DOJ WON’T CHALLENGE STARS ALLIANCE’S JOINT PROCUREMENT PROPOSAL

(The following is a reformatted version of a press release
issued by The Department of Justice and received via e-mail. The
release was confirmed by the sender.) 
DECEMBER 20, 2012 
DEPARTMENT OF JUSTICE WILL NOT CHALLENGE STARS ALLIANCE LLC’S
JOINT PROCUREMENT PROPOSAL 
Nuclear Power Plant Operators’ Proposal Unlikely to Restrict
Competition in Markets for Electricity 
WASHINGTON - The Department of Justice today announced that it
will not challenge a proposal by STARS Alliance LLC (STARS), a
group of seven nuclear power plant operators, to procure jointly
certain goods and services.  The STARS members each operate
single nuclear electric generation plants and seek to obtain
efficiencies similar to those of a nuclear fleet operator
through the proposed joint procurement. 
The department said that, based on representations made by the
applicants, the proposed joint procurement was not likely to
restrict competition in either the upstream markets for the
particular goods and services or the downstream markets for
electricity. 
The department’s position was stated in a second business review
letter to counsel for the STARS Alliance, from Renata B. Hesse,
Acting Assistant Attorney General in charge of the Department of
Justice’s Antitrust Division.  “The proposed conduct may allow
the joint venture to increase efficiencies that result in lower
costs for electricity, benefitting consumers,” said Hesse. 
On July 3, 2012, the department issued its first business review
letter to counsel for STARS stating that the department would
not challenge proposed conduct relating to the sharing of
resources and coordination of best practices and other
operational activities through STARS. 
In issuing today’s letter, the department noted that
none of the proposed joint procurement involves the sale or
purchase of the electric power or the purchase of nuclear fuel,
that STARS will adopt measures to prevent anticompetitive
exchanges of information and that membership and participation
in all of the activities of STARS is voluntary. 
The department determined that the expanded joint venture meets
the requirements of the antitrust safety zone set forth in
Section 4.2 of the Department of Justice’s and Federal Trade
Commission’s Collaboration Among Competitors Guidelines.  The
guidelines provide an “antitrust safety zone” under which,
absent extraordinary circumstances, the agencies will not
challenge a joint venture when the market shares of the joint
venture and its members are not more than 20 percent of each
relevant market.  STARS represented that its members
collectively account for less than 20 percent of each relevant
market in which STARS proposed joint procurement. 
With respect to electricity, the STARS members, for the most
part, are in separate geographic markets and do not compete
against each other for the sale of electricity.  In the two
instances where members both have reactors in the same
electricity transmission organization, the members’ nuclear
units are not likely to have an impact on price. 
The STARS Alliance members are: Union Electric Company, with its
Callaway plant in Missouri; Arizona Public Service Company, with
its Palo Verde plant in Arizona; Luminant Generation Company
LLC, with its Comanche Peak plant in Texas; Pacific Gas and
Electric Company, with its Diablo Canyon plant in California;
Southern California Edison Company, with its San Onofre plant in
California; STP Nuclear Operating Company, with its STP plant in
Texas; and Wolf Creek Nuclear Operating Company, with its Wolf
Creek plant in Kansas. 
Under the department’s business review procedure, an
organization may submit a proposed action to the Antitrust
Division and receive a statement as to whether the division
currently intends to challenge the action under the antitrust
laws based on the information provided.  The department reserves
its right to challenge the proposed action under the antitrust
laws if it produces anticompetitive effects. 
A file containing the business review request and
the department’s response may be examined in the Antitrust
Division’s Antitrust Documents Group, U.S. Department of
Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C.
20530.  After a 30-day waiting period, the documents supporting
the business review will be added to the file, unless a basis
for their exclusion for reasons of confidentiality has been
established under the business review procedure. 
(sgp) NY 
#<278855.14078.3.1.0.0.76>#
 
 
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