UNITED STATES OF AMERICA, Plaintiff, v. ENGELHARD CORPORATION, FLORIDIN COMPANY, U.S. BORAX INC., and U.S. SILICA COMPANY, Defendant.

| | | | | | | | | | | | |

Civil Action No.: Filed:

FINAL PRE-TRIAL ORDER - NON-JURY CASE

The following constitutes a pre-trial order entered in the above-styled case after conference with counsel for the parties:

(1) The name, address, and telephone number of the attorneys who will conduct the trial are as follows:

Plaintiff:	Angela L. Hughes, Lead Attorney Nina B. Hale John R. Read Mark F. Sheridan John S. Sciortino William J. Hughes Alexander Y. Thomas Michele B. Felasco
	Trial Attorneys U.S. Department of Justice, Antitrust Division 555 Fourth Street, N.W., Room 9810 Washington, D.C. 20001 (202) 307-6351
Defendant:	Attorneys for Defendant Engelhard Corporation:
	William T. Lifland Dean Ringel Howard G. Sloane Scott Martin Christopher Nelson Cahill Gordon & Reindel 80 Pine Street New York, New York 10005 (212) 701-3000
	H. Jerome Strickland Jones, Cork & Miller Post Office Box 6437 435 Second Street, 5th Floor Macon, Georgia 31201 (912) 745-2821
	Attorneys for Defendant Floridin Company, U.S. Silica Company and U.S. Borax Inc.
	George Chester Robert A. Long William J. Shieber Covington & Burling 1201 Pennsylvania Avenue, N.W. Washington, D.C. 20044 (202) 662-6000
	Robert Gunn Michael Smith Martin, Snow, Grant & Napier 240 Third Street Post Office Box 1606 Macon, Georgia 31202 (912) 743-7051

It is understood that only counsel who personally appear at the pretrial conference will be allowed to participate in the trial.

(2)

1. Companion cases pending in this and other Federal or State courts are: None.
2. Possible derivative claims not now the subject of pending litigation: None.
3. The estimated time required for trial is: two weeks.

1. The parties agree that the court has jurisdiction of the parties and the subject matter pursuant to 15 U.S.C. §§ 1331 and 1337.
2. There are no motions pending for consideration by the court except as follows: Plaintiff's Motion to Strike Defendants' Efficiencies Affirmative Defense, Plaintiff's Motion in Limine to Exclude Testimony by Defendants' Executives Respecting Customers' Opinions About the Transaction, and Plaintiff's Motion in Limine to Exclude Evidence Relating to Engelhard's Threat to Exit the Business if the Transaction is Enjoined. There may be other issues relating to the admissability of exhibits or deposition testimony that are pending as of the time of the pretrial conference.

(4) Proposed findings of fact and conclusions of law with citations to the record where the evidence may be found or to the statute or case from which the law is derived will be filed with the court 21 days after the end of the trial, accompanied by post-trial briefs. Reply briefs are due ten days thereafter.

(5)

1. All discovery has been completed, unless otherwise noted, and the court will not consider any further motions to compel discovery except for good cause shown.
2. Unless otherwise noted, the names of the parties as shown in the caption to this order are correct and complete, and there is no question by any party as to the misjoinder or non-joinder of any parties.

(6) The plaintiff's outline of the case and contentions are contained in the Trial Brief of the United States filed with this Court on July 14, 1995.

(7) The defendants' outline of the case and contentions are contained in the Defendants' Pretrial Memorandum filed with this Court on July 14, 1995.

(8) The issues for determination by the court as set forth by the plaintiff are as follows:

1. Whether the United States has carried its burden of proving that Engelhard's proposed acquisition of Floridin's assets may substantially lessen competition in the relevant product and geographic markets in violation of Section 7 of the Clayton Act.
   1. Whether the relevant product market is the mining, processing, and sale of gellant-quality attapulgite clay ("gel clay").
   2. Whether the relevant geographic market is the United States.
   3. 1. Whether the proposed acquisition is presumptively illegal because it will substantially increase concentration in a highly concentrated market; or
      2. If defendants successfully rebut the presumption of illegality based on market concentration, whether there is evidence of anticompetitive effects of the proposed acquisition, that is:
         1. Whether the proposed acquisition will result in a reduction in competition in the mining of gel clay.
         2. Whether the proposed acquisition will result in a reduction in competition in processing of gel clay.
         3. Whether the proposed acquisition will result in a reduction in competition in gel clay product quality and innovation.
         4. Whether the proposed acquisition will result in a reduction in gel clay price competition.
2. Whether defendants have carried their burden of proving new entry or expansion in the relevant market is likely to offset the anticompetitive effects of the proposed acquisition.
   1. Whether there are substantial barriers to entry into the United States gel clay market.
   2. Whether Oil-Dri, who previously entered the market unsuccessfully and exited the market in 1992, is likely to re-enter the United States gel clay market.
   3. Whether foreign gel clay is likely to enter the United States gel clay market.
3. Whether defendants have carried their burden of proving that their alleged efficiencies have a legal and factual basis, and if so, that they outweigh the anticompetitive harm of the proposed acquisition.
4. Whether the Engelhard/ITC Supply Contract will be adequate and effective relief to restore the competition that would be lost as a result of Engelhard's acquisition of the Floridin assets, and if so, the extent to which the Court must supervise performance of the Supply Contract and retain jurisdiction to protect gel clay customers and the public.

(9)The issues for determination by the court as set forth by the defendants are as follows:

1. Whether the United States has carried its burden of proving that the transaction as proposed, including the agreement of March 22, 1995 between Engelhard and ITC, will probably substantially lessen competition in relevant product and geographic markets in violation of Section 7 of the Clayton Act.
2. Whether new entry or expansion in the relevant market is likely to offset any anticompetitive effects of the transaction as are proved.
3. Whether defendants have presented sufficient evidence to rebut a prima facie case, if established by the plaintiff, by showing that the transaction as proposed will create significant efficiencies in the relevant market that will ultimately benefit competition and, hence, consumers.
4. Whether any prima facie case, if established by the plaintiff, has been rebutted by evidence indicating that Engelhard will withdraw from the attapulgite business if the transaction as proposed is enjoined.

1. this Court has jurisdiction over this action and the parties;
2. venue is proper in this District; and
3. the defendants are engaged in interstate commerce and in activities substantially affecting interstate commerce.

The parties are still discussing proposed stipulations and will present any other stipulations to which they have agreed to the Court on Monday, July 24 at 8:00 am.

(11) The list of documentary and physical evidence that will be tendered at the trial by the plaintiff is attached as Exhibit A.

(12) The list of documentary and physical evidence that will be tendered at the trial by the defendants is attached as Exhibit B.

(13) The plaintiff's final witness list is attached as Exhibit C.

(14) The defendants' final witness list is attached as Exhibit D. As to any will call witnesses, opposing counsel may rely on representation by the designated party that he will have a witness present unless notice to the contrary is given in sufficient time prior to trial to allow the other party to subpoena the witness or obtain his testimony by other means. Only those witnesses listed in the pre-trial order will be allowed to testify and only in the manner listed.

(15) Set down on non-jury calendar for: July 24, 1995

(16)Other matters: None.

Dated:

Submitted by: ________________________________ Angela L. Hughes Lead Attorney for the Plaintiff United States Department of Justice Antitrust Division 555 Fourth Street, N.W., Room 9401 Washington, D.C. 20001

_______________________________ George Chester Covington & Burling 1201 Pennsylvania Avenue, N.W. Washington, D.C. 20044 Telephone: (202) 662-6000 Facsimile: (202) 662-6291 _______________________________ Robert Gunn Martin, Snow, Grant & Napier 240 Third Street Post Office Box 1606 Macon, Georgia 31202 Telephone: (912) 743-7051 Facsimile: (912) 743- 4204 Attorneys for Defendants Floridin Company, U.S. Borax Inc. and U.S. Silica Company

_______________________________ Dean Ringel Cahill Gordon & Reindel 80 Pine Street New York, New York 10005 Telephone: (212) 701-3000 Facsimile: (212) 5420 _______________________________ H. Jerome Strickland Jones, Cork & Miller Post Office Box 6437435 Second Street, 5th Floor Macon, Georgia 31201 Telephone: (912) 745-2821 Facsimile: (912) 743-9609 Attorneys for Defendant Engelhard Corporation

It is hereby ORDERED that the foregoing, including the attachments thereto, constitutes the pre-trial order in the above case and supersedes the pleadings which may not be further amended except by order of the court to prevent manifest injustice.

This ________ day of ________________________, 1995.

________________________________ W. LOUIS SANDS UNITED STATES DISTRICT JUDGE MIDDLE DISTRICT OF GEORGIA