[Federal Register: December 17, 2003 (Volume 68, Number 242)]
[Notices]               
[Page 70287-70295]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17de03-97]                         

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DEPARTMENT OF JUSTICE

Antitrust Division

 
United States v. Alcan Inc., Alcan Aluminum Corp., Pechiney, 
S.A., and Pechiney Rolled Products, LLC; Complaint, Proposed Final 
Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Hold Separate Stipulation and Order, and Competitive Impact Statement 
have been filed with the United States District Court for the District 
of Columbia in United States v. Alcan, Inc., Alcan Aluminum Corp., 
Pechiney, S.A., and Pechiney Rolled Products, LLC, No. 1:03 CV 02012 
(GK).
    On September 29, 2003, the United States filed a Complaint alleging 
that Alcan's proposed acquisition of Pechiney would violate section 7 
of the Clayton Act, 15 U.S.C. 18, by substantially lessening 
competition in development, production, and sale of brazing sheet in 
North America. Brazing sheet is an aluminum alloy used to make heat 
exchangers (e.g., radiators, heaters, and air conditioners) for motor 
vehicles. The proposed Final Judgment, filed simultaneously with the 
Complaint, requires the defendants to divest Pechiney's brazing sheet 
business to a person acceptable to the United States within 120 days 
after Alcan receives preliminary notice from the responsible French 
stock market regulatory authority that the firm's tender offer for 
Pechiney has been successful. Copies of the Complaint, the proposed 
Final Judgment, Hold Separate Stipulation and Order, and Competitive 
Impact Statement are available for inspection at the U.S. Department of 
Justice, Antitrust Division, Suite 215 North, 325 7th Street, NW., 
Washington, DC 20004 (telephone: (202) 514-2692), and at the Clerk's 
Office of the U.S. Court for the District of Columbia, 333 Constitution 
Avenue NW., Washington, DC 20001.
    Public comment is invited within 60-days of the date of this 
notice. Such comments and responses thereto will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, 
U.S. Department of Justice, 1401 H Street, NW., Suite 3000, Washington, 
DC 20530 (telephone: (202) 307-0924).

J. Robert Kramer II,
Director of Operations, Antitrust Division.

United States District Court for the District of Columbia

    United States of America, U.S. Department of Justice, Antitrust 
Division, 1401 H Street, NW., Suite 3000, Washington, DC 20530, 
Plaintiff, v. Alcan Inc., 1188 Sherbrooke Street West, Montreal, 
Quebec, Canada, H3A 3G2; Alcan Aluminum Corp., 6060 Parkland 
Boulevard, Cleveland, OH 44124-4185; Pechiney, S.A., 7, Place Du 
Chancelier Adenauer, CEDEX 16--75218--Paris, France; and Pechiney 
Rolled Products, LLC, Rural Route 2 Ravenswood, WV 26164-9802, 
Defendants.

Case No.
Judge:
Deck Type: Antitrust
Date:

Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil antitrust 
action to obtain equitable relief against defendants, and alleges as 
follows:
    1. In early July 2003, Alcan Inc. (``Alcan'') launched a $4.6 
billion tender offer for Pechiney, S.A. (``Pechiney''), which was 
later endorsed by Pechiney's board of directors. The United States 
seeks to enjoin this proposed acquisition, which, if consummated, 
would result in consumers

[[Page 70288]]

paying higher prices for brazing sheet, an aluminum alloy used in 
making heat exchangers for motor vehicles.
    2. Alcan, through its United States subsidiary (Alcan Aluminum 
Corp.), and Pechiney, through its United States subsidiary (Pechiney 
Rolled Products, LLC), are, respectively, the second and fourth 
largest producers of brazing sheet in North America. Brazing sheet 
consists of a class of layered aluminum alloys, each of which has a 
unique ability to form a uniform, durable, leak-proof bond with 
other aluminum surfaces. Brazing sheet is widely used in fabricating 
the major components of heat exchanges for motor vehicles, including 
engine cooling (e.g., radiators and oil coolers) and climate control 
(e.g., heaters and air conditioners) systems. A combination of Alcan 
and Pechiney would command over 40 percent of brazing sheets sales 
in North America. The combined firm and one other competitor would 
account for over 80 percent of all brazing sheet sold in North 
America.
    3. The proposed acquisition, if consummated, would combine 
Alcan, a low cost new entrant and price maverick, with Pechiney, a 
large industry incumbent, compromising Alcan's incentive to quickly 
expand its sales by reducing brazing sheet prices, and ending the 
intense competitive rivalry that currently exists between Alcan and 
Pechiney in developing, producing, and selling brazing sheet. This 
competition, which will intensify in the next few years as Alcan 
completes qualifying its brazing sheet with more customers, already 
has produced significant improvements in brazing sheet quality, 
durability, and reliability, and highly competitive prices and terms 
for this material. By reducing the number of major North American 
producers of brazing sheet from four to three, this acquisition 
would substantially increase the likelihood that the combined firm 
will unilaterally increase, or that it and the other major 
competitor will tacitly or explicitly cooperate to increase, prices 
of brazing sheet to the detriment of consumers.
    4. Unless this proposed acquisition is blocked, Alcan's 
acquisition of Pechiney will substantially lessen competition in the 
development, production, and sale of brazing sheet and likely result 
in an increase in prices and a reduction in quality and innovation 
for brazing sheet in violation of Section 7 of the Clayton Act, as 
amended, 15 U.S.C. 18.

I. Jurisdiction and Venue

    5. This Complaint is filed by the United States under 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.
    6. Alcan and Pechiney develop, produce, and sell brazing sheet 
in the flow of interstate commerce. Alcan's and Pechiney's 
activities in developing, producing, and selling brazing sheet 
substantially affect interstate commerce. This Court has 
jurisdiction over the subject matter of this action pursuant to 
Section 12 of the Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1331, 
1337(a) and 1345.
    7. Alcan, Alcan Aluminum Corp., Pechiney, and Pechiney Rolled 
products LLP have consented to personal jurisdiction and venue in 
this judicial district.

II. Defendants

    8. Alcan is a Canadian corporation with its headquarters in 
Montreal, Quebec. Alcan Aluminum, an Alcan subsidiary, is a Delaware 
corporation with its principal place of business in Cleveland, OH. 
Alcan is one of the world's largest fully integrated aluminum 
producers. Alcan mines ore from which primary aluminum is produced, 
and produces a very wide range of rolled aluminum products, 
including brazing sheet. In 2002, Alcan reported sales of about 
$12.5 billion. Alcan projects that its sales of brazing sheet in 
North American in excess of $30 million in 2003.
    9. Pechiney is a French corporation with its main office in 
Paris, France. A subsidiary, Pechiney Rolled Products, is a Delaware 
corporation with its principal place of business in Ravenswood, WV. 
Pechiney is also a leading integrated aluminum producer that makes a 
wide range of rolled aluminum products. In 2002, Pechiney reported 
total sales of about $11.3 billion. Its United States operations 
generate over $100 million in North American sales of brazing sheet.

III. The Proposed Transaction

    10. In early July 2003, Alcan publicly announced a tender offer 
for shares of Pechiney, a transaction now valued at over $4.6 
billion. The tender offer, recently endorsed by Pechiney's board of 
directors, is expected to be completed on November 30, 2003, and 
soon after, Alcan is expected to acquire a majority of the voting 
shares in Pechiney.

IV. Trade and Commerce

A. The Relevant Product Market

    11. Brazing sheet comprises a class of custom-engineered 
aluminum alloys, each of which is composed of a solid metal ``core'' 
clad on one or both sides with an alloy whose melting temperature is 
lower than that of the core material. When brazing sheet is baked at 
the appropriate temperature, the cladding alloy will melt and form a 
durable, uniform leak-proof bond between the core and any adjoining 
aluminum surface, effectively welding the two materials together.
    12. Brazing sheet is ideally suited for fabricating the major 
components of heat exchange systems used in motor vehicles. Heat 
exchanges include engine cooling systems such as radiators and oil 
coolers and climate control systems such as heater cores and air 
conditioning units (i.e., evaporator and condenser cores). By making 
the basic components of heat exchanges with brazing sheet, a parts 
maker can avoid the physically tedious and costly task of welding or 
soldering individual components, many of which have unusually 
intricate surfaces that form joints deep within the heat exchange 
unit. A parts maker instead can loosely assemble the brazed 
components and bake the assembly in a brazing oven. The surfaces of 
the components will melt, converting the entire loose assembly into 
a solid, leak-proof heat exchange unit.
    13. Today, the major components of all heat exchangers used in 
motor vehicles are made of brazing sheet. Less expensive, lighter, 
more durable and formable than materials it replaced, brazing sheet 
enables vehicle makers simultaneously to reduce vehicle cost, size, 
and weight; improve gas mileage; and extend engine, climate control 
system, and drive train life. In heat exchange applications, no 
other material matches the combination of strength, light weight, 
durability, formability, and corrosion resistance of brazing sheet. 
Because of the unique attributes, brazing sheet is the preferred 
material for making heat exchangers for motor vehicles.
    14. A small but significant and nontransitory increase in prices 
for brazing sheet would not cause parts makers to switch to other 
materials for heat exchanger components in volumes sufficient to 
make such a price increase unprofitable and unsustainable. 
Accordingly, the development, production, and sale of brazing sheet 
is a line of commerce and a relevant product market within the 
meaning of Section 7 of the Clayton Act.

B. The Relevant Geographic Market

    15. Alcan produces brazing sheet in an aluminum hot rolling mill 
in Oswego, NY, and ``slits'' or cuts finished roll stock at a cold 
rolling mill in Fairmont, WV. Pechiney makes brazing sheet in an 
aluminum hot rolling mill in Ravenswood, WV. The only other large 
competitor produces brazing sheet in a hot rolling mill in the 
United States. A much smaller rival produces brazing sheet in hot 
rolling mills in Canada and in Europe. Additional volumes of brazing 
sheet are exported to the United States from Europe. Brazing sheet 
exports to North America, however, account for less than eight 
percent of total sales. The Canadian and foreign firms, moreover, 
operate at or near their full production capacity.
    16. Domestic parts makers prefer to purchase brazing sheet from 
North American sources. Foreign brazing sheet typically costs much 
more than, but does not outperform, brazing sheet produced in North 
America. Reliance on overseas sources for brazing sheet can be 
especially risky for domestic parts makers since foreign brazing 
sheet is more prone to supply interruptions and delays than brazing 
sheet procured from local, North American sources. Typically, when 
overseas demand has surged, foreign producers of brazing sheet have 
cut shipments to North American customers, resulting in production 
bottlenecks that have jeopardized North American parts makers' 
relationships with their customers.
    17. For these reasons, North American parts makers generally 
restrict purchases of foreign brazing sheet imports to unique 
circumstances, e.g., as an interim measure until one or more 
domestic producers have been qualified to make brazing sheet for use 
in an auto maker's vehicle, or for low volume heat exchanger parts 
for which a foreign auto maker has designated a single foreign 
supplier as the only qualified source for that brazing sheet 
material.
    18. A small but significant and nontransitory increase in prices 
for brazing sheet in North America would not cause parts makers to 
buy so much brazing sheet from sources outside North America that

[[Page 70289]]

such a price increase would be unprofitable and unsustainable. 
Accordingly, North America is a relevant geographic market within 
the meaning of Section 7 of the Clayton Act.

C. Anticompetitive Effects

    19. There are only four significant competitors in the sale of 
brazing sheet in North America. Pechiney is the second largest 
producer with over 30 percent of sales; Alcan is the fourth largest 
with over 10 percent of sales. After the proposed acquisition, the 
combined firm and the largest U.S. producer of brazing sheet would 
command over 80 percent of all brazing sheet sales. Total North 
American sales of brazing sheet exceed $360 million annually.
    20. The brazing sheet market would become substantially more 
concentrated if Alcan acquires Pechiney. Using a measure of market 
concentration called the Herfindahl-Hirschman Index (``HHI'') 
(defined and explained in Appendix A), the post-acquisition HHI 
would increase by at least 600 points, resulting in a post-merger 
HHI of about 3600, well in excess of levels that ordinarily would 
raise significant antitrust concerns.
    21. The proposed transaction would combine Alcan with Pechiney, 
and remove a low cost, aggressive, and disruptive competitor in the 
North American brazing sheet market. Before the announced 
acquisition, Alcan recently had undertaken to significantly increase 
its sales of brazing sheet in North America. In 2001, Alcan moved 
its brazing sheet operations from England to Oswego, NY, then 
developed new, highly proprietary aluminum rolling technology that 
would make a low cost producer of brazing sheet in North America. 
Alcan also recently has completed qualifying to provide brazing 
sheet to several major domestic parts makers.
    22. The proposed transaction will make it more likely that the 
few remaining brazing sheet producers will engage in anticompetitive 
coordination to increase prices, reduce quality and innovation, and 
decrease production of brazing sheet. After the acquisition, the 
combined firm and its largest North American rival would share 
market leadership and a common incentive to pursue strategies that 
emphasize accommodation and do the risk provocation. The acquisition 
also would substantially increase the likelihood that the combined 
firm will unilaterally increase prices of brazing sheet to the 
detriment of customs for whom Pechiney and Alcan are the only firms 
now qualified to provide brazing sheet for those customers' 
requirements. The other competitors in brazing sheet sales in North 
America do not have the incentive or ability, individually or 
collectively, to effectively constrain a unilateral or cooperative 
exercise of market power after the acquisition.
    23. Purchasers of brazing sheet have benefited from competition 
between Alcan and Pechiney through lower prices and improved 
products. Alcan's acquisition of Pechiney would eliminate 
substantial competition and lead to an increase in prices and 
reduction in innovation and quality of brazing sheet.
    24. The proposed transaction, if consummated, would eliminate a 
significant competitor and facilitate unilateral or coordinated 
increases in prices, or a reduction in levels of quality and 
innovation, for brazing sheet.

D. Entry Unlikely To Deter a Post Acquisition Exercise of Market Power

    25. Successful entry into the brazing sheet market would not be 
timely, likely or sufficient to deter any unilateral or coordinated 
exercise of market power as a result of the transaction.
    26. Significant barriers prevent do novo or lateral entry into 
the development, production, and sale of brazing sheet in North 
America. To produce this material, not only must a firm possess an 
aluminum hot rolling mill (which costs a least $80 million to 
construct), but also the technology and expertise to create custom-
engineered aluminum alloys that perform well in the demanding 
operating conditions prevalent in the small heat exchangers used in 
motor vehicles. Even firms with the physical and technological 
assets to produce brazing sheet must, in order to have a significant 
impact, ``qualify'' with customers, i.e., demonstrate that it would 
be a reliable producer of consistently high quality brazing sheet 
material. Qualification can be acquired only after the new firm has 
made a substantial investment in expensive alloy technology, 
successfully completed a series of time-consuming tests of its 
materials and components, and acquired actual experience producing 
brazing sheet that meets the exacting specifications of risk-averse 
parts markers. It took Alcan over two years from when it moved its 
brazing sheet operations to Oswego, New York to qualify with enough 
customers to make a significant sales impact.

V. Violations Alleged

    27. The effect of Alcan's proposed acquisition of Pechiney may 
be to substantially lessen competition and tend to create a monopoly 
in interstate trade and commerce in violation of Section 7 of the 
Clayton Act.
    28. The transaction will likely have the following anticompetive 
effects, among others:
    a. Competition generally in the development, production, and 
sale of brazing sheet in North America would be substantially 
lessened;
    b. Actual and potential competition between Alcan and Pechiney 
in the development, production, and sale of brazing sheet in North 
America would be eliminated; and
    c. Prices for brazing sheet sold in North America would likely 
increase and the levels of quality and innovation would likely 
decline.
    29. Unless prevented, the acquisition of Pechiney by Alcan would 
violate section 7 of the Clayton Act, as amended, 15 U.S.C. 18.

VI. Requested Relief

    30. Plaintiff requests:
    a. That the proposed acquisition of Pechiney by Alcan be 
adjudged and decreed to be unlawful and in violation of Section 7 of 
the Clayton Act, as amended, 15 U.S.C. 18;
    b. That defendants and all persons acting on their behalf be 
permanently enjoined and restrained from carrying out any contract, 
agreement, understanding or plan, the effect of which would be to 
combine Pechiney with the operations of Alcan;
    c. That plaintiff recover the costs of this action; and
    d. That plaintiff receive such other and further relief as the 
case requires and this Court may deem proper.

    Dated: September 29, 2003.

    Respectfully submitted,

    For Plaintiff United States of America:

R. Hewitt Pate,
Assistant Attorney General, DC Bar # 473598.

Deborah P. Majoras,
Deputy Assistant Attorney General, DC Bar # 474239.

J. Robert Kramer II,
Director of Operations & Civil Enforcement, PA Bar # 23963.

Maribeth Petrizzi,
Chief, Litigation II Section, DC Bar # 435204.

Anthony E. Harris,
IL Bar # 1133713.

Joseph M. Miller,
DC Bar # 439965.

Carolyn L. Davis

John B. Arnett, Sr.,
DC Bar # 439122.

Trial Attorneys, U.S. Department of Justice, Antitrust Division, 
Litigation II Section, 1401 H Street, NW., Suite 3000, Washington, 
DC 20530, Telephone: (202) 307-6583.

Appendix A--Herfindahl-Hirschman Index Calculations

    ``HHI'' means the Herfindahl-Hirschman Index, a commonly 
accepted measure of market concentration. It 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 thirty, thirty, twenty, and 
twenty percent, HHI is 2600 (303 + 302 + 
202 = 2600). The HHI takes into account the relative size 
distribution of the firms in a market and approaches zero when a 
market consists of a large number of firms of relatively equal size. 
The HHI increases both as the number of firms in the market 
decreases and as the disparity in size between those firms 
increases.
    Market in which the HHI is between 1000 and 1800 points are 
considered to be moderately concentrated, and those in which the HHI 
is in excess of 1800 points are considered to be highly 
concentrated. Transactions that increase the HHI by more than 100 
points in highly concentrated markets presumptively raise antitrust 
concerns under the Horizontal Merger Guidelines issued by the U.S. 
Department of Justice and the Federal Trade Commission. See Merger 
Guidelines Sec.  1.51.

Final Judgment

    Whereas, plaintiff, United States of America, filed its 
Complaint on September 29, 2003, and plaintiff and defendants, Alcan 
Inc., Alcan Aluminum Corp., Pechiney, S.A.,

[[Page 70290]]

and Pechiney Rolled Products, LLC, 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 the 
defendants to assure that competition is not substantially lessened;
    And whereas, plaintiff 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 divestiture 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

    This 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. 18.

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means the entity or entities to whom defendants 
divest Pechiney's Brazing Sheet Business.
    B. ``Alcan'' means defendant Alcan Inc., a Canadian corporation 
with its headquarters in Montreal, Canada, its successors and 
assigns, and its subsidiaries (including defendant Alcan Aluminum 
Corp.), divisions, groups, affiliates, partnerships, joint ventures, 
and their directors, officers, managers, agents, and employees.
    C. ``Pechiney'' means Pechiney, S.A., a French corporation with 
its headquarters in Paris, France, and its successors and assigns, 
its subsidiaries, divisions (including Pechiney Rolled Products, 
LLC), groups, affiliates, partnerships, joint ventures, and their 
directors, officers, managers, agents, and employees.
    D. ``Brazing sheet'' means a layered aluminum alloy that 
consists of a core clad on one or both sides with aluminum alloy 
whose melting temperature is lower than that of the core material. 
Brazing sheet is used primarily in making components of heat 
exchange systems (e.g., radiators, oil coolers, and air conditioning 
units) for motor vehicles.
    E. ``Pechiney's Brazing Sheet Business'' means all assets, 
interests, and rights in Pechiney Rolled Products, LLC's aluminum 
product rolling mill located in or near Ravenswood, West Virginia 
26164 (``Ravenswood Facility''), including:
    1. All tangible assets of the Ravenswood Facility and the real 
property on which the Ravenswood Facility is situated; any 
facilities used for research, development, and engineering support 
to the Ravenswood Facility (``the Engineering Facilities''), and any 
real property associated with those facilities; manufacturing and 
sales assets relating to the Ravenswood Facility and to the 
Engineering Facilities, including capital equipment, vehicles, 
supplies, personal property, inventory, office furniture, fixed 
assets and fixtures, materials, on- or off-site warehouses or 
storage facilities, and other tangible property or improvements; all 
licenses, permits and authorizations issued by and governmental 
organization relating to the Ravenswood Facility and to the 
Engineering Facilities; all contracts, agreements, leases, 
commitments, and understandings pertaining to the operations of the 
Ravenswood Facility and to the Engineering Facilities; supply 
agreements all customer lists, accounts, and credit records; and 
other records maintained by Pechiney Rolled Products in connection 
with the operations of the Ravenswood Facility and of the 
Engineering Facilities;
    2. All intangible assets, including but not limited to all 
patents, licenses and sublicenses, intellectual property, 
trademarks, trade names, service marks, service names (except to the 
extent such trademarks, trade names, service marks, or service names 
contain the trademark or names ``Pechiney'' or any variation 
thereof), technical information, 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, and all manuals 
and technical information Pechiney Rolled Products, LLC provides to 
its employees, customers, suppliers, agent or licensees in 
connection with the operations of the Ravenswood Facility; provided, 
however, that defendants may require the Acquirer, in the United 
States's sole discretion, to license defendants to make, have made, 
use, or sell outside of North America any Pechiney product or 
process made by or used in connection with the Ravenswood Facility; 
and
    3. All research data concerning historic and current research 
and development efforts relating to the operations of the Ravenswood 
Facility and of the Engineering Facilities, including designs of 
experiments, and the results of unsuccessful designs and 
experiments.
    F. ``Date that Alcan's tender offer for Pechiney ends'' means 
the date Alcan receives a preliminary indication from the Conseil 
de[sacute] Marches Financiers of Paris, France, that Alcan's tender 
offer has been successful.

III. Applicability

    A. This Final Judgment applies to Alcan and Pechiney, 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. Defendants shall require, as a condition of the sale or other 
disposition of all or substantially all of their assets or of lessor 
business units that include Pechiney's Brazing Sheet Business, that 
the purchaser agrees to be bound by the provisions of this Final 
Judgment, provided, however, that defendants need not obtain such an 
agreement from the Acquirer.

IV. Divestiture

    A. Defendants are ordered and directed, within one hundred 
twenty (120) calendar days after the date that Alcan's tender offer 
for Pechiney ends, or five (5) days after notice of the entry of 
this Final Judgment by the Court, whichever is later, to divest 
Pechiney's Brazing Sheet Business 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 
in total sixty (60) calendar days, and shall notify the Court in 
each such circumstance. Defendants agree to use their best efforts 
to divest Pechiney's Brazing Sheet Business as expeditiously as 
possible.
    B. In accomplishing the divestiture ordered by this Final 
Judgment, defendants promptly shall make known, by usual and 
customary means, the availability of Pechiney's Brazing Sheet 
Business. Defendants shall inform any person making inquiry 
regarding a possible purchase of Pechiney's Brazing Sheet Business 
that it will be 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 Pechiney's Brazing Sheet Business customarily provided in a due 
diligence process except such information or documents subject to 
the attorney-client or work-product privilege. 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 prospective Acquirers of Pechiney's 
Brazing Sheet Business and the United States information relating to 
the personnel involved in the production, operation, development, 
and sale of Pechiney's Brazing Sheet Business to enable the Acquirer 
to make offers of employment. Defendants will not interfere with any 
negotiations by the Acquirer to employ any of the defendants' 
employees whose responsibilities includes the production, operation, 
development, or sale of the products of Pechiney's Brazing Sheet 
Business.
    D. Defendants shall permit prospective Acquirers of Pechiney's 
Brazing Sheet Business to have reasonable access to personnel and to 
make inspections of the physical facilities of Pechiney's Brazing 
Sheet Business; access to any and all environment, 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. Defendants shall warrant to the Acquirer of Pechiney's 
Brazing Sheet Business that each asset that was operational as of 
the date

[[Page 70291]]

of filing of the Complaint in this matter will be operational on the 
date of divestiture.
    F. Defendants shall not take any action that will impede in any 
way the permitting, operation, or divestiture of Pechiney's Brazing 
Sheet Business.
    G. Defendants shall not take any action, direct or indirect, 
that would prevent or discourage in any way any dealer from 
distributing the products of Pechiney's Brazing Sheet Business for a 
period of two years after such divestiture. Nothing in this 
provision, however, shall prevent defendants from promoting and 
selling in the ordinary course of business products that compete 
with those of Pechiney's Brazing Sheet Business.
    H. Defendants shall warrant to the Acquirer of Pechiney's 
Brazing Sheet Business that there are no material defects in the 
environmental, zoning, or other permits pertaining to the operation 
of Pechiney's Brazing Sheet Business, and that following the sale of 
Pechiney's Brazing Sheet Business, defendants will not undertake, 
directly or indirectly, any challenge to the environmental, zoning, 
or other permits relating to the operation of Pechiney's Brazing 
Sheet Business.
    I. Nothing in this Final Judgment shall be construed to require 
the Acquirer as a condition of any license granted by or to 
defendants pursuant to section II (E) and IV to extend to defendants 
the right to use the Acquirer's improvements to any of Pechiney's 
Brazing Sheet Business.
    J. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section IV, or by trustee appointed pursuant 
to Section V, of this Final Judgment, shall include the entire 
Pechiney's Brazing Sheet Business, and shall be accomplish in such a 
way as to satisfy the United States, in its sole discretion, that 
Pechiney's Brazing Sheet Business can and will be used by the 
Acquirer as part of a viable, ongoing business, engaged in 
developing, manufacturing, and selling brazing sheet in North 
America. Divestiture of Pechiney's Brazing Sheet Business may be 
made to an Acquirer, provided that it is demonstrated to the sole 
satisfaction of the United States that Pechiney's Brazing Sheet 
Business will remain viable and the divestiture of such assets will 
remedy the competitive harm alleged in the Complaint. The 
divestitures, whether pursuant to Section IV or Section V of this 
Final Judgment,
    1. Shall be made to an Acquirer that, in the United States's 
sole judgment, has the managerial, operational and financial 
capability to compete effectively in the development, manufacture, 
and sale of brazing sheet in North America; 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 complete 
effectively.

V. Appointment of Trustee to Effect Divestiture

    A. If defendants have not divested Pechiney's Brazing Sheet 
Business within the time period specified in Section IV(A), 
defendants shall notify the United States of that fact in writing. 
Upon application of the United States, the Court shall appoint a 
trustee selected by the United States and approved by the Court to 
effect the divestiture of Pechiney's Brazing Sheet Business.
    B. After the appointment of a trustee becomes effective, only 
the trustee shall have the right to sell Pechiney's Brazing Sheet 
Business. The trustee shall have the power and authority to 
accomplish the divestiture to an Acquirer acceptable to the United 
States at such price and on such terms as are then obtainable upon 
reasonable effort by the trustee, subject to the provisions of 
sections IV, V and VI of this Final Judgment, and shall have such 
other powers as this Court deems appropriate. Subject to section 
V(D) of this Final Judgment, the trustee may hire at the cost and 
expense of defendants any investment bankers, attorneys, or other 
agents, who shall be solely accountable to the trustee, reasonable 
necessary in the trustee's judgment to assist in the divestiture.
    C. Defendants shall not object to a sale by the trustee on any 
ground other than the trustee's malfeasance. Any such objections by 
defendants must be conveyed in writing to the United States and the 
trustee within ten (10) calendar days after the trustee has provided 
the notice required under Section VI.
    D. The trustee shall serve at the cost and expense of 
defendants, on such terms and conditions as plaintiff approves, and 
shall account for all monies derived from the sale of Pechiney's 
Brazing Sheet Business and all costs and expenses to incurred. After 
approval by the Court of the trustee's accounting, including fees 
for its services and those of any professionals and agents retained 
by the trustee, all remaining money shall be paid to defendants and 
the trust shall then be terminated. The compensation of the trustee 
and any professionals and agents retained by the trustee shall be 
reasonable in light of the value of Pechiney's Brazing Sheet 
Business and based on a fee arrangement providing the trustee with 
an incentive based on the price and terms of the divestiture and the 
speed with which it is accomplished, but timeliness is paramount.
    E. Defendants shall use their best efforts to assist the trustee 
in accomplishing the required divestiture. The trustee and any 
consultants, accountants, attorneys, and other persons retained by 
the trustee shall have full and complete access to the personnel, 
books, records, and facilities of the business to be divested, and 
defendants shall develop financial and other information relevant to 
such business as the trustee may reasonably request, subject to 
customary confidentiality protection for trade secret or other 
confidential research, development, or commercial information. 
Defendants shall take no action to interfere with or to impede the 
trustee's accomplishment of the divestiture.
    F. After its appointment, the trustee shall file monthly reports 
with the United States and the Court setting forth the trustee's 
efforts to accomplish the divestiture ordered under this Final 
Judgment. To the extent such reports contain information that the 
trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. 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, and interest in Pechiney's Brazing 
Sheet Business and shall describe in detail each contact with any 
such person. The trustee shall maintain full records of all efforts 
made to divest Pechiney's Brazing Sheet Business.
    G. If the trustee has not accomplished such divestiture within 
six months after its appointment, the trustee shall promptly file 
with the Court a report setting forth (1) the trustee's efforts to 
accomplish the required divestiture; (2) the reasons, in the 
trustee's judgment, why the required divestiture has not been 
accomplished; and (3) the trustee's recommendations. To the extent 
such reports contain information that the trustee deems 
confidential, such reports shall not be filed in the public docket 
of the Court. The trustee shall at the same time furnish such report 
to the plaintiff who 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 trustee's 
appointment by a period requested by the United States.

VI. Notice of Proposed Divestiture

    A. Within two (2) business days following execution of a 
definitive divestiture agreement, defendants or the 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 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 Pechiney's Brazing Sheet Business, 
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 
trustee if applicable additional information concerning the proposed 
divestiture, the proposed Acquirer, and any other potential 
Acquirer. Defendants and the 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

[[Page 70292]]

Acquirer, any third party, and the trustee, whichever is later, the 
United States shall provide written notice to defendants and the 
trustee, if there is one, stating whether or not it objects to 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 
section V(D) 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 
section V(D), 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 this Court. 
Defendants shall take no action that would jeopardize the 
divestiture order by this Court.

IX. Affidavits

    A. Within twenty (20) calendar days of the filing of 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 as to the fact and 
manner of its 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 
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 Pechiney's Brazing Sheet 
Business, 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 Pechiney's Brazing Sheet Business, and to provide required 
information to any prospective Acquirer, 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 limitations 
on the information, shall be made within fourteen (14) 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 IX 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 Pechiney's Brazing Sheet Business and to divest Pechiney's 
Brazing Sheet Business until one year after such divestiture has 
been completed.

X. Compliance Inspection

    A. For purposes of determining or securing compliance with this 
Final Judgment, or of determining whether the Final Judgment should 
be modified or vacated, and subject to any legally recognized 
privilege, from time to time duly authorized representatives of the 
United States Department of Justice, including consultants and other 
persons retained by the United States, shall, upon written request 
of a duly 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 plaintiff's option, to require defendants to provide copies 
of, all books, ledgers, accounts, records 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 a duly authorized representative 
of the Assistant Attorney General in charge of the Antitrust 
Division, defendants shall submit written reports, 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 
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)(7) 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)(7) 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 Pechiney's Brazing 
Sheet Business during the term of this Final Judgment.

XII. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this 
Final Judgment to apply to this 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. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire ten years from the date of its entry.

XIV. Public Interest Determination

    Entry of this Final Judgment is in the public interest.

Date:------------------------------------------------------------------

    Court approval subject to procedures of the Antitrust Procedures 
and Penalties Act, 15 U.S.C. 16.

-----------------------------------------------------------------------
United States District Judge

Competitive Impact Statement

    The United States, pursuant to section 2(b) of the Antitrust 
Procedures and Penalties Act (``Tunney Act''), 15 U.S.C. 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

    In early July 2003, Alcan Inc., (``Alcan'') Publicly announced 
that it would soon begin a tender offer for shares of Pechiney, S.A. 
(``Pechiney''), a transaction formally endorsed by Pechiney's board 
of directors on August 30, 2003. On September 29, 2003, the United 
States filed a civil antitrust suit alleging that Alcan's proposed 
acquisition of Pechiney would violate Section 7 of the Clayton Act, 
15 U.S.C. 18. The Complaint alleges that a combination of Alcan and 
Pechiney would substantially lessen competition in the development, 
production, and sale of brazing sheet in North America. Pechiney and 
Alcan are, respectively, the second and fourth largest competitors 
in the sale of brazing sheet in North America. The acquisition would 
result in a single firm--Alcan--with a market share of over 40 
percent, and the industry's two largest firms having a combined 
share of over 80 percent, of North American sales of brazing sheet. 
The attendant reduction in competition in this highly concentrated 
market would lead to an increase in brazing sheet prices and a 
reduction in product quality and innovation to the detriment of 
North American consumers. Accordingly, the prayer for relief in the 
Complaint seeks: (1) A judgment that the proposed acquisition would 
violate Section 7 of the Clayton Act, and (2) a permanent injunction 
that would prevent Alcan from acquiring control of, or otherwise 
combining its assets with, Pechiney.
    At the same time the Complaint was filed, the United States 
filed a proposed settlement that would allow Alcan to acquire 
Pechiney but require defendants to divest Pechiney's entire North 
American brazing sheet business in such a way as to preserve 
competition in North America. The settlement consists of a Hold 
Separate Stipulation and Order and a

[[Page 70293]]

proposed Final Judgment. According to the terms of the settlement, 
defendants must divest Pechiney's brazing sheet business \1\ to a 
person acceptable to the United States, in its sole discretion, 
within 120 calendar days after Alcan receives preliminary 
notification from the responsible French stock market regulatory 
agency, Conseil des Marches Financiers, that the firm's tender offer 
for shares of Pechiney has been successful, or within five (5) days 
after notice of entry of the Final Judgment, whichever is later. The 
United States, in its sole discretion, may extend the time period 
for this divestiture one or more times, not to exceed a total of 60 
days past the initial divestiture deadline. If defendants do not 
complete the ordered divestiture within the prescribed time period, 
then the United States may nominate, and the Court will appoint, a 
trustee who will have sole authority to divest Pechiney's brazing 
sheet assets.
---------------------------------------------------------------------------

    \1\ Pechiney's brazing sheet business, as defined in Section 
II(E) of the proposed Final Judgment, includes all tangible and 
intangible assets of Pechiney's Ravenswood, West Virginia aluminum 
rolling mill and the engineering facilities, wherever located, that 
provide research and development support for any product produced at 
the Ravenswood plant.
---------------------------------------------------------------------------

    The parties have stipulated that the proposed Final Judgment may 
be entered by the Court after compliance with the Tunney Act. Entry 
of the proposed 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 Violations 
of the Antitrust Laws

A. The Defendants and the Proposed Transaction

    Alcan is a Canadian corporation based in Montreal, Quebec. One 
of the world's largest fully integrated aluminum producers, Alcan 
producers primary aluminum ingot and a wide range of rolled aluminum 
products, including brazing sheet. Its annual revenues exceed $12.5 
billion, including over $30 million in North American sales of 
brazing sheet. This business operation is managed by a domestic 
subsidiary of Alcan, Alcan Aluminum Corporation.
    Pechiney is a French corporation based in Paris, France. 
Pechiney is also a major fully integrated aluminum producer, with 
annual revenues exceeding $11.3 billion. Its U.S. subsidiary, 
Pechiney Rolled Products, LLC, produces a wide variety of rolled 
aluminum products (including brazing sheet) in an aluminum rolling 
mill in Ravenswood, West Virginia. Pechiney's total North American 
sales of brazing sheet exceed $100 million annually.
    Alcan has launched a teder offer for shares of Pechiney, a 
transaction now valued at over $4.6 billion. The tender offer, 
publicly announced in early July and approved in August by 
Pechiney's board of directors, is expected to be completed in early 
December 2003. If the tender offer is successful, Alcan's 
acquisition of Pechiney would combine, respectively, the fourth and 
second largest competitiors in the sale of brazing sheet in North 
America, and substantially lessen competition in this already highly 
concentrated market.
    The acquisition would combine Alcan, a low-cost new entrant and 
pricing maverick, with Pechiney, a large industry incumbent. The 
deal would eliminate Alcan's incentive to expand its sales quickly 
by reducing its brazing sheet prices and increase its sales at the 
expense of larger rivals such as Pechiney, and end the current 
intense competitive rivalry in developing, producing, and selling 
brazing sheet in North America. This competition, which promises to 
intensify in the next few years as Alcan finishes qualifying its 
brazing sheet for more applications with other North American 
customers, has already produced significant improvements in brazing 
sheet quality, durability, and reliability, and highly competitive 
prices and contractual terms for this material. The transaction 
would reduce the number of significant competitors in the sale of 
brazing sheet in North America from four to three, and substantially 
increase the prospect of future tacit or explicit post-merger 
coordination between these firms to increase prices of brazing sheet 
to the detriment of consumers. Other North American competitors in 
the sale of brazing sheet have neither the production capacity nor 
competitive incentive, individually or collectively, to discipline a 
small but significant post-merger unilateral or cooperative price 
increase in brazing sheet.

B. The Effects of the Transaction on Competition in the Sale of Brazing 
Sheet

    1. Relevant market: the sale of brazing sheet in North America. 
The Complaint alleges that development, production, and sale of 
brazing sheet is a relevant product market within the meaning of 
Section 7 of the Clayton Act. Brazing sheet describes a class of 
custom-engineered aluminum alloys made of a solid metal core clad on 
one or both sides with an alloy whose melting temperature is lower 
than that of the core material. When heated to the appropriate 
termperature, the cladding alloy melts and forms a durable, uniform 
leak-proof bond between the core and any adjoining aluminum surface, 
effectively welding the two materials together. Brazing sheet is 
ideally suited, and virtually all of it is used, for fabircating the 
major components of heat exchange systems for motor vehicles. These 
heat exchangers include engine cooling systems, such as radiators 
and oil coolers, and climate control systems, such as heater cores 
and air conditioning units (i.e., evaporator and condenser cores).
    By constructing the basic components of motor vehicle heat 
exchangers with brazing sheet, a parts maker can avoid the tedious 
and costly task of welding or soldering individual components, many 
of which have usually intricate surfaces that form joints deep 
within the heat exchange unit. A parts maker can instead loosely 
assemble brazed components and bake the entire assembly in a brazing 
oven. The surfaces of the components will met, converting the 
assembly into a solid, leak-proof heat exchange unit.
    The major components of all heat exchangers used in motor 
vehicles are made of brazing sheet, a mterial that enables vehicle 
makers simultaneously to reduce vehicle cost, size, and weight; 
improve gas mileage; and extend engine, cllimate control system, and 
drive train life. In heat exchange applications, no other material 
can match the combination of low cost, strength, light weight, 
durability, formability, and corrosion resistance provided by 
brazing sheet.
    A small but significant and nontransitory increase in prices for 
brazing sheet would be profitable and sustainable because it would 
not cause parts makers to begin using significant amounts of other 
materials to make heat exchangers for motor vehicles. The 
development, production, and sale of brazing sheet is a line of 
commerce and a relevant product market within the meaning of section 
7 of the Clayton Act.\2\
---------------------------------------------------------------------------

    \2\ Brazing sheet is designed for and sold to motor vehilcle 
parts makers (and others) on an application-specific basis. Thus, it 
may be possible to delineate relevant markets smaller than the ``all 
brazing sheet'' market alleged in the Complaint. A producer of 
brazing sheet for use in one type of heat exchange component, 
however, generally has the ability to make and market brazing sheet 
suitable for use in producing other types of components for heat 
exchange units. According to the Merger Guidelines, if such 
production substitutability is ``nearly universal'' among the firms 
that make and sell brazing sheet, then it is appropriate, as a 
matter of convenience, to describe the relevant product market as 
``all brazing sheet.'' See Horizontal Merger Guidelines, n. 14 (1997 
rev.).
---------------------------------------------------------------------------

    The Complaint alleges that the sale of brazing sheet in North 
America is a relevant geographic market within the meaning of 
Section 7 of the Clayton Act. Over ninety percent of brazing sheet 
sold in North America is produced by firms located in either the 
United States or Canada. Some customers import brazing sheet into 
North America from overseas sources. Foreign brazing sheet, however, 
is significantly more expensive and more prone to unpredictable and 
costly delivery delays than brazing sheet produced in North America. 
North American customers are reluctant to rely on it for general 
production requirements. A small but significant aand nontransitory 
increase in prices of brazinag sheet sold in North America would be 
profitable and sustainable because it would not be undermined by 
increased customer imports of brazing sheet from overseas sources. 
North America is a relevant geographic market in which to assess the 
competitive effects of Alcan's proposed acquisition of Pechiney on 
sales of brazing sheet.
    2. Anticompetitive effects of the acquisition. The Complaint 
alleges that in this highly concentrated market for brazing sheet, a 
combination of Alcan and Pehiney likely would: (i) Substantially 
lessen competition in the development, production, and sale of 
brazing sheet in North America; (ii) eliminate actual and potential 
competition between Alcan's and Pechiney's brazing sheet businesses; 
and (iii) increase prices and reduce current levels of quality and 
innovation for brazing sheet in North America.
    Specifically, the Complaint alleges that Pechiney and Alcan are, 
respectively, the second and fourth largest producers of brazing 
sheet in North America. The

[[Page 70294]]

combined firm and one other producer command over 80 percent of 
brazing sheet sales in North America. Two smaller firms also sell 
brazing sheet in North America. However, these small firms do not 
have sufficient excess production capacity or capability to attract 
significant sales away from the larger market incumbents, and 
thereby effectively constrain a post-merger exercise of market power 
by those firms.
    Alcan's acquisition of Pechiney is likely to diminish 
competition substantially. First, the remaining competitors would be 
more likely to successfully engage in tacit or explicit coordinated 
pricing to the detriment of consumers, because they would not need 
to worry about the loss of sales to Alcan, currently a small, 
``hungry,'' low-cost new entrant. Second, Alcan could unilaterally 
increase its prices for brazing sheet for which it and Pechiney are 
the only qualified suppliers.
    New entry into the development, production, and sale of brazing 
sheet in North America is difficult. To produce brazing sheet, a 
firm must have an aluminum hot rolling mill (which costs at least 
$80 million and takes three years to construct). Even after 
acquiring an aluminum hot rolling mill, a new firm can begin selling 
brazing sheet to customers only after it has made an additional 
substantial investment in developing and mastering allow-making 
technology, successfully ``qualified'' its products with prospective 
customers by completing a series of time-consuming tests of brazing 
sheet materials and sample heat exchange components, and finally, 
acquired some actual experience producing brazing sheet that meets 
the exacting specifications of risk-averse parts makers.\3\ These 
so-called ``sunk'' entry costs \4\ are very large relative to the 
size of the North American market for brazing sheet, and there is a 
very high risk that a new entrant may not receive any profits from 
its entry. In these circumstances, it is unlikely that, after a 
combination of Alcan and Pechiney, new entry into the brazing sheet 
market in North America would occur so rapidly and be of such 
magnitude that it would effectively constrain a cooperative or 
unilateral post-merger exercise of market power by incumbent 
producers of brazing sheet.
---------------------------------------------------------------------------

    \3\ It took Alcan over two years from when it moved its brazing 
sheet operations to Oswego, New York, to qualify with enough 
customers to make a significant sales impact.
    \4\ The term ``sunk costs'' as used in this context includes the 
costs of acquiring tangible and intangible assets that cannot be 
recovered through the redeployment of these assets outside the 
relevant market, i.e., costs that were uniquely incurred to enter 
the production and sale of brazing sheet in North America and cannot 
be recovered upon exit from that industry.
---------------------------------------------------------------------------

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment will preserve competition in the 
sale of brazing sheet in North America. The Judgment requires that 
defendants sell Pechiney's brazing sheet business to an acquirer 
acceptable to the United States within 120 calendar days after Alcan 
has received a preliminary indication from Conseil des Marches 
Financiers, a French stock market regulatory agency, that Alcan's 
tender offer for shares of Pechiney has been successful, or within 
five (5) days after notice of entry of the Final Judgment, whichever 
is later. The United States may extend this time period for 
divestiture one or more times, for a total time not to exceed 60 
days. Defendants must use their best efforts to divest Pechiney's 
brazing sheet business as expeditiously as possible, and until the 
ordered divestiture takes place, defendants must cooperate with any 
prospective purchasers.
    If Alcan and Pechiney do not accomplish the ordered divestiture 
within the prescribed time period, the United States will nominate, 
and the Court will appoint, a trustee to assume sole power and 
authority to complete the divestiture. Defendants must cooperate 
fully with the trustee's efforts to divest Pechiney's brazing sheet 
business to an acquirer acceptable to the United States and 
periodically report to the United States on their divestiture 
efforts.
    If the trustee is appointed, the defendants will pay all costs 
and expenses of the trustee. The trustee's commission will be 
structured so as to provide an incentive for the trustee based on 
the price obtained and the speed with which the divestiture is 
completed. After his or her appointment becomes effective, the 
trustee will file monthly reports with the parties and the Court, 
setting forth the trustee's efforts to accomplish the divestiture. 
At the end of six months, if the divestiture has not been 
accomplished, the trustee and the parties will make recommendations 
to the Court, which shall enter such orders as appropriate to carry 
out the purpose of the trust, including extending the trust and the 
term of the trustee's appointment.

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 attorney's 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. 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 parties have stipulated that the proposed Final Judgment may 
be entered by the Court after compliance with the provisions of the 
Tunney Act, provided that the United States has not withdrawn its 
consent. The Tunney Act conditions entry of the decree upon the 
Court's determination that the proposed Final Judgment is in the 
public interest.
    The Tunney Act 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. The United States will 
evaluate and respond to the comments. All comments will be given due 
consideration by the Department of Justice, which remains free to 
withdraw its consent to the Proposed Final Judgment at any time 
prior to entry. The comments and the response of the United States 
will be filed with the Court and published in the Federal Register. 
Written comments should be submitted to: Maribeth Petrizzi, Chief, 
Litigation II Section, Antitrust Division, United States Department 
of Justice, 1401 H Street, NW., Suite 3000, 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 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 Alan 
and Pechiney. The United States could have continued the litigation 
to seek preliminary and permanent injunctions against Alcan's 
acquisition of Pechiney. The United States is satisfied, however, 
that the divestiture of the assets as proposed in the Final Judgment 
will establish, preserve, and ensure competition in the relevant 
market. To this end, the United States is convinced that the 
proposed relief, once implemented by the Court, will prevent Alcan's 
acquisition of Pechiney from having adverse competition effects.

VII. Standard of Review Under the Tunney Act for the Proposed Final 
Judgment

    The Tunney Act requires that proposed consent judgments in 
antitrust cases brought by the United States be subject to a sixty-
day comment period, after which the Court shall determine whether 
entry of the proposed Final Judgment ``is in the public interest.'' 
In making that determination, the Court may consider:

    (1) The competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration or relief sought, anticipated effects of 
alternative remedies actually considered, and any other 
considerations bearing upon the adequacy of such judgment;
    (2) The impact of entry of such judgment 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). As the United States Court of Appeals for the 
District of Columbia Circuit held, the Tunney Act permits a court to 
consider, among other things, the relationship between the remedy 
secured and

[[Page 70295]]

the specific allegations set forth in the government's complaint, 
whether the decree is sufficiently clear, whether enforcement 
mechanisms are sufficient, and whether the decree may positively 
harm third parties. See United States v. Microsoft, 56 F.3d 1448, 
1458-62 (D.C. Cir. 1995).

    In conducting this inquiry, ``[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 Senator Tunney).\5\ Rather:

    \5\ See United States v. Gillette Co., 406 F. Supp. 713, 715-16 
(D. Mass. 1975) (recognizing it was not the court's duty to settle; 
rather, the court must only answer ``whether the settlement achieved 
[was] within the reaches of the public interest''). A ``public 
interest'' determination can be made properly on the basis of the 
Competitive Impact Statement and Response to Comments filed pursuant 
to the Tunney Act. Although the Tunney Act authorizes the use of 
additional procedures, 15 U.S.C. 16(f), those procedures are 
discretionary. A court need not invoke any of them unless it 
believes that the comments have raised significant issues and that 
further proceedings would aid the court in resolving those issues. 
See H.R. Rep. No. 93-1463, 93rd Cong., 2d Sess. 8-9 (1974), 
reprinted in 1974 U.S.C.C.N. 6535, 6538.
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    [a]bsent a showing of corrupt failure of the government to 
discharge its duty, the Court, in making its public interest 
finding, should * * * carefully consider the explanations of the 
government in the competitive impact statement and its responses to 
comments in order to determine whether those explanations are 
reasonable under the circumstances.

United States v. Mid-America Dairymen, Inc., 1977-I Trade Cas. (CCH) 
]61,508, at 71,980 (W.D. Mo. May 17, 1977).
    Accordingly, with respect to the adequacy of the relief secured 
by the decree, 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) (citing 
United States v. Bachtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); 
see also Microsoft, 56 F.3d at 1460-62. Case law requires that:

    [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.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\6\
---------------------------------------------------------------------------

    \6\ Cf. BNS, 858 F.2d at 463 (holding that the court's 
``ultimate authority under the [Tunney Act] is limited to approving 
or disapproving the consent decree''); Gillette, 406 F. Supp. at 716 
(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''). See generally Microsoft, 56 F. 3d at 
1461 (discussing whether ``the remedies [obtained in the decree are] 
so inconsonant with the allegations charged as to fall outside of 
the `reaches of the public interest''').
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    The proposed Final Judgment, therefore, should not be reviewed 
under a standard of whether it is certain to eliminate every 
anticompetitive effect of a particular practice or whether it 
mandates certainty of free competition in the future. Court approval 
of a final judgment requires a standard more flexible and less 
strict than the standard required for a finding of liability. ``[A] 
proposed decree must be approved even if it falls short of the 
remedy the court would impose on its own, as long as it falls within 
the range of acceptability or is `within the reaches of public 
interest.' '' United States v. Am. Telephone & Telegraph Co., 552 F. 
Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting Gillette, 
406 F. Supp. at 716), aff'd sub nom. Maryland v. United States, 460 
U.S. 1001 (1983); see also United States v. Alcan Aluminum Ltd., 605 
F. Supp. 619, 622 (W.D. Ky. 1985) (approving the consent decree even 
though the court would have imposed a greater remedy).
    Moreover, the Court's role under the Tunney Act 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. 
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 might have but did not pursue. Id. at 1459-
60.

VIII. Determinative Documents

    There are no determinative materials or documents within the 
meaning of the Tunney Act that were considered by the United States 
in formulating the proposed Final Judgment.

    Dated: November 13, 2003.

    Respectfully submitted,

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Anthony E. Harris,
Illinois Bar No. 1133713, U.S. Department of Justice, Antitrust 
Division, Litigation II Section, 1401 H Street, NW., Suite 3000, 
Washington, DC 20530, Telephone: (202) 307-6583.

Certificate of Service

    I, Anthony E. Harris, hereby certify that on November 14, 2003, 
I caused the foregoing Competitive Impact Statement to be served on 
defendants by sending a facsimile and by mailing a copy first-class, 
postage prepaid, to duly authorized legal representatives of those 
parties, as follows:

Counsel for Defendants Alcan Inc. and Alcan Aluminum Corp.

D. Stuart Meiklejohn, Esquire, Michael B. Miller, Esquire, Sullivan 
& Cromwell, 125 Broad Street, New York, NY 10004-2498

Counsel for Defendants Pechiney, S.A., and Pechiney Rolled Products, 
LLC

W. Dale Collins, Esquire, Shearman & Sterling LLP, 599 Lexington 
Avenue, New York, NY 10022-6069

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Anthony E. Harris, Esquire,
Illinois Bar #1133713, U.S. Department of Justice, Antitrust 
Division, 1401 H Street, NW., Suite 3000, Washington, DC 20530, 
Telephone No.: (202) 307-6583.

[FR Doc. 03-31055 Filed 12-16-03; 8:45 am]

BILLING CODE 4410-11-M