83 FR 16382 - United States v. Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation; Proposed Final Judgment and Competitive Impact Statement
DEPARTMENT OF JUSTICE
Antitrust Division Federal Register Volume 83, Issue 73 (April 16, 2018)
Antitrust Division
Federal Register Volume 83, Issue 73 (April 16, 2018)
| Page Range | 16382-16396 | |
| FR Document | 2018-07840 |
[Federal Register Volume 83, Number 73 (Monday, April 16, 2018)] [Notices] [Pages 16382-16396] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-07840] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF JUSTICE Antitrust Division United States v. Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation; Proposed Final Judgment and Competitive Impact Statement Notice is hereby given pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, Stipulation and Order, and Competitive Impact Statement have been filed with the United States District Court for the District of Columbia in United States of America v. Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation, Civil Action No. 1:18-cv-00747. On April 3, 2018, the United States filed a Complaint alleging that Knorr-Bremse AG (``Knorr'') and Westinghouse Air Brake Technologies Corporation (``Wabtec'') entered into unlawful agreements not to poach employees in violation of Section 1 of the Sherman Act, 15 U.S.C. 1. The proposed Final Judgment, filed at the same time as the Complaint, requires Knorr and Wabtec to refrain from entering into, maintaining, or enforcing unlawful agreements not to compete for employees. Copies of the Complaint, proposed Final Judgment, and Competitive Impact Statement are available for inspection on the Antitrust Division's website at http://www.justice.gov/atr and at the Office of the Clerk of the United States District Court for the District of Columbia. Copies of these materials may be obtained from the Antitrust Division upon request and payment of the copying fee set by Department of Justice regulations. [[Page 16383]] Public comment is invited within 60 days of the date of this notice. Such comments, including the name of the submitter, and responses thereto, will be posted on the Antitrust Division's website, filed with the Court, and, under certain circumstances, published in the Federal Register. Comments should be directed to Maribeth Petrizzi, Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, Department of Justice, 450 Fifth Street NW, Suite 8700, Washington, DC 20530 (telephone: 202-307-0924). Patricia A. Brink, Director of Civil Enforcement. United States District Court for the District of Columbia United States of America, U.S. Department of Justice, Antitrust Division, 450 Fifth Street, NW, Suite 8700, Washington, DC 20530, Plaintiff, v. Knorr-Bremse AG, Moosacher Str. 80, 80809 M[uuml]nchen, Germany, and Westinghouse Air Brake Technologies Corporation, 1001 Airbrake Avenue, Wilmerding, PA 15148, Defendants. Civil Action No: 1:18-cv-00747 Judge: Colleen Kollar-Kotelly 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 Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation. The United States alleges as follows: I. INTRODUCTION 1. This action challenges under Section 1 of the Sherman Act, 15 U.S.C. Sec. 1, a series of unlawful agreement between three of world's largest rail equipment suppliers to restrain competition in the labor markets in which they compete for employees. 2. Defendants Knorr-Bremse AG (``Knorr'') and Westinghouse Air Brake Technologies Corporation (``Wabtec'') are each other's top competitors for rail equipment used in freight and passenger rail applications. They also compete with each other to attract, hire, and retain various skilled employees, including rail industry project managers, engineers, sales executives, business unit heads, and corporate officers. Prior to its acquisition by Wabtec in November 2016, Faiveley Transport S.A. (``Faiveley'') also competed with Knorr and Wabtec to attract, hire, and retain employees. 3. The unlawful agreements between Knorr, Wabtec, and Faiveley included promises and commitments not to solicit, recruit, hire without prior approval, or otherwise compete for employees (collectively, ``no- poach agreements''). The no-poach agreements were not reasonably necessary to any separate, legitimate business transaction or collaboration between the companies. They spanned several years and were monitored and enforced by high-level company executives, and had the effect of unlawfully allocating employees between the companies, resulting in harm to U.S. workers and consumers. 4. Beginning no later than 2009, senior executives at Knorr and Wabtec, including executives at several of their U.S. subsidiaries, entered into no-poach agreements with one another. Beginning no later than 2011, senior executives at certain U.S. subsidiaries of Knorr and Faiveley entered into a no-poach agreement with one another. And beginning no later than January 2014, senior executives at the U.S. passenger rail businesses of Wabtec and Faiveley entered into a no- poach agreement with one another. 5. By entering into no-poach agreements, Knorr, Wabtec, and Faiveley substantially reduced competition for employees to the detriment of workers in this important U.S. industry. These no-poach agreements denied American rail industry workers access to better job opportunities, restricted their mobility, and deprived them of competitively significant information that they could have used to negotiate for better terms of employment. Moreover, these no-poach agreements disrupted the efficient allocation of labor that comes from Knorr, Wabtec, and Faiveley competing for rail industry employees. 6. Defendants' no-poach agreements are per se unlawful restraints of trade that violate Section 1 of the Sherman Act, 15 U.S.C. Sec. 1. The United States seeks an order prohibiting such agreements and other relief. II. JURISDICTION AND VENUE 7. Defendants Knorr and Wabtec develop, manufacture, and sell rail equipment into the United States. In furtherance of each Defendant's U.S. business activities, Knorr and Wabtec recruit and hire skilled employees in the United States. Such activities, including the employee recruiting and hiring activities that are the subject of this Complaint, are in the flow of and substantially affect interstate commerce. The Court has subject matter jurisdiction under Section 4 of the Sherman Act, 15 U.S.C. Sec. 4, and under 28 U.S.C. Sec. Sec. 1331 and 1337, to prevent and restrain Defendants from violating Section 1 of the Sherman Act, 15 U.S.C. Sec. 1. 8. Defendants have consented to venue and personal jurisdiction in this district. Venue is proper in this district under Section 12 of the Clayton Act, 15 U.S.C. Sec. 22, and 28 U.S.C. Sec. 1391. III. DEFENDANTS 9. Defendant Knorr is a privately-owned German company with its headquarters in Munich, Germany. Knorr is a global leader in the development, manufacture, and sale of rail and commercial vehicle equipment. In 2017, Knorr had annual revenues of approximately $7.7 billion. 10. Knorr holds several wholly-owned subsidiaries in the United States. Knorr Brake Company is a Delaware corporation with its headquarters in Westminster, Maryland. It manufactures train control, braking, and door equipment used on passenger rail vehicles. New York Air Brake Corporation is a Delaware corporation with its headquarters in Watertown, New York. It manufactures railway air brakes and other rail equipment used on freight trains. Knorr Brake Company and New York Air Brake Corporation are wholly-owned subsidiaries of Knorr. 11. Defendant Wabtec is a Delaware corporation headquartered in Wilmerding, Pennsylvania. With over 100 subsidiaries, Wabtec is the world's largest provider of rail equipment and services with global sales of $3.9 billion in 2017. It is an industry leader in the freight and passenger rail segments of the rail industry. Wabtec Passenger Transit is a business unit of Wabtec that develops, manufactures, and sells rail equipment and services for passenger rail applications. It is based in Spartanburg, South Carolina. 12. On November 30, 2016, Wabtec acquired Faiveley, which had been a French soci[eacute]t[eacute] anonyme based in Gennevilliers, France. Before the acquisition, Faiveley was the world's third-largest rail equipment supplier behind Wabtec and Knorr. Faiveley had employees in 24 countries, including at six U.S. locations. It developed, manufactured, and sold passenger and freight rail equipment to customers in Europe, Asia, and North America, including the United States, with revenues of approximately [euro]1.2 billion in 2016. In the United States, Faiveley conducted business primarily through Faiveley Transport North America, a wholly-owned subsidiary of Faiveley and a New York corporation headquartered in Greenville, South Carolina. Certain Faiveley recruiting activities conducted prior to its acquisition by Wabtec are at issue in this Complaint. [[Page 16384]] IV. TRADE AND COMMERCE 13. Knorr and Wabtec (which now includes Faiveley) are the world's largest rail equipment suppliers and each other's top rival in the development, manufacture, and sale of equipment used in freight and passenger rail applications. 14. Defendants also compete with one another and with firms at other tiers of the rail industry supply chain to attract, hire, and retain skilled employees by offering attractive salaries, benefits, training, advancement opportunities, and other favorable terms of employment. 15. There is high demand for and limited supply of skilled employees who have rail industry experience. As a result, firms in the rail industry can experience vacancies of critical roles for months while they try to recruit and hire an individual with the requisite skills, training, and experience for a job opening. Employees of other rail industry participants, including the employees of Defendants' customers, competitors, and suppliers, are key sources of potential talent to fill these openings. 16. Firms in the rail industry employ a variety of recruiting techniques, including using internal and external recruiters to identify, solicit, recruit, and otherwise help hire potential employees. Rail companies also receive direct applications from individuals interested in potential employment opportunities. Directly soliciting employees from another rail industry participant is a particularly efficient and effective method of competing for qualified employees. Soliciting involves communicating directly--whether by phone, email, social and electronic networking, or in person--with another firm's employee who has not otherwise applied for a job opening. Such direct solicitation can be performed by individuals of the company seeking to fill the position or by outside recruiters retained to identify potential employees on the company's behalf. Firms in the rail industry rely on direct solicitation of employees of other rail companies because those individuals have the specialized skills necessary and may be unresponsive to other methods of recruiting. In addition, the rail industry is an insular one in which employees at different firms form long-term relationships and often look to their professional networks to fill a vacancy. 17. In a competitive labor market, rail industry employers compete with one another to attract highly-skilled talent for their employment needs. This competition benefits employees because it increases the available job opportunities that employees learn about. It also improves an employee's ability to negotiate for a better salary and other terms of employment. Defendants' no-poach agreements, however, restrained competition for employees and disrupted the normal bargaining and price-setting mechanisms that apply in the labor market. V. THE UNLAWFUL AGREEMENTS 18. Over a period spanning several years, Wabtec, Knorr, and Faiveley entered into similar no-poach agreements with one another to eliminate competition between them for employees. These agreements were executed and enforced by senior company executives and reached several of the companies' U.S. subsidiaries. The no-poach agreements were not reasonably necessary to any separate, legitimate business transaction or collaboration between the companies. I. Wabtec--Knorr Agreements 19. Wabtec and Knorr entered into pervasive no-poach agreements that spanned multiple business units and jurisdictions. Senior executives at the companies' global headquarters and their respective U.S. passenger and freight rail businesses entered into no-poach agreements that involved promises and commitments not to solicit or hire one another's employees. These no-poach agreements primarily affected recruiting for project management, engineering, sales, and corporate officer roles and restricted each company from soliciting current employees from the other's company. At times, these agreements were operationalized as agreements not to hire current employees from one another without prior approval. 20. Beginning no later than 2009, Wabtec's and Knorr Brake Company's most senior executives entered into an express no-poach agreement and then actively managed it with each other through direct communications. For example, in a letter dated January 28, 2009, a director of Knorr Brake Company wrote to a senior executive at Wabtec's headquarters, ``[Y]ou and I both agreed that our practice of not targeting each other's personnel is a prudent cause for both companies. As you so accurately put it, `we compete in the market.' '' Although the no-poach agreement was between Wabtec and Knorr's U.S. passenger rail subsidiary, it was well-known to senior executives at the parent companies, including top Knorr executives in Germany who were included in key communications about the no-poach agreement. In furtherance of their agreement, Wabtec and Knorr Brake Company informed their outside recruiters not to solicit employees from the other company. 21. In some instances, Wabtec and Knorr Brake Company's no-poach agreement foreclosed the consideration of an unsolicited applicant employed by Wabtec or Knorr Brake Company without prior approval of the other firm. For example, in a 2010 internal communication, a senior executive at Knorr Brake Company stated that he would not even consider a Wabtec candidate who applied to Knorr Brake Company without the permission of his counterpart at Wabtec. 22. Wabtec and Knorr's no-poach agreements also reached the companies' U.S. freight rail businesses. In July 2012, for example, a senior executive at New York Air Brake Corporation informed a human resources manager that he could not consider a Wabtec employee for a job opening due to the no-poach agreement between Wabtec and Knorr. 23. Wabtec's and Knorr's senior executives actively policed potential breaches of their companies' no-poach agreements and directly communicated with one another to ensure adherence to the agreements. For example, in February 2016, a member of Knorr's executive board complained directly to an executive officer at Wabtec regarding an external recruiter who allegedly solicited a Knorr Brake Company employee for an opening at Wabtec. The Wabtec executive investigated the matter internally and reported back to Knorr that Wabtec's outside recruiter was responsible for the contact and that he had instructed the recruiter to terminate his activities with the candidate and refrain from soliciting Knorr employees going forward due to the existing no-poach agreement between the companies. II. Knorr--Faiveley Agreement 24. Beginning no later than 2011, senior executives at Knorr Brake Company and Faiveley Transport North America reached an express no- poach agreement that involved promises and commitments to contact one another before pursuing an employee of the other company. In October 2011, a senior executive at Knorr Brake Company explained in an email to a high-level executive at Knorr-Bremse AG that he had a discussion with an executive at Faiveley's U.S. subsidiary that ``resulted in an agreement between us that we do not poach each other's employees. We agreed to talk if there was one trying to get a job[.]'' Executives at Knorr Brake Company and Faiveley's [[Page 16385]] U.S. subsidiary actively managed the agreement with each other through direct communications. 25. In or about 2012, a senior executive at Knorr Brake Company discussed the companies' no-poach agreement with an executive at Faiveley Transport North America. This discussion took place at a trade show in Berlin, Germany. Subsequently, the executives enforced the no- poach agreement with each other through direct communications. This no- poach agreement was known to other senior executives at the companies, who directly communicated with one another to ensure adherence to the agreement. For example, in October 2012, executives at Faiveley Transport North America stated in an internal communication that they were required to contact Knorr Brake Company before hiring a U.S. train brake engineer. 26. The companies continued their no-poach agreement until at least 2015. After Wabtec announced its proposed acquisition of Faiveley in July 2015, a high-level Knorr executive directed the company's recruiters in the United States and other jurisdictions to raid Faiveley for high-potential employees. III. Wabtec--Faiveley Agreement 27. Beginning no later than January 2014, senior executives at Wabtec Passenger Transit and Faiveley Transport North America entered into a no-poach agreement in which the companies agreed not to hire each other's employees without prior notification to and approval from the other company. 28. Wabtec Passenger Transit and Faiveley Transport North America executives actively managed and enforced their agreement with each other through direct communications. For example, in January 2014, Wabtec Passenger Transit executives refused to engage in hiring discussions with a U.S.-based project manager at Faiveley Transport North America without first getting permission from Faiveley Transport North America executives. In an internal email to his colleagues, a Wabtec Passenger Transit executive explained that the candidate ``is a good guy, but I don't want to violate my own agreement with [Faiveley Transport North America].'' Only after receiving permission from Faiveley Transport North America did Wabtec Passenger Transit hire the project manager. One month later, a Wabtec Passenger Transit senior executive informed his staff that hiring Faiveley Transport North America's employees was ``off the table'' due to the agreement with Faiveley Transport North America not to engage in hiring discussions with each other's employees without the other's prior approval. 29. In July 2015, Wabtec and Faiveley publicly announced their intent to merge. Wabtec closed its acquisition of Faiveley on November 30, 2016. Presently, Faiveley is a wholly-owned subsidiary of Wabtec. VI. VIOLATION ALLEGED 30. Defendants are direct competitors in certain labor markets for skilled rail industry employees, including project managers, engineers, sales executives, and corporate officers. Defendants entered into anticompetitive no-poach agreements that reduced competition in the labor markets in which they compete and, in doing so, disrupted the typical bargaining and negotiation between employees and employers that ordinarily would take place in these labor markets. 31. Defendants' no-poach agreements were facially anticompetitive because they eliminated a significant form of competition to attract skilled labor in the U.S. rail industry. These agreements denied employees access to better job opportunities, restricted their mobility, and deprived them of competitively significant information that they could have used to negotiate for better terms of employment. 32. Accordingly, Defendants' no-poach agreements constitute unreasonable restraints of trade that are per se unlawful under Section 1 of the Sherman Act, 15 U.S.C. Sec. 1. VII. REQUEST FOR RELIEF 33. The United States requests that this Court: (a) adjudge and decree that Defendants' no-poach agreements constitute per se illegal restraints of trade and interstate commerce in violation of Section 1 of the Sherman Act; (b) enjoin and restrain Defendants from enforcing or adhering to existing no-poach agreements that unreasonably restrict competition for employees; (c) permanently enjoin and restrain each Defendant from establishing a no-poach agreement except as prescribed by the Court; (d) award the United States such other relief as the Court may deem just and proper to redress and prevent recurrence of the alleged violations and to dissipate the anticompetitive effects of the illegal no-poach agreements entered into by Defendants; and (e) award the United States the costs of this action. Dated: April 3, 2018 Respectfully submitted, FOR PLAINTIFF UNITED STATES OF AMERICA ----------------------------------------------------------------------- MAKAN DELRAHIM Assistant Attorney General for Antitrust ----------------------------------------------------------------------- MARIBETH PETRIZZI (D.C. Bar #435204) Chief Defense, Industrials, and Aerospace Section ----------------------------------------------------------------------- ANDREW C. FINCH Principal Deputy Assistant Attorney General ----------------------------------------------------------------------- DAVID E. ALTSCHULER (D.C. Bar #983023) Assistant Chief Defense, Industrials, and Aerospace Section ----------------------------------------------------------------------- BERNARD A. NIGRO, JR. (D.C. Bar #412357) Deputy Assistant Attorney General ----------------------------------------------------------------------- DOHA MEKKI* DAN MONAHAN GABRIELLA MOSKOWITZ (D.C. Bar #1044309) Trial Attorneys ----------------------------------------------------------------------- PATRICIA A. BRINK Director of Civil Enforcement United States Department of Justice Antitrust Division Defense, Industrials, and Aerospace Section 450 Fifth Street NW, Suite 8700 Washington, D.C. 20530 Telephone: (202) 598-8023 Facsimile: (202) 514-9033 Email: doha.mekki@usdoj.gov *Lead Attorney to be Noticed UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA UNITED STATES OF AMERICA, Plaintiff, v. KNORR-BREMSE AG, and WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION, Defendants. Civil Action No: 1:18-cv-00747 Judge: Colleen Kollar-Kotelly [PROPOSED] FINAL JUDGMENT WHEREAS, Plaintiff, United States of America, filed its Complaint on April 3, 2018, alleging that Defendants Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation violated Section 1 of the Sherman Act, 15 U.S.C. Sec. 1, the United States and the [[Page 16386]] Defendants, 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 WHEREAS, this Final Judgment does not constitute any evidence against or admission by any party regarding any issue of fact or law; AND WHEREAS, the Defendants agree to be bound by the provisions of this Final Judgment pending its approval by this Court; AND WHEREAS, the United States requires the Defendants to agree to undertake certain actions and refrain from certain conduct for the purpose of remedying the anticompetitive effects alleged in the Complaint; 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 and each of the parties to this action. The Complaint states a claim upon which relief may be granted against the Defendants under Section 1 of the Sherman Act, as amended, 15 U.S.C. Sec. 1. II. DEFINITIONS As used in this Final Judgment: A. ``Knorr'' and ``Defendant'' (when that term is applicable to Knorr) means Knorr-Bremse AG, a German corporation with its headquarters in Munich, Germany, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees. B. ``Wabtec'' and ``Defendant'' (when that term is applicable to Wabtec) means Westinghouse Air Brake Technologies Corporation, a Delaware corporation with its headquarters in Wilmerding, Pennsylvania, its successors and assigns, and its subsidiaries (including Faiveley Transport), divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees. Wabtec acquired Faiveley Transport S.A., a French soci[eacute]t[eacute] anonyme based in Gennevilliers, France, on November 30, 2016. C. ``Agreement'' means any agreement, understanding, pact, contract, or arrangement, formal or informal, oral or written, between two or more persons. D. ``HR Management'' means directors, officers, and human resource employees of the Defendant who supervise or have responsibility for recruiting, solicitation, or hiring efforts affecting the United States. E. ``No-Poach Agreement'' or ``No-Poach Provision'' means any Agreement, or part of an Agreement, among two or more employers that restrains any person from cold calling, soliciting, recruiting, hiring, or otherwise competing for (i) employees located in the United States being hired to work in the United States or outside the United States or (ii) any employee located outside the United States being hired to work in the United States. F. ``Person'' means any natural person, corporation, company, partnership, joint venture, firm, association, proprietorship, agency, board, authority, commission, office, or other business or legal entity, whether private or governmental. G. ``Management'' means all officers, directors, and board members of Knorr-Bremse AG or Westinghouse Air Brake Technologies Corporation, or anyone with management or supervisory responsibilities for Knorr's or Wabtec's U.S. business or operations. III. APPLICABILITY This Final Judgment applies to Knorr and Wabtec, and to 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. IV. PROHIBITED CONDUCT Each Defendant is enjoined from attempting to enter into, entering into, maintaining, or enforcing any No-Poach Agreement or No-Poach Provision. V. CONDUCT NOT PROHIBITED A. Nothing in Section IV shall prohibit a Defendant from attempting to enter into, entering into, maintaining, or enforcing a reasonable Agreement not to solicit, recruit, or hire employees that is ancillary to a legitimate business collaboration. B. All Agreements not to solicit, recruit, or hire employees described in Paragraph V(A) that a Defendant enters into, renews, or affirmatively extends after the date of entry of this Final Judgment shall: 1. be in writing and signed by all parties thereto; 2. identify, with specificity, the Agreement to which it is ancillary; 3. be narrowly tailored to affect only employees who are reasonably anticipated to be directly involved in the Agreement; 4. identify with reasonable specificity the employees who are subject to the Agreement; and 5. contain a specific termination date or event. C. Defendants shall not be required to modify or conform, but shall not enforce, any No-Poach Provision to the extent it violates this Final Judgment if the No-Poach Provision appears in a Defendant's agreement in effect as of the date of entry of this Final Judgment (or in effect as of the time a Defendant acquires a company that is a party to such an Agreement). D. Nothing in Section IV shall prohibit a Defendant from unilaterally deciding to adopt a policy not to consider applications from employees of another person, or to solicit, cold call, recruit, or hire employees of another person, provided that Defendants are prohibited from: 1. requesting, encouraging, proposing, or suggesting that any person other than the Defendant and its agents adopt, enforce, or maintain such a policy; or 2. notifying the other person that the Defendant has decided to adopt such a policy. VI. REQUIRED CONDUCT A. Within ten (10) days of entry of this Final Judgment, each Defendant shall appoint an Antitrust Compliance Officer and identify to Plaintiff his or her name, business address, and telephone number. B. Each Antitrust Compliance Officer shall: 1. within sixty (60) days of entry of the Final Judgment, furnish to all of the Defendant's Management and HR Management a copy of this Final Judgment, the Competitive Impact Statement, and a cover letter in a form attached as Exhibit 1; 2. within sixty (60) days of entry of the Final Judgment, in a manner to be devised by each Defendant and approved by the United States, provide the Defendant's U.S. employees reasonable notice of the meaning and requirements of this Final Judgment; 3. annually brief the Defendant's Management and HR Management on the meaning and requirements of this Final Judgment and the antitrust laws; 4. within sixty (60) days of such succession, brief any person who succeeds a person in any position identified in Paragraph VI(B)(3); 5. obtain from each person designated in Paragraph VI(B)(3) or VI(B)(4), within sixty (60) days of that person's receipt of the Final Judgment, a certification that he or she (i) has read and, to the best of his or her ability, understands and agrees to abide by the terms of this Final Judgment; (ii) is not aware of any violation of the Final Judgment that has not been reported to the Defendant; and (iii) understands that any person's failure to comply with this Final [[Page 16387]] Judgment may result in an enforcement action for civil or criminal contempt of court against the Defendant and/or any person who violates this Final Judgment; 6. maintain (i) a copy of all Agreements covered by Paragraph V(A) and (ii) a record of certifications received pursuant to this Section; 7. annually communicate to the Defendant's employees that they may disclose to the Antitrust Compliance Officer, without reprisal, information concerning any potential violation of this Final Judgment or the antitrust laws; 8. within sixty (60) days of entry of the Final Judgment, furnish a copy of this Final Judgment, the Competitive Impact Statement, and a cover letter in a form attached as Exhibit 2 to all recruiting agencies or providers of temporary employees or contract workers retained by the Defendant for recruiting, soliciting, or hiring efforts affecting the Defendant's business activities in the United States at the time of entry of the Final Judgment or subsequently retained by the Defendant during the term of the Final Judgment; and 9. furnish a copy of all materials required to be issued pursuant to Paragraph VI(B) to the United States within seventy-five (75) days of entry of the Final Judgment. C. Within thirty (30) days of entry of the Final Judgment, Defendants shall furnish notice of this action to the rail industry through (1) the placement of an advertisement, at the expense of Knorr and Wabtec equally, to be run in one monthly edition of an industry trade publication approved by the United States in a form approved by the United States prior to publication and containing the text of Exhibit 3, and (2) the creation of website pages linked to the corporate websites of Knorr and Wabtec, respectively, to be posted for no less than one (1) year after the date of entry of the Final Judgment, containing the text of Exhibit 3 and links to the Final Judgment, Competitive Impact Statement, and Complaint on the Antitrust Division's website. D. Each Defendant shall: 1. upon Management or HR Management learning of any violation or potential violation of any of the terms and conditions contained in this Final Judgment, promptly take appropriate action to terminate or modify the activity so as to comply with this Final Judgment and maintain all documents related to any violation or potential violation of this Final Judgment; 2. within sixty (60) days of Management or HR Management learning of any violation or potential violation of any of the terms and conditions contained in this Final Judgment, file with the United States a statement describing any violation or potential violation, which shall include a description of any communications constituting the violation or potential violation, including the date and place of the communication, the persons involved, and the subject matter of the communication; and 3. have its CEO or CFO, and its General Counsel, certify to the United States annually on the anniversary date of the entry of this Final Judgment that the Defendant has complied with the provisions of this Final Judgment. VII. DEFENDANTS' COOPERATION A. Each Defendant shall cooperate fully and truthfully with the United States in any investigation or litigation examining whether or alleging that the Defendant entered into a No-Poach Agreement with any other person in violation of Section 1 of the Sherman Act, as amended, 15 U.S.C. Sec. 1. Each Defendant shall use its best efforts to ensure that all current and former officers, directors, employees, and agents also fully and promptly cooperate with the United States. The full, truthful, and continuing cooperation of each Defendant shall include, but not be limited to: 1. providing sworn testimony to the United States regarding each No-Poach Agreement between the Defendant and any other person; 2. producing, upon request of the United States, all documents and other materials, wherever located, not protected under the attorney- client privilege or the attorney work-product doctrines, in the possession, custody, or control of that Defendant, that relate to any No-Poach Agreement between that Defendant and any other person; 3. making available for interview any officers, directors, employees, and agents if so requested by the United States; and 4. testifying at trial and other judicial proceedings fully, truthfully, and under oath, subject to the penalties of perjury (18 U.S.C. Sec. 1621), making a false statement or declaration in court proceedings (18 U.S.C. Sec. 1623), contempt (18 U.S.C. Sec. 401-402), and obstruction of justice (18 U.S.C. Sec. 1503, et seq.) when called upon to do so by the United States; 5. provided however, that the obligations of each Defendant to cooperate fully with the United States as described in this Section shall cease upon the conclusion of all the United States' investigations and the United States' litigation examining whether or alleging that the Defendant agreed to any No-Poach Agreement with any other person in violation of Section 1 of the Sherman Act, as amended, 15 U.S.C. Sec. 1, including exhaustion of all appeals or expiration of time for all appeals of any Court ruling in each such matter. B. Subject to the full, truthful, and continuing cooperation of each Defendant, as defined in Paragraph VII(A), the United States agrees that it will not bring any further civil actions or criminal charges against that Defendant for any No-Poach Agreement with any other person that: 1. was entered into and terminated on or before the date of the filing of the Complaint in this action; 2. was disclosed to the United States before the date of the filing of the Complaint in this action; and 3. does not in any way constitute or include an agreement to fix wages, compensation, or other benefits. C. The United States' agreement set forth in Paragraph VII(B) does not apply to any acts of perjury or subornation of perjury (18 U.S.C. Sec. 1621-22), making a false statement or declaration (18 U.S.C. Sec. 1001, 1623), contempt (18 U.S.C. Sec. 401-402), or obstruction of justice (18 U.S.C. Sec. 1503, et seq.) by the Defendant or its officers, directors, employees, and agents. VIII. COMPLIANCE INSPECTION A. For the 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 authorized representatives of the United States Department of Justice, including consultants and other persons retained by the United States, shall, upon the written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division, and on reasonable notice to each Defendant be permitted: 1. access during each Defendant's office hours to inspect and copy, or at the option of the United States, to require each Defendant to provide electronic or hard copies of, all books, ledgers, accounts, records, data, and documents in the possession, custody, or control of each Defendant, relating to any matters contained in this Final Judgment; and 2. to interview, either informally or on the record, each Defendant's officers, employees, or agents, who may have counsel, including their individual counsel, present, regarding such matters. The interviews shall be subject to the reasonable convenience of the [[Page 16388]] interviewee and without restraint or interference by any Defendant. B. Upon the written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division, each Defendant shall submit written reports or responses to written interrogatories, under oath if requested, relating to any of the matters contained in this Final Judgment as may be requested. C. No information or documents obtained by the means provided in this section shall be divulged by the United States to any person other than an authorized representative of the executive branch of the United States, except in the course of legal proceedings to which the United States is a party (including grand jury proceedings), or for the purpose of securing compliance with this Final Judgment, or as otherwise required by law. D. If at the time information or documents are furnished by a Defendant to the United States, the Defendant represents and identifies in writing the material in any such information or documents to which a claim of protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure, and the Defendant marks each pertinent page of such material, ``Subject to claim of protection under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the United States shall give the Defendant ten (10) calendar days' notice prior to divulging such material in any legal proceeding (other than a grand jury proceeding). IX. 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. X. ENFORCEMENT OF FINAL JUDGMENT A. The United States retains and reserves all rights to enforce the provisions of this Final Judgment, including its right to seek an order of contempt from this Court. Defendants agree that in any civil contempt action, any motion to show cause, or any similar action brought by the United States regarding an alleged violation of this Final Judgment, the United States may establish a violation of the decree and the appropriateness of any remedy therefor by a preponderance of the evidence, and they waive any argument that a different standard of proof should apply. B. In any enforcement proceeding in which the Court finds that the Defendants have violated this Final Judgment, the United States may apply to the Court for a one-time extension of this Final Judgment, together with such other relief as may be appropriate. In connection with any successful effort by the United States to enforce this Final Judgment against a Defendant, whether litigated or resolved prior to litigation, that Defendant agrees to reimburse the United States for any attorneys' fees, experts' fees, and costs incurred in connection with that enforcement effort, including the investigation of the potential violation. XI. EXPIRATION OF FINAL JUDGMENT Unless this Court grants an extension, this Final Judgment shall expire seven (7) years from the date of its entry, except that after five (5) years from the date of its entry, this Final Judgment may be terminated upon notice by the United States to the Court and the Defendants that the continuation of the Final Judgment no longer is necessary or in the public interest. XII. NOTICE For purposes of this Final Judgment, any notice or other communication required to be provided to the United States shall be sent to the person at the address set forth below (or such other addresses as the United States may specify in writing to the Defendants): Chief Defense, Industrials, and Aerospace Section U.S. Department of Justice Antitrust Division 450 Fifth Street, NW, Suite 8700 Washington, D.C. 20530 XIII. PUBLIC INTEREST DETERMINATION Entry of this Final Judgment is in the public interest. The parties have complied with the Procedures of the Antitrust Procedures and Penalties Act, 15 U.S.C. Sec. 16, including making copies available to the public of this Final Judgment, the Competitive Impact Statement, and any comments thereon and the United States' responses to comments. Based upon the record before the Court, which includes the Competitive Impact Statement and any comments and response to comments filed with the Court, entry of this final judgment is in the public interest. Date:------------------------------------------------------------------ Court approval subject to procedures of Antitrust Procedures and Penalties Act, 15 U.S.C. Sec. 16 ----------------------------------------------------------------------- United States District Judge EXHIBIT 1 [Company Letterhead] [Name and Address of Antitrust Compliance Officer] Re: Agreements Not to Solicit Employees from Other Companies Dear [XX]: I am providing you this notice regarding a judgment recently entered by a federal judge in Washington, D.C. affecting our employee recruiting, soliciting, and hiring practices. The judgment applies to our company and all of its employees, including you, so it is important that you understand the obligations it imposes on us. [CEO Name] has asked me to let each of you know that [s/he] expects you to take these obligations seriously and abide by them. The judgment prohibits us from agreeing with any other employer not to solicit, cold call, or recruit each other's employees. This includes seeking permission or approval before considering or approaching an employee of the employer about a potential opportunity or requiring the other employer to seek permission or approval from us before considering or approaching one of our employees. There are limited exceptions to this restriction. You must consult me before determining whether a particular employer is subject to an exception under the judgment. A copy of the court order is attached. Please read it carefully and familiarize yourself with its terms. The judgment, rather than the above description, is controlling. If you have any questions about the judgment or how it affects your recruiting and hiring activities, please contact me as soon as possible. Thank you for your cooperation. Sincerely, [Defendant's Antitrust Compliance Officer] EXHIBIT 2 [Company Letterhead] [Name and Address of Antitrust Compliance Officer] Re: Agreements Not to Solicit Employees from Other Companies Dear [XX]: I am providing you this notice regarding a judgment recently entered by a federal judge in Washington, D.C. affecting [Defendant's] employee recruiting, soliciting, and hiring [[Page 16389]] practices. The judgment applies to [Defendant] and all of its employees, so it is important that you understand the obligations it imposes on your recruiting activities for [Defendant]. [CEO Name] has asked me to let you know that [s/he] expects you to take these obligations seriously and abide by them, irrespective of any contrary instructions you may receive from any other employee or officer of [Defendant]. The judgment prohibits [Defendant] from agreeing with another employer not to solicit, cold call, or recruit each other's employees. This includes seeking permission or approval before considering or approaching an employee of the other employer about a potential opportunity or requiring the other employer to seek permission or approval from [Defendant] before considering or approaching one of [Defendant's] employees. There are limited exceptions to this restriction. You must consult me before determining whether a particular employer is subject to an exception under the judgment. If any employee of [Defendant] has asked or asks you to refrain from recruiting, cold calling, soliciting, or otherwise approaching an employee from a particular company, you must notify me immediately before doing so. A copy of the court order is attached. Please read it carefully and familiarize yourself with its terms. The judgment, rather than the above description, is controlling. If you have any questions about the judgment or how it affects your recruiting and hiring activities for [Defendant], please contact me as soon as possible. Thank you for your cooperation. Sincerely, [Defendant's Antitrust Compliance Officer] EXHIBIT 3 Please take notice that Knorr-Bremse AG (Knorr) and Westinghouse Air Brake Technologies Corporation (Wabtec) have entered into a settlement with the United States Department of Justice relating to their respective employee recruiting, solicitation, and hiring practices. On April 3, 2018, the United States filed a federal civil antitrust Complaint alleging that Knorr and Wabtec entered into agreements that restrained cold calling, soliciting, recruiting, hiring, or otherwise competing for employees (collectively, ``no-poach agreements'') in violation of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1. At the same time, the United States filed a proposed settlement that prohibits each of Knorr and Wabtec from entering into, maintaining, or enforcing no-poach agreements with another employer subject to limited exceptions. This prohibition includes seeking permission or approval before considering, approaching, or hiring an employee or requiring the other employer to seek permission or approval from Knorr and Wabtec before considering or approaching one of their employees. As part of its settlement with the United States, Knorr and Wabtec confirmed that each company has unilaterally withdrawn from and will not enforce any prohibited no-poach agreements it may have had with any other employer relating to employees located or being hired to work in the United States. The Final Judgment, which was recently entered by a federal district court, is effective for seven years. Copies of the Complaint, Final Judgment, and Competitive Impact Statement are available at: [Link to Complaint] [Link to Final Judgment] [Link to Competitive Impact Statement] UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA UNITED STATES OF AMERICA, Plaintiff, v. KNORR-BREMSE AG and WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION, Defendants. Civil Action No: 1:18-cv-00747 Judge: Colleen Kollar-Kotelly COMPETITIVE IMPACT STATEMENT Plaintiff United States of America (``United States''), pursuant to Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or ``Tunney Act''), 15 U.S.C. Sec. 16(b)-(h), files this Competitive Impact Statement relating to the proposed Final Judgment submitted for entry in this civil antitrust proceeding. I. NATURE AND PURPOSE OF THE PROCEEDING On April 3, 2018, the United States filed a civil antitrust Complaint alleging that Defendants Knorr-Bremse AG (``Knorr'') and Westinghouse Air Brake Technologies Corporation (``Wabtec'') entered into unlawful agreements not to poach each other's employees in violation of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1. Specifically, the Complaint alleges that Knorr and Wabtec entered into a series of agreements not to solicit, recruit, hire without prior approval, or otherwise compete for employees (collectively, ``No-Poach Agreements''). In addition, the Complaint alleges that Knorr and Wabtec separately entered into No-Poach Agreements with Faiveley Transport North America, a U.S. subsidiary of Faiveley Transport S.A. (``Faiveley''), before Faiveley was acquired by Wabtec in November 2016. The No-Poach Agreements were not reasonably necessary to any separate, legitimate business transaction or collaboration between the companies. According to the Complaint, the Defendants' No-Poach Agreements unlawfully allocated employees between the companies and are per se unlawful restraints of trade that violate Section 1 of the Sherman Act, 15 U.S.C. Sec. 1. At the same time the Complaint was filed, the United States also filed a Stipulation and Order and proposed Final Judgment, which would remedy the violation by enjoining the Defendants from entering into, maintaining, or enforcing any No-Poach Agreements, subject to limited exceptions. The proposed Final Judgment also requires the Defendants to take specific compliance measures and to cooperate in any investigation or litigation examining whether or alleging that the Defendant entered into a No-Poach Agreement with any other person in violation of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1. The United States and the Defendants have stipulated that the proposed Final Judgment may be entered after compliance with the APPA. Entry of the proposed Final Judgment would terminate this action, except that the Court would retain jurisdiction to construe, modify, or enforce the provisions of the proposed Final Judgment and to punish violations thereof. II. DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATION A. The Defendants Knorr is a privately-owned German company with its headquarters in Munich, Germany. It is a global leader in the development, manufacture, and sale of rail and commercial vehicle equipment. In 2017, Knorr had annual revenues of approximately $7.7 billion. Knorr holds several wholly-owned rail subsidiaries in the United States. Knorr Brake Company is a Delaware corporation with its headquarters in Westminster, Maryland. It manufactures train control, braking, and door [[Page 16390]] equipment used on passenger rail vehicles. New York Air Brake Corporation is a Delaware corporation with its headquarters in Watertown, New York. It manufactures railway air brakes and other rail equipment used on freight trains. Knorr Brake Company and New York Air Brake Corporation are wholly-owned subsidiaries of Knorr. Wabtec is a Delaware corporation headquartered in Wilmerding, Pennsylvania. With over 100 subsidiaries, Wabtec is the world's largest provider of rail equipment and services with global sales of $3.9 billion in 2017. Wabtec Passenger Transit is a business unit of Wabtec that develops, manufactures, and sells rail equipment and services for passenger rail applications. It is based in Spartanburg, South Carolina. On November 30, 2016, Wabtec acquired Faiveley, which had been a French soci[eacute]t[eacute] anonyme based in Gennevilliers, France. Before the acquisition, Faiveley was the world's third-largest rail equipment supplier behind Wabtec and Knorr. Faiveley had employees in 24 countries, including at six U.S. locations. It developed, manufactured and sold passenger and freight rail equipment to customers in Europe, Asia, and North America, including the United States, with revenues of approximately [euro]1.2 billion in 2016. In the United States, Faiveley conducted business primarily through Faiveley Transport North America, a wholly-owned subsidiary of Faiveley and a New York corporation headquartered in Greenville, South Carolina. B. Defendants Enter into and Maintain No-Poach Agreements The Complaint alleges that Knorr and Wabtec (which now includes Faiveley) are the world's largest rail equipment suppliers and each other's top rival for the development, manufacture, and sale of equipment used in freight and passenger rail applications. Knorr and Wabtec also compete with one another and with firms at other tiers of the rail industry supply chain to attract, hire, and retain skilled employees by offering attractive salaries, benefits, training, advancement opportunities, and other favorable terms of employment. The Complaint further alleges that there is high demand for and limited supply of skilled employees who have rail industry experience. As a result, firms in the rail industry can experience vacancies of critical roles for months while they try to recruit and hire an individual with the requisite skills, training, and experience for a job opening. Employees of other rail industry participants, including the employees of Knorr's and Wabtec's customers, competitors, and suppliers, are key sources of potential talent to fill these openings. According to the Complaint, firms in the rail industry employ a variety of recruiting techniques, including using internal and external recruiters to identify, solicit, recruit, and otherwise help hire potential employees. Rail companies also receive direct applications from individuals interested in potential employment opportunities. Directly soliciting employees from another rail industry participant is a particularly efficient and effective method of competing for qualified employees. Soliciting involves communicating directly-- whether by phone, e-mail, social and electronic networking, or in person--with another firm's employee who has not otherwise applied for a job opening. Firms in the rail industry rely on direct solicitation of employees of other rail companies because those individuals have the specialized skills necessary for the vacant position and may be unresponsive to other methods of recruiting. The Complaint alleges that the rail industry is an insular one where employees at different firms form long-term relationships and often look to their professional networks to fill a vacancy. According to the Complaint, in a competitive labor market, rail industry employers compete with one another to attract highly-skilled talent for their employment needs. This competition benefits employees because it increases the available job opportunities that employees learn about and improves employees' ability to negotiate for better salaries and other terms of employment. The Complaint alleges that, over a period spanning several years, Wabtec, Knorr, and Faiveley entered into similar No-Poach Agreements with one another to eliminate competition between them for employees. These agreements were executed and enforced by senior company executives and reached several of the companies' U.S. subsidiaries and business units. The Complaint alleges that Knorr's and Wabtec's No-Poach Agreements restrained competition for employees and disrupted the normal bargaining and price-setting mechanisms that apply in the labor market. The Complaint further alleges that the No-Poach Agreements were not reasonably necessary to any separate, legitimate business transaction or collaboration between the companies. 1. Wabtec-Knorr Agreements According to the Complaint, Wabtec and Knorr entered into pervasive No-Poach Agreements that spanned multiple business units and jurisdictions. Senior executives at the companies' global headquarters as well as their respective U.S. passenger and freight rail businesses entered into No-Poach Agreements that involved promises and commitments not to solicit or hire one another's employees. As alleged in the Complaint, the No-Poach Agreements primarily affected recruiting for project management, engineering, sales, and corporate officer roles and restricted each company from soliciting current employees from the other company. The Complaint further alleges that, at times, these agreements were operationalized as agreements not to hire current employees from one another without prior approval. According to the Complaint, beginning no later than 2009, Wabtec's and Knorr Brake Company's most senior executives entered into an express No-Poach Agreement and then actively managed it with each other through direct communications. The Complaint alleges that in a letter dated January 28, 2009, a director of Knorr Brake Company wrote to a senior executive at Wabtec's headquarters, ``[Y]ou and I both agreed that our practice of not targeting each other's personnel is a prudent cause for both companies. As you so accurately put it, `we compete in the market.' '' As alleged in the Complaint, that agreement was well- known to senior executives at the parent companies, including top Knorr executives in Germany who were included in key communications about the No-Poach Agreement. The Complaint further alleges that in furtherance of their agreement, Wabtec and Knorr Brake Company informed their outside recruiters not to solicit employees from the other company. In some instances, Wabtec and Knorr Brake Company's No-Poach Agreement foreclosed the consideration of an unsolicited applicant employed by the other company without prior approval of the other firm. Knorr and Wabtec's No-Poach Agreements also extended to the companies' U.S. freight rail businesses. According to the Complaint, Knorr's and Wabtec's senior executives actively policed potential breaches of their companies' No-Poach Agreements and directly communicated with one another to ensure adherence to the agreements. [[Page 16391]] 2. Knorr-Faiveley Agreement As alleged in the Complaint, beginning no later than 2011, senior executives at Knorr Brake Company and Faiveley Transport North America reached an express No-Poach Agreement that involved promises and commitments to contact one another before pursuing an employee of the other company. The Complaint alleges that in October 2011, a senior executive at Knorr Brake Company explained in an email to a high-level executive at Knorr-Bremse AG that he had a discussion with an executive at Faiveley's U.S. subsidiary that ``resulted in an agreement between us that we do not poach each other's employees. We agreed to talk if there was one trying to get a job[.]'' Executives at Knorr Brake Company and Faiveley's U.S. subsidiary actively managed the No-Poach Agreement with each other through direct communications. The Complaint specifically alleges that in or about 2012, a senior executive at Knorr Brake Company discussed the companies' No-Poach Agreement with an executive at Faiveley Transport North America. This discussion took place at a trade show in Berlin, Germany. Subsequently, the executives enforced the No-Poach Agreement with each other through direct communications. This No-Poach Agreement was known to other senior executives at the companies, who directly communicated with one another to ensure adherence to the agreement. As alleged in the Complaint, the companies continued their No-Poach Agreement until at least 2015. After Wabtec announced its proposed acquisition of Faiveley in July 2015, a high-level Knorr executive directed the company's recruiters in the United States and other jurisdictions to raid Faiveley for high-potential employees. 3. Wabtec-Faiveley Agreement The Complaint alleges that beginning no later than January 2014, senior executives at Wabtec Passenger Transit and Faiveley Transport North America entered into a No-Poach Agreement in which the companies agreed not to hire each other's employees without prior notification to and approval from the other company. According to the Complaint, Wabtec Passenger Transit and Faiveley Transport North America executives actively managed and enforced their agreement with each other through direct communications. The Complaint specifically alleges that in an internal email to his colleagues, a Wabtec Passenger Transit executive explained that a candidate ``is a good guy, but I don't want to violate my own agreement with [Faiveley Transport North America].'' The Complaint alleges that in July 2015, Wabtec and Faiveley publicly announced their intent to merge. Wabtec closed its acquisition of Faiveley on November 30, 2016. Presently, Faiveley is a wholly-owned subsidiary of Wabtec. C. Defendants' No-Poach Agreements Were Per Se Unlawful Market Allocation Agreements under Section 1 of the Sherman Act No-Poach Agreements that are not reasonably necessary to any separate, legitimate business transaction or collaboration are properly considered per se unlawful market allocation agreements under Section 1 of the Sherman Act. Section 1 outlaws any ``contract, combination . . ., or conspiracy, in restraint of trade or commerce.'' 15 U.S.C. 1. Courts have long interpreted this language to prohibit only ``unreasonable'' restraints of trade. Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 723 (1988). Most restraints are analyzed under the rule of reason, which requires the plaintiff to present evidence of a restraint's anticompetitive effects and permits the defendant to present procompetitive justifications. Ultimately, the fact-finder weighs all the circumstances to determine whether the restraint is one that suppresses competition or promotes it. See Bd. of Trade of City of Chi. v. United States, 246 U.S. 231, 238 (1918). ``The rule of reason does not govern all restraints,'' however. Leegin Creative Leather Prod., Inc. v. PSKS, Inc., 551 U.S. 877, 886 (2007). Rather, ``some types of restraints on trade have such predictable and pernicious anticompetitive effect, and such limited potential for procompetitive benefit, that they are deemed unlawful per se,'' State Oil Co. v. Khan, 522 U.S. 3, 3 (1997), and thus ``illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use,'' Northern Pac. Ry. v. United States, 356 U.S. 1, 545 (1958). It is well established that naked restraints of competition among horizontal competitors, such as price- fixing or market allocation agreements, are per se unlawful. See United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218 (1940); Palmer v. BRG of Georgia, Inc., 498 U.S. 46, 48-50 (1990) (per curiam).\1\ --------------------------------------------------------------------------- \1\ Under the ancillary restraints doctrine, an agreement ordinarily condemned as per se unlawful is ``exempt from the per se rule'' if it is ancillary to a separate, legitimate procompetitive venture between the competitors and reasonably necessary to achieve the procompetitive benefits of that venture. Rothery Storage & Van Co. v. Atlas Van Lines, Inc., 792 F.2d 210, 224 (DC Cir. 1986) (a customer allocation agreement is ancillary only if it is ``subordinate and collateral to a separate, legitimate transaction'' and reasonably necessary to make that separate transaction ``more effective [or efficient] in accomplishing its purpose''); see Texaco Inc. v. Dagher, 547 U.S. 1, 7-8 (2006). --------------------------------------------------------------------------- Market allocation agreements cannot be distinguished from one another based solely on whether they involve input or output markets.\2\ Nor are labor markets treated differently than other input markets under antitrust law. ``[A]n agreement among employers that they will not compete against each other for the services of a particular employee or prospective employee is, in fact, a service division agreement, analogous to a product division agreement.'' United States v. eBay, Inc., 968 F. Supp. 2d 1030, 1039 (N.D. Cal. 2013) (citation omitted); see also IIA Phillip E. Areeda et al., Antitrust Law, ] 352c at 288-89 (4th ed. 2014) (``Antitrust law addresses employer conspiracies controlling employment terms precisely because they tamper with the employment market and thereby impair the opportunities of those who sell their services there. Just as antitrust law seeks to preserve the free market opportunities of buyers and sellers of goods, so also it seeks to do the same for buyers and sellers of employment services.''). --------------------------------------------------------------------------- \2\ In similar circumstances, the Sixth Circuit has held that an agreement among competitors not to solicit one another's customers was a per se violation of the antitrust laws. See U.S. v. Cooperative Theaters of Ohio, Inc., 845 F.2d 1367 (6th Cir. 1988) (finding that two movie theater booking agents agreed to refrain from actively soliciting each other's customers). In particular, the Sixth Circuit found the defendants' ``no-solicitation agreement'' was ``undeniably a type of customer allocation scheme which courts have often condemned in the past as a per se violation of the Sherman Act.'' Id. at 1373. --------------------------------------------------------------------------- Consistent with these precedents, the United States has repeatedly challenged No-Poach Agreements that are not reasonably necessary to any separate, legitimate business transaction or collaboration as per se unlawful restraints of trade. For example, in September 2010, the United States charged six of the largest U.S. high technology companies--Adobe Systems, Inc., Apple Inc., Google Inc., Intel Corp., Intuit Inc., and Pixar--with per se violations of Section 1 for entering into bilateral agreements to prohibit each company from ``cold calling'' the other company's employees. Complaint, United States v. Adobe Sys., Inc., No. 10-cv-1629 (D.D.C. Oct. 1, 2010).\3\ In [[Page 16392]] December 2010, the United States charged Lucasfilm Ltd. with a per se violation of Section 1 for entering an agreement with Pixar to prohibit cold calling of each other's employees and setting forth anti- counteroffer rules that restrained bidding for employees. Complaint, United States v. Lucasfilm Ltd., No. 10-cv-2220 (D.D.C. Dec. 28, 2010).\4\ And in November 2012, the United States charged eBay with a per se violation of Section 1 for entering an agreement with Intuit, pursuant to which eBay and Intuit agreed not to recruit each other's employees and eBay agreed not to hire Intuit employees, including those that approached eBay for a job. See Complaint, United States v. eBay, Inc., No. 12-cv-5869 (N.D. Cal. Nov. 16, 2012).\5\ In each case, the defendants ultimately agreed to consent decrees terminating their unlawful agreements.\6\ --------------------------------------------------------------------------- \3\ The complaint is available at https://www.justice.gov/atr/case/us-v-adobe-systems-inc-et-al. \4\ The complaint is available at https://www.justice.gov/atr/case/us-v-lucasfilm-ltd. \5\ The complaint is available at https://www.justice.gov/atr/case/us-v-ebay-inc. \6\ The Division's settlement in eBay followed the district court's denial of eBay's motion to dismiss. See United States v. eBay, Inc., 968 F. Supp. 2d 1030 (N.D. Cal. 2013). --------------------------------------------------------------------------- Beginning in October 2016, the department has made clear that it intends to bring criminal, felony charges against culpable companies and individuals who enter into naked No-Poach Agreements.\7\ No-Poach Agreements eliminate competition in the same irredeemable way as a customer- or market-allocation agreement, and the department has long prosecuted such agreements as hardcore cartel conduct. The Division has reiterated this prosecutorial intent in subsequent public statements and indicated that it may proceed criminally where the underlying No- Poach Agreements began or continued after October 2016.\8\ As a matter of prosecutorial discretion, the Division will pursue No-Poach Agreements entered into and terminated before that date through civil actions for equitable relief. --------------------------------------------------------------------------- \7\ See, e.g., Andrew C. Finch, Acting Asst. Att'y Gen., Antitrust Div., U.S. Dep't of Justice, ``Antitrust Enforcement and the Rule of Law,'' Remarks at Global Antitrust Enforcement Symposium (Sept. 12, 2017), available at https://www.justice.gov/opa/speech/file/996151/download (``The Guidelines cautioned that naked agreements among employers not to recruit certain employees, or not to compete on employee compensation, are per se illegal and may thereafter be prosecuted criminally.''); Renata B. Hesse, Acting Asst. Att'y Gen. for Antitrust, U.S. Dep't of Justice, ``The Measure of Success: Criminal Antitrust Enforcement during the Obama Administration,'' Remarks at 26th Annual Golden State Antitrust, UCL and Privacy Law Institute (Nov. 3, 2016), available at https://www.justice.gov/opa/speech/acting-assistant-attorney-general-renata-hesse-antitrust-division-delivers-remarks-26th (``Naked wage-fixing or no-poach agreements eliminate competition in the same irredeemable way as per se unlawful price-fixing and customer- allocation agreements do. So we will approach them the same way, using our professional judgment, and considering all the factors that ordinarily weigh on our discretion as criminal prosecutors.''); Press Release, U.S. Dep't of Justice, Justice Department and Federal Trade Commission Release Guidance for Human Resource Professionals on How Antitrust Law Applies to Employee Hiring and Compensation (Oct. 20, 2016), available at https://www.justice.gov/opa/pr/justice-department-and-federal-trade-commission-release-guidance-human-resource-professionals (``Going forward, the Justice Department intends to criminally investigate naked no-poaching or wage-fixing agreements that are unrelated or unnecessary to a larger legitimate collaboration between the employers.''). \8\ See Andrew C. Finch, Principal Deputy Asst. Att'y Gen., Antitrust Div., U.S. Dep't of Justice, ``Trump Antitrust Policy After One Year,'' Remarks at the Heritage Foundation (Jan. 23, 2018), available at https://www.justice.gov/opa/speech/file/1028906/download (``In October 2016, the Division issued guidance reminding the business community that no-poach agreements can be prosecuted as criminal violations. For agreements that began after the date of that announcement, or that began before but continued after that announcement, the Division expects to pursue criminal charges.''). --------------------------------------------------------------------------- As described in the Complaint, Knorr's and Wabtec's No-Poach Agreements were naked restraints on competition for employees and were not reasonably necessary to any separate, legitimate business transaction or collaboration between the firms. The No-Poach Agreements suppressed and eliminated competition to the detriment of employees by depriving workers of competitively important information that they could have leveraged to bargain for better job opportunities and terms of employment. In doing so, the No-Poach Agreements eliminated significant competition between the firms to attract employees in the rail industry. Accordingly, they are per se unlawful horizontal market allocation agreements under Section 1 of the Sherman Act. The United States has pursued the agreements at issue in the Complaint by civil action rather than as a criminal prosecution because the United States uncovered and began investigating the agreements, and the Defendants terminated them, before the United States had announced its intent to proceed criminally against such agreements. III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT The proposed Final Judgment sets forth (1) conduct in which the Defendants may not engage; (2) conduct in which the Defendants may engage without violating the proposed Final Judgment; (3) certain actions the Defendants are required to take to ensure compliance with the terms of the proposed Final Judgment; (4) the Defendants' obligations to cooperate with the United States in its investigations of No-Poach Agreements; and (5) oversight procedures the United States may use to ensure compliance with the proposed Final Judgment. A. Prohibited Conduct Section IV of the proposed Final Judgment prohibits the Defendants from attempting to enter into, entering into, maintaining, or enforcing any No-Poach Agreement or No-Poach Provision. Paragraph II(E) of the proposed Final Judgment defines ``No-Poach Agreement'' or ``No-Poach Provision'' as ``any Agreement, or part of an Agreement, among two or more employers that restrains any person from cold calling, soliciting, recruiting, hiring, or otherwise competing for (i) employees located in the United States being hired to work in the United States or outside the United States or (ii) any employee located outside the United States being hired to work in the United States.'' \9\ Taken together, these provisions will terminate any existing No-Poach Agreements to which either Defendant is currently a party and prohibit each Defendant from entering into any No-Poach Agreements in the future. --------------------------------------------------------------------------- \9\ Paragraph II(C) defines ``Agreement'' to mean ``any agreement, understanding, pact, contract, or arrangement, formal or information, oral or written, between two or more persons.'' --------------------------------------------------------------------------- B. Conduct Not Prohibited Paragraph V(A) of the proposed Final Judgment provides that nothing in Section IV shall prohibit a Defendant from attempting to enter into, entering into, maintaining, or enforcing a reasonable agreement not to solicit, recruit, or hire employees that is ancillary to a legitimate business collaboration. Paragraph V(B) requires that all Agreements that satisfy Paragraph V(A) that are entered into, renewed, or affirmatively extended after the proposed Final Judgment's entry: (1) be in writing and signed by all parties thereto; (2) identify, with specificity, the collaboration to which the Agreement is ancillary; (3) be narrowly tailored to affect only employees who are anticipated to be directly involved in the Agreement; (4) identify with reasonable specificity the employees who are subject to the Agreement; and (5) contain a specific termination date or event. The purpose of Paragraph V(B) is to ensure that Agreements entered into pursuant to Paragraph V(A) are narrowly tailored and can be properly monitored by the United States. Defendants may have existing Agreements that contain No-Poach [[Page 16393]] Provisions that may not comply with the terms of the proposed Final Judgment. To avoid the unnecessary burden of identifying and renegotiating these existing contracts, Paragraph V(C) of the proposed Final Judgment provides that Defendants are not required to modify or conform existing No-Poach Provisions that violate the proposed Final Judgment but shall not enforce them. Finally, Paragraph V(D) of the proposed Final Judgment provides that a Defendant is not prohibited from unilaterally adopting or maintaining a policy not to consider applications from employees of another person, or not to solicit, cold call, recruit or hire employees of another person, provided that the Defendant does not (1) request, encourage, propose, or suggest that another person adopt, enforce, or maintain such a policy; or (2) notify the other person that the Defendant has adopted such a policy. C. Required Conduct Section VI of the proposed Final Judgment sets forth various mandatory procedures to ensure the Defendants are in compliance with the proposed Final Judgment. Paragraph VI(A) requires each Defendant to appoint an Antitrust Compliance Officer within ten (10) days of entry of the Final Judgment. Paragraph VI(B) then sets forth the steps that the Antitrust Compliance Officer must take in order to ensure the Defendant's compliance with the Final Judgment and make the Defendant's employees and recruiting agencies aware of its terms. Specifically, Paragraph VI(B)(1) of the proposed Final Judgment requires that within sixty days of entry of the Final Judgment, the Antitrust Compliance Officer must furnish copies of the Competitive Impact Statement, the Final Judgment, and a cover letter explaining the obligations of the Final Judgment to the Defendant's Management and HR Management.\10\ Paragraphs VI(B)(3), (B)(5), and (B)(6) further require that the Antitrust Compliance Officer annually brief the Defendant's Management and HR Management on the meaning and requirements of the Final Judgment and the antitrust laws, obtain from each of them a certification that he or she has read and agreed to abide by the terms of the Final Judgment, and maintain a record of all certifications received. --------------------------------------------------------------------------- \10\ Paragraph II(D) of the Proposed Final Judgment defines ``HR Management'' as ``the directors, officers, and human resource employees of the Defendant who supervise or have responsibility for recruiting, solicitation, or hiring efforts affecting the United States.'' Paragraph II(G) defines ``Management'' as ``all officers, directors, and board members of Knorr-Bremse AG or Westinghouse Air Brake Technologies Corporation, or anyone with management or supervisory responsibilities for Knorr's or Wabtec's U.S. business or operations.'' --------------------------------------------------------------------------- In addition, Paragraph VI(B)(2) of the proposed Final Judgment obligates each Defendant to provide all of its U.S. employees reasonable notice of the meaning and requirements of the Final Judgment in a manner to be approved by the United States. Paragraph VI(B)(7) further requires the Antitrust Compliance Officer to annually communicate to the Defendant's employees that they may disclose to the Antitrust Compliance Officer, without reprisal, information concerning any potential violation of the Final Judgment or the antitrust laws. To ensure that each Defendant's outside recruiters are aware of the proposed Final Judgment, Paragraph VI(B)(8) requires the Antitrust Compliance Officer, within sixty days of entry of the Final Judgment, to furnish copies of the Competitive Impact Statement, the Final Judgment, and a cover letter explaining the obligations of the Final Judgment to all recruiting agencies, or providers of temporary employees or contract workers, retained by the Defendant for recruiting, soliciting, or hiring efforts affecting the Defendant's business activities in the United States at the time of entry of the Final Judgment and during the term of the Final Judgment. Pursuant to Paragraph VI(B)(9) of the proposed Final Judgment, the Antitrust Compliance Officer must furnish a copy of all materials required by Paragraph VI(B) of the proposed Final Judgment to the United States within seventy-five (75) days of entry of the Final Judgment. Paragraph VI(C) of the proposed Final Judgment requires the Defendants to furnish notice of this action to the rail industry through the placement of an advertisement in an industry trade publication to be approved by the United States and the creation of website pages linked to the corporate websites of each Defendant for no less than one year. Finally, Paragraph VI(D)(3) requires that the Chief Executive Officer or Chief Financial Officer, and General Counsel of each Defendant separately certify annually to the United States that the Defendant has complied with the provisions of the Final Judgment. Additionally, if Management or HR Management learns of any violation or potential violation of the terms of the Final Judgment, Paragraph VI(D)(1) and (D)(2) of the proposed Final Judgment obligate each Defendant to promptly take action to terminate the violation, maintain all documents relating to the violation, and, within sixty days, file with the United States a statement describing the violation. D. Cooperation Section VII of the proposed Final Judgment requires each Defendant to cooperate with the United States in any investigation or litigation examining whether or alleging that the Defendant entered into a No- Poach Agreement with any other person. Paragraph VII(A) requires each Defendant, upon request of the United States, to provide sworn testimony, produce documents and materials, make employees available for interview, and testify in judicial proceedings about such No-Poach Agreements. Paragraph VII(B) provides that, subject to each Defendant's truthful and continuing cooperation as defined in Paragraph VII(A), the United States will not bring further civil actions or criminal charges against that Defendant for any No-Poach Agreement with another person if the agreement: (1) was entered into and terminated before the date of the filing of the Complaint; (2) was disclosed to the United States before the filing of the Complaint; and (3) does not in any way constitute or include an agreement to fix wages, compensation, or other benefits. The purpose of Paragraph VII(B) is to incentivize each Defendant to provide the United States with all of the information it knows about potential No-Poach Agreements it may have entered into with additional counterparties. E. Compliance To facilitate monitoring of the Defendants' compliance with the proposed Final Judgment, Paragraph VIII(A) permits the United States, upon reasonable notice and a written request: (1) access during each Defendant's office hours to inspect and copy, or at the option of the United States, to require each Defendant to provide electronic or hard copies of, all books, ledgers, accounts, records, data, and documents in the possession, custody, or control of each Defendant, relating to any matters contained in the proposed Final Judgment; and (2) to interview, either informally or on the record, each Defendant's officers, employees, or agents. Additionally, Paragraph VIII(B), upon written request of the United States, requires each Defendant to submit written reports or responses to interrogatories relating to any of the matters contained in the proposed Final Judgment. [[Page 16394]] F. Enforcement and Expiration of the Final Judgment The proposed Final Judgment contains provisions designed to promote compliance and make the enforcement of Division consent decrees as effective as possible. Paragraph X(A) provides that the United States retains and reserves all rights to enforce the provisions of the proposed Final Judgment, including its rights to seek an order of contempt from the Court. Under the terms of this paragraph, the Defendants have agreed that in any civil contempt action, any motion to show cause, or any similar action brought by the United States regarding an alleged violation of the Final Judgment, the United States may establish the violation and the appropriateness of any remedy by a preponderance of the evidence and that the Defendants have waived any argument that a different standard of proof should apply. This provision aligns the standard for compliance obligations with the standard of proof that applies to the underlying offense that the compliance commitments address. Paragraph X(B) of the proposed Final Judgment further provides that should the Court find in an enforcement proceeding that the Defendants have violated the Final Judgment, the United States may apply to the Court for a one-time extension of the Final Judgment, together with such other relief as may be appropriate. In addition, in order to compensate American taxpayers for any costs associated with the investigation and enforcement of violations of the proposed Final Judgment, Paragraph X(B) provides that in any successful effort by the United States to enforce this Final Judgment against a Defendant, whether litigated or resolved prior to litigation, that Defendant agrees to reimburse the United States for any attorneys' fees, experts' fees, or costs incurred in connection with any enforcement effort, including the investigation of the potential violation. Finally, Section XI of the proposed Final Judgment provides that the Final Judgment shall expire seven years from the date of its entry, except that after five years from the date of its entry, the Final Judgment may be terminated upon notice by the United States to the Court and the Defendants that the continuation of the Final Judgment is no longer necessary or in the public interest. IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any person who has been injured as a result of conduct prohibited by the antitrust laws may bring suit in federal court to recover three times the damages the person has suffered, as well as costs and reasonable attorneys' fees. Entry of the proposed Final Judgment 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 the Defendants. V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT The United States and the Defendants have stipulated that the proposed Final Judgment may be entered by the Court after compliance with the provisions of the APPA, provided that the United States has not withdrawn its consent. The APPA conditions entry upon the Court's determination that the proposed Final Judgment is in the public interest. The APPA provides a period of at least sixty (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 sixty (60) days of the date of publication of this Competitive Impact Statement in the Federal Register, or the last date of publication in a newspaper of the summary of this Competitive Impact Statement, whichever is later. All comments received during this period will be considered by the United States, which remains free to withdraw its consent to the proposed Final Judgment at any time prior to the Court's entry of judgment. The comments and the response of the United States will be filed with the Court. In addition, comments will be posted on the U.S. Department of Justice, Antitrust Division's internet website and, under certain circumstances, published in the Federal Register. Written comments should be submitted to: Maribeth Petrizzi Chief, Defense, Industrials, and Aerospace Section Antitrust Division United States Department of Justice 450 Fifth Street NW, Suite 8700 Washington, DC 20530 The proposed Final Judgment provides that the Court retains jurisdiction over this action, and the parties may apply to the Court for any order necessary or appropriate for the modification, interpretation, or enforcement of the Final Judgment. VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT The United States considered, as an alternative to the proposed Final Judgment, a full trial on the merits against the Defendants. The United States is satisfied, however, that the relief proposed in the Final Judgment will prevent the recurrence of the violations alleged in the Complaint and restore competition between the Defendants and other firms for employees. Thus, the proposed Final Judgment would achieve all or substantially all of the relief the United States would have obtained through litigation, but avoids the time, expense, and uncertainty of a full trial on the merits of the Complaint. VII. STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENT The Clayton Act, as amended by the APPA, requires that proposed consent judgments in antitrust cases brought by the United States be subject to a sixty-day comment period, after which the Court shall determine whether entry of the proposed Final Judgment ``is in the public interest.'' 15 U.S.C. 16(e)(1). In making that determination, the Court, in accordance with the statute as amended in 2004, is required to consider: (A) the competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration of relief sought, anticipated effects of alternative remedies actually considered, whether its terms are ambiguous, and any other competitive considerations bearing upon the adequacy of such judgment that the court deems necessary to a determination of whether the consent judgment is in the public interest; and (B) the impact of entry of such judgment upon competition in the relevant market or markets, upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial. 15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors, the Court's inquiry is necessarily a limited one as the government is entitled to ``broad discretion to settle with the defendant within the reaches of the public interest.'' United States v. Microsoft Corp., 56 F.3d 1448, 1461 (DC Cir. 1995); see generally United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 [[Page 16395]] (D.D.C. 2007) (assessing public interest standard under the Tunney Act); United States v. US Airways Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (explaining that the ``court's inquiry is limited'' in Tunney Act settlements); United States v. InBev N.V./S.A., No. 08-1965 (JR), 2009-2 Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, at *3, (D.D.C. Aug. 11, 2009) (noting that the court's review of a consent judgment is limited and only inquires ``into whether the government's determination that the proposed remedies will cure the antitrust violations alleged in the complaint was reasonable, and whether the mechanism to enforce the final judgment are clear and manageable'').\11\ --------------------------------------------------------------------------- \11\ The 2004 amendments substituted ``shall'' for ``may'' in directing relevant factors for court 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). --------------------------------------------------------------------------- As the United States Court of Appeals for the District of Columbia Circuit has held, under the APPA a court considers, among other things, the relationship between the remedy secured and the specific allegations 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 Microsoft, 56 F.3d at 1458-62. 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) (quoting United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, at *3. Courts have held 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).\12\ In determining whether a proposed settlement is in the public interest, a district court ``must accord deference to the government's predictions about the efficacy of its remedies, and may not require that the remedies perfectly match the alleged violations.'' SBC Commc'ns, 489 F. Supp. 2d at 17; see also US Airways, 38 F. Supp. 3d at 75 (noting that a court should not reject the proposed remedies because it believes others are preferable); Microsoft, 56 F.3d at 1461 (noting the need for courts to be ``deferential to the government's predictions as to the effect of the proposed remedies''); 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 views of the nature of the case). --------------------------------------------------------------------------- \12\ Cf. BNS, 858 F.2d at 464 (holding that the court's ``ultimate authority under the [APPA] is limited to approving or disapproving the consent decree''); United States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the court is constrained to ``look at the overall picture not hypercritically, nor with a microscope, but with an artist's reducing glass''). 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'''). --------------------------------------------------------------------------- Courts have greater flexibility in approving proposed consent decrees than in crafting their own decrees following a finding of liability in a litigated matter. ``[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. Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also US Airways, 38 F. Supp. 3d at 76 (noting that room must be made for the government to grant concessions in the negotiation process for settlements) (citing Microsoft, 56 F.3d at 1461); 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). To meet this standard, 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. Moreover, the Court's role under the APPA is limited to reviewing the remedy in relationship to the violations that the United States has alleged in its Complaint, and does not authorize the Court to ``construct [its] own hypothetical case and then evaluate the decree against that case.'' Microsoft, 56 F.3d at 1459; see also US Airways, 38 F. Supp. 3d at 75 (noting that the court must simply determine whether there is a factual foundation for the government's decisions such that its conclusions regarding the proposed settlements are reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``the `public interest' is not to be measured by comparing the violations alleged in the complaint against those the court believes could have, or even should have, been alleged''). Because the ``court's authority to review the decree depends entirely on the government's exercising its prosecutorial discretion by bringing a case in the first place,'' it follows that ``the court is only authorized to review the decree itself,'' and not to ``effectively redraft the complaint'' to inquire into other matters that the United States did not pursue. Microsoft, 56 F.3d at 1459-60. As this Court confirmed in SBC Communications, courts ``cannot look beyond the complaint in making the public interest determination unless the complaint is drafted so narrowly as to make a mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15. In its 2004 amendments, Congress made clear its intent to preserve the practical benefits of utilizing 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 US Airways, 38 F. Supp. 3d at 76 (indicating that a court is not required to hold an evidentiary hearing or to permit intervenors as part of its review under the Tunney Act). The language wrote into the statute what Congress intended when it enacted the Tunney Act in 1974, as Senator Tunney explained: ``[t]he court is nowhere compelled to go to trial or to engage in extended proceedings which might have the effect of vitiating the benefits of prompt and less costly settlement through the consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of Sen. Tunney). Rather, 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. [[Page 16396]] Supp. 2d at 11.\13\ 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. --------------------------------------------------------------------------- \13\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 (D.D.C. 2000) (noting that the ``Tunney Act expressly allows the court to make its public interest determination on the basis of the competitive impact statement and response to comments alone''); United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1 Trade Cas. (CCH) ] 61,508, at 71,980, *22 (W.D.Mo. 1977) (``Absent 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.''); S. Rep. No. 93-298, at 6 (1973) (``Where the public interest can be meaningfully evaluated simply on the basis of briefs and oral arguments, that is the approach that should be utilized.''). --------------------------------------------------------------------------- VIII. DETERMINATIVE DOCUMENTS There are no determinative materials or documents within the meaning of the APPA that were considered by the United States in formulating the proposed Final Judgment. Dated: April 3, 2018 Respectfully submitted, DOHA MEKKI United States Department of Justice Antitrust Division Defense, Industrials, and Aerospace Section 450 Fifth Street NW, Suite 8700 Washington, DC 20530 Telephone: (202) 598-8023 Facsimile: (202) 514-9033 Email: doha.mekki@usdoj.gov [FR Doc. 2018-07840 Filed 4-13-18; 8:45 am] BILLING CODE 4410-11-P
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Africa 3 and Ukraine 4 and, most INTERNATIONAL TRADE permitted to appear in person or by
recently, {3} Italy, Korea, Spain, Turkey, COMMISSION counsel.
and the United Kingdom.5 The The Commission made these
[Investigation Nos. 701–TA–567–569 and determinations pursuant to sections
Commission, therefore, is issuing a 731–TA–1343–1345 (Final)]
supplemental schedule for its 705(b) and 735(b) of the Act (19 U.S.C.
investigations on imports of carbon and Silicon Metal From Australia, Brazil, 1671d(b) and 19 U.S.C. 1673d(b)). It
certain alloy steel wire rod from Italy, Kazakhstan, and Norway completed and filed its determinations
Korea, Spain, Turkey, and the United in these investigations on April 10,
Determinations 2018. The views of the Commission are
Kingdom.
On the basis of the record 1 developed contained in USITC Publication 4773
The Commission’s supplemental in the subject investigations, the United (April 2018), entitled Silicon Metal from
schedule is as follows: The deadline for States International Trade Commission Australia, Brazil, Kazakhstan, and
filing supplemental party comments on (‘‘Commission’’) determines, pursuant Norway: Investigation Nos. 701–TA–
Commerce’s final determinations is to the Tariff Act of 1930 (‘‘the Act’’), 567–569 and 731–TA–1343–1345
April 13, 2018. The staff report in the that an industry in the United States is (Final).
final phase of these investigations will not materially injured or threatened By order of the Commission.
be placed in the nonpublic record and with material injury, and the Issued: April 10, 2018.
a public version will be issued establishment of an industry in the Lisa Barton,
thereafter. United States is not materially retarded Secretary to the Commission.
Supplemental party comments may by reason of imports of silicon metal [FR Doc. 2018–07806 Filed 4–13–18; 8:45 am]
address only Commerce’s final (provided for in subheadings 2804.69.10
BILLING CODE 7020–02–P
determinations regarding imports of and 2804.69.50 of the Harmonized Tariff
carbon and certain alloy steel wire rod Schedule of the United States) from
Australia, Brazil, and Norway, that have
from Italy, Korea, Spain, Turkey, and DEPARTMENT OF JUSTICE
been found by the U.S. Department of
the United Kingdom. These Commerce (‘‘Commerce’’) to be sold in
supplemental final comments may not Antitrust Division
the United States at less than fair value
contain new factual information and (‘‘LTFV’’), and from Australia, Brazil, United States v. Knorr-Bremse AG and
may not exceed five (5) pages in length. and Kazakhstan that have been found by Westinghouse Air Brake Technologies
For further information concerning Commerce to be subsidized by the Corporation; Proposed Final Judgment
these investigations see the governments of those countries. and Competitive Impact Statement
Commission’s notice cited above and Background
the Commission’s Rules of Practice and Notice is hereby given pursuant to the
The Commission, pursuant to sections Antitrust Procedures and Penalties Act,
Procedure, part 201, subparts A and B
705(b) and 735(b) of the Act (19 U.S.C. 15 U.S.C. 16(b)–(h), that a proposed
(19 CFR part 201), and part 207,
1671d(b) and 19 U.S.C. 1673d(b)), Final Judgment, Stipulation and Order,
subparts A and C (19 CFR part 207). and Competitive Impact Statement have
instituted these investigations effective
Authority: These investigations are being March 8, 2017, following receipt of been filed with the United States
conducted under authority of title VII of the petitions filed with the Commission and District Court for the District of
Tariff Act of 1930; this notice is published Commerce by Globe Specialty Metals, Columbia in United States of America v.
pursuant to section 207.21 of the Inc., Beverly, Ohio. The final phase of Knorr-Bremse AG and Westinghouse Air
Commission’s rules. the investigations was scheduled by the Brake Technologies Corporation, Civil
By order of the Commission. Commission following notification of Action No. 1:18–cv–00747. On April 3,
preliminary determinations by 2018, the United States filed a
Issued: April 11, 2018.
Commerce that imports of silicon metal Complaint alleging that Knorr-Bremse
Lisa Barton, AG (‘‘Knorr’’) and Westinghouse Air
from Australia, Brazil, and Kazakhstan
Secretary to the Commission. were subsidized within the meaning of Brake Technologies Corporation
[FR Doc. 2018–07890 Filed 4–13–18; 8:45 am] section 703(b) of the Act (19 U.S.C. (‘‘Wabtec’’) entered into unlawful
BILLING CODE 7020–02–P 1671b(b)) and that imports of silicon agreements not to poach employees in
metal from Australia, Brazil, and violation of Section 1 of the Sherman
Norway were sold at LTFV within the Act, 15 U.S.C. 1. The proposed Final
meaning of 733(b) of the Act (19 U.S.C. Judgment, filed at the same time as the
1673b(b)). Notice of the scheduling of Complaint, requires Knorr and Wabtec
the final phase of the Commission’s to refrain from entering into,
3 Carbon and Alloy Steel Wire Rod From the investigations and of a public hearing to maintaining, or enforcing unlawful
Republic of South Africa: Affirmative Final be held in connection therewith was agreements not to compete for
Determination of Sales at Less Than Fair Value and given by posting copies of the notice in employees.
Affirmative Finding of Critical Circumstances, 83 the Office of the Secretary, U.S. Copies of the Complaint, proposed
FR 2141, January 16, 2018. International Trade Commission, Final Judgment, and Competitive Impact
4 Carbon and Alloy Steel Wire Rod From Ukraine:
Washington, DC, and by publishing the Statement are available for inspection
Affirmative Final Determination of Sales at Less
notice in the Federal Register on on the Antitrust Division’s website at
Than Fair Value, 83 FR 2135, January 16, 2018. http://www.justice.gov/atr and at the
srobinson on DSK3G9T082PROD with NOTICES
5 See generally 83 FR 13228–13254, March 28, October 27, 2017 (82 FR 49848). The
hearing was held in Washington, DC, on Office of the Clerk of the United States
2018 (Commerce’s final affirmative determinations District Court for the District of
of sales at less than fair value of carbon and alloy February 15, 2018, and all persons who
steel wire rod from Italy, Korea, Spain, Turkey, and requested the opportunity were Columbia. Copies of these materials may
the United Kingdom, and Commerce’s final be obtained from the Antitrust Division
affirmative determinations regarding 1 The record is defined in sec. 207.2(f) of the upon request and payment of the
countervailable subsidies by the governments of Commission’s Rules of Practice and Procedure (19 copying fee set by Department of Justice
Italy and Turkey). CFR 207.2(f)). regulations.
VerDate Sep<11>2014 19:42 Apr 13, 2018 Jkt 244001 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 E:\FR\FM\16APN1.SGM 16APN1](https://thefederalregister.org/doc/83_FR_16455/page/1.svg)
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IV. TRADE AND COMMERCE it increases the available job the no-poach agreement. In furtherance
13. Knorr and Wabtec (which now opportunities that employees learn of their agreement, Wabtec and Knorr
includes Faiveley) are the world’s about. It also improves an employee’s Brake Company informed their outside
largest rail equipment suppliers and ability to negotiate for a better salary recruiters not to solicit employees from
each other’s top rival in the and other terms of employment. the other company.
Defendants’ no-poach agreements, 21. In some instances, Wabtec and
development, manufacture, and sale of
however, restrained competition for Knorr Brake Company’s no-poach
equipment used in freight and passenger
employees and disrupted the normal agreement foreclosed the consideration
rail applications.
bargaining and price-setting of an unsolicited applicant employed by
14. Defendants also compete with one
mechanisms that apply in the labor Wabtec or Knorr Brake Company
another and with firms at other tiers of
market. without prior approval of the other firm.
the rail industry supply chain to attract,
For example, in a 2010 internal
hire, and retain skilled employees by V. THE UNLAWFUL AGREEMENTS communication, a senior executive at
offering attractive salaries, benefits, 18. Over a period spanning several Knorr Brake Company stated that he
training, advancement opportunities, years, Wabtec, Knorr, and Faiveley would not even consider a Wabtec
and other favorable terms of entered into similar no-poach candidate who applied to Knorr Brake
employment. agreements with one another to Company without the permission of his
15. There is high demand for and eliminate competition between them for counterpart at Wabtec.
limited supply of skilled employees employees. These agreements were 22. Wabtec and Knorr’s no-poach
who have rail industry experience. As a executed and enforced by senior agreements also reached the companies’
result, firms in the rail industry can company executives and reached U.S. freight rail businesses. In July 2012,
experience vacancies of critical roles for several of the companies’ U.S. for example, a senior executive at New
months while they try to recruit and subsidiaries. The no-poach agreements York Air Brake Corporation informed a
hire an individual with the requisite were not reasonably necessary to any human resources manager that he could
skills, training, and experience for a job separate, legitimate business transaction not consider a Wabtec employee for a
opening. Employees of other rail or collaboration between the companies. job opening due to the no-poach
industry participants, including the agreement between Wabtec and Knorr.
employees of Defendants’ customers, I. Wabtec—Knorr Agreements
23. Wabtec’s and Knorr’s senior
competitors, and suppliers, are key 19. Wabtec and Knorr entered into executives actively policed potential
sources of potential talent to fill these pervasive no-poach agreements that breaches of their companies’ no-poach
openings. spanned multiple business units and agreements and directly communicated
16. Firms in the rail industry employ jurisdictions. Senior executives at the with one another to ensure adherence to
a variety of recruiting techniques, companies’ global headquarters and the agreements. For example, in
including using internal and external their respective U.S. passenger and February 2016, a member of Knorr’s
recruiters to identify, solicit, recruit, freight rail businesses entered into no- executive board complained directly to
and otherwise help hire potential poach agreements that involved an executive officer at Wabtec regarding
employees. Rail companies also receive promises and commitments not to an external recruiter who allegedly
direct applications from individuals solicit or hire one another’s employees. solicited a Knorr Brake Company
interested in potential employment These no-poach agreements primarily employee for an opening at Wabtec. The
opportunities. Directly soliciting affected recruiting for project Wabtec executive investigated the
employees from another rail industry management, engineering, sales, and matter internally and reported back to
participant is a particularly efficient and corporate officer roles and restricted Knorr that Wabtec’s outside recruiter
effective method of competing for each company from soliciting current was responsible for the contact and that
qualified employees. Soliciting involves employees from the other’s company. At he had instructed the recruiter to
communicating directly—whether by times, these agreements were terminate his activities with the
phone, email, social and electronic operationalized as agreements not to candidate and refrain from soliciting
networking, or in person—with another hire current employees from one Knorr employees going forward due to
firm’s employee who has not otherwise another without prior approval. the existing no-poach agreement
applied for a job opening. Such direct 20. Beginning no later than 2009, between the companies.
solicitation can be performed by Wabtec’s and Knorr Brake Company’s
individuals of the company seeking to most senior executives entered into an II. Knorr—Faiveley Agreement
fill the position or by outside recruiters express no-poach agreement and then 24. Beginning no later than 2011,
retained to identify potential employees actively managed it with each other senior executives at Knorr Brake
on the company’s behalf. Firms in the through direct communications. For Company and Faiveley Transport North
rail industry rely on direct solicitation example, in a letter dated January 28, America reached an express no-poach
of employees of other rail companies 2009, a director of Knorr Brake agreement that involved promises and
because those individuals have the Company wrote to a senior executive at commitments to contact one another
specialized skills necessary and may be Wabtec’s headquarters, ‘‘[Y]ou and I before pursuing an employee of the
unresponsive to other methods of both agreed that our practice of not other company. In October 2011, a
recruiting. In addition, the rail industry targeting each other’s personnel is a senior executive at Knorr Brake
is an insular one in which employees at prudent cause for both companies. As Company explained in an email to a
different firms form long-term you so accurately put it, ‘we compete in high-level executive at Knorr-Bremse
srobinson on DSK3G9T082PROD with NOTICES
relationships and often look to their the market.’ ’’ Although the no-poach AG that he had a discussion with an
professional networks to fill a vacancy. agreement was between Wabtec and executive at Faiveley’s U.S. subsidiary
17. In a competitive labor market, rail Knorr’s U.S. passenger rail subsidiary, it that ‘‘resulted in an agreement between
industry employers compete with one was well-known to senior executives at us that we do not poach each other’s
another to attract highly-skilled talent the parent companies, including top employees. We agreed to talk if there
for their employment needs. This Knorr executives in Germany who were was one trying to get a job[.]’’ Executives
competition benefits employees because included in key communications about at Knorr Brake Company and Faiveley’s
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![Federal Register / Vol. 83, No. 73 / Monday, April 16, 2018 / Notices 16385
U.S. subsidiary actively managed the in hiring discussions with each other’s FOR PLAINTIFF UNITED STATES OF
agreement with each other through employees without the other’s prior AMERICA
direct communications. approval. lllllllllllllllllll
25. In or about 2012, a senior 29. In July 2015, Wabtec and Faiveley MAKAN DELRAHIM
executive at Knorr Brake Company publicly announced their intent to Assistant Attorney General for Antitrust
discussed the companies’ no-poach merge. Wabtec closed its acquisition of lllllllllllllllllll
agreement with an executive at Faiveley Faiveley on November 30, 2016. MARIBETH PETRIZZI (D.C. Bar
Transport North America. This Presently, Faiveley is a wholly-owned #435204)
discussion took place at a trade show in subsidiary of Wabtec. Chief
Berlin, Germany. Subsequently, the Defense, Industrials, and Aerospace
executives enforced the no-poach VI. VIOLATION ALLEGED
Section
agreement with each other through 30. Defendants are direct competitors lllllllllllllllllll
direct communications. This no-poach in certain labor markets for skilled rail ANDREW C. FINCH
agreement was known to other senior industry employees, including project Principal Deputy Assistant Attorney
executives at the companies, who managers, engineers, sales executives, General
directly communicated with one and corporate officers. Defendants lllllllllllllllllll
another to ensure adherence to the entered into anticompetitive no-poach DAVID E. ALTSCHULER (D.C. Bar
agreement. For example, in October agreements that reduced competition in #983023)
2012, executives at Faiveley Transport the labor markets in which they Assistant Chief
North America stated in an internal compete and, in doing so, disrupted the Defense, Industrials, and Aerospace
communication that they were required typical bargaining and negotiation Section
to contact Knorr Brake Company before between employees and employers that lllllllllllllllllll
hiring a U.S. train brake engineer. ordinarily would take place in these
26. The companies continued their BERNARD A. NIGRO, JR.
labor markets. (D.C. Bar #412357)
no-poach agreement until at least 2015. 31. Defendants’ no-poach agreements
After Wabtec announced its proposed Deputy Assistant Attorney General
were facially anticompetitive because
acquisition of Faiveley in July 2015, a lllllllllllllllllll
they eliminated a significant form of
high-level Knorr executive directed the DOHA MEKKI*
competition to attract skilled labor in
company’s recruiters in the United DAN MONAHAN
the U.S. rail industry. These agreements
States and other jurisdictions to raid GABRIELLA MOSKOWITZ (D.C. Bar
denied employees access to better job
Faiveley for high-potential employees. #1044309)
opportunities, restricted their mobility,
Trial Attorneys
and deprived them of competitively
III. Wabtec—Faiveley Agreement lllllllllllllllllll
significant information that they could
27. Beginning no later than January PATRICIA A. BRINK
have used to negotiate for better terms
2014, senior executives at Wabtec Director of Civil Enforcement
of employment.
Passenger Transit and Faiveley 32. Accordingly, Defendants’ no- United States Department of Justice
Transport North America entered into a poach agreements constitute Antitrust Division
no-poach agreement in which the unreasonable restraints of trade that are Defense, Industrials, and Aerospace
companies agreed not to hire each per se unlawful under Section 1 of the Section
other’s employees without prior Sherman Act, 15 U.S.C. § 1. 450 Fifth Street NW, Suite 8700
notification to and approval from the Washington, D.C. 20530
other company. VII. REQUEST FOR RELIEF Telephone: (202) 598–8023
28. Wabtec Passenger Transit and 33. The United States requests that Facsimile: (202) 514–9033
Faiveley Transport North America this Court: Email: doha.mekki@usdoj.gov
executives actively managed and (a) adjudge and decree that *Lead Attorney to be Noticed
enforced their agreement with each Defendants’ no-poach agreements
other through direct communications. constitute per se illegal restraints of UNITED STATES DISTRICT COURT
For example, in January 2014, Wabtec trade and interstate commerce in FOR THE DISTRICT OF COLUMBIA
Passenger Transit executives refused to violation of Section 1 of the Sherman
engage in hiring discussions with a UNITED STATES OF AMERICA,
Act;
U.S.-based project manager at Faiveley (b) enjoin and restrain Defendants Plaintiff,
Transport North America without first from enforcing or adhering to existing v.
getting permission from Faiveley no-poach agreements that unreasonably KNORR-BREMSE AG,
Transport North America executives. In restrict competition for employees; and
an internal email to his colleagues, a (c) permanently enjoin and restrain
Wabtec Passenger Transit executive each Defendant from establishing a no- WESTINGHOUSE AIR BRAKE
explained that the candidate ‘‘is a good poach agreement except as prescribed TECHNOLOGIES CORPORATION,
guy, but I don’t want to violate my own by the Court; Defendants.
agreement with [Faiveley Transport (d) award the United States such other Civil Action No: 1:18-cv-00747
North America].’’ Only after receiving relief as the Court may deem just and Judge: Colleen Kollar-Kotelly
permission from Faiveley Transport proper to redress and prevent
North America did Wabtec Passenger recurrence of the alleged violations and [PROPOSED] FINAL JUDGMENT
srobinson on DSK3G9T082PROD with NOTICES
Transit hire the project manager. One to dissipate the anticompetitive effects WHEREAS, Plaintiff, United States of
month later, a Wabtec Passenger Transit of the illegal no-poach agreements America, filed its Complaint on April 3,
senior executive informed his staff that entered into by Defendants; and 2018, alleging that Defendants Knorr-
hiring Faiveley Transport North (e) award the United States the costs Bremse AG and Westinghouse Air Brake
America’s employees was ‘‘off the table’’ of this action. Technologies Corporation violated
due to the agreement with Faiveley Dated: April 3, 2018 Section 1 of the Sherman Act, 15 U.S.C.
Transport North America not to engage Respectfully submitted, § 1, the United States and the
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![16388 Federal Register / Vol. 83, No. 73 / Monday, April 16, 2018 / Notices
interviewee and without restraint or that a different standard of proof should Court approval subject to procedures of
interference by any Defendant. apply. Antitrust Procedures and Penalties Act,
B. Upon the written request of an B. In any enforcement proceeding in 15 U.S.C. § 16
authorized representative of the which the Court finds that the lllllllllllllllllll
Assistant Attorney General in charge of Defendants have violated this Final United States District Judge
the Antitrust Division, each Defendant Judgment, the United States may apply EXHIBIT 1
shall submit written reports or to the Court for a one-time extension of
responses to written interrogatories, this Final Judgment, together with such [Company Letterhead]
under oath if requested, relating to any other relief as may be appropriate. In [Name and Address of Antitrust
of the matters contained in this Final connection with any successful effort by Compliance Officer]
Judgment as may be requested. the United States to enforce this Final Re: Agreements Not to Solicit
C. No information or documents Judgment against a Defendant, whether Employees from Other Companies
obtained by the means provided in this litigated or resolved prior to litigation, Dear [XX]:
section shall be divulged by the United that Defendant agrees to reimburse the I am providing you this notice
States to any person other than an United States for any attorneys’ fees, regarding a judgment recently entered
authorized representative of the experts’ fees, and costs incurred in by a federal judge in Washington, D.C.
executive branch of the United States, connection with that enforcement effort, affecting our employee recruiting,
except in the course of legal proceedings including the investigation of the soliciting, and hiring practices. The
to which the United States is a party potential violation. judgment applies to our company and
(including grand jury proceedings), or XI. EXPIRATION OF FINAL all of its employees, including you, so
for the purpose of securing compliance JUDGMENT it is important that you understand the
with this Final Judgment, or as obligations it imposes on us. [CEO
otherwise required by law. Unless this Court grants an extension, Name] has asked me to let each of you
D. If at the time information or this Final Judgment shall expire seven know that [s/he] expects you to take
documents are furnished by a Defendant (7) years from the date of its entry, these obligations seriously and abide by
to the United States, the Defendant except that after five (5) years from the them.
represents and identifies in writing the date of its entry, this Final Judgment The judgment prohibits us from
material in any such information or may be terminated upon notice by the agreeing with any other employer not to
documents to which a claim of United States to the Court and the solicit, cold call, or recruit each other’s
protection may be asserted under Rule Defendants that the continuation of the employees. This includes seeking
26(c)(1)(G) of the Federal Rules of Civil Final Judgment no longer is necessary or permission or approval before
Procedure, and the Defendant marks in the public interest. considering or approaching an
each pertinent page of such material, XII. NOTICE employee of the employer about a
‘‘Subject to claim of protection under potential opportunity or requiring the
Rule 26(c)(1)(G) of the Federal Rules of For purposes of this Final Judgment, other employer to seek permission or
Civil Procedure,’’ then the United States any notice or other communication approval from us before considering or
shall give the Defendant ten (10) required to be provided to the United approaching one of our employees.
calendar days’ notice prior to divulging States shall be sent to the person at the There are limited exceptions to this
such material in any legal proceeding address set forth below (or such other restriction. You must consult me before
(other than a grand jury proceeding). addresses as the United States may determining whether a particular
specify in writing to the Defendants): employer is subject to an exception
IX. RETENTION OF JURISDICTION
Chief under the judgment.
This Court retains jurisdiction to Defense, Industrials, and Aerospace A copy of the court order is attached.
enable any party to this Final Judgment Section Please read it carefully and familiarize
to apply to this Court at any time for U.S. Department of Justice yourself with its terms. The judgment,
further orders and directions as may be rather than the above description, is
Antitrust Division
necessary or appropriate to carry out or controlling. If you have any questions
construe this Final Judgment, to modify 450 Fifth Street, NW, Suite 8700
about the judgment or how it affects
any of its provisions, to enforce Washington, D.C. 20530 your recruiting and hiring activities,
compliance, and to punish violations of XIII. PUBLIC INTEREST please contact me as soon as possible.
its provisions. DETERMINATION Thank you for your cooperation.
X. ENFORCEMENT OF FINAL Sincerely,
Entry of this Final Judgment is in the
JUDGMENT public interest. The parties have [Defendant’s Antitrust Compliance
complied with the Procedures of the Officer]
A. The United States retains and
reserves all rights to enforce the Antitrust Procedures and Penalties Act, EXHIBIT 2
provisions of this Final Judgment, 15 U.S.C. § 16, including making copies
[Company Letterhead]
including its right to seek an order of available to the public of this Final
Judgment, the Competitive Impact [Name and Address of Antitrust
contempt from this Court. Defendants
Statement, and any comments thereon Compliance Officer]
agree that in any civil contempt action,
any motion to show cause, or any and the United States’ responses to Re: Agreements Not to Solicit
srobinson on DSK3G9T082PROD with NOTICES
similar action brought by the United comments. Based upon the record Employees from Other Companies
States regarding an alleged violation of before the Court, which includes the Dear [XX]:
this Final Judgment, the United States Competitive Impact Statement and any I am providing you this notice
may establish a violation of the decree comments and response to comments regarding a judgment recently entered
and the appropriateness of any remedy filed with the Court, entry of this final by a federal judge in Washington, D.C.
therefor by a preponderance of the judgment is in the public interest. affecting [Defendant’s] employee
evidence, and they waive any argument Date: llllllllllllllll recruiting, soliciting, and hiring
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![Federal Register / Vol. 83, No. 73 / Monday, April 16, 2018 / Notices 16389
practices. The judgment applies to and Wabtec from entering into, agreements not to solicit, recruit, hire
[Defendant] and all of its employees, so maintaining, or enforcing no-poach without prior approval, or otherwise
it is important that you understand the agreements with another employer compete for employees (collectively,
obligations it imposes on your recruiting subject to limited exceptions. This ‘‘No-Poach Agreements’’). In addition,
activities for [Defendant]. [CEO Name] prohibition includes seeking permission the Complaint alleges that Knorr and
has asked me to let you know that [s/ or approval before considering, Wabtec separately entered into No-
he] expects you to take these obligations approaching, or hiring an employee or Poach Agreements with Faiveley
seriously and abide by them, requiring the other employer to seek Transport North America, a U.S.
irrespective of any contrary instructions permission or approval from Knorr and subsidiary of Faiveley Transport S.A.
you may receive from any other Wabtec before considering or (‘‘Faiveley’’), before Faiveley was
employee or officer of [Defendant]. approaching one of their employees. acquired by Wabtec in November 2016.
The judgment prohibits [Defendant] As part of its settlement with the The No-Poach Agreements were not
from agreeing with another employer United States, Knorr and Wabtec reasonably necessary to any separate,
not to solicit, cold call, or recruit each confirmed that each company has legitimate business transaction or
other’s employees. This includes unilaterally withdrawn from and will collaboration between the companies.
seeking permission or approval before not enforce any prohibited no-poach According to the Complaint, the
considering or approaching an agreements it may have had with any Defendants’ No-Poach Agreements
employee of the other employer about a other employer relating to employees unlawfully allocated employees
potential opportunity or requiring the located or being hired to work in the between the companies and are per se
other employer to seek permission or United States. unlawful restraints of trade that violate
approval from [Defendant] before The Final Judgment, which was Section 1 of the Sherman Act, 15 U.S.C.
considering or approaching one of recently entered by a federal district § 1.
[Defendant’s] employees. There are court, is effective for seven years. Copies At the same time the Complaint was
limited exceptions to this restriction. of the Complaint, Final Judgment, and filed, the United States also filed a
You must consult me before Competitive Impact Statement are Stipulation and Order and proposed
determining whether a particular available at: Final Judgment, which would remedy
employer is subject to an exception [Link to Complaint] the violation by enjoining the
under the judgment. If any employee of [Link to Final Judgment] Defendants from entering into,
[Defendant] has asked or asks you to [Link to Competitive Impact Statement] maintaining, or enforcing any No-Poach
refrain from recruiting, cold calling, Agreements, subject to limited
soliciting, or otherwise approaching an UNITED STATES DISTRICT COURT exceptions. The proposed Final
employee from a particular company, FOR THE DISTRICT OF COLUMBIA Judgment also requires the Defendants
you must notify me immediately before to take specific compliance measures
doing so. UNITED STATES OF AMERICA, and to cooperate in any investigation or
A copy of the court order is attached. Plaintiff, litigation examining whether or alleging
Please read it carefully and familiarize v. that the Defendant entered into a No-
yourself with its terms. The judgment, KNORR-BREMSE AG Poach Agreement with any other person
rather than the above description, is and in violation of Section 1 of the Sherman
controlling. If you have any questions WESTINGHOUSE AIR BRAKE Act, 15 U.S.C. § 1.
about the judgment or how it affects TECHNOLOGIES CORPORATION, The United States and the Defendants
your recruiting and hiring activities for have stipulated that the proposed Final
Defendants.
[Defendant], please contact me as soon Judgment may be entered after
as possible. Civil Action No: 1:18-cv-00747 compliance with the APPA. Entry of the
Thank you for your cooperation. Judge: Colleen Kollar-Kotelly proposed Final Judgment would
Sincerely, COMPETITIVE IMPACT STATEMENT terminate this action, except that the
Court would retain jurisdiction to
[Defendant’s Antitrust Compliance Plaintiff United States of America
construe, modify, or enforce the
Officer] (‘‘United States’’), pursuant to Section
provisions of the proposed Final
2(b) of the Antitrust Procedures and
EXHIBIT 3 Judgment and to punish violations
Penalties Act (‘‘APPA’’ or ‘‘Tunney
Please take notice that Knorr-Bremse thereof.
Act’’), 15 U.S.C. § 16(b)-(h), files this
AG (Knorr) and Westinghouse Air Brake Competitive Impact Statement relating II. DESCRIPTION OF THE EVENTS
Technologies Corporation (Wabtec) have to the proposed Final Judgment GIVING RISE TO THE ALLEGED
entered into a settlement with the submitted for entry in this civil antitrust VIOLATION
United States Department of Justice proceeding.
relating to their respective employee A. The Defendants
recruiting, solicitation, and hiring I. NATURE AND PURPOSE OF THE Knorr is a privately-owned German
practices. PROCEEDING company with its headquarters in
On April 3, 2018, the United States On April 3, 2018, the United States Munich, Germany. It is a global leader
filed a federal civil antitrust Complaint filed a civil antitrust Complaint alleging in the development, manufacture, and
alleging that Knorr and Wabtec entered that Defendants Knorr-Bremse AG sale of rail and commercial vehicle
into agreements that restrained cold (‘‘Knorr’’) and Westinghouse Air Brake equipment. In 2017, Knorr had annual
srobinson on DSK3G9T082PROD with NOTICES
calling, soliciting, recruiting, hiring, or Technologies Corporation (‘‘Wabtec’’) revenues of approximately $7.7 billion.
otherwise competing for employees entered into unlawful agreements not to Knorr holds several wholly-owned rail
(collectively, ‘‘no-poach agreements’’) in poach each other’s employees in subsidiaries in the United States. Knorr
violation of Section 1 of the Sherman violation of Section 1 of the Sherman Brake Company is a Delaware
Act, 15 U.S.C. § 1. At the same time, the Act, 15 U.S.C. § 1. Specifically, the corporation with its headquarters in
United States filed a proposed Complaint alleges that Knorr and Westminster, Maryland. It manufactures
settlement that prohibits each of Knorr Wabtec entered into a series of train control, braking, and door
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equipment used on passenger rail industry participants, including the 1. Wabtec–Knorr Agreements
vehicles. New York Air Brake employees of Knorr’s and Wabtec’s
Corporation is a Delaware corporation customers, competitors, and suppliers, According to the Complaint, Wabtec
with its headquarters in Watertown, are key sources of potential talent to fill and Knorr entered into pervasive No-
New York. It manufactures railway air these openings. Poach Agreements that spanned
brakes and other rail equipment used on multiple business units and
According to the Complaint, firms in jurisdictions. Senior executives at the
freight trains. Knorr Brake Company and the rail industry employ a variety of
New York Air Brake Corporation are companies’ global headquarters as well
recruiting techniques, including using as their respective U.S. passenger and
wholly-owned subsidiaries of Knorr.
internal and external recruiters to
Wabtec is a Delaware corporation freight rail businesses entered into No-
headquartered in Wilmerding, identify, solicit, recruit, and otherwise
Poach Agreements that involved
Pennsylvania. With over 100 help hire potential employees. Rail
promises and commitments not to
subsidiaries, Wabtec is the world’s companies also receive direct
solicit or hire one another’s employees.
largest provider of rail equipment and applications from individuals interested
As alleged in the Complaint, the No-
services with global sales of $3.9 billion in potential employment opportunities.
Poach Agreements primarily affected
in 2017. Wabtec Passenger Transit is a Directly soliciting employees from
recruiting for project management,
business unit of Wabtec that develops, another rail industry participant is a
engineering, sales, and corporate officer
manufactures, and sells rail equipment particularly efficient and effective
roles and restricted each company from
and services for passenger rail method of competing for qualified
soliciting current employees from the
applications. It is based in Spartanburg, employees. Soliciting involves
other company. The Complaint further
South Carolina. communicating directly—whether by
phone, e-mail, social and electronic alleges that, at times, these agreements
On November 30, 2016, Wabtec were operationalized as agreements not
acquired Faiveley, which had been a networking, or in person—with another
firm’s employee who has not otherwise to hire current employees from one
French société anonyme based in
applied for a job opening. Firms in the another without prior approval.
Gennevilliers, France. Before the
acquisition, Faiveley was the world’s rail industry rely on direct solicitation According to the Complaint,
third-largest rail equipment supplier of employees of other rail companies beginning no later than 2009, Wabtec’s
behind Wabtec and Knorr. Faiveley had because those individuals have the and Knorr Brake Company’s most senior
employees in 24 countries, including at specialized skills necessary for the executives entered into an express No-
six U.S. locations. It developed, vacant position and may be Poach Agreement and then actively
manufactured and sold passenger and unresponsive to other methods of managed it with each other through
freight rail equipment to customers in recruiting. The Complaint alleges that direct communications. The Complaint
Europe, Asia, and North America, the rail industry is an insular one where alleges that in a letter dated January 28,
including the United States, with employees at different firms form long- 2009, a director of Knorr Brake
revenues of approximately Ö1.2 billion term relationships and often look to Company wrote to a senior executive at
in 2016. In the United States, Faiveley their professional networks to fill a Wabtec’s headquarters, ‘‘[Y]ou and I
conducted business primarily through vacancy. both agreed that our practice of not
Faiveley Transport North America, a targeting each other’s personnel is a
According to the Complaint, in a
wholly-owned subsidiary of Faiveley prudent cause for both companies. As
competitive labor market, rail industry
and a New York corporation you so accurately put it, ‘we compete in
employers compete with one another to
headquartered in Greenville, South the market.’ ’’ As alleged in the
attract highly-skilled talent for their
Carolina. Complaint, that agreement was well-
employment needs. This competition
B. Defendants Enter into and benefits employees because it increases known to senior executives at the parent
Maintain No-Poach Agreements the available job opportunities that companies, including top Knorr
employees learn about and improves executives in Germany who were
The Complaint alleges that Knorr and included in key communications about
Wabtec (which now includes Faiveley) employees’ ability to negotiate for better
salaries and other terms of employment. the No-Poach Agreement. The
are the world’s largest rail equipment Complaint further alleges that in
suppliers and each other’s top rival for The Complaint alleges that, over a
period spanning several years, Wabtec, furtherance of their agreement, Wabtec
the development, manufacture, and sale and Knorr Brake Company informed
of equipment used in freight and Knorr, and Faiveley entered into similar
No-Poach Agreements with one another their outside recruiters not to solicit
passenger rail applications. Knorr and employees from the other company. In
Wabtec also compete with one another to eliminate competition between them
for employees. These agreements were some instances, Wabtec and Knorr
and with firms at other tiers of the rail Brake Company’s No-Poach Agreement
industry supply chain to attract, hire, executed and enforced by senior
company executives and reached foreclosed the consideration of an
and retain skilled employees by offering
several of the companies’ U.S. unsolicited applicant employed by the
attractive salaries, benefits, training,
subsidiaries and business units. The other company without prior approval
advancement opportunities, and other
Complaint alleges that Knorr’s and of the other firm. Knorr and Wabtec’s
favorable terms of employment.
The Complaint further alleges that Wabtec’s No-Poach Agreements No-Poach Agreements also extended to
there is high demand for and limited restrained competition for employees the companies’ U.S. freight rail
supply of skilled employees who have and disrupted the normal bargaining businesses.
srobinson on DSK3G9T082PROD with NOTICES
rail industry experience. As a result, and price-setting mechanisms that apply According to the Complaint, Knorr’s
firms in the rail industry can experience in the labor market. The Complaint and Wabtec’s senior executives actively
vacancies of critical roles for months further alleges that the No-Poach policed potential breaches of their
while they try to recruit and hire an Agreements were not reasonably companies’ No-Poach Agreements and
individual with the requisite skills, necessary to any separate, legitimate directly communicated with one
training, and experience for a job business transaction or collaboration another to ensure adherence to the
opening. Employees of other rail between the companies. agreements.
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2. Knorr-Faiveley Agreement guy, but I don’t want to violate my own Market allocation agreements cannot
As alleged in the Complaint, agreement with [Faiveley Transport be distinguished from one another based
beginning no later than 2011, senior North America].’’ solely on whether they involve input or
executives at Knorr Brake Company and The Complaint alleges that in July output markets.2 Nor are labor markets
Faiveley Transport North America 2015, Wabtec and Faiveley publicly treated differently than other input
reached an express No-Poach announced their intent to merge. markets under antitrust law. ‘‘[A]n
Agreement that involved promises and Wabtec closed its acquisition of agreement among employers that they
commitments to contact one another Faiveley on November 30, 2016. will not compete against each other for
before pursuing an employee of the Presently, Faiveley is a wholly-owned the services of a particular employee or
other company. The Complaint alleges subsidiary of Wabtec. prospective employee is, in fact, a
that in October 2011, a senior executive service division agreement, analogous to
C. Defendants’ No-Poach
at Knorr Brake Company explained in a product division agreement.’’ United
Agreements Were Per Se Unlawful
an email to a high-level executive at States v. eBay, Inc., 968 F. Supp. 2d
Market Allocation Agreements
Knorr-Bremse AG that he had a 1030, 1039 (N.D. Cal. 2013) (citation
under Section 1 of the Sherman Act
discussion with an executive at omitted); see also IIA Phillip E. Areeda
No-Poach Agreements that are not et al., Antitrust Law, ¶ 352c at 288–89
Faiveley’s U.S. subsidiary that ‘‘resulted
reasonably necessary to any separate, (4th ed. 2014) (‘‘Antitrust law addresses
in an agreement between us that we do
legitimate business transaction or employer conspiracies controlling
not poach each other’s employees. We
collaboration are properly considered employment terms precisely because
agreed to talk if there was one trying to
per se unlawful market allocation they tamper with the employment
get a job[.]’’ Executives at Knorr Brake
agreements under Section 1 of the market and thereby impair the
Company and Faiveley’s U.S. subsidiary
Sherman Act. Section 1 outlaws any opportunities of those who sell their
actively managed the No-Poach
‘‘contract, combination . . ., or services there. Just as antitrust law seeks
Agreement with each other through
conspiracy, in restraint of trade or to preserve the free market
direct communications. The Complaint
commerce.’’ 15 U.S.C. 1. Courts have opportunities of buyers and sellers of
specifically alleges that in or about
long interpreted this language to goods, so also it seeks to do the same for
2012, a senior executive at Knorr Brake
prohibit only ‘‘unreasonable’’ restraints buyers and sellers of employment
Company discussed the companies’ No-
of trade. Bus. Elecs. Corp. v. Sharp services.’’).
Poach Agreement with an executive at
Elecs. Corp., 485 U.S. 717, 723 (1988). Consistent with these precedents, the
Faiveley Transport North America. This
Most restraints are analyzed under the United States has repeatedly challenged
discussion took place at a trade show in
rule of reason, which requires the No-Poach Agreements that are not
Berlin, Germany. Subsequently, the
plaintiff to present evidence of a reasonably necessary to any separate,
executives enforced the No-Poach
restraint’s anticompetitive effects and legitimate business transaction or
Agreement with each other through
permits the defendant to present collaboration as per se unlawful
direct communications. This No-Poach
procompetitive justifications. restraints of trade. For example, in
Agreement was known to other senior
Ultimately, the fact-finder weighs all the September 2010, the United States
executives at the companies, who
circumstances to determine whether the charged six of the largest U.S. high
directly communicated with one
restraint is one that suppresses technology companies—Adobe Systems,
another to ensure adherence to the
competition or promotes it. See Bd. of Inc., Apple Inc., Google Inc., Intel Corp.,
agreement.
As alleged in the Complaint, the Trade of City of Chi. v. United States, Intuit Inc., and Pixar—with per se
companies continued their No-Poach 246 U.S. 231, 238 (1918). violations of Section 1 for entering into
Agreement until at least 2015. After ‘‘The rule of reason does not govern bilateral agreements to prohibit each
Wabtec announced its proposed all restraints,’’ however. Leegin Creative company from ‘‘cold calling’’ the other
acquisition of Faiveley in July 2015, a Leather Prod., Inc. v. PSKS, Inc., 551 company’s employees. Complaint,
high-level Knorr executive directed the U.S. 877, 886 (2007). Rather, ‘‘some United States v. Adobe Sys., Inc., No.
company’s recruiters in the United types of restraints on trade have such 10-cv-1629 (D.D.C. Oct. 1, 2010).3 In
States and other jurisdictions to raid predictable and pernicious
Faiveley for high-potential employees. anticompetitive effect, and such limited between the competitors and reasonably necessary
potential for procompetitive benefit, to achieve the procompetitive benefits of that
3. Wabtec-Faiveley Agreement that they are deemed unlawful per se,’’ venture. Rothery Storage & Van Co. v. Atlas Van
Lines, Inc., 792 F.2d 210, 224 (DC Cir. 1986) (a
The Complaint alleges that beginning State Oil Co. v. Khan, 522 U.S. 3, 3 customer allocation agreement is ancillary only if
no later than January 2014, senior (1997), and thus ‘‘illegal without it is ‘‘subordinate and collateral to a separate,
executives at Wabtec Passenger Transit elaborate inquiry as to the precise harm legitimate transaction’’ and reasonably necessary to
they have caused or the business excuse make that separate transaction ‘‘more effective [or
and Faiveley Transport North America efficient] in accomplishing its purpose’’); see
entered into a No-Poach Agreement in for their use,’’ Northern Pac. Ry. v. Texaco Inc. v. Dagher, 547 U.S. 1, 7–8 (2006).
which the companies agreed not to hire United States, 356 U.S. 1, 545 (1958). It 2 In similar circumstances, the Sixth Circuit has
each other’s employees without prior is well established that naked restraints held that an agreement among competitors not to
of competition among horizontal solicit one another’s customers was a per se
notification to and approval from the violation of the antitrust laws. See U.S. v.
other company. According to the competitors, such as price-fixing or Cooperative Theaters of Ohio, Inc., 845 F.2d 1367
Complaint, Wabtec Passenger Transit market allocation agreements, are per se (6th Cir. 1988) (finding that two movie theater
and Faiveley Transport North America unlawful. See United States v. Socony- booking agents agreed to refrain from actively
srobinson on DSK3G9T082PROD with NOTICES
Vacuum Oil Co., 310 U.S. 150, 218 soliciting each other’s customers). In particular, the
executives actively managed and Sixth Circuit found the defendants’ ‘‘no-solicitation
enforced their agreement with each (1940); Palmer v. BRG of Georgia, Inc., agreement’’ was ‘‘undeniably a type of customer
other through direct communications. 498 U.S. 46, 48–50 (1990) (per curiam).1 allocation scheme which courts have often
The Complaint specifically alleges that condemned in the past as a per se violation of the
1 Under the ancillary restraints doctrine, an Sherman Act.’’ Id. at 1373.
in an internal email to his colleagues, a agreement ordinarily condemned as per se unlawful 3 The complaint is available at https://
Wabtec Passenger Transit executive is ‘‘exempt from the per se rule’’ if it is ancillary www.justice.gov/atr/case/us-v-adobe-systems-inc-
explained that a candidate ‘‘is a good to a separate, legitimate procompetitive venture et-al.
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![Federal Register / Vol. 83, No. 73 / Monday, April 16, 2018 / Notices 16395
(D.D.C. 2007) (assessing public interest Bechtel, 648 F.2d at 666 (emphasis remedy in relationship to the violations
standard under the Tunney Act); United added) (citations omitted).12 In that the United States has alleged in its
States v. US Airways Group, Inc., 38 F. determining whether a proposed Complaint, and does not authorize the
Supp. 3d 69, 75 (D.D.C. 2014) settlement is in the public interest, a Court to ‘‘construct [its] own
(explaining that the ‘‘court’s inquiry is district court ‘‘must accord deference to hypothetical case and then evaluate the
limited’’ in Tunney Act settlements); the government’s predictions about the decree against that case.’’ Microsoft, 56
United States v. InBev N.V./S.A., No. efficacy of its remedies, and may not F.3d at 1459; see also US Airways, 38
08–1965 (JR), 2009–2 Trade Cas. (CCH) require that the remedies perfectly F. Supp. 3d at 75 (noting that the court
¶ 76,736, 2009 U.S. Dist. LEXIS 84787, match the alleged violations.’’ SBC must simply determine whether there is
at *3, (D.D.C. Aug. 11, 2009) (noting that Commc’ns, 489 F. Supp. 2d at 17; see a factual foundation for the
the court’s review of a consent judgment also US Airways, 38 F. Supp. 3d at 75 government’s decisions such that its
is limited and only inquires ‘‘into (noting that a court should not reject the conclusions regarding the proposed
whether the government’s proposed remedies because it believes settlements are reasonable); InBev, 2009
determination that the proposed others are preferable); Microsoft, 56 F.3d U.S. Dist. LEXIS 84787, at *20 (‘‘the
remedies will cure the antitrust at 1461 (noting the need for courts to be ‘public interest’ is not to be measured by
violations alleged in the complaint was ‘‘deferential to the government’s comparing the violations alleged in the
reasonable, and whether the mechanism predictions as to the effect of the complaint against those the court
to enforce the final judgment are clear proposed remedies’’); United States v. believes could have, or even should
and manageable’’).11 Archer-Daniels-Midland Co., 272 F. have, been alleged’’). Because the
As the United States Court of Appeals Supp. 2d 1, 6 (D.D.C. 2003) (noting that ‘‘court’s authority to review the decree
for the District of Columbia Circuit has the court should grant due respect to the depends entirely on the government’s
held, under the APPA a court considers, United States’ prediction as to the effect exercising its prosecutorial discretion by
among other things, the relationship of proposed remedies, its perception of bringing a case in the first place,’’ it
between the remedy secured and the the market structure, and its views of follows that ‘‘the court is only
specific allegations set forth in the the nature of the case). authorized to review the decree itself,’’
government’s complaint, whether the Courts have greater flexibility in and not to ‘‘effectively redraft the
decree is sufficiently clear, whether approving proposed consent decrees complaint’’ to inquire into other matters
enforcement mechanisms are sufficient, than in crafting their own decrees that the United States did not pursue.
and whether the decree may positively following a finding of liability in a Microsoft, 56 F.3d at 1459–60. As this
harm third parties. See Microsoft, 56 litigated matter. ‘‘[A] proposed decree Court confirmed in SBC
F.3d at 1458–62. With respect to the must be approved even if it falls short Communications, courts ‘‘cannot look
adequacy of the relief secured by the of the remedy the court would impose beyond the complaint in making the
decree, a court may not ‘‘engage in an on its own, as long as it falls within the public interest determination unless the
unrestricted evaluation of what relief range of acceptability or is ‘within the complaint is drafted so narrowly as to
would best serve the public.’’ United reaches of public interest.’’’ United make a mockery of judicial power.’’ SBC
States v. BNS, Inc., 858 F.2d 456, 462 States v. Am. Tel. & Tel. Co., 552 F. Commc’ns, 489 F. Supp. 2d at 15.
(9th Cir. 1988) (quoting United States v. Supp. 131, 151 (D.D.C. 1982) (citations
omitted) (quoting United States v. In its 2004 amendments, Congress
Bechtel Corp., 648 F.2d 660, 666 (9th
Gillette Co., 406 F. Supp. 713, 716 (D. made clear its intent to preserve the
Cir. 1981)); see also Microsoft, 56 F.3d
Mass. 1975)), aff’d sub nom. Maryland practical benefits of utilizing consent
at 1460–62; United States v. Alcoa, Inc.,
v. United States, 460 U.S. 1001 (1983); decrees in antitrust enforcement, adding
152 F. Supp. 2d 37, 40 (D.D.C. 2001);
see also US Airways, 38 F. Supp. 3d at the unambiguous instruction that
InBev, 2009 U.S. Dist. LEXIS 84787, at
76 (noting that room must be made for ‘‘[n]othing in this section shall be
*3. Courts have held that:
the government to grant concessions in construed to require the court to
[t]he balancing of competing social and conduct an evidentiary hearing or to
political interests affected by a proposed the negotiation process for settlements)
(citing Microsoft, 56 F.3d at 1461); require the court to permit anyone to
antitrust consent decree must be left, in intervene.’’ 15 U.S.C. 16(e)(2); see also
the first instance, to the discretion of the United States v. Alcan Aluminum Ltd.,
605 F. Supp. 619, 622 (W.D. Ky. 1985) US Airways, 38 F. Supp. 3d at 76
Attorney General. The court’s role in (indicating that a court is not required
protecting the public interest is one of (approving the consent decree even
though the court would have imposed a to hold an evidentiary hearing or to
insuring that the government has not permit intervenors as part of its review
breached its duty to the public in greater remedy). To meet this standard,
the United States ‘‘need only provide a under the Tunney Act). The language
consenting to the decree. The court is wrote into the statute what Congress
required to determine not whether a factual basis for concluding that the
settlements are reasonably adequate intended when it enacted the Tunney
particular decree is the one that will Act in 1974, as Senator Tunney
best serve society, but whether the remedies for the alleged harms.’’ SBC
Commc’ns, 489 F. Supp. 2d at 17. explained: ‘‘[t]he court is nowhere
settlement is ‘‘within the reaches of the compelled to go to trial or to engage in
public interest.’’ More elaborate Moreover, the Court’s role under the
APPA is limited to reviewing the extended proceedings which might have
requirements might undermine the the effect of vitiating the benefits of
effectiveness of antitrust enforcement by 12 Cf. BNS, 858 F.2d at 464 (holding that the prompt and less costly settlement
consent decree. court’s ‘‘ultimate authority under the [APPA] is through the consent decree process.’’
limited to approving or disapproving the consent 119 Cong. Rec. 24,598 (1973) (statement
srobinson on DSK3G9T082PROD with NOTICES
11 The 2004 amendments substituted ‘‘shall’’ for decree’’); United States v. Gillette Co., 406 F. Supp.
‘‘may’’ in directing relevant factors for court to 713, 716 (D. Mass. 1975) (noting that, in this way,
of Sen. Tunney). Rather, the procedure
consider and amended the list of factors to focus on the court is constrained to ‘‘look at the overall for the public interest determination is
competitive considerations and to address picture not hypercritically, nor with a microscope, left to the discretion of the Court, with
potentially ambiguous judgment terms. Compare 15 but with an artist’s reducing glass’’). See generally the recognition that the Court’s ‘‘scope
U.S.C. 16(e) (2004) with 15 U.S.C. 16(e)(1) (2006); Microsoft, 56 F.3d at 1461 (discussing whether ‘‘the
see also SBC Commc’ns, 489 F. Supp. 2d at 11 remedies [obtained in the decree are] so
of review remains sharply proscribed by
(concluding that the 2004 amendments ‘‘effected inconsonant with the allegations charged as to fall precedent and the nature of Tunney Act
minimal changes’’ to Tunney Act review). outside of the ‘reaches of the public interest’’’). proceedings.’’ SBC Commc’ns, 489 F.
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![16396 Federal Register / Vol. 83, No. 73 / Monday, April 16, 2018 / Notices
Supp. 2d at 11.13 A court can make its and website content testing. Civil will for the proper performance of the
public interest determination based on submit request for review and approval functions of the Civil Division,
the competitive impact statement and to the Office of Management and Budget including whether the information
response to public comments alone. US (OMB), in accordance with the will have practical utility;
Airways, 38 F. Supp. 3d at 76. Paperwork Reduction Act of 1995. —Evaluate the accuracy of the agency’s
Over the next three (3) years, Civil estimate of the burden of the
VIII. DETERMINATIVE DOCUMENTS anticipates undertaking a variety of new proposed collection of information,
There are no determinative materials surveys and data collections as well as including the validity of the
or documents within the meaning of the reassessing ongoing elder justice methodology and assumptions used;
APPA that were considered by the website projects that address elder
United States in formulating the abuse and elder justice issues. This —Evaluate whether and if so how the
proposed Final Judgment. work will entail development of new quality, utility, and clarity of the
survey instruments, redesigning and/or information to be collected can be
Dated: April 3, 2018 enhanced; and
modifying existing surveys and creating
Respectfully submitted, —Minimize the burden of the collection
or modifying established surveys. In
DOHA MEKKI order to inform Civil data collection of information on those who are to
United States Department of Justice protocols, to develop accurate estimates respond, including through the use of
Antitrust Division of respondent burden and to minimize appropriate automated, electronic,
Defense, Industrials, and Aerospace respondent burden associated with each mechanical, or other technological
Section new or modified data collection, Civil collection techniques or other forms
450 Fifth Street NW, Suite 8700 will engage in pilot and field test of information technology, e.g.,
Washington, DC 20530 activities to refine instrumentation and permitting electronic submission of
Telephone: (202) 598–8023 data collection methodologies. Civil responses.
Facsimile: (202) 514–9033 envisions using a variety of techniques,
Overview of This Information
Email: doha.mekki@usdoj.gov including, but not limited to, tests of
Collection
[FR Doc. 2018–07840 Filed 4–13–18; 8:45 am] different types of survey and data
BILLING CODE 4410–11–P collection operations, focus groups, 1. Type of Information Collection:
pilot testing, exploratory interviews, New Generic.
questionnaires, usability testing and 2. The Title of the Form/Collection:
DEPARTMENT OF JUSTICE electronic data collection instruments. Data Collection Survey to gain a better
Following standard Office of understanding of the prevalence and
[OMB Number 1105–NEW] Management and Budget (OMB)
impact of elder abuse and elder abuse
Requirements, Civil will submit a
Civil Division; Agency Information prevention methods and tools.
change request to OMB individually for
Collection Activities; Proposed 3. The agency form number, if any,
every group of data collection activities
eCollection eComments Requested; and the applicable component of the
undertaken under this generic
New Department sponsoring the collection:
clearance. Civil will provide OMB with
AGENCY: Civil Division, Department of a copy of the individual instruments or Civil Division, United States
Justice. questionnaires (if one is used), as well Department of Justice
ACTION: 60 Day notice.
as other materials describing the project. 4. Affected public who will be asked
DATES: The Department of Justice or required to respond, as well as a brief
SUMMARY: The Department of Justice, encourages public comment and will abstract: Professionals working on elder
Civil Division, intends to request accept input until June 15, 2018. abuse and elder justice issues.
approval from the Office of Management FOR FURTHER INFORMATION CONTACT: If Abstract: The US Department of
and Budget (OMB) for a generic you have additional comments Justice, Elder Justice Initiative will
information collection clearance that especially on the estimated public conduct surveys to gain a better
will allow Civil to conduct a variety of burden or associated response time, understanding of the needs of older
surveys, focus groups, listening sessions suggestions, or need a copy of the Americans who may be at risk of, or the
proposed information collection victims of, elder abuse and the needs of
13 See United States v. Enova Corp., 107 F. Supp.
instrument with instructions or elder justice professionals to build their
2d 10, 17 (D.D.C. 2000) (noting that the ‘‘Tunney additional information, please contact capacity to better serve and protect
Act expressly allows the court to make its public
interest determination on the basis of the Julie Childs, 950 Pennsylvania Ave. older adults from elder abuse.
competitive impact statement and response to NW, Washington, DC 20005, Attn: Civil 5. An estimate of the total number of
comments alone’’); United States v. Mid-Am. Communications Office (Attn: Elder respondents and the amount of time
Dairymen, Inc., No. 73–CV–681–W–1, 1977–1 Trade Justice Initiative) (Phone: 202–307–
Cas. (CCH) ¶ 61,508, at 71,980, *22 (W.D.Mo. 1977)
estimated for an average respondent to
0240). respond: It is estimated that no more
(‘‘Absent a showing of corrupt failure of the
government to discharge its duty, the Court, in SUPPLEMENTARY INFORMATION: Written than 5000 respondents will apply. Each
making its public interest finding, should . . . comments and suggestions from the application takes approximately less
carefully consider the explanations of the than 30 minutes to complete and is
government in the competitive impact statement
public and affected agencies concerning
the proposed collection of information submitted once per year (annually).
srobinson on DSK3G9T082PROD with NOTICES
and its responses to comments in order to
determine whether those explanations are are encouraged. Your comments should 6. An estimate of the total public
reasonable under the circumstances.’’); S. Rep. No. address one or more of the following burden (in hours) associated with the
93–298, at 6 (1973) (‘‘Where the public interest can four points:
be meaningfully evaluated simply on the basis of
collection: The total hour burden to
briefs and oral arguments, that is the approach that —Evaluate whether the proposed complete the applications is 6,000
should be utilized.’’). collection of information is necessary hours.
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Document Created: 2018-04-14 02:19:34
Document Modified: 2018-04-14 02:19:34
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