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Notice2021-27959

United States v. B.S.A. S.A., LAG Holding, Inc., and The Kraft Heinz Company; Complaint, Proposed Final Judgment, and Competitive Impact Statement

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Published

December 27, 2021

Issuing agencies

Justice DepartmentAntitrust Division

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[Federal Register Volume 86, Number 245 (Monday, December 27, 2021)]
[Notices]
[Pages 73319-73342]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-27959]

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DEPARTMENT OF JUSTICE

Antitrust Division

United States v. B.S.A. S.A., LAG Holding, Inc., and The Kraft
Heinz Company; Complaint, 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 Complaint, a proposed Final
Judgment, an Asset Preservation and Hold Separate Stipulation and
Order, and a Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America v. B.S.A. S.A., LAG Holding, Inc., and The

[[Page 73320]]

Kraft Heinz Company, Civil Action No. 1:21-cv-02976-RBW. On November
10, 2021, the United States filed a Complaint alleging that B.S.A.
S.A.'s proposed acquisition of The Kraft Heinz Company's natural cheese
business 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 B.S.A. S.A. to divest The Kraft Heinz Company's Athenos
business--including the worldwide rights to the Athenos brand, under
which The Kraft Heinz Company sells feta cheese and other products--to
Emmi Roth USA, Inc. or an alternative acquirer approved by the United
States. The proposed Final Judgment also requires B.S.A. S.A. to divest
The Kraft Heinz Company's Polly-O business--including the worldwide
rights to the Polly-O brand, under which The Kraft Heinz Company sells
ricotta and other cheeses--to BelGioioso Cheese Inc. or an alternative
acquirer approved by the United States.
Copies of the Complaint, proposed Final Judgment, Asset
Preservation and Hold Separate Stipulation and Order, and Competitive
Impact Statement are available for inspection on the Antitrust
Division's website at <a href="https://www.justice.gov/atr/case/us-v-lactalis-et-al">https://www.justice.gov/atr/case/us-v-lactalis-et-al</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 Eric D. Welsh, Chief, Healthcare and Consumer Products
Section, Antitrust Division, Department of Justice, 450 Fifth Street
NW, Suite 4100, Washington, DC 20530 (email address:
<a href="/cdn-cgi/l/email-protection#dd98afb4bef38ab8b1aeb59da8aeb9b2b7f3bab2ab"><span class="__cf_email__" data-cfemail="eca99e858fc2bb89809f84ac999f888386c28b839a">[email&#160;protected]</span></a>).

Suzanne Morris,
Chief, Premerger and Division Statistics, Antitrust Division.

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 4100, Washington, DC
20530, Plaintiff, v. B.S.A. S.A., 33 Avenue du Maine, Paris, France
75015, LAG Holding, Inc., 2376 South Park Avenue, Buffalo, NY 14220,
and The Kraft Heinz Company, One PPG Plaza, Pittsburgh, PA 15222,
Defendants.

Civil Action No.:

Complaint

The United States of America brings this civil antitrust action to
enjoin B.S.A. S.A. and its subsidiary, LAG Holding, Inc. (together
``Lactalis''), from acquiring the natural cheese business of The Kraft
Heinz Company (``Kraft Heinz'') in the United States. This combination
would bring together the two largest suppliers of feta cheese in the
United States and the two largest suppliers of ricotta cheese in the
metropolitan and surrounding area of New York, New York, and in four
metropolitan and surrounding areas in Florida. As a result, the
proposed combination of Lactalis and Kraft Heinz would likely lead to
higher prices, lower quality, and reduced choice for retail consumers
of these cheeses, at a time when many Americans are struggling to meet
rising food prices. The transaction should be enjoined to prevent
American consumers from suffering these likely anticompetitive harms.
The United States alleges as follows:

I. Nature of the Action

1. Grocery and supermarket purchases account for a significant
portion of the household budget for American families, and Americans'
food bills are rising. According to the USDA's Economic Research
Service, grocery prices have increased in 2021, and are expected to
further increase in 2022, putting more pressure on American consumers
who are struggling to make ends meet. Competition plays an important
role in keeping down the prices for grocery items, such as cheese, that
Americans purchase and use every day.
2. B.S.A. S.A. is one of the world's largest dairy companies,
manufacturing and selling cheese in the United States through its
subsidiaries, LAG Holding, Inc. and Lactalis American Group, Inc. In
the United States, Lactalis sells natural cheeses primarily under the
Galbani and Pr[eacute]sident brand names. Kraft Heinz is one of the
largest food products and beverage companies in the world. Kraft Heinz
is also the largest supplier of natural cheeses to grocery stores and
other retail outlets in the United States, selling natural cheeses
primarily under the Kraft, Cracker Barrel, Athenos, and Polly-O brand
names.
3. On September 15, 2020, B.S.A. S.A. agreed to pay approximately
$3.2 billion to acquire Kraft Heinz's (1) natural cheese business in
the United States, which includes feta, ricotta, and many other types
of cheeses, but excludes processed cheese and cream cheese, (2) grated
cheese business in Canada, and (3) entire cheese business outside North
America (the ``proposed transaction'').
4. The proposed transaction would combine the two largest suppliers
of feta cheese sold to retailers in the United States, and the two
largest suppliers of ricotta cheese sold to retailers in five
metropolitan and surrounding areas located in New York and Florida. If
allowed to proceed, the merged firm's brands would control
approximately 65% of all retail feta sales (brands and private label)
nationwide, with its next closest branded competitor controlling
approximately 6% of retail feta sales. For ricotta, the merged firm's
brands would control approximately 70% of all retail sales (brands and
private label) in the metropolitan and surrounding area of New York,
New York, with its next closest branded competitor controlling
approximately 7% of retail ricotta sales in that market. And in each of
the four metropolitan and surrounding areas in Florida identified
below, the merged firm's brands would control over 65% of all retail
ricotta sales (brands and private label), with its next closest branded
competitor in each of the markets controlling no more than 2% of retail
ricotta sales.
5. Defendants are particularly close competitors for the sale of
feta (through Lactalis's Pr[eacute]sident brand and Kraft Heinz's
Athenos brand) and ricotta (through Lactalis's Galbani brand and Kraft
Heinz's Polly-O brand) to retailers. These strong brands allow Lactalis
and Kraft Heinz to compete aggressively with each other in the sale of
feta and ricotta cheese in the relevant markets, which has resulted in
lower prices and innovative products, such as Lactalis's double cream
ricotta cheese and Kraft Heinz's flip top container for Athenos
crumbled feta cheese, that benefit consumers.
6. The proposed transaction would eliminate this competition,
likely leading to higher prices, reduced innovation, and fewer choices
for these products for retailers in the relevant markets. For these
reasons, the proposed transaction is likely to substantially lessen
competition in the sale of feta and ricotta cheeses in the relevant
markets, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
The Court should, therefore, enjoin the proposed transaction.

II. Jurisdiction and Venue

7. The United States brings this action pursuant to Section 15 of
the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain
Defendants from violating Section 7 of the Clayton Act, as amended, 15
U.S.C. 18.

[[Page 73321]]

8. Defendants sell cheeses, including feta and ricotta, in the flow
of interstate commerce, and their sale of these products substantially
affects interstate commerce, including in this judicial district. This
Court therefore 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.
9. Defendants have each consented to personal jurisdiction and
venue in this judicial district for purposes of this action. Venue is
therefore proper in this district under 28 U.S.C. 1391(b) and (c).

III. The Defendants

10. B.S.A. S.A. is a French company operating under the name
Lactalis Group. B.S.A. S.A. is a corporation organized and existing
under the laws of France, with its headquarters in Laval, France. It is
one of the largest dairy companies in the world.
11. LAG Holding, Inc. is a subsidiary of B.S.A. S.A. It is a
Delaware corporation with its headquarters in Buffalo, New York. LAG
Holding, Inc. and its subsidiary, Lactalis American Group, Inc.,
generated natural cheese sales of approximately $429 million at retail
outlets in the United States in 2020.
12. Kraft Heinz is a Delaware corporation co-headquartered in
Pittsburgh, Pennsylvania, and Chicago, Illinois. Kraft Heinz is one of
the largest food products and beverage companies in the world. Retail
sales of its natural cheeses in the United States amounted to over $2.2
billion in 2020.

IV. Relevant Markets

13. A typical starting point for merger analysis is defining a
relevant market, which has both a product and a geographic dimension.
Courts define relevant markets to help determine the areas of
competition most likely to be affected by a merger. As described below,
both feta cheese sold to retailers across the United States and ricotta
cheese sold to retailers in the metropolitan and surrounding area of
New York, New York (the ``New York Metro Market'') and in four
metropolitan and surrounding areas in Florida--Miami/Ft. Lauderdale,
Tampa/St. Petersburg, Orlando, and Jacksonville (collectively, the
``Florida Metro Markets'')--are relevant markets.

A. Relevant Product Markets

14. Cheeses are sold to retailers as branded cheeses or private
label cheeses. A branded cheese bears a brand name controlled by the
cheese supplier (e.g., Kraft Heinz's Athenos and Polly-O brands and
Lactalis's Pr[eacute]sident and Galbani brands). A branded cheese is
usually carried by multiple retailers. A private label cheese is
usually sold under a name owned by the retailer (e.g., Wal-Mart's Great
Value private label), and is typically offered only in that retailer's
stores.
15. Grocery stores and other food retailers act as proxies for
individual consumers and seek to offer the variety of products demanded
by their customers. As a result, retailers strive to carry products and
brands that their customers value, and may vary their offerings to meet
local customer demand. For example, Polly-O was founded over 100 years
ago in the New York City area, where it became quite popular. As
residents of the New York City area visited or moved to Florida, they
took their Polly-O brand loyalty with them. Thus, Polly-O ricotta
cheese has greater competitive significance in grocery stores and other
retailers in the New York Metro Market and the Florida Metro Markets
than in other areas of the country.
1. Ricotta Cheese Sold to Retailers Is a Relevant Product Market
16. Ricotta is a soft cheese that originated in Italy. It is
primarily used as an ingredient in food dishes.
17. There are no reasonable substitutes for ricotta cheese for most
consumers. A hypothetical monopolist supplier of ricotta cheese to
retailers likely would find it profitable to increase its prices by at
least a small but significant non-transitory amount. Consumers are
unlikely to sufficiently reduce their purchases of ricotta cheese or
shift to a different cheese or other products to render such a price
increase unprofitable. As a result, retailers, buying on behalf of the
consumer, are also unlikely to sufficiently reduce purchases of ricotta
cheese to render such a price increase unprofitable. Accordingly,
ricotta cheese sold to retailers is a relevant product market and line
of commerce within the meaning of Section 7 of the Clayton Act.
18. Defining a market for ricotta cheese that is sold to retailers
is consistent with industry recognition and practice. Suppliers of
ricotta cheese to retailers typically (1) monitor the retail prices of
competing ricotta cheeses and set their prices and promotional spending
accordingly, (2) do not set the price they charge for ricotta cheese
based on the prices of other cheeses or other consumer products, (3)
track their sales to retailers separately from their sales to other
distribution channels (i.e., foodservice and the ingredients or
industrial channels), (4) have sales employees dedicated to serving
retailers, and (5) sell ricotta cheese to retailers in packaging and
package sizes that are different than that used for ricotta sold
through other distribution channels. These factors further support that
ricotta cheese sold to retailers is a relevant product market and line
of commerce within the meaning of Section 7 of the Clayton Act.
2. Feta Cheese Sold to Retailers Is a Relevant Product Market
19. Feta cheese originated in Greece. It is primarily used as an
ingredient in food dishes.
20. There are no reasonable substitutes for feta cheese for most
consumers. A hypothetical monopolist supplier of feta cheese to
retailers likely would find it profitable to increase its prices by at
least a small but significant non-transitory amount. Consumers are
unlikely to sufficiently reduce their purchases of feta cheese or shift
to a different cheese or other products to render such a price increase
unprofitable. As a result, retailers, buying on behalf of the consumer,
are also unlikely to sufficiently reduce purchases of feta cheese to
render such a price increase unprofitable. Accordingly, feta cheese
sold to retailers is a relevant product market and line of commerce
within the meaning of Section 7 of the Clayton Act.
21. Defining a market for feta cheese that is sold to retailers is
consistent with industry recognition and practice. Suppliers of feta
cheese to retailers typically (1) monitor the retail prices of
competing feta cheeses and set their prices and promotional spending
accordingly, (2) do not set the price they charge for feta based on the
prices of other cheeses or other consumer products, (3) track their
sales to retailers separately from their sales to other distribution
channels, (4) have sales employees dedicated to serving retailers, and
(5) sell feta cheese to retailers in packaging and package sizes that
are different than that used for feta sold through other distribution
channels. These factors further support that feta cheese sold to
retailers is a relevant product market and line of commerce within the
meaning of Section 7 of the Clayton Act.

B. Relevant Geographic Markets

22. The relevant geographic markets for analyzing the effects of
the proposed transaction on competition for feta and ricotta cheeses
sold to retailers are best defined by reference to the locations of the
retailers that purchase feta and ricotta cheeses in order to then sell
those products to consumers.

[[Page 73322]]

23. This approach to defining the relevant geographic markets is
appropriate because suppliers of feta and ricotta cheeses to retailers
assess the competitive conditions in particular localities, including
local demand for feta and ricotta cheeses, as well as local demand for
the suppliers' own brands as compared to competing brands or to private
label offerings. As a result, suppliers of feta and ricotta cheeses can
charge different prices, or offer different levels of promotional
funding, to retailers in different locations based on local competitive
conditions. If targeted for a price increase or reduction in
promotional funding, retailers in a given locality would be unlikely to
be able to render such conduct unprofitable by purchasing feta or
ricotta cheeses outside of the relevant geography and transporting it
to their retail location.
24. Where ricotta and feta cheese suppliers can successfully vary
prices and promotional funding based on retailer customer location, the
goal of geographic market definition is to identify the area
encompassing the location of potentially targeted customers. The
relevant geographic markets identified below encompass the locations of
retailers that would likely be targeted by suppliers for price
increases as a result of the proposed transaction.
1. The Relevant Geographic Markets for Ricotta Cheese Sold to Retailers
Are the New York Metro Market and the Florida Metro Markets
25. The relevant geographic markets for the sale of ricotta cheese
to retailers that will be harmed by the proposed transaction are the
New York Metro Market and the Florida Metro Markets. In each of these
markets, Defendants compete vigorously with each other for sales of
ricotta cheese to retailers that resell those products to consumers.
Defendants' Polly-O and Galbani ricotta brands combined would account
for approximately 70% of all ricotta cheese sales by retailers in the
New York Metro Market and over 65% of all ricotta cheese sales by
retailers in each of the Florida Metro Markets.
26. A hypothetical monopolist supplier of ricotta cheese to
retailers in the New York Metro Market and in each of the Florida Metro
Markets likely would increase its price by at least a small but
significant and non-transitory amount. Therefore, the New York Metro
Market and each of the Florida Metro Markets are relevant geographic
markets and sections of the country within the meaning of Section 7 of
the Clayton Act.
2. The Relevant Geographic Markets for Feta Cheese Sold to Retailers
Are Individual Metropolitan and Surrounding Areas, but Can Be Analyzed
on a National Basis for Convenience
27. The relevant geographic markets for the sale of feta cheese to
retailers may be defined as narrowly as individual metropolitan and
surrounding areas. A hypothetical monopolist supplier of feta cheese to
retailers in any given metropolitan and surrounding area in the United
States likely would find it profitable to increase its prices by at
least a small but significant and non-transitory amount. Therefore,
each metropolitan and surrounding area in the United States is a
relevant geographic market and section of the country within the
meaning of Section 7 of the Clayton Act.
28. In circumstances where competitive conditions are similar, it
is appropriate to aggregate local markets into a larger relevant market
for analytical convenience. The competitive conditions across the
country are similar for the sale of feta cheese to retailers who
purchase the cheese for resale to consumers. Kraft Heinz's Athenos feta
and Lactalis's Pr[eacute]sident feta are the two top-selling feta
cheese brands in the United States, and combined, the two brands would
account for approximately 65% of all feta cheese sales by retailers
nationally. While some regional brands of feta cheese exist, none place
a significant competitive constraint on Defendants in any particular
metropolitan and surrounding area. Therefore, it is appropriate to
analyze competition for the sale of feta cheese to retailers on a
national basis.

V. The Proposed Transaction Is Likely to Substantially Lessen
Competition for the Sale of Ricotta and Feta Cheeses to Retailers

29. The proposed transaction would combine the two largest
suppliers of ricotta cheese to retailers in the New York Metro Market
and in each of the Florida Metro Markets, and the two largest suppliers
of feta cheese to retailers nationally, resulting in a substantial
increase in concentration in these markets.
30. The Supreme Court has held that mergers that significantly
increase concentration in already concentrated markets are
presumptively anticompetitive and therefore presumptively unlawful. To
measure market concentration, courts often use the Herfindahl-Hirschman
Index (``HHI'') as described in the U.S. Department of Justice and
Federal Trade Commission Horizontal Merger Guidelines. HHIs range from
0 in markets with no concentration to 10,000 in markets where one firm
has a 100% market share. According to the Horizontal Merger Guidelines,
mergers that increase the HHI by more than 200 and result in an HHI
above 2,500 in any relevant market or line of commerce are presumed to
be anticompetitive and, therefore, unlawful.
31. The proposed transaction would eliminate substantial head-to-
head competition between Defendants in both ricotta and feta cheese
sales to retailers, leading to higher prices, lower quality, and less
innovation for these products in the relevant markets.
32. The significant increase in market concentration that the
proposed transaction would produce in the relevant markets, combined
with the loss of head-to-head competition between Defendants, is likely
to substantially lessen competition in violation of Section 7 of the
Clayton Act.

A. The Proposed Transaction Is Presumptively Unlawful and Is Likely to
Substantially Lessen Head-to-Head Competition for the Sale of Ricotta
Cheese to Retailers

33. In the New York Metro Market, Defendants are the two largest
suppliers of ricotta cheese to retailers, and their Polly-O and Galbani
ricotta cheese brands combined would account for approximately 70% of
all ricotta cheese sales by retailers in that market. In the New York
Metro Market, the proposed transaction would increase the HHI by more
than 2,400 points, resulting in a highly concentrated market with a
post-acquisition HHI of more than 5,000 points. Thus, the proposed
transaction is presumptively unlawful in the New York Metro Market.
34. In each of the Florida Metro Markets, Defendants are also the
two largest suppliers of ricotta cheese to retailers, and their Polly-O
and Galbani ricotta cheese brands combined would account for over 65%
of all ricotta cheese sales by retailers. In each of the Florida Metro
Markets, the proposed transaction would increase the HHI by more than
1,500 points, resulting in highly concentrated markets, each with a
post-acquisition HHI of more than 4,400 points. Thus, the proposed
transaction is presumptively unlawful in each of the Florida Metro
Markets.
35. Defendants are particularly close competitors for ricotta
cheese sold to retailers in the New York Metro Market and the Florida
Metro Markets. They compete aggressively with each other on

[[Page 73323]]

pricing and promotions for ricotta cheese and in offering new and
innovative products and features, such as double cream ricotta and
packaging design.
36. The president of the Lactalis American Group Retail Division
recognized this fact in February 2019, noting that, ``through
aggressive pricing we managed to grow the Galbani share at the expense
of [Kraft Heinz's] Poly-O [sic] from 2015 to 2018'' in the ricotta
cheese category. Additionally, in January 2020, a Lactalis senior sales
manager learned of an Easter price promotion on ricotta cheese that
Polly-O was offering in the Northeast. Lactalis responded by improving
its own Easter price promotion on ricotta cheese.

B. The Proposed Transaction Is Presumptively Unlawful and Is Likely to
Substantially Lessen Head-to-Head Competition for the Sale of Feta
Cheese to Retailers

37. Defendants are the two largest suppliers of feta cheese to
retailers in the United States, and their Athenos and Pr[eacute]sident
feta cheese brands combined would account for approximately 65% of all
feta cheese sales by retailers nationally. In a national market for
feta cheese sold by retailers, the proposed transaction would increase
the HHI by more than 2,100 points, resulting in a highly concentrated
market with a post-acquisition HHI of more than 4,300 points. Thus, the
proposed transaction is presumptively unlawful.
38. Defendants are particularly close competitors for feta cheese
sold to retailers in metropolitan and surrounding areas throughout the
United States. Kraft Heinz's Athenos brand and Lactalis's
Pr[eacute]sident brand are the two top-selling retail brands of feta
cheese sold in the United States. A Lactalis executive referred to them
as the ``two national leaders'' in feta cheese. They compete vigorously
on prices, promotions, flavor, texture, variety (e.g., fat free,
traditional), and quality.
39. For example, in November 2020, a national sales manager at
Kraft Heinz lamented that Kraft Heinz was ``in a really bad position''
at a supermarket chain because it ``lost the feta business in March
when [we] were undercut by Lactalis.'' Similarly, a Lactalis marketing
plan for feta cheese identified an objective of ``steal[ing] market
share from [Kraft Heinz's] Athenos'' in 2021.

VI. Absence of Countervailing Factors

40. New entry and expansion by competitors are unlikely to be
timely and sufficient enough to offset the proposed transaction's
likely anticompetitive effects. Barriers to entering these markets are
high and include the substantial time and expense required to build a
brand's reputation and overcome existing consumer preferences through
promotional and advertising activity as well as the substantial sunk
costs needed to secure the distribution and placement of a new
entrant's products in retail outlets (e.g., paying slotting fees to
obtain shelf space at supermarkets and other food retailers).
41. The proposed transaction is unlikely to generate verifiable,
merger-specific efficiencies sufficient to reverse or outweigh the
anticompetitive effects that are likely to occur as a result of the
proposed transaction.

VII. Violations Alleged

42. The United States hereby incorporates the allegations of
paragraphs 1 through 41 above as if set forth fully herein.
43. The proposed transaction is likely to substantially lessen
competition in interstate trade and commerce, in violation of Section 7
of the Clayton Act, 15 U.S.C. 18.
44. Unless enjoined, the proposed transaction would likely have the
following anticompetitive effects, among others:
a. Substantially lessening head-to-head competition between
Defendants for the sale of feta cheese to retailers in the United
States and ricotta cheese to retailers in the New York Metro Market and
in each of the Florida Metro Markets;
b. substantially lessening competition generally in the market for
feta cheese sold to retailers in the United States and ricotta cheese
sold to retailers in the New York Metro Market and in each of the
Florida Metro Markets;
c. causing prices to be higher than they would be otherwise for
feta cheese sold to retailers in the United States and ricotta cheese
sold to retailers in the New York Metro Market and in each of the
Florida Metro Markets; and
d. reducing choice and innovation for feta cheese sold to retailers
in the United States and ricotta cheese sold to retailers in the New
York Metro Market and in each of the Florida Metro Markets.

VIII. Request for Relief

45. The United States requests that the Court:
a. Adjudge and decree the proposed transaction to be unlawful and
in violation of Section 7 of the Clayton Act, 15 U.S.C. 18;
b. permanently enjoin and restrain Defendants and all persons
acting on their behalf from carrying out the proposed transaction, or
from entering into or carrying out any other contract, agreement, plan,
or understanding, the effect of which would be to combine Defendants in
the relevant markets alleged above;
c. award the United States its costs for this action; and
d. award the United States such other relief as the Court deems
just and proper.

Dated: November 10, 2021

Respectfully submitted,

For Plaintiff United States of America
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Richard A. Powers
Acting Assistant Attorney General, Antitrust Division.
-----------------------------------------------------------------------
Kathleen S. O'Neill
Senior Director of Investigations and Litigation, Antitrust
Division.
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Eric D. Welsh (DC Bar #998612)
Chief, Healthcare and Consumer Products Section, Antitrust Division.
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Andrew J. Robinson (DC Bar #1008003)
Assistant Chief, Healthcare and Consumer Products Section, Antitrust
Division.
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Justin M. Dempsey* (DC Bar #425976)
Giancarlo R. Ambrogio (DC Bar #1736460)
Chris Hong
Garrett M. Liskey (DC Bar #1000937)
Natalie R. Melada
Attorneys for the United States, United States Department of
Justice, Antitrust Division, Healthcare and Consumer Products
Section, 450 Fifth Street NW, Suite 4100, Washington, DC 20530,
Telephone: (202) 307-5815, Facsimile: (202) 307-5802, Email:
<a href="/cdn-cgi/l/email-protection#0d47787e796463234968607d7e68744d787e696267236a627b"><span class="__cf_email__" data-cfemail="206a555354494e0e64454d50534559605553444f4a0e474f56">[email&#160;protected]</span></a>.

*LEAD ATTORNEY TO BE NOTICED

United States District Court for the District of Columbia

United States of America, Plaintiff, v.B.S.A. S.A., LAG Holding,
Inc., and The Kraft Heinz Company, Defendants.

Proposed Final Judgment

Whereas, Plaintiff, United States of America, filed its Complaint
on November 10, 2021;
And whereas, the United States and Defendants, B.S.A. S.A., LAG
Holding, Inc., and The Kraft Heinz Company, 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 certain divestitures to
remedy the loss of competition alleged in the Complaint;

[[Page 73324]]

And whereas, Defendants represent that the divestitures 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. ``Acquirer'' or ``Acquirers'' means the entity or entities
approved by the United States in its sole discretion to which
Defendants divest any of the Divestiture Assets.
B. ``Acquirer of the Athenos Divestiture Assets'' means Emmi Roth
or another entity approved by the United States in its sole discretion
to which Defendants divest the Athenos Divestiture Assets.
C. ``Acquirer of the Polly-O Divestiture Assets'' means BelGioioso
or another entity approved by the United States in its sole discretion
to which Defendants divest the Polly-O Divestiture Assets.
D. ``Athenos Brand Name'' means Athenos and any other name that
uses, incorporates, or references the Athenos name.
E. ``Athenos Divestiture Assets'' means all of Defendants' rights,
titles, and interests in and to all property and assets, tangible and
intangible, wherever located, relating to or used in connection with
the Athenos Divestiture Business, including:
1. The Athenos Brand Name, including (a) the right to the exclusive
use of the Athenos Brand Name in all sales channels (including the
retail, foodservice, and ingredients or industrial channels), and (b)
all other intellectual property owned, licensed, or sublicensed, either
as licensor or licensee, including (i) patents, patent applications,
and inventions and discoveries that may be patentable, (ii) registered
and unregistered copyrights and copyright applications, and (iii)
registered and unregistered trademarks, trade dress, service marks,
trade names, and trademark applications;
2. all contracts, contractual rights, and customer relationships,
and all other agreements, commitments, and understandings, including
agreements with suppliers, manufacturers, co-packers, and retailers,
teaming agreements, leases, and all outstanding offers or solicitations
to enter into a similar arrangement;
3. all licenses, permits, certifications, approvals, consents,
registrations, waivers, and authorizations, including those issued or
granted by any governmental organization, and all pending applications
or renewals;
4. all records and data, including (a) customer 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, 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; and
5. all other intangible property, including (a) commercial names
and d/b/a names, (b) technical information, including recipes and
formulas, (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.E.1-5
above do not include the Athenos Transitional Manufacturing Assets or
the Athenos Transitional Services Contracts.
F. ``Athenos Divestiture Business'' means the worldwide business of
the sale of Athenos Products by Kraft Heinz.
G. ``Athenos Personnel'' means all full-time, part-time, or
contract employees of Kraft Heinz, wherever located, whose job
responsibilities relate in any way to the Athenos Divestiture Assets,
at any time between September 15, 2020, and the date on which the
Athenos Divestiture Assets are divested. The United States, in its sole
discretion, will resolve any disagreement relating to which employees
are Athenos Personnel.
H. ``Athenos Products'' means any product that Kraft Heinz sold,
sells, or has plans to sell under the Athenos Brand Name anywhere in
the world.
I. ``Athenos Transitional Manufacturing Assets'' means:
1. Production lines numbers 25 and 26, which are used by the
Athenos Divestiture Business for crumbling and packaging feta and are
located at Kraft Heinz's facility at 1007 Townline Road, Wausau,
Wisconsin 54403;
2. the feta packaging mold used to produce plastic feta lids and
containers, which was purchased by Kraft Heinz in 2021 and is located
at the facilities of RPC Bramlage-WIKO USA, Inc. in Morgantown,
Pennsylvania; and
3. the contracts and agreements between Kraft Heinz and each of the
following: (a) Agropur, dated January 13, 2021; (b) J. Rettenmaier USA
LP, dated January 1, 2021; (c) International Paper Company, dated
January 1, 2016, and last amended December 31, 2020; (d) Berry Global,
Inc., dated April 1, 2014, supplemented September 22, 2014, and last
amended August 1, 2019; (e) Weber Packaging Solutions, Inc., dated
January 1, 2020; and (f) Bramlage, Inc. d/b/a RPC Bramlage Morgantown
(the ``RPC Agreement''), dated October 23, 2017.
J. ``Athenos Transitional Services Contracts'' means the contracts
and agreements between Kraft Heinz and each of the following: (a)
Prairie Farms, dated November 3, 2020; (b) Great Lakes Cheese Company,
Inc., dated January 1, 2021, and supplemented and amended on January 1,
2021; (c) Marathon Cheese Corporation, dated April 10, 2021, and
supplemented on April 10, 2021; (d) Cedar's Mediterranean Foods, Inc.,
dated November 1, 2020, and supplemented on February 1, 2021; and (e)
Saputo Cheese USA, Inc., dated November 1, 2020.
K. ``BelGioioso'' means BelGioioso Cheese, Inc., a Wisconsin
corporation with its headquarters in Green Bay, Wisconsin, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships, and joint ventures, and their directors,
officers, managers, agents, and employees.
L. ``Divestiture Assets'' means the Athenos Divestiture Assets and
the Polly-O Divestiture Assets.
M. ``Emmi Roth'' means Emmi Roth USA, Inc., a Wisconsin corporation
with its headquarters in Fitchburg, Wisconsin, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships, and joint ventures, and their directors, officers,
managers, agents, and employees.
N. ``Including'' means including, but not limited to.
O. ``Kraft Heinz'' means Defendant The Kraft Heinz Company, a
Delaware corporation with its co-headquarters in Pittsburgh,
Pennsylvania and Chicago, Illinois, its successors and assigns, and its
subsidiaries, divisions, groups, affiliates, partnerships, and joint

[[Page 73325]]

ventures, and their directors, officers, managers, agents, and
employees.
P. ``Lactalis'' means Defendant B.S.A. S.A., a French corporation
with its headquarters in Laval, France, its successors and assigns, and
its subsidiaries, divisions, groups, affiliates, partnerships, and
joint ventures, and their directors, officers, managers, agents, and
employees.
Q. ``LAG Holding'' means Defendant LAG Holding, Inc., a wholly-
owned subsidiary of Lactalis and a Delaware corporation with its
headquarters in Buffalo, New York, its successors and assigns, and its
subsidiaries, including Lactalis American Group, Inc., divisions,
groups, affiliates, partnerships, and joint ventures, and their
directors, officers, managers, agents, and employees.
R. ``Polly-O Brand Name'' means Polly-O and any other name that
uses, incorporates, or references the Polly-O name.
S. ``Polly-O Divestiture Assets'' means all of Defendants' rights,
titles, and interests in and to all property and assets, tangible and
intangible, wherever located, relating to or used in connection with
the Polly-O Divestiture Business, including:
1. The Polly-O Brand Name, including (a) the right to the exclusive
use of the Polly-O Brand Name in all sales channels (including the
retail, foodservice, and ingredients or industrial channels), and (b)
all other intellectual property owned, licensed, or sublicensed, either
as licensor or licensee, including (i) patents, patent applications,
and inventions and discoveries that may be patentable, (ii) registered
and unregistered copyrights and copyright applications, and (iii)
registered and unregistered trademarks, trade dress, service marks,
trade names, and trademark applications;
2. the Shared Recipes License;
3. all contracts, contractual rights, and customer relationships,
and all other agreements, commitments, and understandings, including
agreements with suppliers, manufacturers, co-packers, and retailers,
teaming agreements, leases, and all outstanding offers or solicitations
to enter into a similar arrangement;
4. all licenses, permits, certifications, approvals, consents,
registrations, waivers, and authorizations, including those issued or
granted by any governmental organization, and all pending applications
or renewals;
5. all records and data, including (a) customer 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, 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; and
6. 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.S.1-6
above do not include any ownership of the intellectual property
licensed through the Shared Recipes License or the Polly-O Excluded
Contracts.
T. ``Polly-O Divestiture Business'' means the worldwide business of
the sale of Polly-O Products by Kraft Heinz.
U. ``Polly-O Excluded Contracts'' means the contracts and
agreements between Kraft Heinz and each of the following: (a) Foremost
Farms USA Cooperative, dated October 8, 2020; (b) Marathon Cheese
Corporation, dated April 10, 2021, and supplemented on April 10, 2021;
(c) Saputo Cheese USA Inc., dated November 1, 2020; (d) Amcor Flexibles
North America, Inc. (fka Bemis Company, Inc.), dated January 1, 2015,
entered into initially between H.J. Heinz Supply Chain Europe B.V. and
Bemis Company, Inc., and last amended November 1, 2020; (e)
International Paper Company, dated January 1, 2016, and last amended
December 31, 2020; (f) Berry Global, Inc., dated April 1, 2014,
supplemented September 22, 2014, and last amended August 1, 2019; (g)
Transcontinental US LLC, dated January 1, 2019; and (h) J. Rettenmaier
USA LP, dated January 1, 2021.
V. ``Polly-O Personnel'' means all full-time, part-time, or
contract employees of Kraft Heinz, wherever located, whose job
responsibilities relate in any way to the Polly-O Divestiture Assets,
at any time between September 15, 2020, and the date on which the
Polly-O Divestiture Assets are divested. The United States, in its sole
discretion, will resolve any disagreement relating to which employees
are Polly-O Personnel.
W. ``Polly-O Products'' means any product that Kraft Heinz sold,
sells, or has plans to sell under the Polly-O Brand Name anywhere in
the world.
X. ``Shared Recipes License'' means a perpetual, royalty-free,
paid-up, irrevocable, worldwide, non-exclusive license to the formulas,
recipes and related trade secrets, know-how, confidential business
information and related data that, on or prior to the date of the
signing of the Asset Preservation and Hold Separate Stipulation and
Order by Defendants, were used by Kraft Heinz for the production of
cheese sold under both (i) the Polly-O Brand Name and (ii) any name
other than the Polly-O Brand Name.
Y. ``Transaction'' means the definitive agreement that Lactalis and
Kraft Heinz entered into on September 15, 2020, for the acquisition by
Lactalis of, among other assets, Kraft Heinz's natural, grated,
cultured, and specialty cheese businesses in the United States.

III. Applicability

A. This Final Judgment applies to Lactalis, LAG Holding, and Kraft
Heinz, 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, Section V, and Section
VI of this Final Judgment, Defendants sell or otherwise dispose of all
or substantially all of their assets or of business units that include
any of 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 Acquirers.

IV. Divestiture of the Athenos Divestiture Assets

[[Page 73326]]

C. Unless the United States otherwise consents in writing,
divestiture pursuant to this Final Judgment must include the entire
Athenos Divestiture Assets and must be accomplished in such a way as to
satisfy the United States, in its sole discretion, that the Athenos
Divestiture Assets can and will be used by Acquirer of the Athenos
Divestiture Assets as part of a viable, ongoing business of selling
feta cheese to retailers and that the divestiture to Acquirer of the
Athenos Divestiture Assets will remedy the competitive harm in the
market for selling feta cheese to retailers alleged in the Complaint.
D. The divestiture of the Athenos Divestiture Assets 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 sale
of feta cheese to retailers.
E. The divestiture of the Athenos Divestiture Assets 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 of
the Athenos Divestiture Assets and Defendants gives Defendants the
ability unreasonably to raise costs for Acquirer of the Athenos
Divestiture Assets, to lower the efficiency of Acquirer of the Athenos
Divestiture Assets, or otherwise interfere in the ability of Acquirer
of the Athenos Divestiture Assets to compete effectively in the sale of
feta cheese to retailers.
F. In the event Defendants are attempting to divest the Athenos
Divestiture Assets to an Acquirer other than Emmi Roth, Defendants
promptly must make known, by usual and customary means, the
availability of the Athenos Divestiture Assets. Defendants must inform
any person making an inquiry relating to a possible purchase of the
Athenos Divestiture Assets that the Athenos Divestiture Assets are
being divested in accordance with this Final Judgment and must provide
that person with a copy of this Final Judgment. Defendants must offer
to furnish to all prospective Acquirers of the Athenos Divestiture
Assets, subject to customary confidentiality assurances, all
information and documents relating to the Athenos Divestiture Assets
that are customarily provided in a due diligence process; provided,
however, that Defendants need not provide information or documents
subject to the attorney-client privilege or work-product doctrine.
Defendants 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 must provide prospective Acquirers of the Athenos
Divestiture Assets with (1) access to make inspections of the Athenos
Divestiture Assets; (2) access to all environmental, zoning, and other
permitting documents and information relating to the Athenos
Divestiture Assets; and (3) access to all financial, operational, or
other documents and information relating to the Athenos Divestiture
Assets that would customarily be provided as part of a due diligence
process. Defendants also must disclose all encumbrances on any part of
the Athenos Divestiture Assets, including on intangible property.
H. Defendants must cooperate with and assist Acquirer of the
Athenos Divestiture Assets in identifying and, at the option of
Acquirer of the Athenos Divestiture Assets, in hiring all Athenos
Personnel, including:
1. Within 10 business days following the filing of the Complaint in
this matter, Defendants must identify all Athenos Personnel to Acquirer
of the Athenos Divestiture Assets and the United States, including by
providing organization charts covering all Athenos Personnel.
2. Within 10 business days following receipt of a request by
Acquirer of the Athenos Divestiture Assets or the United States,
Defendants must provide to Acquirer of the Athenos Divestiture Assets
and the United States additional information relating to Athenos
Personnel, including name, job title, reporting relationships, past
experience, responsibilities, training and educational histories,
relevant certifications, and job performance evaluations. Defendants
must also provide to Acquirer of the Athenos Divestiture Assets and the
United States information relating to current and accrued compensation
and benefits of Athenos 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 benefits accrued, or promises made to the Athenos
Personnel. If Defendants are barred by any applicable law from
providing any of this information, Defendants must provide, within 10
business days following receipt of the request, the requested
information to the full extent permitted by law and also must provide a
written explanation of Defendants' inability to provide the remaining
information, including specifically identifying the provisions of the
applicable laws.
3. At the request of Acquirer of the Athenos Divestiture Assets,
Defendants must promptly make Athenos Personnel available for private
interviews with Acquirer of the Athenos Divestiture Assets during
normal business hours at a mutually agreeable location.
4. Defendants must not interfere with any effort by Acquirer of the
Athenos Divestiture Assets to employ any Athenos Personnel.
Interference includes offering to increase the compensation or improve
the benefits of Athenos Personnel unless (a) the offer is part of a
company-wide increase in compensation or improvement in benefits that
was announced prior to September 15, 2020, or (b) the offer is approved
by the United States in its sole discretion. Defendants' obligations
under this Paragraph will expire six months after the date on which the
Athenos Divestiture Assets are divested.
5. For Athenos Personnel who elect employment with Acquirer of the
Athenos Divestiture Assets either (a) before the date on which a
transition services contract entered into pursuant to Paragraph IV.P is
terminated or expires, or (b) within three months after the date on
which such a contract is terminated or expires, Defendants must waive
all non-compete and non-disclosure agreements; vest and pay to the
Athenos Personnel (or to Acquirer of the Athenos Divestiture Assets 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 of the
Athenos Divestiture Assets; vest any unvested pension and other equity
rights; and provide all other benefits that those Athenos Personnel
otherwise would have been provided had the Athenos Personnel continued
employment with Defendants, including any retention bonuses or
payments. Defendants may maintain reasonable restrictions on disclosure
by Athenos Personnel of Defendants' proprietary non-public information
that is unrelated to the Athenos Divestiture Assets and not otherwise
required to be disclosed by this Final Judgment.
6. For a period of 12 months from the date on which the Athenos
Divestiture Assets are divested, Defendants may not solicit to rehire
Athenos Personnel who were hired by Acquirer of the Athenos Divestiture
Assets either (a) before the date on which a transition services
contract entered into pursuant to Paragraph IV.P is terminated or
expires, or (b) within three months after the date on which such a
contract is terminated

[[Page 73327]]

or expires, unless an individual is terminated or laid off by Acquirer
of the Athenos Divestiture Assets or Acquirer of the Athenos
Divestiture Assets agrees in writing that Defendants may solicit to re-
hire that individual. Nothing in this Paragraph prohibits Defendants
from advertising employment openings using general solicitations or
advertisements and re-hiring Athenos Personnel who apply for an
employment opening through a general solicitation or advertisement.
I. Defendants must warrant to Acquirer of the Athenos Divestiture
Assets that (1) the Athenos Divestiture Assets will be operational and
without material defect on the date of their transfer to Acquirer of
the Athenos Divestiture Assets; (2) there are no material defects in
the environmental, zoning, or other permits relating to the operation
of the Athenos Divestiture Assets; and (3) Defendants have disclosed
all encumbrances on any part of the Athenos Divestiture Assets,
including on intangible property. Following the sale of the Athenos
Divestiture Assets, Defendants must not undertake, directly or
indirectly, challenges to the environmental, zoning, or other permits
relating to the operation of the Athenos Divestiture Assets.
J. Defendants must assign, subcontract, or otherwise transfer all
contracts, agreements, and customer relationships (or portions of such
contracts, agreements, and customer relationships) included in the
Athenos Divestiture Assets, including all supply and sales contracts
and co-packing and packaging supplier agreements, to Acquirer of the
Athenos Divestiture Assets; provided, however, that for any contract or
agreement that requires the consent of another party to assign,
subcontract, or otherwise transfer, Defendants must use best efforts to
accomplish the assignment, subcontracting, or transfer. Defendants must
not interfere with any negotiations between Acquirer of the Athenos
Divestiture Assets and a contracting party.
K. Defendants must, at the option of the Acquirer of the Athenos
Divestiture Assets, and subject to the approval by the United States in
its sole discretion, assign, subcontract, or otherwise transfer any of
the Athenos Transitional Services Contracts to Acquirer of the Athenos
Divestiture Assets upon request of the Acquirer of the Athenos
Divestiture Assets either at the time of the divestiture of the Athenos
Divestiture Assets or at any time prior to the expiration or
termination of a transition services contract entered into pursuant to
Paragraph IV.P; provided, however, that for any contract or agreement
that requires the consent of another party to assign, subcontract, or
otherwise transfer, Defendants must use best efforts to accomplish the
assignment, subcontracting, or transfer. Defendants must not interfere
with any negotiations between Acquirer of the Athenos Divestiture
Assets and a contracting party.
L. Defendants must use best efforts to assist Acquirer of the
Athenos Divestiture Assets to obtain all necessary licenses,
registrations, and permits to operate the Athenos Divestiture Business.
Until Acquirer of the Athenos Divestiture Assets obtains the necessary
licenses, registrations, and permits, Defendants must provide Acquirer
of the Athenos Divestiture Assets with the benefit of Defendants'
licenses, registrations, and permits to the full extent permissible by
law.
M. At the option of Acquirer of the Athenos Divestiture Assets, and
subject to approval by the United States in its sole discretion, on or
before the date on which the Athenos Divestiture Assets are divested,
Defendants must enter into a supply contract or contracts for the
processing and packaging of Athenos Products sufficient to meet the
needs of Acquirer of the Athenos Divestiture Assets, as determined by
Acquirer of the Athenos Divestiture Assets, for a period of up to two
years, on terms and conditions reasonably related to market conditions
for the processing and packaging of Athenos Products. Any amendment to
or modification of any provision of any such supply contract 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 supply contract, for a total of up to an additional 12 months. If
Acquirer of the Athenos Divestiture Assets seeks an extension of the
term of any supply contract, Defendants must notify the United States
in writing at least three months prior to the date the supply contract
expires. Acquirer of the Athenos Divestiture Assets may terminate a
supply contract, or any portion of a supply contract, without cost or
penalty at any time upon commercially reasonable written notice. The
employees of Defendants tasked with providing services pursuant to a
supply contract must not share any competitively sensitive information
of Acquirer of the Athenos Divestiture Assets with any other employee
of Defendants.
N. At the option of Acquirer of the Athenos Divestiture Assets, and
subject to approval by the United States in its sole discretion,
Defendants may, for the sole purpose of fulfilling any supply contract
required by Paragraph IV.M of this Final Judgment, retain the Athenos
Transitional Manufacturing Assets until the earlier of (1) 60 calendar
days after Acquirer of the Athenos Divestiture Assets terminates the
supply contract or contracts required by Paragraph IV.M of this Final
Judgment or (2) 60 calendar days following the expiration of any supply
contract or contracts required by Paragraph IV.M of this Final
Judgment, after which Defendants must sell and transfer to Acquirer of
the Athenos Divestiture Assets the Athenos Transitional Manufacturing
Assets on terms and conditions reasonably related to market conditions
for such manufacturing assets.
O. Defendants must warrant to Acquirer of the Athenos Divestiture
Assets that (1) the Athenos Transitional Manufacturing Assets will be
operational and without material defect on the date of their transfer
to Acquirer of the Athenos Divestiture Assets; (2) there are no
material defects in the environmental, zoning, or other permits
relating to the operation of the Athenos Transitional Manufacturing
Assets; and (3) Defendants have disclosed all encumbrances on any part
of the Athenos Transitional Manufacturing Assets, including on
intangible property. Following the sale of the Athenos Transitional
Manufacturing Assets, Defendants must not undertake, directly or
indirectly, challenges to the environmental, zoning, or other permits
relating to the operation of the Athenos Transitional Manufacturing
Assets.
P. At the option of Acquirer of the Athenos Divestiture Assets, and
subject to approval by the United States in its sole discretion, on or
before the date on which the Athenos Divestiture Assets are divested,
Defendants must enter into a contract to provide transition services
for back office, human resources, accounting, information technology
services and support, facilitating repacking, warehousing,
transportation, and by making personnel available to assist Acquirer of
the Athenos Divestiture Assets for a period of up to six 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 of the Athenos Divestiture
Assets seeks an

[[Page 73328]]

extension of the term of any contract for transition services,
Defendants must notify the United States in writing at least 30 days
prior to the date the contract expires. Acquirer of the Athenos
Divestiture Assets 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
employees of Defendants tasked with providing transition services must
not share any competitively sensitive information of Acquirer of the
Athenos Divestiture Assets with any other employee of Defendants.
Q. If any term of an agreement between Defendants and Acquirer of
the Athenos Divestiture Assets, including an agreement to effectuate
the divestiture of the Athenos Divestiture Assets required by this
Final Judgment, varies from a term of this Final Judgment, to the
extent that Defendants cannot fully comply with both, this Final
Judgment determines Defendants' obligations.

V. Divestiture of the Polly-O Divestiture Assets

A. Defendants are ordered and directed, within 30 calendar days
after the Court's entry of the Asset Preservation and Hold Separate
Stipulation and Order in this matter, to divest the Polly-O Divestiture
Assets in a manner consistent with this Final Judgment to BelGioioso 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 must use best efforts to divest the Polly-O
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 Polly-O Divestiture Assets.
C. Unless the United States otherwise consents in writing,
divestiture pursuant to this Final Judgment must include the entire
Polly-O Divestiture Assets and must be accomplished in such a way as to
satisfy the United States, in its sole discretion, that the Polly-O
Divestiture Assets can and will be used by Acquirer of the Polly-O
Divestiture Assets as part of a viable, ongoing business of selling
ricotta cheese to retailers, and that the divestiture to Acquirer of
the Polly-O Divestiture Assets will remedy the competitive harm in the
market for selling ricotta cheese to retailers alleged in the
Complaint.
D. The divestiture of the Polly-O Divestiture Assets 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 sale
of ricotta cheese to retailers.
E. The divestiture of the Polly-O Divestiture Assets 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 of
the Polly-O Divestiture Assets and Defendants gives Defendants the
ability unreasonably to raise costs for Acquirer of the Polly-O
Divestiture Assets, to lower the efficiency of Acquirer of the Polly-O
Divestiture Assets, or otherwise interfere in the ability of Acquirer
of the Polly-O Divestiture Assets to compete effectively in the sale of
ricotta cheese to retailers.
F. In the event Defendants are attempting to divest the Polly-O
Divestiture Assets to an Acquirer other than BelGioioso, Defendants
promptly must make known, by usual and customary means, the
availability of the Polly-O Divestiture Assets. Defendants must inform
any person making an inquiry relating to a possible purchase of the
Polly-O Divestiture Assets that the Polly-O Divestiture Assets are
being divested in accordance with this Final Judgment and must provide
that person with a copy of this Final Judgment. Defendants must offer
to furnish to all prospective Acquirers of the Polly-O Divestiture
Assets, subject to customary confidentiality assurances, all
information and documents relating to the Polly-O Divestiture Assets
that are customarily provided in a due diligence process; provided,
however, that Defendants need not provide information or documents
subject to the attorney-client privilege or work-product doctrine.
Defendants 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 must provide prospective Acquirers of the Polly-O
Divestiture Assets with (1) access to make inspections of the Polly-O
Divestiture Assets; (2) access to all environmental, zoning, and other
permitting documents and information relating to the Polly-O
Divestiture Assets; and (3) access to all financial, operational, or
other documents and information relating to the Polly-O Divestiture
Assets that would customarily be provided as part of a due diligence
process. Defendants also must disclose all encumbrances on any part of
the Polly-O Divestiture Assets, including on intangible property.
H. Defendants must cooperate with and assist Acquirer of the Polly-
O Divestiture Assets in identifying and, at the option of Acquirer of
the Polly-O Divestiture Assets, in hiring all Polly-O Personnel,
including:
1. Within 10 business days following the filing of the Complaint in
this matter, Defendants must identify all Polly-O Personnel to Acquirer
of the Polly-O Divestiture Assets and the United States, including by
providing organization charts covering all Polly-O Personnel.
2. Within 10 business days following receipt of a request by
Acquirer of the Polly-O Divestiture Assets or the United States,
Defendants must provide to Acquirer of the Polly-O Divestiture Assets
and the United States additional information relating to Polly-O
Personnel, including name, job title, reporting relationships, past
experience, responsibilities, training and educational histories,
relevant certifications, and job performance evaluations. Defendants
must also provide to Acquirer of the Polly-O Divestiture Assets and the
United States information relating to current and accrued compensation
and benefits of Polly-O 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 benefits accrued, or promises made to the Polly-O
Personnel. If Defendants are barred by any applicable law from
providing any of this information, Defendants must provide, within 10
business days following receipt of the request, the requested
information to the full extent permitted by law and also must provide a
written explanation of Defendants' inability to provide the remaining
information, including specifically identifying the provisions of the
applicable laws.
3. At the request of Acquirer of the Polly-O Divestiture Assets,
Defendants must promptly make Polly-O Personnel available for private
interviews with Acquirer of the Polly-O Divestiture Assets during
normal business hours at a mutually agreeable location.
4. Defendants must not interfere with any effort by Acquirer of the
Polly-O Divestiture Assets to employ any Polly-O Personnel.
Interference includes offering to increase the compensation or improve
the benefits of Polly-O

[[Page 73329]]

Personnel unless (a) the offer is part of a company-wide increase in
compensation or improvement in benefits that was announced prior to
September 15, 2020, or (b) the offer is approved by the United States
in its sole discretion. Defendants' obligations under this Paragraph
will expire six months after the date on which the Polly-O Divestiture
Assets are divested.
5. For Polly-O Personnel who elect employment with Acquirer of the
Polly-O Divestiture Assets either (a) before the date on which a
transition services contract entered into pursuant to Paragraph V.N is
terminated or expires, or (b) within three months after the date on
which such a contract is terminated or expires, Defendants must waive
all non-compete and non-disclosure agreements; vest and pay to the
Polly-O Personnel (or to Acquirer of the Polly-O Divestiture Assets 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 of the
Polly-O Divestiture Assets; vest any unvested pension and other equity
rights; and provide all other benefits that those Polly-O Personnel
otherwise would have been provided had the Polly-O Personnel continued
employment with Defendants, including any retention bonuses or
payments. Defendants may maintain reasonable restrictions on disclosure
by Polly-O Personnel of Defendants' proprietary non-public information
that is unrelated to the Polly-O Divestiture Assets and not otherwise
required to be disclosed by this Final Judgment.
6. For a period of 12 months from the date on which the Polly-O
Divestiture Assets are divested, Defendants may not solicit to rehire
Polly-O Personnel who were hired by Acquirer of the Polly-O Divestiture
Assets either (a) before the date on which a transition services
contract entered into pursuant to Paragraph V.N is terminated or
expires, or (b) within three months after the date on which such a
contract is terminated or expires, unless an individual is terminated
or laid off by Acquirer of the Polly-O Divestiture Assets or Acquirer
of the Polly-O Divestiture Assets agrees in writing that Defendants may
solicit to re-hire that individual. Nothing in this Paragraph prohibits
Defendants from advertising employment openings using general
solicitations or advertisements and re-hiring Polly-O Personnel who
apply for an employment opening through a general solicitation or
advertisement.
I. Defendants must warrant to Acquirer of the Polly-O Divestiture
Assets that (1) the Polly-O Divestiture Assets will be operational and
without material defect on the date of their transfer to Acquirer of
the Polly-O Divestiture Assets; (2) there are no material defects in
the environmental, zoning, or other permits relating to the operation
of the Polly-O Divestiture Assets; and (3) Defendants have disclosed
all encumbrances on any part of the Polly-O Divestiture Assets,
including on intangible property. Following the sale of the Polly-O
Divestiture Assets, Defendants must not undertake, directly or
indirectly, challenges to the environmental, zoning, or other permits
relating to the operation of the Polly-O Divestiture Assets.
J. Defendants must assign, subcontract, or otherwise transfer all
contracts, agreements, and customer relationships (or portions of such
contracts, agreements, and customer relationships) included in the
Polly-O Divestiture Assets, including all supply and sales contracts
and co-packing and packaging supply agreements, to Acquirer of the
Polly-O Divestiture Assets; provided, however, that for any contract or
agreement that requires the consent of another party to assign,
subcontract, or otherwise transfer, Defendants must use best efforts to
accomplish the assignment, subcontracting, or transfer. Defendants must
not interfere with any negotiations between Acquirer of the Polly-O
Divestiture Assets and a contracting party.
K. In the event Defendants are attempting to divest the Polly-O
Divestiture Assets to an Acquirer other than BelGioioso, Defendants
must, as the option of Acquirer of the Polly-O Divestiture Assets, and
subject to the approval by the United States in its sole discretion,
assign, subcontract, or otherwise transfer any of the Polly-O Excluded
Contracts to Acquirer of the Polly-O Divestiture Assets; provided,
however, that for any contract or agreement that requires the consent
of another party to assign, subcontract, or otherwise transfer,
Defendants must use best efforts to accomplish the assignment,
subcontracting, or transfer. Defendants must not interfere with any
negotiations between Acquirer of the Polly-O Divestiture Assets and a
contracting party.
L. Defendants must use best efforts to assist Acquirer of the
Polly-O Divestiture Assets to obtain all necessary licenses,
registrations, and permits to operate the Polly-O Divestiture Business.
Until Acquirer of the Polly-O Divestiture Assets obtains the necessary
licenses, registrations, and permits, Defendants must provide Acquirer
of the Polly-O Divestiture Assets with the benefit of Defendants'
licenses, registrations, and permits to the full extent permissible by
law.
M. At the option of Acquirer of the Polly-O Divestiture Assets, and
subject to approval by the United States in its sole discretion, on or
before the date on which the Polly-O Divestiture Assets are divested,
Defendants must enter into a supply contract or contracts for the
production and packaging of Polly-O Products sufficient to meet the
needs of Acquirer of the Polly-O Divestiture Assets, as determined by
Acquirer of the Polly-O Divestiture Assets, for a period of up to 12
months, on terms and conditions reasonably related to market conditions
for the production and packaging of Polly-O Products. Any amendment to
or modification of any provision of any such supply contract 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 supply contract, for a total of up to an additional 12 months. If
Acquirer of the Polly-O Divestiture Assets seeks an extension of the
term of any supply contract, Defendants must notify the United States
in writing at least three months prior to the date the supply contract
expires. Acquirer of the Polly-O Divestiture Assets may terminate a
supply contract, or any portion of a supply contract, without cost or
penalty at any time upon commercially reasonable written notice. The
employees of Defendants tasked with providing services pursuant to a
supply contract must not share any competitively sensitive information
of Acquirer of the Polly-O Divestiture Assets with any other employee
of Defendants.
N. At the option of Acquirer of the Polly-O Divestiture Assets, and
subject to approval by the United States in its sole discretion, on or
before the date on which the Polly-O Divestiture Assets are divested,
Defendants must enter into a contract to provide transition services
for back office, human resources, accounting, information technology
services and support, facilitating repacking, warehousing,
transportation, and by making personnel available to assist Acquirer of
the Polly-O Divestiture Assets for a period of up to six 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,

[[Page 73330]]

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 of the Polly-O Divestiture Assets seeks an
extension of the term of any contract for transition services,
Defendants must notify the United States in writing at least 30 days
prior to the date the contract expires. Acquirer of the Polly-O
Divestiture Assets 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
employees of Defendants tasked with providing transition services must
not share any competitively sensitive information of Acquirer of the
Polly-O Divestiture Assets with any other employee of Defendants.
O. If any term of an agreement between Defendants and Acquirer of
the Polly-O Divestiture Assets, including an agreement to effectuate
the divestiture of the Polly-O Divestiture Assets required by this
Final Judgment, varies from a term of this Final Judgment, to the
extent that Defendants cannot fully comply with both, this Final
Judgment determines Defendants' obligations.

VI. Appointment of Divestiture Trustee

A. If Defendants have not divested all of the Divestiture Assets
within the periods specified in Paragraphs IV.A and V.A, Defendants
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 any of the
Divestiture Assets that have not been sold during the time periods
specified in Paragraphs IV.A and V.A.
B. After the appointment of a divestiture trustee by the Court,
only the divestiture trustee will have the right to sell those
Divestiture Assets that the divestiture trustee has been appointed to
sell. The divestiture trustee will have the power and authority to
accomplish the divestiture(s) to an Acquirer(s) acceptable to the
United States, in its sole discretion, at a price and on terms
obtainable through reasonable effort by the divestiture trustee,
subject to the provisions of Sections IV, V, VI, and VII of this Final
Judgment, and will have other powers as the Court deems appropriate.
The divestiture trustee must sell the relevant Divestiture Assets as
quickly as possible.
C. Defendants may not object to a sale by the divestiture trustee
on any ground other than malfeasance by the divestiture trustee.
Objections by Defendants 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 VII.
D. The divestiture trustee will serve at the cost and expense of
Defendants 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 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 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 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 date on
which any divestiture overseen by the divestiture trustee is completed,
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 and the trust will then be terminated.
H. Defendants must use best efforts to assist the divestiture
trustee to accomplish the required divestiture(s). Subject to
reasonable protection for trade secrets, other confidential research,
development, or commercial information, or any applicable privileges,
Defendants 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 relevant
Divestiture Assets. Defendants 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(s).
I. The divestiture trustee must maintain complete records of all
efforts made to sell any of the Divestiture Assets that have not been
sold during the time periods specified in Paragraphs IV.A and V.A,
including by filing monthly reports with the United States setting
forth the divestiture trustee's efforts to accomplish the
divestiture(s) 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
that the divestiture trustee has been appointed to sell and must
describe in detail each contact.
J. If the divestiture trustee has not accomplished the
divestiture(s) 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(s); (2) the reasons, in
the divestiture trustee's judgment, why the required divestiture(s) has
not been accomplished; and (3) the divestiture trustee's
recommendations for completing the divestiture(s). 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.

[[Page 73331]]

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.

VII. Notice of Proposed Divestiture

A. Within two business days following execution of a definitive
agreement to sell the Athenos Divestiture Assets to an Acquirer other
than Emmi Roth or execution of a definitive agreement to sell the
Polly-O Divestiture Assets to an Acquirer other than BelGioioso,
Defendants 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. 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 relevant
Divestiture Assets.
B. Within 15 calendar days of receipt by the United States of a
notice required by Paragraph VII.A, the United States may request from
Defendants, the proposed Acquirer, other third parties, or the
divestiture trustee additional information concerning the proposed
divestiture, the proposed Acquirer, and other prospective Acquirers.
Defendants 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 a notice required by
Paragraph VII.A or within 20 calendar days after the United States has
been provided the additional information requested pursuant to
Paragraph VII.B, whichever is later, the United States will provide
written notice to Defendants 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 Defendants' limited right to object to the
sale under Paragraph VI.C of this Final Judgment. Upon objection by
Defendants pursuant to Paragraph VI.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 10 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 10
calendar days' notice before divulging the material in any legal
proceeding (other than a grand jury proceeding).

VIII. Financing

Defendants may not finance all or any part of any Acquirer's
purchase of all or part of the Divestiture Assets.

IX. Asset Preservation and Hold Separate

Defendants must take all steps necessary to comply with the Asset
Preservation and Hold Separate Stipulation and Order entered by the
Court.

X. Affidavits

A. Within 20 calendar days of the filing of the Complaint in this
matter, and every 30 calendar days thereafter until the divestitures
required by this Final Judgment have been completed, each Defendant
must deliver to the United States an affidavit, signed by (a) on behalf
of Kraft Heinz, the Global Chief Financial Officer, and the Global
General Counsel, and (b) on behalf of Lactalis, the Chief Financial
Officer of LAG Holding, and the Chief Legal Officer of LAG Holding,
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 are attempting to divest the Athenos
Divestiture Assets to an Acquirer other than Emmi Roth or the Polly-O
Divestiture Assets to an Acquirer other than BelGioioso, each affidavit
required by Paragraph X.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 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 on information
provided to prospective Acquirers. Objection by the United States to
information provided by Defendants 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 must keep all records of any efforts made to divest
the Athenos Divestiture Assets until one year after the Athenos
Divestiture Assets are divested. Defendants must keep all records of
any efforts made to divest the Polly-O Divestiture Assets until one
year after the Polly-O Divestiture Assets are divested.
D. Within 20 calendar days of the filing of the Complaint in this
matter, each Defendant must deliver to the United States an affidavit
signed by (a) on behalf of Kraft Heinz, the Global Chief Financial
Officer, and the Global General Counsel, and (b) on behalf of Lactalis,
the Chief Financial Officer of

[[Page 73332]]

LAG Holding, and the Chief Legal Officer of LAG Holding, that describes
in reasonable detail all actions that Defendant has taken and all steps
that Defendant has implemented on an ongoing basis to comply with
Section IX 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 actions and steps described
in affidavits provided pursuant to Paragraph X.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 must keep all records of any efforts made to comply
with Section IX until the later of one year after the Athenos
Divestiture Assets are divested or one year after the Polly-O
Divestiture Assets are divested.

XI. Compliance Inspection

A. For the purposes of determining or securing compliance with this
Final Judgment or of related orders such as the Asset Preservation and
Hold Separate 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
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 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 10 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 10 calendar days' notice before divulging the material in
any legal proceeding (other than a grand jury proceeding).

XII. 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''),
Lactalis 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 sale
of ricotta cheese to retailers in the United States during the term of
this Final Judgment.
B. Lactalis 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 sale of ricotta cheese to retailers 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 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.

XIII. No Reacquisition

Defendants 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.

XIV. 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.

XV. 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

[[Page 73333]]

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.
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.

XVI. 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
divestitures have been completed and continuation of this Final
Judgment is no longer necessary or in the public interest.

XVII. 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]
-----------------------------------------------------------------------
United States District Judge

United States District Court for the District of Columbia

United States of America, Plaintiff, v. B.S.A. S.A., LAG
Holding, Inc., and The Kraft Heinz Company, Defendants.

Civil Action No.: 1:21-cv-02976-RBW

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 September 15, 2020, B.S.A. S.A. (collectively with its
subsidiaries LAG Holding, Inc., and Lactalis American Group, Inc.,
``Lactalis'') agreed to acquire the natural cheese business of The
Kraft Heinz Company (``Kraft Heinz'') in the United States, along with
its grated cheese business in Canada and its entire cheese business
outside North America, for approximately $3.2 billion. The United
States filed a civil antitrust Complaint on November 10, 2021, seeking
to enjoin the transaction. See Dkt. No. 1. The Complaint alleges that
the likely effect of this transaction would be to substantially lessen
competition for the sale of feta cheese to retailers in the United
States and ricotta cheese to retailers in the metropolitan and
surrounding area of New York, New York and in four metropolitan and
surrounding areas in Florida 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
an Asset Preservation and Hold Separate Stipulation and Order
(``Stipulation and Order'') and a proposed Final Judgment, which are
designed to remedy the loss of competition alleged in the Complaint.
See Dkt. Nos. 2-1 and 2-2.
Under the proposed Final Judgment, explained more fully below,
Defendants are required to divest Kraft Heinz's entire Athenos and
Polly-O businesses, including the brand names, all products sold under
those brand names, and other assets related to or used in these
businesses to Emmi Roth USA, Inc. and BelGioioso Cheese, Inc.,
respectively, or to alternative acquirers acceptable to the United
States, within 30 calendar days after entry of the Stipulation and
Order. These divestitures will protect competition by enabling the
acquirers of the Athenos and Polly-O businesses to step into the shoes
of Kraft Heinz and compete with Lactalis in the feta and ricotta
markets.
Under the terms of the Stipulation and Order, Defendants must also
take certain steps to operate, preserve, and maintain the full economic
viability, marketability, and competitiveness of the Athenos
Divestiture Assets and the Polly-O Divestiture Assets. In addition,
Lactalis must hold entirely separate, distinct, and apart from its
other operations, the management, sales, and operations of the Athenos
Divestiture Assets and the Polly-O Divestiture Assets. The purpose of
these terms in the Stipulation and Order is to ensure that competition
is maintained while the divestitures are being accomplished. The Court
signed the Stipulation and Order on November 13, 2021, and entered the
Stipulation and Order on November 15, 2021. See Dkt. No. 3.
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 by the Court 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 Violations

A. The Defendants and the Transaction

B.S.A. S.A. is a French company operating under the name Lactalis
Group, organized and existing under the laws of France, with its
headquarters in Laval, France. It is one of the largest dairy companies
in the world, selling cheese in the United States through its
subsidiaries, LAG Holding, Inc. and Lactalis American Group, Inc. LAG
Holding, Inc., a Delaware corporation with its headquarters in Buffalo,
New

[[Page 73334]]

York, and Lactalis American Group, Inc. generated natural cheese sales
of approximately $429 million at retail outlets in the United States in
2020. In the United States, Lactalis sells natural cheeses primarily
under the Galbani and Pr[eacute]sident brand names.
Kraft Heinz is a Delaware corporation co-headquartered in
Pittsburgh, Pennsylvania and Chicago, Illinois. Kraft Heinz is one of
the largest food products and beverage companies in the world. It is
the largest supplier of natural cheeses to grocery stores and other
retail outlets in the United States, with retail sales of its natural
cheeses totaling over $2.2 billion in 2020. Kraft Heinz sells natural
cheeses primarily under the Kraft, Cracker Barrel, Athenos, and Polly-O
brand names.
Pursuant to a September 15, 2020 asset purchase agreement, Lactalis
will acquire for approximately $3.2 billion Kraft Heinz's interests in
its: (1) Natural cheese business in the United States, which includes
feta, ricotta, and many other types of cheeses; (2) grated cheese
business in Canada; and (3) entire cheese business outside North
America (the ``Transaction''). Kraft Heinz is retaining a significant
portion of its cheese business in the United States, consisting of its
processed cheese and cream cheese businesses, marketed under the Kraft
Singles, Velveeta, Cheez Whiz, and Philadelphia Cream Cheese brand
names.

B. The Competitive Effects of the Transaction

The Complaint alleges that the Transaction will result in
anticompetitive effects in the markets for the sale of feta cheese to
retailers in the United States and the sale of ricotta cheese to
retailers in the metropolitan and surrounding area of New York, New
York (the ``New York Metro Market'') and in four metropolitan and
surrounding areas in Florida: Miami/Ft. Lauderdale, Tampa/St.
Petersburg, Orlando, and Jacksonville (collectively, the ``Florida
Metro Markets'').
Cheeses are sold to retailers (such as grocery stores,
supermarkets, mass merchandisers like Wal-Mart, and club stores like
Sam's Club) as branded cheeses or private label cheeses. A branded
cheese bears a brand name controlled by the cheese supplier (e.g.,
Kraft Heinz's Athenos and Polly-O brands) and is usually carried by
multiple retailers. A private label cheese is usually sold under a name
owned by the retailer (e.g., Wal-Mart's Great Value private label), and
is typically offered only in that retailer's stores. Grocery stores and
other food retailers act as proxies for individual customers and seek
to offer a variety of products demanded by their customers.
Accordingly, retailers strive to carry products and brands that their
customers value, and may vary their offerings to meet local customer
demand.
The Transaction would combine the two largest suppliers of feta
cheese sold to retailers in the United States and the two largest
suppliers of ricotta cheese sold to retailers in the New York Metro
Market and in each of the Florida Metro Markets. As alleged in the
Complaint, eliminating the head-to-head competition between Lactalis
and Kraft Heinz would likely lead to higher prices, lower quality, and
less innovation for these products for retailers (and consumers) in the
relevant markets.
1. Relevant Product Markets
A typical starting point for merger analysis is defining a relevant
market, which has both a product and a geographic dimension. Courts
define relevant markets to help determine the areas of competition most
likely to be affected by a merger.
a. Feta Cheese Sold to Retailers
As alleged in the Complaint, feta cheese sold to retailers is a
relevant antitrust product market in which to analyze the effects of
the Transaction. Feta cheese originated in Greece, and is primarily
used as an ingredient in food dishes. There are no reasonable
substitutes for feta cheese for most consumers. A hypothetical
monopolist supplier of feta cheese to retailers likely would find it
profitable to increase its prices by at least a small but significant
non-transitory amount (e.g., five percent). Consumers are unlikely to
sufficiently reduce their purchases of feta cheese or shift to a
different cheese or other products to render such a price increase
unprofitable. Retailers, buying on behalf of consumers, are also
unlikely to sufficiently reduce purchases of feta cheese to render such
a price increase unprofitable. Accordingly, feta cheese sold to
retailers is a relevant product market and line of commerce within the
meaning of Section 7 of the Clayton Act, 15 U.S.C. 18.
Defining a market for feta cheese that is sold to retailers is also
consistent with industry recognition and practice. As the Complaint
indicates, suppliers of feta cheese to retailers typically (1) monitor
the retail prices of competing feta cheeses and set their prices and
promotional spending accordingly, (2) do not set the price they charge
for feta cheese based on the prices of other cheeses or other consumer
products, (3) track their sales to retailers separately from their
sales to other distribution channels (i.e., foodservice and the
ingredients or industrial channels), (4) have sales employees dedicated
to serving retailers, and (5) sell feta cheese to retailers in
packaging and package sizes that are different than that used for feta
cheese sold through other distribution channels. These factors further
support that feta cheese sold to retailers is a relevant product market
and line of commerce within the meaning of Section 7 of the Clayton
Act, 15 U.S.C. 18.
b. Ricotta Cheese Sold to Retailers
As alleged in the Complaint, ricotta cheese sold to retailers is a
relevant antitrust product market in which to analyze the effects of
the Transaction. Ricotta is a soft cheese that originated in Italy, and
is primarily used as an ingredient in food dishes. There are no
reasonable substitutes for ricotta cheese for most consumers. A
hypothetical monopolist supplier of ricotta cheese to retailers likely
would find it profitable to increase its prices by at least a small but
significant non-transitory amount (e.g., five percent). Similar to feta
cheese, consumers and retailers are unlikely to sufficiently reduce
their purchases of ricotta cheese or shift to a different cheese or
other products to render such a price increase unprofitable. In
addition, defining a market for ricotta cheese that is sold to
retailers is consistent with industry recognition and practice for the
same reasons described above for feta cheese. Accordingly, ricotta
cheese sold to retailers is a relevant product market and line of
commerce within the meaning of Section 7 of the Clayton Act, 15 U.S.C.
18.
2. Relevant Geographic Markets
The relevant geographic markets for analyzing the effects of the
Transaction on competition for feta and ricotta cheeses sold to
retailers are best defined by reference to the locations of the
retailers that purchase feta and ricotta cheeses in order to then sell
those products to consumers. This approach to defining the relevant
geographic markets is appropriate because suppliers of feta and ricotta
cheeses to retailers assess the competitive conditions in particular
localities, including local demand for feta and ricotta cheeses, as
well as local demand for the suppliers' own brands as compared to
competing brands and to private label offerings. As a result, suppliers
of feta and ricotta cheeses can charge different prices, or offer
different

[[Page 73335]]

levels of promotional funding, to retailers in different locations
based on local competitive conditions. If targeted for a price increase
or reduction in promotional funding, retailers in a given locality
would likely not be able to render such conduct unprofitable by
purchasing feta or ricotta cheeses outside of the relevant geography
and transporting it to their retail locations.
As the Complaint alleges, where feta and ricotta cheese suppliers
can successfully vary prices and promotional funding based on retailer
customer location, the goal of geographic market definition is to
identify the area encompassing the location of potentially targeted
customers. The relevant geographic markets described below encompass
the locations of retailers that would likely be targeted by suppliers
for price increases as a result of the Transaction.
a. The Relevant Geographic Markets for Feta Cheese Sold to Retailers
The relevant geographic market for the sale of feta cheese to
retailers may be defined as narrowly as individual metropolitan and
surrounding areas. A hypothetical monopolist supplier of feta cheese to
retailers in any given metropolitan and surrounding area in the United
States likely would find it profitable to increase its prices by at
least a small but significant and non-transitory amount (e.g., five
percent). Therefore, each metropolitan and surrounding area in the
United States is a relevant geographic market and section of the
country within the meaning of Section 7 of the Clayton Act, 15 U.S.C.
18.
As the Complaint alleges, in circumstances where competitive
conditions are similar, it is appropriate to aggregate local markets
into a larger relevant market for analytical convenience. The
competitive conditions across the country are similar for the sale of
feta cheese to retailers. Kraft Heinz's Athenos feta and Lactalis's
Pr[eacute]sident feta are the two top-selling feta cheese brands in the
United States. While some regional brands of feta cheese exist, none
place a significant competitive constraint on Defendants in any
particular metropolitan and surrounding area. Therefore, it is
appropriate to analyze competition for the sale of feta cheese to
retailers on a national basis.
b. The Relevant Geographic Markets for Ricotta Cheese Sold to Retailers
The relevant geographic markets for the sale of ricotta cheese to
retailers are the New York Metro Market and each of the Florida Metro
Markets. In each of these markets, Defendants compete vigorously with
each other for sales of ricotta cheese to retailers. A hypothetical
monopolist supplier of ricotta cheese to retailers in the New York
Metro Market and in each of the Florida Metro Markets likely would
increase its price by at least a small but significant and non-
transitory amount (e.g., five percent). Therefore, the New York Metro
Market and each of the Florida Metro Markets are relevant geographic
markets and sections of the country within the meaning of Section 7 of
the Clayton Act, 15 U.S.C. 18.
3. The Transaction Would Result in Large Combined Market Shares and
Likely Substantially Lessen Head-To-Head Competition Between Two
Particularly Close Competitors
The Transaction would combine Lactalis and Kraft Heinz, the two
largest suppliers of feta cheese to retailers nationally, and the two
largest suppliers of ricotta cheese to retailers in the New York Metro
Market and in each of the Florida Metro Markets, resulting in a
substantial increase in concentration in these markets.
The Supreme Court has held that mergers that significantly increase
concentration in already concentrated markets are presumptively
anticompetitive and therefore presumptively unlawful. To measure market
concentration, courts often use the Herfindahl-Hirschman Index
(``HHI'') as described in the U.S. Department of Justice and Federal
Trade Commission Horizontal Merger Guidelines. HHIs range from 0 in
markets with no concentration to 10,000 in markets where one firm has a
100% market share. According to the Horizontal Merger Guidelines,
mergers that increase the HHI by more than 200 and result in an HHI
above 2,500 in any market are presumed to be anticompetitive and,
therefore, unlawful.
The Complaint alleges that the Transaction is presumptively
unlawful for the sale of feta cheese to retailers nationally.
Defendants are the two largest suppliers of feta cheese to retailers in
the United States, and their Athenos and Pr[eacute]sident feta cheese
brands combined would account for approximately 65% of all feta cheese
sales by retailers nationally. In a national market for feta cheese
sold by retailers, the Transaction would increase the HHI by more than
2,100 points, resulting in a highly concentrated market with a post-
acquisition HHI of more than 4,300 points. Thus, the Transaction is
presumptively unlawful for the sale of feta cheese to retailers
nationally.
As alleged in the Complaint, the Transaction is also presumptively
unlawful for the sale of ricotta cheese to retailers in the New York
Metro Market and in each of the Florida Metro Markets. In each of these
markets, the Defendants are the two largest suppliers of ricotta cheese
to retailers. In the New York Metro Market, their Polly-O and Galbani
ricotta cheese brands combined would account for approximately 70% of
all ricotta cheese sales by retailers, and the Transaction would
increase the HHI by more than 2,400 points, resulting in a highly
concentrated market with a post-acquisition HHI of more than 5,000
points. In each of the Florida Metro Markets, the Defendants' Polly-O
and Galbani ricotta cheese brands combined would account for over 65%
of all ricotta cheese sales by retailers, and the Transaction would
increase the HHI by more than 1,500 points, resulting in highly
concentrated markets, each with a post-acquisition HHI of more than
4,400 points. Thus, the Transaction is presumptively unlawful in the
New York Metro Market and in each of the Florida Metro Markets.
The Complaint further alleges that Lactalis and Kraft Heinz are
particularly close competitors for feta cheese sold to retailers
nationally, and for ricotta cheese sold to retailers in the New York
Metro Market and in each of the Florida Metro Markets. The Defendants
are the only two major brands for feta and ricotta cheese in the
relevant geographic markets and compete aggressively with each other on
pricing and promotions. The Defendants also compete to offer new and
innovative products and features, such as Kraft Heinz's flip top
container for Athenos crumbled feta cheese and Lactalis's double cream
ricotta cheese. Accordingly, the proposed combination of Lactalis and
Kraft Heinz would likely lead to higher prices, lower quality, and less
innovation for feta cheese sold to retailers nationally and for ricotta
cheese sold to retailers in the New York Metro Market and in each of
the Florida Metro Markets.
4. Difficulty of Entry or Expansion
As alleged in the Complaint, new entry and expansion by competitors
will likely neither be timely nor sufficient in scope to prevent the
likely anticompetitive effects of the Transaction. Barriers to entry
and expansion are high and include the substantial time and expense
required to build a brand's reputation and overcome existing consumer
preferences through

[[Page 73336]]

promotional and advertising activity as well as the substantial sunk
costs needed to secure the distribution and placement of a new
entrant's products in retail outlets (e.g., paying slotting fees to
obtain shelf space at supermarkets and other food retailers).
The Complaint also alleges that the likely anticompetitive effects
of the Transaction are not likely to be reversed or outweighed by any
efficiencies that the Transaction may achieve.

III. Explanation of the Proposed Final Judgment

To remedy the likely anticompetitive effects of the Transaction,
the United States required the Defendants to divest Kraft Heinz's
competing feta cheese business (the Athenos Divestiture Business), and
its competing ricotta cheese business (the Polly-O Divestiture
Business) to acquirers who will step into the shoes of Kraft Heinz and
preserve the competition with Lactalis in the relevant geographic
markets. Thus, the relief required by the proposed Final Judgment will
remedy the loss of competition alleged in the Complaint by establishing
independent and economically viable competitors in the markets for the
sale of feta cheese nationally and for the sale of ricotta cheese in
the New York Metro Market and in each of the Florida Metro Markets.

A. Athenos Divestiture Provisions

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 Athenos Divestiture Assets to Emmi Roth USA, Inc.
(``Emmi Roth'') or an alternative acquirer acceptable to the United
States, in its sole discretion. Emmi Roth is an established cheese
producer based in Fitchburg, Wisconsin. With the divestiture of Kraft
Heinz's Athenos business, Emmi Roth, or an alternative qualified
acquirer, will be able to enter or expand feta cheese sales to grocery
stores and other retailers across the United States. The United States,
in its sole discretion, may agree to one or more extensions of the time
period to complete the divestiture of the Athenos Divestiture Assets,
not to exceed 60 calendar days in total, and will notify the Court of
any extensions. Paragraph IV.C of the proposed Final Judgment requires
that the divestiture must include the entire Athenos Divestiture Assets
and that the assets must be divested in such a way as to satisfy the
United States, in its sole discretion, that the assets can and will be
operated by the acquirer as a viable, ongoing business that can compete
effectively in the sale of feta cheese to retailers. Defendants must
take all reasonable steps necessary to accomplish the divestitures
quickly and must cooperate with any acquirer.
The Athenos Divestiture Assets are defined in Paragraph II.E of the
proposed Final Judgment as all rights, titles, and interests in and to
all tangible and intangible property and assets relating to or used in
connection with the Athenos Divestiture Business.\1\ These assets
include: (1) The Athenos Brand Name,\2\ including the exclusive right
to the name in all sales channels (including the retail, foodservice,
and ingredients or industrial channels), and all other intellectual
property owned, licensed, or sublicensed, including patents, patent
applications, and inventions or discoveries that may be patentable,
registered and unregistered copyrights and copyright applications, and
registered and unregistered trademarks, trade dress, service marks,
trade names, and trademark applications; (2) all contracts, contractual
rights, and customer relationships, and all other agreements,
commitments, and understandings, including agreements with suppliers,
manufacturers, co-packers, and retailers, teaming agreements, leases,
and all outstanding offers or solicitations to enter into a similar
arrangement; (3) all licenses, permits, certifications, approvals,
consents, registrations, waivers, and authorizations, and all pending
applications or renewals; (4) all records and data, including customer
lists, accounts, sales, and credit records; production, repair,
maintenance, and performance records; manuals and technical information
Defendants provide to their own employees, customers, suppliers,
agents, or licensees; records and research data concerning historic and
current research and development activities; and drawings, blueprints,
and designs; and (5) all other intangible property, including
commercial names and d/b/a names, technical information such as recipes
and formulas, computer software and related documentation, know-how,
trade secrets, design protocols, specifications for materials, parts,
and devices, procedures for safety, quality assurance, and control,
design tools and simulation capabilities, and rights in internet
websites and domain names.
---------------------------------------------------------------------------

\1\ The Athenos Divestiture Business is defined in Paragraph
II.F of the proposed Final Judgment as ``the worldwide business of
the sale of Athenos Products by Kraft Heinz.'' Athenos Products is
defined in Paragraph II.H of the proposed Final Judgment as ``any
product that Kraft Heinz sold, sells, or has plans to sell under the
Athenos Brand Name anywhere in the world.''
\2\ The Athenos Brand Name is defined in Paragraph II.D of the
proposed Final Judgment as ``Athenos and any other name that uses,
incorporates, or references the Athenos name.''
---------------------------------------------------------------------------

Importantly, the Athenos Divestiture Assets include all rights to
the Athenos Brand Name, which is currently used to sell feta,
gorgonzola, blue cheese, hummus, and pita chips. By requiring the full
divestiture of the Athenos Brand Name, which will allow the acquirer to
use the Athenos Brand Name for more than just feta, the proposed Final
Judgment will enable the acquirer to more effectively compete in the
sale of feta cheese by (1) avoiding the potential consumer confusion
and potential harm to the Athenos Brand Name that could result from
having both the acquirer and Lactalis marketing and selling Athenos-
branded products, and (2) by giving the acquirer control over the sale
of all Athenos Products in all three channels of distribution--retail,
foodservice, and ingredients or industrial.\3\ In this case, it is
appropriate to require a divestiture that is broader than the harm
alleged in the Complaint in order to preserve competition. See, e.g.,
Merger Remedies Manual, Antitrust Division, September 2020, at 9
(explaining that the Division ``may seek to include a full line of
products in the divestiture package, even when the antitrust concern
relates to only a subset of those products''). The divestiture of the
entire Athenos Brand Name (and the entire Athenos Divestiture Business)
will allow the divestiture buyer the opportunity to use the divested
brand in the same way that Kraft Heinz uses it to compete today.
---------------------------------------------------------------------------

\3\ The retail channel is comprised of grocery stores,
supermarkets, mass merchandisers like Wal-Mart, and club stores like
Sam's Club; the foodservice channel is for distributors that sell to
restaurants, cafeterias, hospitals, and other businesses that
prepare and serve food; and the ingredients/industrial channel is
for companies that primarily prepare and package the frozen
entr[eacute]es that are sold in grocery stores and supermarkets.
---------------------------------------------------------------------------

In addition to the Athenos Divestiture Assets, at a later date, the
acquirer will acquire additional physical assets and contracts relating
to Athenos feta cheese. These additional assets are referred to as
Athenos Transitional Manufacturing Assets in Paragraph II.I of the
proposed Final Judgment and defined as: (1) Production lines numbers 25
and 26 that are used by the Athenos Divestiture Business for crumbling
and packaging feta cheese and are located at Kraft Heinz's facility in
Wausau, Wisconsin; (2) the feta cheese packaging mold used to produce
plastic feta lids and containers that was purchased by Kraft Heinz in
2021 and is located at the facilities of packaging supplier RPC
Bramlage-WIKO USA, Inc. in

[[Page 73337]]

Morgantown, Pennsylvania; and (3) contracts and agreements between
Kraft Heinz and Agropur, J. Rettenmaier USA LP, International Paper
Company, Berry Global, Inc., Weber Packaging Solutions, Inc., and
Bramlage, Inc.
Because the Athenos Transitional Manufacturing Assets will be used
by Defendants to fulfill their obligations under the supply contract
permitted by Paragraph IV.M of the proposed Final Judgment, Lactalis is
permitted, pursuant to Paragraph IV.N of the proposed Final Judgment,
to retain these Athenos Transitional Manufacturing Assets until the
supply agreement expires or is terminated. At that point, Defendants
are required to sell and transfer to the acquirer of the Athenos
Divestiture Assets the Athenos Transitional Manufacturing Assets within
60 days. This is preferable because Lactalis will be responsible for
the maintenance and upkeep of the Athenos Transitional Manufacturing
Assets for the duration of any supply contract, and pursuant to
Paragraph IV.O of the proposed Final Judgment, Lactalis is required to
warrant that the Athenos Transitional Manufacturing Assets are
operational and without material defect at the time of such transfer to
the acquirer.
Similarly, Paragraph IV.K of the proposed Final Judgment provides
the acquirer of the Athenos Divestiture Assets with the option to have
a series of third-party contracts relating to the production of Athenos
Products assigned to it at any time prior to the conclusion of any
transition services agreement entered into between the acquirer and
Defendants pursuant to Paragraph IV.P of the proposed Final Judgment.
These third-party contracts are referred to as the Athenos Transitional
Service Contracts in the proposed Final Judgment and are defined in
Paragraph II.J as contracts between Kraft Heinz and Prairie Farms,
Great Lake Cheese Company, Inc., Marathon Cheese Corporation, Cedar's
Mediterranean Foods, Inc., and Saputo Cheese USA, Inc. An acquirer,
such as Emmi Roth, that is already a cheese producer with an existing
series of suppliers and contracts may prefer not to have some or even
any of the Athenos Transitional Services Contracts assigned to it
pursuant to Paragraph IV.K of the proposed Final Judgment, but, for a
different acquirer, this option will ensure continuity in supply while
also allowing that acquirer to evaluate its needs.
The proposed Final Judgment also contains provisions intended to
facilitate the acquirer's efforts to hire employees whose job
responsibilities relate to the Athenos Divestiture Assets, enabling the
acquirer to successfully operate the Athenos business. Paragraph IV.H
of the proposed Final Judgment requires Defendants to provide the
acquirer and the United States with organization charts and information
relating to these employees and to make them available for interviews
with the acquirer. It also prohibits Defendants from interfering 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, incentives, other salary, benefits, or
other compensation fully or partially accrued at the time of transfer;
vest any unvested pension and other equity rights; and provide all
other benefits that the employees would generally be provided had those
employees continued employment with Defendants, including any retention
bonuses or payments. Finally, the timeline for when these employees may
be hired by the acquirer has been set to ensure that employees
providing any transition services pursuant to a transition services
agreement entered into pursuant to Paragraph IV.P of the proposed Final
Judgment are not interrupted.
Paragraph IV.H of the proposed Final Judgment further provides that
Defendants may not directly solicit to rehire any Athenos-related
employees who were hired by the acquirer, unless an employee is
terminated or laid off by the acquirer or the acquirer agrees in
writing that Defendants may solicit to rehire that individual. This
non-solicitation period runs for 12 months from the date of the
divestiture. This provision serves two purposes. First, it promotes a
period of stability that will aid the acquirer in assuming control of
the Athenos business. Second, many food retailers conduct periodic
category reviews in which they evaluate their brand offerings and shelf
space allocations, and a one-year non-solicitation period will permit
the acquirer to complete at least one such category review at most food
retailers. It is important to note, however, that this non-solicitation
provision does not prohibit Defendants from advertising employment
openings using general solicitations or advertisements and rehiring
anyone who applies for an opening through a general solicitation or
advertisement.
The proposed Final Judgment contains several provisions to
facilitate the transition of the Athenos Divestiture Business to the
acquirer. First, Paragraph IV.J of the proposed Final Judgment will
facilitate the transfer to the acquirer of customer and other
contractual relationships that are included within the Athenos
Divestiture Assets. Defendants must transfer all contracts, agreements,
and customer relationships (or portions of such contracts, agreements,
and customer relationships), including all supply and sales contracts
and co-packing and packaging supplier agreements, to the acquirer and
must use best efforts to assign, subcontract, or otherwise transfer
contracts or agreements that require the consent of another party
before assignment, subcontracting, or otherwise transferring.
Defendants must not interfere with any negotiations between the
acquirer of the Athenos Divestiture Assets and a contracting party.
These protections also apply to any of the Athenos Transitional
Services Contracts that the acquirer can elect to have assigned under
Paragraph IV.K of the proposed Final Judgment.
Second, Paragraph IV.M of the proposed Final Judgment requires
Defendants, at the acquirer's option, to enter into a supply contract
or contracts for the processing and packaging of Athenos Products
sufficient to meet the acquirer's needs for a period of up to two years
on terms and conditions reasonably related to market conditions for the
processing and packaging of Athenos Products. A two-year term is
appropriate here to permit the acquirer to move the physical equipment
included in the Athenos Transitional Manufacturing Assets to a facility
that will allow for the most efficient operation of the Athenos
Divestiture Business. Supply contracts of this nature are common in
this industry; indeed, Kraft Heinz today outsources much of its cheese
production to other cheese manufacturers, including its feta cheese
production. Companies operating in this industry have experience
negotiating and managing these types of supply contracts, and such
arrangements are used by other natural cheese brands. In addition,
Paragraph IV.M of the proposed Final Judgment prohibits employees of
the Defendants tasked with providing services pursuant to any supply
contract from sharing any competitively sensitive information of the
acquirer with any other employee of Defendants.
The acquirer may terminate any supply contract described in
Paragraph IV.M of the proposed Final Judgment, or any portion of any
such supply contract, without cost or penalty at any time upon
commercially reasonable written notice. The United States, in its sole
discretion, may approve one or more

[[Page 73338]]

extensions of any supply contract for up to an additional 12 months,
and if the acquirer requests such an extension, Defendants must notify
the United States in writing at least three months prior to the date
the supply contract expires. Any amendments to or modifications of any
provisions of a supply contract are subject to approval by the United
States, in its sole discretion.
Finally, Paragraph IV.P of the proposed Final Judgment requires
Defendants, at the acquirer's option and subject to approval by the
United States in its sole discretion, to enter into a transition
services agreement for a period of up to six months. Among other
things, this transition services agreement will ensure that the
acquirer has sufficient access to Athenos-related enterprise data and
personnel that are knowledgeable about this data, so as to avoid
disruption to the Athenos Divestiture Business while Defendants work to
transfer this data to the acquirer and the acquirer interviews and
makes offers of employment to Athenos personnel. 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 United States, in its sole discretion, may approve
one or more extensions of any transition services agreement for a total
of up to an additional six months, and if the acquirer requests such an
extension, Defendants must notify the United States in writing at least
30 days prior to the date the transition services agreement expires.
Any amendments to or modifications of any provisions of a transition
services agreement are also subject to approval by the United States,
in its sole discretion. The employees of Defendants tasked with
providing transition services must not share any competitively
sensitive information of the acquirer of the Athenos Divestiture Assets
with any other employee of Defendants.

B. Polly-O Divestiture Provisions

Paragraph V.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 Polly-O Divestiture Assets to BelGioioso Cheese,
Inc. (``BelGioioso'') or an alternative acquirer acceptable to the
United States, in its sole discretion. BelGioioso is an established
cheese producer based in Green Bay, Wisconsin. With the divestiture of
Kraft Heinz's Polly-O business, BelGioioso, or an alternative qualified
acquirer, will be able to enter or expand ricotta cheese sales to
grocery stores and other retailers in New York and Florida. The United
States, in its sole discretion, may agree to one or more extensions of
the time period to complete the divestiture of the Polly-O Divestiture
Assets, not to exceed 60 calendar days in total, and will notify the
Court of any extensions. Paragraph V.C of the proposed Final Judgment
requires that the Polly-O Divestiture Assets must be divested in such a
way as to satisfy the United States, in its sole discretion, that the
assets can and will be operated by the acquirer as a viable, ongoing
business that can compete effectively in the sale of ricotta cheese to
retailers. Defendants must take all reasonable steps necessary to
accomplish the divestitures quickly and must cooperate with any
acquirer.
The Polly-O Divestiture Assets are defined in Paragraph II.S of the
proposed Final Judgment as all rights, titles, and interests in and to
all intangible and tangible property and assets, relating to or used in
connection with the Polly-O Divestiture Business.\4\ These assets
include: (1) The Polly-O Brand Name,\5\ including the exclusive right
to the name in all sales channels (including the retail, foodservice,
and ingredients or industrial channels), and all other intellectual
property owned, licensed, or sublicensed, including patents, patent
applications, and inventions or discoveries that may be patentable,
registered and unregistered copyrights and copyright applications, and
registered and unregistered trademarks, trade dress, service marks,
trade names, and trademark applications; (2) the Shared Recipes
License, which is defined in Paragraph II.X of the proposed Final
Judgment as a perpetual, royalty-free, paid-up, irrevocable, worldwide,
non-exclusive license to the formulas, recipes and related trade
secrets, know-how, confidential business information and related data
that were used by Kraft Heinz for the production of cheese sold under
both the Polly-O Brand Name and any other Kraft Heinz brand name; (3)
all contracts, contractual rights, and customer relationships, and all
other agreements, commitments, and understandings, including agreements
with suppliers, manufacturers, co-packers, and retailers, teaming
agreements, leases, and all outstanding offers or solicitations to
enter into a similar arrangement; (4) all licenses, permits,
certifications, approvals, consents, registrations, waivers, and
authorizations, and all pending applications or renewals; (5) all
records and data, including customer lists, accounts, sales, and credit
records; production, repair, maintenance, and performance records;
manuals and technical information Defendants provide to their own
employees, customers, suppliers, agents, or licensees; records and
research data concerning historic and current research and development
activities; and drawings, blueprints, and designs; and (6) all other
intangible property, including commercial names and d/b/a names,
technical information, computer software and related documentation,
know-how, trade secrets, design protocols, specifications for
materials, parts, and devices, procedures for safety, quality
assurance, and control, design tools and simulation capabilities, and
rights in internet websites and domain names.
---------------------------------------------------------------------------

\4\ The Polly-O Divestiture Business is defined in Paragraph
II.T of the proposed Final Judgment as ``the worldwide business of
the sale of Polly-O Products by Kraft Heinz.'' Polly-O Products is
defined in Paragraph II.W of the proposed Final Judgment as ``any
product that Kraft Heinz sold, sells, or has plans to sell under the
Polly-O Brand Name anywhere in the world.''
\5\ The Polly-O Brand Name is defined in Paragraph II.R of the
proposed Final Judgment as ``Polly-O and any other name that uses,
incorporates, or references the Polly-O name.''
---------------------------------------------------------------------------

Similar to the Athenos Divestiture Assets, the proposed Final
Judgment requires Defendants to divest all rights to the Polly-O Brand
Name, which is currently used to sell ricotta, chunk mozzarella,
shredded mozzarella, string mozzarella,\6\ twist mozzarella-cheddar,
fresh mozzarella, asiago, parmesan, romano, and Italian cheese blends.
By requiring the full divestiture of the Polly-O Brand Name, the
proposed Final Judgment will enable the acquirer to more effectively
compete in the sale of ricotta cheese by (1) avoiding the potential
consumer confusion and potential harm to the brand that could result
from having both the acquirer and Lactalis marketing and selling Polly-
O branded cheeses, and (2) by giving the acquirer control over the sale
of all Polly-O Products in all three channels of distribution--retail,
foodservice and ingredients or industrial. For the same reasons
described with respect to the Athenos divestiture provisions, requiring
Defendants to divest the full Polly-O Brand Name will preserve
competition. Most notably, with respect to the Polly-O Brand Name, it
will permit the acquirer to offer both ricotta and chunk mozzarella
cheese under the same brand name, which is important for competing in
the market for the sale

[[Page 73339]]

of ricotta cheese to retailers because both cheeses are often promoted
in tandem.
---------------------------------------------------------------------------

\6\ Both Defendants also sell mozzarella string cheese in many
local areas, particularly in the eastern United States. However,
since the proposed Final Judgment requires divesting the entire
Polly-O business--including mozzarella string cheese--it fully
remedies any potential competitive harm to purchasers of mozzarella
string cheese.
---------------------------------------------------------------------------

Under the Shared Recipes License defined in Paragraph II.X of the
proposed Final Judgment, the acquirer will also receive a perpetual,
royalty free, paid-up, irrevocable, worldwide, non-exclusive license to
the formulas, recipes and related trade secrets, know-how, confidential
business information and related data that were used by Kraft Heinz for
the production of cheese sold under both the Polly-O Brand Name and any
other Kraft Heinz brand name. The Shared Recipes License will enable
the acquirer to produce and sell Polly-O cheeses that share recipes
with any other Kraft Heinz product.
Paragraph V.H of the proposed Final Judgment also contains
provisions intended to facilitate the acquirer's efforts to hire
employees whose job responsibilities relate in any way to the Polly-O
Divestiture Assets. These provisions are the same as those applicable
to employees whose job responsibilities relate in any way to the
Athenos Divestiture Assets, as described above. Specifically, Paragraph
V.H of the proposed Final Judgment requires Defendants to provide the
acquirer and the United States with organization charts and information
relating to these employees and to make them available for interviews
with the acquirer. It also prohibits Defendants from interfering 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, incentives, other salary, benefits, or
other compensation fully or partially accrued at the time of transfer;
vest any unvested pension and other equity rights; and provide all
other benefits that the employees would generally be provided had those
employees continued employment with Defendants, including any retention
bonuses or payments. Finally, the timeline for when these employees may
be hired by the acquirer has been set to ensure that employees
providing any transition services pursuant to a transition services
agreement entered into pursuant to Paragraph V.N of the proposed Final
Judgment are not interrupted.
Paragraph V.H of the proposed Final Judgment further provides that
Defendants may not directly solicit to rehire any Polly-O-related
employees who were hired by the acquirer, unless an employee is
terminated or laid off by the acquirer or the acquirer agrees in
writing that Defendants may solicit to rehire that individual. This
non-solicitation period runs for 12 months from the date of the
divestiture. This provision serves two purposes. First, it promotes a
period of stability that will aid the acquirer in assuming control of
the Athenos business. Second, many food retailers conduct periodic
category reviews in which they evaluate their brand offerings and shelf
space allocations, so a one-year non-solicitation period permits the
acquirer to complete at least one such category review at most food
retailers. It is important to note, however, that this non-solicitation
provision does not prohibit Defendants from advertising employment
openings using general solicitations or advertisements and rehiring
anyone who applies for an opening through a general solicitation or
advertisement.
Paragraph II.U of the proposed Final Judgment defines Polly-O
Excluded Contracts. These are contracts that BelGioioso has informed
Defendants that it does not want included as part of the Polly-O
Divestiture Assets. The Polly-O Excluded Contracts are contracts and
agreements between Kraft Heinz and Foremost Farms USA Cooperative,
Marathon Cheese Corporation, Saputo Cheese USA Inc., Amcor Flexibles
North America, Inc., International Paper Company, Berry Global, Inc,
Transcontinental US LLC, and J. Rettenmaier USA LP. As an established
producer of cheese that has an existing series of suppliers and
contracts, BelGioioso reviewed these contracts and determined that it
did not need them in order to effectively operate the Polly-O
Divestiture Business. To avoid saddling BelGioioso with unnecessary or
potentially duplicative contracts, those contracts are excluded from
the Polly-O Divestiture Assets. However, if Defendants divest the
Polly-O Divestiture Assets to an acquirer other than BelGioioso, and
that alternative acquirer determines it needs these Polly-O Excluded
Contracts, Paragraph V.K of the proposed Final Judgment requires
Defendants to assign, subcontract, or otherwise transfer any of the
Polly-O Excluded Contracts to any such acquirer of the Polly-O
Divestiture Assets.
As with the Athenos Divestiture Business, the proposed Final
Judgment contains several provisions to facilitate the transition of
the Polly-O Divestiture Business to the acquirer. First, Paragraph V.J
of the proposed Final Judgment will facilitate the transfer to the
acquirer of customer and other contractual relationships that are
included within the Polly-O Divestiture Assets. As with the Athenos
divestiture provisions above, Defendants must transfer all such
contracts, agreements, and customer relationships (or portions of such
contracts, agreements, and customer relationships), including all
supply and sales contracts and co-packing and packaging supplier
agreements, to the acquirer and must use best efforts to assign,
subcontract, or otherwise transfer contracts or agreements that require
the consent of another party before assignment, subcontracting, or
otherwise transferring. Defendants must not interfere with any
negotiations between the acquirer and a contracting party. These
protections also apply to any of the Polly-O Excluded Contracts that an
acquirer other than BelGioioso elects to have assigned under Paragraph
V.K of the proposed Final Judgment.
Second, Paragraph V.M of the proposed Final Judgment requires
Defendants, at the acquirer's option, to enter into a supply contract
or contracts for the production and packaging of Polly-O Products
sufficient to meet the acquirer's needs for a period of up to 12 months
on terms and conditions reasonably related to market conditions for the
production and packaging of Polly-O Products. As with the Athenos
divestiture provisions above, supply contracts of this nature are
common in this industry; indeed, Kraft Heinz today outsources much of
its cheese production to other cheese manufacturers, including its
ricotta cheese production. Companies operating in this industry have
experience negotiating and managing these types of supply contracts,
and such arrangements are used by other natural cheese brands. In
addition, Paragraph V.M of the proposed Final Judgment prohibits
employees of Defendants tasked with providing services pursuant to any
supply contract from sharing any competitively sensitive information of
the acquirer with any other employee of Defendants.
The acquirer may terminate any supply contract described in
Paragraph V.M of the proposed Final Judgment, or any portion of any
such supply contract, without cost or penalty at any time upon
commercially reasonable written notice. The United States, in its sole
discretion, may approve one or more extensions of any supply contract
for up to an additional 12 months, and if the acquirer requests such an
extension, Defendants must notify the United States in writing at least
three months prior to the date the supply contract expires. Any
amendments to or modifications of any provisions of a supply contract
are subject to approval

[[Page 73340]]

by the United States, in its sole discretion.
Finally, Paragraph V.N of the proposed Final Judgment requires
Defendants, at the acquirer's option and subject to approval by the
United States in its sole discretion, to enter into a transition
services agreement for a period of up to six months. Among other
things, this transition services agreement will ensure that the
acquirer has sufficient access to Polly-O-related enterprise data and
personnel that are knowledgeable about this data, so as to avoid
disruption to the Polly-O Divestiture Business while Defendants work to
transfer this data to the acquirer and the acquirer interviews and
makes offers of employment to Athenos personnel. 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 United States, in its sole discretion, may approve
one or more extensions of any transition services agreement for a total
of up to an additional six months, and if the acquirer requests such an
extension, Defendants must notify the United States in writing at least
30 days prior to the date the transition services agreement expires.
Any amendments to or modifications of any provisions of a transition
services agreement are also subject to approval by the United States,
in its sole discretion. The employees of Defendants tasked with
providing transition services must not share any competitively
sensitive information of the acquirer of the Polly-O Divestiture Assets
with any other employee of Defendants.

C. Divestiture Trustee Provisions

If Defendants do not accomplish the divestitures within the time
periods prescribed in Paragraphs IV.A and V.A of the proposed Final
Judgment, Section VI of the proposed Final Judgment provides that the
Court will appoint a divestiture trustee selected by the United States
to effect any remaining divestitures. If a divestiture trustee is
appointed, the proposed Final Judgment provides that Defendants must
pay all costs and expenses of the trustee. The divestiture trustee's
commission must be structured so as to provide an incentive for the
trustee based on the price obtained and the speed with which the
divestiture is accomplished. After 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
remaining divestitures. If the remaining divestitures have 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.

D. Ricotta Notification Requirement Provisions

Section XII of the proposed Final Judgment requires Lactalis to
notify the United States at least 30 days in advance of acquiring,
directly or indirectly, in a transaction that would not otherwise be
reportable under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, 15 U.S.C. 18a (the ``HSR Act''), any assets or any
interest in any entity involved in the sale of ricotta cheese to
retailers in the United States. Pursuant to the proposed Final
Judgment, Lactalis 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, except that
the information requested in Items 5 through 8 of the instructions must
be provided only about the sale of ricotta cheese to retailers in the
United States. 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.
The reason for this requirement for ricotta cheese is that there is
evidence of strong regional variation in brand strength in ricotta
cheese. Accordingly, Lactalis could purchase a regional brand of
ricotta that is very important to competition in that particular
region, but that purchase might be small enough on a national level not
to require a filing under the HSR Act. Given Lactalis's strong presence
in the sale of ricotta cheese nationwide, it is important for the
United States to receive notice of regional transactions which could
have the potential to substantially reduce competition in this
industry. Requiring notification from Lactalis before acquisition of an
entity involved in the sale of ricotta cheese to retailers will permit
the United States to assess the competitive effects of that acquisition
before it is consummated and, if necessary, seek to enjoin the
transaction.

E. Compliance and Enforcement Provisions

The proposed Final Judgment also contains provisions designed to
promote compliance with and make enforcement of the Final Judgment as
effective as possible. Paragraph XV.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 XV.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 result from 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
specifically and in reasonable detail, as interpreted in light of this
procompetitive purpose.
Paragraph XV.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
XV.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 XV.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

[[Page 73341]]

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.

F. Term of the Final Judgment

Section XVI 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 divestitures have been completed and that the continuation of
this 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: Eric D. Welsh,
Chief, Healthcare and Consumer Products Section, Antitrust Division,
United States Department of Justice, 450 Fifth Street NW, Suite 4100,
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 Lactalis's proposed acquisition of Kraft
Heinz's natural cheese business in the United States. 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 sale of feta cheese sold to
retailers in the United States and ricotta cheese sold to retailers in
the New York Metro Market and in each of the Florida Metro Markets.
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 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 mechanisms 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;

[[Page 73342]]

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 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 also 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, Public Law 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: December 20, 2021

Respectfully submitted,

For Plaintiff United States of America:
-----------------------------------------------------------------------
Justin M. Dempsey (D.C. Bar #425976),
Trial Attorney, United States Department of Justice, Antitrust
Division, Healthcare and Consumer Products Section, 450 Fifth Street
NW, Suite 4100, Washington, DC 20530, Telephone: (202) 307-5815,
Email: <a href="/cdn-cgi/l/email-protection#59132c2a2d3037771d3c34292a3c20192c2a3d3633773e362f"><span class="__cf_email__" data-cfemail="d59fa0a6a1bcbbfb91b0b8a5a6b0ac95a0a6b1babffbb2baa3">[email&#160;protected]</span></a>.

[FR Doc. 2021-27959 Filed 12-23-21; 8:45 am]
BILLING CODE 4410-11-P

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