United States v. Amcor Limited and Bemis Company, Inc.; Proposed Final Judgment and Competitive Impact Statement

 
CONTENT
Federal Register, Volume 84 Issue 123 (Wednesday, June 26, 2019)
[Federal Register Volume 84, Number 123 (Wednesday, June 26, 2019)]
[Notices]
[Pages 30223-30234]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13531]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Amcor Limited and Bemis Company, Inc.; Proposed
Final Judgment and Competitive Impact Statement
    Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec.  16(b)-(h), that a proposed Final
Judgment, Stipulation, and Competitive Impact Statement have been filed
with the United States District Court for the District of Columbia in
United States v. Amcor Limited and Bemis Company, Inc., Civil Action
No. 1:19-cv-01592-TNM. On May 30, 2019, the United States filed a
Complaint alleging that Amcor Limited's proposed acquisition of Bemis
Company, Inc. 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 Amcor to divest medical flexible packaging assets, including
facilities in Ashland, Massachusetts; Milwaukee, Wisconsin; and
Madison, Wisconsin, along with certain tangible and intangible assets.
    Copies of the Complaint, proposed Final Judgment, and Competitive
Impact Statement are available for inspection on the Antitrust
Division's website at http://www.justice.gov/atr 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 directed to Maribeth Petrizzi,
Chief, Defense, Industrials, and Aerospace Section, Antitrust Division,
Department of Justice, 450 Fifth Street NW, Suite 8700, Washington, DC
20530 (telephone: 202-307-0924).
Patricia A. Brink,
Director of Civil Enforcement.
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
    UNITED STATES OF AMERICA, Department of Justice, Antitrust
Division, 450 5th Street, N.W., Suite 8700, Washington, D.C. 20530,
Plaintiff, v. AMCOR LIMITED, Thurgauerstrasse 34, CH-8050, Zurich,
Switzerland, and BEMIS COMPANY, INC., One Neenah Center, Neenah, WI
54957, Defendants.
Civil Action No.: 1:19-cv-01592-TNM
Judge: Hon. Trevor N. McFadden
COMPLAINT
    The United States of America (``United States''), acting under the
direction of the Attorney General of the United States, brings this
civil antitrust action against Defendants Amcor Limited (``Amcor'') and
Bemis Company, Inc. (``Bemis'') to enjoin Amcor's proposed acquisition
of Bemis. The United States complains and alleges as follows:
I. NATURE OF THE ACTION
    1. Pursuant to a Transaction Agreement dated August 6, 2018, Amcor
proposes to acquire all of the shares of Bemis for $6.8 billion, making
the combined company the largest flexible packaging manufacturer in the
world. Hospitals rely on flexible medical packaging to preserve the
sterility of surgical tools, implants such as artificial hips, and a
host of other medical devices. Improper packaging threatens the health
of patients by allowing contamination from hazardous microbes and
raises the cost of healthcare by exposing medical facilities to
unnecessary risk.
    2. In the United States, Amcor and Bemis are two of only three
significant suppliers of three medical packaging products critical to
the safe transportation and use of medical devices: heat-seal coated
medical-grade Tyvek rollstock (``coated Tyvek''), heat-seal coated
medical-grade paper rollstock (``coated paper''), and heat-seal coated
medical-grade Tyvek die-cut lidding (``die-cut lids''). Tyvek is a
spinbonded material made from high-density polyethylene fibers, while
paper is made from cellulose fibers. Both coated Tyvek and coated paper
are wound onto a roll (``rollstock'') for easy transport and later
conversion into finished medical packaging. Pouches and bags made from
coated Tyvek, for example, are used to package surgical kits and
cardiac catheters, while coated paper pouches and bags are used to
package gauze and other wound care products. Coated Tyvek also is a
necessary input to die-cut lids when the lids are used by medical
device manufacturers to package and transport heavy, expensive, sharp,
or bulky devices such as implants or pacemakers.
    3. The proposed acquisition will eliminate competition between
Amcor and Bemis to supply these products to customers and likely lead
to increased prices. As a result, the proposed acquisition likely would
substantially lessen competition in the development, production, and
sale of coated Tyvek, coated paper, and die-cut lids for medical use in
the United States in violation of Section 7 of the Clayton Act, 15
U.S.C. Sec.  18, and should be enjoined.
II. THE PARTIES
    4. Amcor, a global packaging manufacturer, is organized under
Australian law and is headquartered in Zurich, Switzerland. In 2018,
Amcor had total sales of over $9 billion, including approximately $288
million in sales of flexible packaging for medical use in the United
States.
    5. Bemis, a global packaging manufacturer, is a Missouri
corporation headquartered in Neenah, Wisconsin. In 2018, Bemis had
total sales of over $4 billion, including approximately $260.9 million
in sales of flexible packaging for medical use in the United States.
III. JURISDICTION AND VENUE
    6. The United States brings this action under Section 15 of the
Clayton Act, 15 U.S.C. Sec.  25, to prevent and restrain Defendants
from violating Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.
    7. Defendants themselves, or through wholly-owned subsidiaries,
produce and sell coated Tyvek, coated paper, and die-cut lids in the
flow of interstate commerce. Defendants' activities in the development,
production, and sale of these products substantially affect interstate
commerce. This Court has subject-matter jurisdiction over this action
pursuant to Section 15 of the Clayton Act, 15 U.S.C. Sec.  25, and 28
U.S.C. Sec. Sec.  1331, 1337(a), and 1345.
    8. Defendants have consented to venue and personal jurisdiction in
this District. Venue is proper in this District under Section 12 of the
Clayton Act, 15 U.S.C. Sec.  22, and 28 U.S.C. Sec.  1391(c).
IV. INDUSTRY BACKGROUND
    9. Medical flexible packaging protects medical devices from
dangerous microbes and particulates that can cause medical
complications and risk patient safety. Medical devices used every day
in hospitals, medical offices, and labs--ranging from a patient's gown
to a syringe or an orthopedic implant--are sterilized after they have
been packaged and must remain that way until use. With lives
potentially at stake if a sterile barrier fails, flexible packaging
manufacturers use complex chemical engineering and substantial
manufacturing know-how and expertise to make their packaging products.
    10. Of the many materials available to make medical flexible
packaging, two--
[[Page 30224]]
medical grade paper and Tyvek--are each necessary for packaging certain
medical devices. Both products can be sold in rollstock form, or as a
``converted,'' or finished, packaging product, such as a die-cut lid, a
bag, or a pouch.
    11. Unlike any other medical flexible packaging materials, Tyvek
and medical grade paper are compatible with all methods of medical
device sterilization, including sterilization by ethylene-oxide gas
(``EtO''), which requires a ``breathable,'' or porous, package. To
limit the risk of contamination, medical devices are sterilized after
they are packaged, and the most common way to sterilize a medical
device is with EtO. Tyvek and paper allow EtO gas to enter and exit
while maintaining a sterile barrier. Other breathable materials have
been developed, but no other breathable material is currently used to
package medical devices.
    12. Tyvek often is preferred by medical device manufacturers over
any other flexible packaging material because it is extremely durable.
Once packaged and sterilized, medical devices are transported to
hospitals, labs, or doctors' offices and stored until use. During
transport and storage, medical device manufacturers rely on a device's
packaging to withstand rough handling and preserve a sterile barrier.
Because Tyvek is the most tear and puncture resistant medical flexible
packaging material on the market, it is frequently used to protect
bulky, heavy, or expensive devices such as hip implants and other
orthopedics.
    13. Medical device manufacturers require a heat-seal coating to be
applied to Tyvek and paper when those materials are used to package
certain medical devices or in conjunction with certain medical
packaging conversion equipment. Developing a coating formula and
perfecting the application of coating to Tyvek or paper is complicated
and requires substantial know-how and expertise. Coatings are trade
secrets and difficult to engineer and replicate. If a coating is not
applied properly, a package's seal can fail, rendering the medical
device inside hazardous to use.
    14. When a medical device is used in a medical procedure, a number
of risks arise that can compromise a device's function or sterility.
Heat-seal coatings reduce the risk of contamination because they ensure
that Tyvek and paper peel cleanly from the remainder of the package and
do not generate particulates when opened. If the package is not easy to
open, a medical professional could drop the device, touch it
inadvertently, or cause it to touch the outside of the package or
something else that is not sterile. Alternatively, if, at the time of
opening, the packaging material releases particulates, those
particulates can contaminate the device.
    15. Coatings also may make certain seals between different
materials possible. For example, hip implants are normally packaged in
rigid trays with die-cut lids made of Tyvek that are cut to match the
shape of the tray. Because of the combined durability of a rigid tray
and coated Tyvek, the pairing often is preferred for packaging
expensive, heavy, or unusually-shaped medical devices. Sealing Tyvek to
a rigid tray, however, is not possible unless the Tyvek is coated. A
coating may also make it possible for sealing to occur at a broader
range of temperatures, which makes coatings particularly important for
medical device manufacturers or converters with older equipment.
    16. The Food and Drug Administration has established strict
regulatory standards for evaluating, selecting, and using medical
packaging materials. Medical device manufacturers have an obligation to
ensure that their medical flexible packaging meets these standards,
which requires qualification of the conditions in which a product will
be manufactured and validation of the packaging's forming, sealing, and
assembly processes.
    17. Before a packaged medical device goes to market, the medical
device manufacturer must qualify the packaging supplier's facilities,
raw materials, and manufacturing line. Additionally, the combination of
device and packaging must be validated by the medical device
manufacturer. The validation process requires numerous tests, including
quality testing, sterilization testing, seal-strength testing, real-
time aging simulations, and shipping and handling simulations. These
safeguards protect patients from hazardous microbes, bacteria, or
particulates that can breach the package's sterile barrier during
transport, storage, or opening.
    18. Qualification and validation of new packaging for a medical
device can take years to complete and cost thousands of dollars. Even
small changes to an existing package can necessitate requalification or
revalidation.
V. RELEVANT MARKETS
A. Product Markets
a. Heat-Seal Coated Medical-Grade Tyvek Rollstock
    19. Heat-seal coated medical-grade Tyvek rollstock (``coated
Tyvek'') is a properly defined relevant product market within the
meaning of Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.
    20. There are no substitutes for coated Tyvek for certain packaging
applications. Uncoated Tyvek lacks the peelability, sealability, and
particulate control of coated Tyvek and does not adhere to a rigid
tray. Medical-grade paper in coated or uncoated form also generally is
not a substitute for coated Tyvek because medical-grade paper lacks the
same degree of durability that Tyvek delivers.
    21. In the event of a small but significant non-transitory price
increase for coated Tyvek, customers would not substitute away from
coated Tyvek in sufficient volume so as to render the price increase
unprofitable.
b. Heat-Seal Coated Medical Grade Paper Rollstock
    22. Heat-seal coated medical-grade paper rollstock (``coated
paper'') is a properly defined relevant product market within the
meaning of Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.
    23. There are no substitutes for coated paper for certain packaging
applications. Uncoated paper lacks the peelability and particulate
control of coated paper. Tyvek rollstock in coated or uncoated form
also generally is not a substitute for applications that rely upon
coated paper, because the price of Tyvek is so much higher than the
price of coated paper that a customer would not switch to Tyvek even
considering Tyvek's superior durability.
    24. In the event of a small but significant non-transitory price
increase for coated paper, customers would not substitute away from
coated paper in sufficient volume so as to render the price increase
unprofitable.
c. Heat-Seal Coated Tyvek Die-Cut Lids
    25. Heat-seal coated Tyvek die-cut lids (``die-cut lids'') are a
properly defined relevant product market within the meaning of Section
7 of the Clayton Act, 15 U.S.C. Sec.  18.
    26. There are no substitutes for die-cut lids when used for certain
applications. Uncoated materials are not substitutes for die-cut lids
because coating is necessary for a lid to adhere to a rigid tray.
Similarly, lids made of paper are not a substitute for die-cut lids
because paper lids lack the same degree of durability as Tyvek.
    27. In the event of a small but significant non-transitory price
increase for die-cut lids, customers would not substitute away from
die-cut lids in sufficient volume so as to render the price increase
unprofitable.
[[Page 30225]]
B. Geographic Market
    28. The relevant geographic market for each of the relevant product
markets is the United States. Producers of the relevant products can
target customers based on their locations. Due to shipping costs and
unique specifications there is no ability to arbitrage. Therefore, the
relevant geographic market for each relevant product market is defined
as sales made to customers in the United States.
VI. ANTICOMPETITIVE EFFECTS
    29. The proposed acquisition of Bemis by Amcor likely would
substantially lessen competition for U.S. customers the three relevant
product markets. Amcor, Bemis, and one other company are the three
primary competitors in each of these markets. The Defendants' combined
share is over 70% in coated Tyvek and coated paper, and over 50% in
die-cut lids.
    30. Market concentration is a useful indication of how rigorous
competition is in a market and whether a transaction is likely to cause
competitive effects. Concentration in relevant markets is typically
measured by the Herfindahl-Hirschman Index (or ``HHI''). Markets in
which the HHI is in excess of 2,500 points are considered highly
concentrated. See U.S. Dep't of Justice & Fed. Trade Comm'n, Horizontal
Merger Guidelines ] 5.3 (revised August 19, 2010) (``Merger
Guidelines''), https://www.justice.gov/atr/horizontal-merger-guidelines-08192010.
    31. As demonstrated in the table below, which is based on
Defendants' 2017 revenues, each of these markets is highly concentrated
and would become significantly more concentrated as a result of the
proposed acquisition.
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                                           Pre-acquisition
                 Market                          HHI               Post-acquisition HHI            HHI delta
----------------------------------------------------------------------------------------------------------------
Coated Tyvek............................               3300  More than 5800..................               2500
Coated Paper............................               3900  8000............................               4200
Die-Cut Lids............................               3600  4900............................               1300
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    32. The proposed acquisition leads to an increase in the HHI of
more than 200 points in each of these product markets, making the
acquisition presumptively harmful under the Horizontal Merger
Guidelines.
    33. The transaction also eliminates head-to-head competition
between Amcor and Bemis and threatens the benefits that customers have
realized from that competition in the form of lower prices and better
service. Due to Amcor and Bemis's collective overall expertise in
meeting the needs of customers and other technical and commercial
factors, including among other things, price, quality, and the ability
to pass each customer's rigorous qualification and validation
procedures, Amcor and Bemis are frequently viewed by each other and by
customers as two of the three most significant competitors in the
market.
    34. Amcor and Bemis competed against each other to win business,
and they proposed pricing and products to customers that reflected an
awareness of that competition. As a result, the ability of each company
to raise prices, reduce quality, or limit technical support services to
Medical Device Manufacturers has been constrained by the possibility of
losing business to the other. For many customers, Amcor and Bemis are
their two best substitutes. By eliminating Bemis as a competitor, Amcor
likely would gain the incentive and ability to increase its bid prices,
reduce quality, and reduce technical support below what it would have
been absent the acquisition.
    35. Customers have benefitted from competition between Amcor and
Bemis through lower prices and higher quality. The combination of Amcor
and Bemis would eliminate this competition and future benefits to
customers and likely would result in harmful unilateral price effects.
VII. ENTRY
    36. Entry is unlikely to prevent or remedy the acquisition's likely
anticompetitive effects. Entry into the development, production, and
sale of the foregoing relevant products is costly and unlikely to be
timely or sufficient to prevent the harm to competition caused by the
elimination of Bemis as an independent supplier.
    37. Barriers to entry include the significant technical expertise
required to design a coating and production process that satisfies
customer requirements. A new supplier would first need to develop and
produce a heat-seal coating sufficient to meet the rigorous standards
set by potential customers. The supplier would then need to develop a
system to apply the coating to meet customers' rigorous standards. In
addition, the technical know-how necessary to pass customers'
qualification tests is difficult to obtain and is learned through a
time-consuming trial-and-error process.
    38. Even after a new entrant has developed the necessary
capabilities, the entrant's product must be qualified and validated by
potential customers, demonstrating that its products can meet rigorous
quality and performance standards. These qualification and validation
requirements discourage entry by imposing substantial costs on
potential suppliers with no guarantee that their products will be
successful in the market. They also take substantial time--in some
cases, years--to complete.
VIII. VIOLATIONS ALLEGED
    39. The acquisition of Bemis by Amcor is likely to lessen
competition substantially in each of the relevant markets set forth
above in violation of Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.
    40. The transaction will likely have the following anticompetitive
effects, among others:
    a. actual and potential competition between Amcor and Bemis in the
relevant markets will be eliminated;
    b. competition generally in the relevant markets will be
substantially lessened; and
    c. prices in the relevant markets will likely increase.
    41. The United States requests that this Court:
    a. adjudge and decree Amcor's acquisition of Bemis to be unlawful
and in violation of Section 7 of the Clayton Act, 15 U.S.C. Sec.  18;
    b. enjoin Defendants and all persons acting on their behalf from
consummating the proposed acquisition of Bemis by Amcor or from
entering into or carrying out any other agreement, plan, or
understanding the effect of which would be to combine Amcor with Bemis;
    c. award the United States its costs of this action; and
    d. grant the United States such other relief as the Court deems
just and proper.
Dated: May 30, 2019
Respectfully submitted,
FOR PLAINTIFF UNITED STATES:
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Makan Delrahim (D.C. Bar 457795)
Assistant Attorney General, Antitrust Division.
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Andrew C. Finch (D.C. Bar 494992)
Principal Deputy Assistant Attorney General, Antitrust Division.
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Bernard A. Nigro, Jr. (D.C. Bar 412357)
Deputy Assistant Attorney General, Antitrust Division.
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Patricia A. Brink
Director of Civil Enforcement, Antitrust Division.
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Maribeth Petrizzi (D.C. Bar 435204)
Chief, Defense, Industrials, and Aerospace Section, Antitrust
Division.
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Stephanie A. Fleming
Assistant Chief, Defense, Industrials, and Aerospace Section,
Antitrust Division.
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Rebecca Valentine * (D.C. Bar 989607)
Jeremy Cline (D.C. Bar 1011073),
Steven A. Harris,
Samer Musallam,
John Lynch (D.C. Bar 418313),
Defense, Industrials, and Aerospace Section, Antitrust Division, 450
Fifth Street N.W., Suite 8700, Washington, D.C. 20530, Telephone
(202) 598-2844, Facsimile (202) 514-9033.
* Counsel of record
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
    UNITED STATES OF AMERICA, Plaintiff, v. AMCOR LIMITED and BEMIS
COMPANY, INC., Defendants.
Case No.: 1:19-CV-01592-TNM
JUDGE: Hon. Trevor N. McFadden
[PROPOSED] FINAL JUDGMENT
    WHEREAS, Plaintiff, United States of America, filed its Complaint
on May 30, 2019, the United States and Defendants, Amcor Limited, and
Bemis Company, Inc., by their respective attorneys, have consented to
the entry of this Final Judgment without trial or adjudication of any
issue of fact or law and without this Final Judgment constituting any
evidence against or admission by any party regarding any issue of fact
or law;
    AND WHEREAS, Defendants agree to be bound by the provisions of this
Final Judgment pending its approval by the Court;
    AND WHEREAS, the essence of this Final Judgment is the prompt and
certain divestiture of certain rights or assets by Defendants to assure
that competition is not substantially lessened;
    AND WHEREAS, the United States requires Defendants to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
    AND WHEREAS, Defendants have represented to the United States that
the divestitures required below can and will be made and that
Defendants will later raise no claim of hardship or difficulty as
grounds for asking the Court to modify any of the divestiture
provisions contained below;
    NOW THEREFORE, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ORDERED, ADJUDGED, AND DECREED:
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, as amended (15 U.S.C. Sec.  18).
II. DEFINITIONS
    As used in this Final Judgment:
    A. ``Acquirer'' means Tekni-Plex, Inc. or the entity to which
Defendants divest the Divestiture Assets.
    B. ``Amcor'' means Defendant Amcor Limited, organized under the
laws of Australia and headquartered in Zurich, Switzerland, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships, and joint ventures, and their directors,
officers, managers, agents, and employees.
    C. ``Bemis'' means Defendant Bemis Company, Inc., a Missouri
corporation headquartered in Neenah, Wisconsin, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and their directors, officers,
managers, agents, and employees.
    D. Tekni-Plex means Tekni-Plex, Inc., a Delaware corporation with
its headquarters in Wayne, Pennsylvania, its successors and assigns,
and its subsidiaries, divisions, groups, affiliates, partnerships, and
joint ventures, and their directors, officers, managers, agents, and
employees.
    E. ``Divestiture Assets'' means:
    1. All interests and rights the Defendants hold in the facilities
located at the following addresses:
    a. 6161 North 64th Street, Milwaukee, Wisconsin 53218 (``Milwaukee
Facility'');
    b. 150 Homer Avenue, Ashland, Massachusetts 01721 (``Ashland
Facility''); and
    c. 4101 Lien Road, Madison, Wisconsin 53704 (``Madison Facility'');
    2. All tangible assets that comprise the Medical Flexibles
Divestiture Business including, but not limited to, research and
development activities; all manufacturing equipment, tooling and fixed
assets, personal property, inventory, office furniture, materials,
supplies, and other tangible property; all licenses, permits,
certifications, and authorizations issued by any governmental
organization; all contracts, teaming arrangements, agreements, leases,
commitments, certifications, qualifications, and understandings,
including supply agreements; all customer lists, contracts, accounts,
and credit records; all repair and performance records; and all other
records; and
    3. All intangible assets used in the design, development,
production, distribution, sale, or service of Medical Flexibles
Packaging, including, but not limited to, all patents; licenses and
sublicenses; intellectual property; copyrights; trademarks; trade
names; service marks; product codes; service names; technical
information; computer software and related documentation; know-how;
trade secrets; drawings; blueprints; designs; design protocols;
specifications for materials; specifications for parts and devices;
safety procedures for the handling of materials and substances; quality
assurance and control procedures; design tools and simulation
capability; all manuals and technical information Defendants provide to
their own employees, customers, suppliers, agents, or licensees; and
all research data concerning historic and current research and
development efforts relating to the Divestiture Assets, including, but
not limited to, designs of experiments and the results of successful
and unsuccessful designs and experiments.
    F. ``Medical Flexibles Divestiture Business'' means all Amcor
business conducted at the Milwaukee Facility and the Ashland Facility,
and all Amcor business conducted at the Madison Facility in the design,
development, production, distribution, sale, or service of Medical
Flexible Packaging.
    G. ``Medical Flexible Packaging'' means any package the shape of
which can be readily changed for medical uses and includes (i) heat-
seal coated Tyvek rollstock, (ii) heat-seal coated Tyvek die-cut lids,
and (iii) heat-seal coated paper rollstock.
    H. ``Core-Peel Technology'' means all intellectual property,
whether or not patented, relating to Core-Peel technology owned by
Amcor, including (1) the International Patent Application Number PCT/
EP2017/082146 (the ``Application'') and all know-how relating to the
subject matter described therein and (2) any patent related to
[[Page 30227]]
Core-Peel Technology that is granted to Amcor in the United States,
including all patents granted in the United States that are part of the
``patent family'' of the patent.
    I. ``Tyvek,'' a registered trademark of DuPont, means spinbonded
material made from high-density polyethylene fibers.
III. APPLICABILITY
    A. This Final Judgment applies to Amcor and Bemis, as defined
above, and all other persons in active concert or participation with
any of them who receive actual notice of this Final Judgment by
personal service or otherwise.
    B. If, prior to complying with Section IV and Section V of this
Final Judgment, Defendants sell or otherwise dispose of all or
substantially all of their assets or of lesser business units that
include the Divestiture Assets, Defendants shall require the purchaser
to be bound by the provisions of this Final Judgment. Defendants need
not obtain such an agreement from the Acquirer of the assets divested
pursuant to this Final Judgment.
IV. DIVESTITURES
    A. Defendants are ordered and directed, within 30 calendar days
after the entry of the Hold Separate Stipulation and Order in this
matter to divest the Divestiture Assets in a manner consistent with
this Final Judgment to an 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 sixty
(60) calendar days in total and shall notify the Court in such
circumstances. Defendants agree to use their best efforts to divest the
Divestiture Assets as expeditiously as possible.
    B. In the event Defendants are attempting to divest the Divestiture
Assets to an Acquirer other than Tekni-Plex, Defendants promptly shall
make known, by usual and customary means, the availability of the
Divestiture Assets. Defendants shall inform any person making an
inquiry regarding a possible purchase of the Divestiture Assets that
they are being divested pursuant to this Final Judgment and provide
that person with a copy of this Final Judgment. Defendants shall offer
to furnish to all prospective Acquirers, subject to customary
confidentiality assurances, all information and documents relating to
the Divestiture Assets customarily provided in a due diligence process,
except information or documents subject to the attorney-client
privilege or work-product doctrine. Defendants shall make available
such information to the United States at the same time that such
information is made available to any other person.
    C. Defendants shall provide the Acquirer and the United States
information relating to the personnel involved in the design,
development, production, distribution, sale, or service of Medical
Flexible Packaging to enable the Acquirer to make offers of employment.
Defendants will not interfere with any negotiations by the Acquirer to
employ any Defendant employee whose primary responsibility is the
design, development, production, distribution, sale, or service of
Medical Flexible Packaging.
    D. Defendants shall permit prospective Acquirers of the Divestiture
Assets to have reasonable access to personnel and to make inspections
of the Milwaukee Facility, Ashland Facility, and Madison Facility;
access to any and all environmental, zoning, and other permit documents
and information; and access to any and all financial, operational, or
other documents and information customarily provided as part of a due
diligence process.
    E. Amcor may elect to sublease a portion of the Madison Facility
for the sole purpose of continuing its current production,
distribution, sale, or servicing of products other than Medical
Flexible Packaging. If Amcor elects to enter into such a sublease,
Amcor must, within six (6) months of the divestiture required under
this Final Judgment, construct a permanent, structural partition
dividing the Madison Facility into two distinct and separate units.
    F. Defendants shall warrant to the Acquirer that each asset will be
operational on the date of sale.
    G. Defendants shall not take any action that will impede in any way
the permitting, operation, or divestiture of the Divestiture Assets.
    H. At the option of the Acquirer, Defendants shall enter into a
supply agreement for Tyvek sufficient to meet all or part of the
Acquirer's needs for a period of up to twelve (12) months. The United
States, in its sole discretion, may approve one or more extensions of
this agreement, for a total of up to an additional twelve (12) months.
If the Acquirer seeks an extension of the term of this agreement,
Defendants shall notify the United States in writing at least three (3)
months prior to the date the agreement expires. The terms and
conditions of any contractual arrangement meant to satisfy this
provision must be reasonably related to market conditions for Tyvek.
    I. Defendants shall grant a perpetual, royalty-free license to the
Acquirer to use Core-Peel technology.
    J. Defendants shall warrant to the Acquirer (1) that there are no
material defects in the environmental, zoning, or other permits
pertaining to the operation of the Divestiture Assets, and (2) that
following the sale of the Divestiture Assets, Defendants will not
undertake, directly or indirectly, any challenges to the environmental,
zoning, or other permits relating to the operation of the Divestiture
Assets.
    K. Unless the United States otherwise consents in writing, the
divestiture pursuant to Section IV or by Divestiture Trustee appointed
pursuant to Section V of this Final Judgment shall include the entire
Divestiture Assets and shall be accomplished in such a way as to
satisfy the United States, in its sole discretion, that the Divestiture
Assets can and will be used by the Acquirer as part of a viable,
ongoing business of the design, development, production, distribution,
sale, and service of Medical Flexible Packaging. If any of the terms of
an agreement between Defendants and the Acquirer to effectuate the
divestitures required by the Final Judgment varies from the terms of
this Final Judgment then, to the extent that Defendants cannot fully
comply with both terms, this Final Judgment shall determine Defendants'
obligations. The divestiture, whether pursuant to Section IV or Section
V of this Final Judgment:
    (1) shall 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) of competing effectively in the business of the design,
development, production, distribution, sale, and service of Medical
Flexible Packaging; and
    (2) shall be accomplished so as to satisfy the United States, in
its sole discretion, that none of the terms of any agreement between
an Acquirer and Defendants give Defendants the ability unreasonably
to raise the Acquirer's costs, to lower the Acquirer's efficiency,
or otherwise to interfere in the ability of the Acquirer to compete
effectively.
V. APPOINTMENT OF DIVESTITURE TRUSTEE
    A. If Defendants have not divested the Divestiture Assets within
the time period specified in Paragraph IV(A), Defendants shall notify
the United States of that fact in writing. Upon application of the
United States, the Court shall appoint a Divestiture Trustee selected
by the United States and approved by the Court to effect the
divestiture of the Divestiture Assets.
    B. After the appointment of a Divestiture Trustee becomes
effective,
[[Page 30228]]
only the Divestiture Trustee shall have the right to sell the
Divestiture Assets. The Divestiture Trustee shall have the power and
authority to accomplish the divestiture to an Acquirer acceptable to
the United States, in its sole discretion, at such price and on such
terms as are then obtainable upon reasonable effort by the Divestiture
Trustee, subject to the provisions of Sections IV, V, and VI of this
Final Judgment, and shall have such other powers as the Court deems
appropriate. Subject to Paragraph V(D) of this Final Judgment, the
Divestiture Trustee may hire at the cost and expense of Defendants any
agents, investment bankers, attorneys, accountants, or consultants, who
shall be solely accountable to the Divestiture Trustee, reasonably
necessary in the Divestiture Trustee's judgment to assist in the
divestiture. Any such agents or consultants shall serve on such terms
and conditions as the United States approves, including confidentiality
requirements and conflict of interest certifications.
    C. Defendants shall not object to a sale by the Divestiture Trustee
on any ground other than the Divestiture Trustee's malfeasance. Any
such objections by Defendants must be conveyed in writing to the United
States and the Divestiture Trustee within ten (10) calendar days after
the Divestiture Trustee has provided the notice required under Section
VI.
    D. The Divestiture Trustee shall serve at the cost and expense of
Defendants pursuant to a written agreement, on such terms and
conditions as the United States approves, including confidentiality
requirements and conflict of interest certifications. The Divestiture
Trustee shall account for all monies derived from the sale of the
assets sold by the Divestiture Trustee and all costs and expenses so
incurred. After approval by the Court of the Divestiture Trustee's
accounting, including fees for any of its services yet unpaid and those
of any professionals and agents retained by the Divestiture Trustee,
all remaining money shall be paid to Defendants and the trust shall
then be terminated. The compensation of the Divestiture Trustee and any
professionals and agents retained by the Divestiture Trustee shall 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, but the timeliness of the divestiture is
paramount. If the Divestiture Trustee and Defendants are unable to
reach agreement on the Divestiture Trustee's or any agents' or
consultants' compensation or other terms and conditions of engagement
within fourteen (14) calendar days of the appointment of the
Divestiture Trustee, the United States may, in its sole discretion,
take appropriate action, including making a recommendation to the
Court. The Divestiture Trustee shall, within three (3) business days of
hiring any other agents or consultants, provide written notice of such
hiring and the rate of compensation to Defendants and the United
States.
    E. Defendants shall use their best efforts to assist the
Divestiture Trustee in accomplishing the required divestiture. The
Divestiture Trustee and any agents or consultants retained by the
Divestiture Trustee shall have full and complete access to the
personnel, books, records, and facilities of the business to be
divested, and Defendants shall provide or develop financial and other
information relevant to such business as the Divestiture Trustee may
reasonably request, subject to reasonable protection for trade secrets;
other confidential research, development, or commercial information; or
any applicable privileges. Defendants shall take no action to interfere
with or to impede the Divestiture Trustee's accomplishment of the
divestiture.
    F. After its appointment, the Divestiture Trustee shall file
monthly reports with the United States setting forth the Divestiture
Trustee's efforts to accomplish the divestiture ordered under this
Final Judgment. Such reports shall include the name, address, and
telephone number of each person who, during the preceding month, made
an offer to acquire, expressed an interest in acquiring, entered into
negotiations to acquire, or was contacted or made an inquiry about
acquiring any interest in the Divestiture Assets and shall describe in
detail each contact with any such person. The Divestiture Trustee shall
maintain full records of all efforts made to divest the Divestiture
Assets.
    G. If the Divestiture Trustee has not accomplished the divestiture
ordered under this Final Judgment within six months after its
appointment, the Divestiture Trustee shall promptly file with the Court
a report setting forth (1) the Divestiture Trustee's efforts to
accomplish the required divestiture; (2) the reasons, in the
Divestiture Trustee's judgment, why the required divestiture has not
been accomplished; and (3) the Divestiture Trustee's recommendations.
To the extent such reports contain information that the Divestiture
Trustee deems confidential, such reports shall not be filed in the
public docket of the Court. The Divestiture Trustee shall at the same
time furnish such report to the United States, which shall have the
right to make additional recommendations consistent with the purpose of
the trust. The Court thereafter shall enter such orders as it shall
deem appropriate to carry out the purpose of the Final Judgment, which
may, if necessary, include extending the trust and the term of the
Divestiture Trustee's appointment by a period requested by the United
States.
    H. If the United States determines that the Divestiture Trustee has
ceased to act or failed to act diligently or in a reasonably cost-
effective manner, the United States may recommend the Court appoint a
substitute Divestiture Trustee.
VI. NOTICE OF PROPOSED DIVESTITURE
    A. Within two (2) business days following execution of a definitive
divestiture agreement, Defendants or the Divestiture Trustee, whichever
is then responsible for effecting the divestiture required herein,
shall notify the United States of any proposed divestiture required by
Section IV or Section V of this Final Judgment. If the Divestiture
Trustee is responsible, it shall similarly notify Defendants. The
notice shall set forth the details of the proposed divestiture and list
the name, address, and telephone number of each person not previously
identified who offered or expressed an interest in or desire to acquire
any ownership interest in the Divestiture Assets, together with full
details of the same.
    B. Within fifteen (15) calendar days of receipt by the United
States of such notice, the United States may request from Defendants,
the proposed Acquirer, any other third party, or the Divestiture
Trustee, if applicable, additional information concerning the proposed
divestiture, the proposed Acquirer, and any other potential Acquirer.
Defendants and the Divestiture Trustee shall furnish any additional
information requested within fifteen (15) calendar days of the receipt
of the request, unless the parties shall otherwise agree.
    C. Within thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after the United States has been
provided the additional information requested from Defendants, the
proposed Acquirer, any third party, and the Divestiture Trustee,
whichever is later, the United States shall provide written notice to
Defendants and the Divestiture Trustee, if there is one, stating
whether or not, in its sole discretion, it objects to the Acquirer or
any other aspect of the proposed divestiture. If the United
[[Page 30229]]
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 V(C) of this Final Judgment. Absent written
notice that the United States does not object to the proposed Acquirer
or upon objection by the United States, a divestiture proposed under
Section IV or Section V shall not be consummated. Upon objection by
Defendants under Paragraph V(C), a divestiture proposed under Section V
shall not be consummated unless approved by the Court.
VII. FINANCING
    Defendants shall not finance all or any part of any purchase made
pursuant to Section IV or Section V of this Final Judgment.
VIII. HOLD SEPARATE
    Until the divestiture required by this Final Judgment has been
accomplished, Defendants shall take all steps necessary to comply with
the Hold Separate Stipulation and Order entered by the Court.
Defendants shall take no action that would jeopardize the divestiture
ordered by the Court.
IX. AFFIDAVITS
    A. Within twenty (20) calendar days of the filing of the Complaint
in this matter, and every thirty (30) calendar days thereafter until
the divestiture has been completed under Section IV or Section V,
Defendants shall deliver to the United States an affidavit, signed by
each Defendant's Chief Financial Officer and General Counsel, which
shall describe the fact and manner of Defendants' compliance with
Section IV or Section V of this Final Judgment. Each such affidavit
shall include the name, address, and telephone number of each person
who, during the preceding thirty (30) calendar days, made an offer to
acquire, expressed an interest in acquiring, entered into negotiations
to acquire, or was contacted or made an inquiry about acquiring, any
interest in the Divestiture Assets, and shall describe in detail each
contact with any such person during that period. Each such affidavit
shall also include a description of the efforts Defendants have taken
to solicit buyers for the Divestiture Assets, and to provide required
information to prospective Acquirers, including the limitations, if
any, on such information. Assuming the information set forth in the
affidavit is true and complete, any objection by the United States to
information provided by Defendants, including limitation on
information, shall be made within fourteen (14) calendar days of
receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, Defendants shall deliver to the United States an
affidavit that describes in reasonable detail all actions Defendants
have taken and all steps Defendants have implemented on an ongoing
basis to comply with Section VIII of this Final Judgment. Defendants
shall deliver to the United States an affidavit describing any changes
to the efforts and actions outlined in Defendants' earlier affidavits
filed pursuant to this Section within fifteen (15) calendar days after
the change is implemented.
    C. Defendants shall keep all records of all efforts made to
preserve and divest the Divestiture Assets until one year after such
divestiture has been completed.
X. COMPLIANCE INSPECTION
    A. For the purposes of determining or securing compliance with this
Final Judgment, or of any related orders such as any Hold Separate
Stipulation and Order or of determining whether the Final Judgment
should be modified or vacated, and subject to any legally-recognized
privilege, from time to time authorized representatives of the United
States, including agents and consultants retained by the United States,
shall, upon written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division and on
reasonable notice to Defendants, be permitted:
    (1) access during Defendants' office hours to inspect and copy
or, at 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, regarding such matters. The interviews
shall be subject to the reasonable convenience of the interviewee
and without restraint or interference by Defendants.
    B. Upon the written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division,
Defendants shall submit written reports or response to written
interrogatories, under oath if requested, relating to any of the
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in
this Section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States, except in the course of legal proceedings to which the United
States is a party (including grand jury proceedings), for the purpose
of securing compliance with this Final Judgment, or as otherwise
required by law.
    D. If at the time that Defendants furnish information or documents
to the United States, Defendants represent and identify in writing the
material in any such information or documents to which a claim of
protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules
of Civil Procedure, and Defendants mark each pertinent page of such
material, ``Subject to claim of protection under Rule 26(c)(1)(G) of
the Federal Rules of Civil Procedure,'' then the United States shall
give Defendants ten (10) calendar days' notice prior to divulging such
material in any legal proceeding (other than a grand jury proceeding).
XI. LIMITS ON ACQUISITIONS AND COLLABORATIONS
    Defendants may not reacquire any part of the Divestiture Assets
during the term of this Final Judgment. In addition, Defendants and
Acquirer shall not, without the prior written consent of the United
States, enter into any new collaboration or expand the scope of any
existing collaboration involving any of the Divestiture Assets during
the term of this Final Judgment. The decision whether or not to consent
to a collaboration shall be within the sole discretion of the United
States.
XII. 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.
XIII. 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 any civil contempt
action, any motion to show cause, or any similar action brought by the
United States regarding an alleged violation of this Final Judgment,
the United States may establish a violation of the decree and the
appropriateness of any remedy therefor by a preponderance of the
evidence, and Defendants waive any
[[Page 30230]]
argument that a different standard of proof should apply.
    B. The Final Judgment should be interpreted to give full effect to
the procompetitive purposes of the antitrust laws and to restore all
competition 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 any enforcement proceeding in which the Court finds that
Defendants have violated this Final Judgment, the United States may
apply to the Court for a one-time extension of this Final Judgment,
together with such other relief as may be appropriate. In connection
with any successful effort by the United States to enforce this Final
Judgment against a Defendant, whether litigated or resolved prior to
litigation, that Defendant agrees to reimburse the United States for
the fees and expenses of its attorneys, as well as any other costs
including experts' fees, incurred in connection with that enforcement
effort, including in the investigation of the potential violation.
    D. For a period of four (4) years after the expiration of the Final
Judgment pursuant to Section XIV, 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 under this Section, (2)
any appropriate contempt remedies, (3) any additional relief needed to
ensure the Defendant complies with the terms of the Final Judgment, and
(4) fees or expenses as called for in Paragraph XIII(C).
XIV. EXPIRATION OF FINAL JUDGMENT
    Unless the Court grants an extension, this Final Judgment shall
expire ten (10) years from the date of its entry, except that after
five (5) 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 that the continuation of
the Final Judgment no longer is necessary or in the public interest.
XV. 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. Sec.  16, including making copies available to
the public of this Final Judgment, the Competitive Impact Statement,
any comments thereon, and the United States' responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and responses 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. Sec.  16]
-----------------------------------------------------------------------
United States District Judge
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
    UNITED STATES OF AMERICA, Plaintiff, v. AMCOR LIMITED and BEMIS
COMPANY, INC., Defendants.
Case No.: 1:19-CV-01592-TNM
JUDGE: Hon. Trevor N. McFadden
Deck Type: Antitrust
COMPETITIVE IMPACT STATEMENT
    Plaintiff United States of America (``United States''), pursuant to
Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or
``Tunney Act''), 15 U.S.C. Sec.  16(b)-(h), files this Competitive
Impact Statement relating to the proposed Final Judgment submitted for
entry in this civil antitrust proceeding.
I.
NATURE AND PURPOSE OF THE PROCEEDING
    On August 6, 2018, Defendants Amcor Limited (``Amcor'') and Bemis
Company, Inc. (``Bemis'') entered into a Transaction Agreement,
pursuant to which Amcor proposes to acquire all of the shares of Bemis
for $6.8 billion. The United States filed a civil antitrust Complaint
on May 30, 2019, seeking to enjoin the proposed acquisition. The
Complaint alleges that the likely effect of this acquisition would be
to substantially lessen competition in the development, production, and
sale of heat-seal coated medical-grade Tyvek (``coated Tyvek''), heat-
seal coated medical-grade paper (``coated paper''), and heat-seal
coated Tyvek die-cut lids (``die-cut lids''), in violation of Section 7
of the Clayton Act, 15 U.S.C. Sec.  18. This loss of competition likely
would result in higher prices and lower-quality medical flexible
packaging products.
    At the same time the Complaint was filed, the United States also
filed a Hold Separate Stipulation and Order (``Hold Separate'') and
proposed Final Judgment, which are designed to eliminate the
anticompetitive effects of the acquisition. Under the proposed Final
Judgment, which is explained more fully below, Amcor is required to
divest its Ashland, Massachusetts, Milwaukee, Wisconsin, and Madison,
Wisconsin facilities, along with certain tangible and intangible assets
(collectively, ``Divestiture Assets''). Under the terms of the Hold
Separate, Amcor will take certain steps to ensure that the Divestiture
Assets are operated as a competitively independent, economically viable
and ongoing business concern, that will remain independent and
uninfluenced by Amcor, and that competition is maintained during the
pendency of the ordered divestitures.
    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 would terminate this action, except that
the Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II.
DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATION
A. The Defendants and the Proposed Transaction
    Amcor and Bemis are global manufacturers of flexible packaging,
rigid containers, specialty cartons, closures, and services for the
food, beverage, pharmaceutical, medical-device, home, and personal care
industries. Amcor, which is headquartered in Zurich, Switzerland, sold
more than $9 billion in packaging products in 2018, including
approximately $288 million in sales of flexible packaging for medical
use (``Medical Flexible Packaging'') in the United States. Bemis, which
is headquartered in Neenah, Wisconsin, sold more than $4 billion in
packaging products in 2018, including approximately $260.9 million in
sales of Medical Flexible Packaging in the United States.
    In the United States, Amcor and Bemis are two of only three
significant suppliers of three highly-engineered
[[Page 30231]]
medical packaging products that protect medical devices throughout
their journey from a medical device manufacturer's facility into the
hands of a medical professional: heat-seal coated medical-grade Tyvek
rollstock (``coated Tyvek''), heat-seal coated medical-grade paper
rollstock (``coated paper''), and heat-seal coated medical-grade Tyvek
die-cut lidding (``die-cut lids''). In 2017, Amcor and Bemis
represented more than 70% of sales in coated Tyvek and coated paper in
the United States and over 50% of sales in die-cut lids in the United
States. The proposed transaction, as initially agreed to by Defendants,
would lessen competition substantially for these medical packaging
products, which are the subject of the Complaint and proposed Final
Judgment filed by the United States on May 30, 2019.
B. The Competitive Effects of the Transaction
    An extensive investigation by the United States revealed that
Amcor's proposed acquisition of Bemis likely would result in increased
prices and lower-quality service for U.S. customers purchasing coated
Tyvek, coated paper, and die-cut lids. Amcor and Bemis are two of only
three primary suppliers of these products, and for many customers, they
are each other's closest competitor. The transaction will harm
customers by eliminating the benefits of competition that these
customers have realized due to head-to-head competition.
1. Relevant Markets
    As alleged in the Complaint, coated Tyvek, coated paper, and die-
cut lids are relevant product markets under Section 7 of the Clayton
Act. Of the many materials used in Medical Flexible Packaging, medical-
grade paper and Tyvek have particular properties--breathability (i.e.,
the ability to be permeated by ethylene oxide gas during sterilization)
and, for Tyvek, durability--that make them uniquely suited for
sterilizing and packaging certain medical devices. Medical-grade paper
and Tyvek may be wound on a roll (``rollstock'') or ``converted'' into
a finished product such as a lid, bag, or pouch, and both materials may
be heat-seal coated to impart additional properties on a medical
device's package. Heat-seal coatings may be required by medical device
manufacturers for certain packaging applications, to reduce the risks
of contamination that arise when a package is difficult to open and to
make seals between different materials possible.
    There are no substitutes for coated Tyvek, coated paper, or die-cut
lids for certain packaging applications. Alternatives to coated Tyvek
lack the necessary peelability, sealability, and particulate control
attributes, and do not adhere to rigid trays. Alternatives to coated
paper lack the necessary peelability and particulate control
attributes, or are more expensive than coated paper. Finally,
alternatives to die-cut lids lack the durability or the ability to
adhere that lidding made of Tyvek possesses.
    The Complaint alleges that the relevant geographic market for each
of the relevant product markets is the United States. Producers of
Medical Flexible Packaging know the locations of their customers and
can adjust their pricing based on the availability of alternatives to a
customer at a particular location. Due to shipping costs and unique
specifications, there is no ability for customers to arbitrage.
Therefore, the relevant geographic market for each relevant product
market is defined as sales made to customers in the United States.
2. Competitive Effects
    As explained in the Complaint, the proposed acquisition would
eliminate competition between Amcor and Bemis to supply coated Tyvek,
coated paper, and die-cut lids, resulting in higher prices and lower-
quality products. The relevant markets are highly concentrated and
would become significantly more concentrated as a result of the
proposed acquisition, making the transaction presumptively harmful
under the Horizontal Merger Guidelines. Amcor and Bemis have
established themselves as two of only three suppliers in the market
with the necessary expertise to meet the price, quality, technical
service, and regulatory rigors of manufacturing the relevant products.
Competition between the two companies has constrained the ability of
either company to raise prices, reduce quality, or limit technical
support to customers. These constraints would no longer exist after the
proposed acquisition is consummated.
3. Entry
    According to the Complaint, entry is unlikely to prevent or remedy
the anticompetitive effects caused by the elimination of Bemis as an
independent supplier. An entrant first would need a high-quality coated
paper, coated Tyvek, or die-cut lid product to sell. Creating such a
product would require development of a coating formula and a
methodology for applying coating that would meet the rigorous standards
of medical device manufacturers. The quality of the entrant's product
then would need to be proven through a series of qualification and
validation exercises that can take years to complete. These
qualification and validation requirements discourage entry by imposing
substantial costs on potential suppliers with no guarantee that their
products will be successful in the market.
III.
EXPLANATION OF THE PROPOSED FINAL JUDGMENT
    The divestitures required by the proposed Final Judgment will
eliminate the anticompetitive effects of the acquisition with respect
to coated Tyvek, coated paper, and die-cut lids by establishing a new,
independent, and economically viable competitor. The proposed Final
Judgment requires Defendants, within 30 calendar days after the entry
of the Hold Separate by the Court, to divest the Divestiture Assets in
such a way as to satisfy the United States, in its sole discretion,
that the Divestiture Assets can and will be operated by the purchaser
as a viable, ongoing business that can compete effectively in the
relevant market. Defendants must take all reasonable steps necessary to
accomplish the divestitures quickly and must cooperate with prospective
purchasers.
    The proposed Final Judgment requires Defendants to divest the
Divestiture Assets to an Acquirer acceptable to the United States, in
its sole discretion. Because the Divestiture Assets are distributed
across multiple sites, the United States required an upfront buyer to
provide additional certainty that the transaction can be accomplished
without disruption to the Medical Flexible Packaging business. The
United States has approved Tekni-Plex, Inc. as the Acquirer of the
Divestiture Assets. Tekni-Plex, Inc. is an experienced and well-known
flexible packaging and medical product supplier.
    The proposed Final Judgment requires the divestitures of all
interests and rights in three Amcor facilities involved in the design,
development, production, distribution, sale, or service of Medical
Flexible Packaging: one in Ashland, Massachusetts (``Ashland
Facility''), one in Milwaukee, Wisconsin (``Milwaukee Facility''), and
one in Madison, Wisconsin (``Madison Facility''). The Divestiture
Assets include all tangible and intangible assets at Amcor's Milwaukee
and Ashland Facilities, as well as all tangible and intangible Medical
Flexible Packaging assets in the
[[Page 30232]]
Madison Facility.\1\ The divestitures of the Ashland, Milwaukee, and
Madison Facilities will eliminate the anticompetitive effects of the
acquisition without disrupting the supply chain of existing medical
device manufacturer customers of those facilities, which otherwise
would require those medical device manufacturers to revalidate their
packaging or requalify alternative facilities, raw materials, or
manufacturing lines.
---------------------------------------------------------------------------
    \1\ In addition to assets used to manufacture coated Tyvek,
coated paper, and die-cut lids, the Divestiture Assets include other
Medical Flexible Packaging manufacturing assets used to manufacture
laminates and cold seal products. Paragraph IV(I) of the proposed
Final Judgment also requires Amcor to grant a license to the
Acquirer for current or future intellectual property rights in Core-
Peel technology.
---------------------------------------------------------------------------
    Paragraph IV(E) of the proposed Final Judgment provides that, for
the sole purpose of manufacturing products other than Medical Flexible
Packaging (for example, food packaging or personal care packaging),
Amcor may sublease a portion of the Madison Facility. This provision
ensures that the non-medical customers that Amcor currently serves from
the Madison Facility can continue to be served from that facility. If
production of those customers' products were instead moved to another
facility, most such customers would be forced to incur significant
expenses and supply disruptions associated with revalidating packaging
or requalifying alternative facilities, raw materials, or manufacturing
lines. These requalification procedures can take significant time to
complete and create substantial supply risks to customers.
Requalification also would likely create a long-term entanglement
between Amcor and the Acquirer during the period in which the business
was transitioned out of the Madison facility to a different Amcor
facility. To avoid these issues, during the term of the Final Judgment,
Amcor is permitted under the Final Judgment to continue its
manufacturing operations in flexible packaging for food and other
products other than those relating to Medical Flexible Packaging. If
Amcor chooses to enter into a sublease, however, Amcor must, within six
months of the divestitures required by the Proposed Final Judgment,
construct a permanent, structural partition that physically isolates
Amcor's operations from the Acquirer's. The partition ensures that
Amcor and the Acquirer's businesses will be physically separated and
that each company's competitively sensitive information will remain
protected. Because Amcor and the Acquirer will not be producing
competing products at the same facility during the term of the Final
Judgment, there is no risk of competitive information sharing.
    To facilitate the Acquirer's immediate use of the Divestiture
Assets, Paragraph IV(H) of the proposed Final Judgment provides the
Acquirer with the option to enter into a supply agreement for Tyvek
sufficient to meet the Acquirer's needs for a period of up to 12
months. The United States may approve one or more extensions of the
supply agreement for a total of up to an additional 12 months.
    Paragraph IV(A) of the proposed Final Judgment requires Amcor to
complete its divestitures within 30 days after the entry of the Hold
Separate Stipulation and Order. Defendants must take all reasonable
steps necessary to accomplish the divestitures quickly and must
cooperate with prospective purchasers.
    In the event that Defendants do not accomplish the divestitures
within the periods prescribed in the proposed Final Judgment, the Final
Judgment provides that the Court will appoint a trustee selected by the
United States to effect the divestitures.
    The proposed Final Judgment also contains provisions designed to
promote compliance and make the enforcement of the Final Judgment as
effective as possible. Paragraph XIII(A) provides that the United
States retains and reserves all rights to enforce the provisions of the
proposed Final Judgment, including its rights 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 obligations with the
standard of proof that applies to the underlying offense that the
compliance commitments address.
    Paragraph XIII(B) provides additional clarification regarding the
interpretation of the provisions of the proposed Final Judgment. The
proposed Final Judgment was drafted to restore all competition that
would otherwise be harmed by the merger. Defendants agree that they
will abide by the proposed Final Judgment, and that they may be held in
contempt of this 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 XIII(C) of the proposed Final Judgment provides that
should the Court find in an enforcement proceeding that Defendants have
violated the Final Judgment, the United States may apply to the Court
for a one-time extension of the Final Judgment, together with such
other relief as may be appropriate. In addition, in order to compensate
American taxpayers for any costs associated with the investigation and
enforcement of violations of the proposed Final Judgment, Paragraph
XIII(C) provides that in any successful effort by the United States to
enforce the Final Judgment against a Defendant, whether litigated or
resolved prior to litigation, that Defendant agrees to reimburse the
United States for attorneys' fees, experts' fees, or costs incurred in
connection with any enforcement effort, including the investigation of
the potential violation.
    Paragraph XIII(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 under
Section XIV. This provision is meant to address circumstances such as
when evidence that a violation of the Final Judgment occurred during
the term of the Final Judgment is not discovered until after the Final
Judgment has expired or been terminated or when there is not sufficient
time for the United States to complete an investigation of an alleged
violation until after the Final Judgment has expired or been
terminated. This provision, therefore, makes clear that, for four years
after the Final Judgment has expired or been terminated, the United
States may still challenge a violation that occurred during the term of
the Final Judgment.
    Finally, Section XIV of the proposed Final Judgment provides that
the Final Judgment shall expire ten 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 the Final Judgment is no longer necessary or in the
public interest.
    The divestitures of these assets to an Acquirer acceptable to the
United States will eliminate the anticompetitive effects of the
acquisition in the relevant markets by establishing a new, independent,
and economically viable competitor.
[[Page 30233]]
IV.
REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS
    Section 4 of the Clayton Act, 15 U.S.C. Sec.  15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
Sec.  16(a), the proposed Final Judgment has no prima facie effect in
any subsequent private lawsuit that may be brought against Defendants.
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
United States Department of Justice, which remains free to withdraw its
consent to the proposed Final Judgment at any time prior to the Court's
entry of judgment. The comments and the response of the United States
will be filed with the Court. In addition, comments will be posted on
the U.S. Department of Justice, Antitrust Division's internet website
and, under certain circumstances, published in the Federal Register.
    Written comments should be submitted to:
Maribeth Petrizzi, Chief
Defense, Industrials, and Aerospace Section
Antitrust Division
United States Department of Justice
450 5th St. N.W.
Suite 8700
Washington, D.C. 20530
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI.
ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT
    The United States considered, as an alternative to the proposed
Final Judgment, a full trial on the merits against Defendants. The
United States could have continued the litigation and sought
preliminary and permanent injunctions against Defendant's acquisition
of Bemis. The United States is satisfied, however, that the
divestitures of assets described in the proposed Final Judgment will
preserve competition for the provision of Medical Flexible Packaging in
the relevant markets identified by the United States. Thus, the
proposed Final Judgment would achieve 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
of the Complaint.
VII.
STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENT
    The Clayton Act, as amended by the APPA, requires that proposed
consent judgments in antitrust cases brought by the United States be
subject to a 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. Sec.  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. Sec.  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 the court's
review of a consent judgment is limited and only inquires ``into
whether the government's determination that the proposed remedies will
cure the antitrust violations alleged in the complaint was reasonable,
and whether the mechanism to enforce the final judgment are clear and
manageable'').
    As the United States Court of Appeals for the District of Columbia
Circuit has held, under the APPA a court considers, among other things,
the relationship between the remedy secured and the specific
allegations in the government's complaint, whether the Final Judgment
is sufficiently clear, whether its enforcement mechanisms are
sufficient, and whether the Final Judgment may positively harm third
parties. See Microsoft, 56 F.3d at 1458-62. With respect to the
adequacy of the relief secured by the Final Judgment, a court may not
``engage in an unrestricted evaluation of what relief would best serve
the public.'' United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir.
1988) (quoting United States v. Bechtel Corp., 648 F.2d 660, 666 (9th
Cir. 1981)); see also Microsoft, 56 F.3d at 1460-62; United States v.
Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S.
Dist. LEXIS 84787, at *3. Instead:
[t]he balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
[[Page 30234]]
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\
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    \2\ See also BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); United States v. Gillette Co.,
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the
court is constrained to ``look at the overall picture not
hypercritically, nor with a microscope, but with an artist's
reducing glass'').
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    The United States' predictions with respect to 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 in 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
United States v. Western Elec. Co., 900 F.2d 283, 309 (D.C. Cir.
1990)).
    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 (``the `public
interest' is not to be measured by comparing the violations alleged in
the complaint against those the court believes could have, or even
should have, been alleged''). Because the ``court's authority to review
the decree depends entirely on the government's exercising its
prosecutorial discretion by bringing a case in the first place,'' it
follows that ``the court is only authorized to review the decree
itself,'' and not to ``effectively redraft the complaint'' to inquire
into other matters that the United States did not pursue. Microsoft, 56
F.3d at 1459-60.
    In its 2004 amendments to the APPA,\3\ Congress made clear its
intent to preserve the practical benefits of utilizing consent Final
Judgments in antitrust enforcement, adding the unambiguous instruction
that ``[n]othing in this section shall be construed to require the
court to conduct an evidentiary hearing or to require the court to
permit anyone to intervene.'' 15 U.S.C. Sec.  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 United States v. Enova Corp., 107 F. Supp. 2d 10, 17 (D.D.C.
2000)).
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    \3\ Pub. L. 108-237, Sec.  221.
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VIII.
DETERMINATIVE DOCUMENTS
    There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Dated: June 14, 2019
Respectfully submitted,
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REBECCA VALENTINE * (D.C. Bar 989607)
Defense, Industrials, and Aerospace Section, Antitrust Division, 450
Fifth Street N.W., Suite 8700, Washington, D.C. 20530, Telephone
(202) 598-2844, Facsimile (202) 514-9033
* Counsel of record
[FR Doc. 2019-13531 Filed 6-25-19; 8:45 am]
BILLING CODE 4410-11-P