to impede the divestiture trustee's accomplishment of the
divestiture.
I. The divestiture trustee must maintain complete records of all
efforts made to sell the Divestiture Assets, including by filing
monthly reports with the United States setting forth the divestiture
trustee's efforts to accomplish the divestiture ordered by this Final
Judgment. The reports must 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 must describe in detail each
contact.
J. If the divestiture trustee has not accomplished the divestiture
ordered by this Final Judgment within six months of appointment, the
divestiture trustee must promptly provide the United States with a
report setting forth: (1) The divestiture trustee's efforts to
accomplish the required divestiture; (2) the reasons, in the
divestiture trustee's judgment, why the required divestiture has not
been accomplished; and (3) the divestiture trustee's recommendations
for completing the divestiture. Following receipt of that report, the
United States may make additional recommendations to the Court. The
Court thereafter may enter such orders as it deems appropriate to carry
out the purpose of this Final Judgment, which may include extending the
trust and the term of the divestiture trustee's appointment by a period
requested by the United States.
K. The divestiture trustee will serve until divestiture of all
Divestiture Assets is completed or for a term otherwise ordered by the
Court.
L. If the United States determines that the divestiture trustee is
not acting diligently or in a reasonably cost-effective manner, the
United States may recommend that the Court appoint a substitute
divestiture trustee.
VI. Notice of Proposed Divestiture
A. Within two business days following execution of a definitive
agreement with an Acquirer other than RemSom to divest the Divestiture
Assets, Defendants Wienerberger, General Shale, and Meridian or the
divestiture trustee, whichever is then responsible for effecting the
divestiture, must notify the United States of the proposed divestiture.
If the divestiture trustee is responsible for completing the
divestiture, the divestiture trustee also must notify Defendants
Wienerberger, General Shale, and Meridian. The notice must set forth
the details of the proposed divestiture 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.
B. Within 15 calendar days of receipt by the United States of the
notice required by Paragraph VI.A, the United States may request from
Defendants Wienerberger, General Shale, and Meridian, the proposed
Acquirer, other third parties, or the divestiture trustee additional
information concerning the proposed divestiture, the proposed Acquirer,
and other prospective Acquirers. Defendants Wienerberger, General
Shale, and Meridian and the divestiture trustee must furnish the
additional information requested within 15 calendar days of the receipt
of the request unless the United States provides written agreement to a
different period.
C. Within 45 calendar days after receipt of the notice required by
[[Page 58932]]
Paragraph VI.A or within 20 calendar days after the United States has
been provided the additional information requested pursuant to
Paragraph VI.B, whichever is later, the United States will provide
written notice to Defendants Wienerberger, General Shale, and Meridian
and any divestiture trustee that states whether the United States, in
its sole discretion, objects to the proposed Acquirer or any other
aspect of the proposed divestiture. Without written notice that the
United States does not object, a divestiture may not be consummated. If
the United States provides written notice that it does not object, the
divestiture may be consummated, subject only to the limited right to
object to the sale under Paragraph V.C of this Final Judgment. Upon
objection by Defendants Wienerberger, General Shale, and Meridian
pursuant to Paragraph V.C, a divestiture by the divestiture trustee may
not be consummated unless approved by the Court.
D. No information or documents obtained pursuant to this Section
may 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, for the purpose of
evaluating a proposed Acquirer or securing compliance with this Final
Judgment, or as otherwise required by law.
E. In the event of a request by a third party for disclosure of
information under the Freedom of Information Act, 5 U.S.C. 552, the
United States Department of Justice's Antitrust Division will act in
accordance with that statute, and the Department of Justice regulations
at 28 CFR part 16, including the provision on confidential commercial
information, at 28 CFR 16.7. Persons submitting information to the
Antitrust Division should designate the confidential commercial
information portions of all applicable documents and information under
28 CFR 16.7. Designations of confidentiality expire ten years after
submission, ``unless the submitter requests and provides justification
for a longer designation period.'' See 28 CFR 16.7(b).
F. If at the time that a person furnishes information or documents
to the United States pursuant to this Section, that person represents
and identifies in writing information or documents for which a claim of
protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules
of Civil Procedure, and marks each pertinent page of such material,
``Subject to claim of protection under Rule 26(c)(1)(G) of the Federal
Rules of Civil Procedure,'' the United States must give that person ten
calendar days' notice before divulging the material in any legal
proceeding (other than a grand-jury proceeding).
VII. Financing
Defendants may not finance all or any part of Acquirer's purchase
of all or part of the Divestiture Assets.
VIII. Asset Preservation
Defendants must take all steps necessary to comply with the Asset
Preservation Stipulation and Order entered by the Court.
IX. Affidavits
A. Within 20 calendar days of the filing of the Complaint in this
matter, and every 30 calendar days thereafter until the divestiture
required by this Final Judgment has been completed, Defendant
Wienerberger must deliver to the United States an affidavit, signed by
Defendant Wienerberger's Chief Executive Officer and General Counsel,
Defendant General Shale must deliver to the United States an affidavit,
signed by Defendant General Shale's Chief Executive Officer and Chief
Financial Officer, and Defendant Meridian must deliver to the United
States an affidavit signed by Defendant Meridian's Chief Executive
Officer and Chief Financial Officer, describing in reasonable detail
the fact and manner of that Defendant's compliance with this Final
Judgment. The United States, in its sole discretion, may approve
different signatories for the affidavits.
B. In the event Defendants Wienerberger, General Shale, and
Meridian are attempting to divest the Divestiture Assets to an Acquirer
other than RemSom, each affidavit required by Paragraph IX.A must
include: (1) The name, address, and telephone number of each person
who, during the preceding 30 calendar days, made an offer to acquire,
expressed an interest in acquiring, entered into negotiations to
acquire, or was contacted or made an inquiry about acquiring, an
interest in the Divestiture Assets and describe in detail each contact
with such persons during that period; (2) a description of the efforts
Defendants Wienerberger, General Shale, and Meridian have taken to
solicit buyers for and complete the sale of the Divestiture Assets and
to provide required information to prospective Acquirers; and (3) a
description of any limitations placed by Defendants Wienerberger,
General Shale, and Meridian on information provided to prospective
Acquirers. Objection by the United States to information provided by
Defendants Wienerberger, General Shale, and Meridian to prospective
Acquirers must be made within 14 calendar days of receipt of the
affidavit, except that the United States may object at any time if the
information set forth in the affidavit is not true or complete.
C. Defendants Wienerberger, General Shale, and Meridian must keep
all records of any efforts made to divest the Divestiture Assets until
one year after the Divestiture Date.
D. Within 20 calendar days of the filing of the Complaint in this
matter, Defendant Wienerberger, Defendant General Shale, and Defendant
Meridian must deliver to the United States an affidavit signed by each
Defendant's Chief Executive Officer and Chief Financial Officer, that
describes in reasonable detail all actions that Defendants have taken
and all steps that Defendants Wienerberger, General Shale, and Meridian
have implemented on an ongoing basis to comply with Section VIII of
this Final Judgment. The United States, in its sole discretion, may
approve different signatories for the affidavits.
E. If a Defendant makes any changes to the actions and steps
described in affidavits provided pursuant to Paragraph IX.D, the
Defendant must, within 15 calendar days after any change is
implemented, deliver to the United States an affidavit describing those
changes.
F. Defendants Wienerberger, General Shale, and Meridian must keep
all records of any efforts made to comply with Section VIII until one
year after the Divestiture Date.
X. Compliance Inspection
A. For the purposes of determining or securing compliance with this
Final Judgment or of related orders such as the Asset Preservation
Stipulation and Order or of determining whether this Final Judgment
should be modified or vacated, upon written request of an authorized
representative of the Assistant Attorney General for the Antitrust
Division, and reasonable notice to Defendants, Defendants must permit,
from time to time and subject to legally recognized privileges,
authorized representatives, including agents retained by the United
States:
1. to have access during Defendants' office hours to inspect and
copy, or at the option of the United States, to require Defendants to
provide electronic copies of all books, ledgers, accounts, records,
data, and documents in the possession, custody, or control of
[[Page 58933]]
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, relating to any matters contained in this Final Judgment. The
interviews must 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 for the Antitrust Division, Defendants must
submit written reports or respond to written interrogatories, under
oath if requested, relating to any matters contained in this Final
Judgment.
C. No information or documents obtained by the United States
pursuant to this Section may 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,
for the purpose of securing compliance with this Final Judgment, or as
otherwise required by law.
D. In the event of a request by a third party for disclosure of
information under the Freedom of Information Act, 5 U.S.C. 552, the
Antitrust Division will act in accordance with that statute, and the
Department of Justice regulations at 28 CFR part 16, including the
provision on confidential commercial information, at 28 CFR 16.7.
Defendants submitting information to the Antitrust Division should
designate the confidential commercial information portions of all
applicable documents and information under 28 CFR 16.7. Designations of
confidentiality expire ten years after submission, ``unless the
submitter requests and provides justification for a longer designation
period.'' See 28 CFR 16.7(b).
E. If at the time that Defendants furnish information or documents
to the United States pursuant to this Section, Defendants represent and
identify in writing information or documents for 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,'' the United States must give
Defendants ten (10) calendar days' notice before divulging the material
in any legal proceeding (other than a grand jury proceeding).
XI. Notification
A. Unless a 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''),
Defendants Wienerberger, General Shale, and Meridian may not, without
first providing at least 30 calendar days advance notification to the
United States, directly or indirectly acquire any assets of or any
interest, including a financial, security, loan, equity, or management
interest, in an entity involved in the design, manufacture, or sale of
residential bricks in Alabama, Indiana, Kentucky, Michigan, Ohio, or
Tennessee during the term of this Final Judgment.
B. Defendants Wienerberger, General Shale, and Meridian must
provide the notification required by this Section in the same format
as, and in accordance with 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 8 of the instructions must
be provided only about the design, manufacture, and sale of residential
bricks in the United States.
C. Notification must be provided at least 30 calendar days before
acquiring any assets or interest and must include, beyond the
information required by the instructions, the names of the principal
representatives who negotiated the transaction on behalf of each party,
and all management or strategic plans discussing the proposed
transaction. If, within the 30 calendar days following notification,
representatives of the United States make a written request for
additional information, Defendants Wienerberger, General Shale, and
Meridian may not consummate the proposed transaction until 30 calendar
days after submitting all requested information.
D. Early termination of the waiting periods set forth in this
Section 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 must be broadly
construed, and any ambiguity or uncertainty relating to whether to file
a notice under this Section must be resolved in favor of filing notice.
XII. No Reacquisition
Defendants Wienerberger, General Shale, and Meridian may not
reacquire any part of or any interest in the Divestiture Assets during
the term of this Final Judgment without prior authorization of the
United States.
XIII. Retention of Jurisdiction
The Court retains jurisdiction to enable any party to this Final
Judgment to apply to the 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.
XIV. Enforcement of Final Judgment
A. The United States retains and reserves all rights to enforce the
provisions of this Final Judgment, including the right to seek an order
of contempt from the Court. Defendants agree that in a civil contempt
action, a motion to show cause, or a similar action brought by the
United States relating to an alleged violation of this Final Judgment,
the United States may establish a violation of this Final Judgment and
the appropriateness of a remedy therefor by a preponderance of the
evidence, and Defendants waive any argument that a different standard
of proof should apply.
B. This Final Judgment should be interpreted to give full effect to
the procompetitive purposes of the antitrust laws and to restore the
competition the United States alleges was harmed by the challenged
conduct. Defendants agree that they may be held in contempt of, and
that the Court may enforce, any provision of this Final Judgment that,
as interpreted by the Court in light of these procompetitive principles
and applying ordinary tools of interpretation, is stated specifically
and in reasonable detail, whether or not it is clear and unambiguous on
its face. In any such interpretation, the terms of this Final Judgment
should not be construed against either party as the drafter.
C. In an enforcement proceeding in which the Court finds that
Defendants have violated this Final Judgment, the United States may
apply to the Court for an extension of this Final Judgment, together
with other relief that may be appropriate. In connection with a
successful effort by the United States to enforce this Final Judgment
against a Defendant, whether litigated or resolved before litigation,
that Defendant agrees to reimburse the United States for the fees and
expenses of its attorneys, as well as all other costs including
experts' fees, incurred in connection with that effort to enforce this
Final Judgment, including in the investigation of the potential
violation.
[[Page 58934]]
D. For a period of four years following the expiration of this
Final Judgment, if the United States has evidence that a Defendant
violated this Final Judgment before it expired, the United States may
file an action against that Defendant in this Court requesting that the
Court order: (1) Defendant to comply with the terms of this Final
Judgment for an additional term of at least four years following the
filing of the enforcement action; (2) all appropriate contempt
remedies; (3) additional relief needed to ensure the Defendant complies
with the terms of this Final Judgment; and (4) fees or expenses as
called for by this Section.
XV. Expiration of Final Judgment
Unless the Court grants an extension, this Final Judgment will
expire 10 years from the date of its entry, except that after five
years from the date of its entry, this Final Judgment may be terminated
upon notice by the United States to the Court and Defendants that the
divestiture has been completed and continuation of this Final Judgment
is no longer necessary or in the public interest.
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 by making available to the
public copies of this Final Judgment and the Competitive Impact
Statement, public comments thereon, and any response to comments by the
United States. Based upon the record before the Court, which includes
the Competitive Impact Statement and, if applicable, 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]
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United States District Judge
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Wienerberger AG, General
Shale Brick, Inc., LSF9 Stardust Super Holdings, L.P., Boral
Limited, and Meridian Brick LLC, Defendants.
Civil Action No.: 1:21-cv-02555 (CRC)
Competitive Impact Statement
In accordance with the Antitrust Procedures and Penalties Act, 15
U.S.C. 16(b)-(h) (the ``APPA'' or ``Tunney Act''), the United States of
America files this Competitive Impact Statement related to the proposed
Final Judgment filed in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
On December, 18, 2020, General Shale Brick, Inc. (``General
Shale''), a subsidiary of Wienerberger AG, announced its intention to
acquire Meridian Brick LLC (``Meridian'') from Meridian's parent
companies, Boral Limited and LSF9 Stardust Super Holdings, L.P. as part
of a total transaction valued at approximately $250 million. The United
States filed a civil antitrust Complaint on October 1, 2021, seeking to
enjoin the proposed acquisition. The Complaint alleges that the likely
effect of this acquisition would be to substantially lessen competition
for the design, manufacture, and sale of residential brick in eight
geographic markets in the midwestern and southern United States in
violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
At the same time the Complaint was filed, the United States filed a
proposed Final Judgment and an Asset Preservation Stipulation and Order
(``Stipulation and Order''), which are designed to remedy the loss of
competition alleged in the Complaint.
Under the proposed Final Judgment, which is explained more fully
below, Defendants are required to divest specified residential brick
manufacturing and sales assets located within seven states.
Under the terms of the Stipulation and Order, Defendants must take
certain steps to ensure that the assets that must be divested are
operated as ongoing, economically viable, competitive assets for the
design, manufacture, and sale of residential brick and must take all
other actions to preserve and maintain the full economic viability,
marketability, and competitiveness of the assets to be divested. On
October 5, 2021, the Court entered the Stipulation and Order.
The United States and Defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment will terminate this action, except that the
Court will retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II. Description of Events Giving Rise to the Alleged Violation
A. The Defendants and the Proposed Transaction
On December 18, 2020, General Shale announced its intention to
acquire Meridian from Boral Limited and LSF9 Stardust Super Holdings,
L.P. in a total transaction valued at approximately $250 million.
General Shale is a Delaware corporation headquartered in Johnson
City, Tennessee. It is a leading U.S. producer of building material
solutions and one of North America's largest brick, stone, and concrete
block manufacturers. General Shale operates 11 production facilities in
10 states and provinces. It also has a network of 21 sales locations
and more than 200 affiliated distributors in North America.
Wienerberger AG is General Shale's parent company. Based in Vienna,
Austria, it is one of the world's largest building materials
manufacturers. Wienerberger AG operates manufacturing and distribution
facilities for brick and other construction materials in three
continents, including in North America through its subsidiary General
Shale. In 2020, Wienerberger AG's North American business generated
revenues of approximately $370 million, 78% of which was derived from
brick sales, including residential brick sales.
Meridian is a Delaware limited liability company headquartered in
Alpharetta, Georgia. Meridian manufactures and sells construction
materials, including commercial and residential brick and masonry
materials. Meridian is the largest brick supplier in the United States.
During the fiscal year 2020, Meridian generated over $400 million in
revenues, primarily from brick sales, including residential brick
sales. Meridian and its sister company Meridian Brick Canada Ltd. make
up the Meridian Group. The Meridian Group is directly and indirectly
owned by Boral Limited and LSF9 Stardust Super Holdings, L.P. Boral
Limited and LSF9 Stardust Super Holdings, L.P. formed Meridian as a
joint venture in 2016.
B. Relevant Product Market: Residential Brick
Residential brick is a type of exterior cladding that is used to
protect homes and other buildings from weather and the elements. It
comes in various sizes and colors and is primarily comprised of shale
or red clay that has been fired in a kiln. Residential brick of each
color and size is manufactured in a substantially similar process, with
minor adjustments in the amount of clay or type of color additives used
to make a particular brick model. Indeed, although residential brick
comes in varying sizes (e.g., modular, queen, and king) and colors
(e.g., red, white, or grey), all residential brick volumes are
[[Page 58935]]
measured in Standard Brick Equivalents (``SBE'').\3\
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\3\ The American Society for Testing and Materials has
established a standard brick size for construction uses, which is
referred to as the standard brick equivalent or ``SBE.'' Residential
brick of different sizes is converted to SBE units when sold for
purposes of measuring the volume sold.
---------------------------------------------------------------------------
Residential brick is distinct from commercial brick. Residential
brick is less expensive than commercial brick due to different
manufacturing processes. In particular, commercial brick is made by a
process called through-body extrusion. Through-body extrusion entails a
rigorous coloring process that ensures uniform coloring throughout the
body of the brick. This achieves the higher color quality required of
commercial brick. By contrast, residential brick is often colored only
on the outer portion of the brick, and the residential brick
manufacturing process requires fewer additives and other costly inputs.
Residential brick must meet standard specifications for residential
use that are set by the American Society for Testing and Materials
(``ASTM''). These standards require certain durability and load
capabilities that differentiate residential brick from decorative
paving brick as well as ``thin'' brick, which is a fraction of the
thickness of residential brick and has lower structural requirements
because it is ornamental.
Residential brick is distinct from other types of exterior
cladding. It has both performance characteristics (such as durability
and structural integrity) and aesthetic traits that distinguish it from
products such as siding and other exterior claddings. Customers who
prefer the look of residential brick, or whose projects require the
unique properties of residential brick, cannot reasonably turn to
alternative exterior cladding solutions.
As alleged in the Complaint, because of these unique
characteristics, substitution away from residential brick in the event
of a small but significant increase in price by a hypothetical
monopolist of residential brick would be insufficient to make such a
price increase unprofitable. Accordingly, residential brick is a line
of commerce, or relevant product market, for purposes of analyzing the
effects of the proposed acquisition under Section 7 of the Clayton Act.
C. The Relevant Geographic Markets Are Local
Residential brick is generally transported by truck. Transportation
costs can be substantial and typically range from 15% to 30% of the
total price of residential brick. As a result, the Complaint alleges
the geographic markets for residential brick tend to be local, with the
specific geographic boundaries of any local market also determined by
road infrastructure, traffic conditions, and natural conditions, such
as mountain ranges that impose significantly higher fuel costs on the
transportation of residential brick to customers in local markets.
As alleged in the Complaint, the transaction would likely harm
competition for residential brick in the following Metropolitan
Statistical Areas (``MSAs''): \4\ (1) Nashville, Tennessee; (2)
Memphis, Tennessee; (3) Huntsville, Alabama; (4) Lexington, Kentucky;
(5) Louisville, Kentucky; (6) Indianapolis, Indiana; (7) Detroit,
Michigan; and (8) Cincinnati, Ohio.
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\4\ An MSA is a geographical region defined by the Office of
Management and Budget for use by federal statistical agencies, such
as the Census Bureau. It is based on the concept of a core area with
a large concentrated population, plus adjacent communities having
close economic and social ties to the core. For the purposes of the
Complaint, it includes the dense central business districts in the
named cities as well as the adjacent, connected communities.
---------------------------------------------------------------------------
In each of these relevant markets, the Complaint alleges a small
but significant increase in price by a hypothetical monopolist of
residential brick would not be defeated by substitution to commercial
brick or other claddings, other construction materials, or by
arbitrage--i.e., a buyer cannot purchase outside the MSA and transport
the residential bricks itself without incurring prohibitive
transportation costs. Accordingly, the sale of residential brick in
each of these MSAs constitutes a relevant market for purposes of
analyzing the effects of the acquisition under Section 7 of the Clayton
Act.
D. Anticompetitive Effects of the Proposed Transaction
The Complaint alleges the proposed transaction would significantly
increase concentration in the relevant markets and harm consumers by
eliminating the substantial head-to-head competition that currently
exists between General Shale and Meridian.
For each relevant market, General Shale and Meridian are among the
top suppliers of residential brick by volume sold and have a
competitive advantage because of the proximity of their manufacturing
facilities to customers in each relevant market. Further, only two or
three significant competitors, including General Shale and Meridian,
supply each relevant market. Other residential brick suppliers face
significantly higher transportation costs to serve these markets and
thus have limited competitive significance. Competition between General
Shale and Meridian has also spurred product innovation that has yielded
higher quality and a variety of innovative residential brick products,
including new colors, textures, and facing styles.
As alleged in the Complaint, homebuilders and other customers in
the relevant markets thus rely on competition between General Shale and
Meridian to supply a variety of quality residential brick at
competitive prices. By eliminating this competition, the proposed
transaction would likely lead to higher prices and reduced investment
in innovation and quality.
1. The Nashville, Tennessee MSA
In 2020, Tennessee was the second-largest brick consuming state in
the United States. General Shale and Meridian supplied approximately
54% of the total brick volume sold in Tennessee in 2020. General Shale
and Meridian are particularly important suppliers for the Nashville
MSA, where they are the top two suppliers of residential brick by
volume and face only each other as significant competitors. General
Shale and Meridian are the only significant suppliers of residential
brick that operate brick manufacturing facilities located within 150
miles of Nashville, and no other significant supplier has a
manufacturing facility located within 200 miles.
2. The Memphis, Tennessee MSA
General Shale and Meridian are also important suppliers of
residential brick for the Memphis MSA, where they face only one other
significant competitor. These three firms are the only significant
suppliers that operate brick manufacturing facilities within 200 miles
of Memphis, and no other significant supplier of residential brick has
a facility located within 350 miles.
3. The Huntsville, Alabama MSA
Alabama consumed the fifth most bricks of any state in the nation
in 2020. General Shale and Meridian are two of the top three
residential brick suppliers in Alabama and combined supplied over 43%
of the total brick volume sold in Alabama in 2020. General Shale and
Meridian are particularly important suppliers for the Huntsville MSA,
where they are two of the top three residential brick suppliers by
volume and face only one other significant competitor. These three
firms are the only significant suppliers that operate a residential
brick manufacturing facility located within 125 miles of Huntsville.
[[Page 58936]]
4. The Lexington, Kentucky MSA
General Shale and Meridian supplied over 50% of the total brick
volume sold in Kentucky in 2020. General Shale and Meridian are
particularly important suppliers for the Lexington MSA, where they are
the two largest suppliers of residential brick by volume and face only
each other as significant competitors. General Shale and Meridian are
the only significant residential brick suppliers located within 50
miles of Lexington; the next closest residential brick manufacturer is
over 230 miles away.
5. The Louisville, Kentucky MSA
General Shale and Meridian are also important residential brick
suppliers for the Louisville MSA. In the Louisville MSA, the proposed
acquisition would reduce the number of significant competitors for
residential brick from three to two, as the merging parties own two of
the three brick manufacturing facilities located within 200 miles of
Louisville. Following the transaction, the third-closest significant
residential brick manufacturer would be located over 300 miles away.
6. The Indianapolis, Indiana MSA
General Shale and Meridian are the top two suppliers of residential
brick to customers in Indiana. In 2020, they combined to supply over
45% of the total brick volume sold in the state. General Shale and
Meridian are particularly important suppliers of residential brick for
the Indianapolis MSA, where they face only one other significant
competitor. These three firms are the only significant suppliers that
operate a residential brick manufacturing facility located within 100
miles of Indianapolis, with the next closest competitor located almost
350 miles away.
7. The Detroit, Michigan MSA
General Shale and Meridian are the first and third largest
suppliers of brick to customers in Michigan. In 2020, General Shale and
Meridian supplied 45% of the total brick volume sold in the state.
General Shale and Meridian are particularly important suppliers for the
Detroit MSA, where they are the top two competitors for residential
brick by volume. In this market, the proposed acquisition would reduce
the number of significant suppliers for residential brick from three to
two with these three firms being the only significant suppliers that
operate residential brick manufacturing facilities within 375 miles of
Detroit.
8. The Cincinnati, Ohio MSA
General Shale and Meridian are the top two residential brick
suppliers to customers in Ohio. In 2020, General Shale and Meridian
supplied 28% of the total brick volume sold in the state. General Shale
and Meridian are particularly important suppliers for the Cincinnati
MSA, where they are the top two competitors for residential brick by
volume and face only one other significant supplier. These three firms
are the only significant suppliers with residential brick manufacturing
facilities located within 200 miles of Cincinnati, and no other
significant manufacturer has a facility within 350 miles.
E. Difficulty of Entry
As alleged in the Complaint, entry of new competitors into the
relevant residential brick markets would be costly, time consuming, and
is unlikely to prevent the harm to competition that is likely to result
if the proposed transaction were to proceed unremedied. The time and
expense required to construct manufacturing facilities, acquire
necessary equipment, develop product formulas, and overcome various
regulatory hurdles would take years of planning and significant
financial investment.
Additionally, repositioning by a commercial brick manufacturer is
also unlikely to lessen the harm that would likely result from the
proposed transaction. This is because commercial brick yields higher
profit margin than residential brick, and, accordingly, such a switch
would come at a significant opportunity cost that commercial brick
manufacturers are unlikely to be incentivized to make.
III. Explanation of the Proposed Final Judgment
The relief required by the proposed Final Judgment will remedy the
loss of competition alleged in the Complaint by establishing an
independent and economically viable competitor in the design,
manufacture, and sale of residential brick in the eight geographic
markets alleged in the Complaint.
A. The Divestiture Assets
Paragraph IV(A) of the proposed Final Judgment requires Defendants,
within 30 days after the entry of the Stipulation and Order by the
Court, to divest the Divestiture Assets (capitalized terms are defined
in the proposed Final Judgment) to RemSom, LLC or an alternative
acquirer acceptable to the United States, in its sole discretion. The
assets must be divested in such a way as to satisfy the United States
in its sole discretion, that the Divestiture Assets can and will be
used by the Acquirer as part of a viable, ongoing business that can
compete effectively in the design, manufacture, and sale of residential
brick in the eight geographic markets alleged in the Complaint
(proposed Final Judgment Paragraphs IV(C) and (D)). Defendants
Wienerberger AG, General Shale, and Meridian must use best efforts to
divest the Divestiture Assets expeditiously and may not take actions
that would jeopardize the completion of the divestiture (proposed Final
Judgment Paragraph IV(B)).
The Divestiture Assets are defined at Paragraph II(H) of the
proposed Final Judgment. The Divestiture Assets are defined to include
three manufacturing facilities, 14 Distribution Yards, and six mines,
identified in Appendices A and B. The Divestiture Assets also include
all tangible and intangible property and assets related or used in
connection with the manufacturing facilities, mines, and Distribution
Yards, except for the assets identified in Appendix C of the proposed
Final Judgment and any trademarks, trade names, service marks, or
service names containing the names ``General Shale,'' ``Meridian,''
``Watsontown,'' ``Columbus,'' ``Arriscraft,'' or ``Wienerberger.'' The
Divestiture Assets include all of the assets necessary for the Acquirer
to operate an economically viable business that will remedy the harm
that the United States allege would otherwise result from the
transaction.
B. Divestiture Provisions
The proposed Final Judgment contains several provisions to
facilitate the transition of the Divestiture Assets to the Acquirer.
First, Paragraph IV(J) of the proposed Final Judgment facilitates the
transfer of customers and other contractual relationships to the
Acquirer. Defendants Wienerberger AG, General Shale, and Meridian must
transfer all contracts, agreements, and relationships included in the
Divestiture Assets to the Acquirer and must make best efforts to
assign, subcontract, or otherwise transfer contracts or agreements that
require the consent of another party before assignment, subcontracting,
or other transfer.
Second, Paragraph IV(K) requires Defendants Wienerberger AG,
General Shale, and Meridian to use their best efforts to assist the
Acquirer in obtaining all of the licenses, registrations, and permits
necessary to operate the Divestiture Assets. Paragraph IV(K) further
requires Defendants Wienerberger AG, General Shale, and Meridian to
provide the Acquirer with the benefit of Defendants
[[Page 58937]]
Wienerberger AG's, General Shale's, and Meridian's licenses,
registrations, and permits to the full extent permissible by law until
the Acquirer obtains the necessary licenses, registrations, and
permits.
Third, Paragraph IV(L) of the proposed Final Judgment requires
Defendants Wienerberger AG, General Shale, and Meridian, at the option
of the Acquirer, and subject to the approval by the United States in
its sole discretion, on or before the date of the divestiture, to enter
into an agreement to provide transition services for back office, human
resources, accounting, employee health and safety, and information
technology services and support for the Divestiture Assets for a period
of up to 12 months. The Acquirer may terminate the transition services
agreement, or any portion of it, without cost or penalty at any time
upon commercially reasonable written notice. The paragraph further
provides that if the Acquirer seeks an extension of the term of any
contract for transition services, Defendants Wienerberger AG, General
Shale, and Meridian must notify the United States in writing at least
three months prior to the date the contract expires. Paragraph IV(L)
also provides that employees of Defendants Wienerberger AG, General
Shale, and Meridian tasked with supporting this agreement must not
share any competitively sensitive information of the Acquirer with any
other employee of Defendants Wienerberger AG, General Shale, and
Meridian.
The proposed Final Judgment also contains provisions intended to
facilitate efforts by the Acquirer to hire certain employees.
Specifically, Paragraph IV(H) of the proposed Final Judgment requires
Defendants Wienerberger AG, General Shale, and Meridian to provide the
Acquirer and the United States with organization charts and information
relating to these employees and to make them available for interviews.
It also provides that all Defendants must not interfere with any
negotiations by the Acquirer to hire these employees. In addition, for
employees who elect employment with the Acquirer, Defendants must waive
all non-compete and non-disclosure agreements, vest and pay on a
prorated basis any bonuses, incentive, other salary, benefits or other
compensation fully or partially accrued at the time the employee
transfers to the Acquirer, vest any unvested pension and other equity
rights, and provide all other benefits that those employees otherwise
would have been provided had those employees continued employment with
Defendants, including but not limited to any retention bonuses or
payments. This paragraph further provides that the Defendants
Wienerberger AG, General Shale, and Meridian may not solicit to hire
any employees who elect employment with the Acquirer, unless that
individual is terminated or laid off by the Acquirer or the Acquirer
agrees in writing that the Defendants Wienerberger AG, General Shale,
and Meridian may solicit or hire that individual. The non-solicitation
period runs for 12 months from the date of the divestiture. This
paragraph does not prohibit Defendants Wienerberger AG, General Shale,
and Meridian from advertising employment openings using general
solicitations or advertisements and rehiring employees who apply for a
position through a general solicitation or advertisement.
C. Divestiture Trustee
If Defendants Wienerberger AG, General Shale, and Meridian do not
accomplish the divestiture within the period prescribed in Paragraph
IV(A) of the proposed Final Judgment, Section V of the proposed Final
Judgment provides that the Court will appoint a divestiture trustee
selected by the United States to effect the divestiture. If a
divestiture trustee is appointed, the proposed Final Judgment provides
that Defendants Wienerberger AG, General Shale, and Meridian must pay
all costs and expenses of the trustee. The divestiture trustee's
compensation must be structured so as to provide an incentive for the
trustee based on the price and terms obtained and the speed with which
the divestiture is accomplished. After the divestiture trustee's
appointment becomes effective, the trustee must provide monthly reports
to the United States setting forth his or her efforts to accomplish the
divestiture. If the divestiture has not been accomplished within six
months of the divestiture trustee's appointment, the United States may
make recommendations to the Court, which will enter such orders as
appropriate, in order to carry out the purpose of the Final Judgment,
including by extending the trust or the term of the divestiture
trustee's appointment by a period requested by the United States.
D. Other Provisions
Section XI of the proposed Final Judgment requires Defendants
Wienerberger AG, General Shale, and Meridian, unless a 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''), to not directly or indirectly acquire
any assets of or any interest, including a financial, security, loan,
equity, or management interest, in an entity involved in the design,
manufacture, and sale of residential brick in Alabama, Indiana,
Kentucky, Michigan, Ohio, or Tennessee without first providing at least
30 calendar days advance notification to the United States. Pursuant to
the proposed Final Judgment, during the term of the proposed Final
Judgment, Defendants Wienerberger AG, General Shale, and Meridian must
notify the United States of such acquisitions as it would for a
required HSR Act filing, as specified in the Appendix to Part 803 of
Title 16 of the Code of Federal Regulations. The proposed Final
Judgment further provides for waiting periods and opportunities for the
United States to obtain additional information analogous to the
provisions of the HSR Act before such acquisitions can be consummated.
Requiring notification of any such acquisition will permit the United
States, as relevant, to assess the competitive effects of that
acquisition before it is consummated and, if necessary, seek to enjoin
the transaction.
The proposed Final Judgment also contains provisions designed to
promote compliance with and make enforcement of the Final Judgment as
effective as possible. Paragraph XIV(A) provides that the United States
retains and reserves all rights to enforce the Final Judgment,
including the right to seek an order of contempt from the Court. Under
the terms of this paragraph, Defendants have agreed that in any civil
contempt action, any motion to show cause, or any similar action
brought by the United States regarding an alleged violation of the
Final Judgment, the United States may establish the violation and the
appropriateness of any remedy by a preponderance of the evidence and
that Defendants have waived any argument that a different standard of
proof should apply. This provision aligns the standard for compliance
with the Final Judgment with the standard of proof that applies to the
underlying offense that the Final Judgment addresses.
Paragraph XIV(B) provides additional clarification regarding the
interpretation of the provisions of the proposed Final Judgment. The
proposed Final Judgment is intended to remedy the loss of competition
the United States alleges would otherwise be caused by the transaction.
Defendants agree that they will abide by the proposed Final Judgment
and that they may be held in contempt of the Court for failing to
comply with any provision of the proposed Final Judgment that is stated
[[Page 58938]]
specifically and in reasonable detail, as interpreted in light of this
procompetitive purpose.
Paragraph XIV(C) provides that if the Court finds in an enforcement
proceeding that a Defendant has violated the Final Judgment, the United
States may apply to the Court for an extension of the Final Judgment,
together with such other relief as may be appropriate. In addition, to
compensate American taxpayers for any costs associated with
investigating and enforcing violations of the Final Judgment, Paragraph
XIV(C) provides that, in any successful effort by the United States to
enforce the Final Judgment against a Defendant, whether litigated or
resolved before litigation, the Defendant must reimburse the United
States for attorneys' fees, experts' fees, and other costs incurred in
connection with that effort to enforce this Final Judgment, including
the investigation of the potential violation.
Paragraph XIV(D) states that the United States may file an action
against a Defendant for violating the Final Judgment for up to four
years after the Final Judgment has expired or been terminated. This
provision is meant to address circumstances such as when evidence that
a violation of the Final Judgment occurred during the term of the Final
Judgment is not discovered until after the Final Judgment has expired
or been terminated or when there is not sufficient time for the United
States to complete an investigation of an alleged violation until after
the Final Judgment has expired or been terminated. This provision,
therefore, makes clear that, for four years after the Final Judgment
has expired or been terminated, the United States may still challenge a
violation that occurred during the term of the Final Judgment.
Finally, Section XV of the proposed Final Judgment provides that
the Final Judgment will expire 10 years from the date of its entry,
except that after five years from the date of its entry, the Final
Judgment may be terminated upon notice by the United States to the
Court and Defendants that the divestiture has been completed and
continuation of the Final Judgment is no longer necessary or in the
public interest.
IV. Remedies Available to Potential Private Plaintiffs
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment neither impairs
nor assists 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 United States 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 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 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 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 U.S.
Department of Justice, which remains free to withdraw its consent to
the proposed Final Judgment at any time before the Court's entry of the
Final Judgment. The comments and the response of the United States will
be filed with the Court. In addition, the comments and the United
States' responses will be published in the Federal Register unless the
Court agrees that the United States instead may publish them on the
U.S. Department of Justice, Antitrust Division's internet website.
Written comments should be submitted in English to: Jay D. Owen,
Acting Chief, Defense, Industrials, and Aerospace Section, Antitrust
Division, U.S. Department of Justice, 450 Fifth Street NW, Suite 8700,
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
As an alternative to the proposed Final Judgment, the United States
considered a full trial on the merits against Defendants. The United
States could have continued the litigation and sought preliminary and
permanent injunctions against General Shale's acquisition of Meridian.
The United States is satisfied, however, that the relief required by
the proposed Final Judgment will remedy the anticompetitive effects
alleged in the Complaint, preserving competition for the design,
manufacture, and sale of residential brick in the eight geographic
markets alleged in the Complaint. Thus, the proposed Final Judgment
achieves all or substantially all of the relief the United States would
have obtained through litigation but avoids the time, expense, and
uncertainty of a full trial on the merits.
VII. Standard of Review Under the APPA for the Proposed Final Judgment
Under the Clayton Act and APPA, proposed Final Judgments, or
``consent decrees,'' in antitrust cases brought by the United States
are subject to a 60-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 (D.C. Cir. 1995); United States v. U.S. Airways Grp.,
Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (explaining that the
``court's inquiry is limited'' in Tunney
[[Page 58939]]
Act settlements); United States v. InBev N.V./S.A., No. 08-1965 (JR),
2009 U.S. Dist. LEXIS 84787, at *3 (D.D.C. Aug. 11, 2009) (noting that
a court's review of a proposed Final 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'').
As the U.S. 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 in
the government's complaint, whether the proposed Final Judgment is
sufficiently clear, whether its enforcement mechanisms are sufficient,
and whether it may positively harm third parties. See Microsoft, 56
F.3d at 1458-62. With respect to the adequacy of the relief secured by
the proposed Final Judgment, a court may not ``make de novo
determination of facts and issues.'' United States v. W. Elec. Co., 993
F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also
Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F.
Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F.
Supp. 2d 10, 16 (D.D.C. 2000); InBev, 2009 U.S. Dist. LEXIS 84787, at
*3. Instead, ``[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.'' W.
Elec. Co., 993 F.2d at 1577 (quotation marks omitted). ``The court
should bear in mind the flexibility of the public interest inquiry: the
court's function is not to determine whether the resulting array of
rights and liabilities is one that will best serve society, but only to
confirm that the resulting settlement is within the reaches of the
public interest.'' Microsoft, 56 F.3d at 1460 (quotation marks
omitted); see also United States v. Deutsche Telekom AG, No. 19-2232
(TJK), 2020 WL 1873555, at *7 (D.D.C. Apr. 14, 2020). More demanding
requirements would ``have enormous practical consequences for the
government's ability to negotiate future settlements,'' contrary to
congressional intent. Microsoft, 56 F.3d at 1456. ``The Tunney Act was
not intended to create a disincentive to the use of the consent
decree.'' Id.
The United States' predictions about the efficacy of the remedy are
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at
1461 (recognizing courts should give ``due respect to the Justice
Department's . . . view of the nature of its case''); United States v.
Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 2016) (``In
evaluating objections to settlement agreements under the Tunney Act, a
court must be mindful that [t]he government need not prove that the
settlements will perfectly remedy the alleged antitrust harms[;] it
need only provide a factual basis for concluding that the settlements
are reasonably adequate remedies for the alleged harms.'' (internal
citations omitted)); United States v. Republic Servs., Inc., 723 F.
Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review to
which the government's proposed remedy is accorded''); United States v.
Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A
district court must accord due respect to the government's prediction
as to the effect of proposed remedies, its perception of the market
structure, and its view of the nature of the case.''). The ultimate
question is whether ``the remedies [obtained by the Final Judgment are]
so inconsonant with the allegations charged as to fall outside of the
`reaches of the public interest.' '' Microsoft, 56 F.3d at 1461
(quoting W. Elec. Co., 900 F.2d at 309).
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 U.S. Airways,
38 F. Supp. 3d at 75 (noting that the court must simply determine
whether there is a factual foundation for the government's decisions
such that its conclusions regarding the proposed settlements are
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``[T]he
`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.
In its 2004 amendments to the APPA, Congress made clear its intent
to preserve the practical benefits of using judgments proposed by the
United States in antitrust enforcement, Pub. L. 108-237 Sec. 221, and
added 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); see also U.S. Airways, 38 F. Supp. 3d at 76
(indicating that a court is not required to hold an evidentiary hearing
or to permit intervenors as part of its review under the Tunney Act).
This language explicitly wrote into the statute what Congress intended
when it first 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 Sen.
Tunney). ``A court can make its public interest determination based on
the competitive impact statement and response to public comments
alone.'' U.S. Airways, 38 F. Supp. 3d at 76 (citing Enova Corp., 107 F.
Supp. 2d at 17).
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: October19, 2021
Respectfully submitted,
For Plaintiff United States of America:
-----------------------------------------------------------------------
Daniel J. Monahan, Jr.,
Defense, Industrials, and Aerospace Section, Antitrust Division,
U.S. Department of Justice, 450 Fifth Street NW, Suite 8700,
Washington, DC 20530, Telephone: (202) 598-8774,
<a href="/cdn-cgi/l/email-protection#5317323d3a363f7d1e3c3d323b323d132620373c397d343c25"><span class="__cf_email__" data-cfemail="feba9f90979b92d0b391909f969f90be8b8d9a9194d0999188">[email protected]</span></a>.
APPENDIX A
1. General Shale's Mooresville, IN manufacturing facility at 148
Sycamore Lane, Mooresville, IN 46158;
2. General Shale's Edwards Mine, at West Merriman Road, Mooresville,
IN;
3. Meridian's Gleason, TN manufacturing facility at 4970 Old State
Highway 22, Gleason, TN 38229;
4. Meridian's Rich Mine at 179 Cypress Lane, Gleason TN;
5. Meridian's Collins Mine at 1300 Finch Road, Gleason, TN;
6. Meridian's Lease agreement for the Wingo Mine, Humphrey Road,
Hickman, KY;
7. Meridian's Bessemer, AL manufacturing facility at 8250 Hopewell
Road SE, Bessemer, AL 35022;
8. Meridian's Vulcan Mine at Vulcan Road SE, Bessemer, AL 35022; and
9. Meridian's Centreville Mine, Parcel 1 and Parcel 2 Highway 5,
Brent, AL 35034.
APPENDIX B
1. General Shale's Mooresville, IN distribution yard located at 148
Sycamore Lane, Mooresville, IN 46158;
[[Page 58940]]
2. General Shale's Evansville, IN distribution yard located at 3401
Mt Vernon Ave, Evansville, IN 47712;
3. General Shale's Sterling Heights, MI distribution yard located at
42374 Mound Rd, Sterling Heights, MI 48314;
4. General Shale's Whitmore Lake, MI distribution yard located at
6556 Whitmore Lake Rd, Whitmore Lake, MI 48189;
5. Meridian's Bessemer AL distribution yard located at 8250 Hopewell
Road SE, Bessemer, AL 35022;
6. Meridian's Clarksville, TN distribution yard located at 181
Terminal Road, Clarksville, TN 37040
7. Meridian's Florence, AL distribution yard located at 3309 Hough
Road, Florence, AL 35630;
8. Meridian's Huntsville, AL distribution yard located at 154
Slaughter Rd, Madison, AL 35758;
9. Meridian's Knoxville, TN distribution yard located at 641
Corporate Point Way, Knoxville, TN 37932
10. Meridian's Memphis, TN distribution yard located at 9525 Macon
Road, Cordova, TN 38016;
11. Meridian's Nashville, TN distribution yard located at 7140
Centennial Place, Nashville, TN 37209;
12. Meridian's Nashville, TN leased property located at 7230
Centennial Place, Nashville, TN 37209;
13. Meridian's Pelham Store located at Pelham Town Center, 381
Huntley Pkwy, Pelham, AL 35124; and
14. Meridian's Tupelo, MS distribution yard located at 1735
McCullough Blvd., Tupelo, MS 38801.
APPENDIX C: List of Retained Assets
1. With respect to the Centennial (Nashville), Tennessee
Distribution Yard only, all equipment used in or related to
Meridian's ``tint center'' operations for its stucco business;
2. With respect to the Whitmore Lake (Detroit), Michigan
Distribution Yard, one trailer with a purchase order dated February
11, 2021; and
3. With respect to the Mooresville Plant, the non-essential real
property, being approximately 78+/- acres, Parcel 55-05-12-400-
003.000-005, Morgan County, Indiana.
[FR Doc. 2021-23205 Filed 10-22-21; 8:45 am]
BILLING CODE 4410-11-P
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