[Federal Register Volume 64, Number 239 (Tuesday, December 14, 1999)]
[Notices]
[Pages 69784-69797]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-31669]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. AlliedSignal Inc. and Honeywell Inc.; Proposed
Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Hold Separate Stipulation and Order, and Competitive Impact Statement
have been filed with the United States District Court for the District
of Columbia, Washington, DC, in United States v. AlliedSignal Inc. and
Honeywell Inc., Case No. 1:99 CV 02959 (PLF).
On November 8, 1999, the United States filed a Complaint, which
alleged that AlliedSignal's proposed merger with Honeywell would
violate Section 7 of the Clayton Act, 15 U.S.C. 18, by substantially
lessening competition in the traffic alert and collision avoidance
systems (``TCAS'') market, the search and surveillance weather radar
(``SSWR'') market, the reaction and momentum wheel market, and the
inertial systems market. The proposed Final Judgment, filed on November
8, 1999, requires AlliedSignal and Honeywell to divest the TCAS
business of Honeywell located in Glendale, Arizona; the SSWR business
of AlliedSignal located in Olathe, Kansas; the space and navigation
business of AlliedSignal located in Teterboro, New Jersey; the
mechanical rate gyroscope business of Allied Signal located in
Cheshire, Connecticut, and a related repair business in Newark Ohio;
the microSCIRAS technology business of AlliedSignal located in Redmond,
Washington, or, in the alternative, the micro-electro-mechanical system
inertial sensor business of Honeywell located in Minneapolis and
Plymouth, Minnesota; and the AlliedSignal micromachined silicon
accelerator and micromachined accelerometer gyroscope technology
business.
Public comment is invited within the statutory 60-day comment
period. Such comments and responses thereof will be published in the
Federal Register and filed with the Court. Comments should be directed
to J. Robert Kramer II, Chief, Litigation II Section, Antitrust
Division, U.S. Department of Justice, 1401 H. Street, NW, Suite 3000,
Washington, DC 20530 [telephone: (202) 307-0924].
Constance K. Robinson,
Director of Operations & Merger Enforcement.
Hold Separate Stipulation and Order
It is hereby stipulated and agreed by and between the undersigned
parties, subject to approval and entry by the Court, that:
I. Definitions
As used in this Hold Separate Stipulation and Order:
A. ``United States'' means plaintiff United States of America.
B. ``DoD'' means the United States Department of Defense.
C. ``AlliedSignal'' means defendant AlliedSignal Inc., a Delaware
corporation with its headquarters in Morristown, New Jersey, and its
successors, assigns, subsidiaries,
[[Page 69785]]
divisions, groups, affiliates, partnerships and joint ventures, and
directors, officers, managers, agents, and employees.
D. ``Honeywell'' means defendant Honeywell Inc., a Delaware
corporation with its headquarters in Minneapolis, Minnesota, and its
successors, assigns, subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and directors, officers, managers,
agents, and employees.
E. ``TCAS Business'' means the traffic alert and collision
avoidance systems (``TCAS'') business of Honeywell, as defined in the
proposed Final Judgment filed in this case.
F. ``SSWR Business'' means the search and surveillance weather
radar (``SSWR'') business of AlliedSignal, as defined in the proposed
Final Judgment filed in this case.
G. ``Teterboro Business'' means AlliedSignal's entire Space and
Navigation business in Teterboro, New Jersey, as defined in the
proposed Final Judgment filed in this case.
H. ``Cheshire Business'' means the entire business of AlliedSignal
in Cheshire, Connecticut that produces mechanical inertial measurement
units and components, as defined in the proposed Final Judgment filed
in this case.
I. ``AlliedSignal Micro SCIRAS Business'' means the micro SCIRAS
business of AlliedSignal, as defined in the proposed Final Judgment
filed in this case.
J. ``Honeywell MEMS Business'' means the micro-electro-mechanical
systems (``MEMS'') business of Honeywell, as defined in the proposed
Final Judgment filed in this case.
K. ``AlliedSignal MSA and MAG Technology Business'' means the
business owned by AlliedSignal and relating directly to the
``Micromachined Silicon Accelerometer (`MSA')'' and the ``Micromachined
Accelerometer Gyroscope (`MAG')'', as defined in the proposed Final
Judgment filed in this case.
L. ``Divested Businesses'' means the TCAS Business, the SSWR
Business, the Teterboro Business, the Cheshire Business, the
AlliedSignal Micro SCIRAS Business (or, as provided in the proposed
Final Judgment filed in this case, the Honeywell MEMS Business), and
the AlliedSignal MSA and MAG Technology Business.
M. ``Post-merger Company'' means that company resulting from the
merger of defendants AlliedSignal and Honeywell, in accordance with the
terms contained in the proposed Final Judgment in this case.
N. ``Merger Agreement'' means the Agreement and Plan of Merger
entered into by AlliedSignal and Honeywell on June 4, 1999, and any
subsequent agreement relating to or amending the June 4, 1999
agreement.
II. Objectives
The proposed Final Judgment filed in this case is meant to ensure
prompt divestiture by defendants of the Divested Businesses for the
purposes of creating viable competitors in the innovation, development,
production, marketing and sale of the products of the Divested
Businesses and to remedy the effects that the United States alleges
would otherwise result from defendants' proposed merger. This Hold
Separate Stipulation and Order ensures the timely and complete transfer
of the Divested Businesses and maintains each of the Divested
Businesses as an independent, viable competitor until the divestitures
are complete.
III. Jurisdiction and Venue
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 District Court for the District of Columbia.
IV. Compliance With and Entry of Proposed Final Judgment
A. The parties stipulate that a proposed Final Judgment in the form
attached hereto as Exhibit A may be filed with 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
Procedures and Penalties Act (15 U.S.C. 16), and without further notice
to any party or other proceedings, provided that the United States 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.
B. Defendants shall abide by and comply with the provisions of the
proposed Final Judgment, pending the Judgment's entry 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 Hold Separate Stipulation and Order by the parties,
comply with all the terms and provisions of the proposed Final Judgment
as though the same were in full force and effect as an order of the
Court.
C. Defendants shall not consummate the transaction sought to be
enjoined by the Complaint herein before the Court has signed this Hold
Separate Stipulation and Order.
D. This Hold Separate Stipulation and Order 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.
E. In the event (1) The United States has withdrawn its consent, as
provided in Section IV(A) above, or (2) The proposed Final Judgment is
not entered pursuant to this Hold Separate Stipulation and Order, 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 Hold Separate Stipulation and Order, and the
making of this Hold Separate Stipulation and Order shall be without
prejudice to any party in this or any other proceeding.
F. Defendants represent that the divestitures ordered in the
proposed Final Judgment can and will be made, and that defendants will
later raise no claim of mistake, hardship or difficulty of compliance
as grounds for asking the Court to modify any of the provisions
contained therein.
V. Hold Separate Provisions
A. Defendants shall expressly undertake to compete with each of the
Divested Businesses in the applicable market in the exercise of their
best judgments and without regard to the Merger Agreement, as if the
Post-merger Company and the Divested Businesses were in all respects
separate and independent business entities.
B. Defendants shall preserve, maintain, and operate each of the
Divested Businesses as an independent competitor with management,
research, development, production, sales and operations held entirely
separate, distinct and apart from the other businesses of defendants.
None of the Divested Businesses shall coordinate its innovation,
development, production, marketing or sales with that of the Post-
merger Company, except to the limited extent provided in V(D) below, or
to provide the accounting, management information services or other
necessary support functions afforded by AlliedSignal or Honeywell prior
to the merger. Within fifteen (15) days of the entering of this Hold
Separate Stipulation and Order, defendants shall inform the United
States and DoD of the steps taken to comply with this provision.
[[Page 69786]]
C. Defendants shall take all steps necessary to ensure that each of
the Divested Businesses will be maintained and operated as an
independent, ongoing, and economically viable and active competitor in
the innovation, research and development, production, and sale of
products it develops, produces, and sells; that all planned innovation,
research, and product development be continued; that the management of
each of the Divested Businesses will not be influenced by defendants;
and that the books, records, competitively sensitive sales, marketing
and pricing information, and decision-making associated with each of
the Divested Businesses, including the performance and decision-making
functions regarding internal innovation, research and development,
sales and pricing, will be kept separate and apart from the business of
the Post-merger Company. Defendants' influence over each of the
Divested Businesses shall be limited to that necessary to carry out
their obligations under this Hold Separate Stipulation and Order and
the proposed Final Judgment.
D. Defendants shall provide and maintain sufficient working capital
to maintain each of the Divested Businesses as economically viable,
ongoing businesses, consistent with current business plans.
E. Defendants shall provide and maintain sufficient lines and
sources of credit to maintain each of the Divested Businesses as
economically viable, ongoing businesses.
F. Defendants shall maintain on behalf of each of the Divested
Businesses in accordance with sound accounting practices, separate,
true and complete financial ledgers, books and records reporting the
assets, liabilities, expenses, revenues and income of each of the
Divested Businesses on a periodic basis, such as the last business day
of each month, consistent with past practices.
G. Defendants shall use all reasonable efforts to maintain and
increase sales and revenues of each of the Divested Businesses and
shall maintain at 1998 or previously approved levels for 1999,
whichever are higher, all internal research and development funding,
promotional, advertising, sales, technical assistance, marketing, and
merchandising support for products produced or under development of
each of the Divested Businesses.
H. Defendants shall not sell, lease, assign, transfer or otherwise
dispose of, or pledge as collateral for loans, assets that may be
required to be divested pursuant to the proposed Final Judgment filed
in this case.
I. Defendants shall preserve the assets that may be required to be
divested pursuant to the proposed Final Judgment filed in this case in
a state of repair equal to their state of repair as of the date of this
Hold Separate Stipulation and Order, ordinary wear and tear excepted,
and shall maintain and adhere to normal repair and maintenance
schedules for these assets.
J. Except in the ordinary course of business or as is otherwise
consistent with this Hold Separate Stipulation and Order, defendants
shall not transfer or terminate any employee who, on the date of the
filing of the Complaint in this mater, works for any of the Divested
Businesses, or alter, to the detriment of any such employee, the
employee's current employment, benefits, or salary agreement.
K. Until such time as this Hold Separate Stipulation and Order is
terminated, defendants shall not change the management of any of the
Divested Businesses, except in the ordinary course of business. The
TCAS Business shall be managed by Joseph Hoffman; the SSWR Business
shall be managed by Walter Mores; the Teterboro Business shall be
managed by Christopher D. Clayton; the Cheshire Business shall be
managed by Wayne R. Demmons; the AlliedSignal MicroSCRIRAS Business and
the AlliedSignal MSA and MAG Technology Business shall be managed by
Randy Sprague; and the Honeywell MEMS Business shall be managed by
David S. Willits. Each identified manager shall have complete
managerial responsibility for his respective Divested Business, subject
to the provisions of this Hold Separate Stipulation and Order and the
proposed Final Judgment. In the event that any identified manager of
any of the Divested Businesses is unable to perform his duties,
defendants shall appoint a replacement within ten (10) days from the
current management of the applicable Divested Business, subject to DOJ
approval. Should defendants fail to appoint a replacement acceptable to
the DOJ within ten (10) working days, the DOJ, after consultation with
DoD, shall appoint a replacement.
L. Defendants shall take no action that would interfere with the
ability of the trustees appointed pursuant to the proposed Final
Judgment filed in this case to complete the divestitures required by
that Final Judgment.
M. Defendants shall ensure to the satisfaction of DoD that the
operations of each of the Divested Businesses, including its support of
DoD programs, not be disrupted during the required divestitures.
N. This Hold Separate Stipulation and order shall remain in effect
until all of the divestitures required by the proposed Final Judgment
filed in this case are complete or until further Order of the Court.
Dated: November 8, 1999.
For Plaintiff United States of America:
Michael K. Hammaker,
DC Bar #233684, U.S. Department of Justice, Antitrust Division,
Litigation II, Suite 3000, Washington, D.C. 20005, (202) 307-0924.
For Defendant AlliedSignal Inc.:
William J. Kolasky,
DC Bar #217539, Wilmer, Cutler & Pickering, 2445 M Street, NW,
Washington, DC 20037, 202-663-6357.
For Defendant Honeywell Inc.:
C. Benjamin Crisman, Jr.,
DC Bar #240135, Skadden, Arps, Slate, Meagher & Flom LLP, 1440 New York
Avenue, NW, Washington, DC 20005, 202-371-7330.
It Is So Ordered by the Court, this ______ day of November,
1999.
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United States District Judge
Parties Entitled to Notice of Entry of Order:
Counsel for Plaintiff United States of America.
Michael K. Hammaker, U.S. Department of Justice, Antitrust Division,
Suite 3000, 1401 H Street, NW, Washington, D.C. 20503.
Counsel for Defendant AlliedSignal Inc.
William J. Kolasky,
Wilmer, Cutler & Pickering, 2445 M Street, NW, Washington, DC 20037.
Counsel for Honeywell Inc.
C. Benjamin Crisman, Jr.,
Skadden, Arps, Slate, Meagher & Flom LLP, 1440 New York Avenue, NW,
Washington, DC 20005.
Final Judgment
Whereas, plaintiff, the United States of America (``United
States''), and defendants AlliedSignal Inc. and Honeywell Inc., 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, in the event of
a merger between the defendants, the prompt and certain divestiture of
the businesses identified below to assure that competition is not
substantially lessened;
[[Page 69787]]
And Whereas, the United States requires defendants to make the
divestitures ordered herein for the purpose of remedying the loss of
competition alleged in the Complaint;
And Whereas, defendants have represented to the United States that
the divestitures ordered herein can and will be made promptly and that
defendants later will raise no claim of hardship or difficulty as
grounds for asking the Court to modify any of the divestiture
provisions contained below;
Now, Therefore, before taking any testimony, and without trial or
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 each of the parties hereto and
over the subject matter of this action. The Complaint states a claim
upon which relief may be granted against defendants, as hereinafter
defined, under Section 7 of the Clayton Act, as amended (15 U.S.C. 18).
II. Definitions
As used in this Final Judgment:
A. ``AlliedSignal'' means defendant AlliedSignal Inc., a Delaware
corporation with its headquarters in Morristown, New Jersey, and
includes its successors and assigns, and its subsidiaries, divisions,
groups, affiliates, partnerships, joint ventures, directors, officers,
managers, agents, and employees.
B. ``Honeywell'' means defendant Honeywell Inc., a Delaware
corporation with its headquarters in Minneapolis, Minnesota, and
includes its successors and assigns, and its subsidiaries, divisions,
groups, affiliates, partnerships, joint ventures, directors, officers,
managers, agents, and employees.
C. ``DoD'' means the United States Department of Defense.
D. ``TCAS Business'' means the traffic alert and collision
avoidance systems (``TCAS'') business of Honeywell, which it operates
at its Glendale and Phoenix, Arizona facilities. The TCAS Business does
not include the building or related fixtures housing the Glendale and
Phoenix operations. The TCAS Business includes, but is not limited to,
Honeywell's TCAS II computer, TCAS 2000 computer, TCAS 1500 computer
(still under development), TCAS directional antenna, dedicated TCAS
controller, and the dedicated TCAS display (``TCAS System'') and all
employees listed in Confidential Attachment A. Also included, as common
to the TCAS System and other systems of Honeywell, are the Vertical
Speed Indicator/Traffic Resolution Advisory (``VSI/TRA''), pressure
transducer and ARINC Diversity/Mode S transponder used with the basic
TCAS System, and the following:
(1) All tangible assets used in the TCAS Business, including, but
not limited to, research and development activities; all manufacturing
equipment and fixed assets, personal property, inventory, office
furniture, materials, supplies, and other tangible property used in the
TCAS Business; all licenses, permits and authorizations issued by any
governmental organization for the TCAS Business; all contracts, teaming
arrangements, agreements, leases, commitments and understandings of the
TCAS Business, including supply agreements; all customer lists and
credit records; all other records of the TCAS Business; and, at the
purchaser's request, a lease to any real property currently utilized
for the TCAS Business;
(2) Any and all intangible assets used in the TCAS Business,
including, but not limited to, (a) All intellectual property rights
used exclusively in the TCAS Business, (b) With respect to all other
intellectual property rights used in both the TCAS Business and other
Honeywell businesses, a transferable, paid-up license, exclusive in the
TCAS Business field of use;
(c) All existing licenses and sublicenses relating exclusively to
the TCAS Business; and (d) A transferable, paid-up sublicense,
exclusive in the TCAS Business field of use, to all other existing
licenses and sublicenses relating to the TCAS Business. Intellectual
property rights comprise, but are not limited to, patents, copyrights,
technical information, computer software and related documentation,
know-how, trade secrets, drawings, blueprints, designs, design
protocols, specifications for materials, parts and devices, safety
procedures for the handling of materials and substances, quality
assurance and control procedures, design tools and simulation
capability, manuals, and all research data concerning historic and
current research and development efforts relating to the TCAS Business,
including, but not limited to, designs of experiments, and the results
of successful and unsuccessful designs and experiments (Intellectual
property does not include the mark HONEYWELL).
E. ``SSWR Business'' means the search and surveillance weather
radar (``SSWR'') business of AlliedSignal, which it operates at its
Olathe, Kansas facility. The SSWR Business does not include the
building or related fixtures housing the Olathe operations. The SSWR
Business includes, not is not limited to, AlliedSignal's RDR-1400 and
RDR-1500 product lines, all employees listed in Confidential Attachment
A, and the following:
(1) All tangible assets used in the SSWR Business, including, but
not limited to, research and development activities; all manufacturing
equipment and fixed assets, personal property, inventory, office
furniture, materials, supplies, and other tangible property used in the
SSWR Business; all licenses, permits and authorizations issued by any
governmental organization for the SSWR Business; all contracts, teaming
arrangements, agreements, leases, commitments and understandings of the
SSWR Business, including supply agreements; all customer lists and
credit records; all other records of the SSWR Business; and, at the
purchaser's request, a lease to any real property currently utilized
for the SSWR Business;
(2) Any and all intangible assets used in the SSWR Business,
including, but not limited to, (a) All intellectual property rights
used exclusively in the SSWR Business, (b) With respect to all other
intellectual property rights used in both the SSWR Business and other
AlliedSignal businesses, a transferable, paid-up license, exclusive in
the SSWR Business field of use; (c) All existing licenses and
sublicenses relating exclusively to the SSWR Business and (d) A
transferable, paid-up sublicense, exclusive in the SSWR Business field
of use, to all other existing licenses and sublicenses relating to the
SSWR Business. Intellectual property rights comprise, but are not
limited to, patents, copyrights, technical information, computer
software and related documentation, know-how, trade secrets, drawings,
blueprints, designs, design protocols, specifications for materials,
parts and devices, safety procedures for the handling of materials and
substances, quality assurance and control procedures, design tools and
simulation capability, manuals, and all research data concerning
historic and current research and development efforts relating to the
SSWR Business, including, but not limited to, designs of experiments,
and the results of successful and unsuccessful designs and experiments
(Intellectual property does not include the marks AlliedSignal, Bendix
King, or Bendix).
F. ``Teterboro Space and Navigation Business'' means AlliedSignal's
entire Space and Navigation Systems business in Teterboro, New Jersey
(including an option to buy or lease the facility in
[[Page 69788]]
which the business is housed or to lease a portion of the facility,
including fixtures and improvements). The Teterboro Space and
Navigation Business includes, but is not limited to, ring laser
gyroscopes (``RLGs''), fiber optic gyroscopes (```FOGs''), inertial
measurement units, reaction and momentum wheels, control moment
gyroscopes, star sensors, sun shades, navigation and pointing systems
and fire control systems. The Teterboro Space and Navigation Business
does not include avionics products, avionics test products, the rate
grade mechanical inertial measurement units manufactured in Cheshire,
or RLV (``reusable launch vehicle'') integration systems (X-33 and
Kistler). The Teterboro Space and Navigation Business includes all
employees listed in Confidential Attachment A, and the following:
(1) All tangible assets used in the Teterboro Space and Navigation
Business, including, but not limited to, research and development
activities; all manufacturing equipment and fixed assets, personal
property, inventory, office furniture, materials, supplies, and other
tangible property used in the Teterboro Space and Navigation Business;
all licenses, permits and authorizations issued by any governmental
organization for the Teterboro Space and Navigation Business; all
contracts, teaming arrangements, agreements, leases, commitments and
understandings of the Teterboro Space and Navigation Business,
including supply agreements, all customer lists and credit records; and
all other records of the Teterboro Space and Navigation Business;
(2) Any and all intangible assets used in the Teterboro Space and
Navigation Business, including, but not limited to, (a) All
intellectual property rights used exclusively in the Teterboro Space
and Navigation Business, (b) With respect to all other intellectual
property rights used in both the Teterboro Space and Navigation
Business and other AlliedSignal businesses, a transferable, paid-up
license, exclusive in the Teterboro Space and Navigation Business field
of use; (c) All existing licenses and sublicenses relating exclusively
to the Teterboro Space and Navigation Business; and (d) A transferable,
paid-up sublicense, exclusive in the Teterboro Space and Navigation
Business field of use, to all other existing licenses and sublicenses
relating to the Teterboro Space and Navigation Business. Intellectual
property rights comprise, but are not limited to, patents, copyrights,
technical information, computer software and related documentation,
know-how, trade secrets, drawings, blueprints, designs, design
protocols, specifications for materials, parts and devices, safety
procedures for the handling of materials and substances, quality
assurance and control procedures, design tools and simulation
capability, annuals, and all research data concerning historic and
current research and development efforts relating to the Teterboro
Space and Navigation Business, including, but not limited to, designs
of experiments, and the results of successful and unsuccessful designs
and experiments (Intellectual property does not include the mark
AlliedSignal).
G. ``Cheshire Business'' means the entire business of AlliedSignal
in Cheshire, Connecticut that produces rate-grade mechanical inertial
measurement units and components. The Cheshire Business includes, but
is not limited to, AlliedSignal's Newark, Ohio repair and overhaul
business, all employees listed in Confidential Attachment A, and the
following:
(1) All tangible assets used in the Cheshire Business, including,
but not limited to, research and development activities, all leases for
real property housing the Cheshire and Newark operations; all
manufacturing equipment and fixed assets, personal property, inventory,
office furniture, materials, supplies, and other tangible property or
improvements used in the Cheshire Business; all licenses, permits and
authorizations issued by any governmental organization for the Cheshire
Business; all contracts, teaming arrangements, agreements, leases,
commitments and understandings of the Cheshire Business, including
supply agreements, all customer lists and credit records; and all other
records of the Cheshire Business;
(2) Any and all intangible assets used in the Cheshire Business,
including, but not limited to, (a) All intellectual property rights
used exclusively in conducting the Cheshire Business, (b) With respect
to all other intellectual property rights used in both the Cheshire
Business and other AlliedSignal businesses, a transferable, paid-up
license, exclusive in the Cheshire Business field of use, (c) All
existing licenses and sublicenses relating exclusively to the Cheshire
Business, and (d) A transferable, paid-up sublicense, exclusive in the
Cheshire Business field of use, to all other existing licenses and
sublicenses relating to the Cheshire Business. Intellectual property
rights comprise, but are not limited to, patents, copyrights, technical
information, computer software and related documentation, know-how,
trade secrets, drawings, blueprints, designs, design protocols,
specifications for materials, parts and devices, safety procedures for
the handling of materials and substances, quality assurance and control
procedures, design tools and simulation capability, manuals, and all
research data concerning historic and current research and development
efforts relating to the Cheshire Business, including, but not limited
to, designs of experiments, and the results of successful and
unsuccessful designs and experiments (Intellectual property does not
include the Mark AlliedSignal).
H. ``AlliedSignal MicroSCIRAS Business'' means the MicroSCIRAS
business of AlliedSignal, which it operates at its Richmond, Washington
facility. The AlliedSignal MicroSCIRAS Business does not include the
building or related fixtures housing the Redmond MicroSCIRAS
operations. Subject to AlliedSignal's reasonable continued use of the
engineering foundry with respect to its remaining businesses, the
AlliedSignal MicroSCIRAS Business, but is not limited to, the right to
use the existing silicon engineering foundry at the Redmond facility;
an option to lease the existing engineering foundry in Redmond, and/or
an option to purchase the equipment currently in or authorized for the
foundry, on November 1, 2000 or the date that AlliedSignal's separate
silicon production foundry is completed, whichever occurs first, all
employees listed in Confidential Attachment A; and the following:
(1) All tangible assets used in the AlliedSignal MicroSCIRAS
Business, including, but not limited to, research and development
activities; all manufacturing equipment and fixed assets, personal
property, inventory, office furniture, materials, supplies, and other
tangible property used in the AlliedSignal MicroSCIRAS Business; all
licenses, permits and authorizations issued by any governmental
organization for the AlliedSignal MicroSCIRAS Business; all contracts,
teaming arrangements, agreements, leases, commitments and
understandings of the AlliedSignal MicroSCIRAS Business, including
supply agreements; all customer lists and credit records; and all other
records of the AlliedSignal MicroSCIRAS Business;
(2) Any and all intangible assets used in the AlliedSignal
MicroSCIRAS Business, including, but not limited to, (a) all
intellectual property rights used exclusively in conducting the
AlliedSignal MicroSCIRAS Business, (b)
[[Page 69789]]
with respect to all other intellectual property rights used in both the
AlliedSignal MicroSCIRAS Business and other AlliedSignal businesses, a
transferable, paid-up license, exclusive in the AlliedSignal
MicroSCIRAS Business field of use; (c) all existing licenses and
sublicenses relating exclusively to the AlliedSignal MicroSCIRAS
Business; and (d) a transferable, paid-up sublicense, exclusive in the
AlliedSignal MicroSCIRAS Business field of use, to all other existing
licenses and sublicenses relating to the AlliedSignal MicroSCIRAS
Business. Intellectual property rights comprise, but are not limited
to, patents, copyrights, technical information, maskwork rights,
computer software and related documentation, know-how, trade secrets,
drawings, blueprints, designs, design protocols, specifications for
materials, parts and devices, safety procedures for the handling of
materials and substances, quality assurance and control procedures,
design tools and simulation capability, manuals, and all research data
concerning historic and current research and development efforts
relating to the AlliedSignal MicroSCIRAS Business, including, but not
limited to, designs of experiments, and the results of successful and
unsuccessful designs and experiments (Intellectual property does not
include the mark AlliedSignal).
1. ``Honeywell MEMS Business'' means the entire micro-electro-
mechanical systems (``MEMS'') inertial sensor business of Honeywell,
located in Minneapolis and Plymouth, Minnesota. The Honeywell MEMS
Business does not include the buildings or related fixtures housing the
Minneapolis and Plymouth operations. The Honeywell MEMS Business
includes, but is not limited to, all employees listed in Confidential
Attachment A and the following:
(1) All tangible assets used in the Honeywell MEMS Business,
including, but not limited to, research and development activities, all
manufacturing equipment and fixed assets, personal property, inventory,
office furniture, materials, supplies, and other tangible property used
in the Honeywell MEMS; all licenses, permits and authorizations issued
by any governmental organization for the Honeywell MEMS Business; all
contracts, teaming arrangements, agreements, leases, commitments and
understandings of the Honeywell MEMS Business, including supply
agreements, all customer lists and credit records; all other records of
the Honeywell MEMS Business; and, at the purchaser's request, a lease
to any real property currently utilized for the Honeywell MEMS
Business;
(2) Any and all intangible assets used in the Honeywell MEMS
Business, including, but not limited to, (a) All intellectual property
rights used exclusively in conducting the Honeywell MEMS Business, (b)
With respect to all other intellectual property rights used in both the
Honeywell MEMS Business and other Honeywell business, a transferable,
paid-up license, exclusive in the Honeywell MEMS Business field of use;
(c) All existing licenses and sublicenses relating exclusively to the
Honeywell MEMS Business; and (d) A transferable, paid-up sublicense,
exclusive in the Honeywell MEMS Business field of use, to all other
existing licenses and sublicenses relating to the Honeywell MEMS
Business. Intellectual property rights comprise, but are not limited
to, patents, copyrights, technical information, maskwork rights,
computer software and related documentation, know-how, trade secrets,
drawings, blueprints, designs, design protocols, specifications for
materials, parts and devices, safety procedures for the handling of
materials and substances, quality assurance and control procedures,
design tools and simulation capability, manuals, and all research data
concerning historic and current research and development efforts
relating to the Honeywell MEMS Business, including, but not limited to,
designs of experiments, and the results of successful and unsuccessful
designs and experiments (Intellectual property does not include the
mark HONEYWELL).
J. ``AlliedSignal MSA and MAG Technology Business'' means
AlliedSignal's business relating directly to the ``Micromachined
Silicon Accelerometer (``MSA'') and the ``Micromachined Accelerometer
Gyroscope (``MAG'') as defined in the agreements listed below.
Sales and License Agreement For MSA Technology Between Northrop
Grumman Precision Products Plant and Endevco Corporation, dated August
4, 1994, as amended; and
Sales and License Agreement for MAG Technology Between Northrop
Grumman Precision Products--Norwood and Endevco Corporation, dated
April 12, 1995, as amended.
The business includes an assignment of AlliedSignal's interest in
all intellectual property identified in one or more of these
agreements, as well as the agreements themselves.
K. ``Divested Businesses'' mean the Teterboro Space and Navigation
Business, the Cheshire Business, the TCAS Business, the SSWR Business,
the AlliedSignal MicroSCIRAS Business (or as described below in Section
VI, the Honeywell MEMS business), and the AlliedSignal MSA and MAG
Technology Business. To the extent that employees of any of the
Divested Businesses are still employed by defendants, the sale of each
of the Divested Businesses shall include the purchaser's right to
reasonable access to the technical, sales, production and
administrative employees of the defendants for a period not to exceed
eighteen months from the date of the purchase. The services furnished
to each Divested Business will be provided free by defendants for the
first six months following the respective closing date applicable to
the sale of each of the Divested Businesses. Thereafter, the charges
for such services will be set by the defendants at a rate sufficient to
cover the service provider's reasonable estimate of its actual costs
for providing the services and, if applicable, consistent with the
prices the service provider would charge to an affiliate.
III. Applicability
A. The provisions of this Final Judgment apply to the defendants,
their successors and assigns, their subsidiaries, directors, officers,
managers, agents, and employees, 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 of all or
substantially all of their assets, or of lesser business units
including AlliedSignal or Honeywell's business of developing and
producing traffic alert and collision avoidance systems and Mode S
transponders, search and surveillance weather radar systems, reaction
and momentum wheels, or inertial system products or assets, that the
purchaser or purchasers 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, by February 29, 2000, or within five
(5) days of the approval of the proposed merger between defendants by
the European Commission, or within five (5) days after notice of the
entry of this Final Judgment by the Court, whichever is later, to sell
the Divested Businesses as viable ongoing businesses to one or more
purchasers acceptable to the
[[Page 69790]]
United States and DoD in their sole discretion.
B. Defendants shall use their best efforts to accomplish the
divestitures ordered by this Final Judgment is expeditiously and timely
as possible. The United States, in its sole discretion in consultation
with DoD, may extend the time period for any divestiture for an
additional period of time not to exceed sixty (60) days.
C. In accomplishing the divestitures ordered by this Final
Judgment, defendants shall make known promptly, by usual and customary
means, the availability of the businesses to be divested pursuant to
this Final Judgment. Defendants shall inform all 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
this Final Judgment. Defendants also shall offer to furnish to all
prospective purchasers, subject to section IV(I) and customary
confidentiality assurances, all information regarding any business to
be divested 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
the United States and DoD at the same time that such information is
made available to any other person.
D. Subject to Section IV(I), defendants shall permit all
prospective purchasers of any business to be divested pursuant to this
Final Judgment to have reasonable access to personnel relating to that
business and to make such inspection of the physical facilities of that
business and all financial, operation, or other documents and
information customarily provided as part of a due diligence process.
E. For a period of two years from the filing of the Complaint in
this matter, defendants shall not solicit to hire, or hire, any
individual listed in Confidential Attachment A who, within six (6)
months of the date of sale of the Divested Business that employs the
individual, receives a reasonable offer of employment from the approved
purchaser of the Divested Business, unless such employee is terminated
or laid off by the purchaser. Defendants shall not interfere with any
negotiations by the purchaser of a Divested Business to employ an
AlliedSignal or Honeywell employee of that Business listed in
Confidential Attachment A, including, but no limited to, offering to
increase in any way the employee's salary or other benefits (other than
company-wide increases in salary or other benefits). In order to foster
the employment and retention of employees by the purchasers,
AlliedSignal or Honeywell, as the case may be, shall, for each employee
of the TCAS Business, the SSWR Business and the AlliedSignal
MicroSCIRAS Business (or, as described below in Section VI, the
Honeywell MEMS Business) who elects to be employed by the purchaser of
the Divested Business, vest all unvested pension and other equity
rights of that employee. For each such employee, AlliedSignal or
Honeywell shall also provide all benefits to which the employee would
have been entitled if terminated without cause, provided the employee
is still employed by the purchaser at the end of the time period
covered by such benefits.
F. Defendants shall take no action, direct or indirect, to impede
in any way the operation of one or more of the businesses to be
divested.
G. Defendants shall warrant to each purchaser of a business to be
divested that the existing business will be operational on the date of
sale.
H. Unless both the United States and DoD consent in writing, the
divestiture of each business to be divested pursuant to Section IV of
this Final Judgment, whether by defendants or by a trustee appointed
pursuant to Section VI of this Final Judgment, shall include the entire
business as defined in Section II. Prior to divestiture, each of the
Divested Businesses shall be operated in place pursuant to the Hold
Separate Stipulation and Order entered by this Court. Each such
divestiture shall be accomplished by selling or otherwise conveying the
business to be divested to a purchaser in such a way as to satisfy the
United States and DoD, in their sole discretion, that the business to
be divested can and will be used by the purchaser of the business as
part of a viable ongoing business. Each divestiture, whether pursuant
to Section IV or Section VI of this Final Judgment shall be made to a
purchaser that has satisfied the United States and DoD, in their sole
discretion, that it: (1) Has the capability and intent of competing
effectively in the development, production and sale of the relevant
products; (2) Has the managerial, operational, and financial capability
to compete effectively in the development, production and sale of the
relevant products; (3) Is eligible to receive applicable DoD security
clearances; and (4) Is not hindered by the terms of any agreement
between the purchaser and defendants that gives either defendant the
ability unreasonably to raise the purchaser's costs, to lower the
purchaser's efficiency, or otherwise to interfere with the ability to
purchaser to compete effectively.
I. Defendants shall comply with all agreements with DoD and all
applicable United States laws and regulations, including those
regarding the protection of classified information and export control.
J. Defendants shall not charge to DoD any costs directly or
indirectly incurred in complying with this Final Judgment.
V. Notice of Proposed Divestitures
A. 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 or in part, any proposed divestitures
pursuant to Sections IV or VI of this Final Judgment, defendants or the
trustee, whichever is then responsible for effecting the divestitures,
shall notify the United States and DoD of the proposed divestitures. 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 that is
the subject of the binding contract, together with full details of
same. Within fifteen (15) calendar days of receipt by the United States
and DoD of such divestiture notice, the United States, in consultation
with DoD, may request from defendants, the proposed purchaser, 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 them 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 or within twenty (20) calendar days after the
United States and DoD have been provided the additional information
requested from the defendants, the proposed purchaser, and any third
party, whichever is later, the United States and DoD shall each provide
written notice to defendants and the trustee, if there is one, stating
whether or not it objects to the proposed divestiture. If the United
States and DoD provide written notice to defendants (and the trustee if
applicable) that they do not object, then the divestiture may be
consummated, subject only to defendants' limited right to object to the
sale under Section VI(B) of this Final Judgment. Absent written notice
that the United States and DoD do not object to
[[Page 69791]]
the proposed purchaser or upon objection by the United States or DoD, a
divestiture proposed under Section IV or Section VI may not be
consummated. Upon objection by defendants under the provision in
Section VI(B), a divestiture proposed under Section VI shall not be
consummated unless approved by the Court.
B. Purchasers of the Teterboro Space and Navigation Business and
the AlliedSignal MicroSCIRAS Business (or, as described below in
Section VI, the Honeywell MEMS Business) must be identified
simultaneously by defendants, or by the applicable trustee, in order
that the proposed divestitures may be reviewed jointly and approved
together by the United States and DoD in accordance with the terms and
conditions of the Final Judgment.
VI. Appointment of Trustees
A. Immediately upon the filing of this Final Judgment, the United
States may, in its sole discretion, nominate no more than two trustees,
which the Court shall appoint. If two trustees are appointed, one
trustee shall monitor the divestiture by defendants of the TCAS
Business and the SSWR Business, and the other trustee shall monitor the
divestiture by the defendants of the Teterboro Space and Navigation
Business, the Cheshire Business, the AlliedSignal MicroSCIRAS Business,
and the AlliedSignal MSA and MAG Technology Business. This procedure
will enable each trustee to be familiar with all applicable divestiture
issues in the event the trustee becomes responsible, pursuant to this
Final Judgment, to divest all non-divested businesses the trustee is
monitoring.
B. In the event that defendants have not divested all of the
businesses required to be divested pursuant to this Final Judgment
within the time specified in Section IV of this Final Judgment, only
the trustee monitoring defendants' attempts to divest the non-divested
business shall have the power and authority to accomplish the
divestiture of the non-divested businesses. If the AlliedSignal
MicroSCIRAS Business has not been divested, the trustee responsible for
divesting that business may, in its sole discretion, divest the
Honeywell MEMS Business instead. For each non-divested business, the
trustee shall seek to attain the best price then obtainable for the
non-divested business upon a reasonable effort by the trustee, subject
to the provisions of Sections IV and VI of this Final Judgment, and
shall have such other powers as the Court shall deem appropriate.
Subject to Section VI(C) of this Final Judgment, each trustee shall
have the power and authority to hire, after the time period described
in section IV(A) and at the cost and expense of the defendants, any
investment bankers, attorneys, or other agents reasonably necessary in
the judgment of the trustee to assist in the divestitures, and such
professionals and agent shall be accountable solely to the trustee. The
trustees shall have the power and authority to accomplish the
divestitures at the earliest possible time to a purchaser acceptable to
the United States and DoD and shall have such other powers as this
Court shall deem appropriate. Defendants shall not object to a
divestiture by a trustee on any ground other than the trustee's
malfeasance. Any such objections by defendants must be conveyed in
writing to the United States and the appropriate trustee within ten
(10) calendar days after the trustee has provided the notice required
under Section V of this Final Judgment.
C. The trustees shall serve at the cost and expense of defendants,
on customary and reasonable terms and conditions agreed to by the
trustees and the United States, unless modified by the Court. Each
trustee shall account for all monies derived from the sale of each
asset 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 the trustees and of any
professionals and agents retained by any trustee shall be reasonable in
light of the value of the divested businesses and based on a fee
arrangement providing the trustees with an incentive based on the price
and terms of the divestitures and the speed with which they are
accomplished.
D. Defendants shall use their best efforts to assist the trustees
to monitor carefully defendants' attempts to divest the businesses to
be divested pursuant to the Final Judgment and, if necessary, to
accomplish the required divestitures, including their best efforts to
effect all necessary consents and regulatory approvals. Each trustee
and any consultants, accountants, attorneys, and other persons retained
by the trustee shall have, to the extent permitted by law, full and
complete access to the personnel, books, records, and facilities of the
businesses to be divested by the trustee, and defendants shall develop
financial or other information relevant to the businesses to be
divested customarily provided in a due diligence process as the trustee
may reasonably request, subject to customary confidentiality
assurances.
E. After its appointment, each trustee shall file monthly reports
with the parties and the Court setting forth either the defendants' or
the trustee's efforts, whichever is applicable, to accomplish the
divestitures ordered under this Final Judgment; provided, however, that
to the extent such reports contain information that the trustee or the
defendants deem confidential, such reports shall not be filed in the
public docket of the Court. After the time period described in Section
IV(A), 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 businesses 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 businesses to
be divested.
F. If a trustee has not accomplished the divestiture of all non-
divested businesses within six (6) months after it became responsible
for selling the non-divested businesses, the trustee thereupon shall
file promptly with the Court a report setting forth (1) The trustee's
efforts to accomplish the required divestitures, (2) The reasons, in
the trustee's judgment, why the required divestitures have not been
accomplished, and (3) The trustees 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 the United States.
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
divestitures have been completed, whether pursuant to Section IV or
Section VI of this Final Judgment, defendants shall deliver to the
United States and DoD an affidavit as to the fact and manner of
compliance with Sections IV or VI of this Final
[[Page 69792]]
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 acquiring, any
interest in the businesses 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 potential purchasers for the
businesses to be divested and to provide required information to
potential purchasers, including the limitations, if any, on such
information. Assuming the information set forth in the affidavit is
true and complete, any objection by the United States to information
provided by defendants, including limitations on information, shall be
made within fourteen (14) days of receipt of such affidavit.
B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, defendants shall deliver to the United States and DoD
an affidavit which describes in detail all actions defendants have
taken and all steps defendants have implemented on an on-going basis to
preserve the businesses to be divested pursuant to Section VIII of this
Final Judgment and the Hold Separate Stipulation and Order entered by
the Court. The affidavit also shall describe, but not be limited to,
defendants' efforts to maintain and operate each business to be
divested as an active competitor, maintain the management, staffing,
research and development activities, sales, marketing and pricing of
each business to be divested and maintain each such business in
operable condition at current capacity configurations. Defendants shall
deliver to the United States and DoD 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 each such divestiture has been completed,
defendants shall preserve all records of all efforts made to preserve
the business to be divested and to effect the ordered divestiture.
VIII. Hold Separate Order
Until the divestitures required by the Final Judgment have been
accomplished, defendants shall take all steps necessary to comply with
the Hold Separate Stipulation and Order entered by this Court.
Defendants shall take no action that would jeopardize the divestitures
ordered by this Court.
IX. Financing
Defendants are ordered and directed not to finance all or any part
of any purchase made pursuant to Sections IV or VI of this Final
Judgment.
X. Compliance Inspection
For the purposes of determining or securing compliance with this
Final Judgment or of determining whether the Final Judgment should be
modified or vacated, 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 the Hold Separate Stipulation and Order; and
2. Subject to the reasonable convenience of defendants and without
restraint or interference from them, to interview, either informally or
on the record, their officers, employees, and agents, who may have
counsel present, regarding any such matters.
B. Upon the written request of the Attorney General or 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 and the Hold Separate Stipulation and Order.
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 United States to any person other than a duly
authorized representative of the Executive Branch of the United States,
except in the course of 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 the United States or DoD, defendants 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 shall be given to defendants by the United States
or DoD prior to divulging such material in any legal proceeding (other
than a grand jury proceeding) to which defendants are 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 date of its entry.
XIII. Public Interest
Entry of this Final Judgment is in the public interest.
Dated: January ____, 2000.
----------------------------------------------------------------------
United States District Judge
Confidential Attachment a to Final Judgment
To be filed under seal.
Competitive Impact Statement
The United States, pursuant to Section 2(b) of the Antitrust
Procedures and Penalties Act (``APPA''), 15 U.S.C. 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 November 8, 1999, the United States filed a civil antitrust
Complaint alleging that the proposed merger of AlliedSignal Inc.
(``AlliedSignal'') and Honeywell Inc. (``Honeywell'') would violate
Section 7 of the Clayton Act, 15 U.S.C. 18. The Complaint alleges that
Honeywell and AlliedSignal are two of the leading manufacturers of
aerospace products used by the U.S. military and by numerous commercial
aviation and
[[Page 69793]]
space companies. AlliedSignal competes against Honeywell in the
production of traffic alert and collision avoidance systems, search and
surveillance weather radar, reaction and momentum wheels, and inertial
systems used in a wide range of applications. The proposed merger of
Honeywell and AlliedSignal would substantially lessen or eliminate
competition in major product areas critical to the national defense and
to the commercial aviation and space industries. Unless the merger is
blocked, the loss of competition will likely result in higher prices,
lower quality and less innovation for each of these products.
The prayer 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 AlliedSignal and Honeywell from
merging; (3) An award to the United States of its costs in bringing the
lawsuit; and (4) Such other relief as the Court deems proper.
When the Complaint was filed, the United States also filed a
proposed settlement that would permit AlliedSignal and Honeywell to
merge, but would require divestitures to preserve competition in the
relevant markets. This settlement consists of a Hold Separate
Stipulation and Order and a proposed Final Judgment.
The proposed Final Judgment orders the defendants to divest, by
February 29, 2000, or within five (5) days of the approval of the
proposed merger by the European Commission, which has concurrent
jurisdiction over the proposed merger, or within (5) days after notice
of the entry of the Final Judgment by the Court, whichever is later,
certain businesses and associated assets as defined in Section II of
the proposed Final Judgment. Specifically, the defendants must divest
to a purchaser or purchasers acceptable to the United States and to the
U.S. Department of Defense (``DoD'') the Traffic Alert and Collision
Avoidance Systems (``TCAS'') Business of Honeywell; the Search and
Surveillance Weather Radar (``SSWR'') Business of AlliedSignal; the
Teterboro Space and Navigation Business of AlliedSignal; the Cheshire
Business of AlliedSignal; the AlliedSignal MicroSCIRAS Business, or, in
the alternative, the Honeywell MEMS Business; and the AlliedSignal
Micromachined Silicon Accelerator (``MSA'') and Micromachined
Accelerometer Gyroscope (``MAG'') Technology Business (collectively,
the ``Divested Businesses''). Purchasers of the Teterboro Space and
Navigation Business and the AlliedSignal MicroSCIRAS Business (or, as
described in Section VI of the proposed Final Judgment, the Honeywell
MEMS Business) must be approved simultaneously. The proposed Final
Judgment authorizes the United States to nominate for appointment
immediately up to two trustees to monitor the defendants' efforts to
sell the Divested Businesses, and to sell those businesses if
defendants cannot do so in the required time frame.
The terms of the Hold Separate Stipulation and Order ensure that
each of the Divested Businesses shall be held separate and apart from
the post-merger company and maintained as viable, independent
competitors until such time as each business is divested.
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
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
AlliedSignal is a Delaware corporation headquartered in Morristown,
New Jersey. The advanced technology and manufacturing company provides
aerospace products and services, automotive products, chemicals,
fibers, plastics and advanced materials. The company reported 1998
sales of about $15 billion, and sales to the U.S. Government (primarily
aerospace-related) of about $1.9 billion. The aerospace business unit
generated about half, or about $7.5 billion, of the company's 1998
revenues.
Honeywell, a Delaware corporation headquartered in Minneapolis,
Minnesota, develops and supplies advanced technology controls and other
products, systems and services to homes and buildings, industry, and
space and aviation customers. The company had annual revenues of about
$8.4 billion in 1998, approximately one-fourth of which were generated
by Honeywell's space and aviation business.
Pursuant to an Agreement and Plan of Merger entered into by
defendants on June 4, 1999, AlliedSignal proposes to merge its business
with Honeywell.
B. The Relevant Markets
1. TCAS
A traffic alert and collision avoidance system is an avionics
safety product that reduces the potential for mid-air collisions
between aircraft. TCAS provides pilots with information on surrounding
air traffic, alerts them when a nearby aircraft has the potential to be
a hazard, and affords a means for coordinating evasive maneuvers for
both aircraft. TCAS operates by transmitting to and eliciting replies
from communications transponders installed on approaching aircraft. The
system tracks aircraft within a specified range and altitude to
determine whether they have the potential to become a collision threat.
2. Search and Surveillance Weather Radar
Weather radar uses radio wave reflections from water droplets and
ice crystals to locate areas of rain, snow and other precipitation.
Search and surveillance weather radar is a special type of weather
radar often installed on helicopters and frequently used in rescue
missions. The radar employs traditional radio frequency technology, but
also has a beaconing capacity which allows the pilot to detect radio
transmissions emitted by small objects, such as a boat or an oil
drilling rig, during poor weather conditions.
3. Reaction and Momentum Wheels
Reaction and momentum wheels are mechanical devices that move and
stabilize satellites by spinning and generating torque. The desired
combination of torque and momentum generated by changes in wheel speed
repositions the satellite. Satellites typically have one to three
reaction and momentum wheels.
4. Inertial Systems
An inertial measurement unit (``IMU'') measures the linear
acceleration and angular rate of rotation of a vehicle. A typical IMU
includes three accelerometers and three gyroscopes. Accelerometers
measure the linear acceleration of a vehicle, which is used to
determine vehicle velocity and vehicle position. Gyroscopes measure the
angular rate of rotation of a vehicle. From these measurements, a
computer can calculate the vehicle's position and heading.
A variety of different types of gyroscopes are used in IMUs,
including mechanical rate gyroscopes (``MRGs''), ring laser gyroscopes
(``RLGs''), fiber optic gyroscopes (``FOGs''), and micro-electro-
mechanical systems (``MEMS'') gyroscopes. Each of these gyroscopes may
substitute with the others as an
[[Page 69794]]
input into an IMU, depending on performance, cost and size
requirements.
MRGs include gas, spinning mass and other comparable mechanical
gyroscopes. Based upon technology developed in the 1950s, these
gyroscopes (often employing magnets, gases and other masses) are
generally larger and more expensive than those produced using newer
technologies. Mechanical gyroscopes are utilized in high accuracy space
applications, strategic missiles, and tactical munitions.
An RLG uses two laser beams housed in an optical cavity with a set
of highly reflective mirrors. One laser beam travels clockwise around
the optical cavity while the other moves counter-clockwise. When the
gyroscope is rotated, a small difference in the circulation time for
each beam occurs because one beam travels less distance than the other.
This difference is used to compute the rate of angular rotation. RLGs
are commonly used in commercial and military aviation, land
applications, satellites, space launch vehicles and high performance
tactical missiles.
FOGs employ optical fiber wound on a spool. Each FOG has a light
source and control electronics to provide two beams of light, one
traveling clockwise and the other counter-clockwise, through the wound
coil. A detector on the coil output senses phase shifts between the two
light beams and converts the phase shift into an angular rate of
rotation. FOGS were developed after RLGs and are beginning to be
utilize in commercial and military aviation, land applications,
satellites, space launch vehicles and high performance tactical
missiles.
MEMS is a developing technology which produces IMUs using silicon
wafers made from semiconductor manufacturing processes and
sophisticated micro-machining. MEMS technology holds tremendous
potential for the next-generation IMU. MEMS IMUs may permit
manufacturers to achieve significant size, cost and weight reductions
in the product. Depending on the ultimate degree of accuracy that MEMS
IMUs provide, they could eventually supplement or replace numerous
types of IMUs currently in the marketplace.
C. Harm to Competition as a Consequence of the Merger
AlliedSignal and Honeywell are two of only three manufacturers of
TCAS used in U.S. military and commercial aircraft. Post merger, the
comined firm would posses more than 60% of the TCAS market.
In addition, the merger of Allied Signal and Honeywell would
eliminate competition in the development, production, and sale of
search and surveillance weather radar and effectively give the combined
firm a monopoly in this market.
AlliedSignal and Honey well are two of only four significant
companies that produce reaction and momentum wheels for use in U.S.
military and commercial space projects. Post merger, the combined firm
would control over 50 percent of the reaction and momentum wheel
market.
Finally, AlliedSignal and Honeywell are two of the leading inertial
system manufacturers in the world. Each company competes to produce and
sell inertial systems for tactical, strategic, navigation and space
applications to the U.S. military and to numerous commercial and space
customers. Allied Signal and Honeywell each manufacture MRGs, RLGs, and
FOGs that are used in inertial systems. In addition, the defendants are
leading competitors in the development of a MEMS IMU. The merger of
these two inertial manufacturers would substantially limit competition
in the production of inertial systems.
Entry by a new company would not be timely, likely or sufficient to
prevent harm to competition in any of these markets. In each market, a
successful entrant would have to design and develop sophisticated, high
technology products, establish complex production processes, and meet
rigorous qualification standards. Applicable laws and regulations may
make it difficult, if not impossible, for manufacturers of the relevant
products located outside the United States to sell their products to
the U.S. military, a major purchaser. It is unrealistic to expect
sufficient new entry in a timely fashion to protect competition in the
relevant markets following the proposed merger.
The Complaint alleges that the effect of AlliedSignal's proposed
merger with Honeywell would be to lessen competition substantially and
to tend to create a monopoly in interstate trade and commerce in
violation of Section 7 of the Clayton Act. The combined firm would have
the ability to increase prices for each relevant product, either
unilaterally or in coordination with other competitors. In particular,
the proposed merger likely would have the following effects, among
others: actual and potential competition between AlliedSignal and
Honeywell in the development, production, and sale of products in each
of the relevant markets would be eliminated; competition in the
development, production, and sale of products in each of the relevant
markets would be eliminated or substantially lessened; prices for
products in each relevant market likely would increase and quality
likely would decline; and innovation in each relevant market likely
would decrease.
III. Explanation of the Proposed Final Judgment
A. The Divested Businesses
The provisions of the proposed Final Judgment are designed to
eliminate the anticompetitive effects of the merger of Honeywell and
AlliedSignal. The divestiture of the businesses required by the
proposed Final Judgment, which collectively generate about $250 million
in annual revenues, will ensure that competition will continue to
flourish in the markets where AlliedSignal and Honeywell compete.
Without the divestitures required by the proposed settlement, a broad
range of commercial, space, and U.S. defense customers likely would
suffer from higher prices for advanced avionics products essential to
their businesses and from a decline in product quality and innovation.
Pursuant to the proposed Final Judgment, Honeywell will divest its
TCAS Business, which it operates at its Glendale and Phoenix, Arizona
facilities. The TCAS Business to be divested includes Honeywell's TCAS
II computer, TCAS 2000 computer, TCAS 1500 computer (which is still
under development), TCAS directional antenna, dedicated TCAS
controller, and the dedicated TCAS display (``TCAS System''). The TCAS
divestiture also includes, as common to the TACS System and other
systems of Honeywell, the Vertical Speed Indicator/Traffic Resolution
Advisory (``VSI/TRA''), pressure transducer and ARINC Diversity/Mode S
transponder used with the basic Honeywell TCAS System. The divested
TCAS Business will include all relevant tangible and intangible assets
used in connection with the business and needed to make it a viable
competitor in the TCAS marketplace.
AlliedSignal will, pursuant to the proposed Final Judgment, divest
its SSWR Business, which it operates at its Olathe, Kansas facility.
The SSWR Business includes AlliedSignal's RDR-1400 and RDR-1500 product
lines. The divested SSWR Business will include all relevant tangible
and intangible assets used in connection with the business and needed
to make it a viable competitor in the SSWR marketplace.
AlliedSignal also will divest its Teterboro Space and Navigation
Business located in Teterboro, New
[[Page 69795]]
Jersey. The Teterboro Space and Navigation Business produces ring laser
gyroscopes, fiber optic gyroscopes, inertial measurement units,
reaction and momentum wheels, control moment gyroscopes, star sensors,
sun shades, navigation and pointing systems and fire control systems.
The divested Teterboro Space and Navigation Business will include all
relevant tangible and intangible assets used in connection with the
business and needed to make it a viable competitor in both the IMU
marketplace and the reaction and momentum wheel marketplace.
AlliedSignal also will divest its IMU business located in Cheshire,
Connecticut that produces rate-grade mechanical inertial measurement
units and components. The Cheshire Business also includes
AlliedSignal's Newark, Ohio repair and overhaul business. The divested
Cheshire Business will include all relevant tangible and intangible
assets used in connection with the business and needed to make it a
viable competitor in the rate-grade mechanical IMU marketplace.
AlliedSignal also will divest its MicroSCIRAS Business, which it
operates at its Redmond, Washington facility. MicroSCIRAS is a silicon-
based MEMS technology. The divested AlliedSignal MicroSCIRAS Business
includes the right to use the existing silicon engineering foundry at
the Redmond facility, an option to lease the existing Redmond
engineering foundry, and/or an option to purchase the equipment
currently in or authorized for the foundry, on November 1, 2000 or the
date that AlliedSignal's separate silicon production foundry is
completed, whichever occurs first. The divested MicroSCIRAS Business
will include all relevant tangible and intangible assets used in
connection with the business and needed to make it a viable competitor
in the MEMS marketplace.
If AlliedSignal does not divest its MicroSCIRAS Business as
required by the proposed Final Judgment, Honeywell's MEMS Business,
which is located in Minneapolis and Plymouth, Minnesota, may be
divested. The Honeywell MEMS Business will include all relevant
tangible and intangible assets used in connection with the business and
needed to make it a viable competitor in the MEMS marketplace.
Finally, AlliedSignal will divest its MSA and MAG Technology
Business. IMUs to be produced with the technologies controlled by this
business, which AlliedSignal acquired pursuant to two agreements
identified in the proposed Final Judgment, potentially compete with the
MEMS technology AlliedSignal is ordered to divest.
Each of the businesses to be divested is defined in detail in
Section II of the proposed Final Judgment. The divestiture of the TCAS
Business, the SSWR Business, the Teterboro Space and Navigation
Business, and the Cheshire Business each involves the sale of
production equipment or facilities which manufacture the identified
products on a daily basis. In contrast, the divestiture of the
AlliedSignal MicroSCIRAS Business, the Honeywell MEMS Business and the
AlliedSignal MSA and MAG Technology Business each involves the sale or
transfer of developing IMU technologies. With one exception,\1\ these
latter three businesses do not yet have the current capability to
produce IMU products at production level volumes for sale to the
public.
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\1\ The AlliedSignal MSA and MAG Technology Business owns, among
other assets, patents which are exclusively licensed to Endevco
Corporation and permit Endevco to manufacture micromachined silicon
accelerometers sold to the public.
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B. Employees
The proposed Final Judgment contains other provisions designed to
protect competition in the relevant product markets. The most important
of these provisions relate to employees of the Divested Businesses and
the firms that purchase the businesses.
Confidential Attachment A to the proposed Final Judgment lists for
each business to be divested a group of employees who are important to
operating the business. The proposed Final Judgment provides that, for
a period of two years from the filing of the Complaint in this matter,
defendants shall not solicit to hire, or hire, any individual listed in
Confidential Attachment A who, within six months of the date of sale of
a Divested Business that employs the individual, receives a reasonable
offer of employment from the approved purchaser of the Divested
Business, unless such employee is terminated or laid off by the
purchaser. Defendants shall not interfere with any negotiations by the
purchaser of a Divested Business to employ anyone listed in
Confidential Attachment A, including, but not limited to, offering to
increase in any way the employee's salary or other benefits (other than
company-wide increases in salary or other benefits). In addition,
AlliedSignal or Honeywell, as the case may be, shall, for each employee
of the TCAS Business, the SSWR Business and the AlliedSignal
MicroSCIRAS Business (or, as described in Section VI of the proposed
Final Judgment, the Honeywell MEMS Business) who elects to be employed
by the purchaser of the Divested Business, vest all unvested pension
and other equity rights of that employee. For each such employee,
AlliedSignal or Honeywell shall also provide all benefits to which the
employee would have been entitled if terminated without cause, provided
the employee is still employed by the purchaser at the end of the time
period covered by such benefit.
The proposed Final Judgment also directs that to the extent
employees of any of the Divested Businesses remain employed by
defendants, the sale of each Divested Business shall include the
purchaser's right to reasonable access to such employees for up to
eighteen (18) months from the date of the purchase. The services
furnished will be provided free by defendants for the first six (6)
months following the sale of the business. Thereafter, the charges for
such services will be set by the defendants at a rate sufficient to
cover the service provider's reasonable estimate of its actual costs
for providing the services and, if applicable, consistent with the
prices the service provider would charge to an affiliate.
C. Approval of Divested Business Purchasers and Appointment of Trustees
Each business divested pursuant to the proposed Final Judgment must
be sold to a purchaser that can satisfy the United States and DoD, in
their sole discretion, that the business will be a viable ongoing
business. The purchaser must satisfy the United States and DoD, in
their sole discretion, that it: (1) Has the capability and intent of
competing effectively in the development, production, and sale of the
relevant products; (2) Has the managerial, operational, and financial
capability to compete effectively in the development, production, and
sale of the relevant products; (3) Is eligible to receive applicable
DoD security clearances; and (4) Is not hindered by the terms of any
agreement between the purchaser and defendants that gives either
defendant the ability unreasonably to raise the purchaser's costs, to
lower the purchaser's efficiency, or otherwise to interfere with the
ability of the purchaser to compete effectively.
Immediately upon the filing of the proposed Final Judgment, the
United States may, in its sole discretion, nominate no more than two
trustees for Court appointment. The trustees shall serve at the cost
and expense of defendants, on customary and reasonable terms and
conditions agreed to by the trustees and the United States,
[[Page 69796]]
unless modified by the Court. If two trustees are appointed, one
trustee shall monitor the divestiture by defendants of the TCAS
Business and the SSWR Business, and the other trustee shall monitor the
divestiture by the defendants of the Teterboro Space and Navigation
Business, the Cheshire Business, the AlliedSignal MicroSCIRAS Business,
and the AlliedSignal MSA and MAG Technology Business.
In the event that defendants have not sold all of the businesses
required to be divested pursuant to the proposed Final Judgment in the
specified time frame, only the trustee monitoring defendants' attempts
to divest each non-divested business shall have the power and authority
to accomplish the divestiture. If the AlliedSignal Micro SCIRAS
Business has not been divested, the trustee responsible for divesting
that business may, in its sole discretion, divest the Honeywell MEMS
Business instead. Defendants may not object to a divestiture by a
trustee on any ground other than the trustee's malfeasance.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act (15 U.S.C. 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.
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 have 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 (60) 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 (60) 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 final Judgment at any time prior
to entry. The comments and the response of the United States will be
field with the Court and published in the Federal Register. Written
comments should be submitted to:
J. Robert Kramer II,
Chief, Litigation II Section, Antitrust Division, United States
Department of Justice, 1401 H Street, N.W., Suite 3000, Washington,
D.C. 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 proposed 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 defendants. The
United States could have brought suit and sought preliminary and
permanent injunctions against the merger of AlliedSignal and Honeywell.
The United States is satisfied that the divestiture of the
described businesses and assets pursuant to the proposed Final Judgment
will encourage viable competition in the research, development,
production, and sale of TCAS, SSWR, reaction and momentum wheels, and
inertial systems. The United States is satisfied that the proposed
relief will prevent the merger from having anticompetitive effects in
any of these markets.
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 compliant including consideration of the
public benefit, if any, to be derived from a determination of the
issues at trial.
15 U.S.C. 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 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, 1458-62 (D.C. Cir. 1995). The courts
have recognized that the term `` `public interest' take[s] meaning from
the purposes of the regulatory legislation.'' NAACP v. Federal Power
Comm'n, 425 U.S. 662, 669 (1976). Since the purpose of the antitrust
laws is to preserve ``free and unfettered competition as the rule of
trade,'' Northern Pacific Railway Co. v. United States, 356 U.S. 1, 4
(1958), the focus of the ``public interest'' inquiry under the APPA is
whether the proposed Final Judgment would serve the public interest in
free and unfettered competition. United States v. American Cyanamid
Co., 719 F.2d 558, 565 (2d Cir 1983), cert, denied, 465 U.S. 1101
(1984); United States v. Waste Management, Inc., 1985-2 Trade Cas.,
para. 66,651, at 63,046 (D.D.C. 1985). 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 settlement through the consent
decree process.'' \2\ Rather,
\2\ 119 Cong. Rec. 24598 (1973). See 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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[a]bsent 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.
[[Page 69797]]
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 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 (9th Cir.), cert denied, 454 U.S. 1083 (1981). See also
Microsoft, 56 F.3d 1448 (D.C. Cir. 1995). Precedent requires that:
The 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.\3\
\3\ United States v. Bechtel, 648 F.2d at 666 (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); United States v. Gillette Co., 406 F.
Supp. at 716. See also United States v. American Cyanamid Co., 719
F.2d at 565.
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A proposed consent decree is an agreement between the parties which
is reached after exhaustive negotiations and discussions. Parties to
not hastily and thoughtlessly stipulate to a decree because, in doing
so, they
waive their right to litigate the issues involved in the case the
thus save themselves the time, expense, and inevitable risk of
litigation. Naturally, the agreement reached normally embodies a
compromise; in exchange for the saving of cost and the elimination
of risk, the parties each give up something they might have won had
they proceeded with the litigation.
United States v. Armour & Co., 402 U.S. 673, 681 (1971).
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 completion in the future. Court approval of a
proposed 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).\4\
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\4\ United States v. American Tel. and 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 United States v. Gillette Co., supra,
406 F. Supp. at 716; United States v. Alcan Aluminum, Ltd., 605 F.
Supp. 619, 622 (W.D. Ky. 1985).
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VIII. Determinative Documents
No determinative materials or documents within the meaning of the
APPA were considered by the United States in formulating the proposed
Final Judgment.
Dated: November 22, 1999.
For Plaintiff United States of America:
J. Robert Kramer II,
Chief, Litigation II Section,
PA Bar # 23963.
Michael K. Hammaker,
DC Bar # 233684 and
P. Terry Lubeck,
Janet Adams Nash,
Carolyn Davis,
Denise Cheung,
Paul E. O'Brien,
Trial Attorneys,
U.S. Department of Justice, Antitrust Division, 1401 H St., NW., Suite
3000, Washington DC 20530, 202-307-0924, 202-307-6283 (Facsimile).
[FR Doc. 99-31669 Filed 12-13-99; 8:45 am]
BILLING CODE 4410-11-M