[Federal Register Volume 69, Number 144 (Wednesday, July 28, 2004)]
[Notices]
[Pages 45063-45066]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-17155]


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FEDERAL TRADE COMMISSION

[Docket No. 9310]


Aspen Technology, Inc.; Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the complaint and 
the terms of the consent order--embodied in the consent agreement--that 
would settle these allegations.

DATES: Comments must be received on or before August 13, 2004.

ADDRESSES: Comments should refer to ``Aspen Technology, Inc., Docket 
No. 9310,'' to facilitate the organization of comments. A comment filed 
in paper form should include this reference both in the text and on the 
envelope, and should be mailed or delivered to the following address: 
Federal Trade Commission/Office of the Secretary, Room H-159, 600 
Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing 
confidential material must be filed in paper form, as explained in the 
Supplementary Information section. The FTC is requesting that any 
comment filed in paper form be sent by courier or overnight service, if 
possible, because U.S. postal mail in the Washington area and at the 
Commission is subject to delay due to heightened security precautions. 
Comments filed in electronic form (except comments containing any 
confidential material) should be sent to the following e-mail box: 
[email protected].

FOR FURTHER INFORMATION CONTACT: Peter Richman, FTC, Bureau of 
Competition, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 
326-2563.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Section 
3.25(f) of the Commission's Rules of Practice, 16 CFR 3.25(f), notice 
is hereby given that the above-captioned consent agreement containing a 
consent order to cease and desist, having been filed with and accepted, 
subject to final approval, by the Commission, has been placed on the

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public record for a period of thirty (30) days. The following Analysis 
to Aid Public Comment describes the terms of the consent agreement, and 
the allegations in the complaint. An electronic copy of the full text 
of the consent agreement package can be obtained from the FTC Home Page 
(for July 15, 2004), on the World Wide Web, at http://www.ftc.gov/os/2004/07/index.htm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. Written comments must be submitted 
on or before August 13, 2004. Comments should refer to ``Aspen 
Technology, Inc., Docket No. 9310,'' to facilitate the organization of 
comments. A comment filed in paper form should include this reference 
both in the text and on the envelope, and should be mailed or delivered 
to the following address: Federal Trade Commission/Office of the 
Secretary, Room H-159, 600 Pennsylvania Avenue, NW., Washington, DC 
20580. If the comment contains any material for which confidential 
treatment is requested, it must be filed in paper (rather than 
electronic) form, and the first page of the document must be clearly 
labeled ``Confidential.'' \1\ The FTC is requesting that any comment 
filed in paper form be sent by courier or overnight service, if 
possible, because U.S. postal mail in the Washington area and at the 
Commission is subject to delay due to heightened security precautions. 
Comments filed in electronic form should be sent to the following e-
mail box: [email protected].
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments, whether filed 
in paper or electronic form, will be considered by the Commission, and 
will be available to the public on the FTC Web site, to the extent 
practicable, at www.ftc.gov. As a matter of discretion, the FTC makes 
every effort to remove home contact information for individuals from 
the public comments it receives before placing those comments on the 
FTC Web site. More information, including routine uses permitted by the 
Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
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    \1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be 
accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment to be withheld from 
the public record. The request will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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Analysis of Proposed Agreement Containing Consent Order To Aid Public 
Comment

    The Federal Trade Commission, subject to its final approval, has 
accepted for public comment an Agreement Containing Consent Order 
(``Proposed Order'') with Aspen Technology, Inc. (``AspenTech'') to 
resolve the anticompetitive effects alleged in the Complaint issued by 
the Commission on August 6, 2003.
    On or about May 31, 2002, AspenTech acquired Hyprotech, Ltd. from 
AEA Technology plc for approximately $106.1 million in a transaction 
that was not reportable under the Hart-Scott-Rodino Act. At the time of 
the acquisition, AspenTech and Hyprotech were the primary global 
suppliers of process engineering simulation software and had only one 
other significant competitor, Simulation Sciences (``SimSci''). The 
Agreement requires that AspenTech divest its integrated engineering 
software business to Bentley Systems, Inc. (``Bentley''), and its batch 
and continuous process engineering software business to a Commission-
approved buyer.
    The Proposed Order has been placed on the public record for 30 days 
for interested persons to comment. Comments received during this 30 day 
period will become part of the public record. After 30 days, the 
Commission will again review the Proposed Order and the comments 
received and will decide whether it should withdraw the Proposed Order 
or make the Proposed Order final.

I. The Parties

    AspenTech, headquartered in Cambridge, Massachusetts, is a 
developer and worldwide supplier of manufacturing, engineering, and 
supply chain simulation computer software. AspenTech's products include 
non-linear process engineering simulation software used by the 
refining, oil and gas, petrochemical, chemical, pharmaceutical, and 
other process manufacturing industries and by engineering and 
construction companies that support those industries. AspenTech had 
total revenues of approximately $323 million for fiscal year 2003, and 
it employs approximately 1,750 people worldwide.
    Hyprotech was a wholly-owned operating division of AEA Technology 
plc, a corporation organized, existing, and doing business under the 
laws of the United Kingdom. Hyprotech was also a developer and 
worldwide supplier of engineering and simulation computer software used 
by the refining, oil and gas, petrochemical, chemical, pharmaceutical, 
and other process manufacturing industries and by engineering and 
construction companies that support those industries. Headquartered in 
Calgary, Alberta, Canada, Hyprotech had offices throughout the world, 
including the United States, and had revenues of approximately $68.5 
million in fiscal year 2002.
    Prior to the acquisition, AspenTech and Hyprotech were the largest 
providers of process engineering simulation software. Process 
engineering simulation software enables plant designers, engineers, 
production planners, and others, to design, simulate, and analyze 
production processes used in various industrial operations. The 
software allows users to mathematically model, or simulate, a process 
to predict what happens when different variables (such as heat, 
pressure, or raw material composition) are changed, thereby allowing 
more efficient and lower cost operations. AspenTech and Hyprotech were 
also the two primary providers of integrated engineering software, 
which facilitates the sharing and implementation of process design 
data.

II. The Commission's Complaint

    On August 6, 2003, the Commission issued a Complaint charging that 
AspenTech unlawfully acquired the assets of Hyprotech in violation of 
Section 7 of the Clayton Act, 15 U.S.C. 18, and Section 5 of the 
Federal Trade Commission Act, 15 U.S.C. 45.
    The Complaint alleges the following seven global markets within 
which to analyze the effects of the acquisition: (1) Software used to 
simulate continuous process engineering applications; (2) four narrower 
markets contained within the overall continuous process engineering 
software market, each such market defined by end-use application 
(specifically oil and gas, refining, chemicals, and air separation 
process simulation); (3) software used to simulate batch process 
engineering applications, such as fine chemicals or pharmaceuticals; 
and (4) software used for integrated engineering applications (multi-
user software that enables engineers to share process design data).
    The Complaint alleges that, prior to the acquisition, AspenTech and

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Hyprotech were the closest competitors within each relevant market. The 
Complaint further alleges that, prior to the acquisition, AspenTech and 
Hyprotech vigorously competed to develop, license, and support 
continuous and batch process engineering simulation software and 
integrated engineering software. This competition provided customers 
with lower prices, better service, and increased product innovation. 
The Complaint maintains that entry into the relevant product markets is 
not likely and if entry did occur, it would be neither timely nor 
sufficient to prevent or mitigate the anticompetitive effects of the 
acquisition.
    The Complaint charges that the combination of the two companies 
substantially lessened competition in the relevant markets. 
Specifically, the acquisition eliminated the competition between 
AspenTech and Hyprotech to reduce prices, enhance innovation, and offer 
better services with respect to their software offerings in the 
relevant markets. Thus the acquisition enhanced AspenTech's ability to 
raise customers' prices above competitive levels in the relevant 
markets. The acquisition also increased AspenTech's capability to 
undermine open standard setting organizations, diminishing the pro-
consumer effectiveness of such organizations to promote third-party 
software design and sale.

III. Terms of the Proposed Order

    The Proposed Order effectively remedies the acquisition's alleged 
anticompetitive effects by requiring AspenTech to divest the 
overlapping Hyprotech assets. The continuous process and batch process 
assets, along with AspenTech's operator training software and service 
business, are to be divested to a Commission-approved buyer and in a 
manner approved by the Commission, and the integrated engineering 
software business is to be divested to Bentley, also subject to the 
Commission's final approval.
A. Divestiture of the Hyprotech Process Engineering Software and 
AspenTech Operator Training Software Business
    The Proposed Order directs AspenTech to sell Hyprotech's continuous 
process and batch process assets, as well as AspenTech's operator 
training business, to a buyer acceptable to the Commission within the 
required time period. Section II. If AspenTech is unable to divest this 
set of assets to a Commission-approved buyer within 60 or 90 days of 
the Commission making the Proposed Order final, this time period 
dependant on when AspenTech provides an application for divestiture, 
the Commission may appoint a trustee to divest the assets to a 
Commission-approved buyer.
    The Proposed Order assures the viability of the divestiture of the 
continuous and batch process engineering software assets by (1) 
requiring AspenTech to divest its operator training software and 
services business and (2) allowing customers with current software 
maintenance and support agreements to choose between maintaining those 
contracts with AspenTech or switching to the Commission-approved buyer. 
Section II. Customers will also be able to obtain additional copies of 
Hyprotech software from the Commission-approved buyer without affecting 
current license agreements with AspenTech. Paragraph II.F.
    The Proposed Order allows AspenTech to license the Hyprotech 
continuous and batch process engineering software from the Commission-
approved buyer to preserve software development efforts since the 
acquisition. The Proposed Order requires AspenTech to provide the 
Commission-approved buyer with (1) all releases and upgrades to the 
Hyprotech process engineering simulation software for two years and (2) 
within fourteen days after the two-year post-divestiture period, all 
Hyprotech process engineering software under development at that time. 
Paragraph II.D. The Proposed Order additionally requires AspenTech to 
provide support services on the process engineering software assets to 
the Commission-approved buyer for two years from the date of 
divestiture. Paragraph II.E. These provisions ensure that the 
Commission-approved buyer will be able to create and maintain 
integrated engineering products that interface with AspenTech 
engineering products.
    The Proposed Order requires AspenTech to indemnify the Commission-
approved buyer in the event that the divested process engineering 
software infringes specific intellectual property rights. AspenTech 
will be bound to either procure for the Commission-approved buyer the 
right to continue to use the software or modify or replace the software 
so that it does not infringe the third party's intellectual property 
rights. Paragraphs II.H. and II.I.
    The Commission's purpose in divesting the process engineering 
simulation software assets is to allow the buyer to engage in the 
development and licensing of the Hyprotech software and to remedy the 
lessening of competition alleged in the Commission's Complaint in the 
markets for (1) continuous process engineering simulation flowsheet 
software for process industries and smaller markets contained therein, 
and (2) batch process engineering simulation flowsheet software for 
process industries.
B. Divestiture to Bentley
    Pursuant to the Proposed Order and subject to the Commission's 
final approval, AspenTech will divest Hyprotech's AXSYS integrated 
engineering software business to Bentley. Section III. Bentley is a 
technology firm that provides architecture, engineering, construction, 
and operations software for a variety of applications, including 
buildings, industrial plants, and civil operations. Bentley reported 
2003 revenues of approximately $260 million.
    Under the terms of the Proposed Order, Bentley will acquire 
Hyprotech's integrated engineering software products and, among other 
things, all rights to any existing software contracts no earlier than 
one day, and no later than ten days after the Proposed Order is placed 
on the public record. The Proposed Order contains additional provisions 
that require AspenTech to provide Bentley with updates, upgrades, and 
new releases of AspenTech's engineering and other products on at least 
as favorable terms as offered to any other person, for a period of five 
years. Paragraph III.E. AspenTech must also provide Bentley with no-
cost support services relating to the AXSYS assets for a period of two 
years. Paragraph III.F. These provisions ensure that Bentley will be 
able to create and maintain integrated engineering products that 
interface with AspenTech engineering products.
    The Commission believes that Bentley is a satisfactory buyer for 
these assets. The AXSYS software effectively complements the other 
software and services that Bentley currently offers. Bentley has the 
engineering, software, and marketing resources to support the AXSYS 
software, and the expertise to provide updated and innovative versions 
of AXSYS. As a result, the Commission believes that divestiture of this 
product line to Bentley will remedy the acquisition's alleged 
anticompetitive effects in the integrated engineering software market.
    The purpose of the divestiture is to ensure the continued use and 
development of the AXSYS software in the same business in which 
Hyprotech used the software prior to Hyprotech's acquisition by 
AspenTech and to remedy the lessening of competition alleged in the 
Commission's Complaint

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in the market for integrated engineering software for process 
industries.
C. Other Provisions
    To maintain the viability of both packages and to provide a level 
playing field for third-party software developers that must interface 
with the Hyprotech and AspenTech process engineering simulation 
software products, the Proposed Order requires Aspentech to maintain a 
level playing field. For a period of five years after the divestiture, 
the Proposed Order requires AspenTech to develop its engineering 
simulation software in a manner that maintains its compatibility with 
HYSYS and to maintain published interfaces to AspenTech engineering 
simulation software. Paragraphs IV.A. and IV.B. AspenTech also must 
publish and provide support for all HYSYS and AspenPlus interfaces. 
Paragraphs IV.B. and IV.C. Finally, the proposed order prohibits 
AspenTech from entering into or enforcing any agreement with any 
competitors that has the purpose of impeding or obstructing the conduct 
or organizational structure of any standard-setting organization, which 
agreement has not been explicitly disclosed to the members of that 
standard-setting organization and that is inconsistent with the purpose 
of the Proposed Order as stated in Paragraphs II.K. and III.H. 
Paragraph IV.D.
    To ensure that both the Commission-approved buyer of the process 
engineering software and operator training software and Bentley can 
hire employees familiar with the divested software, the Proposed Order 
directs AspenTech to provide the acquirers with access to relevant 
AspenTech employees. Paragraph V.A. This provision requires AspenTech 
to provide the acquirers with lists of relevant employees, remove any 
impediments deterring current AspenTech employees from switching to 
Commission-approved buyers, and for a period of two years following the 
divestitures, prevents AspenTech from soliciting any former AspenTech 
employees who choose to work for either of the Commission-approved 
buyers. Paragraphs V.B. through V.D.
    Section VI of the Proposed Order includes the standard divestiture 
trustee provision pursuant to which the Commission may appoint a 
trustee to effectuate a required divestiture if AspenTech is unable to 
comply with its divestiture obligations in either Section II. or 
Section III., or both. Section VI. If, however, the Commission rejects 
Bentley as a buyer, AspenTech is granted an additional six months to 
divest the asset package to an acquirer that receives the prior 
approval of the Commission. Paragraph III.B. If AspenTech is unable to 
divest within that six month period, then the Commission may appoint a 
trustee to divest the AXSYS Assets.

IV. Opportunity for Public Comment

    By accepting the Proposed Order, subject to final approval, the 
Commission anticipates that the competitive problems alleged in the 
Complaint will be resolved. The purpose of this analysis is to invite 
public comment on the Proposed Order, including the proposed 
divestitures, to aid the Commission in its determination of whether it 
should make final the Proposed Order contained in the agreement. This 
analysis is not intended to constitute an official interpretation of 
the Proposed Order or modify the terms of the Proposed Order in any 
way.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 04-17155 Filed 7-27-04; 8:45 am]
BILLING CODE 6750-01-P