United States v. Symrise AG, et al. Proposed Final Judgment and Competitive Impact Statement

 
CONTENT
Federal Register, Volume 84 Issue 228 (Tuesday, November 26, 2019)
[Federal Register Volume 84, Number 228 (Tuesday, November 26, 2019)]
[Notices]
[Pages 65174-65185]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25600]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Symrise AG, et al. Proposed Final Judgment and
Competitive Impact Statement
    Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation, and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America v. Symrise AG, et al., Civil Action No. 1:19-cv-
03263. On October 30, 2019, the United States filed a Complaint
alleging that Symrise AG's proposed acquisition of IDF Holdco, Inc. and
ADF Holdco, Inc.'s chicken-based food ingredients 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 Symrise AG
to divest its Banks County facility in Georgia that manufactures and
sells chicken-based food ingredients.
    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
[[Page 65175]]
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 Robert Lepore,
Acting Chief, Transportation, Energy & Agriculture Section, Antitrust
Division, Department of Justice, 450 Fifth Street NW, Suite 8000,
Washington, DC 20530 (telephone: 202-307-6349).
Amy Fitzpatrick,
Counsel to the Senior Director of Investigations and Litigation.
United States District Court for the District of Columbia
    United States of America, Department of Justice, Antitrust
Divisio[beta]e 1, 37603 Holzminden, Germany and IDF Holdco, Inc.,
3801 East Sunshine Street, Springfield, MO 65809 and ADF Holdco,
Inc., 3801 East Sunshine Street, Springfield, MO 65809, Defendants.
CASE NO.: 1:19-cv-03263
JUDGE: Hon. Royce Lamberth
Complaint
    The United States of America brings this civil action pursuant to
Section 7 of the Clayton Act, 15 U.S.C. 18, to enjoin the acquisition
of International Dehydrated Foods, LLC (``IDF'') and American
Dehydrated Foods, LLC (``ADF'') (collectively ``IDF/ADF'') from IDF
Holdco, Inc. and ADF Holdco, Inc. by Symrise AG (``Symrise'') and to
obtain other equitable relief. The United States alleges as follows:
I. Nature of the Action
    1. Symrise's acquisition of IDF/ADF would combine two of the
leading manufacturers and sellers of chicken-based food ingredients
made from human-grade natural chicken, including chicken broth, chicken
fat, and cooked chicken meat (hereafter ``chicken-based food
ingredients'') and sold to food manufacturers in the United States.
Symrise and IDF/ADF manufacture chicken-based food ingredients for use
by manufacturers of food for people and pets (collectively ``food
manufacturers'') in products such as soups, stews, sauces, gravies, dry
seasonings, and baking mixes.
    2. Food manufacturers purchase chicken-based food ingredients to
provide taste, nutritional content, and functional characteristics to
the food manufacturers' end products. Food manufacturers have few
alternatives to chicken-based food ingredients, which provide the
unique flavor and texture profiles of food manufacturers' branded
soups, sauces, and gravies. In addition, United States Department of
Agriculture regulations require chicken-based food ingredients to be
manufactured domestically, which prevents food manufacturers from
turning to imports.
    3. IDF/ADF is the established United States market leader in the
manufacture and sale of chicken-based food ingredients for food
manufacturers, with a market share of approximately 54%.
    4. Symrise, a leading manufacturer of chicken-based food
ingredients in Europe recently entered the United States market by
building a state-of-the-art chicken-based food ingredients plant in
Banks County, Georgia. The plant opened in October 2018. Symrise is
poised to become the second-largest manufacturer of chicken-based food
ingredients in the United States, as its newly opened Banks County
plant represents 23% of the manufacturing capacity in the market.
    5. Symrise now seeks to acquire IDF/ADF. If the acquisition is
allowed to proceed, the competition between these companies in the
manufacture and sale of chicken-based food ingredients in the United
States will be lost, and the merged firm will control 75% of the
capacity in the market, leading to higher prices, reduced service
quality, and diminished innovation.
    6. Accordingly, as alleged more specifically below, the
acquisition, if consummated, likely would substantially lessen
competition in violation of Section 7 of the Clayton Act, 15 U.S.C. 18,
and should be enjoined.
II. Defendants and the Transaction
    7. Defendant Symrise is a global company headquartered in
Holzminden, Germany.
    Symrise has diversified operations in multiple lines of business,
including a chicken-based food ingredients business run by its Diana
Food and Diana Pet Food subsidiaries. Symrise is the market leader in
Europe in manufacturing and selling chicken-based food ingredients to
food manufacturers. In 2019, Symrise began to sell products from its
newly constructed plant in Banks County, Georgia, to United States food
manufacturers, including to some of IDF/ADF's largest customers. The
plant represents approximately 23% of the capacity in the market for
the manufacture and sale of chicken-based food ingredients.
    8. Defendants IDF Holdco, Inc. and ADF Holdco, Inc. are the
ultimate parent entities of IDF and ADF, family-owned limited liability
companies headquartered in Springfield, Missouri. IDF manufactures
chicken-based food ingredients. ADF holds the family's interests in
Food Ingredient Technologies, LLC (``Fitco'') which also manufactures
chicken-based food ingredients. The chicken-based food ingredients
operations of IDF and ADF's Fitco business are run in an integrated
fashion and include plants in Anniston, Alabama and Monett, Missouri.
Like Symrise, IDF/ADF manufactures and sells chicken-based food
ingredients to food manufacturers in the United States. IDF/ADF is the
largest supplier of chicken-based food ingredients in the United States
with a capacity-based market share of approximately 54% and 2018 fiscal
year sales of $177 million.
    9. Pursuant to a Purchase Agreement dated January 31, 2019
(``Transaction''), Symrise will acquire IDF/ADF, and related assets for
approximately $900 million.
III. Jurisdiction and Venue
    10. 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, 15 U.S.C. 18.
    11. Defendants manufacture chicken-based food ingredients in the
flow of interstate commerce, and their sale of chicken-based food
ingredients substantially affects interstate commerce. The Court has
subject matter jurisdiction over this action pursuant to Section 15 of
the Clayton Act, 15 U.S.C. 25, and 28 U.S.C. 1331, 1337(a), and 1345.
    12. Defendants have consented to venue and personal jurisdiction in
the District of Columbia for adjudication of this matter. Venue is
therefore proper in this district under Section 12 of the Clayton Act,
15 U.S.C. 22 and 28 U.S.C. 1391(b) and (c).
IV. Relevant Market
    13. Chicken-based food ingredients manufactured and sold to food
manufacturers is a relevant product market and line of commerce under
Section 7 of the Clayton Act. Food manufacturers have no reasonable
substitutes for chicken-based food ingredients. Because food
manufacturers have no reasonable alternatives to chicken-based food
ingredients, few, if any, food manufacturers would substitute to other
products in response to a price increase.
[[Page 65176]]
    14. Food manufacturers choose from chicken-based food ingredients
suppliers that can provide the flavor, nutritional profile, and
functional characteristics required by the food manufacturers'
manufacturing processes. The market for chicken-based food ingredients
is nationwide. Symrise and IDF/ADF compete with one another for
customers throughout the United States.
    15. A well-accepted methodology for assessing whether a group of
products and services sold in a particular area constitutes a relevant
market under the Clayton Act is to ask whether a hypothetical
monopolist over all the products sold in the area would raise prices
for a non-transitory period by a small but significant amount, or
whether enough customers would switch to other products or services or
purchase outside the area such that the price increase would be
unprofitable. Fed. Trade Comm'n & U.S. Dep't of Justice Horizontal
Merger Guidelines (2010); accord Fed. Trade Comm'n v. Whole Foods Mkt.,
548 F.3d 1028, 1038 (D.C. Cir. 2008). A hypothetical monopolist of
chicken-based food ingredients manufactured and sold in the United
States likely would impose at least a small but significant price
increase because few if any customers would substitute to purchasing
other products. Therefore, the manufacture and sale of chicken-based
food ingredients in the United States is a relevant market under
Section 7 of the Clayton Act.
V. Likely Anticompetitive Effects
    16. The proposed acquisition is likely to lead to anticompetitive
effects. As an initial matter, the transaction is presumptively
anticompetitive. The Supreme Court has held that mergers that
significantly increase concentration in concentrated markets are
presumptively anticompetitive and, therefore, unlawful. See United
States v. Phila. Nat'l Bank, 374 U.S. 321, 363-65 (1963). To measure
market concentration, courts often use the Herfindahl-Hirschman Index
(``HHI'') as described in the Horizontal Merger Guidelines.\1\ 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.
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    \1\ See U.S. Dep't of Justice and Federal Trade Commission,
Horizontal Merger Guidelines Sec.  5.3 (2010), available at http://www.justice.gov/atr/public/guidelines/hmg-2010 html. The HHI is
calculated by squaring the market share of each firm competing in
the market and then summing the resulting numbers. For example, for
a market consisting of four firms with shares of 30, 30, 20, and 20
percent, the HHI is 2,600 (30\2\ + 30\2\ + 20\2\ + 20\2\ = 2,600).
The HHI takes into account the relative size distribution of the
firms in a market. It approaches zero when a market is occupied by a
large number of firms of relatively equal size and reaches its
maximum of 10,000 points when a market is controlled by a single
firm. The HHI increases both as the number of firms in the market
decreases and as the disparity in size between those firms
increases.
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    17. The relevant market is highly concentrated and would become
more concentrated as a result of the Transaction. IDF/ADF's share of
the relevant market based on its maximum capacity to process chicken
into ingredients is approximately 54%. Symrise's new Banks County plant
has the capacity to take a 23% share of the market. None of the
remaining manufacturers holds larger than 6% share.
    18. The market for the manufacture and sale of chicken-based food
ingredients in the United States currently is highly concentrated, with
an HHI over 3,500. The Transaction would increase the HHI by about
2,400, rendering the Transaction presumptively anticompetitive under
Supreme Court precedent.
    19. Defendants are two of only a few firms that have the technical
capabilities and expertise to manufacture and sell chicken-based food
ingredients in the United States. Defendants vigorously compete on
price, service quality, and product development, and customers have
benefitted from this competition.
    20. The Transaction would eliminate the competition between
Defendants to manufacture and sell chicken-based food ingredients to
food manufacturers in the United States. After the Transaction, Symrise
would gain the incentive and ability to raise its prices significantly
above competitive levels, reduce its investment in research and
development, and provide lower levels of service.
VI. Absence of Countervailing Factors
    21. Entry by a new manufacturer of chicken-based food ingredients
or expansion of existing marginal manufacturers would not be timely,
likely, and sufficient to prevent the substantial lessening of
competition caused by the elimination of IDF/ADF as an independent
competitor.
    22. Successful entry into the market for the manufacture and sale
of chicken-based food ingredients in the United States is difficult,
costly, and time consuming. Any entrant would need to develop
infrastructure, research and development capabilities to allow it to
manufacture ingredients to match the taste and other characteristics
desired by customers, supply relationships to provide reliable access
to raw materials, and a track record of successfully meeting customer
needs in the food industry. Because of the significant investment food
manufacturers make in developing products according to specific taste,
nutritional, and other characteristics, as well as the high costs of
any problem or delay in production, food manufacturers are unlikely to
switch away from established chicken-based food ingredients
manufacturers, making it difficult for new chicken-based food
ingredients manufacturers to enter the market. As an example, it took
Symrise, an experienced food ingredients manufacturer with extensive
chicken-based food ingredients operations in Europe, almost three years
to construct the plant in Banks County, Georgia, that opened recently.
Finally, as noted above, United States Department of Agriculture
regulations prevent food manufacturers from importing products from
abroad.
    23. Defendants cannot demonstrate cognizable and merger-specific
efficiencies that would be sufficient to offset the Transaction's
anticompetitive effects.
VII. Violation Alleged
    24. The effect of the Transaction, if consummated, would likely be
to lessen substantially competition for chicken-based food ingredients
manufactured and sold to food manufacturers in the United States in
violation of Section 7 of the Clayton Act, 15 U.S.C. 18. Unless
restrained, the Transaction would likely have the following effects,
among others:
    (a) Competition in the market for chicken-based food ingredients
sold to food manufacturers in the United States would be substantially
lessened;
    (b) prices for chicken-based food ingredients sold to food
manufacturers in the United States would increase;
    (c) the quality of chicken-based food ingredients sold to food
manufacturers in the United States would decrease; and
    (d) innovation in the market for chicken-based food ingredients
sold to food manufacturers in the United States would diminish.
VIII. Requested Relief
    25. The United States requests that this Court:
    (a) Adjudge Symrise's proposed acquisition of IDF/ADF to violate
Section 7 of the Clayton Act, 15 U.S.C. 18;
    (b) Permanently enjoin and restrain Defendants from consummating
the proposed acquisition by Symrise of IDF/ADF or from entering into or
carrying out any contract, agreement, plan, or
[[Page 65177]]
understanding, the effect of which would be to combine Symrise and IDF/
ADF;
    (c) Award the United States its costs for this action; and
    (d) Award the United States such other and further relief as the
Court deems just and proper.
Dated: October 30, 2019
Respectfully submitted,
FOR PLAINTIFF UNITED STATES:
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Makan Delrahim
Assistant Attorney General
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Bernard A. Nigro, Jr.
Deputy Assistant Attorney General
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Kathleen S. O'neill
Senior Director of Investigations & Litigation
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Robert A. Lepore
Acting Chief, Transportation, Energy & Agriculture Section
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Patricia C. Corcoran
Assistant Chief, Transportation, Energy & Agriculture Section
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William M. Martin
Jeremy Evans (D.C. Bar #478097)
Barbara W. Cash
Attorneys for the United States, U.S. Department of Justice,
Antitrust Division, 450 5th Street NW, Suite 8000, Washington, DC
20530, (202) 598-8193, [email protected].
United States District Court for the District of Columbia
    United States of America, Department of Justice, Antitrust
Division, 450 5th Street NW, Suite 8000, Washington, DC 20530
Plaintiff, v. Symrise AG, M[uuml]hlenfeldstra[beta]e 1, 37603
Holzminden, Germany and IDF Holdco, Inc., 3801 East Sunshine Street,
Springfield, MO 65809 and ADF Holdco, Inc., 3801 East Sunshine
Street, Springfield, MO 65809, Defendants.
[Proposed] Final Judgment
    Whereas, Plaintiff United States of America, filed its Complaint on
October 30, 2019, the United States and Defendants, Symrise AG
(``Symrise''), ADF Holdco, Inc. (``ADF Seller'') and IDF Holdco, Inc.
(``IDF Seller''), 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 Defendants agree 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 divestiture required below can and will be made and that Defendants
will not later raise any 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, 15 U.S.C. 18.
II. Definitions
    As used in this Final Judgment:
    A. ``Acquirer'' means Kerry, Inc., a Delaware corporation, and
Kerry Luxembourg S.a.r.l., a Luxembourg soci[eacute]t[eacute] [agrave]
responsabilit[eacute] limit[eacute]e, or the entity to whom Defendants
divest the Divestiture Assets.
    B. ``Symrise'' means Defendant Symrise AG, an Aktiengesellschaft,
or publicly listed company, organized under the laws of Germany, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships, and joint ventures, and their directors,
officers, managers, agents, and employees.
    C. ``IDF Seller'' means Defendant IDF Holdco, Inc., a Missouri
corporation, with its headquarters in Springfield, Missouri, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships, and joint ventures, and their directors,
officers, managers, agents, and employees.
    D. ``ADF Seller'' means Defendant ADF Holdco, Inc., a Missouri
corporation, with its headquarters in Springfield, Missouri, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships, and joint ventures, and their directors,
officers, managers, agents, and employees.
    E. ``Diana Food'' means Diana Food, Inc. (previously known as Diana
Naturals, Inc.), a wholly-owned subsidiary of Symrise and an Oregon
corporation with its headquarters in Silverton, Oregon, its successors
and assigns, and its subsidiaries and divisions, groups, affiliates,
partnerships, and joint ventures, and its directors, officers,
managers, agents and employees.
    F. ``Development Authority'' means the Development Authority of
Banks County, Georgia, which currently holds legal title to the real
estate and real property related to the Banks County facility pursuant
to the Diana Food Bonds-for-Title Transaction.
    G. ``Banks County facility'' means the production facility and
surrounding real estate located at 171 Diana Way Commerce, GA 30529,
owned by the Development Authority, leased to Diana Food pursuant to
the Diana Food Bond-for-Title Transaction, and built to manufacture
certain Chicken-Based Food Ingredients.
    H. ``Chicken-Based Food Ingredients'' means ingredients
manufactured and sold to food manufacturers for use in food for human
consumption or pet consumption (including chicken broth, chicken fat,
and cooked chicken meat) made in whole or in part from human- grade
natural chicken.
    I. ``Diana Food Bonds-for-Title Transaction'' means the current
ownership and lease arrangement between Diana Food and the Development
Authority for the Banks County facility.
    J. ``Divestiture Assets'' means:
    1. All interests and rights Diana Food holds in the Banks County
facility;
    2. All bonds, bond documents, grant documents, and lease agreements
to which Diana Food is a party, related to the Banks County facility;
    3. All tangible assets located at the Banks County facility and all
tangible assets located elsewhere primarily related to the development,
production, servicing, and sale of Chicken-Based Food Ingredients
manufactured at the Banks County facility. Tangible assets includes,
but is 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 relating to Chicken-Based Food
Ingredients manufactured at the Banks County facility; all contracts,
teaming arrangements, agreements, leases, commitments, certifications,
and understandings, including supply agreements; all customer lists,
contracts, accounts, and credit records; all repair and performance
records; and all other records relating to Chicken-Based Food
Ingredients manufactured at the Banks
[[Page 65178]]
County facility. Defendant Symrise may retain a copy of records
necessary for tax, accounting, or regulatory purposes. To the extent
any records also include commercially sensitive information,
proprietary information, or personally identifiably information
pertaining solely to Defendant Symrise's businesses, operations, or
products not being transferred to Acquirer, Defendant Symrise may
withhold or redact such portions of said records prior to Defendant
Symrise's transfer to Acquirer;
    4. All intangible assets used in the development, production,
servicing, and sale of Chicken-Based Food Ingredients manufactured at
the Banks County facility, including, but not limited to all patents;
licenses and sublicenses; intellectual property; copyrights;
trademarks; trade names; service marks; 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
relating to Chicken-Based Food Ingredients manufactured at the Banks
County facility including but not limited to designs of experiments and
the results of successful and unsuccessful designs and experiments.
    Notwithstanding the above definition,
    (1) Defendant Symrise shall license to Acquirer, through a
perpetual and transferable license that is paid up, royalty free,
worldwide, and irrevocable, any know-how, including research and
development information, unpatented inventions, rights in research and
development, and technical data or information, that is (i) controlled
by Defendant Symrise, (ii) used in or necessary to the development,
production, servicing, and sale of Chicken-Based Food Ingredients
manufactured at the Banks County facility, and (iii) used in or
necessary to the development, production, servicing, and sale of other
Symrise products;
    (2) the Divesture Assets do not include the intangible assets that
Defendant Symrise shall provide as services or use to provide services
identified in any transition services agreement entered between the
Acquirer and Defendant Symrise, as described infra in Paragraph IV(G);
and
    (3) the Divestiture Assets do not include any trademarks, trade
names, service marks, or service names containing the name ``Symrise''
or ``Diana.
III. Applicability
    A. This Final Judgment applies to Symrise, IDF Seller, and ADF
Seller 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 acquirers of the assets divested
pursuant to this Final Judgment.
IV. Divestiture
    A. Defendants are ordered and directed, within forty-five (45)
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 the Defendants attempt to divest the Divestiture
Assets to an Acquirer other than Kerry, Inc., 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 Acquirer and the United States with
organization charts and other information relating to the personnel who
spend all, or a majority of their business time involved in the
development, production, servicing, and sale of Chicken-Based Food
Ingredients manufactured at the Banks County facility, including name,
job title, experience, responsibilities, training and educational
history, relevant certifications, and to the extent permissible by law,
job performance evaluations, and current salary and benefits
information, to enable Acquirer to make offers of employment. Upon
request, Defendants shall make such personnel available for interviews
with Acquirer during normal business hours at a mutually agreeable
location and will not interfere with any negotiations by Acquirer to
employ such personnel involved in the development, production,
servicing, and sale of Chicken-Based Food Ingredients manufactured at
the Banks County facility. Interference with respect to this paragraph
includes, but is not limited to, offering to increase the salary or
benefits of such personnel involved in the development, production,
servicing, and sale of Chicken-Based Food Ingredients manufactured at
the Banks County facility other than as part of a company-wide increase
in salary or benefits granted in the ordinary course of business.
    D. Defendant Symrise shall permit prospective Acquirers of the
Divestiture Assets to have reasonable access to personnel who spend
all, or a majority of their business time involved in the development,
production, servicing, and sale of Chicken-Based Food Ingredients
manufactured at the Banks County facility and to make inspections of
the Banks County facility; access to any and all environmental, zoning,
and other permit documents and information; access to any of the
underlying documents for the Diana Food Bonds-for-Title Transaction;
and access to any and all financial, operational, or other documents
and information customarily provided as part of a due diligence
process. For any employees who elect employment with Acquirer,
Defendants shall waive all noncompete and nondisclosure agreements. For
a period of eighteen (18) months after the divestiture has been
completed under Section IV or V, Defendants may not solicit to hire, or
hire, any employee hired by Acquirer, unless: (1) Acquirer agrees in
writing that Defendants may solicit or hire that employee; or, (2) the
employee responds to a general advertisement or solicitation not
targeted at employees who accept employment with Acquirer. Nothing in
[[Page 65179]]
Paragraphs IV(C) and (D) shall prohibit Defendant Symrise from
maintaining reasonable restrictions on the disclosure by any employee
who accepts an offer of employment with Acquirer of Defendant Symrise's
proprietary non-public information that is (1) not otherwise required
to be disclosed by this Final Judgment, (2) related solely to Defendant
Symrise's businesses and clients, and (3) unrelated to the Divestiture
Assets.
    E. Defendant Symrise shall warrant to Acquirer that each asset will
be operational on the date of sale.
    F. Defendants shall not take any action that will impede in any way
the permitting, operation, or divestiture of the Divestiture Assets. At
the option of Acquirer, and subject to approval by the United States,
Defendant Symrise shall enter into a transition services agreement to
provide back office and information technology support for the Banks
County facility for a period ranging between three (3) and twenty (20)
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
three (3) months. The terms and conditions of any contractual
arrangement intended to satisfy this provision must be reasonably
related to the market value of the expertise of the personnel providing
needed assistance. The Symrise employees tasked with providing these
transition services may not share any competitively sensitive
information of Acquirer with any other Symrise, IDF Seller, or ADF
Seller employee. If Acquirer seeks an extension of the term of this
transition services agreement, Defendants shall notify the United
States in writing at least three (3) months prior to the date the
transition services agreement expires.
    G. Defendant Symrise shall warrant to Acquirer (1) that there are
no material defects in the environmental, zoning, certifications, 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, certifications, or other permits relating to the
operation of the Divestiture Assets.
    H. At the option of Acquirer, and with the written consent of the
United States, Defendants may convey, transfer, or otherwise sell
Divestiture Assets to the Development Authority in exchange for tax-
exempt bonds pursuant to the Diana Food Bonds-for-Title Transaction
arrangement in order to facilitate the divestiture. 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 Acquirer as part of a viable, ongoing business in the
manufacture and sale of Chicken-Based Food Ingredients in the United
States, and that the divestiture will remedy the competitive harm
alleged in the Complaint. If any of the terms of an agreement between
Defendants and 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 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 market for the manufacture and sale of
Chicken-Based Food Ingredients; 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 gives Defendants the ability unreasonably to
raise Acquirer's costs, to lower Acquirer's efficiency, or otherwise to
interfere in the ability of 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, 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 or consultants, including, but not limited to, investment
bankers, attorneys, and accountants, 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
Defendant Symrise 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 its services yet unpaid and those of any
agents and consultants retained by the Divestiture Trustee, all
remaining money shall be paid to Defendant Symrise and the trust shall
then be terminated. The compensation of the Divestiture Trustee and any
agents and consultants retained by the Divestiture Trustee shall be
reasonable in light of the value of the Divestiture Assets and based on
a fee arrangement providing the Divestiture Trustee with an incentive
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 Defendant Symrise 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 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
agents or consultants, provide
[[Page 65180]]
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
or 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 by this Final Judgment within six (6) months of appointment,
the Divestiture Trustee must promptly provide the United States with a
report setting forth (1) the Divestiture Trustee's efforts to
accomplish the required divestiture, (2) the reasons, in the
Divestiture Trustee's judgment, why the required divestiture has not
been accomplished, and (3) the Divestiture Trustee's recommendations.
The United States will have the right to make additional
recommendations consistent with the purpose of the trust to the Court.
The Court thereafter may enter such orders as it deems appropriate to
carry out the purpose of the Final Judgment, which, if necessary, may
include extending the trust and the term of the Divestiture Trustee's
appointment by a period requested by the United States. 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. In the event Defendants are divesting the Divestiture Assets to
an Acquirer other than Kerry, Inc., 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 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 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 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 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 V, Defendants
shall deliver to the United States an affidavit, signed by each
Defendant's chief financial officer and general counsel, describing the
fact and manner of Defendants' compliance with Section IV or 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
and complete the sale of 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
[[Page 65181]]
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 (1) 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 the 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 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 responses 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), or for the
purpose of securing compliance with this Final Judgment, or as
otherwise required by law.
    D. If at the time information or documents are furnished by the
Defendants 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. No Reacquisition
    Defendants may not reacquire any part of the Divestiture Assets
during the term of this Final Judgment.
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 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 all
competition the United States alleged 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 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 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 before
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 following the expiration of the
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 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 this Section.
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.
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 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 response to comments filed with the
Court, entry of this Final Judgment is in the public interest.
Date:------------------------------------------------------------------
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. 16
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[[Page 65182]]
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United States District Judge
United States District Court for the District of Columbia
    United States of America, Department of Justice, Antitrust
Division, 450 5th Street NW, Suite 8000, Washington, DC 20530,
Plaintiff, v. Symrise AG, M[uuml]hlenfeldstra[beta]e 1, 37603
Holzminden, Germany and IDF Holdco, Inc., 3801 East Sunshine Street,
Springfield, MO 65809 and ADF Holdco, Inc., 3801 East Sunshine
Street, Springfield, MO 65809, Defendants.
Case No.: 1:19-cv-03263
Judge: Hon. Royce Lamberth
Competitive Impact Statement
    The United States of America, under Section 2(b) of the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16(b)-(h) (the ``APPA'' or
``Tunney Act''), 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 January 31, 2019, Symrise AG (``Symrise'') agreed to acquire
International Dehydrated Foods, LLC (``IDF''), and American Dehydrated
Foods, LLC (``ADF'') (collectively ``IDF/ADF''), from IDF Holdco, Inc.
and ADF Holdco, Inc., for approximately $900 million. The United States
filed a civil antitrust Complaint on October 30, 2019, seeking to
enjoin the proposed acquisition. The Complaint alleges that the likely
effect of this acquisition would be to substantially lessen competition
for the manufacture and sale of chicken-based food ingredients
(including chicken broth, chicken fat, and cooked chicken meat) for
manufacturers of food for people and pets (collectively ``food
manufacturers'') in violation of Section 7 of the Clayton Act, 15
U.S.C. 18.
    At the same time the Complaint was filed, the United States filed a
Hold Separate Stipulation and Order (``Hold Separate'') and proposed
Final Judgment, which are designed to address the anticompetitive
effects of the acquisition. Under the proposed Final Judgment, which is
explained more fully below, Defendants are required to divest, to
Kerry, Inc. (``Kerry''), a global manufacturer of ingredients and
recipe solutions for the food and beverage industry, or another
acquirer approved by the United States, Symrise's newly constructed
facility located in Banks County, Georgia (the ``Banks County
facility'') which was built to manufacture and sell chicken-based food
ingredients; along with certain tangible and intangible assets
(collectively, the ``Divestiture Assets''). Under the terms of the Hold
Separate, Defendants will take certain steps to ensure that the
Divestiture Assets are operated as a competitively independent,
economically viable and ongoing business concern, which will remain
independent and uninfluenced by Symrise, and that competition is
maintained during the pendency of the ordered divestiture.
    The United States and Defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment will terminate this action, except that the
Court will retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II. Description of Events Giving Rise to the Alleged Violation
A. The Defendants
    Symrise, an Aktiengesellschaft, or publicly listed company,
organized under the laws of Germany, is headquartered in Holzminden,
Germany. Symrise is active globally in three main business segments:
(i) Flavor; (ii) nutrition; and (iii) scent and care. In its 2018
fiscal year, Symrise had global sales of EUR 3.154 billion (or
approximately $3.53 billion). Symrise's nutrition segment, represented
by its Diana division, which also operates in the United States,
specializes in producing natural functional ingredients for food
manufacturers and aquaculture.
    In October 2018, Diana Food, part of the Diana division within
Symrise, opened the Banks County facility. The Banks County facility
marked Symrise's entrance into the U.S. market for the manufacture and
sale of chicken-based food ingredients for food manufacturers, to
compete with incumbent suppliers, such as IDF/ADF. Production at the
Banks County facility began in 2019. Diana Food's sales for chicken-
based food ingredients manufactured at the Banks County facility
continue to ramp up and Symrise expects, and has budgeted for,
significant sales by year-end 2019. Moreover, Symrise envisions
continuing to gain shares of the U.S. market thereafter.
    IDF Holdco, Inc. and ADF Holdco, Inc. are the ultimate parent
entities of IDF and ADF. IDF and ADF are limited liability companies
headquartered in Springfield, Missouri. IDF manufactures and sells
chicken-based food ingredients. ADF owns 50% of Food Ingredient
Technologies, LLC (``Fitco'') which also manufactures and sells
chicken-based food ingredients. Although legally separate entities, IDF
and ADF operate as an integrated business unit and collectively are the
largest developers and manufacturers in the United States of chicken-
based food ingredients for food manufacturers. The companies develop
and manufacture chicken-based food ingredients at facilities in Monett,
Missouri, and Anniston, Alabama. IDF/ADF's 2018 annual total sales were
approximately $266 million, of which approximately $177 million was
attributable to the sale of chicken-based food ingredients.
B. The Competitive Effects of the Transaction
1. Relevant Markets
    As explained in the Complaint, the manufacture and sale of chicken-
based food ingredients (including chicken broth, chicken fat, and
cooked chicken meat) for food manufacturers is a relevant product
market under Section 7 of the Clayton Act, 15 U.S.C. 18. The
ingredients at issue are human-grade quality and are relied upon by
food manufacturers for their taste and nutritional attributes. The
chicken broth, chicken fat, and cooked chicken meat are each available
in different forms and offer different taste profiles, nutrition, and
ingredient characteristics that allow for limited substitution with
other products.
    Alternatives to chicken-based food ingredients may lack the taste,
nutritional attributes, form, or labelling abilities desired by food
manufacturers. For example, a purchaser of human-grade natural chicken
broth for use in a finished chicken broth may not switch to turkey
broth. Nor is a purchaser of human-grade natural cooked chicken meat
likely to switch to turkey, tofu, or any other meat product for use in
chicken noodle soup when the price of human-grade natural chicken broth
or cooked chicken meat increases by a significant non-transitory
amount.
    Additionally, some pet food manufacturers producing end-products
with certain ingredient or health claims use only human-grade chicken-
based food ingredients, and cannot make the necessary ingredient or
health claims with non-human-grade products.
    Although some food manufacturers may be able to reformulate their
end-products to decrease the amount of chicken-based food ingredients
called for in a certain formula or recipe, at least some manufacturers
may not be able to reformulate to an extent that would allow for
complete substitution. Additionally, even a small reformulation to
limit the amount of chicken-based food ingredients used in a given
recipe requires time-consuming
[[Page 65183]]
reformulation work by food manufacturers. This is especially true
because a food manufacturer may need its end-product to maintain the
same nutritional and taste attributes that consumers expect, making
switching, even in small amounts, impractical and potentially costly.
For these reasons, a hypothetical profit-maximizing monopolist
manufacturer and seller of chicken-based food ingredients for food
manufacturers in the United States could profitably impose at least a
small but significant and non-transitory price increase.
    The relevant geographic market for the manufacture and sale of
chicken-based food ingredients for food manufacturers is the United
States. Domestic customers of chicken-based food ingredients for use in
food for human consumption or pet consumption cannot buy the products
from outside of the United States to use domestically because of
restrictions imposed by the United States Department of Agriculture
(``USDA'') that prohibit importation into the United States of natural
chicken ingredients. Accordingly, the United States is the relevant
geographic market within the meaning of Section 7 of the Clayton Act,
15 U.S.C. 18.
2. Competitive Effects
    As explained in the Complaint, the proposed acquisition would
eliminate the burgeoning competition between IDF/ADF and Symrise, the
likely effect of which would be a substantial lessening of competition
for the manufacture and sale of chicken-based food ingredients for food
manufacturers, resulting in higher prices and lower quality products.
The relevant market is highly concentrated, with IDF/ADF having a 54%
market share by capacity of the chicken-based food ingredients market
and 2018 sales of $177 million. Symrise recently entered this market
through the construction of the Banks County facility which began to
sell chicken-based food ingredients to food manufacturers earlier this
year, including to some of IDF/ADF's largest customers. The brand-new
plant has the capacity to take approximately 23% of the market, making
it IDF/ADF's largest competitor. This would give the merged company
more than three-quarters of the market by capacity for the manufacture
and sale of chicken-based food ingredients, with no other individual
competitor having more than a 6% share.
3. Entry
    As alleged in the Complaint, entry of additional competitors into
the market for the manufacture and sale of chicken-based food
ingredients for food manufacturers is unlikely to be timely, likely, or
sufficient to prevent the harm to competition that would result if the
proposed transaction were consummated.
    Any new entrant would need to develop infrastructure and research
and development capabilities in order to start manufacturing and
selling chicken-based ingredients. This would require significant time
and financial resources as Symrise's recent entry experience
demonstrates. Symrise, a company with significant chicken-based food
ingredient operations in Europe, still needed almost three years and
over $54 million dollars to construct the Banks County facility. Any
new entrant also would need to work with food manufacturers to develop
chicken-based food ingredients that meet the specific flavor,
nutritional and other characteristics sought by the customer. This
often requires extensive and time-consuming testing between a facility
and the food manufacturer customer. Finally, food manufacturers often
are reluctant to switch from an established chicken-based food
ingredients manufacturer given the close relationships that develop,
presenting a further hurdle to any new entrant.
III. Explanation of the Proposed Final Judgment
    The divestiture required by the proposed Final Judgment will remedy
the loss of competition alleged in the Complaint. The proposed Final
Judgment requires Symrise, within forty-five (45) calendar days after
the entry of the Hold Separate by the Court, to divest the Divestiture
Assets to Kerry or another acquirer approved by the United States. The
assets must be divested in such a way as to satisfy the United States,
in its sole discretion, that they can and will be operated by the
acquirer as a viable, ongoing business that can compete effectively in
the market for the manufacture and sale of chicken-based food
ingredient for food manufacturers. Defendants must take all reasonable
steps necessary to accomplish the divestiture quickly and must
cooperate with prospective acquirers.
    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 competition that would
otherwise be harmed by the transaction. 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 if the
Court finds 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, to compensate American taxpayers
for any costs associated with investigating and enforcing 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 before litigation,
Defendants will reimburse the United States for attorneys' fees,
experts' fees, and other 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. 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 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.
This provision, therefore,
[[Page 65184]]
makes clear that, for four years after the Final Judgment has expired,
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 will 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 divestiture has been completed and that
the continuation of the Final Judgment is no longer necessary or in the
public interest.
IV. Remedies Available to Potential Private Litigants
    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, 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:
Robert Lepore, Chief, Transportation, Energy, and Agriculture Section
Antitrust Division, United States Department of Justice, 450 Fifth
Street NW, Suite 8000, 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 Symrise's acquisition of IDF/ADF. The
United States is satisfied, however, that the divestiture of assets
described in the proposed Final Judgment will remedy the
anticompetitive effects alleged in the Complaint, preserving
competition for the manufacture and sale of chicken-based food
ingredients for food manufacturers in the United States. 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 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. 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
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 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 is ``not to make de novo
determination of facts and issues.'' United States v. W. Elec. Co., 993
F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also
Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F.
Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F.
Supp. 2d 10, 16 (D.D.C. 2000); InBev, 2009 U.S. Dist. LEXIS 84787, at
*3. Instead, ``[t]he balancing of competing social and political
interests affected by a proposed antitrust consent decree must be left,
in the first instance, to the discretion of the Attorney General.'' W.
Elec. Co., 993
[[Page 65185]]
F.2d at 1577 (quotation marks omitted). ``The court should bear in mind
the flexibility of the public interest inquiry: the court's function is
not to determine whether the resulting array of rights and liabilities
is one that will best serve society, but only to confirm that the
resulting settlement is within the reaches of the public interest.''
Microsoft, 56 F.3d at 1460 (quotation marks omitted). More demanding
requirements would ``have enormous practical consequences for the
government's ability to negotiate future settlements,'' contrary to
congressional intent. Id. 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 (``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, Congress made clear its intent
to preserve the practical benefits of using consent 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: November 18, 2019
Respectfully submitted,
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Jeremy Evans, (DC Bar #478097) ,
Barbara W. Cash,
William M. Martin,
United States Department of Justice, Antitrust Division,
Transportation, Energy, and Agriculture Section, Liberty Square
Building, 450 Fifth Street NW, Suite 8000, Washington, DC 20530,
Telephone: (202) 598-8193.
[FR Doc. 2019-25600 Filed 11-25-19; 8:45 am]
 BILLING CODE 4410-11-P