[Federal Register Volume 61, Number 120 (Thursday, June 20, 1996)] [Notices] [Pages 31526-31529] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 96-15731] ======================================================================= ----------------------------------------------------------------------- FEDERAL TRADE COMMISSION [File No. 961-0057] Raytheon Company; Proposed Consent Agreement With Analysis To Aid Public Comment AGENCY: Federal Trade Commission. ACTION: Proposed consent agreement. ----------------------------------------------------------------------- SUMMARY: In settlement of alleged violations of federal law prohibiting unfair or deceptive acts or practices and unfair methods of competition, this consent agreement, accepted subject to final Commission approval, would require the Lexington, Massachusetts-based company to erect an information ``firewall'' between it and Chrysler Technologies Holding, Inc. (CTH). The consent agreement settles allegations that Raytheon's acquisition of CTH may compromise the competitiveness of an upcoming procurement for the Navy's Submarine High Data Rate system (Submarine HDR), on which Raytheon has bid. CTH is presently a second-tier subcontractor to GTE Corporation, which also bid on the Submarine HDR contract. DATES: Comments must be received on or before August 19, 1996. ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580. FOR FURTHER INFORMATION CONTACT: James Holden, Federal Trade Commission, 6th and Pennsylvania Ave, NW., Washington, DC 20580, (202) 326-2682. 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 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)). Agreement Containing Consent Order The Federal Trade Commission (``Commission''), having initiated an investigation of the proposed acquisition by Raytheon Company (``Raytheon'') of Chrysler Technologies Holding, Inc. (``CTH''), and it now appearing that Raytheon, hereinafter sometimes referred to as ``Proposed Respondent,'' is willing to enter into an agreement containing an order to refrain from certain acts and to provide for certain other relief: It is hereby agreed by and between Proposed Respondent Raytheon, by its duly authorized officers and attorneys, and counsel for the Commission that: 1. Proposed Respondent Raytheon 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 141 Spring Street, Lexington, Massachusetts 02173. 2. Proposed Respondent admits all the jurisdictional facts set forth in the draft of complaint. 3. Proposed Respondent waives: 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 [[Page 31527]] validity of the order entered pursuant to this agreement; and d. Any claim under the Equal Access to Justice Act. 4. Proposed Respondent shall submit within twenty (20) days of the date this agreement is signed by Proposed Respondent, an initial report, pursuant to Section 2.33 of the Commission's Rules, signed by Proposed Respondent setting forth in detail the manner in which Proposed Respondent will comply with Paragraph II. 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 for public comment. 5. This agreement shall not become part of the public record of the 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 Respondent, 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. 6. This agreement is for settlement purposes only and does not constitute an admission by Proposed Respondent that the law has been violated as alleged in the draft of complaint, or that the facts as alleged in the draft complaint, other than jurisdictional facts, are true. 7. This agreement contemplates that, if it is accepted by the Commission, and 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 Respondent, (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 Respondent's address as stated in the agreement shall constitute service. Proposed Respondent waives any right it may have to any other manner of service. The complaint may be used in construing the terms of the order, and no agreement, understanding, representation or interpretation not contained in the order or the agreement may be used to vary or contradict the terms of the order. 8. Proposed Respondent has read the proposed complaint and order contemplated hereby. Proposed Respondent understands that once the order has been issued, it will be required to file one or more compliance reports showing that it has fully complied with the order. Proposed Respondent further understands it 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. ``Respondent'' or ``Raytheon'' means Raytheon Company, its directors, officers, employees, agents, representatives, predecessors, successors and assigns; its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures controlled by Raytheon Company, and the respective directors, officers, employees, agents, representatives, successors and assigns of each. For purposes of Paragraph II. of this order, Raytheon does not include ESI. B. ``CTH'' means Chrysler Technologies Holding, Inc., a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware with its principal office and place of business located in 1000 Chrysler Drive, Auburn Hills, Michigan 48326- 2766, its directors, officers, employees, agents, representatives, predecessors, successors and assigns; its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures controlled by CTH, and the respective directors, officers, employees, agents, representatives, successors and assigns of each. C. ``ESI'' means Electrospace Systems, Inc., a wholly-owned subsidiary of Chrysler Technologies Holding, Inc., with its principal office and place of business located at 1301 East Collins Boulevard, Richardson, Texas 75083, or by any other entity within or controlled by Chrysler Technologies Holding, Inc. that is engaged in, among other things, the research, development, manufacture or sale of Antenna and Terminal Controls, its directors, officers, employees, agents, representatives, predecessors, successors and assigns; its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures controlled by ESI (or such similar entity), and the respective directors, officers, employees, agents, representatives, successors and assigns of each. D. ``Commission'' means the Federal Trade Commission. E. ``Submarine High Data Rate Satellite Communications Terminal'' means the system to be procured in the United States Department of the Navy's scheduled competitive procurement of the Submarine High Data Rate Satellite Communications Terminal, a satellite communications system for use on U.S. Navy submarines that is capable of, among other things, transmitting and receiving both super high frequency and extremely high frequency signals. F. ``Antenna and Terminal Controls'' means any current or future equipment and services designed, developed, proposed or provided by ESI in connection with the United States Department of the Navy's procurement of the Submarine High Data Rate Satellite Communications Terminal. G. ``Non-Public Information of Raytheon'' mean any information not in the public domain and in the possession or control of Raytheon relating to the Submarine High Data Rate Satellite Communications Terminal. H. ``Non-Public Information of ESI'' means any information not in the public domain and in the possession or control of ESI relating to the Submarine High Data Rate Satellite Communications Terminal, and any information not in the public domain furnished by Rockwell International Corporation or GTE Corporation or any other company to ESI in its capacity as subcontractor to Rockwell International Corporation in connection with the U.S. Navy's procurement of the Submarine High Data Rate Satellite Communications Terminal. I. ``Acquisition'' means Raytheon's acquisition of all of the voting securities of Chrysler Technologies Holding, Inc. II It is further ordered that: A. Raytheon shall not provide, disclose or otherwise make available, directly or indirectly, to ESI any Non-Public Information of Raytheon until either: (1) The United States Department of the Navy selects only one supplier for the Submarine High Data Rate Satellite Communications Terminal; or (2) the [[Page 31528]] United States Department of the Navy cancels its procurement of the Submarine High Data Rate Satellite Communications Terminal entirely. B. Raytheon shall not obtain or seek to obtain, directly or indirectly, any Non-Public Information of ESI until either: (1) the United States Department of the Navy selects only one supplier for the Submarine High Data Rate Satellite Communications Terminal; or (2) the United States Department of the Navy cancels its procurement of the Submarine High Data Rate Satellite Communications Terminal entirely. III It is further ordered that Respondent 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 Paragraph II. of this order are complied with or until such other time as is stated in said Interim Agreement. IV It is further ordered that within twenty (20) days of the date this order becomes final, and annually on the anniversary of the date this order become final until either the United States Department of the Navy selects only one supplier for the Submarine High Data Rate Satellite Communications Terminal or cancels its procurement of the Submarine High Data Rate Satellite Communications Terminal entirely, and at such other times as the Commission may require, Respondent shall file a verified written report with the Commission setting forth in detail the manner and form in which it has complied and it complying with Paragraph II of this order. V It is further ordered that Respondent shall notify the Commission at least thirty (30) days prior to any proposed change in the corporate Respondent such as dissolution, assignment, sale resulting in the emergence of a successor corporation, or the creation or dissolution of subsidiaries or sale of any division or any other change in the corporation, in each instance where such change may affect compliance obligations arising out of the order. VI 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, Respondent shall permit any duly authorized representatives 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 Respondent, relating to any matters contained in this order; and B. Upon five (5) days' notice to Respondent, and without restraint or interference from Respondent, to interview officers, directors, or employees of Respondent, who may have counsel present, regarding any such matters. VII It is further ordered that Respondent's obligations under this order shall terminate when either: (1) the United States Department of the Navy selects only one supplier for the Submarine High Data Rate Satellite Communications Terminal; or (2) the United States Department of the Navy cancels its procurement of the Submarine High Data Rate Satellite Communications Terminal entirely. Appendix I Interim Agreement This Interim Agreement is by and between Raytheon Company (``Raytheon''), a corporation organized and existing under the laws of the State of Delaware, 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. Sec. 41, et seq. Premises Whereas, Raytheon has proposed to acquire all of the outstanding voting securities of Chrysler Technologies Holding, Inc., and Whereas, the Commission is now investigating the proposed Acquisition 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 during the period prior to the final issuance 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 Acquisition might not be possible, or might be less than an effective remedy; and Whereas, Raytheon entering into this Interim Agreement shall in no way be construed as an admission by Raytheon that the proposed Acquisition constitutes a violation of any statute; and Whereas, Raytheon understands 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 Act by reason of anything contained in this Interim Agreement. Now, therefore, Raytheon agrees, upon the understanding that the Commission has not yet determined whether the proposed Acquisition will be challenged, and in consideration of the Commission's agreement that, at the time it accepts the Consent Agreement for public comment, it will grant early termination of the Hart-Scott-Rodino waiting period, as follows: 1. Raytheon agrees to execute and be bound by the terms of the Order contained in the Consent Agreement, as if it were final, from the date Raytheon signs the Consent Agreement. 2. Raytheon agrees to deliver, within three (3) days of the date the Consent Agreement is accepted for public comment by the Commission, a copy of the Consent Agreement and a copy of this Interim Agreement to the United States Department of Defense, Rockwell International Corporation, and GTE Corporation. 3. Raytheon agrees to submit, within twenty (20) days of the date the Consent Agreement is signed by Raytheon, an initial report, pursuant to Section 2.33 of the Commission's Rules, signed by Raytheon setting forth in detail the manner in which Raytheon will comply with Paragraph II. of the Consent Agreement. 4. Raytheon agrees that, from the date Raytheon signs the Consent Agreement until the first of the dates listed in subparagraphs 4.a. and 4.b., it will comply with the provisions of this interim Agreement: a. Ten (10) 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; or [[Page 31529]] b. The date the Commission finally issues its Compliant and its Decision and Order. 5. Raytheon waives 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, Raytheon shall permit any duly authorized representative or representatives of the Commission: a. Access, during the office hours of Raytheon 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 Raytheon relating to compliance with this Interim Agreement; and b. Upon five (5) days' notice to Raytheon and without restraint or interference from it, to interview officers, directors, or employees of Raytheon, 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 Raytheon Company (``Raytheon''), which prohibits Raytheon from gaining access to any non-public information in the possession of Electrospace Systems, Inc. (``ESI'') related to the Submarine High Data Rate Satellite Communications Terminal (``Submarine HDR Terminal'') to be procured by the United States Department of the Navy, or disclosing any such information in its possession to ESI. In addition, the Commission has accepted an Interim Agreement which prohibits Raytheon from receiving any non-public information related to the Submarine HDR Terminal from ESI, or giving any such non-public information in its possession to ESI. 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 a Stock Purchase Agreement dated April 4, 1996, Raytheon proposed to purchase all of the voting securities of Chrysler Technologies Holding, Inc. (``CTH'') for approximately $455 million. ESI is a wholly-owned subsidiary of CTH. The proposed Complaint alleges that the acquisition, if consummated, would violate Section 7 of the Clayton Act, as amended, 15 U.S.C. Sec. 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. Sec. 45, in the market for the research, development, manufacture and sale of Submarine HDR Terminals. The Submarine HDR Terminal is a satellite communications system for use on U.S. Navy submarines that is capable of, among other things, transmitting and receiving both super high frequency and extremely high frequency signals. Initial proposals (bids) for the Navy's procurement of the Submarine HDR Terminal were due on April 15, 1996, and Raytheon submitted an initial proposal. An initial proposal was also submitted by GTE Corporation, for which ESI is a second-tier subcontractor supplying the antenna/terminal controls (an extremely small portion of the overall system). Having received initial proposals, the Navy now intends to hold discussions that may culminate in a ``Best And Final Offer'' competition. At this point in the competition for the Navy's Submarine HDR Terminal, the market is highly concentrated, and effective new entry is unlikely to occur in a timely manner. In its capacity as supplier of the antenna/terminal controls for the GTE proposal, ESI already possesses a significant amount of competitively sensitive information concerning the GTE proposal, and may be in a position to acquire even more such information during the period from the present until the competition is concluded. The upcoming competition for the Navy's Submarine HDR Terminal could be jeopardized if either Raytheon or ESI gains access to competitively sensitive information in the other's possession as a result of the proposed acquisition. The proposed Consent Order remedies this antitrust concern by prohibiting the exchange of competitively sensitive information between Raytheon and ESI. Other than the exchange of information, the proposed acquisition is unlikely to have an anticompetitive effect due to, among other reasons, the fact that ESI's role on the GTE proposal is extremely small. Under the provisions of the Consent Order, Raytheon is also required to provide the Commission with a report of compliance with the Order within twenty (20) days of the date the Order becomes final, and annually thereafter until the Navy either: (1) selects only one Submarine HDR Terminal supplier; or (2) cancels the Submarine HDR Terminal procurement entirely. The purpose of this analysis is to facilitate public comment on the proposed Consent 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. 96-15731 Filed 6-19-96; 8:45 am] BILLING CODE 6750-01-M