[Federal Register Volume 65, Number 54 (Monday, March 20, 2000)]
[Notices]
[Pages 15013-15016]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6749]
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
Antitrust Division
United States v. AlliedSignal Inc. and Honeywell Inc., Case No.
1:99 CV 02959 (PLF) (D.D.C.); Response to Public Comments on Antitrust
Consent Decree
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that on March 9, 2000, the United
States filed is responses to public comments on the proposed Final
Judgment in United States v. AlliedSignal Inc. and Honeywell Inc. Case
No. 1:99 CV 02959 (PLF) (D.D.C., filed November 8, 1999), with the
United States District Court for the District of Columbia.
On November 8, 1999, the United States filed a Complaint which
alleged that AlliedSignal's proposed merger with Honeywell would
violate Section 7 of the Clayton Act, 15 U.S.C. 18, by substantially
lessening competition in the traffic alert and collision avoidance
systems (``TCAS'') market, the search and surveillance weather radar
(``SSWR'') market, the reaction and momentum wheel market, and the
inertial systems market. The proposed Final Judgment, also filed on
November 8, 1999, requires AlliedSignal and Honeywell to divest the
TCAS business of Honeywell located in Glendale, Arizona; the SSWR
business of AlliedSignal located in Olathe, Kansas; the space and
navigation business of AlliedSignal located in Teterboro, New Jersey;
the mechanical rate gyroscope business of AlliedSignal located in
Cheshire, Connecticut, and a related repair business in Newark, Ohio;
the microSCIRAS technology business of AlliedSignal located in Redmond,
Washington, or, in the alternative, the micro-electro-mechanical
systems inertial sensor business of Honeywell located in Minneapolis
and Plymouth, Minnesota; and the AlliedSignal micromachined silicon
accelerator and micromachined accelerometer gyroscope technology
business.
Public comment was invited within the statutory 60-day comment
period. The public comments and the United States' responses thereto
are hereby published in the Federal Register and have been filed with
the Court. Copies of the Complaint, Hold Separate Stipulation and
Order, proposed Final Judgment, Competitive Impact Statement, and the
United States' Certificate of Compliance with Provisions of the
Antitrust Procedures and Penalties Act (to which the public comments
and the United States' responses are attached) are available for
inspection in Room 215 of the Antitrust Division, Department of
Justice, 325 7th Street, NW, Washington, DC 20530 (telephone: 202-514-
2481) and at the Office of the Clerk of the United States District
Court for the District of Columbia, 333 Constitution Avenue, NW,
Washington, DC 20001.
Copies of any of these materials may be obtained upon request and
payment of a copying fee.
Constance K. Robinson,
Director of Operations & Merger Enforcement, Antitrust Division.
INSPEC Japan
January 17, 2000
Mr. J. Robert Kramer II
Chief, Litigation II Section, Antitrust Division, United States
Department of Justice, 1401 H Street, N.W., Suite 3000, Washington D.C.
20530
Dear Sir: Subject: Antitrust Case # 1:99CV02959, United States of
America v. Allied Signal Inc and Honeywell Inc. Invitation to submit
written comment
My company, INSPEC International Co. Ltd., a Japanese registered
corporation, is a long term Supplier to Honeywell of an electro-
mechanical sub-assembly which is used in the TCAS cockpit display, as
well as a number of individual piece parts.
[[Page 15014]]
As a result of the United States request of Honeywell to sell the
TCAS product line, it is conceivable that the new Owner will not
continue to procure either products or services from the existing
Honeywell Suppliers, which could include INSPEC.
Avionics products such as this are generally known, and reasonably
anticipated, to continue in production for many years. INSPEC, as a
Honeywell Supplier in good standing, and an asset friendly to the
United States, may suffer losses or unexpected costs in the event of
prematurely terminated procurement by the new Owner.
Furthermore, as a Small Business, with limited resources, the
effect on my company could be much more severe than that experienced by
other larger Honeywell Suppliers but, nonetheless, significantly effect
the livelihood of staff employed by any Supplier, large or small. This
may also include Suppliers of Allied Signal company.
Based on this, I would like to offer the comment that the United
States, as the party requiring the divestiture as approval for the
merger, may damage Suppliers unfairly and should seek to protect and
preserve the manufacturing ability and know-how of them after the
divestiture has taken place, as well as the revenue they could
reasonably expect for their continuing products and services throughout
the life of a program, particularly as the risk of a government forcing
a complete stoppage of an existing program in this way is not one which
is generally anticipated by a business owner such as myself.
Whilst unsure of the exact vehicle to do this, it would seem the
most simplest solution could perhaps be by way of an Order requiring
continued procurement by the new Owner.
A further comment would be that divestiture will result in forced
termination of our existing Supplier relationship with Honeywell. A
hard earned relationship which we value greatly. Re-establishing that
relationship on another program is not easy. Whilst there appears to be
no right to a continuing relationship, I feel there is a presumption
that Suppliers in good standing should be granted the opportunity re-
establish a relationship with the new Allied Signal/Honeywell
organization. In view of this, it would be appropriate if the United
States would also consider the additional costs and effort this will
involve Suppliers in.
In closing, I would like to make it clear that INSPEC only recently
learnt of the divestiture and we do not oppose it because of its
obvious merits to the two organizations nor, to date, have we been in
discussion with Honeywell concerning it. I am sure that when we are, we
will enjoy their usual highly professional handing of our concerns.
Finally, whilst I would argue, from an academic point of view, that
a merger would not necessarily involve reduced Quality of products or
services in experienced companies such as Honeywell and Allied Signal
as you have stated, but could actually result in an improvement of the
many aspects which contribute to our perception and experience of
Quality in its overall sense, whilst reducing specific Costs Of Quality
to the benefit of the government, public and shareholders. I understand
the position of the Untied States in the other concerns you have
outlined. Nevertheless, I would strongly urge you to consider the
potential negative impact upon Suppliers outlined above that this
forced divestiture entails without proper safeguards, and who may not
be aware or adequately represented or considered in this case.
Thank you for your kind consideration of my comments.
Very Truly Yours,
INSPEC International Co. Ltd.
Richard Wicks,
President.
U.S. Department of Justice
March 9, 2000.
Mr. Richard Wicks,
President, INSPEC International Company Ltd., 1-1-4 Wakamatsu Cho,
Fuchu, Tokyo, 183, Japan
Re: Comment on Proposed Final Judgment in United States v.
AlliedSignal Inc. and Honeywell Inc., No. 1:99 CV 002959
(PLF)(D.D.C. November 8, 1999)
Dear Mr. Wicks: Thank you for your letter of January 17, 2000
concerning the proposed Final Judgment in United States v.
AlliedSignal Inc. and Honeywell Inc., currently pending before the
federal district court for the District of Columbia. The United
States' complaint alleges that the merger as proposed between
AlliedSignal Inc. and Honeywell Inc. would have substantially
lessened competition in four product areas--traffic alert and
collision avoidance systems; search and surveillance weather radar;
reaction and momentum wheels, and inertial systems. The proposed
Final Judgment would settle the case by requiring the post-merger
company, now known as Honeywell International Inc. (``Honeywell''),
to divest, among other assets, its traffic alert and collision
avoidance system (``TCAS'') business in Glendale, Arizona.
Negotiations to divest this business consistent with the terms of
the proposed Final Judgment are ongoing.
Your letter states that INSPEC INTERNATIONAL Company Ltd.
(``INSPEC'') manufactures an electro-mechanical product which is
supplied to the Honeywell TCAS business soon to be divested. INSPEC
is concerned that the proposed divestiture may damage its business
unfairly and terminate its hard-earned relationship with Honeywell.
Given INSPEC's investment in the products it now sells to Honeywell,
it requests that the United States consider requiring the new owner
of the TCAS assets to purchase products from INSPEC.
Every change in corporate ownership, whether by divestiture or
otherwise, raises the potential that a new owner may seek new
suppliers. Since U.S. antitrust laws are intended to preserve
competition, not specific competitors, the United States
respectfully declines to require the new purchaser of the TCAS
assets to deal with INSPEC or any other specific supplier. INSPEC'
competitive assets, the technological know-how and manufacturing
ability referenced in your letter, and your company's reputation
with the employees of the TCAS business in Glendale, Colorado (who
overwhelmingly will remain with the business) will be unaffected by
the divestiture and will provide a platform for your firm to
continue to compete successfully against other potential suppliers.
Thank you for bringing your concerns to our attention; we hope
this letter will help you understand the reasons for our position.
Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C.
Sec. 16(d), a copy of your comment and his response will be
published in the Federal Register and filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
January 6, 2000.
J. Robert Kramer, II,
Chief, Litigation II Section, Antitrust Division, U.S. Dep't. of
Justice, 1401 H St., NW., Suite 3000, Washington, DC 20005, (202)
307-0924
This protest is being submitted in accordance with the
opportunity offered to submit written comment concerning the
proposed decree during a 60-day comment period.
I represent a significant number of Honeywell employees who have
eligibility for retirement and have been offered employment with the
1.3 Corporation, Space and Navigation Systems Division. We submit
the comments below for your consideration. We (the potential
retirees) only recently inadvertently obtained a copy of the
Honeywell memo citing the 60-day comment period (Honeywell issued
the memo to certain people Nov. 10, 1999).
The items listed below encourage resignation of key employees,
adversely affecting the viability of the 1.3 Space and Navigation
Div, in conflict with the spirit if not the intent of the
Divestiture agreement. Additional comments may be forthcoming next
week.
Whereas Honeywell has reneged on its commitment to provide
retiree medical benefits to divested Space and Navigation personnel
accepting comparable employment with 1.3 subsequent to retirement
from 1.3.
Whereas, 1.3 is requiring approval for previously accepted
divested retiree-eligible Space and Navigation personnel on a non-
comparable employment basis in exchange
[[Page 15015]]
for Honeywell retirement pension and medical benefits in conflict
with the intent of published AlliedSignal commitments to their
employees.
Whereas divested Honeywell Space and Navigation employees are
excluded from the ``foster the employment and the retention of
employees'' specified in para. F. of Section 4 ``Divestiture''
contained in U.S. District Court for the District of Columbia Civil
No. 992959 filed on 11/8/99.
Your attention to this matter would be appreciated.
Sincerely Yours,
Stephen Suckenick,
3951 Gouverneur Ave., New York, New York 10463.
December 27, 1999
J. Robert Kramer II,
Chief Litigation II Section, Antitrust Division, U.S. Department of
Justice
Dear Sir: With reference to the Consent Decree between the
Department of Justice and Allied Signal/Honeywell, I represent a
group of approximately 60 employees of the new Honeywell
International Corporation who are being divested in the Teterboro-
based Navigation/Space operation. They would like to know why the
Teterboro operation was not given the same severance benefit as the
other operations listed on page 16, paragraph E?
Sincerely,
Stephen Suckenick,
3951 Gouverneur Ave, New York, NY 10463.
November 30, 1999.
Dear Sir, the following regards the planned divestiture of the
AlliedSignal Space and Navigation business located in Teterboro, New
Jersey. My understanding is that this divestiture is a result of an
agreement between AlliedSignal and the Department of Justice (DOJ)
and is a condition of the DOJ approval of the merger of
AlliedSignal, Inc. and Honeywell, Inc. My further understanding is
that this divestiture is intended to maintain the former
AlliedSignal Space and Navigation business as a viable long term
aerospace subsystems supplies.
This letter is intended to inform your office of a situation
which could prevent the Space and Navigation business from being a
viable long term aerospace subsystems supplier and to solicit DOJ
intervention in precluding this outcome. The specific situation
concerns the large number of senior staff employees who are pension
eligible and are likely to retire at the time of the divestiture
rather than sustain the risks associated with having their vested
pension and retiree health benefits redefined by the new owner's
benefit policy changes and the risk associated with the new owner's
long-term financial stability. This outcome did in fact occur as a
result of two recent sales of AlliedSignal divisions (the
communications Division in Towson, Maryland and the Ocean Systems
Division in Sylmar, California). It is estimated that at the Space
and Navigation business one third of the employees are pension
eligible and they clearly represent a critical mass of technical and
business knowledge essential to the continuing success of this
business.
The Space and navigation business sale is targeted to be closed
by December 24, 1999. It is requested that the DOJ involve itself
immediately in the issue described above and assure an outcome which
will support the DOJ's stated objective.
Sincerely,
Stephen Suckenik,
3951 Gouverneur Avenue, New York, N.Y. 10463, (718-884-6986)
U.S. Department of Justice
March 9, 2000.
Mr. Stephen Suckenik,
3951 Gouveneur Avenue, New York, New York 10463
Re: Comments on Proposed Final Judgment in United States v.
AlliedSignal Inc. and Honeywell Inc., No. 1:99 CV 002959 (PLF)
(D.D.C. November 8, 1999)
Dear Mr. Suckenik: This letter responds to your comments dated
November 30, 1999, December 27, 1999 and January 6, 2000 concerning
the proposed Final Judgment in United States v. AlliedSignal Inc.
and Honeywell Inc., currently pending before the federal district
court for the District of Columbia. The United States' complaint
alleges that the merger as proposed between AlliedSignal Inc. and
Honeywell Inc. would have substantially lessened competition in four
product areas--traffic alert and collision avoidance systems; search
and surveillance whether radar; reaction and momentum wheels, and
inertial systems. The proposed Final Judgment would settle the case
by requiring the post-merger company, now known as Honeywell
International Inc. (``Honeywell''), to divest, among other assets,
its space and navigation business in Teterboro, New Jersey. That
business produces numerous products, including ring laser
gyroscopes, fiber optic gyroscopes and reaction and momentum wheels.
In a transaction approved in advance by both the U.S. Department
of Justice and the U.S. Department of Defense in December 1999, L-3
Communications Corporation (``L-3'') has now purchased the space and
navigation business and certain other divested assets from
Honeywell. The purchase was approved by the Government only after a
careful review of L-3 led to the conclusion that L-3 had the
financial capability, the intent and the managerial expertise to
operate the space and navigation business in competition with other
businesses making the same products, including Honeywell.
Your letters state that you represent a significant number of
Honeywell employees (approximately 60) who are eligible for
retirement with Honeywell but have received offers of employment
from L-3 to work in the divested space and navigation business in
Teterboro. The letters collectively raise several concerns about the
proposed Final Judgment as it affects the divestiture of Honeywell's
space and navigation business to L-3. Your November 30 comment
suggests that the long-term viability of the divested space and
navigation business may be affected negatively by the likely
retirement of a large number of senior staff members in lieu of
their acceptance of the risks related to L-3's potential redefining
of their vested pension and retiree health benefits. In your
December 27 letter, you ask why the Teterboro space and navigation
business employees did not receive severance benefits identical to
those received by certain other employees pursuant to Section IV(E)
of the proposed Final Judgment. Your January 6, 2000 comment again
states that the resignation of key Honeywell employees could affect
the viability of the divested space and navigation business. You
note, among other reasons, that Honeywell has reneged on its
commitment to provide retiree medical benefits to former Honeywell
employees accepting employment with L-3, after their retirement from
L-3, and that the incentives given to certain Honeywell employees
under Section IV(E) of the proposed Final Judgment are not offered
to space and navigation employees who join L-3.
Differences in the retirement or severance benefits offered by a
new employer as compared to those afforded by a prior one are always
a concern when a business is sold. The facts here strongly suggest,
however, that L-3 has successfully avoided the potential resignation
of key Honeywell employees involved with the space and navigation
business in Teterboro. L-3 considered approximately 430 applicants
who had been previously employed by Honeywell in its space and
navigation business. L-3 subsequently offered jobs to roughly 383
persons, and virtually all of those offers (about 94 percent) have
been accepted. L-3 believes it has successfully recruited the key
Honeywell employees it requires to insure the long-term viability of
the divested space and navigation business.
In addition, Section IV(E) of the proposed Final Judgment
intentionally provides a different incentive package to specific
groups of Honeywell employees based on the United States' assessment
that certain employee groups would require greater motivation to
join the new purchaser of a divested business. Where a product to be
divested constitutes less than an entire Honeywell business unit or
sub-unit, the opportunity for affected employees to remain at
Honeywell in a similar capacity is greater because the Honeywell
business unit in which the employee works will still be part of
Honeywell. In those situations, incentives to motivate movement to
the new purchaser of a divested product were increased by requiring
Honeywell to vest all unvested pension rights of the employee and to
provide that employee with all severance benefits to which the
employee would have been entitled if terminated without cause. The
Teterboro space and navigation business functioned as a separate
Honeywell business sub-unit, and was not therefore entitled to the
additional incentives described above. The virtual unanimity with
which key employees of the space and navigation business accepted L-
3's offers of employment confirms the correctness of the United
States' judgment on this issue.
Thank you for bringing your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C.
[[Page 15016]]
Sec. 16(d), a copy of your comments and this response will be
published in the Federal Register and filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
36 William Drive, Rockaway, NJ 07866, November 10, 1999
J. Robert Kramer II,
Chief, Litigation II Section, Antitrust Division, U.S. Department of
Justice, 1401 H St., NW., Suite 3000, Washington, DC 20005
Dear Mr. Kramer: This letter concerns the AlliedSignal
divestiture of its space and navigation business at Teterboro, New
Jersey. In my opinion, there will likely be unintended consequences
stemming from the Government's antitrust suit and the resulting
consent decree that were not mentioned in today's Department of
Justice press release.
First, it is probable that the Teterboro facility will be
closed. As you may know, Teterboro's business has not been on plan.
Employees were told a planned sizable layoff was delayed only
because of the moratorium on such action imposed by the Government.
The already troubled Teterboro business will not survive as two
smaller businesses.
Second, employees forced to become part of the Space and
Navigation entity to be divested may lose important benefits. For
example, there has been no assurance from AlliedSignal that an
employee's severance benefits will be honored by the acquiring
Company. This is especially important because involuntary layoffs of
Space and Navigation business employees seem certain because of the
poor business prospects mentioned above.
In summary, the Government's principled attempt to preserve
competition has sparked a series of decisions and events detrimental
to Teterboro employees.
Sincerely,
Michael J. Kelly.
cc: Hon. Frank Lautenberg, Hon. Robert Torricelli, Hon. Rodney
Frelinghuysen.
Mr. Michael J. Kelly,
36 William Drive, Rockaway, NJ 07866
Re: Comment on Proposed Final Judgment in United States v.
AlliedSignal Inc. and Honeywell Inc., No. 1:99 CV 002959 (PLF)
(D.D.C. November 8, 1999)
Dear Mr. Kelly, This letter responds to your November 10, 1999
comment on the proposed Final Judgment in United States v.
AlliedSignal Inc. and Honeywell Inc., currently pending before the
federal district court for the District of Columbia. The United
States' complaint alleges that the merger as proposed between
AlliedSignal Inc. and Honeywell Inc. would have substantially
lessened competition in four product areas--traffic alert and
collision avoidance systems; search and surveillance weather radar;
reaction and momentum wheels, and inertial systems. The proposed
Final Judgment would settle the case by requiring the post-merger
company, now known as navigation business in Teterboro, New Jersey.
That business produces numerous products, including ring laser
gyroscopes, fiber optic gyroscopes and reaction and momentum wheels.
In a transaction approved in advance by both the U.S. Department
of Justice and the U.S. Department of Defense in December 1999, L-3
Communications Corporation (``L-3'') has now purchased the space and
navigation business and certain other divested assets from
Honeywell. The purchase was approved by the Government only after a
careful review of L-3 led to the conclusion that L-3 had the
financial capability, the intent and the managerial expertise to
operate the space and navigation business in competition with other
businesses making the same products, including Honeywell. We
disagree with the suggestion in your letter that separating the
space and navigation business from the remainder of Honeywell's
Teterboro operations makes it more likely that the space and
navigation business, or any other operation, will fail. A more
likely outcome is that L-3's specific focus on the management and
growth of its recent acquisition will insure that the space and
navigation business has the best chance possible to succeed.
Your November 10 letter further expresses the concern that L-3
may not honor the same severance benefits provided by Honeywell in
the past, and notes that this benefit is particularly important in
the context of a business struggling to survive in a tough business
environment. Understanding the importance of this benefit, the
United States does not generally dictate the terms and conditions
pursuant to which a particular purchase is made; these details are
subject to negotiation between the buyer and seller. Section IV(E)
of the proposed Final Judgment encourages L-3 to make reasonable
offers to those employees it desires to recruit by precluding
Honeywell from hiring any employee for a period of two years once a
reasonable offer has been received from L-3. This requirement,
together with L-3's already-strong incentive to make attractive
offers to key personnel it needs to recruit, provides reasonable
protection to Honeywell employees joining L-3 or any other approved
purchaser of a divested business. Following its review of the space
and navigation business, L-3 offered jobs to roughly 383 persons;
virtually all of those offers (about 94 percent) have now been
accepted.
Thank you for bringing your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. Sec. 16(d), a copy of your
comment and this response will be published in the Federal Register
and filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
cc: Honorable Frank Lautenberg, Honorable Robert Torricelli,
Honorable Rodney Frelinghuysen.
[FR Doc. 00-6749 Filed 3-17-00; 8:45 am]
BILLING CODE 4410-11-M