| IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
PETITION BY THE UNITED STATES FOR AN ORDER TO SHOW CAUSE WHY
UNITED STATES OF AMERICA,
325 7th Street N.W. Suite 500
Washington, D.C. 20530,
CAL DIVE INTERNATIONAL, INC.
400 North Sam Houston Parkway East
Houston, Texas 77060,
HELIX ENERGY SOLUTIONS GROUP, INC.
400 North Sam Houston Parkway East
Houston, Texas 77060,
| Supplemental Action to
Case No. 1:05CV02041
Judge: Emmet G. Sullivan
Deck Type: Antitrust
Filed: November 26, 2007
RESPONDENTS CAL DIVE INTERNATIONAL, INC. AND HELIX ENERGY
SOLUTIONS GROUP, INC. SHOULD NOT BE FOUND IN CIVIL CONTEMPT
The United States of America, by its attorneys, acting under the direction of the Attorney General of the United States, presents this Petition for an Order requiring Respondents Cal Dive International, Inc. and Helix Energy Solutions Group, Inc. to show cause why they should not be found in civil contempt of the Final Judgment entered by this Court on January 11, 2006, in United States v. Cal Dive International, Inc., et al., Civil Action No. 1:05CV02041 (D.D.C. 2005) ("Final Judgment") and the Hold Separate Stipulation and Order ("Hold Separate Order") entered by this Court on October 27, 2005. A copy of the Final Judgment is appended to this petition as Exhibit 1 and a copy of the Hold Separate Order is appended as Exhibit 2. The United States represents as follows:
- On October 18, 2005, the United States named Cal Dive International, Inc. ("CDI") a defendant in United States v. Cal Dive International, Inc., et al., Civil Action No. 1:05CV02041 (D.D.C. 2005). At the time the case was filed, CDI was a corporation organized and existing under the laws of the state of Minnesota. It had its principal place of business at 400 North Sam Houston Parkway East, Houston, Texas 77060.
- On or about February 3, 2006, CDI formed a new subsidiary, also named Cal Dive International, Inc., which was incorporated in the state of Delaware ("Cal Dive"). Cal Dive has its principal place of business at 400 North Sam Houston Parkway East, Houston, Texas 77060. Cal Dive, a Respondent to this Petition, had notice of, and is subject to, the terms of the Final Judgment and Hold Separate. As used herein, "Cal Dive" shall refer to Cal Dive, the Delaware corporation, or its predecessor, CDI.
- On or about March 6, 2006, CDI changed its name to Helix Energy Solutions Group, Inc. ("Helix"). Helix, formerly known as CDI, is a corporation organized and existing under the laws of the state of Minnesota, also with its principal place of business at 400 North Sam Houston Parkway East, Houston, Texas 77060. Helix, a Respondent to this Petition, is the majority owner of Cal Dive. Helix had notice of, and is subject to, the terms of the Final Judgment and Hold Separate Order.
II. JURISDICTION OF THE COURT
- This petition alleges violations of the Final Judgment and Hold Separate Order by the Respondents. This Court has jurisdiction both under its inherent powers to enforce compliance with its orders and under Section XIII of the Final Judgment, which provides:
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.
III. THE FINAL JUDGMENT AND HOLD SEPARATE
- On October 18, 2005, the United States filed a civil antitrust Complaint under Section 7 of the Clayton Act, 15 U.S.C. 18, seeking to permanently enjoin the proposed acquisition by Cal Dive of certain assets from Stolt Offshore, Inc. and S&H Diving, LLC (collectively, "Stolt"), including a number of diving support vessels, saturation diving systems, and other assets used by Stolt to provide saturation diving services in the United States Gulf of Mexico ("U.S. Gulf"). The Complaint alleged that the transaction would substantially lessen competition for saturation diving services in the U.S. Gulf.
- Simultaneously with filing the Complaint, with the consent of Cal Dive, the United States also filed a proposed Final Judgment and Hold Separate Order. An amended proposed Final Judgment, agreed upon in writing by the parties, was filed in Court on October 27, 2005. To preserve competition for saturation diving services in the U.S. Gulf, the amended proposed Final Judgment ordered Cal Dive to divest (a) the vessel designated as the Seaway Defender, a vessel with a permanently installed saturation diving system; (b) the vessel designated as the Midnight Carrier, a vessel capable of accommodating a portable saturation diving system; and (c) the Torch Saturation Diving System, a portable saturation diving system (collectively, the "Saturation Diving Assets"). The Saturation Diving Assets were to be divested to one or more acquirers, acceptable to the United States, that had the intent and capability to compete effectively in the saturation diving business in the U.S. Gulf.
- Cal Dive, pursuant to the terms of the Hold Separate Order, was bound by the terms of the proposed Final Judgment as of October 18, 2005, and by the terms of the amended proposed Final Judgment as of October 27, 2005.
- The Court entered the amended proposed Final Judgment on January 11, 2006, upon completing the public interest review called for by the Antitrust Procedures and Penalties Act, 15 U.S.C. §16.
- To ensure a "prompt and certain" divestiture of the Saturation Diving Assets that would prevent any substantial lessening of competition, the Final Judgment and the Hold Separate Order, among their provisions, ordered Cal Dive to:
IV. RESPONDENTS' CONDUCT
- use its "best efforts to divest the Saturation Diving Assets as expeditiously as possible" (Final Judgment § IV.A.);
- divest the assets in the same condition and state of repair as they existed at the time it acquired them, ordinary wear and tear excepted (Final Judgment § IV.E. & Hold Separate § V.A.);
- take no action that would jeopardize, delay, or impede the divestiture or impede the operation of the Saturation Diving Assets (Final Judgment §§ IV.F. & VIII. & Hold Separate § V.B.); and
- abide by and comply with the provisions of the proposed Final Judgment pending its entry by the Court (Hold Separate § IV.B.).
- In the summer of 2005, the U.S. Gulf region was devastated by Hurricanes Rita and Katrina, which damaged over 200 oil drilling platforms and hundreds of miles of pipeline in the U.S. Gulf. The need to inspect and repair these facilities created an unprecedented demand for saturation diving services, as well as for diving vessels and saturation diving systems such as the Saturation Diving Assets.
- By November 1, 2005, Cal Dive had taken possession of the Saturation Diving Assets, including the Seaway Defender, and immediately began working the Seaway Defender in the U.S. Gulf.
- As a result of the demand arising from the hurricane damage, Cal Dive had a strong financial incentive to retain ownership and continue receiving the revenues from the Seaway Defender for as long as possible. At the same time, Cal Dive expected there would be considerable interest in the Saturation Diving Assets, and the Seaway Defender in particular, once firms knew of their availability.
- Cal Dive chose to engage in a course of conduct that had the effect of delaying and impeding the divestitures and failed to use its best efforts to divest the assets as expeditiously as possible. Among other things:
- Cal Dive failed to use accepted industry means that it had previously used to sell similar assets and ignored an expression of interest in the Seaway Defender by a competitor which, if pursued, could have concluded in an expeditious divestiture of the vessel;
- Cal Dive decided to sell the Seaway Defender by auction, but scheduled that auction for only two weeks prior to the divestiture deadline. Cal Dive also established auction rules that were designed to, and did, deter participation in that auction, such as requiring that the successful purchaser lease the vessel back to Cal Dive for an open-ended period and at a below market daily charter rate; and
- Cal Dive proposed purchasers to the Department of Justice for its approval that Cal Dive knew or should have known were unacceptable under the decree in that they did not have the intent or capability to compete independently of Cal Dive in the U.S. Gulf, including one purchaser Offshore Technology Solutions Limited in which Cal Dive held a substantial ownership interest.
- Because of Cal Dive's course of conduct, no acceptable purchasers of the Saturation Diving Assets were approved prior to the deadline for Cal Dive to accomplish the divestitures. After that deadline lapsed, Cal Dive found an appropriate purchaser for one of the assets to be divested, the Torch Saturation Diving System. The United States then moved the Court to appoint a trustee to effect the divestitures of the Seaway Defender and Midnight Carrier. Cal Dive continued to earn revenues by operating the Seaway Defender while the trustee worked to find appropriate purchasers of those assets.
- After the trustee found an appropriate purchaser for the Seaway Defender (over five months after the filing of the Complaint), Cal Dive continued to delay and impede the divestiture of the vessel by failing to divest the vessel in a condition and state of repair equal to its condition and state of repair as of the date Cal Dive acquired it from Stolt. Before transferring possession of the Seaway Defender, Cal Dive removed a pump and three diving helmets, equipment necessary and integral to the operation of the Seaway Defender's saturation diving system that had been part of the vessel when Cal Dive had acquired it from Stolt.
- Cal Dive earned substantial revenues operating the Seaway Defender prior to its ultimate divestiture.
V. VIOLATIONS ALLEGED
- Cal Dive engaged in a course of conduct that frustrated the prompt and certain divestiture called for by the Final Judgment. Cal Dive violated the terms of the Final Judgment by failing to use its best efforts to divest the Saturation Diving Assets as expeditiously as possible, failing to divest the assets in the same condition and repair as they existed at the time it acquired them, and failing to abide by its commitment to take no action that would jeopardize, delay, or impede the divestiture or impede the operation of the Saturation Diving Assets.
- By the acts described above, Respondents have been in civil contempt for violating Sections IV.A., IV.E., IV.F., and VIII. of the Final Judgment and Sections IV.B., V.A. and V.B. of the Hold Separate Order.
For the foregoing reasons, the United States respectfully requests that this Court enter an Order directing Respondents to appear before this Court at a time and place to be fixed in that Order and to show cause why they should not be adjudged in civil contempt of this Court. The United States also prays for the following relief:
- that the Respondents be found in civil contempt for the violations of the Final Judgment and Hold Separate as described above;
- that the Respondents be ordered to pay an amount deemed appropriate by this Court for contempt of the Final Judgment and Hold Separate Order;
- that the United States be awarded costs and attorneys fees incurred in investigating the Respondents' conduct and filing this Petition; and
- that the United States have any and all other relief as the Court may deem justified.
|Dated: November 26, 2007
|| Respectfully submitted,
THOMAS O. BARNETT
Assistant Attorney General
DEBORAH A. GARZA
Deputy Assistant Attorney General
PATRICIA A. BRINK
Deputy Director of Operations
DONNA N. KOOPERSTEIN
WILLIAM H. STALLINGS
Transportation, Energy & Agriculture Section
JENNIFER L. CIHON
Ohio Bar No. 0068404
C. ALEXANDER HEWES
D.C. Bar No. 150284
DAVID S. ZLOTLOW
California Bar No. 235340
325 7th Street, N.W., Suite 500
Washington, D.C. 20530
Attorneys for the United States