For the reasons acceptable to the Department of Justice, either divestiture in accordance with the option would not violate the provisions of the Clayton Act. The real advantage which would accrue to the Department of Justice, it is asserted, is the submission by LTV to supervision by the Department of Justice in order to assure the Government that there would be no violation of the Clayton Act within the next ten year period.
It would seem to me that any divestiture should not be prolonged for a period of three years but should be done immediately in accord with the decisions of our Supreme Court. Cascade Nat. Gas v. El Paso Nat. Gas Corp., 386 U.S. 129, 87 S. Ct. 932, 17 L. Ed. 2d 814 (1967); United States v. Von's Grocery Co., 384 U.S. 270, 16 L. Ed. 2d 555, 86 S. Ct. 1478 (1966); United States v. El Paso Gas Co., 376 U.S. 651, 12 L. Ed. 2d 12, 84 S. Ct. 1044 (1964).
The Government argues in this connection that "the three year period of time within which the divestiture is to be completed under the terms of the proposed consent final judgment will, in all probability, result in an earlier divestiture than would be accomplished if the case were fully litigated and resulted in a judgment for the Government on the merits." I conclude, however, that the Department of Justice has agreed to the three year period for the purpose of permitting LTV to balance and stabilize its affairs because of the fact that the LTV financial structure is complex and holds the fate of a large number of employees as well as many thousand investors. I have had no evidence presented to me on this phase other than the many letters which I received and of those witnesses who appeared in court with hearsay evidence upon which I may speculate, but not make any findings of fact relevant to a determination here.
But because the parties have filed their stipulation and submitted a decree upon which they have agreed, I am relieved of the necessity of making certain findings of fact and conclusions of law which I would ordinarily be required to do if the action proceeded in adversary fashion. And this is so in view of the fact that Congress has obviously anticipated the times when the United States would enter into consent decrees with some of those whom it prosecutes under the antitrust laws.
Congress has made provisions under § 5(a) of the Clayton Act for the effect which is to be given to consent decrees when such are arrived at before testimony is undertaken.
In foreseeing the use of consent decrees to settle antitrust litigation, Congress obviously considered the desirability of avoiding long drawn-out litigation. United States v. Automobile Manufacturers Ass'n, 307 F. Supp. 617 (D.C. Cal. 1969), affirmed 397 U.S. 248, 90 S. Ct. 1105, 25 L. Ed. 2d 280 (1970); United States v. Carter Products, Inc., 211 F. Supp. 144 (S.D.N.Y. 1962). Therefore the consent decree does have a proper place in the prosecution of antitrust cases by the Government. An agreement or stipulation filed by the United States and those whom it prosecutes becomes a judicial act only when it is so decreed by the court in which the action is brought. But it should not be effected without judicial inquiry. "It is a judicial power to render judgment on consent", Pope v. United States, 323 U.S. 1, 12, 89 L. Ed. 3, 65 S. Ct. 16 (1944). When the court approves such a decree it becomes the adjudication of the court. Brunswick Corporation v. Chrysler Corporation, 408 F.2d 335, C.A. 7, 1969. Thus, while an agreement between parties can facilitate and advance a judicial determination which would, otherwise, be arrived at in an adversary proceeding, I am nevertheless not relieved from examining the same and inquiring into any matter which in equity should have been considered had the matter proceeded in adversary fashion.
Where, as here, the subject matter of the litigation concerns the public interest and its economy, and where, as here, I have not been provided with a complete record upon which I can rest a determination, I must obviously place weight upon the stipulation of the parties and particularly the assurance of the Department of Justice that its participation in the settlement and its recommendations to me are strictly in accord with the Congressional scope of the subject matter. With the acceptance by the parties of a plan which permits the defendant LTV to proceed with a modified version of the originally undertaken acquisition of J & L, the private interests are resolved but " . . . the public interest in preserving a free-competitive economy cannot be outweighed by any private interest." United States v. Ingersoll-Rand Company, 218 F. Supp. 530 (W.D. Pa., 1963), aff'd 320 F.2d 509, C.A. 3, 1963.
I received numerous letters from employees and pensioners of J & L and of the Presidents of two Unions of United Steelworkers of America, the first dated March 26, 1970 from Local 1843 at Pittsburgh, Pennsylvania, and the second dated May 28, 1970 from Local 4793 at Ishpeming, Michigan, expressing deep concern with the effect which the proposed judgment will have on the various pension and employees' plans, as well as possible employment aspects. In the first letter, President Frank W. O'Brien stated that "[over] forty thousand employees would be affected by this action. Ten thousand in the Pittsburgh Works would be affected." He said that there are twenty-one hundred persons on pension in the Pittsburgh Works at the present time, and that hundreds of employees have vested pension rights under labor agreements. In the second letter, President Jim Sodergren stated that "225 hourly employees are soon to qualify for a pension." The concern is expressed that the mine would be closed by LTV or sold to mining interests. The mine ships iron ore.
Prior to the acquisition of the J & L stock by LTV, certain rights had been created for the benefit of their employees and pensioners of J & L and its subsidiaries. This group of individuals have in most instances given long years of service to J & L and its subsidiaries and undoubtedly have done so in reliance upon employment protections and pension benefits. It is for the preservation of these rights created by benefit plans to which I direct the specific attention of the parties. These plans or their subsequent modifications and amendments, marked as exhibits by counsel for J & L, and admitted into evidence, comprise a series of contract and trust agreements. After examining these I find that the administration of these agreements is left with J & L and that the possession of the trust fund is in the hands of the Trustee, Mellon National Bank and Trust Company, who was appointed by the Board of Directors of J & L and who also is subject to removal upon proper notice by the Board of Directors of J & L.
I have no information before me on what the amount of the funds are, how they are constituted, or how much is presently protective of the rights for which the agreements have been entered into and accepted by J & L. Since the requested decree provides for certain powers of participation by LTV in J & L control, I must regard as an element of public concern the rights of employees and pensioners in the funds and that these be preserved in accordance with the spirit of the agreements. This is so in spite of the fact that the proffered decree denies LTV certain controls until the merger has been effected.
I particularly emphasize the fact that because of the right of the trustee to invest in stocks, it is possible that it might invest in securities of LTV or any of its corporate holdings, thereby producing an advantage to LTV if this were done.
It is my belief that the trust funds should remain inviolate and LTV denied controls over them, not only until the merger has been effected, but also for so long as the purposes of the plans and trust funds contemplate. As relates to the agreements which may be terminated, the basis for such termination would be a matter of public concern and merits judicial protection as long as jurisdiction remains here.
On June 1st Mr. O'Brien followed through with a Petition to Intervene but moved through counsel for the withdrawal of the same on the basis that there had been meetings between him and James J. Ling, President and Robert Stewart, III, Chairman of the Board, who had given assurance of a course of conduct designed to protect the integrity of the various funds. This was followed by a letter which was read into evidence, but not formally made a part of the record, in which Mr. Ling made this assertion, "With respect to pension fund, supplemental unemployment benefits and similar matters, it is my intention and policy that there shall never be any violation of any contractual, trust fund or other legal rights of these persons which must be protected." Accordingly, the proposed final judgment will be entered upon the parties' submission forthwith of an undertaking acceptable to me which provides safeguards to the employee benefit and pension funds involved.
Other matters here presented by way of letters and by objectors at the hearings on June 1st are for the most part conjectural. Many letter complaints received, alleged that because of the acquisition by LTV of the J & L stock, J & L directors at their last meeting passed a quarterly dividend for the first time in years, causing financial difficulties for persons who relied upon such income. This failure to pay a dividend was for the most part blamed on LTV because of its ulterior motives. For whatever reason the dividend was passed, it may or may not give the J & L minority stockholders some satisfaction in knowing that if a dividend had been voted more than 80% of it would have been paid to LTV for whatever purposes it chose to use such funds. As is, such funds remain within the control of J & L for such capital utilization as should benefit the minority as well as the majority stockholders.
One stockholder whose holdings were greater than those of some of the J & L officers, attempted to show that the present officials of J & L were actually the puppets of LTV and that they were acting without respect to the interests of the minority stockholders. This was denied by all counsel, and particularly by counsel for the Government, who indicated that LTV had no controlling power over the affairs of J & L during the pendency of the preliminary injunction. Whatever the circumstances in this instance, there is no question that the rights of the minority stockholders should be protected, but these are not matters which can properly be treated here. The rights of the minority stockholders should be preserved in the future by such proceedings as were available to them prior to and as of the time of the acquisition of the J & L stock by LTV. Accordingly, in the adoption of the decree I do not exercise any jurisdiction which will preclude a state court from enforcing remedies of stockholders or security holders where such are properly brought in accordance with law.