[Federal Register Volume 62, Number 141 (Wednesday, July 23, 1997)]
[Notices]
[Pages 39540-39549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19315]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Raytheon Company and Texas Instruments 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,
Stipulation and Order, Hold Separate and Partition Plan Stipulation and
Order and Competitive Impact Statement have been filed with the United
States District Court in the District of Columbia, Civil No.
1:97CV01515.
On July 2, 1997, the United States filed a Complaint alleging that
the proposed acquisition by Raytheon Company of the Defense Systems and
Electronics Unit of Texas Instruments Inc. (``DS&E'') would violate
Section 7 of the Clayton Act, 15 U.S.C. Sec. 18. The complaint further
alleges that the acquisition by Raytheon of DS&E would lead to a
monopoly in X-band high power amplifier monolithic microwave integrated
circuits (``MMICs''). The proposed Final Judgment, filed the same time
as the Complaint, requires Raytheon to divest the MMICs business of
DS&E.
Public comment is invited within the statutory 60-day comment
period. Such comments and responses thereto will be published in the
Federal Register and filed with the Court. Comments should be directed
to J. Robert Kramer, Chief, Litigation II Section, Antitrust Division,
United States Department of Justice, 1401 H Street, N.W., Suite 3000,
Washington, D.C. 20530 (telephone: 202/307-0924).
Copies of the Complaint, Stipulation and Order, Hold Separate and
Partition Plan Stipulation and Order, Proposed Final Judgment, and
Competitive Impact Statement are available for inspection in Room 215
of the U.S. Department of Justice, Antitrust Division, 325 7th Street,
N.W., Washington, D.C. 20530, (202) 514-2841. Copies of these
[[Page 39541]]
materials may be obtained upon request and payment of a copying fee.
Constance K. Robinson,
Director of Operations, Antitrust Division.
Stipulation and Order
It is stipulated by and between the undersigned parties, by their
respective attorneys, as follows:
(1) 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.
(2) The parties stipulate that a Final Judgment in the form hereto
attached may be filed 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. Sec. 16), and without further notice to any party or other
proceedings, provided that plaintiff 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.
(3) Defendant shall abide by and comply with the provisions of the
proposed Final Judgment pending entry of the Final Judgment 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 Stipulation 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.
(4) This Stipulation 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.
(5) In the event plaintiff withdraws its consent, as provided in
paragraph 2 above, or in the event the proposed Final Judgment is not
entered pursuant to this Stipulation, 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
Stipulation, and the making of this Stipulation shall be without
prejudice to any party in this or any other proceeding.
(6) Defendants represent that the divestiture ordered in the
proposed Final Judgment can and will be made, and that defendants will
later raise no claim of hardship or difficulty as grounds for asking
the Court to modify any of the divestiture provisions contained
therein.
Dated: July 2, 1997.
For Plaintiff United States of America:
Willie L. Hudgins, Esquire, (D.C. Bar #37127, U.S. Department of
Justice, Antitrust Division, Litigation II, Suite 3000, Washington,
D.C. 20005, (202) 307-0924.
For Defendant Raytheon Company:
Robert D. Paul, Esquire, (D.C. Bar #416314), Michael S. Shuster,
Esquire, White & Case, 601 13th St., N.W., Washington, D.C. 20005-
3807, (202) 626-3614.
For Defendant Texas Instruments Inc.:
Kathleen L. Ferrell, Esquire, (D.C. Bar #367971), Paul Bartel,
Esquire, Davis, Polk & Wardwell, 450 Lexington Avenue, New York, NY
10017, (212) 450-4760.
It is so ordered by the Court, this ______ day of July, 1997.
______, United States District Judge.
Parties Entitled to Notice of Entry of Order
United States of America:
Department of Justice Antitrust Division, J. Robert Kramer II, Esq.,
Willie L. Hudgins, Esq., Suite 3000, 1401 H Street, N.W.,
Washington, D.C. 20530.
Counsel for Raytheon Company:
Robert D. Paul, Esq., Michael S. Shuster, Esq., White & Case, 601
13th St., N.W., Washington, D.C. 20005-3807.
Counsel for Texas Instruments Incorporated:
Paul W. Bartel, Esq., Thomas P. Ogden, Esq., Kathleen L.
Ferrell, Davis, Polk & Wardwell, 450 Lexington Avenue, New York, NY
10017.
Hold Separate and Partition Plan Stipulation and Order
It is hereby stipulated and agreed by and between the undersigned,
subject to approval and entry by the Court, that:
I. Definitions
As used in this Hold Separate and Partition Plan Stipulation and
Order:
A. ``DoD'' means the Department of Defense.
B. ``DOJ'' means the Antitrust Division of the Department of
Justice.
C. ``GaAs'' means gallium arsenide.
D. ``MMIC'' means a Monolithic Microwave Integrated Circuit.
E. ``MMIC Business'' means the GaAs foundry and MMIC business of
the R/F Microwave Business Unit of TI purchased by Raytheon, including
the GaAs Operations Group, Microwave GaAs Products Business Unit, the
MMIC component of the Microwave Integrated Circuits Center of
Excellence, the MMIC research and development component of the System
Components Laboratory, and associated contracting, quality assurance
and control personnel located in the North Building and East Building
of TI's Expressway site, all employees listed in attachment A, and all
assets, including:
1. all tangible assets purchased by Raytheon used in the operation
of the MMIC Business including but not limited to: all real property
(owned or leased), including interests in the North Building and East
Building, used in the operation of that MMIC Business, including
research and development activities; all manufacturing, personal
property, inventory, office furniture, fixed assets and fixtures,
materials, supplies, on-site warehouses or storage facilities, and
other tangible property or improvements used in the operation of the
MMIC Business; all licenses, permits and authorizations issued by any
governmental organization relating to that MMIC Business; all
contracts, teaming arrangements, agreements, leases, commitments and
understandings pertaining to the MMIC Business and its operations;
supply agreements; all customer lists and credit records; and other
records maintained by TI in connection with the MMIC Business;
2. all intangible assets purchased by Raytheon relating to the MMIC
Business, including but not limited to all patents, licenses and
sublicenses, intellectual property, maskwork rights, technical
information, know-how, trade secrets, drawings, blueprints, designs,
design protocols, cell libraries, specifications for materials,
specifications for parts and devices, safety procedures for the
handling of materials and substances, quality assurance and control
procedures, design tools and simulation capability, and all manuals and
technical information TI provides to its own employees, customers,
suppliers, agents or licensees; and
3. all research data concerning historic and current research and
development efforts relating to the MMIC Business, including designs of
experiments, and the results of unsuccessful designs and experiments.
F. ``Raytheon'' means Raytheon Company, a Delaware corporation with
its headquarters and principal place of business in Lexington,
Massaschusetts, and its successors, assigns, subsidiaries, divisions,
groups, affiliates, partnerships and joint ventures, directors
officers, managers, agents, and employees.
G. ``TI'' means defendant Texas Instruments, Inc., a Delaware
corporation with its headquarters and principal place of business in
Dallas, Texas, and its successors, assigns subsidiaries, divisions,
groups, affiliates, partnerships and joint
[[Page 39542]]
ventures, and directors, officers, managers, agents and employees.
II. Objectives
The Final Judgment filed in this case is meant to ensure Raytheon's
prompt divestiture of the MMIC Business for the purposes of creating a
viable competitor in development, production and sale of MMICs used in
advance military radars and to remedy the effects that the United
States alleges would otherwise result from Raytheon's proposed
acquisition of the MMIC Business of TI. This Hold Separate and
Partition Plan Stipulation and Order ensures the timely and complete
transfer of the MMIC Business and maintains the MMIC Business as an
independent, viable competitor until divestiture is complete.
III. Hold Separate Provisions
A. Raytheon and MMIC Business shall expressly undertake to compete
in the MMIC market in the exercise of their best judgments and without
regard to the merger agreement, as if they were in all respects
separate and independent business entities.
B. Raytheon shall preserve, maintain, and operate the MMIC Business
purchased by Raytheon from TI as an independent competitor with
management, research, development, production, sales and operations
held entirely separate, distinct and apart from those of Raytheon.
Raytheon shall not coordinate its production, marketing or sale of
gallium arsenide products with that of the MMIC Business, except to the
limited extent provided in III(D) below. Within fifteen (15) days of
the entering of this Order, Raytheon will inform the DOJ and DoD of the
steps taken to comply with this provision.
C. Raytheon shall take all steps necessary to ensure that the MMIC
Business will be maintained and operated as an independent, ongoing,
economically viable and active competitor in the development,
production and sale of gallium arsenide products, including MMICs, that
the management of the MMIC Business will not be influenced by Raytheon,
and that the books, records, competitively sensitive sales, marketing
and pricing information, and decision-making associated with the MMIC
Business, including the performance and decision-making functions
regarding internal research and development, sales and pricing, will be
kept separate and apart from the business of Raytheon. Raytheon's
influence over the MMIC Business shall be limited to that necessary to
carry out Raytheon's obligations under this Order and the Final
Judgment. Nothing in the provision, however, shall prevent Raytheon
from obtaining information customarily provided in due diligence to
allow Raytheon to determine what technology, intellectual property, and
know-how it may desire to license from the purchaser of the MMIC
Business and to determine whether to contract with the purchaser of the
MMIC Business to produce product for Raytheon.
D. Raytheon shall provide and maintain sufficient working capital
to maintain the MMIC Business as a viable, ongoing business, consistent
with current business plans.
E. Raytheon shall provide and maintain sufficient lines and sources
of credit to maintain the MMIC Business as a viable, ongoing business.
F. Raytheon shall maintain on behalf of the business of the MMIC
Business in accordance with sound accounting practices, separate, true
and complete financial ledgers, books and records reporting the profit
and loss and liabilities of the business on a monthly and quarterly
basis.
G. Raytheon shall use all reasonable efforts to maintain and
increase sales of the MMIC Business, and shall maintain at 1996 or
previously approved levels for 1997, whichever are higher, internal
research and development funding, sales, marketing, and support for
MMIC and module products produced by the MMIC Business.
H. Raytheon 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 Final Judgment.
I. Raytheon shall preserve the assets that may be required to be
divested pursuant to the Final Judgment in a state of repair equal to
their state of repair as of the date of this Order, ordinary wear and
tear excepted.
J. Nothing in this Order shall prohibit Raytheon from contracting
with the MMIC Business, pursuant to arm's length negotiations, to have
the MMIC Business produce product for Raytheon from any excess capacity
at the foundry of the MMIC Business.
K. Except in the ordinary course of business or as is otherwise
consistent with this Order, defendants shall not transfer or terminate,
or alter, to the detriment of any employee, any current employment or
salary agreements for any MMIC Business employee who, on the date of
entry of this Order, works for the MMIC Business. Defendants shall not
solicit to hire any individual who, on the date of entry of this Order,
was an employee of the MMIC Business. Defendants shall not hire any
individual who, on the date of entry of this Order, was an employee of
the MMIC Business, unless such individual has a written offer of
employment from a third party for a like position.
L. Until such time as this Order is terminated, the MMIC Business
shall be managed by Thomas Cordner. Mr. Cordner shall have complete
managerial responsibility for the MMIC Business, subject to the
provisions of this Order and the Final Judgment. In the event that Mr.
Cordner is unable to perform his duties, Raytheon shall appoint from
the current management of the MMIC Business, subject to the DOJ's
approval, a replacement within ten (10) working days. Should Raytheon
fail to appoint a replacement acceptable to the DOJ within ten (10)
working days, the DOJ, after consultation with DoD, shall appoint a
replacement.
M. Raytheon shall take no action that would interfere with the
ability of any trustee appointed pursuant to the Final Judgment to
complete the divestiture pursuant to the Final Judgment to a suitable
purchaser.
N. This Order shall remain in effect until the divestiture required
by the Final Judgment is complete, or until further Order of the Court.
IV. Partition Plan
A. Defendants are hereby ordered and directed to present a plan to
partition the facilities of the MMIC Business from the facilities of
Raytheon and TI to the DoD and DOJ, within twenty-eight (28) days of
the entry of this Order. In the event the parties are unable to agree
on a partition plan within twenty-eight (28) days of the entry of this
Order, DOJ, in consultation with DoD, may appoint an expert to devise
such a partition plan. The expert shall have the right, in its sole
discretion, to allocate space and equipment between Raytheon, TI and
the MMIC Business. Defendants shall not object to the partitioning plan
devised by the expert on any grounds other than the expert's
malfeasance. The expert shall serve at the cost and expense of
Raytheon. Raytheon shall take no action to interfere with or impede the
expert's partition plan.
B. Raytheon shall ensure to the satisfaction of DoD that the
operations of the MMIC Business, including its support of DoD programs,
not be disrupted.
Dated: July 2, 1997.
For Plaintiff United States of America:
Willie L. Hudgins, Esquire, (D.C. Bar # 37127), U.S. Department
of Justice, Antitrust Division, Litigation II, Suite 3000,
Washington, D.C. 20005, (202) 307-0924.
For Defendant Raytheon Company:
Robert D. Paul, Esquire, (D.C. Bar # 416314), Michael S.
Shuster, Esquire, White
[[Page 39543]]
& Case, 601 13th St., N.W., Washington, D.C. 20005-3807, (202) 626-
3614.
For Defendant Texas Instruments Inc.:
Kathleen L. Ferrell, Esquire, (D.C. Bar # 367971), Paul Bartel,
Esquire, Davis, Polk & Wardwell, 450 Lexington Avenue, New York, NY
10017, (212) 450-4760.
It is so ordered by the Court, this ______ day of July, 1997.
__________, United States District Judge.
Parties Entitled to Notice of Entry of Order
United States of America:
Department of Justice Antitrust Division, J. Robert Kramer II, Esq.,
Willie L. Hudgins, Esq., Suite 3000, 1401 H Street, N.W.,
Washington, DC 20530.
Counsel for Raytheon Company:
Robert D. Paul. Esq., Michael S. Shuster, Esq., White & Case, 601
13th St., N.W., Washington, DC 20005-3807.
Counsel for Texas Instruments Incorporated:
Paul W. Bartel, Esq., Thomas P. Ogden, Esq., Kathleen L. Ferrell,
Davis, Polk & Wardell, 450 Lexington Ave., New York, NY 10017.
Final Judgment
Whereas, plaintiff, the United States of America, and defendants
Raytheon Company (``Raytheon'') and Texas Instruments, Inc. (``TI''),
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 the prompt and
certain divestiture of the gallium arsenide foundry and MMIC business
of TI to assure that competition is not substantially lessened;
And whereas, plaintiff requires defendants to make certain
divestitures for the purpose of establishing a viable competitor in the
development, production and sale of X-band high power amplifier MMICs;
And whereas, defendants have represented to the plaintiff that the
divestitures ordered herein can and will be made and that defendants
will later raise no claims of hardship or difficulty as grounds for
asking the Court to modify any of the divestiture provisions contained
below;
Now, therefore, before the taking of 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
Sec. 18).
II. Definitions
As used in this Final Judgment:
A. ``DoD'' means the Department of Defense.
B. ``DOI'' means the Antitrust Division of the Department of
Justice.
C. ``GaAs'' means gallium arsenide.
D. ``MMIC'' means a Monolithic Microwave Integrated Circuit.
E. ``MMIC Business'' means the GaAs foundry and MMIC business of
the R/F Microwave Business Unit of TI purchased by Raytheon, including
the GaAs Operations Group, Microwave GaAs Products Business Unit, the
MMIC component of the Microwave Integrated Circuits Center of
Excellence, the MMIC research and development component of the System
Components Laboratory and associated contracting, quality assurance and
control personnel located in the North Building and East Building of
TI's Expressway site, all employees listed in attachment A, and all
assets, including:
1. all tangible assets purchased by Raytheon used in the operation
of the MMIC Business including but not limited to: all real property
(owned or leased), including interests in the North Building and East
building, used in the operation of that MMIC Business, including
research and development activities, as identified pursuant to the
Court's Hold Separate and Partition Plan Stipulation and Order; all
manufacturing, personal property, inventory, office furniture, fixed
assets and fixtures, materials, supplies, on-site warehouses or storage
facilities, and other tangible property or improvements used in the
operation of the MMIC Business; all licenses, permits and
authorizations issued by any governmental organization relating to that
MMIC Business; all contracts, teaming arrangements, agreements, leases,
commitments and understandings pertaining to the MMIC Business and its
operations; supply agreements; all customer lists and credit records;
and other records maintained by TI in connection with the MMIC
Business;
2. all intangible assets purchased by Raytheon relating to the MMIC
Business, including but not limited to all patents, licenses and
sublicenses, intellectual property, maskwork rights, technical
information, know-how, trade secrets, drawings, blueprints, designs,
design protocols, cell libraries, specifications for materials,
specifications for parts and devices, safety procedures for the
handling of materials and substances, quality assurance and control
procedures, design tools and simulation capability, and all manuals and
technical information TI provides to its own employees, customers,
suppliers, agents or licensee; and
3. all research data concerning historic and current research and
development efforts relating to the MMIC Business, including designs of
experiments, and the results of unsuccessful designs and experiments.
F. ``Module Business'' means the transmit and receive module
business of the R/F Microwave Business Unit of TI purchased by
Raytheon, including the R/F Microwave Manufacturing Group, Microwave
Module & Subsystems Center for Excellence Microwave Packaging Center
for Excellence, Microwave Laboratories and Support Systems Center for
Excellence, Technology Programs Customer Product Team, module component
of the Microwave Integrated Circuits Center for Excellence, and
associated contracting, quality assurance and control personnel located
in the North Building of TI's Expressway site, and all assets,
including:
1. all tangible assets purchased by Raytheon used in the operation
of the Module Business including but not limited to: all real property
(owned or leased), including interests in the North Building, used in
the operation of that Module Business, including research and
development activities; all manufacturing, personal property,
inventory, office furniture, fixed assets and fixtures, materials,
supplies, on-site warehouses or storage facilities, and other tangible
property or improvements used in the operation of the Module Business;
all licenses, permits and authorizations issued by any governmental
organization relating to that Module Business; all contracts, teaming
arrangements, agreements, leases, commitments and understandings
pertaining to the Module Business and its operations; supply
agreements; all customer lists and credit records; and other records
maintained by TI in connection with the Module Business;
2. all intangible assets purchased by Raytheon relating to the
Module Business, excluding information relating to TI's MMIC Business,
and otherwise including but not limited to all patents,
[[Page 39544]]
licenses and sublicenses, intellectual property, technical information,
know-how, trade secrets, drawings, blueprints, designs, design
protocols, specifications for materials, specifications for parts and
devices, safety procedures for the handling of material and substances,
quality assurance and control procedures, design tools and simulation
capability, and all manuals and technical information TI provides to
its own employees, customers, suppliers agents or licensee; and
3. all research data concerning historic and current research and
development efforts relating to the Module Business, including design
of experiments, and the results of unsuccessful designs and
experiments.
G. ``Raytheon'' means Raytheon Company, a Delaware corporation with
its headquarters and principal place of business in Lexington,
Massachusetts, and its successors, assigns, subsidiaries, divisions,
groups, affiliates, partnerships and joint ventures, and directors,
officers, managers, agents, and employees.
H. ``TI'' means defendant Texas Instruments, Inc., a Delaware
corporation with its headquarters and principal place of business in
Dallas, Texas, and its successors, assigns, subsidiaries, divisions,
groups, affiliates, partnerships and joint ventures, and directors,
officers, managers, agents and employees.
III. Applicability
A. The provisions of this Final Judgment apply to Raytheon, its
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. Raytheon shall require, as a condition of the sale or other
disposition of all or substantially all of its assets or of a lesser
business unit that includes Raytheon's business of developing and
producing MMICs, that the transferee agree to be bound by the
provisions of this Final Judgment.
IV. Divestiture
A. Raytheon is hereby ordered and directed in accordance with the
terms of this Final Judgment, within one hundred and eighty (180)
calendar days after the filing of the Complaint in this matter, or five
(5) days after notice of the entry of this Final Judgment by the Court,
whichever is later, to divest the MMIC Business to an acquirer
acceptable to DOJ and DoD in their sole discretion.
B. Raytheon shall use its best efforts to accomplish the
divestiture as expeditiously and timely as possible. DOJ in its sole
determination, in consultation with DoD, may extend the time period for
any divestiture an additional period of time not to exceed thirty (30)
calendar days.
C. In accomplishing the divestiture ordered by this Final Judgment,
Raytheon promptly shall make known, by usual and customary means, the
availability of the MMIC Business described in this Final Judgment.
Raytheon shall inform any 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. Raytheon
shall also offer to furnish to all bona fide prospective purchasers,
subject to customary confidentially assurances, all information
regarding the MMIC Business customarily provided in a due diligence
process except such information subject to attorney-client privilege or
attorney work product privilege Raytheon shall make available such
information to the DOJ at the same time that such information is made
available to any other person.
D. Raytheon shall permit prospective purchasers of the MMIC
Business to have reasonable access to personnel and to make such
inspection of the physical facilities of the MMIC Business and any and
all Financial, Operational, or other documents and information
customarily provided as part of a due diligence process.
E. Raytheon shall not take any action that will impede in any way
the operation of the MMIC Business.
F. Unless both DOJ and DoD otherwise consent in writing, the
divestiture pursuant to Section IV, or by trustee appointed pursuant to
Section V of this Final Judgment, shall include the entire MMIC
Business, operated in place pursuant to the Hold Separate and Partition
Plan Stipulation and Order, and be accomplished by selling or otherwise
conveying the MMIC Business to a purchaser in such a way as to satisfy
DOJ and DoD, in their sole discretion, that the MMIC Business can and
will be used by the purchaser as part of a viable, ongoing business or
businesses engaged in the development, production and sale of MMICs.
The divestiture, whether pursuant to Section IV or Section V of this
Final Judgment, shall be made to a purchaser for whom it is
demonstrated to DOJs and DoD sole satisfaction: (1) Has the capability
and intent of competing effectively in the development, production and
sale of MMICs for advanced DoD radar systems; (2) has the managerial,
operational, and financial capability to complete effectively in the
development, production and sale of MMICs for advanced DoD radar
systems; (3) is eligible to receive applicable DoD security clearances;
and (4) that none of the terms of any agreement between the purchaser
and Raytheon give Raytheon the ability unreasonably to raise the
purchasers costs, to lower the purchasers' efficiency, or otherwise to
interfere in the ability of the purchaser to complete effectively.
Subject to these provisions, nothing in this Final Judgment shall
prohibit TI from seeking to re-acquire the MMIC Business from Raytheon.
G. Nothing in this Final Judgment shall prevent Raytheon and the
purchaser of the MMIC Business from entering into a contract under
which the purchaser would produce product for Raytheon using any
capacity of the MMIC Business not required to support DoD programs. In
addition, nothing in this Final Judgment shall prevent Raytheon from
licensing technology or know-how from the purchaser.
H. For a period two years from the filing of the Complaint in this
matter, defendants shall not solicit to hire any individual who, on the
date of the filing of the Complaint in this matter, with an employee of
the MMIC Business, For a period of two years from the filing of the
Complaint in this matter, defendants shall not hire any individual who,
on the date of the filing of the Complaint in this matter, was an
employee of the MMIC business unless such individual has a written
offer of employment from a third party for alike position.
I. Raytheon shall comply with all agreements with DoD regarding the
protection of information related to classified programs.
J. Raytheon shall not charge to DoD any costs directly or
indirectly incurred in complying with this Final Judgment.
V. Appointment of Trustee
A. In the event that Raytheon has not divested the MMIC Business
within the time specified in Section IV of this Final Judgment, the
Court shall appoint, on application of the United States, a trustee
selected by DOJ, in consultation with DoD, to effect the-divestiture of
the MMIC Business.
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the MMIC Business described in
Section II(E) of this Final Judgment. The trustee shall have the power
and authority to accomplish the divesture at the best price then
[[Page 39545]]
obtainable upon a reasonable effort by the trustee, subject to the
provision of sections IV and VIII of this Final Judgment, and shall
have such other powers as the Court shall deem appropriate. The trustee
shall have the right, in its sole discretion, to include in the package
of assets to be divested the Module Business; in such event all of the
obligations and of Raytheon under Section IV of this Final Judgment
shall apply to the Module Business as well. Subject to Section V(C) of
this Final Judgment, the trustee shall have the power and authority to
hire at the cost and expense of Raytheon any investment bankers,
attorneys, or other agents reasonably necessary in the judgment of the
truest to assist in the divestiture, and such professionals and agents
shall be accountable solely to the trustee. The trustee shall have the
power and authority to accomplish the divestiture at the earliest
possible time to a purchaser acceptable to the DOJ and DoD, and shall
have such other powers as this Court shall deem appropriate. Raytheon
shall not object to a sale by the trustee on any grounds other than the
trustee's malfeasance. Any such objections by Raytheon must be conveyed
in writing to DOJ and the trustee within ten (10) calendar days after
the trustee has provided the notice required under Section VI of this
Final Judgment.
C. The trustee shall serve at the cost and expense of Raytheon, on
such terms and conditions as the Court may prescribe, and shall account
for all monies derived from the sale of the assets 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 Raytheon and the trust shall then be terminated.
The compensation of such trustee and of any professionals and agents
retained by the trustee shall be reasonable in light of the value of
the divested business and based on a fee arrangement providing the
trustee with an incentive based on the price and terms of the
divestiture and the speed with which it is accomplished.
D. Raytheon shall use its best efforts to assist the trustee in
accomplishing the required divestiture, including best efforts to
affect all necessary regulatory approvals. The trustee and any
consultants, accountants, attorneys, and other persons retained by the
trustee shall have full and complete access to the personnel, books,
records, and facilities of the business to be divested, and Raytheon
shall develop financial or other information relevant to the business
to be divested customarily provided in a due diligence process as the
trustee may reasonably request, subject to customary confidentiality
assurances. Raytheon shall permit bona fide prospective acquirers of
the assets to have reasonable access to personnel and to make such
inspection of physical facilities and any and all financial,
operational or other documents and other information as may be relevant
to the divestiture required by this Final Judgment.
E. After its appointment, the trustee shall file monthly reports
with the parties and the Court setting forth the trustee's efforts to
accomplish the divestiture ordered under this Final Judgment; 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. 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 business 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 business to be divested.
F. If the trustee has not accomplished such divestiture within six
(6) months after its appointment, the trustee thereupon shall file
promptly with the Court a report setting forth (1) The trustee's
efforts to accomplish the required divestiture, (2) the reasons, in the
trustee's judgment, why the required divestiture has not been
accomplished, and (3) the trustee's 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 DOJ.
VI. Notification
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 divestiture
pursuant to Sections IV or V of this Final Judgment, Raytheon or the
trustee, whichever is then responsible for effecting the divestiture,
shall notify DOJ and DoD of the proposed divestiture. If the trustee is
responsible, it shall similarly notify Raytheon. The notice shall set
forth the details of the proposed transaction and list the name,
address, and telephone number of each person 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 DOJ and DoD of such notice,
DOJ, in consultation with DoD, may request from Raytheon, the proposed
purchaser, or any other third party additional information concerning
the proposed divestiture and the proposed purchaser. Raytheon 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 DOJ has been provided the additional information requested from
Raytheon, the proposed purchaser, and any third party, whichever is
later, DOJ and DoD shall each provide written notice to Raytheon and
the trustee, if there is one, stating whether or not it objects to the
proposed divestiture. If DOJ and DoD provide written notice to Raytheon
and the trustee that they do not object, then the divestiture may be
consummated, subject only to Raytheon's limited right to object to the
sale under Section V(B) of this Final Judgment. Absent written notice
that DOJ and DoD do not object to the proposed purchaser or upon
objection by DOJ or DoD, a divestiture proposed under Section IV or
Section V may be consummated. Upon objection by Raytheon under the
provision in Section V(B), a divestiture proposed under Section V shall
not be consummated unless approved by the Court.
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
divestiture has been completed whether pursuant to Section IV or
Section V of this Final Judgment, Raytheon shall deliver to DOJ and DoD
an affidavit as to the fact and manner of compliance with Sections IV
or V of this Final Judgment. Each such
[[Page 39546]]
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 business 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 Raytheon has taken to solicit a buyer
for the relevant assets and to provide required information to
prospective purchasers including the limitations, if any, on such
information. Assuming the information set forth in the affidavit is
true and complete, any objection by DOJ to information provided by
Raytheon, 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, Raytheon shall deliver to DOJ and DoD an affidavit
which describes in detail all actions Raytheon has taken and all steps
Raytheon has implemented on an on-going basis to preserve the MMIC
Business pursuant to Section VIII of this Final Judgment and the Hold
Separate and Partition Order entered by the Court. The affidavit also
shall describe, but not be limited to, Raytheon's efforts to maintain
and operate the MMIC Business as an active competitor, maintain the
management, staffing, research and development activities, sales,
marketing and pricing of the MMIC Business, and maintain the MMIC
Business in operable condition at current capacity configurations.
Raytheon shall deliver to DOJ and DoD an affidavit describing any
changes to the efforts and actions outlined in Raytheon's earlier
affidavit(s) filed pursuant to this Section within fifteen (15)
calendar days after the change is implemented.
C. Until one year after such divestiture has been completed,
Raytheon shall preserve all records of all efforts made to preserve the
business to be divested and effect the divestiture.
VIII. Hold Separate Order
Until the divestitures required by the Final Judgment have been
accomplished, Raytheon shall take all steps necessary to comply with
the Hold Separate and Partition Plan Stipulation and Order entered by
this Court and to preserve the assets of the Module Business.
Defendants shall take no action that would jeopardize the divestiture
ordered by this Court.
IX. Financing
Raytheon is ordered and directed not to finance all or any part of
any purchase by an acquirer made pursuant to Sections IV or V of this
Final Judgment without prior written consent of DOJ.
X. Compliance Inspection
For purposes of determining or securing compliance with the Final
Judgment 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 Raytheon made to its principal offices, shall be
permitted:
1. Access during office hours of Raytheon to inspect and copy all
books, ledgers, accounts, correspondence, memoranda, and other records
and documents in the possession or under the control of Raytheon, 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 Raytheon and without
restraint or interference from it, to interview, either informally or
on the record, its 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
Raytheon's principal offices, Raytheon shall submit such written
reports, under oath if requested, with respect to any matter contained
in the Final Judgment and the Hold Separate and Partition 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 plaintiff 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
Raytheon to DOJ or DoD, Raytheon represents and identifies 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 Raytheon marks 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 by DOJ or DoD to Raytheon prior to divulging such
material in any legal proceeding (other than a grand jury proceeding)
to which Raytheon is 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 order and directions as may be necessary or
appropriate for the construction or carrying out 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__________, 1997.
__________, United States District Judge.
Competitive Impact Statement
The United States, pursuant to Section 2(b) of the Antitrust
Procedures and Penalties Act (``APPA''), 15 U.S.C. Sec. 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 July 2, 1997, the United States filed a civil antitrust
Complaint alleging that the proposed acquisition by Raytheon Company
(``Raytheon'') of the Defense Systems and Electronics Unit (``DS&E'')
of Texas Instruments (``TI'') would violate Section 7 of the Clayton
Act, 15 U.S.C. Sec. 18. The Complaint alleges that Raytheon and TI are
the only two firms that are now in a position to develop and produce an
essential input required in state-of-the-art military radar systems
that will cost the Department of Defense about $10 billion. These
inputs are X-band high power amplifier monolithic microwave integrated
circuits (``MMICs''). Raytheon is also a leading producer of radar
systems. TI, on the other hand, is an independent supplier of MMICs,
often supplying them to Raytheon's radar system competitors.
[[Page 39547]]
As described in the Complaint, since X-band high power amplifier
MMICs are purchased by domestic radar producers for inclusion in weapon
systems sold to the Department of Defense, and there are no foreign
producers to which domestic radar producers could reasonably turn to
purchase these MMICs, the relevant geographic market is the United
States.
The prayer for relief in the Complaint seeks: (1) a judgment that
the proposed acquisition would violate Section 7 of the Clayton Act;
and (2) a permanent injunction preventing Raytheon from acquiring DS&E.
When the Complaint was filed, the United States also filed a
proposed settlement that would permit Raytheon to complete its
acquisition of DS&E, but require a divestiture and other terms that
will preserve competition in the relevant market. This settlement
consists of a Stipulation and Order, Hold Separate and Partition Plan
Stipulation and Order, and a proposed Final Judgment.
The proposed Final Judgment orders Raytheon to divest, within one
hundred and eighty (180) calendar days after the filings of the
Complaint in this matter, or five (5) days after notice of the entry of
the Final Judgment by the Court, whichever is later, the MMIC Business
(as defined in the Final Judgment) of DS&E to an acquirer acceptable to
the Antitrust Division of the Department of Justice (``DOJ'') and the
Department of Defense (``DoD''). TI's MMIC Business includes its
commercial and defense MMICs, a gallium arsenide foundry, and all
tangible and intangible assets used by TI in the operation of its MMIC
Business. Raytheon is also required to divest the Module Business (as
defined in the Final Judgment) of DS&E if a trustee deems the sale of
this business is necessary to perfect a sale of the MMIC Business.
Until such divestiture is completed, the terms of the Hold Separate
and Partition Plan Stipulation and Order entered into by the parties
apply to ensure that the MMIC Business of DS&E shall be maintained as
an independent competitor from Raytheon.
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
Raytheon is a Delaware corporation headquartered in Lexington,
Massachusetts. Raytheon produces aircraft, guided missiles, space
vehicles, and defense electronics equipment. It develops and produces
high power amplifier MMICs for military radars as its Advanced Device
Center in Andover, Massachusetts. In 1996, Raytheon reported total
sales of about $12 billion. Raytheon is also a leading designer and
producer of radar systems.
TI is a Delaware corporation headquartered in Dallas, Texas. In
1996, TI reported total sales of about $13 billion. Its DS&E unit
produces guided missiles, electro-optical systems, and defense
electronics equipment. DS&E develops and produces high power amplifier
MMICs for military radars through its R/F Microwave Business Unit at a
facility in Dallas, Texas. In 1996, DS&E reported total sales of about
$1.3 billion.
On January 4, 1997, Raytheon entered into an agreement with TI to
purchase DS&E. This transaction, which would, in part, take place in
the highly concentrated high power amplifier MMIC market, precipitated
the government's suit.
B. MMIC Market
High power amplifier MMICs are solid state semiconductor components
(commonly referred to as ``chips'') made of gallium arsenide and used
in active electronically scanned array (``AESA'') radars MMICs are
designed to operate within specified frequency ranges or bands of the
microwave spectrum. Military AESA radars demand the highest performance
MMICs typically those operating in that part of the spectrum called the
X-band, because this band offers the best combination of all-weather
capability and ability to detect low-level targets. Because of the
importance of the X-band high power amplifier MMIC to the performance
of an AESA radar, the performance of these MMICs is important selection
criterion among competing radar systems.
Raytheon has produced more high power amplifier MMICs and modules
than any other firm, and TI is the recognized leader in developing high
power amplifier MMICs. The two companies are the only firms capable of
developing and producing the high power amplifier MMICs required for
military radar bids scheduled for the next two to three years. In the
next two to three years, radar programs worth over $10 billion will be
competed. The radars for these programs will all require X-band high
power amplifier MMICs. TI and Raytheon are the only firms that have
established production processes and proven manufacturing capability
for these high power amplifier MMICs.
Raytheon's acquisition of TI's DS&E, including the MMICs Business,
would have eliminated competition in the development, production, and
sale of X-band high power amplifier MMICs for military radars being
developed over the next two to three years. The proposed acquisition
would have resulted in a single supplier with the incentive and ability
to raise prices and little or no incentive to minimize cost.
The acquisition also likely would have resulted in a lessening of
competition in the market for military radars. Raytheon is not only a
supplier of high power amplifier MMICs but is also a major supplier of
the radar systems of which these devices are critical components. Prior
to announcement of the acquisition. TI had teamed with other radar
systems suppliers to develop MMICs that met the required specifications
for DoD weapon systems. If it acquired the MMIC Business, Raytheon
would have controlled access to all currently viable high power
amplifier MMICs. Without access to the latest high power amplifier
MMICs, a radar manufacturer would be at a serious disadvantage for
upcoming military radar competitions.
Successful entry into the production and sale of high power
amplifier MMICs is difficult, time consuming, and costly. Entry
requires advanced technology, skilled engineers, and costly customized
equipment. A new gallium arsenide foundry costs $50-100 million and
takes at least two years to construct. A potential entrant would have
to engage in difficult, expensive, and time consuming research to
develop designs and production processes that can economically and
reliably produce high power amplifier MMICs. These designs and
production processes must be perfected in order to bid successfully for
a military radar program.
Because the high power amplifier MMIC is a crucial input of the
radar system, there are no reasonable substitutes to which customers
could switch in the event of a small, but significant and non-
transitory price increase.
C. Harm to Competition As A Consequence of the Acquisition
Raytheon's acquisition of DS&E's MMIC Business would eliminate
[[Page 39548]]
competition in the research, development, and production of high power
amplifier MMICs necessary to military weapons systems in the United
States.
If Raytheon acquired the MMIC Business of DS&E, the current two
producers of high power amplifier MMICs in the United States would be
reduced to one. Entry by a new company would not be timely, likely or
sufficient to prevent harm to competition.
The Complaint alleges that the transaction would have the following
effects, among others: competition generally in the innovation,
development, production, and sale of high power amplifier MMICs for
military radars in the United States would be lessened substantially;
actual and future competition between Raytheon and TI in the
development, production and sale of high power amplifier MMICs for
military radars in the United States will be eliminated; prices for
high power amplifier MMICs for military radars in the United States
would likely increase; and competition generally in development,
production and sale of military radars in the United States would be
lessened substantially.
III. Explanation of the Proposed Final Judgment
The provisions of the proposed Final Judgment are designed to
eliminate the anticompetitive effects of the acquisition of DS&E's MMIC
Business by Raytheon.
The proposed Final Judgment provides that Raytheon must divest,
within one hundred and eighty (180) calendar days after the filing of
the Complaint in this matter, or five (5) days after notice of the
entry of the Final Judgment by the Court, whichever is later, the MMIC
Business of DS&E to an acquirer acceptable to the DOJ and DoD. If
defendants fail to divest the MMIC Business, a trustee (selected by DOJ
in consultation with DoD) will be appointed. The trustee will be
authorized to sell, in his or her sole discretion, the MMIC Business.
In addition, the trustee shall have the right, in his or her sole
discretion, to include in the package of assets to be divested the
Module Business, if sale of the Module Business is necessary to perfect
a sale of the MMIC Business.
The Final Judgment provides that Raytheon will pay all costs and
expenses of the trustee. After his or her appointment becomes
effective, the trustee will file monthly reports with the parties and
the Court, setting forth the trustee's efforts to accomplish
divestiture. At the end of six months, if the divestiture has not been
accomplished, the trustee and the parties will make recommendations to
the Court, which shall enter such orders as appropriate in order to
carry out the purpose of the trust, including extending the trust or
the term of the trustee's appointment.
Divestiture of the MMIC Business preserves competition because it
will restore the high power amplifier MMIC market to a structure that
existed prior to the acquisition and will preserve the existence of an
independent competitor. Divestiture will keep at least two producers of
high power amplifier MMICs in the market competing for upcoming AESA
radar programs, which will preserve and encourage ongoing competition
in product innovation and development, production, and sales.
Divestiture will also prevent radar system manufacturers from being
foreclosed from a critical input and thus will preserve competition in
upcoming military radar programs.
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 has 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 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 Judgment at any time prior to entry. The
comments and the response of the United States will be filed 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,
NW., Suite 3000, Washington, DC 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 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 Raytheon
and TI. The United States could have brought suit and sought
preliminary and permanent injunctions against Raytheon's acquisition.
The United States also considered a settlement involving the licensing
of MMIC technology to one or more firms. The United States determined,
however, that such a proposal would not fully protect competition for
important radar projects over the next several years.
United States is satisfied that the divestiture of the described
assets and the other terms specified in the proposed Final Judgment
will encourage viable competition in the research, development, and
production of high power amplifier MMICs. The United States is
satisfied that the proposed relief will prevent the acquisition from
having anticompetitive effects in this market. The divestiture of the
MMIC Business and the other proposed terms will restore the high power
amplifier MMIC market to a structure that existed prior to the
acquisition and will preserve the existence of an independent
competitor.
VII. Standard of Review Under the APPA for Proposed Final Judgment
The APPA requires that proposed consent judgment 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 the public interest.'' In making that
determination, the court may consider--
[[Page 39549]]
(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 complaint including consideration of the public benefit, if any,
to be derived from a determination of the issues at trail.
15 U.S.C. Sec. 16(e) (emphasis added). As the Court of Appeals for the
District of Columbia Circuit recently held, the APPA permits a court to
consider, among other things, the relationship between the remedy
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 (D.C. Cir. 1995).
In conduction this injury, ``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.'' \1\ Rather, absent 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.
---------------------------------------------------------------------------
\1\ 119 Cong. Rec. 24598 (1973). See also United States v.
Gillete 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.
---------------------------------------------------------------------------
United States v. Mid-America Dairymen, Inc., 1977-1 Trace 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 an 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 660,666 (9th Cir.), cert. denied, 454 U.S. 1083 (1981);
see also, Microsoft, 56 F.3d 1448 (D.C. Cir. 1995). Precedent requires
that
[t]he 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 pubic 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.\2\
\2\ United States v. Bechtel, 648 F.2d at 666 (internal
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 558, 565 (2d Cir. 1983).
---------------------------------------------------------------------------
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
certainly of free competition in the future. Court approval of a 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).\3\
---------------------------------------------------------------------------
\3\ 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).
---------------------------------------------------------------------------
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
For Plaintiff United States of America:
J. Robert Kramer II, Chief, Litigation II Section, PA Bar #
23963; William L. Hudgins, Assistant Chief, Litigation II Section,
DC Bar # 37127; and
Janet Adams Nash, Kevin C. Quin, Stacy Nelson, Laura M. Scott, Nancy
Olson, Tara M. Higgins, Charles R. Schwidde, Robert W. Wilder,
Melanie Sabo,
Trail Attorneys, U.S. Department of Justice, Antitrust Division,
1401 H St., N.W., Suite 3000, Washington, D.C. 20530, 202-307-0924,
202-307-6283 (Facsimile).
Dated: July 2, 1997.
[FR Doc. 97-19315 Filed 7-22-97; 8:45 am]
BILLING CODE 4410-11-M