[Federal Register Volume 75, Number 98 (Friday, May 21, 2010)]
[Notices]
[Pages 28616-28619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-12183]


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FEDERAL TRADE COMMISSION

[File No. 091 0135]


Agilent Technologies, Inc.; Analysis of the Agreement Containing 
Consent Order 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 draft 
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 June 17, 2010.

ADDRESSES: Interested parties are invited to submit written comments 
electronically or in paper form. Comments should refer to``Agilent 
Technologies, File No. 091 0135'' to facilitate the organization of 
comments. Please note that your comment -- including your name and your 
state -- will be placed on the public record of this proceeding, 
including on the publicly accessible FTC website, at (http://www.ftc.gov/os/publiccomments.shtm).
    Because comments will be made public, they should not include any 
sensitive personal information, such as an individual's Social Security 
Number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. Comments also 
should not include any sensitive health information, such as medical 
records or other individually identifiable health information. In 
addition, comments should not include any ``[t]rade secret or any 
commercial or financial information which is obtained from any person 
and which is privileged or confidential. . . .,'' as provided in 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and Commission Rule 
4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing material for which 
confidential

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treatment is requested must be filed in paper form, must be clearly 
labeled ``Confidential,'' and must comply with FTC Rule 4.9(c), 16 CFR 
4.9(c).\1\
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    \1\ 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 FTC Rule 4.9(c), 16 CFR 
4.9(c).
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    Because paper mail addressed to the FTC is subject to delay due to 
heightened security screening, please consider submitting your comments 
in electronic form. Comments filed in electronic form should be 
submitted by using the following weblink: (https://public.commentworks.com/ftc/agilent) and following the instructions on 
the web-based form. To ensure that the Commission considers an 
electronic comment, you must file it on the web-based form at the 
weblink: (https://public.commentworks.com/ftc/agilent). If this Notice 
appears at (http://www.regulations.gov/search/index.jsp), you may also 
file an electronic comment through that website. The Commission will 
consider all comments that regulations.gov forwards to it. You may also 
visit the FTC website at (http://www.ftc.gov/) to read the Notice and 
the news release describing it.
    A comment filed in paper form should include the ``Agilent 
Technologies, File No. 091 0135'' 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-135 (Annex 
D), 600 Pennsylvania Avenue, NW, Washington, DC 20580. 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.
    The Federal Trade Commission Act (``FTC Act'') and other laws the 
Commission administers permit the collection of public comments to 
consider and use in this proceeding as appropriate. The Commission will 
consider all timely and responsive public comments that it receives, 
whether filed in paper or electronic form. Comments received will be 
available to the public on the FTC website, to the extent practicable, 
at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of 
discretion, the Commission makes every effort to remove home contact 
information for individuals from the public comments it receives before 
placing those comments on the FTC website. 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.shtm).

FOR FURTHER INFORMATION CONTACT: Lisa De Marchi Sleigh (202-326-2535), 
Bureau of Competition, 600 Pennsylvania Avenue, NW, Washington, D.C. 
20580.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 the 
Commission Rules of Practice, 16 CFR 2.34, 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 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 May 14, 2010), on the World Wide Web, at (http://www.ftc.gov/os/actions.shtm). A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW, Washington, 
D.C. 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. All comments should be filed as 
prescribed in the ADDRESSES section above, and must be received on or 
before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order to Aid Public Comment

I. Introduction

    The Federal Trade Commission (``Commission'') has accepted from 
Agilent Technologies, Inc. (``Agilent''), subject to final approval, an 
Agreement Containing Consent Orders (``Consent Agreement''), which is 
designed to remedy the anticompetitive effects resulting from Agilent's 
proposed acquisition of Varian, Inc. (``Varian''). Under the terms of 
the Consent Agreement, Agilent will: (1) divest the assets of its Micro 
Gas Chromatography (``Micro GC'') instruments business to Inficon Group 
(``Inficon''), a subsidiary of Inficon Holding AG; and (2) divest the 
assets of Varian's Triple Quadrupole Gas Chromatography-Mass 
Spectrometry (``3Q GC-MS'') and Inductively Coupled Plasma-Mass 
Spectrometry (``ICP-MS'') instruments businesses to Bruker Corp. 
(``Bruker''), within ten days of closing its acquisition of Varian.
    The proposed Consent Agreement has been placed on the public record 
for 30 days to solicit comments from interested persons. Comments 
received during this period will become part of the public record. 
After 30 days, the Commission will again review the proposed Consent 
Agreement and will decide whether it should withdraw from the proposed 
Consent Agreement, modify it, or make it final.
    Pursuant to an Agreement and Plan of Merger dated July 26, 2009, 
Agilent plans to acquire Varian for approximately $1.5 billion. The 
Commission's Complaint alleges that the proposed acquisition, if 
consummated, would violate Section 7 of the Clayton Act, as amended, 15 
U.S.C. Sec.  18, and Section 5 of the FTC Act, as amended, 15 U.S.C. 
Sec.  45, by lessening competition in the markets for Micro GC, 3Q GC-
MS and ICP-MS instruments (``the Products'').

II. The Parties

    Agilent, headquartered in Santa Clara, California, is a global 
supplier of scientific measurement instruments and related products and 
services. Agilent's broad range of products and services includes 
equipment used to test cell phones and communications equipment, 
machines that determine the contents of human tissue and environmental 
samples, and microarrays that are used to analyze gene expression, 
which are commonly used in cancer research.
    Varian is headquartered in Palo Alto, California, and supplies 
scientific instruments and chemical analysis technologies to customers 
worldwide. Varian's products, which employ various analytical 
techniques to test samples of many types, are used by academic 
researchers, forensics laboratories, food safety and agriculture 
laboratories, pharmaceutical companies, and chemical and oil and gas 
firms. Varian also offers a line of vacuum pumps, which are important 
components in a variety of scientific instruments and industrial 
processes.

III. The Products and Structure of the Markets

    Micro GCs are portable gas chromatography instruments that are used 
primarily in the oil, mining, and waste disposal industries to detect 
the presence of toxins in the air or in emissions. Micro GC instruments 
are designed for field use and, accordingly, must be small and light 
enough to be

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portable and sufficiently robust to withstand travel and use in a 
variety of environments. Because Micro GC customers strongly value 
portability, they would not switch to any other analytical technique or 
product if the price of Micro GCs were to increase by five to ten 
percent. In the United States, Agilent and Varian are the sole 
competitors in the market for Micro GC instruments. Agilent and Varian 
account for approximately 75 percent and 25 percent of the market by 
revenue, respectively, and directly compete for sales on the basis of 
price, service, and product innovation.
    3Q GC-MS instruments combine a front-end gas chromatograph with a 
triple quadrupole mass spectrometer. 3Q GC-MSs offer extraordinarily 
high sensitivity and are used to identify and quantify trace amounts of 
substances in a wide variety of samples, such as performance-enhancing 
drugs in blood and pesticides in food. Less sensitive GC-MSs are widely 
available, and substantially less expensive, but they are not 
substitutes for 3Q GC-MSs because they lack the capability to detect 
compounds at very low concentrations and cannot differentiate among 
structurally-similar compounds. Where the significantly greater 
performance of a 3Q GC-MS is required, customers would not switch to 
other instruments or technologies even if the price of 3Q GC-MSs 
increased by five to ten percent. In the United States, there are four 
competitors supplying 3Q GC-MS instruments. Post-acquisition, the 
combined Agilent and Varian would have in excess of a 48 percent share 
of the U.S. market by revenue. The other two competitors, Thermo Fisher 
Scientific, Inc. (``Thermo'') and Waters Corp., have market shares of 
approximately 36 percent and 16 percent, respectively.
    ICP-MS instruments combine inductively coupled plasma technology 
and mass spectrometry technology and are used for the analysis of 
inorganic materials. The most common application for ICP-MS is testing 
water samples, such as drinking, ground or waste water, for the 
presence of toxic metals, like arsenic, mercury, or lead. ICP-MS is the 
only technology approved by the Environmental Protection Agency for 
testing drinking water. Because customers require the sensitivity 
provided by ICP-MS, and because many customers perform tests pursuant 
to regulatory guidelines, they would not switch to any other technique 
or device if the price of ICP-MS instruments were to increase by five 
to ten percent. In the United States, there are only four suppliers of 
ICP-MS instruments. Agilent accounts for 40 percent of the ICP-MS 
market by revenue, and a combined Agilent and Varian would have in 
excess of a 48 percent share of the U.S. market. The other two 
competitors, Thermo and PerkinElmer, Inc. have market shares of 
approximately 14 percent and 37 percent, respectively.
    The relevant geographic area in which to evaluate the markets for 
Micro GC, 3Q GC-MS, and ICP-MS instruments is the United States. 
Because Micro GC, 3Q GC-MS, and ICP-MS customers require local sales, 
service, and support, a supplier that lacks the local infrastructure 
necessary to provide these services is not a viable alternative for 
U.S. customers.

IV. Entry

    Neither new entry nor repositioning and expansion sufficient to 
deter or counteract the anticompetitive effects of the proposed 
acquisition is likely to occur within two years. A new entrant to the 
Micro GC, 3Q GC-MS, or ICP-MS instrument markets would face significant 
barriers to entry. A new entrant would have to design, develop, and 
test a product, and would have to establish a service and support 
infrastructure in the United States. Perhaps most importantly, a new 
entrant would have to develop a reputation for quality and reliability, 
and it would take at least several years to acquire a reputation on par 
with the current Micro GC, 3Q GC-MS, and ICP-MS suppliers. Accordingly, 
new entry by a domestic or foreign firm would not be timely, likely, or 
sufficient to counteract the anticompetitive effects that would arise 
as a result of the acquisition.

V. Effects of the Acquisition

    Agilent and Varian are the only two competitors in the market for 
Micro GC instruments. By creating a monopoly and eliminating the 
substantial competition between Agilent and Varian, the proposed 
acquisition would cause the purchasers of Micro GC instruments to pay 
higher prices and experience reduced levels of service and slower 
innovation rates.
    With only four suppliers, the market for 3Q GC-MS instruments is 
highly concentrated. 3Q GC-MSs are generally purchased through a 
competitive evaluation process, which fosters competition for features, 
reliability, performance, price, and service. Agilent and Varian's 3Q 
GC-MSs are positioned similarly in terms of their features, price, and 
performance. The elimination of the direct competition between the 
Agilent and Varian 3Q GC-MS products would allow Agilent to increase 
prices, slow the pace of innovation, and/or decrease service levels. In 
addition, the fact that there would be only three suppliers after the 
proposed acquisition leads to an increased likelihood of coordination 
among the remaining competitors.
    The market for ICP-MS instruments is also highly concentrated, and 
Agilent's acquisition of Varian would leave only three suppliers. The 
ICP-MS instruments of the various suppliers compete on the basis of 
reliability, price, product features, performance, and service. Because 
Agilent and Varian directly compete with each other for many sales, and 
because Varian is frequently the low-priced competitor, Agilent would 
have a strong post-acquisition incentive to increase ICP-MS prices. The 
transaction would also facilitate coordination among the three 
remaining firms.

VI. The Consent Agreement

    The proposed Consent Agreement eliminates the competitive concerns 
raised by Agilent's proposed acquisition of Varian by requiring the 
divestiture of Agilent's assets relating to the manufacture and sale of 
Micro GC instruments and Varian's assets relating to the manufacture 
and sale of 3Q GC-MS and ICP-MS instruments. Agilent and Varian have 
reached agreements to sell the Micro GC assets to Inficon and the 3Q 
GC-MS and ICP-MS assets to Bruker, within ten days of closing the 
acquisition.
    Inficon possesses the resources and capability to acquire the Micro 
GC assets and replace Agilent as an effective competitor in the Micro 
GC market. Inficon, headquartered in Switzerland, manufactures 
analytical instruments for gas analysis, measurement, and control. 
Inficon currently supplies several products complementary to Micro GC 
instruments, including portable GC-MS analyzers. Inficon has an 
existing worldwide infrastructure for the marketing and sales of its 
analyzers, and therefore is well-positioned to replace the competition 
that will be lost as a result of the proposed transaction.
    Headquartered in Billerica, Massachusetts, Bruker is a global 
provider of life-sciences scientific instruments, as well as solutions 
for molecular and materials research and industrial and applied 
analysis. Bruker's acquisition of the Varian 3Q GC-MS and ICP-MS 
product lines will complement Bruker's existing strengths in the 
analytical instruments market. Bruker manufactures a variety of high-
performance mass spectrometry

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instruments, including product lines adjacent to the 3Q GC-MS and ICP-
MS businesses. As a result, Bruker has a significant existing global 
infrastructure that will enable it to quickly support additional 
business expansion and replace the loss of competition posed by 
Agilent's acquisition of Varian.
    Pursuant to the Consent Agreement, Inficon will receive the assets 
necessary to replicate Agilent's Micro GC instrument business, and 
Bruker will receive the assets necessary to replicate Varian's 3Q GC-MS 
and ICP-MS instrument businesses. In addition to ensuring that the 
employees of the relevant businesses will continue their employment 
with the acquirers, the Consent Agreement requires Agilent to provide 
Inficon and Bruker with access to additional Agilent employees who may 
be needed to facilitate the transition of the assets associated with 
each of the Products. The Consent Agreement also requires Agilent to 
transfer all relevant intellectual property and all contracts and 
confidential business information associated with each of the Products. 
Combined, these provisions ensure that Inficon and Bruker fully and 
immediately restore the competition that will be eliminated by the 
acquisition.
    The Commission may appoint an interim monitor to oversee the 
divestiture of the Products at any time after the Consent Agreement has 
been signed. In order to ensure that the Commission remains informed 
about the status of the proposed divestitures, the proposed Consent 
Agreement requires the parties to file periodic reports with the 
Commission until the divestiture is accomplished. If the Commission 
determines that Agilent has not fully complied with its obligations 
under the Decision and Order within ten days after the date the 
Decision and Order becomes final, the Commission may appoint a 
divestiture trustee to divest the Micro GC, 3Q GC-MS, and ICP-MS assets 
to a Commission-approved acquirer.
    The purpose of this analysis is to facilitate public comment on the 
Consent Agreement, and it is not intended to constitute an official 
interpretation of the proposed Decision and Order or to modify its 
terms in any way.
    By direction of the Commission.

Donald S. Clark
Secretary.
[FR Doc. 2010-12183 Filed 5-20-10; 11:55 am]
BILLING CODE 6750-01-S