[Federal Register Volume 60, Number 18 (Friday, January 27, 1995)]
[Notices]
[Pages 5408-5414]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2060]
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FEDERAL TRADE COMMISSION
[File No. 951 0005]
Lockheed Corporation, et al.; Proposed Consent Agreement With
Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
allow, among other things, the completion of the merger between
Lockheed Corporation and Martin Marietta Corporation, to form Lockheed
Martin Corporation, but would prohibit the respondents from enforcing
exclusivity provisions contained in teaming arrangements that each
individual firm now has with infrared sensor producers. The consent
agreement also would prohibit certain divisions of the merged firm from
gaining access through other divisions to nonpublic information that
the respondents' electronics division receives from competing military
aircraft manufacturers when providing a navigation and targeting system
known as ``LANTIRN'' to competing aircraft producers; or that the
respondents' satellite divisions receive from competing expendable
launch vehicle suppliers when those competing suppliers launch the
respondents' satellites.
DATES: Comments must be received on or before March 28, 1995.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th Street and Pennsylvania Avenue, NW., Washington, DC
20580.
FOR FURTHER INFORMATION CONTACT:
Mary Lou Steptoe, Ann Malester, or Laura Wilkinson, FTC/H-374 or S-
2224, Washington, DC 20580 (202) 326-2584, 326-2820 or 326-2830.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby
given that the following consent agreement containing a consent order
to cease and desist, having been filed with and accepted, subject to
final approval, by the Commission, has been placed on the public record
for a period [[Page 5409]] of sixty (60) days. Public comment is
invited. Such comments or views will be considered by the Commission
and will be available for inspection and copying at its principal
office in accordance with Section 4.9(b)(6)(ii) of the Commission's
Rules of Practice (16 CFR 4.9(b)(6)(ii).
In the Matter of LOCKHEED CORPORATION, a corporation, MARTIN
MARIETTA CORPORATION, a corporation, and LOCKHEED MARTIN
CORPORATION, a corporation, File No. 951-0005.
Agreement Containing Consent Order
The Federal Trade Commission (``the Commission''), having initiated
an investigation of the merger of Lockheed Corporation (``Lockheed'')
and Martin Marietta Corporation (``Martin Marietta''), and it now
appearing that Lockheed, Martin Marietta and Lockheed Martin
Corporation (``Lockheed Martin''), hereinafter sometimes referred to as
proposed respondents, are willing to enter into an agreement containing
an order to refrain from certain acts and to provide for other relief:
It is hereby agreed by and between proposed respondents, by their
duly authorized officers and attorneys, and counsel for the Commission
that:
1. Proposed respondent Lockheed is a corporation organized,
existing, and doing business under and by virtue of the laws of the
State of Delaware, with its office and principal place of business
located at 4500 Park Granada Boulevard, Calabasas, California 91399.
2. Proposed respondent Martin Marietta is a corporation organized,
existing, and doing business under and by virtue of the laws of the
State of Maryland, with its office and principal place of business
located at 6801 Rockledge Drive, Bethesda, Maryland 20817.
3. Proposed respondent Lockheed Martin is a corporation organized,
existing, and doing business under and by virtue of the laws of the
State of Maryland, with its office and principal place of business
located at 6801 Rockledge Drive, Bethesda, Maryland 20817.
4. Proposed respondents admit all the jurisdictional facts set
forth in the draft of complaint.
5. Proposed respondents waive:
a. Any further procedural steps;
b. The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
c. All rights to seek judicial review or otherwise to challenge or
contest the validity of the other entered pursuant to this agreement;
and
d. Any claim under the Equal Access to Justice Act.
6. Proposed respondents shall submit within thirty (30) days of the
date this agreement is signed by proposed respondents an initial
report, pursuant to Section 2.33 of the Commission's Rules, signed by
the proposed respondents setting forth in detail the manner in which
the proposed respondents will comply with Paragraphs II, III, IV, V,
VI, VII and VIII of the order when and if entered. Such report will not
become part of the public record unless and until the accompanying
agreement and order are accepted by the Commission.
7. This agreement shall not become a part of the public record of
proceeding unless and until it is accepted by the Commission. If this
agreement is accepted by the Commission it, together with the draft of
complaint contemplated thereby, will be placed on the public record for
a period of sixty (60) days and information in respect thereto publicly
released. The Commission thereafter may either withdraw its acceptance
of this agreement and so notify proposed respondents, in which event it
will take such action as it may consider appropriate, or issue and
serve its complaint (in such form as the circumstances may require) and
decision, in disposition of the proceeding.
8. This agreement is for settlement purposes only and does not
constitute an admission by proposed respondents that the law has been
violated as alleged in the draft complaint, other than jurisdictional
facts, are true.
9. This agreement contemplates that, if it is accepted by the
Commission, if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Section 2.34 of the
Commission's Rules, the Commission may, without further notice to
proposed respondents, (1) issue its complaint corresponding in form and
substance with the draft of complaint and its decision containing the
following order to refrain from certain acts in disposition of the
proceeding, and (2) make information public with respect thereto. When
so entered, the order shall have the same force and effect and may be
altered, modified, or set aside in the same manner and within the same
time provided by statute for other orders. The order shall become final
upon service. Delivery by the U.S. Postal Service of the complaint and
decision containing the agreed-to order to proposed respondents'
addresses as stated in this agreement shall constitute service.
Proposed respondents waive any right they may have to any other manner
of service. The compliant may be used in construing the terms of the
order, and no agreement, understanding, representation or
interpretation not contained in the order of the agreement may be used
to vary or contradict the terms of the order.
10. Proposed respondents have read the draft of complaint and order
contemplated hereby. Proposed respondents understand that once the
order has been issued, they will be required to file one or more
compliance reports showing that they have fully complied with the
order. Proposed respondents further understand that they may be liable
for civil penalties in the amount provided by law for each violation of
the order after it becomes final.
Order
I
It is ordered that, as used in this order, the following
definitions shall apply:
A. ``Lockheed'' means Lockheed Corporation and its predecessors,
successors, subsidiaries, divisions, groups and affiliates controlled
by Lockheed, and their respective directors, officers, employees,
agents and representatives, and their respective successors and
assigns.
B. ``Missile Systems'' means the Missile Systems Division of
Lockheed Missiles & Space Company, Inc., an entity with its principal
place of business at 1111 Lockheed Way, Sunnyvale, California 94088,
which is engaged in, among other things, the research, development,
manufacture and sale of Expendable Launch Vehicles, and its
subsidiaries, divisions, groups and affiliates controlled by Missiles
Systems, and their respective directors, officers, employees, agents
and representatives, and their respective successors and assigns.
C. ``Commercial Space'' means Lockheed Commercial Space Company,
Inc., an entity with its principal place of business at 1111 Lockheed
Way, Sunnyvale, California 94088, and Lockheed-Khrunichev-Energia
International (``LKEI''), a joint venture between Lockheed Commercial
Space Company, Inc., Khrunichev Enterprise and Energia Scientific-
Productive Entity with its principal place of business at 2099 Gateway
Place, Suite 220, San Jose, California 95110, which are engaged in,
among other things, the research, development, manufacture, marketing
and sale of Expendable Launch Vehicles, and its subsidiaries,
[[Page 5410]] divisions, joint venture partners, groups and affiliates
controlled by Commercial Space, and their respective directors,
officers, employees, agents and representatives, and their respective
successors and assigns.
D. ``Space Systems'' means the Space Systems Division of Lockheed
Missiles & Space Company, Inc., an entity with its principal place of
business at 1111 Lockheed Way, Sunnyvale, California 94088, which is
engaged in, among other things, the research, development, manufacture
and sale of Satellites, and its subsidiaries, divisions, groups and
affiliates controlled by Space Systems, and their respective directors,
officers, employees, agents and representatives, and their respective
successors and assigns.
E. ``Aeronautical Systems'' means Lockheed Aeronautical Systems
Group, an entity with its principal place of business at 2859 Paces
Ferry, Suite 1800, Atlanta, Georgia 30339, which is engaged in, among
other things, the research, development, manufacture and sale of
Military Aircraft, and its subsidiaries, divisions, groups and
affiliates controlled by Aeronautical Systems, and their respective
directors, officers, employees, agents and representatives, and their
respective successors and assigns.
F. ``Martin Marietta'' means Martin Marietta Corporation and its
predecessors, successors, subsidiaries, divisions, groups and
affiliates controlled by Martin Marietta, and their respective
directors, officers, employees, agents and representatives, and their
respective successors and assigns.
G. ``Astronautics'' means Martin Marietta's Astronautics Company,
an entity with its principal place of business at P.O. Box 179, Denver,
Colorado 80201, which is engaged in, among other things, the research,
development, manufacture and sale of Satellites and Expendable Launch
Vehicles, and its subsidiaries, divisions, groups and affiliates
controlled by Astronautics, and their respective directors, officers,
employees, agents and representatives, and their respective successors
and assigns.
H. ``Astro Space'' means Martin Marietta's Astro Space Company, an
entity with its principal place of business at P.O. Box 800, Princeton,
New Jersey 08543, which is engaged in, among other things, the
research, development, manufacture and sale of Satellites, and its
subsidiaries, divisions, groups and affiliates controlled by Astro
Space, and their respective directors, officers, employees, agents and
representatives, and their respective successors and assigns.
I. ``Electronics and Missiles'' means Martin Marietta's Electronics
and Missiles Company, an entity with its principal place of business at
5600 Sand Lake Road, Orlando, Florida 32819, which is engaged in, among
other things, the manufacture and sale of LANTIRN Systems, and its
subsidiaries, divisions, groups and affiliates controlled by
Electronics and Missiles, and their respective directors, officers,
employees, agents and representatives, and their respective successors
and assigns.
J. ``Lockheed Martin'' means Lockheed Martin Corporation and its
predecessors, successors, subsidiaries, divisions, groups and
affiliates controlled by Lockheed Martin, and their respective
directors, officers, employees, agents and representatives, and their
respective successors and assigns.
K. ``Respondents'' means Lockheed, Martin Marietta and Lockheed
Martin.
L. ``Hughes'' means GM Hughes Electronics Corporation, a
corporation, organized, existing, and doing business under and by
virtue of the laws of the State of Delaware, with its office and
principal place of business located at 7200 Hughes Terrace, Los
Angeles, California 90045.
M. ``Grumman'' means Northrop Grumman Corporation, a corporation,
organized, existing, and doing business under and by virtue of the laws
of the State of Delaware, with its office and principal place of
business located at 1840 Century Park East, Los Angeles, California
90067.
N. ``Person'' means any natural person, corporate entity,
partnership, association, joint venture, government entity, trust or
other business or legal entity.
O. ``Commission'' means the Federal Trade Commission.
P. ``Lockheed/Hughes Teaming Agreement'' means the teaming
agreement entered into on January 15, 1985, between Lockheed and the
Electro-Optical and Data Systems Group of the Hughes Aircraft Company
for the purpose of submitting a proposal to the United States
Department of Defense for the Demonstration/Validation phase of the
Follow-On Early Warning System, and all subsequent amendments or other
modifications thereto.
Q. ``Martin Marietta/Grumman Teaming Agreement'' means the teaming
agreement entered into on June 20, 1994, between Martin Marietta and
Grumman for the purpose of bidding on or otherwise competing for the
United States Department of Defense's Alert, Locate and Report Missiles
program, and all subsequent amendments or other modifications thereto.
R. ``Space Based Early Warning System'' means any Satellite system
designed to be used for tactical warning and attack assessment, theater
and strategic missile defense, and related military purposes by the
United States Department of Defense, including but not limited to the
Space Based InfraRed (``SBIR'') system and successor systems considered
by the United States Department of Defense to follow SBIR
programmatically.
S. ``Military Aircraft'' means aircraft manufactured for sale to
the United States Department of Defense, whether for use by the United
States Department of Defense or for transfer to a foreign military sale
purchaser.
T. ``LANTIRN Systems'' means dual pod, externally mounted, Low-
Altitude Navigation and Targeting Infrared for Night Systems
manufactured by Martin Marietta for use on Military Aircraft.
U. ``Expendable Launch Vehicle'' means a vehicle that launches a
Satellite(s) from the Earth's surface that is consumed during the
process of launching a Satellite(s) and therefore cannot be launched
more than one time.
V. ``Satellite'' means an unmanned machine that is launched from
the Earth's surface for the purpose of transmitting data back to Earth
and which is designed either to orbit the Earth or travel away from the
Earth.
W. ``Non-Public LANTIRN Information'' means any information not in
the public domain furnished by any Military Aircraft manufacturer to
Electronics and Missiles in its capacity as the provider of LANTIRN
Systems, and (1) if written information, designated in writing by the
Military Aircraft manufacturer as proprietary information by an
appropriate legend, marking, stamp, or positive written identification
on the face thereof, or (2) if oral, visual or other information,
identified as proprietary information in writing by the Military
Aircraft manufacturer prior to the disclosure or within thirty (30)
days after such disclosure. Non-Public LANTIRN Information shall not
include: (i) information already known to Respondents, (ii) information
which subsequently falls within the public domain through no violation
of this order by Respondents, (iii) information which subsequently
becomes known to Respondents from a third party not in breach of a
confidential disclosure agreement, or (iv) information after six (6)
years from the date of disclosure of such Non-Public LANTIRN
Information to Respondents, or such other period as
[[Page 5411]] agreed to in writing by Respondents and the provider of
the information.
X. ``Non-Public ELV Information'' means any information not in the
public domain furnished by an Expendable Launch Vehicle manufacturer to
Space Systems, Astro Space or Astronautics in their capacities as
providers of Satellites, and (1) if written information, designated in
writing by the Expendable Launch Vehicle manufacturer as proprietary
information by an appropriate legend, marking, stamp, or positive
written identification on the face thereof, or (2) if oral, visual or
other information, identified as proprietary information in writing by
the Expendable Launch Vehicle manufacturer prior to the disclosure or
within thirty (30) days after such disclosure. Non-Public ELV
Information shall not include: (i) information already known to
Respondents, (ii) information which subsequently falls within the
public domain through no violation of this order by Respondents, (iii)
information which subsequently becomes known to Respondents from a
third party not in breach of a confidential disclosure agreement, or
(iv) information after six (6) years from the date of disclosure of
such Non-Public ELV Information to Respondents, or such other period as
agreed to in writing by Respondents and the provider of the
information.
Y. ``Merger'' means the merger of Martin Marietta and Lockheed.
II
It is further ordered that Respondents shall not enforce or attempt
to enforce any provision contained in the Lockheed/Hughes Teaming
Agreement that prohibits in any way Hughes from (1) Competing against
Lockheed for any part of any Space Based Early Warning System, or (2)
teaming or otherwise contracting with any other person for the purpose
of bidding on, developing, manufacturing, or supplying any part of any
Space Based Early Warning System. Respondents shall not enforce or
attempt to enforce any proprietary rights in the electro-optical
sensors developed by Hughes in connection with or by virtue of the
Lockheed/Hughes Teaming Agreement in a manner that would inhibit Hughes
from competing with Respondents for any part of any Space Based Early
Warning System.
III
It is further ordered that Respondents shall not enforce or attempt
to enforce any provision contained in the Martin Marietta/Grumman
Teaming Agreement that prohibits in any way Grumman from (1) Competing
against Martin Marietta for any part of any Space Based Early Warning
System, or (2) teaming or otherwise contracting with any other person
for the purpose of bidding on, developing, manufacturing, or supplying
any part of any Space Based Early Warning System. Respondents shall not
enforce or attempt to enforce any proprietary rights in the electro-
optical sensors developed by Grumman in connection with or by virtue of
the Martin Marietta/Grumman Teaming Agreement in a manner that would
inhibit Grumman from competing with Respondents for any part of any
Space Based Early Warning System.
IV
It is further ordered that:
A. Respondents shall not, absent the prior written consent of the
proprietor of Non-Public LANTIRN Information, provide, disclose, or
otherwise make available to Aeronautical Systems any Non-Public LANTIRN
Information; and
B. Respondents shall use any Non-Public LANTIRN Information
obtained by Electronics and Missiles only in Electronics and Missiles'
capacity as the provider of LANTIRN Systems, absent the prior written
consent of the proprietor of Non-Public LANTIRN Information.
V
It is further ordered that Respondents shall deliver a copy of this
order to any United States Military Aircraft manufacturer prior to
obtaining any Non-Public LANTIRN Information relating to the
manufacturer's Military Aircraft either from the Military Aircraft's
manufacturer or through the Merger; provided that for Non-Public
LANTIRN Information described in Paragraph I.W.(2) of this order,
Respondents shall deliver a copy of this order within ten (10) days of
the written identification by the Military Aircraft manufacturer.
VI
It is further ordered that Respondents shall not make any
modifications, upgrades, or other changes to LANTIRN Systems or any
component or subcomponent thereof that discriminate against any other
Military Aircraft manufacturer with regard to the performance of the
Military Aircraft or the time or cost required to integrate LANTIRN
Systems into the Military Aircraft. Provided, however, that nothing in
this paragraph shall prohibit Respondents from making any such
modifications, upgrades, or other changes that are: (1) necessary to
meet competition from (a) foreign military aircraft, or (b) other
products designed to provide targeting, terrain following, or night
navigation functions comparable in performance to LANTIRN Systems; or
(2) approved in writing by the Secretary of Defense or his or her
designee.
VII
It is further ordered that:
A. Respondents shall not, absent the prior written consent of the
proprietor of Non-Public ELV Information, provide, disclose, or
otherwise make available to Astronautics, Missile Systems or Commercial
Space any Non-Public ELV Information obtained by Astro Space or Space
Systems; and
B. Respondents shall use any Non-Public ELV Information obtained by
Astronautics, Astro Space or Space Systems only in Astronautics', Astro
Space's and Space System's capacities as providers of Satellites,
absent the prior written consent of the proprietor of Non-Public ELV
Information.
VIII
It is further ordered that Respondents shall deliver a copy of this
order to any United States Expendable Launch Vehicle manufacturer prior
to obtaining any Non-Public ELV Information relating to the
manufacturer's Expendable Launch Vehicle(s) either from the Expendable
Launch Vehicle manufacturer or through the Merger; provided that for
Non-Public ELV Information described in Paragraph I.X.(2) of this
order, Respondents shall deliver a copy of this order within ten (10)
days of the written identification by the Expendable Launch Vehicle
manufacturer.
IX
It is further ordered that Respondents shall comply with all terms
of the Interim Agreement, attached to this order and made a part hereof
as Appendix I. Said Interim Agreement shall continue in effect until
the provisions in Paragraphs II, III, IV, V, VI, VII and VIII are
complied with or until such other time as is stated in said Interim
Agreement.
X
It is further ordered that within sixty (60) days of the date this
order becomes final and annually for the next ten (10) years on the
anniversary of the date this order becomes final, and at such other
times as the Commission may require, Respondents shall file a verified
written report with the Commission setting forth in detail the manner
and form in which they have complied and are complying with this order.
To the extent not prohibited by United States [[Page 5412]] Government
national security requirements, Respondents shall include in their
reports information sufficient to identify (a) all modifications,
upgrades, or other changes to LANTIRN Systems for which Respondents
have requested and/or received written approval from the Secretary of
Defense or his or her designee pursuant to Paragraph VI of this order,
(b) all United States Military Aircraft manufacturers with whom
Respondents have entered into an agreement for the research,
development, manufacture or sale of LANTIRN Systems, and (c) all United
States Expendable Launch Vehicle manufacturers with whom Respondents
have entered into an agreement for the research, development,
manufacture or sale of Satellites.
XI
It is further ordered that Respondents shall notify the Commission
at least thirty days prior to any proposed change in Respondents, such
as dissolution, assignment, sale resulting in the emergence of a
successor corporation, or the creation or dissolution of subsidiaries
or any other change in Respondent that may affect compliance
obligations arising out of this order.
XII
It is further ordered that, for the purpose of determining or
securing compliance with this order, and subject to any legally
recognized privilege and applicable United States Government national
security requirements, upon written request, and on reasonable notice,
any Respondent shall permit any duly authorized representative of the
Commission:
A. Access, during office hours and in the presence of counsel, to
inspect and copy all books, ledgers, accounts, correspondence,
memoranda and other records and documents in the possession or under
the control of that Respondent relating to any matters contained in
this order; and
B. Upon five (5) days' notice to any Respondent and without
restraint or interference from it, to interview officers, directors, or
employees of that Respondent, who may have counsel present, regarding
such matters.
XIII
It is further ordered that this order shall terminate twenty (20)
years from the date this order becomes final.
Appendix I
In the Matter of LOCKHEED CORPORATION, a corporation, MARTIN
MARIETTA CORPORATION, a corporation, and LOCKHEED MARTIN
CORPORATION, a corporation, File No. 951-0005.
Interim Agreement
This Interim Agreement is by and between Lockheed Corporation
(``Lockheed''), a corporation organized and existing under the laws of
the State of Delaware, Martin Marietta Corporation (``Martin
Marietta''), a corporation organized and existing under the laws of the
State of Maryland, Lockheed Martin Corporation (``Lockheed Martin''), a
corporation organized and existing under the laws of the State of
Maryland (collectively referred to as ``Proposed Respondents''), and
the Federal Trade Commission (the ``Commission''), an independent
agency of the United States Government, established under the Federal
Trade Commission Act of 1914, 15 U.S.C. 41, et seq. (collectively, the
``Parties'').
Premises
Whereas, Martin Marietta and Lockheed have proposed the merger of
their businesses by the formation of a new corporation, Lockheed
Martin; and
Whereas, the Commission is now investigating the proposed Merger to
determine if it would violate any of the statutes the Commission
enforces; and
Whereas, if the Commission accepts the Agreement Containing Consent
Order (``Consent Agreement''), the Commission will place it on the
public record for a period of at least sixty (60) days and subsequently
may either withdraw such acceptance or issue and serve its Complaint
and decision in disposition of the proceeding pursuant to the
provisions of Section 2.34 of the Commission's Rules; and
Whereas, the Commission is concerned that if an understanding is
not reached, preserving competition during the period prior to the
final acceptance of the Consent Agreement by the Commission (after the
60-day public notice period), there may be interim competitive harm and
divestiture or other relief resulting from a proceeding challenging the
legality of the proposed Merger might not be possible, or might be less
than an effective remedy; and
Whereas, Proposed Respondents entering into this Interim Agreement
shall in no way be construed as an admission by Proposed Respondents
that the proposed Merger constitutes a violation of any statute; and
Whereas, Proposed Respondents understand that no act or transaction
contemplated by this Interim Agreement shall be deemed immune or exempt
from the provisions of the antitrust laws or the Federal Trade
Commission by reason of anything contained in this Interim Agreement.
Now, therefore, the Parties agree, upon the understanding that the
Commission has not yet determined whether the proposed Merger will be
challenged, and in consideration of the Commission's agreement that,
unless the Commission determines to reject the Consent Agreement, it
will not seek further relief from Proposed Respondents with respect to
the proposed Merger, except that the Commission may exercise any and
all rights to enforce this Interim Agreement, the Consent Agreement,
and the final order in this matter, and, in the event that Proposed
Respondents do not comply with the terms of this Interim Agreement, to
seek further relief pursuant to Section 5 of the Federal Trade
Commission Act, 15 U.S.C. Sec. 45, and Section 7 of the Clayton Act, 15
U.S.C. Sec. 18, as follows:
1. Proposed Respondents agree to execute and be bound by the terms
of the Other contained in the Consent Agreement, as if it were final,
from the date the Consent Agreement is accepted for public comment by
the Commission.
2. Proposed Respondents agree to deliver within three (3) days of
the date the Consent Agreement is accepted for public comment by the
Commission, a copy if the Consent Agreement and a copy of this Interim
Agreement to the United States Department of Defense, GM Hughes
Electronics Corporation, Loral Corporation, Northorp Grumman
Corporation, Rockwell International Corporation and TRW Incorporated.
3. Proposed Respondents agree to submit within thirty (30) days of
the date the Consent Agreement is signed by the Proposed Respondents,
an initial report, pursuant to Section 2.33 of the Commission's Rules,
signed by the Proposed Respondents setting forth in detail the manner
in which the Proposed Respondents will comply with Paragraphs II, III,
IV, V, VI, VII and VIII of the Consent Agreement.
4, Proposed Respondents agree that, from the date the Consent
Agreement is accepted for public comment by the Commission until the
first of the dates listed in subparagraphs 4.a and 4.b, they will
comply with the provisions of this Interim Agreement:
a. Ten business days after the Commission withdraws its acceptance
of the Consent Agreement pursuant to the provisions of Section 2.34 of
the Commission's rules;
b. The date the Commission finally accepts the Consent Agreement
and issues its Decision and Order. [[Page 5413]]
5. Proposed Respondents waive all rights to contest the validity of
this Interim Agreement.
6. For the purpose of determining or securing compliance with this
Interim Agreement, subject to any legally recognized privilege and
applicable United States Government national security requirements, and
upon written request, and on reasonable notice, to any Proposed
Respondent made to its principal office, that Proposed Respondent shall
permit any duly authorized representative or representatives of the
Commission:
a. Access during the office hours of that Proposed Respondent and
in the presence of counsel to inspect and copy all books, ledgers,
accounts, correspondence, memoranda, and other records and documents in
the possession or under the control of that Proposed Respondent
relating to compliance with this Interim Agreement; and
b. Upon five (5) days' notice to any Proposed Respondent and
without restraint or interference from it, to interview officers,
directors, or employees of that Proposed Respondent, who may have
counsel present, regarding any such matters.
7. This Interim Agreement shall not be binding until accepted by
the Commission.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an agreement containing a proposed Consent Order
from Lockheed Corporation (``Lockheed''), Martin Marietta Corporation
(``Martin Marietta'') and Lockheed Martin Corporation (``Lockheed
Martin''), collectively referred to as respondents. The proposed
Consent Order prohibits respondents from enforcing exclusivity
provisions contained in teaming agreements with manufacturers of
sensors for space-based early warning systems. The proposed Consent
Order also prohibits respondents' military aircraft division from
gaining access to any non-public information that respondents'
electronics division receives from competing military aircraft
manufacturers when providing a navigation and targeting system known as
``LANTIRN'' to competing aircraft producers. In addition, the proposed
Consent Order prohibits respondents from making any modifications to
the LANTIRN system that discriminate against other military aircraft
manufacturers unless such modifications either are necessary to meet
competition or are approved by the Secretary of Defense. Finally, the
proposed Consent Order prohibits respondents' expendable launch vehicle
(``ELV'') divisions from gaining access to any non-public information
that respondents' satellite divisions receive from competing ELV
suppliers when those competing suppliers launch respondents'
satellites.
The proposed Consent Order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
agreement and the comments received and will decide whether it should
withdraw from the agreement or make final the agreement's proposed
Order.
Pursuant to an August 29, 1994, Agreement and Plan of
Reorganization, Lockheed and Martin Marietta agreed to merge their
businesses into a newly created corporation, Lockheed Martin. The
proposed complaint alleges that the merger, if consummated, would
violate Section 5 of the Federal Trade Commission Act, as amended, 15
U.S.C. 45, and Section 7 of the Clayton Act, as amended, 15 U.S.C. 18,
in the following three markets in the United States:
(1) the research, development, manufacture and sale of satellites
for use in space-based early warning systems;
(2) the research, development, manufacture and sale of military
aircraft; and
(3) the research, development, manufacture and sale of expendable
launch vehicles.
The proposed Consent Order would remedy the alleged violations.
First, in the market for space-based early warning systems, Lockheed
and Martin Marietta are exclusively teamed with the Electro-Optical and
Data Systems Group of Hughes Aircraft Company (``Hughes'') and Northrop
Grumman Corporation (``Northrop Grumman''), respectively. Hughes and
Northrop Grumman are two of the leading manufacturers of sensors for
space-based early warning systems. Because the Lockheed/Hughes and
Martin Marietta/Northrop Grumman teaming agreements are both exclusive,
the proposed merger would allow Lockheed Martin to tie up two different
sensors for space-based early warning systems. The proposed Consent
Order makes these agreements non-exclusive, which allows Hughes and
Northrop Grumman to bid for space-based early warning systems either on
their own or teamed with other companies, as well as to continue
working with their current teammates, Lockheed and Martin Marietta. The
purpose of the proposed Consent Order is to increase the number of
competitors for space-based early warning systems procured by the
United States Department of Defense (``DoD'').
Second, Lockheed is a significant competitor in the manufacture and
sale of military aircraft, and Martin Marietta is the only supplier of
the LANTIRN infrared navigation and targeting system, a critical
component on some military aircraft. Following the merger, Lockheed
Martin would be the sole source for LANTIRN systems, as well as a
competitor in the military aircraft market. Because military aircraft
manufacturers will have to provide proprietary information to the
Lockheed Martin division that manufacturers LANTIRN, Lockheed Martin's
military aircraft division could gain access to competitively
significant and non-public information concerning competing military
aircraft. In addition, because the LANTIRN system is periodically
modified or upgraded, Lockheed Martin could modify the LANTIRN in a
manner that discriminates against competing military aircraft
manufacturers. As a result, the proposed merger increases the
likelihood that competition between military aircraft suppliers would
decrease because Lockheed Martin would have access to its competitors'
proprietary information, which could affect the prices and services
that Lockheed Martin provides. In addition, advancements in military
aircraft research, innovation, and quality would be reduced because
Lockheed Martin's military aircraft competitors would fear that
Lockheed Martin could ``free ride'' off of its competitors'
technological developments.
Therefore, the proposed Consent Order prohibits Lockheed Martin
from disclosing any non-public information that it received from
military aircraft manufacturers in its capacity as a provider of the
LANTIRN system to Lockheed Martin's military aircraft division. Under
the proposed Order, Lockheed Martin may only use such information in
its capacity as a provider of the LANTIRN system. Non-public
information in this context means any information not in the public
domain and designated as proprietary information by any military
aircraft manufacturer that provides such information to Lockheed
Martin. The proposed Consent Order also prohibits Lockheed Martin from
making any modifications to the LANTIRN system that disadvantage other
military aircraft manufacturers unless the modification are necessary
to meet competition or are approved by the Secretary of Defense, or
[[Page 5414]] his or her designee. The purpose of the proposed Order is
to maintain the opportunity for full competition in the market for the
research, development, manufacture and sale of military aircraft.
Third, Martin Marietta and Lockheed are significant competitors in
the manufacture and sale of satellites and expendable launch vehicles.
The proposed merger increases the degree of vertical integration in the
markets for satellites and ELVs used by the United States government.
Because satellites manufactured by Lockheed Martin may be launched on
ELVs supplied by Lockheed Martin's competitors, Lockheed Martin's
satellite divisions could gain access to competitively significant and
non-public information concerning competitors' ELVs during the process
of integrating a satellite and an ELV. As a result, the proposed merger
increases the likelihood that competition between ELV suppliers would
decrease because Lockheed Martin would have access to its competitor's
proprietary information, which could affect the prices and services
that Lockheed Martin provides. In addition, advancements in ELV
research, innovation, and quality would be reduced because Lockheed
Martin's ELV competitors would fear that Lockheed Martin could ``free
ride'' off of its competitors' technological developments.
The proposed Consent Order prohibits Lockheed Martin's satellite
divisions from disclosing to Lockheed Martin's ELV divisions any non-
public information that Lockheed Martin receives from competing
suppliers of ELVs. Under the proposed Order, Lockheed Martin may only
use such information in its capacity as a satellite manufacturer. Non-
public information in this context means any information not in the
public domain and designated as proprietary information by any ELV
manufacturer that provides such information to Lockheed Martin's
satellite divisions. The purpose of the proposed Order is to maintain
the opportunity for full competition in the research, development,
manufacture and sale of ELVs.
Under the provisions of the proposed Consent Order, respondents are
required to deliver a copy of the Order to any United States military
aircraft manufacturer and to any United States ELV manufacturer prior
to obtaining any information from them that is outside the public
domain. Under the proposed Order, respondents also are required to
provide to the Commission reports of their compliance with the Order
sixty (60) days after the Order becomes final and annually for the next
ten (10) years on the anniversary of the date the Order becomes final.
In order to preserve or promote competition in the relevant markets
during the period prior to the final acceptance of the proposed Consent
Order (after the 60-day public notice period), respondents have entered
into an Interim Agreement with the Commission in which respondents
agreed to be bound by the proposed Consent Order as of January 10,
1995, the date the Commission accepted the proposed Consent Order
subject to final approval.
The purpose of this analysis is to facilitate public comment on the
proposed Order, and it is not intended to constitute an official
interpretation of the agreement and proposed Order or to modify in any
way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 95-2060 Filed 1-26-95; 8:45 am]
BILLING CODE 6750-01-M