80 FR 47517 - United States and State of New York v. Twin America, LLC, et al.; Public Comment and Response on Proposed Final Judgment

DEPARTMENT OF JUSTICE
Antitrust Division

Federal Register Volume 80, Issue 152 (August 7, 2015)

[Federal Register Volume 80, Number 152 (Friday, August 7, 2015)]
[Notices]
[Pages 47517-47525]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-19495]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Antitrust Division


United States and State of New York v. Twin America, LLC, et al.; 
Public Comment and Response on Proposed Final Judgment

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h), the United States hereby publishes below the comment 
received on the proposed Final Judgment in United States and State of 
New York v. Twin America, LLC, et al., Civil Action No. 12-cv-8989 
(ALC) (GWG) (S.D.N.Y.), together with the Response of the United States 
to Public Comment.
    Copies of the comment and the United States' Response are available 
for inspection at the Department of Justice Antitrust Division, 450 
Fifth Street NW., Suite 1010, Washington, DC 20530 (telephone: 202-514-
2481), on the Department of Justice's Web site at

[[Page 47518]]

http://www.justice.gov/atr/case/us-and-state-new-york-v-twin-america-llc-et-al, and at the Office of the Clerk of the United States District 
Court for the Southern District of New York, Daniel Patrick Moynihan 
United States Courthouse, 500 Pearl Street, New York, NY 10007. Copies 
of any of these materials may also be obtained upon request and payment 
of a copying fee.

Patricia A. Brink,
Director of Civil Enforcement.

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

    UNITED STATES OF AMERICA, AND STATE OF NEW YORK, Plaintiffs, v. 
TWIN AMERICA, LLC, et al. Defendants.

Civil Action No. 12-cv-8989 (ALC) (GWG)

ECF Case

RESPONSE OF PLAINTIFF UNITED STATES TO PUBLIC COMMENT ON THE PROPOSED 
FINAL JUDGMENT

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h) (``Tunney Act''), the United States 
hereby files the single public comment received concerning the proposed 
Final Judgment in this case and the United States' response to the 
comment. After careful consideration of the submitted comment, the 
United States continues to believe that the proposed Final Judgment 
provides an effective and appropriate remedy for the violations alleged 
in the Complaint. The United States will move the Court for entry of 
the proposed Final Judgment after the public comment and this Response 
have been published in the Federal Register pursuant to 15 U.S.C. 
16(d).

I. PROCEDURAL HISTORY

    On March 17, 2009, Defendants Coach USA, Inc. (through subsidiary 
International Bus Services, Inc.) and CitySights LLC (through 
subsidiary City Sights Twin, LLC) formed Twin America, LLC (``Twin 
America''), a joint venture that combined their hop-on, hop-off bus 
tour operations in New York City.
    Defendants subsequently applied to the federal Surface 
Transportation Board (``STB'') for approval of the Twin America 
transaction, which would have conferred antitrust immunity. After more 
than two years of proceedings, the STB rejected the joint venture as 
anticompetitive. However, while Defendants ceased operating the nominal 
interstate service that had formed the basis for the STB's 
jurisdiction, they continued operating their hop-on, hop-off bus tour 
operations in New York City.
    In December 2012, the United States and the State of New York 
(collectively, ``Plaintiffs'') filed this civil antitrust action, 
alleging that the formation of Twin America substantially lessened 
competition in the market for hop-on, hop-off bus tours in New York 
City in violation of Section 7 of the Clayton Act, 15 U.S.C. 18, and 
also violated Section 1 of the Sherman Act, 15 U.S.C. 1, Section 340 of 
the Donnelly Act, N.Y. Gen. Bus. Law Sec.  340, and Section 63(12) of 
the New York Executive Law, N.Y. Exec. Law Sec.  63(12). The Complaint 
sought to remedy the harm to competition and disgorge the ill-gotten 
gains Defendants had obtained from operating Twin America in violation 
of the antitrust laws.
    In December 2014, the parties adjourned a February 2015 trial date 
to facilitate settlement discussions. These discussions culminated in 
the proposed Final Judgment, which was filed on March 16, 2015 (Dkt. 
No. 127-1).\1\ As required by the Tunney Act, the United States 
published the proposed Final Judgment and Competitive Impact Statement 
in the Federal Register on March 27, 2015, 80 FR 16427 (Mar. 27, 2015), 
and caused to be published summaries of the terms of the proposed Final 
Judgment and Competitive Impact Statement, together with directions for 
the submission of written comments relating to the proposed Final 
Judgment, in The Washington Post and the New York Daily News for seven 
days (March 24 through March 30, 2015). The 60-day period for public 
comments ended on May 29, 2015. The United States received one comment, 
which is described below and attached hereto as Exhibit 1.
---------------------------------------------------------------------------

    \1\ In October 2014, this Court approved Defendants' settlement 
of related class action lawsuits. See Order and Final Judgment 
Approving In Re NYC Bus Tour Antitrust Litigation Class Action 
Settlement, In re NYC Bus Tour Antitrust Litigation, No. 13-CV-0711 
(ALC) (GWG) (S.D.N.Y. Oct. 21, 2014) (Dkt. No. 122).
---------------------------------------------------------------------------

II. THE PROPOSED SETTLEMENT

    The Complaint alleged that the formation of Twin America had the 
purpose and effect of creating a monopoly in the hop-on, hop-off bus 
tour market in New York City. The joint venture eliminated substantial 
head-to-head competition between Coach and City Sights that had 
benefitted consumers in the form of discounts, increased product 
offerings, and service improvements. The joint venture also enabled 
Defendants to increase hop-on, hop-off bus tour prices by approximately 
10%, resulting in immediate and continuing harm to consumers.
    The Complaint alleged that entry of new firms into the market or 
expansion of existing firms was unlikely to counteract the competitive 
harm caused by the formation and operation of Twin America. According 
to the Complaint, the primary barrier to entry was the difficulty of 
obtaining hop-on, hop-off bus stop authorizations from the New York 
City Department of Transportation (``NYCDOT''). Bus stop authorizations 
are required by NYCDOT for each location a tour operator wishes to load 
and unload passengers. Defendants obtained a robust portfolio of bus 
stop authorizations from NYCDOT several years ago, including 
authorizations at or very close to virtually all of Manhattan's major 
tourist attractions. Recent entrants, by contrast, were consistently 
unable to obtain competitive bus stop authorizations from NYCDOT at top 
tourist attractions because NYCDOT allocated such authorizations on a 
``first come, first served'' basis and most competitive bus stop 
locations were already at capacity or otherwise unavailable. As a 
result, more than five years after Twin America's formation, the joint 
venture still dominated the market and Defendants had sustained their 
anticompetitive price increases.
    The proposed Final Judgment addresses the harm alleged in the 
Complaint by requiring Twin America to divest all of City Sights's bus 
stop authorizations in Manhattan to NYCDOT, the city agency charged 
with managing bus stop authorizations. The divestiture significantly 
eases the primary entry barrier alleged in the Complaint by increasing 
NYCDOT's inventory of bus stops, including for the locations most 
sought by recent entrants. City Sights's set of approximately 50 bus 
stops includes highly-coveted stops surrounding key tourist attractions 
such as Times Square, the Empire State Building, and Battery Park that 
are critical to operating a competitive hop-on, hop-off bus tour. The 
proposed Final Judgment also prohibits Defendants from applying for or 
obtaining any bus stop authorizations for hop-on, hop-off bus tours at 
the locations of the divested City Sights bus stop authorizations for 
five years, subject to limited exceptions. In compliance with the 
proposed Final Judgment, Defendants relinquished the City Sights bus 
stop authorizations to NYCDOT on April 30, 2015.
    The proposed Final Judgment also requires Defendants to pay $7.5 
million in disgorgement to the United States and State of New York, 
which is on top

[[Page 47519]]

of the payments made by Defendants to settle the class action.

III. STANDARD OF JUDICIAL REVIEW UNDER THE TUNNEY ACT

    The Tunney Act requires that proposed consent judgments in 
antitrust cases brought by the United States be subject to a 60-day 
public 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); see also United States v. Apple, Inc., 889 F. Supp. 2d 
623, 630 (S.D.N.Y. 2012); United States v. Morgan Stanley, 881 F. Supp. 
2d 563, 566 (S.D.N.Y. 2012). 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); see also Apple, 889 F. Supp. 2d at 630-31; Morgan 
Stanley, 881 F. Supp. 2d at 566-67.
    In considering these statutory factors, the court's inquiry is 
necessarily a limited one. Apple, 889 F. Supp. 2d at 631; Morgan 
Stanley, 881 F. Supp. 2d at 567; United States v. Keyspan Corp., 763 F. 
Supp. 2d 633, 637 (S.D.N.Y. 2011). A court should consider, among other 
things, the relationship between the remedy secured and the specific 
allegations set forth in the Complaint, whether the decree is 
sufficiently clear, whether the enforcement mechanisms are sufficient, 
and whether the decree may positively harm third parties. Apple, 889 F. 
Supp. 2d at 631; United States v. Microsoft Corp., 56 F.3d 1448, 1458-
62 (D.C. Cir. 1995). However, ``[a] court must limit its review to the 
issues in the complaint and give `due respect to the [Government's] 
perception of . . . its case[.]' '' Morgan Stanley, 881 F. Supp. 2d at 
567 (quoting Microsoft, 56 F.3d at 1461); see also Keyspan, 763 F. 
Supp. 2d at 638 (same); Apple, 889 F. Supp. 2d at 631 (``In most cases, 
the court is not permitted to reach beyond the complaint to evaluate 
claims that the government did not make.'') (internal quotation 
omitted).
    ``The role of the court is not to determine whether the decree 
results in the array of rights and liabilities `that will best serve 
society, but only to ensure that the resulting settlement is within the 
reaches of the public interest.''' Apple, 889 F. Supp. 2d at 631 
(quoting Keyspan, 763 F. Supp. 2d at 637) (emphasis in original); see 
also Morgan Stanley, 881 F. Supp. 2d at 567; Microsoft, 56 F.3d at 
1460; United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) 
(explaining court may not ``engage in an unrestricted evaluation of 
what relief would best serve the public''); United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir. 1981) (noting that ``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'') (citations omitted).
    In determining whether a proposed settlement is in the public 
interest, ``the court should be `deferential to the government's 
predictions as to the effect of the proposed remedies.' '' Apple, 889 
F. Supp. 2d at 631 (quoting Microsoft, 56 F.3d at 1461); see also 
United States v. US Airways Grp., Inc., 38 F. Supp. 3d 69, 76 (D.D.C. 
2014) (``must accord deference to the government's predictions about 
the efficacy of its remedies'') (quoting United States v. SBC Commc'ns, 
Inc., 489 F. Supp. 2d 1, 17 (D.D.C. 2007)); United States v. Archer-
Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that 
the court should grant due respect to the United States' ``prediction 
as to the effect of proposed remedies, its perception of the market 
structure, and its view of the nature of the case'').
    A court ``is not permitted to reject the proposed remedies merely 
because the court believes other remedies are preferable.'' Keyspan, 
763 F. Supp. 2d at 637; see also Apple, 889 F. Supp. 2d at 631 (same); 
United States v. Am. Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C. 
1982) (stating that ``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 the 
public interest'') (citations and internal quotations omitted); United 
States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) 
(approving consent decree even though the court would have imposed 
greater remedy).
    The relevant inquiry ``is whether the Government has established an 
ample `factual foundation for [its] decisions such that its conclusions 
regarding the proposed settlement are reasonable.' '' Apple, 889 F. 
Supp. 2d at 631 (quoting Keyspan, 763 F. Supp. 2d at 637-38); see also 
Microsoft, 56 F.3d at 1461 (assessing 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.' ''); SBC 
Commc'ns, 489 F. Supp. 2d at 17 (explaining that courts ``may not 
require that the remedies perfectly match the alleged violations''). 
Accordingly, the United States ``need only provide a factual basis for 
concluding that the settlements are reasonably adequate remedies for 
the alleged harms.'' SBC Commc'ns, 489 F. Supp. 2d at 17; see also 
Apple, 889 F. Supp. 2d at 631.
    In its 2004 amendments to the Tunney Act,\2\ Congress made clear 
its intent to preserve the practical benefits of using consent decrees 
in antitrust enforcement, adding the unambiguous instruction that 
``[n]othing in this section shall be construed to require the court to 
conduct an evidentiary hearing or to require the court to permit anyone 
to intervene.'' 15 U.S.C. 16(e)(2); see also Apple, 889 F. Supp. 2d at 
631 (``The Tunney Act allows, but does not require, the court to 
conduct an evidentiary hearing and to permit third parties to 
intervene.''). The procedure for the public-interest determination is 
left to the discretion of the court, with the recognition that the 
court's ``scope of review remains sharply proscribed by precedent and 
the nature of Tunney Act proceedings.'' SBC Commc'ns, 489 F. Supp. 2d 
at 11. ``A court can make its public interest determination based on 
the competitive impact statement and response to public comments 
alone.'' US Airways, 38 F. Supp. 3d at 76.
---------------------------------------------------------------------------

    \2\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for courts to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns, 
489 F. Supp. 2d at 11 (concluding that the 2004 amendments 
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------

IV. UNITED STATES' RESPONSE TO PUBLIC COMMENT

    The United States received one public comment, from Taxi Tours, 
Inc., doing business as BigBus (``Big Bus''). Big Bus entered the New 
York City hop-on, hop-off bus tour market in 2014 by acquiring an 
existing player, Big Taxi. The comment makes four principal points: (1) 
There should be additional remedies to facilitate competitors' ticket 
sales; (2) there should be a more specific process governing the 
allocation of bus stop authorizations; (3) the judgment should apply to 
Defendants' future affiliated

[[Page 47520]]

entities; and (4) there should be a process for third parties to report 
violations of the Final Judgment. The United States respectfully 
responds to each point below.

1. Divestiture of the City Sights bus stops is sufficient to remedy the 
harm alleged in the Complaint

    Big Bus's comment asserts that Defendants prevent competitors from 
selling tickets for hop-on, hop-off bus tours at or near certain key 
tourist attractions and proposes that the settlement be amended to 
ensure equal access to vendors to market and sell tickets from 
Defendants' competitors. Big Bus also expresses concerns regarding the 
conduct of City Experts, an affiliate of Defendants that offers 
tourists a variety of tours and attractions from concierge desks it 
operates at certain New York City hotels. Big Bus contends that because 
City Experts sells Defendants' hop-on, hop-off bus tours as part of its 
bundled tourism packages but not the hop-on, hop-off bus tours of 
Defendants' competitors, it ``prevents the Defendants' competitors from 
effectively competing at the hotel and retail level.'' Big Bus also 
complains that Twin America's employees prevent Big Bus staff from 
selling tickets by verbally and physically attacking them.
    Pursuant to the Tunney Act, review of a proposed Final Judgment is 
limited to the relationship of the remedy to the violations alleged in 
the Complaint. See Microsoft, 56 F.3d at 1459-61; Morgan Stanley, 881 
F. Supp. 2d at 567; Keyspan, 763 F. Supp. 2d at 637-38; Apple, 889 F. 
Supp. 2d at 631. As described above, the Complaint alleged that the 
formation and operation of Twin America substantially lessened 
competition in the hop-on, hop-off bus tour market in New York City and 
identified potential entrants' inability to obtain bus stop 
authorizations at or sufficiently near top tourist attractions as the 
primary entry barrier. The proposed settlement addresses this entry 
barrier by requiring Twin America to divest all of the approximately 50 
City Sights bus stop authorizations in Manhattan, including highly 
desirable stops at or near key tourist attractions that rivals have 
been consistently unable to obtain. By relinquishing all of the City 
Sights bus stops to NYCDOT, the proposed Final Judgment increases the 
available inventory of bus stops for which rivals can obtain the 
authorizations needed to effectively compete with Twin America.
    The Complaint did not allege that the conduct of Defendants' street 
sellers, its City Experts affiliate, or Defendants' sales practices 
otherwise served as a meaningful barrier to competition in the hop-on, 
hop-off bus tour market. Nor did the Complaint allege that the 
formation of the joint venture had an impact on these practices. Thus, 
the suggested additional provisions are unnecessary to address the 
competitive harm set forth in the Complaint.

2. NYCDOT administers bus stop authorizations

    Big Bus argues that the proposed settlement should establish 
certain rules and processes related to the allocation and use of hop-
on, hop-off bus stops. First, Big Bus asserts that the Final Judgment 
``should define a fair and monitored process of reassignment/
reallocation of the divested [City Sights bus stop] authorizations to 
ensure that all competitors in the relevant market have an equal 
opportunity to apply for the divested stop authorizations.'' Big Bus 
also claims that the Final Judgment should address how hop-on, hop-off 
bus stop authorizations would be handled in the event that Defendants 
acquired an existing hop-on, hop-off bus tour business.
    Procedures relating to the assignment and allocation of bus stop 
authorizations are within the jurisdiction of NYCDOT, the New York City 
agency charged with regulating and managing bus stops. See, e.g., NYC 
Charter Sec.  2903 (giving NYCDOT control of and responsibility for 
``all those functions and operations of the city relating to 
transportation''); NYC Charter Sec.  2903(a)(14) (empowering NYCDOT to 
enforce rules and regulations regarding vehicular traffic and the 
parking, standing, or stopping of vehicles on the city's streets); 34 
RCNY Sec.  4-10 (governing the operations of buses in the city and 
providing that bus operators, subject to certain exceptions, cannot 
``pick up or discharge passengers on a street except at a bus stop 
designated by the Commissioner [of NYCDOT] in writing.''). Pursuant to 
this authority, NYCDOT is best positioned to determine how to 
distribute the City Sights bus stops that have been relinquished 
pursuant to the proposed Final Judgment, taking into account the 
relevant factors just as it does with respect to bus stop allocations 
and authorizations generally.
    Given the established NYCDOT role in bus stop authorizations and 
allocations, the United States concluded that the facts of this case 
did not call for the proposed Final Judgment to establish any 
additional regulations or processes relating to the assignment or 
allocation of bus stop authorizations.

3. The proposed settlement already covers affiliated entities

    Big Bus's comment raises a concern that two provisions of the 
proposed Final Judgment--having to do with notification to the 
government of certain transactions (Section X) and ``reacquisition'' of 
stops (Section XII)--would not apply to affiliated entities that 
Defendants might form after entry of the Final Judgment. Big Bus is 
incorrect. The proposed Final Judgment applies to Defendant entities as 
well as their ``successors and assigns, and any subsidiaries, 
divisions, groups, affiliates, partnerships and joint ventures under 
their control, and their directors, officers, managers, agents, and 
employees'' (emphasis added). Therefore, any entities that Defendants 
form or acquire after entry of the Final Judgment will also be subject 
to it.

4. Third parties may report violations of the Final Judgment to the 
United States or State of New York

    Finally, Big Bus argues that Section XIII of the proposed Final 
Judgment, which provides that the Court retains jurisdiction for ten 
years to monitor and enforce the terms of the Final Judgment, should 
also set forth ``a process whereby third parties may directly report 
violations of the Final Judgment by the Defendants.'' The United States 
does not believe this is necessary. Third parties can already report 
such violations to the Antitrust Division of the Department of Justice 
or the Antitrust Bureau of the New York Attorney General's Office. 
Plaintiffs will take the appropriate steps to respond to any reported 
violations, including by applying to the Court to enforce compliance or 
punish violations pursuant to Section XIII of the proposed Final 
Judgment.

V. CONCLUSION

    After carefully reviewing the public comment submitted by Big Bus, 
the United States has determined that the proposed Final Judgment, as 
drafted, provides an effective and appropriate remedy for the antitrust 
violation alleged in the Complaint and is therefore in the public 
interest. The United States will move this Court to enter the proposed 
Final Judgment after the public comment and this Response have been 
published in the Federal Register.

Dated: July 28, 2015

Respectfully submitted,

/s/--------------------------------------------------------------------

Sarah Oldfield
David E. Altschuler

U.S. Department of Justice, Antitrust Division, Transportation, 
Energy &

[[Page 47521]]

Agriculture Section, 450 Fifth Street NW., Suite 8000, Washington, 
DC 20530, Telephone: (202) 305-8915, [email protected], 
[email protected].

Benjamin Sirota

U.S. Department of Justice, Antitrust Division, New York Office, 26 
Federal Plaza, Room 3630, New York, NY 10278, Telephone: (212) 335-
8056, [email protected].

Attorneys for Plaintiff United States

[[Page 47522]]

[GRAPHIC] [TIFF OMITTED] TN07AU15.044


[[Page 47523]]


[GRAPHIC] [TIFF OMITTED] TN07AU15.045


[[Page 47524]]


[GRAPHIC] [TIFF OMITTED] TN07AU15.046


[[Page 47525]]


[GRAPHIC] [TIFF OMITTED] TN07AU15.047

[FR Doc. 2015-19495 Filed 8-6-15; 8:45 am]
BILLING CODE P