[Federal Register: November 2, 1998 (Volume 63, Number 211)]
[Notices]
[Page 58770-58780]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02no98-103]
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DEPARTMENT OF JUSTICE
Antitrust Division
Proposed Final Judgment and Competitive Impact Statement
United States v. Halliburton Company and Dresser Industries, Inc.
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec. 16(b)-(h), that a proposed Final
Judgment, Stipulation and Order, and Competitive Impact Statement have
been filed with the United States District Court for the District of
Columbia in United States v. Halliburton Company and Dresser
Industries, Inc., Civil Action No. 98-CV-2340. The proposed Final
Judgment is subject to approval by the Court after the expiration of
the statutory 60-day public comment period and compliance with the
Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h).
On September 29, 1998, the United States filed a Complaint seeking
to enjoin a transaction in which Halliburton Company (``Halliburton'')
would merge with Dresser Industries, Inc. (``Dresser''). The Complaint
alleges that the merger would combine two of four companies that
provide logging-while-drilling (``LWD'') services for oil and natural
gas drilling projects. Oil and gas companies use LWD tools and services
when drilling non-vertical wells, especially when drilling offshore.
While the drilling ongoing, sensors in
[[Page 58771]]
these tools send back data that allow the drillers to evaluate the
formation through which the drill bit is cutting. The formation
evaluation data assist the driller in locating oil and gas reserves.
Because LWD tools transmit formation data during the drilling, the
driller can detect changes in downhole pressure and prevent the drill
bit from straying out of the zone of oil and gas, thereby reducing the
time and risk of drilling. The Complaint alleges that the proposed
acquisition would substantially lessen competition in the provision of
LWD services in the United States in violation of Section 7 of the
Clayton Act, 15 U.S.C. 18.
The proposed Final Judgment orders defendants to sell Halliburton's
worldwide LWD Business, as defined in Schedule A of the Proposed Final
Judgment, to a purchaser acceptable to plaintiff in its sole
discretion. The Final Judgment and the stipulation and Order also
impose a hold separate agreement that, in essence, requires the
defendants to ensure that, until the divestiture mandated by the Final
Judgment has been accomplished, the LWD Business will be held separate
and apart from, and operated independently of, any of defendants' other
assets and businesses. A Competitive Impact Statement filed by the
United States describes the Complaint, the proposed Final Judgment, and
remedies available to private litigants.
Public comment is invited within the statutory 60-day comment
period. Such comments, and responses thereto, will be published in the
Federal Register and filed with the Court. Written comments should be
directed to Roger W. Fones, Chief, Transportation, Energy, and
Agriculture Section, Antitrust Division, 325 Seventh Street, N.W.,
Suite 500, Washington, DC 20530 (telephone: (202) 307-6351).
Copies of the Complaint, Stipulation and Order, proposed Final
Judgment, and Competitive Impact Statement are available for inspection
in Room 215 of the U.S. Department of Justice, Antitrust Division, 325
Seventh Street, N.W., Washington, DC 20530 (telephone: (202) 514-2481),
and at the office of the Clerk of the United States District Court for
the District of Columbia, 333 Constitution Avenue, N.W., Washington, DC
20001. Copies of any of these materials may be obtained upon request
and payment of a copying fee.
Constance K. Robinson,
Director of Operations and Merger, Enforcement, Antitrust Division.
Stipulation and Order
It is hereby Stipulated by and between the undersigned parties, by
their respective attorneys, as follows:
1. The 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 Court for the District of Columbia.
2. The parties stipulate that a Final Judgment in the form hereto
attached may be filed and entered by the Court, upon the motion of any
party or upon the Court's own motion, at any time after compliance with
the requirements of the Antitrust Procedure and Penalties Act (15
U.S.C. Sec. 16), and without further notice to any party or other
proceedings, provided that plaintiff 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 the Court.
3. Defendant shall abide by and comply with the provisions of the
proposed Final Judgment pending entry of the Final Judgment by the
Court, or until expiration of time for all appeals of any Court ruling
declining entry of the proposed Final Judgment, and shall, from the
date of the signing of this Stipulation by the parties, comply with all
the terms and provisions of the proposed Final Judgment as though they
were in full force and effect as an order of the Court.
4. This Stipulation shall apply with equal force and effect to any
amended proposed Final judgment agreed upon in writing by the parties
and submitted to the Court.
5. In the event that plaintiff withdraws its consent, as provided
in paragraph 2 above, or in the event that the proposed Final Judgment
is not entered pursuant to this Stipulation, the time has expired for
all appeals of any Court ruling declining entry of the proposed Final
Judgment, and the Court has not otherwise ordered continued compliance
with the terms and provisions of the proposed Final Judgment, then the
parties are released from all further obligations under this
Stipulation, and the making of this Stipulation shall be without
prejudice to any part in this or any other proceeding.
6. Defendants represent that the divestiture ordered in the
proposed Final Judgment can and will be made, and that the defendants
will later raise no claims of hardship or difficulty as grounds for
asking the Court to modify any of the divestiture provisions contained
therein.
Respectfully submitted,
For Plaintiff, United States of America:
Angela L. Hughes,
Member of the Florida Bar No. 211052, Attorney, Antitrust Division,
U.S. Department of Justice, 325 Seventh St., N.W., Suite 500,
Washington, DC 20530, (202) 307-6410 or (202) 307-6351, Facsimile:
(202) 307-2784.
Dated: September 29, 1998.
For Defendant, Halliburton Company:
Ky P. Ewing, Jr.,
District of Columbia Bar No. 41285, Vinson & Elkins L.L.P., The Willard
Office Building, 1455 Pennsylvania Avenue, N.W., Washington, DC 20004-
1008, (202) 639-6500.
For Defendant, Dresser Industries, Inc.:
David A. Hickerson,
District of Columbia Bar No. 414723, Weil, Gotshal & Manges L.L. P.,
1615 L Street, N.W., Washington, DC 20035, (202) 682-7000.
Order
It is So Ordered, this ______ day of ______, 1998.
----------------------------------------------------------------------
United States District Court Judge
Final Judgment
Whereas, plaintiff, the United States of America, filed its
Complaint in this action on September 29, 1998, and plaintiff and
defendants Halliburton Company (``Halliburton'') and Dresser
Industries, Inc. (``Dresser'') by their respective attorneys, having
consented to the entry of this Final Judgment without trial or
adjudication of any issue of fact or law herein, and without this Final
Judgment constituting any evidence against or an admission by any party
with respect to any issue of law or fact herein;
And Whereas, defendants have agreed to be bound by the provisions
of this Final Judgment pending its approval by the Court;
And Whereas, the essence of this Final Judgment is prompt and
certain divestiture of Halliburton's LWD Business to assure that
competition is not substantially lessened;
And Whereas, plaintiff requires defendants to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
And Whereas, defendants have represented to the plaintiff that the
divestiture ordered herein can and will be made and that defendants
will later raise no claims of hardship or difficulty as grounds for
asking the Court to modify any of the divestiture requirements
contained below;
Now, Therefore, before the taking of any testimony, and without
trial or
[[Page 58772]]
adjudication of any issue of fact or law herein, and upon consent of
the parties hereto, it is hereby Ordered, Adjudged, and Decreed as
follows:
I. Jurisdiction
This Court has jurisdiction over defendants hereto and over the
subject matter of this action. The Complaint states a claim upon which
relief may be granted against defendants, as hereafter defined, under
Section 7 of the Clayton Act, as amended (15 U.S.C. Sec. 18).
II. Definitions
As used in this Final Judgment:
A. ``Dresser'' means Dresser Industries, Inc., a Delaware
corporation with its headquarters and principal place of business in
Dallas, Texas, and its; successors, assigns, subsidiaries, divisions,
groups, affiliates, partnerships and joint ventures, directors,
officers, managers, agents, and employees.
B. ``Halliburton'' means Halliburton Company, a Delaware
corporation with its headquarters and principal place of business in
Dallas, Texas, and its successors, assigns, subsidiaries, divisions,
groups, affiliates, partnerships and joint ventures, directors,
officers, managers, agents, and employees.
C. ``HESI'' means Halliburton Energy Services, Inc., a wholly owned
subsidiary of Halliburton.
D. ``Intellectual Property'' means intellectual property used in
connection with the use, manufacture and/or sale of the transferred LWD
and MWD tools and related software, including without limitation,
foreign and domestic patent applications and patents; trade secrets;
foreign and domestic copyrights and copyright registrations; and
foreign and domestic common law and registered trademarks or service
marks, and trademarks or service mark applications.
E. ``LWD Services'' means the services and products used to provide
real-time logging-while-drilling formation evaluation data is utilized
to evaluate the formation characteristics of a given geologic
formation. LWD Services also include MWD Services provided in
conjunction with LWD Services.
F. ``LWD Business'' means `HESI's worldwide business providing LWD
Services and includes the tangible and intangible assets, obligations,
and understandings set forth in Schedule A.
G. ``MWD Services'' means the services and products used in
drilling directional wells to provide real-time information about the
inclination and azimuth of downhole drilling tools at the bottom of the
hole.
H. ``Person'' means any natural person, corporation, association,
firm, relationship, or other business or legal entity.
III. Applicability
A. The provisions of this Final Judgment apply to each of the
defendants, their successors and assigns, their subsidiaries,
directors, officers, managers, agents, and employers, and all other
persons in active concert or participation with any of them who shall
have received 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 the LWD Business, that the
acquiring party agree to be bound by the provisions of this Final
Judgment.
IV. Divestiture
A. Defendants are hereby ordered and directed in accordance with
the terms of this Final Judgment, within one hundred and eighty (180)
calendar days after this Final Judgment is filed by plaintiff or five
(5) days after notice of the entry of this Final Judgment by the Court,
whichever is later, to divest the LWD Business as an ongoing business,
in accordance with the terms and commitments set forth in Schedule A,
to an acquirer acceptable to plaintiff in its sole discretion.
B. Defendants shall use their best efforts to accomplish the
divestiture ordered by this Final Judgment as expeditiously and timely
as possible. Plaintiff, in its sole discretion, may extend the time
period for any divestiture for an additional period of time not to
exceed thirty (30) days.
C. In accomplishing the divestiture ordered by this Final Judgment,
defendants promptly shall make known, by usual and customary means, the
availability for sale of the LWD Business Defendants shall inform any
person making an inquiry regarding a possible purchase that the sale is
being made pursuant to this Final Judgment and provide such person with
a copy of the Final Judgment. Defendants shall also offer to furnish to
all prospective purchasers, subject to customary confidentiality
assurances, all information regarding the LWD Business customarily
provided in a due diligence process except such information subject to
attorney-client privilege or attorney work-product privilege.
Defendants shall make available such information to plaintiff at the
same time that such information is made available to any other person.
Defendants shall not interfere with any negotiations by any purchaser
to employ any Halliburton employee of the LWD Business.
D. Defendants shall permit prospective purchasers of the LWD
Business to have reasonable access to their personnel and to make such
inspection of the physical facilities and any and all of their
financial, operational, or other documents and information customarily
provided as part of a due diligence process.
E. Defendants shall not take any action, direct or indirect, that
will impede in any way the operation of the LWD Business.
F. Unless plaintiff otherwise consents in writing, divestiture
pursuant to Section IV, or by trustee appointed pursuant to Section V
of this Final Judgment, shall include all of the LWD Business, and
shall be accomplished in such a way as to satisfy plaintiff, in its
sole discretion, that the LWD Business can and will be used by the
purchaser as part of a viable, ongoing business engaged in the
provision of LWD Services. The divestiture, whether pursuant to Section
IV or Section V of this Final Judgment, shall be made (1) to a
purchaser who is demonstrated to plaintiff's sole satisfaction (a) to
have the capability and intent of competing effectively in LWD
Services, and (b) to have the managerial, operational, and financial
capability to compete effectively in LWD Services, and (2) on terms
none of which give defendants the ability unreasonably to raise the
purchaser's costs, to lower the purchaser's efficiency, or otherwise to
interfere in the ability of the purchaser to compete effectively.
G. Defendants shall not sell the LWD Business to Baker Hughes,
Inc., Schlumberger Limited, or any of their affiliates or subsidiaries
during the life of this decree.
V. Appointment of Trustee
A. In the event that defendants have not divested the LWD Business
within the time specified in Section IV of this Final Judgment, the
Court shall appoint, on application of the United States, a trustee
selected by plaintiff to effect the divestiture of the LWD Business.
Until such time as a trustee is appointed, defendants shall continue
their efforts to effect the divestiture as specified in Section IV.
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the LWD Business. The trustee
shall have the power and authority to accomplish the divestiture at the
best price then obtainable upon a reasonable effort by the trustee,
subject to the provisions of Sections IV and VI
[[Page 58773]]
of this Final Judgment, and shall have such other powers as the Court
shall deem appropriate. Subject to Section V(C) of this Final Judgment,
the trustee shall have the power and authority to hire at the cost and
expense of defendants any investment bankers, attorneys, or other
agents reasonably necessary in the judgment of the trustee to assist in
the divestiture, and such professionals and agents shall be accountable
solely to the trustee. The trustee shall have the power and authority
to accomplish the divestiture at the earliest possible time to a
purchaser acceptable to plaintiff in its sole discretion, and shall
have such other powers as this Court shall deem appropriate. Defendants
shall not object to a sale by the trustee on any grounds other than the
trustee's malfeasance. Any such objections by defendants must be
conveyed in writing to plaintiff and the trustee within ten (10)
calendar days after the trustee has provided the notice required under
Section VI of this Final Judgment.
C. The trustee shall serve at the cost and expense of defendants,
on such terms and conditions as the Court may prescribe, 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 the
Court of the trustee's accounting, including fees for its services and
those of any professionals and agents retained by the trustee, all
remaining money shall be paid to defendants, and the trust shall then
be terminated. The compensation of such trustee and of any
professionals and agents retained by the trustee shall be reasonable in
light of the value of the divested business and based on a fee
arrangement providing the trustee with an incentive based on the price
and terms of the divestiture and the speed with which it is
accomplished.
D. Defendants shall use their best efforts to assist the trustee in
accomplishing the required divestiture, including their best efforts to
effect all necessary regulatory approvals. The trustee and any
consultants, accountants, attorneys, and other persons retained by the
trustee shall have full and complete access to the personnel, books,
records, and facilities of the business to be divested, and Defendants
shall develop financial or other information relevant to the business
to be divested customarily provided in a due diligence process as the
trustee may reasonable request, subject to customary confidentiality
assurances. Defendants shall permit bona fide prospective purchasers of
the assets to have reasonable access to their personnel and to make
such inspection of physical facilities and any and all financial,
operational or other documents and other information as may be relevant
to the divestiture required by this Final Judgment.
E. After its appointment, the trustee shall file monthly reports
with the parties and the Court setting forth the trustee's efforts to
accomplish the divestiture ordered under this Final Judgment; provided,
however, that to the extent such reports contain information that the
trustee deems confidential, such reports shall not be filed in the
public docket of the Court. Such reports shall include the name,
address and telephone number of each person who, during the preceding
month, made an offer to acquire, expressed an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, any interest in the business to be divested,
and shall describe in detail each contact with any such person during
that period. The trustee shall maintain full records of all efforts
made to divest the LWD Business.
F. If the trustee has not accomplished such divestiture within six
(6) months after its appointment, the trustee thereupon shall file
promptly with the Court a report setting forth (1) the trustee's
efforts to accomplish the required divestiture, (2) the reasons, in the
trustee's judgment, why the required divestiture has not been
accomplished, and (3) the trustee's recommendations; provided, however,
that to the extent such reports contain information that the trustee
deems confidential, such reports shall not be filed in the public
docket of the Court. The trustee shall at the same time furnish such
report to the parties, who shall each have the right to be heard and to
make additional recommendations consistent with the purpose of the
trust. The Court shall enter thereafter such orders as it shall deem
appropriate in order to carry out the purpose of the trust which may,
if necessary, include extending the trust and the term of the trustee's
appointment by a period requested by plaintiff.
VI. Notification
Within two (2) business days following execution of a definitive
agreement, contingent upon compliance with the terms of this Final
Judgment, to effect, in whole in part, any proposed divestiture
pursuant to Section IV or V of this Final Judgment, defendants or the
trustee, whichever is then responsible for effecting the divestiture,
shall notify plaintiff of the proposed divestiture. If the trustee is
responsible, it shall similarly notify defendants. The notice shall set
forth the details of the proposed transaction and list the name,
address and telephone number of each person not previously identified
who offered to, or expressed an interest in or a desire to, acquire any
ownership interest in the business to be divested, together with full
details of same. Within fifteen (15) calendar days of receipt by
plaintiff of such notice, plaintiff may, in its sole discretion,
request from defendants, the proposed purchaser or purchasers, or any
other third party, additional information concerning the proposed
divestiture and the proposed purchaser. Defendants and the trustee
shall furnish any additional information requested from then within
fifteen (15) calendar days of the receipt of the request, unless the
parties shall otherwise agree. Within thirty (30) calendar days after
receipt of the notice of within twenty (20) calendar days after
plaintiff has been provided with the additional information requested
from defendants, the proposed purchaser or purchasers, and any third
party, whichever is later, plaintiff shall provide written notice to
defendants and the trustee, if there is one, stating whether or not it
objects to the proposed divestiture. If plaintiff provides written
notice to defendants and the trustee that it does not object, then the
divestiture may be consummated, subject only to defendants' limited
right to object to the sale under Section V(B) of this Final Judgment.
Absent written notice that plaintiff does not object to the proposed
purchaser or upon objection by the plaintiff, a divestiture proposed
under Section IV or V may not be consummated. Upon objection by
defendants under the provision in Section V(B), a divestiture proposed
under Section V shall not be consummated unless approved by the Court.
VII. Affidavits
A. Within twenty (20) calendar days of the filing of the Complaint
in this matter and every thirty (30) calendar days thereafter until the
divestiture has been completed, whether pursuant to Section IV or
Section V of this Final Judgment, defendants shall deliver to plaintiff
an affidavit as to the fact and manner of compliance with Section IV or
V of this Final Judgment. Each such affidavit shall include, inter
alia, the name, address, and telephone number of each person who, at
any time after the period covered by the last such report, made an
offer to acquire, expressed an interest in acquiring, entered into
negotiations to acquire, or was contacted or made an inquiry about
[[Page 58774]]
acquiring, any interest in the business to be divested, 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 that defendants have taken to solicit a purchaser for the
relevant business and to provide required information to prospective
purchasers including the limitations, if any, on such information.
B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, defendants shall deliver to plaintiff an affidavit
which describes in detail all actions defendants have taken and all
steps defendants have implemented on an on-going basis to perserve the
LWD Business pursuant to Section VIII of this Final Judgment. The
affidavit also shall describe, but not be limited to, defendants'
efforts to maintain and operate the LWD Business as an active
competitor, maintain the management, staffing, research and development
activities, sales, marketing and pricing of the LWD Business, and
maintain the LWD Business in operable condition at current capacity
configurations. Defendants shall deliver to plaintiff an affidavit
describing any changes to the efforts and actions outlined in
defendants' earlier affidavit(s) filed pursuant to this Section within
fifteen (15) calendar days after the change is implemented.
C. Until one year after such divestiture has been completed,
defendants shall preserve all records of all efforts made to preserve
the business to be divested and effect the divestiture.
VIII. Preservation of Assets
Until the divestiture required by the Final Judgment has been
accomplished:
A. Defendants shall take all steps necessary to assure that the LWD
Business will be maintained as a separate and independent, economically
viable, ongoing business with its assets (including Intellectual
Property, management, operations, and books and records) separate,
distinct, and apart from those of defendants. Defendants shall use all
reasonable efforts on behalf of themselves and the LWD Business to
maintain and increase sales of LWD Services, continue current plans for
research, development, and testing of LWD Services, and otherwise
maintain the business as a viable and active competitor. Defendants
shall take no action that would jeopardize the sale of the LWD
Business.
B. Defendants shall not sell, lease, assign, transfer or otherwise
dispose of, or pledge as collateral for loans (except such loans as are
currently outstanding or replacements or substitutes therefore), assets
required to be divested pursuant to Section IV or V, except that any
component of such assets as is replaced in the ordinary course of
business with a newly purchased, assembled, remanufactured or
manufactured component may be sold or otherwise disposed of, provided
the newly purchased, assembled, remanufactured or manufactured
component is so identified as a replacement component for one to be
divested.
C. Defendants shall provide and maintain sufficient working capital
to maintain the LWD Business as a viable, ongoing business consistent
with the requirements of Section VIII(A).
D. Defendants shall preserve the assets required to be divested
pursuant to Section IV or V, except those replaced with newly acquired
assets in the ordinary course of business, in a state of repair equal
to their state of repair as of the date this Final Judgment is filed,
ordinary wear and tear excepted. Defendants shall preserve the
documents, books, and records relating to the LWD Business until the
date of divestiture of the LWD Business.
E. Except in the ordinary course of business, Defendants shall
refrain from terminating or altering current employment, salary, or
benefit agreements for any executive or managerial person whose
principal responsibilities are with the LWD Business, or for any sales,
manufacturing, marketing, engineering, or other technical person of the
LWD Business. Defendants shall also refrain from transferring any
employee so employed without the prior approval of plaintiff.
F. Defendants shall use all reasonable efforts to maintain the
manufacturing activities of the LWD Business, and shall maintain at a
level no less than the highest level since February 25, 1998, research
and development funding, promotional, advertising, sales, technical
assistance, marketing, and merchandising support for the LWD Business.
G. Defendants shall provide and maintain sufficient lines and
sources of credit to maintain the LWD Business as an economically
viable, ongoing business.
H. Defendants shall take all steps necessary to ensure that the
facilities associated with the LWD Business are fully maintained in
operable condition at no lower than their current rated capacity, and
shall maintain and adhere to normal repair and maintenance schedules
for the LWD Business.
I. Defendants shall maintain, in accordance with sound accounting
principles, separate, true, 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, income, profit and loss of the
LWD Business.
J. Defendants shall take no action that would interfere with the
ability of any trustee appointed pursuant to the Final Judgment to
complete the divestiture pursuant to the Final Judgment to a suitable
purchaser.
K. Until such time as the LWD Business is divested, the assets to
be divested shall be managed by a person appointed by Halliburton
within ten (10) business days of consummation of the merger of
Halliburton and Dresser, subject to plaintiff's approval. The person so
appointed shall have complete managerial responsibility for the LWD
Business, subject to the provisions of this Order and the Final
Judgment. In the event that the person becomes unable to perform his
duties, defendants shall appoint, subject to plaintiff's approval, a
replacement within ten (10) business days. Should defendants fail to
appoint a replacement acceptable to plaintiff within ten (10) business
days, plaintiff shall appoint a replacement.
IX. Financing
Defendants are ordered and directed not to finance all or any part
of any purchase by purchaser made pursuant to Sections IV or V of this
Final Judgment.
X. Compliance Inspection
For purposes of determining or securing compliance with the Final
Judgment and subject to any legally recognized privilege, from time to
time.
A. Duly authorized representatives of the United States Department
of Justice, upon written request of the Attorney General or of the
Assistant Attorney General in charge of the Antitrust Division, and on
reasonable notice to defendants made to their principal offices, shall
be permitted:
1. Access during office hours of defendants to inspect and copy all
books, ledgers, accounts, correspondence, memoranda, and other records
and documents in the possession or under the control of defendants, who
may have counsel present, relating to the matters contained in this
Final Judgment; and
2. Subject to the reasonable convince of defendants and without
restraint or interference from them, to interview, either informally or
on the record, their officers, employees, and agents, who
[[Page 58775]]
may have counsel present, regarding any such matters.
B. Upon the written request of the Attorney General of the
Assistant Attorney General in charge of the Antitrust Division, made to
defendants' principal offices, defendants shall submit such written
reports, under oath if requested, with respect to any matter contained
in the Final Judgment.
C. No information or documents obtained by the means provided in
Sections VII or X of this Final Judgment shall be divulged by a
representative of the plaintiff to any person other than a duly
authorized representative of the Executive Branch of the United States,
except in the course or legal proceedings to which the United States is
a party (including grand jury proceedings), or for the purpose of
securing compliance with this Final Judgment, or as otherwise required
by law.
D. If at the time information or documents are furnished by
defendants to plaintiff, defendant represent and identify in writing
the material in any such information or documents to which a claim of
protection may be asserted under Rule 26(c)(7) of the Federal Rules of
Civil Procedure, and defendants mark each pertinent page of such
material: ``Subject to claim of protection under Rule 26(c)(7) of the
Federal Rules of Civil Procedure,'' then ten (10) calendar days notice,
if practicable, shall be given by plaintiff to defendants prior to
divulging such material in any legal proceeding (other than a grand
jury proceeding) to which each defendant is not a party.
XI. Retention of Jurisdiction
Jurisdiction is retained by this Court for the purpose of enabling
any of the parties to this Final Judgment to apply to this Court at any
time for such further orders and directions as may be necessary or
appropriate for the construction or carrying out of this Final
Judgment, for the modification of any of the provisions hereof, for the
enforcement of compliance herewith, and for the punishment of any
violations hereof.
XII. Termination
Unless this Court grants an extension, this Final Judgment will
expire upon the tenth anniversary of the day of its entry.
XIII. Public Interest
Entry of this Final Judgment is in the public interest.
Dated __________, 1998.
----------------------------------------------------------------------
United States District Judge
Schedule A
1. LWD and MWD Tools
Subject to the other provisions of this Schedule A, HESI shall
transfer to purchaser all of its LWD tools and such quantity of MWD
tools as will allow purchaser to operate such LWD tools. Such LWD tools
shall include the following tools:
------------------------------------------------------------------------
Approximate
current
quantity
------------------------------------------------------------------------
LWD:
CWRGM Resistivity--GR Tool............................ 111
DNSC Density--Neutron Tool............................ 53
SCWR Slim Resistivity Tool............................ 42
------------------------------------------------------------------------
In order to allow purchaser to operate such LWD tools, HESI will
transfer the following MWD tools to purchaser:
------------------------------------------------------------------------
MWD:
HDSM Directional Tool (positive pulse) 95
HDS1 MWD Kits (positive pulse) 17
RX4 MLWD Surface System............................... 50
------------------------------------------------------------------------
Included with such tools shall be the software required to operate
such tools in their current mode of operation by HESI and a hard copy
and copy of all computer tapes and discs containing any data in the
possession or control of HESI (but not data owned by a customer unless
the customer consents) that record the performance anywhere of those
tools, together with instructions and all other materials necessary to
use or interpret the data. HESI will use its best efforts to obtain the
consent of customers who own such data that is in its possession or
control.
2. Sonic Tools
HESI shall transfer to purchaser 50% of its CLSS Sonic Tools
(approximately 23 tools), 50% of its SCLSS Sonic (slim) Tools
(approximately 9 tools), and 50% of its Sonic Workstations
(approximately 7 workstations). HESI will also grant to purchaser a
worldwide, royalty-free, irrevocable, non-exclusive license covering
HESI's Intellectual Property for the use, manufacture and sale of such
Sonic Tools. Such license will not be subject to any requirement to
grant back to HESI rights to any improvements made by purchaser to such
tools.
Included with such tools shall be the software necessary to operate
such tools in their current mode of operation by HESI and a hard copy
and copy of all computer tapes and discs containing any data in the
possession or control of HESI (but not data owned by a customer unless
the customer consents) that record the performance anywhere of those
tools, together with instructions and all other materials necessary to
use or interpret the data. HESI will use its best efforts to obtain the
consent of customers who own such data that is in its possession or
control. HESI shall be permitted to offer Sonic LWD services worldwide
using the Sonic LWD tools and workstations it retains. HESI shall be
permitted to rent from purchaser sufficient other HESI LWD tools to
allow it to provide sonic LWD services until such tine as HESI is able
to adapt its sonic LWD tools to operate in real time with LWD tools
acquired from Dresser Industries, Inc., but in any event not longer
than 12 months after the merger of Halliburton Company and Dresser
Industries, Inc. is consummated. To the extent and for the period that
HESI retains LWD tools (other than sonic tools) for such purpose, it
shall pay purchaser a reasonable rental amount for such retained tools.
3. Buildings
(a) In the United States, the LWD Business is operated from the
HESI-owned Lafayette, Louisiana service center, which is a 63,400 sq.
ft. facility located on a 9.8 acre site, and configured for the storage
of radioactive well logging sources. HESI shall transfer to purchaser
the entire Lafayette facility, including all workshop, testing, and
repair equipment required for the maintenance of the tools.
(b) With respect to equipment and facilities located outside the
United States which are used by HESI to conduct the LWD Business, HESI
will transfer to purchaser all workshop, testing, and repair equipment
used by HESI to conduct the LWD Business and such of the buildings HESI
owns or leases which are used solely for purposes of conducting the LWD
Business. Where HESI conducts its LWD Business from a facility that is
also used by HESI for other purposes, HESI will transfer such workshop,
testing and repair equipment to purchaser at a nearby facility of
purchaser's selection which purchaser has acquired for such purpose. In
those areas where, following the merger of Halliburton Company and
Dresser Industries, Inc., a facility formerly used by one of the
companies to provide LWD services will not be used by HESI to provide
LWD services, purchaser will have the option to
[[Page 58776]]
acquire that facility from HESI as part of the LWD Business.
4. Manufacturing
(a) HESI will transfer to purchaser manufacturing, assembly,
testing, calibration and other machinery and equipment, including
related software, to equip a building, to be supplied by purchaser,
with sufficient equipment to permit purchaser to conduct the
manufacturing, assembly, testing, and calibration of LWD tools and MWD
tools used in conjunction with the LWD tools currently performed by
HESI (with the exception of a test well). HESI will make its current
test well in Fort Worth, TX available to purchaser for a period of two
years for a charge not to exceed the amount charged by AMOCO at its
test well in Catoosa, OK, which is available on a rental basis to the
industry. This transferred equipment shall include HESI designed
automated test equipment and accelerated stress screen test equipment,
and standard injection molding equipment used to ``pott'' circuit
boards in shock resistant elastomer. Also included will be a hydraulic
shake table used to perform tool chassis testing. HESI will provide
purchaser with copies of all drawings, histories, manuals, lab
notebooks, blueprints, designs, design protocols, specifications for
materials, specifications for parts and devices, and quality assurance
control procedures and other records maintained by HESI related to the
tools specified in paragraphs 1 and 2.
(b) A reasonable number of employees whose qualifications are
suited to conduct the management of the manufacturing, assembly,
testing or calibration process will be selected by purchaser from a
list HESI shall supply to purchaser of all of its skilled technical and
management employees who work in the manufacturing, assembly, testing,
or calibration of LWD tools and MWD tools used in conjunction with the
LWD tools, which list shall include their expertise, qualifications,
job descriptions, salary, date of hire, and all other information from
the employee's personnel file that HESI can legally provide to
purchaser. Purchaser will be responsible for offering such employees
such compensation and benefit program as will induce such persons
voluntarily to agree to leave HESI's employment and become employees of
purchaser. HESI will use its best efforts to work with purchaser to
make reasonable arrangements to cause such employees to accept such
employment by purchaser.
(c) If at the time of sale there exist continuing contract
obligations of HESI to sell or maintain or support LWD tools previously
sold to third-parties, HESI shall identify and purchaser shall assume
such obligations.
5. R&D
HESI will deliver to purchaser R&D equipment, including related
software, and copies of tool histories, development records and
laboratory records related to the LWD tools and MWD tools listed in
paragraphs 1 and 2, including the results of unsuccessful designs. HESI
will provide purchaser, at a location to be supplied by purchaser, a
LWD research laboratory capable of conducting the research projects
existing at any time on or after February 25, 1998 with respect to
existing LWD or MWD tools or new tools that extend the technology
contained in the tools listed in paragraphs 1 and 2. A reasonable
number of employees whose technical qualifications are suited to
conduct the types of LWD research and development purchaser wishes to
conduct will be selected by purchaser from HESI's current LWD technical
staff. HESI shall supply to purchaser a complete list of all its LWD
technical staff members who have participated in any research projects
with respect to LWD or MWD tools, including their expertise,
qualifications, job descriptions, salary, date of hire, and all other
information from the employee's personnel file that HESI can legally
provide to purchaser. Purchaser will be responsible for offering such
employees such compensation and benefit programs as will induce such
persons voluntarily to agree to leave HESI's employment and become
employees of purchaser. HESI will use its best efforts to work with
purchaser to make reasonable arrangements to cause such employees to
accept employment by purchaser.
6. Licenses
(a) HESI will grant to purchaser a worldwide, royalty-free,
irrevocable, non-exclusive license covering HESI owned Intellectual
Property. Purchaser shall not be granted any rights, including
trademarks and service marks, associated with the use of the trade
names or commercial names of Halliburton or HES; provided, however,
that in the marketing of LWD services using LWD or MWD tools acquired
from HESI, purchaser will possess the right following the date of the
purchase of the LWD Business to identify its LWD and MWD tools as being
manufactured pursuant to a license from HESI and its LWD Business as
having been acquired from HESI. Such license will not be subject to any
requirement that purchaser grant back to HESI rights to any
improvements made by purchaser to such tools.
(b) HESI will grant to purchaser sublicenses covering the use of
third-party technology and related software embodied in the transferred
LWD and MWD tools and software, to the extent permitted by its licenses
from such third parties. Such sublicenses will not be subject to any
requirement that purchaser grant back to HESI rights to any
improvements made by purchaser to such tools. To the extent that the
third party licenses do not permit HESI to grant purchaser a
sublicense, HESI will identify each such third party license and use
its best efforts to assist purchaser in obtaining a license from the
third party.
7. Contracts
(a) At the time of sale, HESI will assign to purchaser all of its
contracts with customers to provide LWD services in the United States,
or to the extent applicable, portions of contracts to provide LWD
services in the United States that are outstanding at closing. To the
extent not assignable, HESI will use its best efforts to obtain for
purchaser the benefit of such contracts by designating purchaser as
HESI's agent for the purposes of performing such contracts and paying
to purchaser all monies due under such contracts for the performance of
such LWD services.
(b) At the time of sale, HESI will assign to purchaser all of its
contracts with customers to provide LWD Services outside the United
States, or to the extent applicable, portions of contracts to provide
LWD Services that are outstanding at closing. To the extent not
assignable or to the extent that the assignment is unacceptable to the
customer, in order to allow HESI to complete contracts existing at the
time of sale any resulting from the award under a tender outstanding at
the date of sale, HESI shall be allowed to rent from purchaser such LWD
and MWD tools, and to use equipment and facilities of the LWD Business
and such employees of the LWD Business as are reasonably required for
HESI to complete the performance of LWD Services under such contracts.
HESI shall pay to purchaser a reasonable rental amount for such tools,
equipment, facilities, and employees during the period from the close
of the sale of the LWD Business to the time such contracts are
completed.
[[Page 58777]]
8. Employees
Subject to the other terms of this Schedule A, HESI and purchaser
will enter into commercially reasonable arrangements for purchaser to
employ such of the employees of the LWD Business as purchaser requires
to operate the LWD Business.
9. Customer Lists, Credit Records, and Supplied/Vendor Lists and
Supplier/Vendor Contracts
HESI will transfer to purchaser its lists of customers, customer
credit records, and supplier/vendor lists and supplier/vendor contracts
for its LWD Business anywhere in the world.
10. Technical Support and Training
HESI will transfer to purchaser technical support and training
services employees and related assets with respect to the LWD Business.
Purchaser will be responsible for offering such employees such
compensation and benefit programs as will induce such persons
voluntarily to agree to leave HESI's employment and become employees of
purchaser. HESI shall be permitted to utilize the services of
sufficient technical support and training services employees and
related assets to the extent required for HESI to complete the
contracts referred to in paragraph 7(b). To the extent and for the
period that HESI utilizes the services of technical support and
training services employees and related assets, it shall pay purchaser
a reasonable fee for those services.
11. Spare Parts
HESI's inventory of spare parts and consumables relating to the LWD
Business will be transferred to purchaser, provided, however, that the
inventory of Sonic LWD tool parts shall be divided between HESI and
purchaser in the same proportions as the Sonic tools are divided
pursuant to paragraph 2. Purchase will agree to sell to HESI at
reasonable prices spare parts sufficient to permit HESI to complete the
contracts referred to in paragraph 7(b).
12. Continuing LWD Services
HESI agrees that after the sale of the LWD Business it will not
offer LWD services, directly or indirectly, including by a licensee
other than purchaser, anywhere in the world using any of the HESI tools
of the type sold to purchaser, except (i) LWD services necessary to
complete the contracts referred to in paragraph 7(b); (ii) LWD services
using LWD tools acquired from Dresser; and (iii) sonic LWD services
using sonic LWD tools of the type sold to purchaser. Further, HESI may
continue to use the underlying technology licensed to purchaser in its
wireline logging tools and other products and in Dresser tools.
13. No Transfer of Acquired Assets
HESI may require purchaser to agree that it will not transfer by
any means any of the tangible or intangible property or assets it
acquires from HESI to either Schlumberger Limited, or Baker Hughes
Incorporated, or their affiliates for the life of the consent decree.
This provision does not prevent purchaser from making the property or
assets available to any joint venture in which it participated.
Excluded assets:
Excluded from the LWD Business are (1) all business, assets and
technology of Dresser Industries, Inc. which is being acquired by
Halliburton; (2) all business, assets and technology of NUMAR; and (3)
Intellectual Property, except to the extent provided in paragraphs 2
and 6.
Certificate of Service
I hereby certify that I have caused a copy of the foregoing
Complaint and proposed Final Judgment to be served on counsel for
defendants in this matter in the manner set forth below:
By first class mail, postage prepaid, and by facsimile:
Helene D. Jaffe, Esquire, Weil, Gotshal & Manges, 767 Fifth Avenue, New
York, NY 10153
Ky P. Ewing, Esquire, Vinson & Elkins, 1455 Pennsylvania Avenue, N.W.,
Washington, D.C. 20004-1008
Andrew K. Rosa,
Antitrust Division, U.S. Department of Justice, 325 Seventh Street,
N.W., Suite 500, Washington, D.C. 20530, (202) 307-0886, (202) 616-2441
(Fax).
Competitive Impact Statement
The United States, pursuant to Section 2(b) of the Antitrust
Procedures and Penalties Act (``APPA''), 15 U.S.C. Sec. 16(b)-(h),
files this Competitive Impact Statement relating to the proposed Final
Judgment submitted for entry in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
On September 29, 1998, the United States filed a civil antitrust
Complaint alleging that the proposed merger of Dresser Industries, Inc.
(``Dresser'') and Halliburton Company (``Halliburton'') would violate
Section 7 of the Clayton Act, 15 U.S.C. Sec. 18. The Complaint alleges
that Halliburton and Dresser are two of only four companies that
provide logging-while-drilling (``LWD'') services to oil and gas
drilling companies and are the only sources of current and likely
future innovations in new and improved LWD tools. The request for
relief in the Complaint seeks: (1) a judgment that the proposed merger
would violate Section 7 of the Clayton Act; (2) a permanent injunction
preventing consummation of the merger agreement; (3) an award of costs
to the plaintiff; and (4) such other relief as the Court may deem just
and proper.
When the Complaint was filed, the United States also filed a
proposed settlement that would permit the merger of Halliburton and
Dresser to proceed, but require a divestiture that will preserve
competition in the market for provision of LWD services. This
settlement consists of a Stipulation and Order and a proposed Final
Judgment. The proposed Final Judgment orders defendants to divest ``the
LWD business,'' which is described in Schedule A of the proposed Final
Judgment, within one hundred and eighty (180) calendar days after the
filing of the Final Judgment in this matter, or five (5) days after
notice of the entry of the Final Judgment by the Court, whichever is
later. The purchaser of the LWD Business must be acceptable to the
Antitrust Division of the Department of Justice (``DOJ''). The LWD
Business includes virtually all of Halliburton's LWD tools; sufficient
measurement-while-drilling (``MWD'') tools for use with the LWD tools;
manufacturing equipment; workshop, testing, and repair equipment used
by Halliburton to conduct the LWD Business anywhere in the world;
research and development equipment; Halliburton's Lafayette, Louisiana,
facility and the option to acquire facilities outside the United States
previously used by Halliburton or Dresser to provide LWD services that
will not continue to be used by Halliburton; the right to hire
employees of the LWD Business as the purchaser requires to operate the
LWD business, including a reasonable number of employees to manage the
manufacture, assembly, testing or calibration of LWD tools and
associated MWD tools and to conduct LWD research and development; and
worldwide, royalty-free, irrevocable licenses to the intellectual
property used in connection with the use, manufacture, or sale of the
transferred tools.
The plaintiff and defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed final Judgment would terminate the action, except that the
Court would retain jurisdiction to construe, modify, or enforce the
[[Page 58778]]
provisions of the proposed Final Judgment and to punish violations
thereof.
II. Description of the Events Giving Rise to the Alleged Violation
A. The Defendants and the Proposed Transaction
Halliburton is a Delaware corporation, with its principal office in
Dallas, Texas. It provides products and services for the exploration,
development, and production of oil and natural gas. It is one of the
``Big Four'' oil field service companies--along with Dresser and two
other companies. In 1997, Halliburton had revenues of over $8 billion.
Dresser is also a Delaware corporation headquartered in Dallas, Texas.
In 1997, it reported total sales of about $7.5 billion.
On February 25, 1998, Halliburton and Dresser entered into an
Agreement and Plan of Merger under which Halliburton would merge with
Dresser. This transaction, which would increase concentration in the
already highly concentrated market for the provision of LWD services,
precipitated the government's suit.
B. The LWD Service Market
Oil and gas companies use data from LWD tools, which are placed
behind the drill bit, to guide drilling operations, particularly in
offshore drilling projects. The data from LWD tools, which is
transmitted to the surface while the drilling is ongoing, allows the
driller to evaluate the formation that the drill bit is cutting. With
this data, the driller can detect changes in downhole pressure, prevent
the drill bit from straying out or oil or gas deposits, and otherwise
determine the optimum drilling path.
There are four types of LWD tools, each of which provide different
data to evaluate the formation: (1) gamma ray, (2) resistivity, (3)
neutron density, and (4) sonic. Gamma ray tools, which are the most
rudimentary LWD tools, identify the type of formation (e.g., shale or
sand) by measuring natural radioactivity. Data from LWD resistivity
tools help detect the presence of oil, gas, and water in the formation.
Data from LWD neutron density and sonic tools help determine the
formation's porosity, which indicates the amount of liquid in the
formation and the formation's permeability.
There are no realistic substitutes for LWD services for offshore
drilling projects. Drillers can use wireline logging tools to gather
similar data, but, in order to use wireline logging, they must cease
drilling, remove the drill from the well, lower tools into the well by
wire, collect data downhole, remove the tools, and read the data on the
surface. During this entire operation, which may take as long as a day
and a half, the drilling rig sits idle (costing the operator $250,000
to $300,000 per day in deepwater areas of the Gulf of Mexico), which
makes wireline logging much more expensive than LWD services. A small
but significant and nontransitory increase in the price of LWD services
would not cause a significant number of customers drilling offshore
wells to switch to wireline services, or to any other method for
obtaining formation evaluation data.
C. Harm to Competition as a Consequence of the Merger
Halliburton and Dresser are two of only four firms that provide the
full range of LWD services. The proposed transaction would reduce to
three the number of firms providing the full range of LWD services in
the United States.
Moreover, successful entry into the market for provision of LWD
services would be difficult, time-consuming, and costly. Even if a new
entrant invested in the research, development, and engineering programs
required to produce the current generation of LWD tools, it would also
have to engage in extensive testing, and, over a course of years,
eventually establish a reputation for quality and reliability--
particularly for customers drilling offshore for whom the costs of
delay due to failure of LWD tools can be great.
Halliburton and Dresser are also two of only four firms that are
engaged in the research, development, and commercialization of new LWD
tools. Competition between these firms to develop new and better LWD
tools is important to oil and gas companies, in order to minimize the
per-barrel cost of producing oil and gas. This competition has hastened
the pace of innovation and given customers a variety of solutions to
their formation evaluation needs.
The Complaint alleges that the transaction would have the following
effects, among others:
a. Actual and potential competition between Halliburton and Dresser
will be eliminated;
b. Competition generally in the provision of LWD services will
likely be substantially lessened;
c. Prices for LWD services will likely increase; and
d. Competition in the development, commercialization, and
improvement of LWD tools will likely be substantially lessened.
III. Explanation of the Proposed Final Judgment
The provisions of the proposed Final Judgment are designed to
eliminate the anticompetitive effects of the proposed merger of
Halliburton and Dresser.
The proposed Final Judgment provides that, within one hundred and
eighty (180) calendar days after the filing of the Final Judgment in
this matter, or five (5) days after notice of the entry of the Final
Judgment by the Court, whichever is later, defendants must divest the
LWD Business to an acquirer acceptable to DOJ. If defendants fail to
divest the LWD Business within this period, a trustee, selected by DOJ,
will be appointed by the Court to sell the LWD Business.
The Final Judgment provides that defendants will pay all costs and
expenses of the trustee. After the trustee's appointment becomes
effective, the trustee will file monthly reports with the parties and
the Court, setting forth the trustee's efforts to accomplish
divestiture. At the end of six months, if the divestiture has not been
accomplished, the trustee and the parties will have the opportunity to
make recommendations to the Court, which shall enter such orders as
appropriate in order to carry out the purpose of the trust, including
extending the trust and the term of the trustee's appointment.
Section IV of the proposed Final Judgment requires defendants to
divest ``the LWD Business' as an ongoing business to a purchaser
acceptable to the United States in its sole discretion. ``The LWD
Business'' is defined as Halliburton Energy Services, Inc.'s (``HESI'')
worldwide business providing LWD Services and includes the tangible and
intangible assets, obligations, and understandings set forth in
Schedule A of the proposed Final Judgment.\1\
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\1\ HESI is a wholly owned subsidiary of Halliburton. ``LWD
Services'' means the services and products used to provide real-time
logging-while-drilling formation evaluation data which is utilized
to evaluate the formation characteristics of a given geologic
formation. LWD Services also include MWD Services provided in
conjunction with LWD Services. MWD tools are used when drilling non-
vertical wells to measure and transmit data from downhole during the
drilling process on the inclination and azimuth of the downhole
drilling tools. When LWD tools are used, the driller also uses MWD
tools, and the driller usually obtains both types of tools from the
same company because the MWD tools and LWD tools must be compatible.
---------------------------------------------------------------------------
The assets to be divested include:
(1) HESI's resistivity tools, density-neutron tools, and slim
resistivity tools;
(2) half of Halliburton's sonic tools and sonic workstations;
(3) enough MWD tools to allow the purchaser to operate these LWD
tools;
[[Page 58779]]
(4) software required to operate the tools, information about tool
performance history, and spare parts;
(5) a building from which Halliburton currently supplies LWD
services to U.S. offshore drilling projects;
(6) equipment necessary to allow the buyer of the LWD Business to
manufacture, assemble, test, and calibrate LWD and MWD tools,\2\
---------------------------------------------------------------------------
\2\ Excluded from the divestiture package is HESI's test well.
The purchaser will be able, for a fee, to use HESI's test well at
Fort Worth, Texas, for two years.
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(7) worldwide, royalty-free, irrevocable, non-exclusive licenses to
use HESI-owned intellectual property, and sublicenses covering the use
of third-party technology and related software embodied in the
transferred LWD and MWD tools and software, to the extent permitted by
HESI's licenses from such third parties;
(8) research and development equipment and development and
laboratory records related to the LWD tools and MWD tools to be sold,
including the results of unsuccessful designs;
(9) all assignable contracts to provide LWD services worldwide, as
well as lists of customers, customer credit records, and supplier/
vendor lists and supplier/vendor contracts; and
(10) the opportunity to hire Halliburton employees to operate the
LWD Business, including employees in manufacturing, research and
development, and technical support and training services.
After the sale of the LWD Business, defendants will not be able to
offer LWD services using any of the tools of the type sold with the LWD
Business, except for (i) LWD services necessary to complete existing
contracts for which Halliburton will rent the tools from the purchaser;
(ii) LWD services using LWD tools acquired from Dresser; and (iii)
sonic LWD services using sonic LWD tools of the type sold to purchaser.
Although the Complaint alleges the United States as the relevant
geographic market, the proposed Final Judgment requires divestiture of
the assets that Halliburton has used to provide LWD Services worldwide.
Divestiture of the worldwide LWD business is necessary to preserve
competition in the United States LWD services market because
Halliburton, Dresser, and the other two major providers of LWD Services
have worldwide operations that provide them a revenue base to support
LWD research and development efforts. Thus, the divestiture is designed
to ensure that the new buyer is viable and to put the purchaser in
Halliburton's place as an international LWD company, enabling the
purchaser to continue the innovation of LWD tools, which will benefit
U.S. customers.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. Sec. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
Sec. 16(a), the proposed Final Judgment has no prima facie effect in
any subsequent private lawsuit that may be brought against defendants.
V. Procedures Available for Modification of the Proposed Final
Judgment
The United States and defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least sixty days preceding the
effective date of the proposed Final Judgment within which any person
may submit to the United States written comments regarding the proposed
Final Judgment. Any person who wishes to comment should do so within
sixty 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 Judgment at any time prior to entry. The
comments and the response of the United States will be filed with the
Court and published in the Federal Register. Written comments should be
submitted to: Roger W. Fones, Chief, Transportation, Energy &
Agriculture Section, Antitrust Division, United States Department of
Justice, 325 Seventh Street, NW., Suite 500, Washington, DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The United States considered, as an alternative to the proposed
Final Judgment, a full trial on the merits against Halliburton and
Dresser. The United States is satisfied that the divestiture of the
described assets specified in the proposed Final Judgment will
facilitate continued viable competition in the market for the provision
of LWD services. The United States is satisfied that the proposed
relief will prevent the merger from having anticompetitive effects in
this market. The divestiture of the LWD Business will preserve the
structure of the market for the provision of LWD services that existed
prior to the merger and will preserve the existence of an independent
competitor.
VII. 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 sixty-day comment
period, after which the court shall determine whether entry of the
proposed Final Judgment ``is in the public interest.'' In making that
determination, the court may consider--
(1) The competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration or relief sought, anticipated effects of
alternative remedies actually considered, and any other
considerations bearing upon the adequacy of such judgment;
(2) The impact of entry of such judgment upon the public
generally and individuals alleging specific injury from the
violations set forth in the complaint including consideration of the
public benefit, if any, to be derived from a determination of the
issues at trail.
15 U.S.C. Sec. 16(e). As the Court of Appeals for the District of
Columbia Circuit 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, 56 F.3d 1448 (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
[[Page 58780]]
settlement through the consent decree process.'' \3\ Rather,
\3\ 119 Cong. Rec. 24598 (1973). See also 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. Sec. 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. 93-1463, 93rd Cong. 2d Sess. 8-9, reprinted in (1974) U.S.
Code Cong. & Ad. News 6535, 6538.
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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.
United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. para.
61,508, at 71,980, (W.D. Mo. 1977).
Accordingly, with respect to the adequacy of the relief secured by
the decree, a court may not ``engage in an unrestricted evaluation of
what relief would best serve the public.'' United States v, BNS, Inc.,
858 F.2d 456, 462 (9th Cir. 1988), quoting United States v. Bechtel
Corp., 648 F. 2d 660, 666 (9th Cir.), cert denied, 454 U.S. 1083
(1981). Precedent requires that
[t]he balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.\4\
\4\ United States v. Bechtel, 648 F.2d at 666 (internal
citations omitted) (emphasis added); see United States v. BNS, Inc.,
858 F.2d at 463; United States v. National Broadcasting Co., 449 F.
Supp. 1127, 1143 (C.D. Cal. 1978); Gillette, 406 F. Supp. at 716.
See also United States v. American Cyanamid Co., 719 F.2d 558, 565
(2d Cir. 1983).
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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.' (citations
omitted).'' \5\
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\5\ United States v. American Tel & Tel. Co., 552 F. Supp. 131,
150 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 460
U.S. 1001 (1983), quoting Gillette, 406 F. Supp. at 716; United
States v. Alcan Aluminium, Ltd., 605 F. Supp. 619, 622 (W.D. Ky.
1985).
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VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
For Plaintiff United States of America:
Dated: October 21, 1998.
Respectfully submitted,
Angela L. Hughes,
Trial Attorney, U.S.C. Department of Justice, Antitrust Division, 325
Seventh Street, N.W., Suite 500, Washington, DC 20530, Telephone: (202)
307-6410 or (202) 307-6351, Facsimile: (202) 307-2784.
Certificate of Service
I hereby certify that on this 21st day of October, 1998, I have
caused a copy of the foregoing Competitive Impact Statement to be
served on counsel for defendants in this matter by first class mail,
postage prepared, and by facsimile.
Counsel for Defendant Halliburton Company:
Ky P. Ewing, Jr., Esquire, Vinson & Elkins, 1455 Pennsylvania Avenue,
N.W., Washington, D.C. 20004-1008, Telephone (202) 639-6580, Facsimile:
(202) 639-6604
Counsel for Defendant Dresser Industries, Inc.:
Helene D. Jaffe, Esquire, Weil, Gotshal & Manges, 767 Fifth Avenue, New
York, NY 10153, Telephone: (212) 310-8572, Facsimile: (212) 310-8007.
Angela L. Hughes,
Antitrust Division, U.S. Department of Justice, 325 Seventh Street,
N.W., suite 500, Washington, D.C. 20530, Telephone: (202) 307-6410,
Facsimile: (202) 307-2784.
[FR Doc. 98-29222 Filed 10-30-98; 8:45 am]
BILLING CODE 4410-11-M