[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]


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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]
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