[Federal Register: February 12, 2003 (Volume 68, Number 29)]
[Notices]
[Page 7132-7147]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12fe03-58]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Village Voice Media, LLC, & NT Media, LLC;
Proposed Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. section 16(b) through (h), that a proposed
final judgment, Hold Separate Stipulation and Order, and Competitive
Impact Statement have been filed with the United States District court
for the Northern District of Ohio in United States of America v.
Village Voice Media, LLC, and NT Media, LLC, Civil Action No.
1:03CV0164. On January 27, 2003, the United States filed a Complaint
alleging that the market allocation agreement between New Times and
Village Voice Media was per se illegal under section 1 of the Sherman
Act, 15 U.S.C. 1. The proposed final judgment, filed the same time as
the complaint, (i) enjoins Village Voice Media and New Times from
taking any actions in furtherance of, or required under, their per se
illegal market allocation agreement; (ii) requires defendants to divest
all the assets used in connection with the publication of the New Times
LA, New Times's alternative newsweekly in Los Angeles, and the
Cleveland Free Times, Village Voice Media's alternative newsweekly in
Cleveland, for the purpose of establishing a viable competitive
alternative newsweekly in both geographic markets; (iii) permits any
advertiser that entered into an advertising or promotion contract after
October 1, 2002, with Village Voice Media's LA Weekly, or New Times's
Cleveland Scene, for a specified time and solely at the advertiser's
option, to terminate such contract without penalty or threat of
retaliatory action; (iv) requires Village Voice Media and New Times to
notify the United States for the next five years of any future
acquisitions, or sales of, alternative newsweeklies; (v) prevents both
defendants from enforcing any non-compete contractual provisions
against any current or former employees involved in their Cleveland or
Los Angeles alternative newsweeklies; and (vi) prevents each defendant
and its officers, directors, agents, and employees, from entering into,
continuing, maintaining, or renewing any market or customer allocation
agreement. Copies of the complaint, proposed final judgment, and
competitive impact statement are available for inspection at the
Department of Justice in Washington, DC, in Room 200, 325 Seventh
Street, NW., on the Department of Justice's web site at http://www.usdoj.gov/atr/
, and at the Office of the Clerk of the United States
District Court for the Northern District of Ohio, Eastern Division, in
Cleveland, Ohio.
Public comment is invited within 60 days of the date of this
notice. Such comments, and responses thereto, will be published in the
Federal Register and filed with the Court. Comments should be directed
to James R. Wade, Chief, Litigation III Section, Antitrust Division,
Department of Justice, 325 7th Street, NW., Suite 300, Washington, DC
20530 (telephone: (202) 616-5935).
Constance K. Robinson,
Director of Operations.
Hold Separate Stipulation and Order
It is hereby stipulated and Agreed by and between the undersigned
parties, subject to approval and entry by this court, that:
I. Definitions
As used in this Hold Separate Stipulation and Order:
(A) ``Acquirer'' or ``acquirers'' means the entity or entities to
which defendants divest the Divestiture assets.
(B) ``Alternative newsweekly'' means a publication (such as the
Cleveland Scene or LA Weekly) that posses more than one of the
following attributes: (i) It is published in a geographic area served
by one or more daily newspaper to which residents turn as their primary
source or sources of printed news; (ii) it is published weekly (or less
frequently), and at least 24 times annually; (iii) it is distributed
free of charge; (iv) it is not owned by a daily newspaper publishing
company; and (v) it is a general interest publication that does not
focus exclusively on one specific topic, such as music, entertainment,
religion, the environment, or a political party or organization.
(C) ``Cleveland Free Times assets'' means all assets within the
possession, custody or control of Village Voice Media and New Times
that were formerly employed in the publication of the Cleveland Free
Times alternative newsweekly in the Greater Cleveland area by Village
Voice Media before October 1, 2002, including, but not limited to:
(1) All rights to the Cleveland Free Times name (and any
derivations thereof), logo, layout and design, including all legal
rights, including intellectual property rights associated with the
Cleveland Free Times, including trademarks, trade names, service names,
service marks, designs, trade dress, patents, copyrights and all
licenses and sublicenses to such intellectual property to the fullest
extent sublicensable (provided that, with respect to any rights not
legally transferable, Village Voice Media shall assist, and neither
impede nor hinder, the Acquirer in negotiating with, and obtaining all
necessary legal right from, the third party controls such rights);
(2) Except for the payroll systems located in New York, New York,
all computer hardware, software and licensing agreements connected with
that software to the fullest extent sublicensable (provided that, with
respect to any rights not legally transferable, Village Voice Media
shall assist, and neither impede nor hinder, the acquirer in
negotiating with, and obtaining all necessary legal rights from, the
third party who controls such rights); and all information relating to
the Cleveland Free Times stored on the computer hardware, including all
design templates and databates;
(3) All office furniture, telephone systems, T-1 lines, fax
machines, copy machines, stationery, business cards, rate kits, and all
other supplies and equipment used by the Cleveland Free Times;
[[Page 7133]]
(4) All rights to the Cleveland Free Times website and URL
(www.freetimes.com);
(5) All rights to the print and electronic archives of the
Cleveland Free Times publications and articles on a non-exclusive
basis;
(6) All assets used in the publication of the Cleveland Free Times,
including all distribution racks, street distribution boxes, permits
and licenses for individual distribution racks and boxes, route sheets,
and leases or other rights to real property from which Village Voice
Media published the Cleveland Free Times; and
(7) All other tangible and intangible assets used in the
publication of the Cleveland Free Times, including, but not limited to:
All other leases; all licenses, permits and authorizations issued by
any governmental organization; all contracts, terming arrangements,
agreements, commitments, certifications, and understanding, including
supply agreements, all customer lists, contracts, accounts, and credit
records; all agreements with retailers, wholesalers, or any other
person regarding the sale, promotion, marketing, advertising or
placement of such products; all graphics and artwork relating to the
Cleveland Free Times; all other records stored in the office of, or
generated by or fore, the Cleveland Free Times; all technical
information, computer software and related documentation, and know-how,
and information relating to plans for, or improvements to, the
Cleveland Free Times; all research, packaging, sales, marketing,
advertising and distribution know-how, information, data, and
documentation, including marketing and sales data, and layout designs,
and manuals and technical information Village Voice Media provided to
any of its Cleveland Free Times employees, customers, suppliers, agents
or licensees; and all specifications for materials.
(D) ``Divestiture assets'' means the Cleveland Free Times Assets
and the New Times LA Assets.
(E) ``Greater Cleveland area'' means the counties of Cuyahoga,
Lake, Geauga, Portage, Summit, Medina and Lorain in the state of Ohio.
(F) ``Greater Loss Angeles area'' means the counties of Los
Angeles, Orange, San Bernardino, Riverside and Ventura in the state of
California.
(G) ``New Times'' means defendant NT Media, LLC, a limited
liability company organized and existing under the laws of the State of
Delaware with its headquarters in Phoenix, Arizona, its successor and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, including without limitation Cleveland
Scene, LLC, and New Times Los Angeles, LP, and their directors,
officers, managers, agents, and employees.
(H) ``New Times LA Assets'' means all assets within the possession,
custody or control of New Times and Village Voice Media that were
formerly employed in the publication of the New Times LA alternative
newsweekly in the Greater Los Angeles area by New Times before October
1, 2002, including, but not limited to:
(1) Subject to the provisions of section V(K) of the proposed final
judgment, all rights to the New Tiems LA, LA Reader and LA View names
(including any derivations thereof), logos, layout and design,
including all legal rights, including intellectual property rights
associated with the New Times LA, LA Reader and LA View, including
trademarks, trade names, service names, service marks, designs, trade
dress, patents, copyrights and all licenses and sublicenses to such
intellectual property to the fullest extent sublicensable (provided
that, with respect to any rights not legally transferable, New Times
shall assist, and neither impede nor hinder, the Acquirer in
negotiating with, and obtaining all necessary legal rights from, the
third party who controls such rights);
(2) All computer hardware, software, and licensing agreements
connected with that software to the fullest extent sublicensable, which
are associated primarily with the publication of the New Times LA,
including all rights to the New Times LA website and URL
(www.newtimesla.com); all information relating to the New Times LA
stored on the computer hardware, including all design templates and
databases; New Times shall provide in the original format to the
Acquirer (if such format is not readable or usable by commercially
available software, then New Times shall provide such data in such
format the Acquirer may reasonably specify) all other information
relating to the publication of New Times LA stored on New Times's
computer hardware (provided that, with respect to any rights not
legally transferable, New Times shall assist, and neither impede nor
hinder, the acquirer in negotiating with, and obtaining all necessary
legal rights from, the third party who controls such rights);
(3) All office furniture, telephone systems, T-1 lines, fax
machines, copy machines, stationery, business cards, rate kits, and all
other supplies and equipment used by the New Times LA;
(4) All rights to the print and electronic archives of New Times LA
publications and articles on a non-exclusive basis;
(5) All graphics and artworks used in the publication of the New
Times LA and New Times's other alternative newsweeklies as of October
1, 2002, on a non-exclusive basis;
(6) All assets used in the publication of the New Times LA,
including all distribution racks, street distribution boxes, permits
and licenses for individual distribution racks and boxes, route sheets,
and leases or other rights to real property from which New Times
published the New Times LA; and
(7) All other tangible and intangible assets used in the
publication of the New Times LA; including, but not limited to: all
other leases; all licenses, permits and authorizations issued by any
governmental organization; all contracts, teaming arrangements,
agreements, commitments, certifications, and understandings, including
supply agreements; all customer lists, contracts, accounts, and credit
records; all agreements with retailers, wholesalers, or any other
person regarding the sale, promotion, marketing, advertising or
placement of such products; all graphics and artwork relating
exclusively to the New Times LA; all other records stored in the
offices of, or generated by or for, the New Times LA; all technical
information, computer software and related documentation, and know-how,
and information relating to plans for, or improvements to, the New
Times LA; all research, packaging, sales, marketing, advertising, and
distribution know-how, information, data and documentation, including
marketing and sales data, and layout designs used exclusively in, or
which relate exclusively to, the publication of the New Times LA (and
copies of such know-how, information, data and documentation which
relates to the publication of the New Times LA); all manuals and
technical information New Times provided to any of its New Times LA
employees, customers, suppliers, agents or licensees; and all
specifications for materials.
(I) ``Publication'' means all activities associated with the
business of offering an alternative newsweekly to the public as a
commercial endeavor, including, but not limited to, editing, writing,
printing, circulating, operating, marketing, and distributing such
alternative newsweeklies, and selling advertisements and promotions
therein.
(J) ``State Attorneys General'' means the Office of the Attorney
General of the State of Ohio and the Office of the
[[Page 7134]]
Attorney General of the State of California, who may share information
and consult with the Office of the Los Angeles County District Attorney
on any matters arising under this hold separate stipulation and order.
(K) ``Village Voice Media'' means defendant Village Voice Media,
LLC, a limited liability company organized and existing under the laws
of the State of Delaware with its headquarters in New York, New York,
its successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, including without
limitation LA Weekly Media, Inc. and Cleveland Free Times Media, Inc.,
and their directors, officers, managers, agents, and employees.
(L) The terms ``and'' and ``or'' have both conjunctive and
disjunctive meanings.
II. Objectives
The final judgment filed in this civil action is meant to ensure
prompt divestitures for the purpose of establishing viable competitors
in the alternative newsweekly industry in order to remedy the effects
that the United States alleges have resulted, and would otherwise
continue to result, from the defendants' agreement that the United
States alleges to have violated section one of the Sherman Act. The
hold separate stipulation and order ensure, prior to such divestitures,
that the Cleveland Free Times Assets and New Times LA Assets remain
economically viable, and that the divestiture assets be maintained and
not be diminished during the pendency of the ordered divestitures.
III. Jurisdiction and Venue
This court has jurisdiction over the subject matter of this action
and over each of the parties hereto, and venue of this action is proper
in the United States District Court for the Northern District of Ohio.
IV. Compliance With and Entry of Final Judgment
(A) The parties stipulate that a final judgment in the form
attached hereto as Exhibit A may be filed with and entered by this
court, upon the motion of any party or upon this court's own motion, at
any time after compliance with the requirements of the Antitrust
Procedures and Penalties Act (15 U.S.C. 16), and without further notice
to any part or other proceedings, provided that the United States has
not withdrawn its consent, which it may do at any time before the entry
of the proposed final judgment by serving notice thereof on defendants
and by filing that notice with this Court.
(B) Defendants shall abide by and comply with the provisions of the
proposed final judgment, pending the judgment's entry by this court, or
until expiration of time for all appeals of any court ruling declining
entry of the proposed final judgment. Defendants, from the date of the
signing of this hold separate stipulation and order by the parties,
shall comply with all the terms and provisions of the proposed final
judgment as though the same were in full force and effect as an order
of this court.
(C) This hold separate stipulation and order shall apply with equal
force and effect to any amended proposed final judgment agreed upon in
writing by the parties and submitted to this Court.
(D) In the event that (1) the proposed final judgment is not
entered pursuant to this hold separate stipulation and order, the time
has expired for all appeals of any court ruling declining entry of the
proposed final judgment, and this court has not otherwise ordered
continued compliance with the terms and provisions of the proposed
final judgment, or (2) the United States has withdrawn its consent, as
provided in section IV(A) above, then the parties are released from all
further obligations under this hold separate stipulation and order, and
the making of this hold separate stipulation and order shall be without
evidentiary prejudice to any party in this or any other proceeding.
(E) Defendants represent that the divestitures ordered in the
proposed final judgment can and will be made, and that defendants will
later raise no claim of mistake, hardship or difficulty of compliance
as grounds for asking this court to modify any of the provisions
contained therein.
V. Hold Separate Provisions
Until the divestitures required by the final judgment have been
accomplished:
(A) Defendants shall preserve and maintain the value and goodwill
of the divestiture assets. Defendants shall not, except as part of a
divestiture approved by the United States, after consultation with the
State Attorneys General, in accordance with the terms of the proposed
final judgment, remove, sell, lease or sublease, assign, transfer,
pledge or otherwise dispose of any of the divestiture assets.
(B) Defendants shall maintain, in accordance with sound accounting
principles, separate, accurate and complete financial ledgers, books
and records that report on a periodic basis, such as the last business
day of every month, consistent with past practices, the assets,
liabilities, expenses, revenues and income, if any, of the Divestiture
Assets.
Cleveland Free Times Assets
(C) With respect to the books, records, sales, marketing,
promotions, customer and pricing information as part of the Cleveland
Free Times Assets in its possession, custody or control, New Times
shall hold them entirely separate, distinct and apart from those of New
Times's other operations. Until such time that the Cleveland Free Times
Assets are divested, the Cleveland Free Times Assets in New Time's
possession, custody, or control shall be managed by a person, not
employed by New Time's alternative newsweekly, the Cleveland Scene (the
``New Times designated person'').
(D) The New Times Designated Person shall have complete managerial
responsibility for the Cleveland Free Times Assets in the possession,
custody, and control of New Times, subject to the provisions of this
order, and will be responsible for overseeing New Times's compliance
with this section.
(E) In the event that the New Times designated person is unable to
perform his or her duties, or is not approved by the United States,
upon consultation with the State Attorneys General, New Times shall
appoint, subject to the approval of the United States, upon
consultation with the State Attorneys General, a replacement within
five calendar days. Should defendant New Times fail to appoint a
replacement acceptable to the United States, upon consultation with the
State Attorneys General, within five calendar days, the United States
shall appoint, upon consultation with the State Attorneys General, a
replacement.
(F) Defendant New Times shall take no action that would interfere
with the ability of the New Times designated person or any later
appointed persons to oversee the Cleveland Free Times assets in New
Times's possession, custody or control. The New Times Designated person
shall not be terminated, transferred or reassigned prior to the
divestiture of such assets under the final judgment and this hold
separate stipulation and order.
(G) Within 10 calendar days after either the filing of the
complaint or the entry of the hold separate stipulation and order,
whichever is earlier, New Times shall deliver to the United States and
State Attorneys General an affidavit that describes in reasonable
detail: (i) Each Cleveland Free Times asset in its possession, custody,
or control, (ii) the identity, title, and responsibilities of the New
Times designated person, and (iii)
[[Page 7135]]
all actions New Times has taken and all steps New Times has implemented
on an ongoing basis to comply with this hold separate stipulation and
order.
New Times LA Assets
(H) With respect to the books, records, sales, marketing,
promotions, customer and pricing information as part of the New Times
LA Assets in its possession, custody or control, Village Voice Media
shall hold them entirely separate, distinct and apart from those of
Village Voice Media's other operations. Until such time that the New
Times LA assets are divested, the New Times LA assets shall be managed
by a person, not employed by Village Voice Media's Alternative
Newsweekly, the LA Weekly (the ``VVM designated person'').
(I) The VVM designated person shall have complete managerial
responsibility for the New Times LA assets in the possession, custody,
and control of Village Voice Media, subject to the provisions of this
order, and will be responsible for overseeing Village Voice Media's
compliance with this section.
(J) In the event that the VVM designated person is unable to
perform his or her duties, or is not approved by the United States,
upon consultation with the State Attorneys General, Village Voice Media
shall appoint, subject to the approval of the United States, upon
consultation with the State Attorneys General, a replacement within
five calendar days. Should Village Voice Media fail to appoint a
replacement acceptable to the United States, upon consultation with the
State Attorneys General, within five calendar days, the United States
shall appoint, upon consultation with the State Attorneys General, a
replacement.
(K) Defendant Village Voice Media shall take no action that would
interfere with the ability of the VVM designated person or any later
appointed persons to oversee the New Times LA Assets in Village Voice
Media's possession, custody or control. The VVM designated person shall
not be terminated, transferred or reassigned prior to the divestiture
of such assets under the final judgment and this hold separate
stipulation and order.
(L) Within 10 calendar days after either the filing of the
complaint or the entry of the hold separate stipulation and order,
whichever is earlier, Village Voice Media shall deliver to the United
States and State Attorneys General an affidavit that describes in
reasonable detail: (i) Each New Times LA asset in its possession,
custody, or control, (ii) the identity, title, and responsibilities of
the VVM designated person, and (iii) all actions Village Voice Media
has taken and all steps Village Voice Media has implemented on an
ongoing basis to comply with this hold separate stipulation and order.
(M) Defendants shall take all steps necessary to ensure that
preservation of the assets will be conducted by the designated persons
and not be influenced by New Times or Village Voice Media. Defendants
shall take all steps necessary to ensure that the divestiture assets
are fully maintained in operable condition, and shall maintain and
adhere to normal repair, product improvement and upgrade, and
maintenance schedules for the divestiture assets.
(N) Defendants shall use their best efforts to assist, and shall
take no action to interfere with or to impede, the trustee (if
applicable) in accomplishing the required divestiture pursuant to the
final judgment.
(O) This hold separate stipulation and order shall remain in effect
until consummation of the divestiture required by the proposed final
judgment or until further order of this court.
Dated: January 25, 2003, Washington, DC
Respectfully submitted,
For defendant Village Voice Media, LLC:
Melanie Sabo,
(Florida Bar No. 0875287), Preston Gates Ellis & Rouvelas Meeds, LLP
1735 New York Avenue, NW., Suite 500, Washington, DC 20006-5209,
(202) 628-1700 (telephone). (202) 331-1024 (facsimile).
melanies@prestongates.com.
For defendant NT Media, LLC:
Joseph Kattan, P.C.,
(DC Bar No. 33542), Gibson Dunn & Crutcher, LLP, 1050 Connecticut
Avenue, NW., Washington, DC 20036, (202) 955-8500 (telephone), (202)
530-9558 (facsimile), Jkattan@gibsondunn.com.
For plaintiff United States of America:
Maurice E. Stucke,
(New York--no bar number assigned), U.S. Department of Justice,
Antitrust Division, Litigation III Section, 325 7th Street, NW.,
Suite 300, Washington DC 20530, (202) 305-1489 (telephone), (202)
514-7308 (facsimile). Maurice.Stucke@usdoj.gov.
Order
It is so ordered by this court, this ---- day of --/--/--/--,
2003.
United States District Judge.
Final Judgment
Whereas, the United States of America filed its compliant on
January 27, 2003, alleging that defendants Village Voice Media and New
Times entered into agreements in violation of section one of the
Sherman Act, and the plaintiff and 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 without this
final judgment constituting any evidence against, or any admission by,
any party regarding any such issue of fact or law;
And whereas, Village Voice Media and New Times agree to be bound by
the provisions of this Final Judgment pending its approval by this
court;
And whereas, the essence of this Final Judgment is the prompt and
certain divestiture of certain rights or assets by Village Voice Media
and New Times to restore the loss of competition alleged in the
complaint;
And whereas, the United States requires Village Voice Media and New
Times to agree to certain procedures and prohibitions for the purpose
of restoring the loss of competition alleged in the complaint;
And whereas, the United States requires Village Voice Media and New
Times to make certain divestitures for the purpose of remedying the
loss of competition alleged in the complaint;
And whereas, Village Voice Media and New Times have represented to
the United States that the divestitures required below can and will be
made and that they will later raise no claim of hardship or difficulty
as grounds for asking the court to modify any of the divestiture
provisions contained below;
Now therefore, before any testimony is taken, without trail or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ordered, adjudged and decreed:
I. Jurisdiction
This court has jurisdiction over the subject matter of and each of
the parties to this action. The compliant states a claim upon which
relief may be granted against Village Voice Media and New Times under
section 1 of the Sherman Act, as amended (15 U.S.C. 1).
II. Definitions
As used in this final judgment:
(A) ``Acquirer'' or ``acquirers'' means the entity or entities to
which defendants divest the divestiture assets.
(B) ``Alternative newsweekly'' means a publication (such as the
Cleveland Scene or LA Weekly) that possesses more than one of the
following attributes: (i) It is published in a geographic area served
by one or more daily newspapers to which residents turn as their
primary source or sources of printed news; (ii) it is published weekly
(or less frequently), and at least 24 times annually; (iii) it is
distributed free of charge; (iv) it is not owned by a daily newspaper
publishing company; and (v) it is a general interest publication that
does not focus
[[Page 7136]]
exclusively on one specific topic, such as music, entertainment,
religion, the environment, or a political party or organization.
(C) ``California Attorney General'' means the Office of the
Attorney General of the State of California, who may share information
and consult with the Office of the Los Angeles County District Attorney
on any matters arising under this final judgment.
(D) ``Cleveland Asset Purchase Agreement'' means the Asset Purchase
Agreement by and among Cleveland Free Times Media, Inc., Cleveland
Scene, LLC, Village Voice Media, LLC, and NT Media, LLC, dated October
1, 2002, and any agreements ancillary thereto.
(E) ``Cleveland Free Times Assets'' means all assets within the
possession, custody or control of Village Voice Media and New Times
that were formerly employed in the publication of the Cleveland Free
Times alternative newsweekly in the Greater Cleveland Area by Village
Voice Media before October 1, 2002, including, but not limited to:
(1) All rights to the Cleveland Free Times name (and any
derivations thereof), logo, layout and design, including all legal
rights, including intellectual property rights associated with the
Cleveland Free Times, including trademarks, trade names, service names,
service marks, designs, trade dress, patents, copyrights and all
licenses and sublicenses to such intellectual property to the fullest
extent sublicensable (provided that, with respect to any rights not
legally transferable, Village Voice Media shall assist, and neither
impede nor hinder, the acquirer in negotiating with, and obtaining all
necessary legal rights from, the third party who controls such rights);
(2) Except for the payroll systems located in New York, New York,
all computer hardware, software and licensing agreements connected with
that software to the fullest extent sublicensable (provided that, with
respect to any rights not legally transferable, Village Voice Media
shall assist, and neither impede nor hinder, the acquirer in
negotiating with, and obtaining all necessary legal rights from, the
third party who controls such rights); and all information relating to
the Cleveland Free Times stored on the computer hardware, including all
design templates and databases;
(3) All office furniture, telephone systems, T-1 lines, fax
machines, copy machines, stationery, business cards, rate kits, and all
other supplies and equipment used by the Cleveland Free Times;
(4) All rights to the Cleveland Free Times website and URL
(www.freetimes.com);
(5) All rights to the print and electronic archives of the
Cleveland Free Times publications and articles on a non-exclusive
basis;
(6) All assets used in the publication of the Cleveland Free Times,
including all distribution racks, street distribution boxes, permits
and licenses for individual distribution racks and boxes, route sheets,
and leases or other rights to real property from which Village Voice
Media published the Cleveland Free Times; and
(7) All other tangible and intangible assets used in the
publication of the Cleveland Free Times, including, but not limited to:
All other leases; all licenses, permits and authorizations issued by
any governmental organization; all contracts, teaming arrangements,
agreements, commitments, certifications, and understandings, including
supply agreements; all customer lists, contracts, accounts, and credit
records; all agreements with retailers, wholesalers, or any other
person regarding the sale, promotion, marketing, advertising or
placement of such products; all graphics and artwork relating to the
Cleveland Free Times; all other records stored in the offices of, or
generated by or for, the Cleveland Free Times; all technical
information, computer software and related documentation, and know-how,
and information relating to plans for, or improvements to, the
Cleveland Free Times; all research, packaging, sales, marketing,
advertising and distribution know-how, information, data, and
documentation, including marketing and sales data, and layout designs;
all manuals and technical information Village Voice Media provided to
any of its Cleveland Free Times employees, customers, suppliers, agents
or licensees; and all specifications for materials.
(F) ``Cleveland Scene termination period'' means the period of time
beginning October 1, 2002, and ending 30 calendar days after
consummation of the divestiture of the Cleveland Free Times assets.
(G) ``Divestiture assets'' means the Cleveland Free Times Assets
and the New Times LA assets.
(H) ``Greater Cleveland area'' means the counties of Cuyahoga,
Lake, Geauga, Portage, Summit, Medina and Lorain in the state of Ohio.
(I) ``Greater Los Angeles area'' means the counties of Los Angeles,
Orange, San Bernardino, Riverside and Ventura in the state of
California.
(J) ``Los Angeles asset purchase agreement'' means the asset
purchase agreement among LA Weekly Media, Inc., New Times Los Angeles,
LP, Village Voice Media, LLC, and NT Media, LLC, dated October 1, 2002,
and any agreements ancillary thereto.
(K) ``LA Weekly termination period'' means the period of time
beginning October 1, 2002, and ending 30 calendar days after
consummation of the divestiture of the New Times LA assets.
(L) ``New Times'' means Defendant NT Media, LLC, a limited
liability company organized and existing under the laws of the State of
Delaware with its headquarters in Phoenix, Arizona, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, including without limitation Cleveland
Scene, LLC, and New Times Los Angeles, LP, and their directors,
officers, managers, agents, and employees.
(M) ``New Times LA Assets'' means all assets within the possession,
custody or control of New Times and Village Voice Media that were
formerly employed in the publication of the New Times LA alternative
newsweekly in the Greater Los Angeles area by New Times before October
1, 2002, including, but not limited to:
(1) Subject to the provisions of section V(K), all rights to the
New Times LA, LA Reader and LA View names (including any derivations
thereof), logos, layout and design, including all legal rights,
including intellectual property rights associated with the New Times
LA, LA Reader and LA View, including trademarks, trade names, service
names, service marks, designs, trade dress, patents, copyrights and all
licenses and sublicenses to such intellectual property to the fullest
extent sublicensable (provided that, with respect to any rights not
legally transferable, New Times shall assist, and neither impede nor
hinder, the Acquirer in negotiating with, and obtaining all necessary
legal rights from, the third party who controls such rights);
(2) All computer hardware, software, and licensing agreements
connected with that software to the fullest extent sublicensable, which
are associated primarily with the publication of the New Times LA,
including all rights to the New Times LA website and URL
(www.newtimesla.com); all information relating to the New Times LA
stored on the computer hardware, including all design templates and
databases; New Times shall provide in the original
[[Page 7137]]
format to the acquirer (if such format is not readable or usable by
commercially available software, then New Times shall provide such data
in such format the acquirer may reasonably specify) all other
information relating to the publication of New Times LA stored on New
Times's computer hardware (provided that, with respect to any rights
not legally transferable, New Times shall assist, and neither impede
nor hinder, the acquirer in negotiating with, and obtaining all
necessary legal rights from, the third party who controls such rights);
(3) All office furniture, telephone systems, T-1 lines, fax
machines, copy machines, stationery, business cards, rate kits, and all
other supplies and equipment used by the New Times LA;
(4) All rights to the print and electronic archives of New Times LA
publications and articles on a non-exclusive basis;
(5) All graphics and artworks used in the publication of the New
Times LA and New Times's other alternative newsweeklies as of October
1, 2002, on a non-exclusive basis;
(6) All assets used in the publication of the New Times LA,
including all distribution racks, street distribution boxes, permits
and licenses for individual distribution racks and boxes, route sheets,
and leases or other rights to real property from which New Times
published the New Times LA; and
(7) All other tangible and intangible assets used in the
publication of the New Times LA, including, but not limited to: All
other leases; all licenses, permits and authorizations issued by any
governmental organization; all contracts, teaming arrangements,
agreements, commitments, certifications, and understandings, including
supply agreements; all customer lists, contracts, accounts, and credit
records; all agreements with retailers, wholesalers, or any other
person regarding the sale, promotion, marketing, advertising or
placement of such products; all graphics and artwork relating
exclusively to the New Times LA; all other records stored in the
offices of, or generated by or for, the New Times LA; all technical
information, computer software and related documentation, and know-how,
and information relating to plans for, or improvements to, the New
Times LA; all research, packaging, sales, marketing, advertising, and
distribution know-how, information, data and documentation, including
marketing and sales data, and layout designs used exclusively in, or
which relate exclusively to, the publication of the New Times LA (and
copies of such know-how, information, data and documentation which
relates to the publication of the New Times LA); all manuals and
technical information New Times provided to any of its New Times LA
employees, customers, suppliers, agents or licensees; and all
specifications for materials.
(N) ``Ohio Attorney General'' means the Office of the Attorney
General of the State of Ohio.
(O) ``Publication'' means all activities associated with the
business of offering an alternative newsweekly to the public as a
commercial endeavor, including, but not limited to, editing, writing,
printing, circulating, operating, marketing, and distributing such
alternative newsweeklies, and selling advertisements and promotions
therein.
(P) ``State Attorneys General'' means the California Attorney
General and the Ohio Attorney General.
(Q) ``Village Voice Media'' means defendant Village Voice Media,
LLC, a limited liability company organized and existing under the laws
of the State of Delaware with its headquarters in New York, New York,
its successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, including without
limitation LA Weekly Media, Inc. and Cleveland Free Times Media, Inc.,
and their directors, officers, managers, agents, and employees.
(R) The terms ``and'' and ``or'' have both conjunctive and
disjunctive meanings.
III. Applicability
(A) This final judgment applies to Village Voice Media and New
Times, as defined above, and all other persons in active concert or
participation with any of them who receive actual notice of this Final
Judgment by personal service or otherwise.
(B) Defendants shall require, as a condition of the sale or other
disposition of all or substantially all of their assets or of lesser
business units that include any of the divestiture assets that the
purchaser agrees to be bound by the provisions of this final judgment,
provided, however, that Village Voice Media and New Times need not
obtain such an agreement from the acquirer(s).
IV. Prohibited and Required Conduct
(A) Village Voice Media and New Times are enjoined as of the filing
of the Complaint in this matter from taking any actions in furtherance
of, or required under, either the Cleveland asset purchase agreement or
the Los Angeles asset purchase agreement. Village Voice Media's and New
Times's obligation under this final judgment supercede their
obligations under either of these agreements, and Village Voice Media
and New Times shall not object to the performance of their obligations
under this final judgment on the grounds that those obligations would
cause them to breach either agreement.
(B) For a period of two years commencing upon the filing date of
the complaint in this matter, Village Voice Media shall permit any
advertiser that entered during the LA Weekly termination period into a
written or oral contract to advertise in, or engage in a promotion
with, the LA Weekly, solely at the advertiser's option, to terminate
such contract without penalty, retaliatory action, or threat of
retaliatory action. Village Voice Media shall provide all affected
advertisers a copy of this final judgment within 15 calendar days after
the filing of the complaint in this matter, and inform in writing all
affected advertisers within: (i) Fifteen calendar days after the filing
of the complaint in this matter; and (ii) thirty calendar days after
consummation of the divestiture of the New Times LA assets, of their
rights to terminate at their option their advertising or promotion
contracts with the LA Weekly.
(C) For a period of two years commencing upon the filing date of
the complaint in this matter, New Times shall permit any advertiser
that entered during the Cleveland Scene termination period into a
written or oral contract to advertise in, or engage in a promotion
with, the Cleveland Scene, solely at the advertiser's option, to
terminate such contract without penalty, retaliatory action, or threat
of retaliatory action. New Times shall provide all affected advertisers
a copy of this final judgment within 15 calendar days after the filing
of the complaint in this matter, and inform in writing all affected
advertisers within: (i) Fifteen calendar days after the filing of the
complaint in this matter; and (ii) 30 calendar days after consummation
of the divestiture of the Cleveland Free Times assets, of their right
to terminate at their option their advertising or promotion contracts
with the Cleveland Scene.
(D) Each defendant, its officers, directors, agents, and employees,
acting or claiming to act on its behalf, and successors and all other
persons action or claiming to act on its behalf, are enjoined and
restrained from, in any matter, directly or indirectly, entering into,
continuing, maintaining, or renewing any market or customer allocation
agreement, or from engaging in any other combination, conspiracy,
contract, agreement, understanding or concert of action having a
similar purpose or effect, and from adopting or
[[Page 7138]]
following any practice, plan, program, or device having a similar
purpose or effect.
(E) Unless such transaction is otherwise subject to the reporting
and waiting period requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''),
defendants for a period of five years commencing upon the filing of the
complaint in this matter, and without providing advance notification to
the Antitrust Division of the United States Department of Justice,
shall not directly or indirectly enter into any merger or joint venture
involving, or sale of, any of its alternative newsweeklies or national
advertising networks or acquire any assets of or any interest,
including any financial, security, loan, equity or management interest,
in any publication that possesses more than two of the five attributes
specified in the definition of ``alternative newsweekly'' in section
II(B) and this final judgment, one of which must be the attribute
specified in section II(B)(v). Such notification shall be provided to
the Antitrust Division in the same format as, and per the instructions
relating to, the notification and report form set forth in the Appendix
to part 803 of title 16 of the Code of Federal Regulations as amended,
except that the information requested in items 5 through 8 of the
instructions must be provided only about alternative newsweeklies.
Notification shall be provided at least 30 calendar days prior to
acquiring any such interest, and shall include, beyond what may be
required by the applicable instructions, the names of the principal
representatives of the parties to the agreement who negotiated the
agreement, and any management or strategic plans discussing the
proposed transaction. If within the 30-day period after notification,
representatives of the Antitrust Division make a written request for
additional information, defendants shall not consummate the proposed
transaction or agreement until 20 calendar days after submitting all
such additional information. Early termination of the waiting periods
in this paragraph may be requested and, where appropriate, granted in
the same manner as is applicable under the requirements and provisions
of the HSR Act and rules promulgated thereunder. This section shall be
broadly construed and any ambiguity or uncertainty regarding the filing
of notice under this section shall be resolved in favor of filing
notice.
(F) For any employee involved in the publication of the Cleveland
Free Times as of October 1, 2002, any non-compete provision imposed by
Village Voice Media shall be null and void. For a period from the
filing of the complaint to one year from the divestiture of the
Cleveland Free Times assets, defendants shall not enforce any other
non-compete contractual provisions against any of their former or
current employees of the Cleveland Free Times or the Cleveland Scene in
the Greater Cleveland area. Defendants shall notify in writing all
affected former and current employees that such non-compete contractual
provisions will not be enforced.
(G) For any employee involved in the publication of the New Times
LA as of October 1, 2002, any non-compete provision imposed by New
Times shall be null and void. For a period from the fling of the
complaint to one year from the divestiture of the New Times LA assets,
defendants shall not enforce any other non-compete contractual
provisions against any of their former or current employees of the New
Times LA or LA Weekly in the Greater Los Angles area. Defendants shall
notify in writing all affected former and current employees that such
non-compete contractual provisions will not be enforced.
V. Divestitures
(A) Defendants are ordered and directed, within 30 calendar days
after the filing of the complaint in this matter, to divest the
divestiture assets in a manner consistent with this final judgment to
an acquirer or acquirers acceptable to the United States in its sole
discretion, after consultation with the State Attorneys General. The
United States, in its sole discretion, after consultation with the
State Attorneys General, may agree to an extension of this time period
for any divestiture of up to 30 additional calendar days, and shall
notify this court in such circumstances.
(B) Defendants agree to use their best efforts to divest the
divestiture assets in a manner consistent with this final judgment to
an acquirer or acquirers acceptable to the United States in its sole
discretion, after consultation with the State Attorneys General, and to
effect such divestitures as expeditiously as possible.
(C) In accomplishing the divestitures ordered by this final
judgment, each defendant promptly shall make known, by usual and
customary means, the availability of the divestiture assets under it
possession, custody or control. Defendants shall inform any person
making inquiry regarding a possible purchase of the divestiture assets
that such assets are being divested pursuant to this final judgment and
provide that person with a copy of this final judgment. Defendants
shall offer to furnish to all prospective acquirers, subject to
customary confidentiality assurances, all information and documents
relating to the divestiture assets customarily provided in a due
diligence process except such information or documents subject to the
attorney-client privilege or attorney work-product doctrine. Defendants
shall make available such information to the United States and the
State Attorneys General at the same time that such information is made
available to any other person.
(D) Village Voice Media shall provide the acquirers, the United
States, and the State Attorneys General information relating to the
personnel that were involved in any way in the publication of the
Cleveland Free Times to enable the acquirer to make offers of
employment. Defendants will not interfere with any negotiations by the
acquirer(s) to employ any current or former Village Voice Media
employee that was involved in the publication of the Cleveland Free
Times.
(E) New Times shall provide the acquirers, the United States, and
the State Attorneys General information relating to the personnel that
were involved in any way in the publication of the New Times LA to
enable the acquirer to make offers of employment. Defendants will not
interfere with any negotiations by the acquirer(s) to employ any
current or former New Times employee that was involved in the
publication of the New Times LA.
(F) Defendants shall permit prospective acquirers of the
divestiture assets to have reasonable access to personnel and to make
inspections of the physical facilities of the divestiture assets. To
the extent that defendants continue to maintain any environmental,
zoning or other permits pertaining to the publication of the Cleveland
Free Times or the New Times LA, defendants shall permit prospective
acquirers access to any and all documents and information associated
with those permits. Defendants shall permit prospective acquirers of
the divestiture assets to have access to any and all financial,
operational, or other documents and information customarily provided as
part of a due diligence process.
(G) Defendants shall warrant to the acquirer(s) of the divestiture
assets that each asset will be operational on the date of sale.
(H) Defendants shall not take any action that will impede in any
way the permitting, operation, or divestiture of
[[Page 7139]]
the Cleveland Free Times assets or the New Times LA assets.
(I) To the extent that Defendants continue to maintain any
environmental, zoning or other permits pertaining to the publication of
the Cleveland Free Times or the New Times LA Defendants shall warrant
to the Acquirer(s) that there are no material defects in those permits.
Following the sale of the Cleveland Free Times and/or the New Times LA
Assets, defendants will not undertake, directly or indirectly, any
challenges to the environmental, zoning, or other permits relating to
the publication of the Cleveland Free Times and/or the New Times LA.
(J) Unless the United States, in its sole discretion, after
consultation with the State Attorneys General, otherwise consents in
writing, the divestiture pursuant to section V, or by trustee appointed
pursuant to section VI, or this final judgment, shall include the
Divestiture assets, and shall be accomplished in such a way as to
satisfy the United States, in its sole discretion, after consultation
with the State Attorneys General, that the Cleveland Free Times or the
New Times LA can and will be published by the acquirer(s) as viable,
ongoing alternative newsweeklies. Divestiture of the divestiture assets
may be made to one acquirer or to two acquirers, provided that (1) all
the Cleveland Free Times assets are sold to one acquirer, (2) all the
New Times LA assets are sold to one acquirer, and (3) in each instance
it is demonstrated to the sole satisfaction of the United States, after
consultation with the State Attorneys General, that the Cleveland Free
Times assets and the New Times LA assets will remain viable and that
the divestiture of the divestiture assets will remedy the competitive
harm alleged in the complaint. The divestitures, whether pursuant to
section V or section VI of this final judgment,
(1) Shall be made to an acquirer (or acquirers) that, in the
United States's sole judgment, after consultation with the State
Attorneys General, has the intent and capability (including the
necessary managerial, operational, technical and financial
capability) of competing effectively in the publication of
alternative newsweeklies; and
(2) Shall be accomplished so as to satisfy the United States, in
its sole discretion, after consultation with the State Attorneys
General, that none of the terms of any agreement between an acquirer
(or acquirers) and defendants give defendants the ability
unreasonably to raise the acquirer's costs, to lower the acquirer's
efficiency, or otherwise to interfere in the ability of the acquirer
to compete effectively.
(K) With respect to copyrights or trademarks associated
specifically with the New Times LA that New Times employs in the
publication of other New Times Alternative Newsweeklies, the
divestiture pursuant to section V, or by a trustee appointed pursuant
to section VI, of this Final Judgment shall be accomplished by means of
an exclusive, perpetual, royalty-free, assignable license to those
copyrights or trademarks for use by the acquirer and its successors in
connection with publishing an alternative newsweekly in the Greater Los
Angeles area. New Times is enjoined from using, or granting rights to
persons other than the acquirer or its successors to use, such
copyrights or trademarks in the publication of an alternative
newsweekly in the Greater Los Angeles area. New Times, consistent with
the purpose and intent of this final judgment, may include, as part of
the license for any valid registered trademark used specifically with
New Times's other alternative newsweeklies and New Times LA, the
requirement on the acquirer and its successors to take the minimum
reasonable measures necessary to prevent New Times from being deemed to
have abandoned such shared registered trademarks under the Lanham Act.
VI. Appointment of Trustee
(A) If defendants have not divested the Cleveland Free Times assets
within the time period specified in section V(A), they shall notify the
United States and the State Attorneys General of that fact in writing.
Upon application of the United States, the court shall appoint a
trustee selected by the United States in its sole discretion and
approved by this court to effect the divestiture of the Cleveland Free
Times assets.
(B) If defendants have not divested the New Times LA assets within
the time period specified in section V(A), they shall notify the United
States and the State Attorneys General of that fact in writing. Upon
application of the United States, the court shall appoint a trustee
selected by the United States in its sole discretion and approved by
this court to effect the divestiture of the New Times LA assets.
(C) After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the divestiture assets. The
trustee shall have the power and authority to accomplish the
divestiture to an acquirer(s) acceptable to the United States, after
consultation with the State Attorneys General, at such price and on
such terms as are then obtainable upon reasonable effort by the
trustee, subject to the provisions of sections V, VI, and VII of this
final judgment, and shall have such other powers as this court deems
appropriate. Subject to section VI(E) of this final judgment, the
trustee may hire at the cost and expense of the defendant whose
divestiture assets the trustee is to divest any investment bankers,
attorneys, or other agents, who shall be solely accountable to the
trustee, reasonably necessary in the trustee's judgment to assist in
the divestiture.
(D) Defendants shall not object to a sale by the trustee on any
ground other than the trustee's malfeasance. Any such objections by
defendants must be conveyed in writing to the United States, the State
Attorneys General and the trustee within five calendar days after the
trustee has provided the notice required under section VII of this
final judgment.
(E) The trustee shall serve at the cost and expense of the
defendant whose divestiture assets the trustee is to divest, on such
terms and conditions as the United States approves, after consultation
with the State Attorneys General, and shall account for all monies
derived from the sale of the assets sold by the trustee and all costs
and expenses so incurred. After approval by this court of the trustee's
accounting, including fees for its services and those of any
professionals and agents retained by the trustee, all remaining money
shall be paid to the defendant whose divestiture assets the trustee
divested and the trust shall then be terminated. The compensation of
the trustee and any professionals and agents retained by the trustee
shall be reasonable in light of the value of the divestiture assets and
based on a fee arrangement providing the trustee with an incentive
based on the price and terms of the divestiture and the speed with
which it is accomplished, but timeliness is paramount.
(F) Defendants shall use their best efforts to assist the trustee
in accomplishing the required divestiture. The trustee and any
consultants, accountants, attorneys, and other persons retained by the
trustee shall have full and complete access to the defendants'
personnel, books, records, and facilities, and defendants shall develop
financial and other information relevant to such businesses as the
trustee may reasonably request, subject to reasonable protection for
trade secrets or other confidential research, development, or
commercial information. Defendants shall take no action to interfere
with or to impede the trustee's accomplishment of the divestiture.
[[Page 7140]]
(G) After its appointment, the trustee shall file monthly reports
with the United States, the State Attorneys General and the court
setting forth the trustee's efforts to accomplish the divestiture
ordered under this final judgment. To the extent such reports contain
information that the trustee deems confidential, such reports shall not
be filed in the public docket of this court. Such reports shall include
the name, address, and telephone number of each person who, during the
preceding month, made an offer to acquire, expressed an interest in
acquiring, entered into negotiations to acquire, or was contacted or
made an inquiry about acquiring, any interest in the divestiture assets
the trustee is to divest, and shall describe in detail each contact
with any such person. The trustee shall maintain full records of all
efforts made to divest the divestiture assets.
(H) If the trustee has not accomplished such divestiture within
three months after its appointment, the trustee shall promptly file
with this court a report setting forth: (1) The trustee's efforts to
accomplish the required divestiture, (2) the reasons, in the trustee's
judgment, why the required divestiture has not been accomplished, and
(3) the trustee's recommendations. To the extent such reports contain
information that the trustee deems confidential, such reports shall not
be filed in the public docket of this court. The trustee shall at the
same time furnish such report to the United States and the State
Attorneys General who shall have the right to make additional
recommendations consistent with the purpose of the final judgment. The
court thereafter shall enter such orders as it shall deem appropriate
to carry out the purpose of the final judgment, which may, if
necessary, include extending the trust and the terms of the trustee's
appointment by a period request by the United States.
VII. Noticke of Proposed Divestiture
(A) Within two business days following execution of a definitive
divestiture agreement. Village Voice Media, New Times, or the trustee,
whichever effected the divestiture, shall notify the United States and
the State Attorneys General of any proposed divestiture required by
section V or VI of this final judgment. If the trustee is responsible,
it shall similarly notify the defendant whose divestiture assets the
trustee divested. The notice shall set forth the details of the
proposed divestiture and list the name, address, and telephone number
of each person not previously identified who offered or expressed an
interest in or desire to acquire any ownership interest in the
divestiture assets, together with full details of the same.
(B) Within five calendar days of receipt by the United States and
the State Attorneys General of such notice, the United States, after
consultation with the State Attorneys General, may request from
defendants, the proposed acquirer or acquirers, any other third party,
or the trustee (if applicable) additional information concerning the
proposed divestiture, the proposed acquirer or acquirers, and any other
potential acquirer. Defendants and the trustee shall furnish any
additional information requested within five calendar days of the
receipt of the request, unless the parties shall otherwise agree.
(C) Within fifteen calendar days after receipt of the notice or
within five calendar days after the United States and the State
Attorneys General have been provided the additional information
requested from defendants, the proposed acquirer or acquirers, any
third party, and the trustee (if applicable), whichever is later, the
United States, after consultation with the State Attorneys General,
shall provide written notice to the defendant whose divestiture assets
are at issue, and the trustee (if applicable), stating whether or not
it objects to the proposed divestiture. If the United States provides
written notice that it does not object, the divestiture may be
consummated, subject only to defendants' limited right to object to the
sale under section VI(D) of this final judgment. Absent written notice
that the United States does not object to the proposed acquirer or upon
objection by the United States, a divestiture proposed under section V
or section VI shall not be consummated. Upon objection by either
defendant under section VI(D), a divestiture proposed under section VI
shall not be consummated unless approved by this court.
VIII. Financing
Defendants shall not finance all or any part of any purchase made
pursuant to section V or VI of this final judgment.
IX. Affidavits
(A) Within fifteen calendar days of the filing of the complaint in
this matter, and every thirty calendar days thereafter until the
divestiture(s) has been completed under section V or VI, defendants
each shall deliver to the United States and the State Attorneys General
an affidavit as to the fact and manner of its compliance with section V
or VI of this final judgment. Each such affidavit shall include the
name, address, and telephone number of each person who, during the
preceding thirty days, made an offer to acquire, expressed an interest
in acquiring, entered into negotiations to acquire, or was contacted or
made an inquiry about acquiring, any interest in the divestiture
assets, and shall describe in detail each contact with any such person
during that period. Each such affidavit shall also include a
description of the efforts defendants have taken to solicit buyers for
the divestiture assets, and to provide required information to
prospective purchasers, including the limitations, if any, on such
information. Assuming the information set forth in the affidavit is
true and complete, any objective by the United States, after
consultation with the State Attorneys General, to information provided
by defendants, including limitation on information, shall be made
within five calendar days of receipt of such affidavit.
(B) Defendants shall keep all records of all efforts made to
preserve and divest the divestiture assets until one year after such
divestiture has been completed.
X. Compliance Inspection
(A) For the purposes of determining or securing compliance with
this final judgment, or of determining whether the final judgment
should be modified or vacated, and subject to any legally recognized
privilege, from time to time duly authorized representatives of the
United States Department of Justice or the State Attorneys General,
including consultants and other persons retained or designated thereby,
shall, upon written request of a duly authorized representative of the
Assistant Attorney General in charge of the Antitrust Division, or duly
authorized representatives of the State Attorneys General, and on
reasonable notice to defendants, be permitted:
(1) Access during defendants' office hours to inspect and copy, or
at the United States' or State Attorneys General's option, to require
defendants to provide copies of, all books, ledgers, accounts, records
and documents in their possession, custody, or control relating to any
matters contained in this final judgment; and
(2) To interview, either informally or on the record, defendants'
officers, employees, or agents, who may have their individual counsel
present, regarding such matters. The interviews shall be subject to the
reasonable convenience of the interviewee and without restraint or
interference by defendants.
(B) Upon the written request of a duly authorized representative of
the Assistant Attorney General in charge of
[[Page 7141]]
the Antitrust Division, or upon written request of duly authorized
representatives of the State Attorneys General, defendants shall submit
written reports, under oath if requested, relating to any of the
matters contained in this final judgment as may be requested.
(C) No information or documents obtained by the means provided in
this section shall be divulged by plaintiffs to any person other than
an authorized representative of the executive branch of the United
States, or of the State Attorneys General, except in the course of
legal proceedings to which the United States or State Attorneys General
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 defendants furnish information or documents to
the United States, they represent and identify in writing the material
in any such information or documents to which a claim of protection may
be asserted under Rule 26(c)(7) of the Federal Rules of Civil
Procedure, and mark each pertinent page fo such material, ``Subject to
claim of protection under Rule 26(c)(7) of the Federal Rules of Civil
Procedure,'' then the United States shall give defendants ten calendar
days notice prior to divulging such material in any legal proceeding
(other than a grand jury proceeding).
XI. No Reacquisition
Defendants may not reacquire any part of the divestiture assets
during the term of this final judgment.
XII. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this final
judgment to apply to this court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this final judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
XIII. Expiration of Final Judgment
Unless this court grants an extension, this final judgment shall
expire ten years from the date of its entry.
XIV. Notice
For purposes of this final judgment, any notice or other
communication shall be given to the persons at the addresses set forth
below (or such other addresses as the United States or State Attorneys
General may specify in writing to New Times or Village Voice Media):
For the United States: James R. Wade, Chief, Litigation III
Section, U.S. Department of Justice, Antitrust Division, 325 Seventh
Street, NW., Suite 300, Washington, DC 20530.
For the Ohio Attorney General: Alan C. Witten, Antitrust Section,
Ohio Attorney General's Office, 140 East Town Street, 12th Floor,
Columbus, Ohio 43215.
For the California Attorney General: Winston H. Chen, Deputy
Attorney General, Office of the California Attorney General, 300 South
Spring Street, Los Angeles, California 90013.
XV. Public Interest Determination
Entry of this final judgment is in the public interest.
Dated:-----------------------------------------------------------------
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. 16.
United States District Judge.
Competitive Impact Statement
The United States, pursuant to section 2(b) of the Antitrust
Procedures and Penalties Act (``APPA''), 15 U.S.C. 16(b), files this
competitive impact statement relating to the proposed final judgment
submitted for entry in this civil antitrust proceeding.
On January 27, 2003, the United States filed a civil antitrust
complaint pursuant to section 4 of the Sherman Act, as amended, 15
U.S.C. 4, against defendants Village Voice Media, LLC, (``Village Voice
Media'') and NT Media, LLC, (``New Times''), the nation's two largest
chains of alternative newsweeklies. The compliant alleges that
defendants entered into and engaged in a combination and conspiracy to
suppress and eliminate advertising and editorial competition by
allocating the markets for advertising in, and readers of, alternative
newsweeklies in Cleveland, Ohio and Los Angeles, California.
Defendants' market allocation agreement, as the complaint further
alleges, is an unreasonable restraint of interstate trade that is per
se illegal under section 1 of the Sherman Act, 15 U.S.C. 1.
The compliant seeks an order to terminate defendants' illegal
agreement, to enjoin future conduct in furtherance of any such
agreement, and to obtain such other equitable relief necessary to
restore competition for the benefit of advertisers and readers in
Cleveland and Los Angeles.
The United States filed simultaneously with the complaint a
proposed final judgment and a hold separate stipulation and order,
which constitute the parties' settlement.
This proposed final judgment, as explained more fully below, (i)
enjoins Village Voice Media and New Times from taking any actions in
furtherance of, or required under, their per se illegal market
allocation agreement; (ii) requires defendants to divest all the assets
used in connection with the publication of the New Times Los Angeles
(``New Times LA''), New Times's alternative newsweekly in Los Angeles,
and the Cleveland Free Times, Village Voice Media's alternative
newsweekly in Cleveland, for the purpose of establishing a viable
competitive alternative newsweekly in both geographic markets; (iii)
permits any advertiser that entered into an advertising or promotion
contract after October 1, 2002, with Village Voice Media's alternative
newsweekly, the LA Weekly, or New Time's alternative newsweekly, the
Cleveland Scene, for a specified time and solely at the advertiser's
option, to terminate such contract without penalty or threat of
retaliatory action; (iv) requires Village Voice Media and New Times to
notify the United States for the next five years of any future
acquisitions or sales of alternative newsweeklies; (v) prevents both
defendants from enforcing any non-compete contractual provisions
against any current or former employees involved in their Cleveland or
Los Angeles alternative newsweeklies; and (vi) prevents each defendant
and its officers, directors, agents, and employees, from entering into,
continuing, maintaining, or renewing any market or customer allocation
agreement.
The hold separate stipulation and order, which were filed with this
Court on January 27, 2003, and the proposed final judgment require New
Times and Village Voice Media to maintain and preserve the assets to be
divested under the proposed final judgment to ensure that the assets
remain economically viable until divested.
The United States, New Times, and Village Voice Media have
stipulated that the proposed final judgment may be entered after
compliance with the APPA, unless the United States withdraws its
consent. Entry of the proposed final judgment would terminate this
action, except that this court would retain jurisdiction to construe,
modify, and enforce the proposed final judgment and to punish
violations thereof.
[[Page 7142]]
1. Description of the Events Giving Rise to the Alleged Violation of
the Antitrust Laws
A. Defendants
1. Village Voice Media
Village Voice Media, LLC, is a limited liability company organized
and existing under the laws of the State of Delaware, with its
principal place of business in New York, New York. Prior to its
agreement with New Times to shut down its Cleveland Free Times
alternative newsweekly, Village Voice Media owned alternative
newsweeklies in New York City, Minneapolis-St. Paul, Cleveland,
Seattle, Nashville, Orange County, and Los Angeles. Village Voice
Media's revenues in 2001 were approximately $92 million.
Village Voice Media's Cleveland Free Times, launched in 1992, grew
to become Ohio's largest alternative newsweekly, with an average weekly
circulation that tripled in recent years to over 80,000. With a decade
of covering news, arts, and music in Northeast Ohio, the Cleveland Free
Times was popular with local retailers, concert promoters, clubs, and
national advertisers, who sought to reach the weekly's demographic of
active, young adults. Until its sudden closing on October 2, 2002, it
directly competed against New Times's alternative newsweekly, the
Cleveland Scene.
Village Voice Media's LA Weekly was launched in 1978 with the
mission, according to Village Voice Media, to cover political,
cultural, and social issues often overlooked by the mainstream daily
newspaper, and provide readers with each week's most comprehensive
events listing. With a weekly circulation of approximately 215,000 and
an average 200 pages per issue, Village Voice Media's LA Weekly has the
highest page count of any alternative newsweekly in the United States.
Until October 3, 2002, its direct competitor was New Times's
alternative newsweekly, the New Times LA.
2. New Times
NT Media, LLC, is a limited liability company organized and
existing under the laws of the State of Delaware, with its principal
place of business in Phoenix, Arizona. Prior to its agreement with
Village Voice Media to shut down its New Times LA alternative
newsweekly, New Times published 12 award-winning alternative
newsweeklies (nine of which New Times had acquired since 1991) in
Phoenix, Cleveland, Los Angeles, San Francisco, Oakland-Berkeley,
Broward-Palm Beach, Miami, Denver, St. Louis, Kansas City, Dallas, and
Houston. New Times's revenues in 2001 were approximately $104 million.
New Times in the summer of 1996 purchased two established
alternative newsweekies, the LA Reader and LA View, for approximately
$4 million, and consolidated and renamed them the New Times LA. To
better compete against the LA Weekly, New Times grew its newsweekly's
circulation to approximately 120,000 copies, aggressively discounted
its advertising rates, and offered award-winning journalism.
In August 1998, New Times acquired the Cleveland Scene, a local
music publication established in 1970. New Times repositioned and
reformatted the Cleveland Scene to compete directly and aggressively
against Cleveland's other alternative newsweekly, Village Voice Media's
Cleveland Free Times.
B. The Alternative Newsweekly Industry
As the name suggests, alternative newsweeklies provide an
alternative perspective to the established news-gathering
organizations. In 1955, Village Voice Media's predecessors launched the
first alternative newsweekly, The Village Voice, in New York City.
Since then, the popularity of alternative newsweeklies has increased
dramatically, fueled by the typically ``anti-establishment''
perspective of these publications which emerged during the 1960's and
1970's. Today over 125 alternative newsweeklies are published
throughout the United States. Their popularity with readers continues
to be driven largely by a unique editorial mix of politics,
investigative reporting, and entertainment issues, often presented with
a somewhat controversial or highly opinionated slant, and all of which
is focused on decidedly local issues.
The local nature of these alternative newsweeklies, with their in-
depth coverage of local happenings in the arts, music, politics, and
entertainment fields, makes them particularly attractive to advertisers
hoping to reach a young, educated, and urban audience in a cost-
effective manner. Between 1990 and 2000, the collective weekly
circulation of alternative newsweeklies has more than doubled to 7.8
million. Likewise, advertising expenditures in alternative newsweeklies
have jumped, exceeding $500 million in the United States in 2000.
Two major chains dominate the alternative newsweekly industry:
defendants New Times and Village Voice Media. New Times, the leading
chain, distributes each week over 1.1 million copies of its various
alternative newsweeklies. Village Voice Media operates on a similar
scale, with a weekly circulation of over 800,000 for its alternative
newsweeklies.
C. The Competition Between Village Voice Media and New Times
Prior to the defendants' per se illegal market allocation
agreement, the only two geographic markets in which defendants competed
head-to-head for readers and advertisers were Cleveland, Ohio and Los
Angeles, California. This competition between the defendants'
alternative newsweeklies provided both readers and advertisers with
better editorial coverage, heavily discounted advertising rates, and
higher quality service.
In Cleveland, New Times's alternative newsweekly, the Cleveland
Scene, fought against the newly matched Village Voice Media's
newsweekly, the Cleveland Free Times. From 1998 (when New Times
purchased the Cleveland Scene) until October 2, 2002, the competition
between the Cleveland Scene and the Cleveland Free Times was fierce. It
resulted in steep discounts off the defendants' published advertising
rate cards, better customer service, increased promotions, and a host
of value-added services offered at little cost to the advertiser, such
as ``buy one ad get one free'' deals, larger ads for the same price, or
free upgrades of ads from black and white to color.
After New Times reformatted the Cleveland Scene to compete directly
and aggressively against the Cleveland Free Times, the editorial
competition between the defendants' alternative newsweeklies was
similarly intense. The Cleveland Scene and the Cleveland Free Times
responded to the other's editorial changes and improvements by
introducing new or better features or increasing investigative
journalism to recapture the readers' attention to its publication, both
of which were distributed each Wednesday throughout Cleveland.
Likewise, from 1996 until October 3, 2002, advertisers benefitted
from the competition between New Times LA and Village Voice Media's LA
Weekly with lower advertising rates, better advertisement placement and
improved service. Even if they did not advertise in the New Times LA,
advertisers could leverage that alternative newsweekly in their
negotiations with the older, entrenched LA Weekly. Moreover, the New
Times LA discounted significantly off of its published rate cards--
which benefitted smaller advertisers that could not afford the LA
Weekly's higher advertising rates.
[[Page 7143]]
Both the LA Weekly and New Times LA, which were distributed each
Thursday throughout Los Angeles, aggressively competed for readers. The
different, and at times opposing, views and positions of the
defendants' competing alternative newsweeklies provided readers with
alternative viewpoints of important local events affecting social,
political, esthetic, and moral issues. Since 1997, the New Times LA
garnered numerous journalism awards--including over 30 awards from the
Greater Los Angeles Press Club--for its investigative and news
reporting.
D. The Illegal Market Allocation Agreement
In July 2002, New Times proposed to Village Voice Media to end
their competitive war by agreeing to ``swap'' markets: New Times would
close its New Times LA publication, making Village Voice Media's LA
Weekly, in the words of Defendants' executives, the ``only alternative
weekly in LA.'' Likewise, Village Voice Media would close its Cleveland
Free Times, leaving New Times's Cleveland Scene ``the only alternative
weekly in Cleveland.'' By August 12, 2002, Defendants agreed in
principle to swap markets. Over the next two months, New Times's and
Village Voice Media's senior executives and attorneys negotiated the
terms of their contracts to effectuate their proposed market swap. As
part of this agreement, Village Voice Media would compensate New Times
for withdrawing from the larger Los Angeles market by paying New Times
$9 million in cash. The proposed deal ended all competition between
defendants, and created an opportunity for the remaining alternative
newsweekly in each market to raise advertising rates.
On October 1, 2002, Village Voice Media's and New Times's senior
executives signed two written contracts, each expressly contingent on
the other, which sealed their per se illegal market allocation
arrangement. Village Voice Media paid New Times a net amount of $9
million in cash at closing ($11 million to New Times less $2 million
paid to Village Voice Media). The defendants' written contracts did not
involve the transfer or integration of any meaningful economic assets
associated with those shuttered papers. New Times shifted the New Times
LA's accounts receivable, customer lists, and advertising contracts to
Village Voice Media, who, in exchange, shifted the Cleveland Free
Times's accounts receivable, customer lists, advertising contracts, and
street boxes to New Times. These advertisers were already well known to
defendants because each defendant had attempted in the past to sign up
the other's advertisers. Moreover, the net assets (primarily the
accounts receivable) actually transferred in Los Angeles accounted,
according to the defendants' calculations, for only seven percent of
their $11 million sale price in Los Angeles, and 24 percent of their $2
million sale price in Cleveland.
The defendants' written contracts specifically excluded from the
sale most of the assets associated with the actual operations and
goodwill of the two shuttered newsweeklies, notably: (i) The
advertising personnel, writers, editors, and other employees, (ii)
leases, offices, and computer equipment, (iii) back issues and archived
materials of the closed publications, including editorial articles,
photos, and art work, and (iv) the logos, trade names, trademarks, and
copyrights associated with the closed publications. New Times
specifically retained the rights to its New Times LA logo or ``flag,''
and Village Volice Media specifically retained the rights to its
Cleveland Free Times logo or ``flag,'' but both defendants were
contractually prevented from using, or letting anyone else use, these
logos.
As defendants acknowledged in their internal documents, the goal of
their agreement was to end their competitive war and to give one
another a monopoly in each market. Consequently, the defendants'
written contracts were designed to ensure that neither defendant would
face competition in its ``protected'' market. To further that end, the
defendants' contracts contained:
[sbull] Essentially identical ``non-competition'' clauses in which
each defendant agreed not to publish an alternative newsweekly in the
other defendant's market for at least ten years;
[sbull] Commitments by each defendant not to solicit or attempt to
induce any advertiser to advertise in a competing publication over the
next decade;
[sbull] Requirements that each Defendant redirect any traffic on
its closed weekly's website to the other defendant's website for a
period of one year, and to prominently state on its website that its
alternative newsweekly was no longer in circulation;
[sbull] Provisions to deter any new competitive entry into each
defendant's protected market. For example, over the next decade,
Village Voice Media agreed not to use, and to prevent anyone else from
using, the name ``Cleveland Free Times'' in connection with any current
or future publication in the greater Cleveland area. Similarly, over
the next decade, New Times agreed not to use, and to prevent anyone
else from using, the name ``New Times LA'' or any variant containing
``New Times'' in connection with any current or future publication in
the greater Los Angeles area; and
[sbull] Prohibitions on selling or otherwise making available any
of the fixed assets associated with each defendant's closed publication
to any of its former employees, consultants, or independent contractors
in the affected markets.
After defendants executed their written contracts on October 1,
2002, defendant Village Voice Media closed down its Cleveland Free
Times alternative newsweekly the next day, leaving New Time's Cleveland
Scene the only alternative newsweekly in Cleveland, Ohio. Likewise, on
October 2, 2002, New Times informed its New Times LA staff that it was
shutting down immediately, leaving Village Voice Media's LA Weekly the
only alternative newsweekly distributed throughout the greater Los
Angeles area.
E. Competitors' Allocation of Geographic Markets Is an Unreasonable
Restraint of Trade That is Per Se Illegal
The Supreme Court has long held that territorial allocation schemes
among direct competitors are naked restraints of trade with no purpose
except stifling competition. United States v. Topco Assoc., 405 U.S.
596, 608 (1972) (citations omitted); see also Addyston Pipe & Steel Co.
v. United States, 175 U.S. 211 (1899), modifying and aff'g 85 F. 271
(6th Cir. 1898) (Taft, J.); Citizen Publ'g Co. v. United States, 394
U.S. 131, 139-40 (1969)(applying per se standard where defendants'
``market control'' agreement comported neither with antitrust laws nor
with First Amendment). As recently as 1990, the Supreme Court repeated
that such market allocation agreements are classic examples of a per se
violation of the Sherman Act. Palmer v. BRG of Georgia, Inc., 498 U.S.
46 (1990).
Accordingly, these market allocation agreements--whereby
competitors agree to divide or allocate among themselves certain
geographic areas--are condemned as per se violations of section one of
the Sherman Act. Given their pernicious effect on competition and lack
of any redeeming virtue, these market allocation agreements are
conclusively presumed to be unreasonable, without the need for an
elaborate inquiry into the precise harm that they caused or the
potential business justification for their use. Topco, 405 U.S. at 607
(quoting Northern Pacific Ry. Co. v. United States, 356 U.S. 1, 5
(1958)). Consequently, competitors cannot agree to split or ``swap''
markets.
[[Page 7144]]
This is not a case in which the territorial restraints were
ancillary to a lawful business transaction. Such ancillary restraints
are not illegal when reasonably necessary to protect the purchaser of
the full enjoyment of the legitimate fruits of the contract. Addyston
Pipe & Steel, 85 F. at 283. The Antitrust Division examines the
substance, rather than the form, of the parties' agreement in
evaluating its potential effect. When the restraints of trade are
reasonably ancillary to the agreement's central pro-competitive
purposes, then the Division will analyze the restraints under the rule-
of-reason standard. Where the central purpose of the parties'
agreement, however, is to unreasonably restrain competition by
allocating territories and terminating competition among themselves and
by preventing any significant entrant from competing, then the entire
agreement will be treated as per se illegal. As Judge (later Mr. Chief
Justice) Taft noted over 100 years ago, ``[t]here is in such contracts
no main lawful purpose, to subserve which partial restraint is
permitted, and by which its reasonableness is measured, but the sole
object is to restrain trade in order to avoid the competition which it
has always been the policy of the common law to foster.'' Id.
That is the case, here, where the central purpose and effect of the
defendants' agreement were to unreasonably restrain competition, by
allocating the only two markets in which they compete, so that after
swapping these markets, defendants would face no significant direct
competitor. Five factors support this conclusion.
First, this was not a case where the underlying agreement created a
distinctive product, and thereby increased competition in the
alternative newsweekly industry generally, or in Cleveland or Los
Angeles, specifically.\1\ The defendants' restraints on competition
were not essential for, or even beneficial to, the products, which in
this case are alternative newsweeklies, to be made available in the
first place. After all, before their market allocation agreement,
defendants vigorously competed through their own alternative
newsweeklies. As a direct result of the defendants' agreement to
withdraw from each other's market, advertisers and readers were left
with fewer meaningful options and the prospect of higher advertising
rates. Consequently, the defendants' agreement on its face did not
promote enterprise and productivity at the time it was adopted.
---------------------------------------------------------------------------
\1\ See, e.g., Broadcast Music, Inc. v. Columbia Broad, Sys.,
Inc., 441 U.S. 1 (1979)(challenged agreement created distinctive
product of access to vast musical repertoire).
---------------------------------------------------------------------------
Second, the clear intent and explicit design of the defendants'
contractual provisions were to eliminate competition in these markets
and prevent others from meaningfully entering. Village Voice Media
agreed to shut down its Cleveland alternative newsweekly, solely on the
condition that New Times shuts down its newsweekly in Los Angeles. The
contracts' essentially identical ``non-competition'' clauses prevented
each defendant from publishing an alternative newsweekly in the other
defendant's market for at least 10 years. Each defendant also agreed
not to solicit or attempt to induce any advertiser to advertise in a
competing publication over the next decade. Defendants restrained each
other from meaningfully using the closed papers' logos and prevented
anyone else from using these valuable assets in connection with any
current or future publication in the Los Angeles or Cleveland areas.
Furthermore, each defendant agreed not to sell or otherwise make
available the fixed assets associated with its closed publication to
any of its former employees, consultants or independent contractors,
who might seek to rejuvenate the closed alternative newsweekly, and
restore competition in the marketplace.
Third, The anticompetitive restraints at issue cannot be said to be
ancillary to the sale of assets, given that so few assets were actually
transferred. None of the assets associated with the actual operations
and goodwill of the defendants' two shuttered newsweeklies were sold or
integrated into the other defendant's newsweekly. The assets defendants
actually transferred (which were mainly the accounts receivable of the
shuttered paper) were of little value, even by defendants' own
calculations.
Fourth, the anticompetitive purpose of the defendants' agreements
is evident from the defendants' documents, which confirm that they
entered into this agreement to end their competitive war, and grant
each another a monopoly in the respective markets. The defendants'
documents are replete with evidence that shows--and the testimony of
the defendants' former employees and current advertisers confirms--that
the defendants' market allocation agreement will end all meaningful
competition, and enable each remaining alternative newsweekly, as the
``only game in town,'' to raise advertising rates by a significant,
non-cost based, amount.
Fifth, the fact that defendants planned to, and in some cases did,
implement such rate hikes after allocating markets on October 2, 2002,
confirms that the defendants' agreement was formed for the purpose, and
with the effect, of raising advertising rates.
II. Explanation of the Proposed Final Judgment
The proposed final judgment requires divestiture that will restore
the editorial and advertising competition in alternative newsweeklies
published an distributed in Cleveland, Ohio and Los Angeles,
California. Within 30 calendar days after January 27, 2003, the date
the complaint was filed, defendants must divest the assets used in the
publication of New Times's alternative newsweekly, the New Times LA,
and Village Voice Media's alternative newsweekly, the Cleveland Free
Times, to an acquirer or acquirers that, in the United States' sole
judgment, has the intent and capability (including the necessary
managerial, operational, technical, and financial capability) of
competing effectively in the alternative newsweekly business.\2\ This
relief has been tailored to ensure that the ordered divestitures
restore the competition that has been eliminated as a result of the
defendants' market allocation agreement and further prevent either
defendant from exercising market power in the Cleveland of Los Angeles
markets.
---------------------------------------------------------------------------
\2\ The assets to be divested are defined and described in
section II of the proposed final judgment as the ``New Times LA
Assets'' and ``Cleveland Free Times Assets.'' Defendants in essence
must divest all assets that were formerly employed in the
publication of the New Times LA and Cleveland Free Times alternative
newsweeklies, including, but not limited to, all rights to the New
Times LA, LA Reader, LA View and Cleveland Free Times names
(including any derivations thereof); all rights to the New Times LA
and Cleveland Free Times website; all rights to the print and
electronic archives of New Times LA and Cleveland Free Times
publications and articles on a non-exclusive basis; and all other
tangible and intangible assets used in the publication of the New
Times LA and Cleveland Free Times.
---------------------------------------------------------------------------
Given that defendants has closed the Cleveland Free Times and New
Times LA in October 2002, a quick and effective remedy was necessary to
reestablish competition. Consequently, defendants must use their best
efforts to divest assets within 30 days. The proposed final judgment
provides that the assets be divested in such a way as to satisfy the
United States, in its sole discretion, that the acquirer can and will
use the assets as part of a viable, ongoing business engaged in the
publication of an alternative newsweekly in Cleveland, Ohio and Los
Angles, California. Until the ordered divestitures take place,
defendants must
[[Page 7145]]
cooperate with any perspective purchasers.
If defendants do not accomplish the ordered divestitures within the
prescribed 30-day time period, then section VII of the proposed final
judgment provides that this court will appoint a trustee, selected by
the United States, to complete the divestitures.
If a trustee is appointed, the proposed final judgment provides
that defendants must cooperate fully with the trustee and pay all of
the trustee's costs and expenses. The trustee's compensation will be
structured to provide an incentive for the trustee based on the price
and terms of the divestiture and the speed with which its is
accomplished. After the trustee's appointment becomes effective, the
trustee will file monthly reports with the United States, the State
Attorney General of Ohio and California, and this Court setting forth
the trustee's efforts to accomplish the required divestiture. If at the
end of three months after that appointment, the divestiture has not
been accomplished, then the trustee, the United States, and the State
Attorneys General of Ohio and California will make recommendations to
this court, which shall enter such orders as appropriate to carry out
the purpose of the final judgment.
In addition to ordering the divestiture of the assets used in the
publication of the Cleveland Free Times and New Times LA, the proposed
final judgment places several additional requirements on defendants.
First, Village Voice Media and New Times are enjoined under the
proposed final judgment from taking any actions in furtherance of, or
required under, both their written and oral market allocation
agreements.
Second, for a period of two years commencing from January 27, 2003,
Village Voice Media and New Times must allow advertisers that entered
into certain written or oral contracts to advertise in, or engage in a
promotion with, the LA Weekly or Cleveland Scene, solely at the
advertiser's option, the right to terminate such contract without
penalty, retaliatory action, or threat of retaliatory action. The
advertising or promotion contracts that may be terminated are those
entered into beginning October 1, 2002, and for the Cleveland
advertisers, ending 30 days after the assets of the Cleveland Free
Times are sold, and for the Los Angeles advertisers, 30 days after the
assets of the New Times LA are sold.
Third, for a period of five years commencing from January 27, 2003,
each defendant cannot directly or indirectly enter into any merger,
sale, or joint venture involving any of its alternative newsweeklies or
national advertising networks or acquire any assets of any alternative
newsweekly without first notifying the United States 30 days in
advance. If within this 30-day period, the United States requests
additional information, defendants cannot consummate the proposed
transaction or agreement until 20 days after submitting all such
additional information.
Fourth, for any employee who was involved in the publication of the
Cleveland Free Times or the New Times LA as of October 1, 2002, any
non-compete provision imposed by defendants on such employee shall be
null and void. Moreover, from the date the complaint was filed, January
27, 2003, to one year from the divestiture of the Cleveland Free Times
assets, neither Village Voice Media nor New times can enforce any other
non-compete contractual provisions against any of their former or
current employees in the greater Cleveland area. Likewise, from January
27, 2003, to one year from the divestiture of the New times LA assets,
defendants cannot enforce any other non-compete contractual provisions
against any of their former or current employees in the greater Los
Angeles area.
Fifth, the final judgment enjoins each defendant, and its officers,
directors, agents, and employees from entering into, continuing,
maintaining, or renewing this, or any other, market or customer
allocation agreement, or from engaging in any other conspiracy,
agreement, or understanding having a similar purpose or effect, and
from adopting or following any practice having a similar purpose or
effect.
III. 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 suite in Federal district court to recover
three times the damages the person has suffered, as well as the costs
of bringing a lawsuit 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 effect as prima facie evidence in any subsequent private lawsuit
that may be brought against defendants.
IV. Procedures Available for Modification of the Proposed Final
Judgment
The parties have stipulated that the proposed final judgment may be
entered by this court after compliance with the provisions of the APPA,
provided that the United States has not withdrawn its consent. The APPA
conditions entry of the decree upon this court's determination that the
proposed final judgment is in the public interest.
The APPA provides a period of at least 60 days preceding the
effective date of the proposed final judgment within which any person
may submit to the United States written comments regarding the proposed
final judgment. Any person who wishes to comment should do so within 60
days of the date of publication of this competitive impact statement in
the Federal Register. The United States will evaluate and respond to
the comments. All comments will be given due consideration by the
Department of Justice, which remains free to withdraw its consent to
the proposed final judgment at any time prior to entry. the comments
and the response of the United States will be filed with this court and
published in the Federal Register.
Written comments should be submitted to: James R. Wade, Chief,
Litigation III Section, Antitrust Division, United States Department of
Justice, 325 Seventh Street, NW., Suite 300, Washington, DC 20530.
The proposed final judgment provides that this court retains
jurisdiction over this action, and the parties may apply to this court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the final judgment.
V. Alternatives to the Proposed Final Judgment
The United States considered, as an alternative to the proposed
final judgment, a full trial on the merits against defendants. Given
the inherent delays of a full trial and the appeals process, the United
States is satisfied that the prompt divestiture of the Cleveland Free
Times assets and New Times LA assets, coupled with the other relief
contained in the proposed final judgment, will quickly establish,
preserve and ensure a viable competitor in the publication of
alternative newsweeklies in Cleveland, Ohio and Los Angeles,
California. Thus, the United States is convinced that the proposed
final judgment, once implemented by the court, will present
[[Page 7146]]
defendants from illegally benefitting from their market allocation
agreement.
VI. Standard of Review Under the APPA for Proposed Final Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a 60-day comment
period, after which the court shall determine whether entry of the
proposed final judgment is ``in the public interest.'' In making that
determination, the court ``may consider''--
(1) The competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration or relief sought, anticipated effects of
alternative remedies actually considered, and any other
considerations bearing upon the adequacy of such judgment;
(2) The impact of entry of such judgment upon the public
generally and individuals alleging specific injury from the
violations set forth in the complaint including consideration of the
public benefit, if any, to be derived from a determination of the
issues at trial.
15 U.S.C. 16(e)(emphasis added). As the Court of Appeals for the
District of Columbia has held, the APPA permits a court to consider,
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 United States v. Microsoft Corp., 56 F.3d 1448, 1458-62 (D.C. Cir.
1995).
In conducting this inquiry, ``the 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.''\3\ Rather,
\3\ 119 Cong. Rec. 24,598 (1973). See United States v. Gillette
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest''
determination can be made properly on the basis of the competitive
impact statement and response to comments filed pursuant to the
APPA. Although the APPA authorizes the use of additional procedures,
15 U.S.C. 16(f), those procedures are discretionary. A court need
not invoke any of them unless it believes that the comments have
raised significant issues and that further proceedings would aid the
court in resolving those issues. See H.R. Rep. No. 93-1463, 93rd
Cong. 2d Sess. 8-9 (1974), reprinted in 1974 U.S.C.C.A.N. 6535,
6538-39.
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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.\4\
\4\ United States v. Mid-America Dairymen, Inc., 1977-1 Trade
Cas. (CCH) ]61,508, at 71,980 (W.D. Mo. 1977); see also United
States v. Loew's Inc., 783 F. Supp. 211, 214 (S.D.N.Y. 1992); United
States v. Columbia Artists Mgmt., Inc., 662 F. Supp. 865, 870
(S.D.N.Y. 1987).
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Accordingly, with respect to the adequacy of the relief secured by
the decree, a court may not ``engage in an unrestricted evaluation of
what relief would best serve the public.'' United States v. BNS, Inc.,
858 F.2d 456, 462 (9th Cir. 1988) (quoting United States v. Bechtel
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083
(1981)); see also Microsoft, 56 F.3d at 1458. ``Indeed, the district
court is without authority to `reach beyond the complaint to evaluate
claims that the government did not make and to inquire as to why they
were not made.' '' United States v. Microsoft Corp., 231 F. Supp. 2d
144, 154 (D.D.C. 2002) (quoting Microsoft, 56 F.3d at 1459). Precedent
requires that:
The 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.\5\
\5\ United States v. Bechtel Corp., 648 F.2d at 666 (emphasis
added); see also United States v. BNS, Inc., 858 F.2d at 462-63
(district court may not base its public interest determination on
antitrust concerns in markets other than those alleged in
government's complaint); United States v. Gillette Co., 406 F. Supp.
at 716 (court will not look at settlement ``hypercritically, nor
with a microscope''); United States v. National Broad. Co., 449 F.
Supp. 1127, 1143 (C.D. Cal. 1978) (same).
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The proposed final judgment, therefore, should not be reviewed
under a standard of whether it is certain to eliminate every
anticompetitive effect of a particular practice or whether it mandates
certainty of free competition in the future. Court approval of a final
judgment requires a standard more flexible and less strict than the
standard required for a finding of liability. A ``proposed decree must
be approved even if it falls short of the remedy the court would impose
on its own, as long as it falls within the range of acceptability or is
within the reaches of public interest.'' \6\
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\6\ Microsoft, 231 F. Supp. 2d at 153 (quoting United States v.
American Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C. 1982)
(citation omitted), aff'd sub nom. Maryland v. United States, 460
U.S. 1001 (1983)); see also United States v. Alcan Aluminum, Ltd.,
605 F. Supp. 619, 622 (W.D. Ky. 1985) (standard is not whether
decree is one that will best serve society, but whether it is within
the reaches of the public interest); United States v. Carrols Dev.
Corp., 454 F. Supp. 1215, 1222 (N.D.N.Y. 1978) (standard is not
whether decree is the best of all possible settlements, but whether
decree falls within the reaches of the public interest).
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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. Since the ``court's
authority to review the decree depends entirely on the government's
exercising its prosecutorial discretion by bringing a case in the first
place,'' it follows that the court ``is only authorized to review the
decree itself,'' and not to ``effectively redraft the complaint'' to
inquire into other matters that the United States might have but did
not pursue. Microsoft, 56 F.3d at 1459-60.
VII. 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: February 3, 2003.
Respectfully submitted,
Maurice E. Stucke,
Carol A. Bell,
Matthew J. Bester,
Attorneys for the United States, U.S. Department of Justice,
Antitrust Division, Litigation III Section, 325 7th Street, NW.,
Suite 300, Washington, DC 20530. (202 305-1489 (telephone). (202)
514-1517 (facsimile). Maurice.Stucke@usdoj.gov.
Jon Smibert,
Attorney for the United States, U.S. Department of Justice,
Antitrust Division, Cleveland Field Office, 55 Erieview Plaza, Suite
700, Cleveland, OH 44114-1816.
Certificate of Service
I hereby certify that I served a copy of the foregoing competitive
impact statement via first class United States mail, this 3rd day of
February, 2003, on:
Melanie Sabo,
Preston Gates Ellis & Rouvelas Meeds LLP, 1735 New York Avenue, NW.,
Suite 500, Washington, DC 20006-5209. Counsel for Defendant Village
Voice Media, LLC.
Joseph Kattan, P.C.
Gibson, Dunn & Crutcher LLP, 1050 Connecticut Avenue, NW.,
Washington, DC 20036. Counsel for Defendant NT Media, LLC.
Matthew Bester,
[[Page 7147]]
Attorney for the United States, U.S. Department of Justice,
Antitrust Division, 325 Seventh Street, NW., Suite 300, Washington,
DC 20530. (202) 353-4391.
[FR Doc. 03-3441 Filed 2-11-03; 8:45 am]
BILLING CODE 4410-11-M