[Federal Register Volume 76, Number 172 (Tuesday, September 6, 2011)]
[Notices]
[Pages 55111-55122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-22623]



[[Page 55111]]

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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. General Electric Co., et al.; Proposed Final 
Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Hold Separate Stipulation and Order, and Competitive Impact Statement 
have been filed with the United States District Court for the District 
of Columbia in United States of America v. General Electric Co., et 
al., Civil Action No. 1:11-cv-01549. On August 29, 2011, the United 
States filed a Complaint alleging that the proposed acquisition by 
General Electric Company (``GE'') of CVT Holding SAS, Financi[egrave]re 
CVT SAS, and Converteam Group SAS would violate Section 7 of the 
Clayton Act, 15 U.S.C. 18. The proposed Final Judgment, filed at the 
same time as the Complaint, requires GE to divest the Converteam 
Electric Machinery Business, which produces low-speed synchronous 
electric motors used in reciprocating compressors in the oil and gas 
industry, and includes its production facility located in Minneapolis, 
Minnesota, as well as certain tangible and intangible assets associated 
with the business.
    Copies of the Complaint, proposed Final Judgment and Competitive 
Impact Statement are available for inspection at the Department of 
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth 
Street, NW., Suite 1010, Washington, DC 20530 (telephone: 202-514-
2481), on the Department of Justice's Web site at http://www.usdoj.gov/atr, and at the Office of the Clerk of the United States District Court 
for the District of Columbia. Copies of these materials may be obtained 
from the Antitrust Division upon request and payment of the copying fee 
set by Department of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, 
Department of Justice, 450 Fifth Street, NW., Suite 8700, Washington, 
DC 20530 (telephone: 202-307-0924).

Patricia A. Brink,
Director of Civil Enforcement.

United States District Court for the District of Columbia

    United States of America, Department of Justice, Antitrust 
Division, 450 Fifth Street, NW., Suite 8700, Washington, DC 20530, 
Plaintiff, v. General Electric Company, 3135 Easton Turnpike, 
Fairfield, CT 06828, and CVT Holding SAS, 30 avenue Carnot, 91345 
Massy Cedex, France, Financi[egrave]re CVT SAS, 30 avenue Carnot, 
91345 Massy Cedex, France, Converteam Group SAS, 30 avenue Carnot, 
91345 Massy Cedex, France, Defendants.

Case: 1:11-cv-01549.
Assigned To: Boasberg, James E.
Assign. Date: 8/29/2011.
Description: Antitrust.

Complaint

    Plaintiff, the United States of America (``United States''), acting 
under the direction of the Attorney General of the United States brings 
this civil antitrust action to enjoin the proposed acquisition of CVT 
Holding SAS, Financi[egrave]re CVT SAS, and Converteam Group SAS 
(collectively, ``Converteam'') by General Electric Company (``GE'') and 
to obtain other equitable relief. The United States alleges as follows:

I. Nature of the Action

    1. Pursuant to a share purchase agreement dated March 28, 2011, GE 
intends to acquire control of Converteam Group SAS by purchasing 
approximately 90 percent of the shares of CVT Holding SAS and 100 
percent of the shares of Financi[egrave]re CVT SAS for approximately 
$3.2 billion.
    2. GE and Converteam are two of the three leading North American 
suppliers of low-speed synchronous electric motors used in 
reciprocating compressors in the oil and gas industry (hereafter 
``LSSMs'').
    3. The proposed acquisition would eliminate competition between GE 
and Converteam for these motors. For a significant number of customers, 
GE and Converteam are the two best sources of LSSMs. Elimination of 
competition between GE and Converteam likely would give GE the ability 
to raise prices or decrease the quality of service provided to these 
customers. As a result, the proposed acquisition likely would 
substantially lessen competition in the development, manufacture, and 
sale of LSSMs in the United States, in violation of Section 7 of the 
Clayton Act, 15 U.S.C. 18.

II. The Defendants

    4. Defendant General Electric Company is a New York corporation 
with its principal offices in Fairfield, Connecticut. GE is a global 
manufacturing, technology and services company. GE's subsidiary, GE 
Energy, provides power generation and energy delivery technologies in a 
number of areas in the energy industry, including coal, oil, natural 
gas, and nuclear energy, as well as in renewable resources such as 
water, wind, solar and alternative fuels. GE Energy also manufactures a 
full range of electric motors, including LSSMs. GE's facility in 
Peterborough, Canada manufactures LSSMs sold in North America. In 2010, 
GE's worldwide revenues were $150 billion and revenues from its 
Peterborough large motor and generator facility were $139.1 million.
    5. Defendant Converteam Group SAS, headquartered in Massy Cedex, 
France, is a wholly and directly owned subsidiary of Financi[egrave]re 
CVT SAS, a French corporation, which is itself owned by CVT Holding 
SAS, a French corporation. CVT Holding SAS's equity is held by Barclays 
Private Equity France, LBO France, and Converteam Group SAS management. 
Converteam is a power conversion engineering company focusing on 
motors, generators, drives, converters and automation controls. 
Converteam manufactures and assembles medium-voltage large electric 
motors in facilities located in France, the United Kingdom, and the 
United States. Converteam's indirectly held United States subsidiary, 
Electric Machinery Holding Company, manufactures LSSMs in Minneapolis, 
Minnesota. In 2010, Converteam's worldwide revenues were $1.5 billion 
and revenues from its Minneapolis facility were $47.7 million.

III. Jurisdiction, Venue, and Interstate Commerce

    6. The United States brings this action pursuant to Section 15 of 
the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain 
Defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18.
    7. Defendants GE and Converteam develop, manufacture and sell LSSMs 
in the flow of interstate commerce. Defendants' activities in the 
development, manufacture, and sale of LSSMs substantially affect 
interstate commerce. The Court has subject-matter jurisdiction over 
this action pursuant to Section 15 of the Clayton Act, 15 U.S.C. 25, 
and 28 U.S.C. Sec.  1331, 1337(a), and 1345.

[[Page 55112]]

    8. Defendants have consented to venue and personal jurisdiction in 
the District of Columbia. Venue is therefore proper in this District 
under Section 12 of the Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1391 
(c). Venue is also proper in the District of Columbia for defendant 
Converteam under 28 U.S.C. 1391(d).

IV. Trade and Commerce

A. Industry Background

    9. Oil and gas refineries and certain other petrochemical 
operations utilize reciprocating compressors for processes requiring 
high-pressure delivery of gases. A reciprocating compressor uses 
mechanical drivers (motors) to turn its crankshafts and move its 
pistons, thereby compressing low-pressure gas and making it higher-
pressure. Compressor drivers fall into three categories--electric, 
steam, and gas. The production facility requiring a reciprocating 
compressor will choose the type of driver based on the facility's 
available energy or waste supply.
    10. Due to the availability of a steady supply of electricity, 
North American oil refineries generally require an electric driver--a 
large electric motor--for their reciprocating compressors. Large 
electric motors consist of a stator and a rotor, with the speed 
(rotation per minute) of the motor dependent upon the number of rotor 
poles. Motors that contain more poles operate at slower speeds.
    11. Electric motors are either synchronous or induction (also known 
as asynchronous). Induction motors are easier to manufacture and 
cheaper to purchase and maintain than synchronous motors. Synchronous 
motors are more expensive and involve a sophisticated engineering 
process. They are used in applications that require precise speed 
regulation; the motor rotates at a speed proportional to and accurately 
synchronized with the frequency of the power supply. An induction motor 
may run slightly slower or faster than the power supply frequency, and 
will slip as the load increases. Synchronous motors are more efficient 
than induction motors, will operate at a fixed speed, without any 
slippage, and provide higher performance at higher power ratings.
    12. In processing and refining crude oil into petroleum products, 
oil refineries use low-speed reciprocating compressors for hydrogen 
compression to support different refinery operations. For optimal 
performance and reliability, this application requires a LSSM to drive 
the compressor. Each LSSM is custom-designed to meet technical 
performance requirements related to specific facility characteristics. 
These LSSMs generally operate between 277 to 400 revolutions per 
minute, meaning they have between 18 to 26 poles, are typically 
operating at medium voltage, and generate horsepower in the range of 
1,500 to 15,000.
    13. LSSMs are sold pursuant to bids, which are based on technical 
specifications from the customer. Suppliers of LSSMs use patented or 
proprietary technology and know-how--including expertise gained through 
years or decades of trial and error and expertise with prior 
installations--to custom design LSSMs that satisfy the customers' 
technical specifications. LSSMs for use in North America must meet 
specific National Electrical Manufacturers Association (``NEMA'') 
regulatory standards, as opposed to the International Electrotechnical 
Commission (``IEC'') standards applicable to the rest of the world.
    14. Customers (in conjunction with the engineering firms that 
consult for them) evaluate competing bids based on their compliance 
with technical specifications and on commercial considerations such as 
price, delivery schedule, and terms of sale. The combined technical and 
commercial needs of the customer differ for each LSSM project.
    15. LSSMs have a useful life ranging from 30 to 40 years. New 
construction of refineries is uncommon in North America. Purchases of 
new LSSMs in North America are therefore infrequent; customers 
typically purchase new reciprocating compressors only when a refinery 
is expanded or overhauled.

B. Relevant Market

1. Product Market
    16. Oil refineries rely on heavy equipment that consumes large 
amounts of electricity twenty-four hours per day. To operate 
effectively, refineries generally are connected directly to the 
electricity grid, in lieu of receiving power through distribution 
lines, which are less efficient. This direct connection to the grid 
means that equipment in the refinery usually operates at a much higher 
power level than equipment not so connected. In order to minimize 
energy costs, refineries require a LSSM, which uses electrical energy 
more efficiently than other types of motors. Use of a LSSM guarantees 
that the motor always will operate at precisely the power factor of the 
refinery and that the refinery's reciprocating compressor will be 
driven at a fixed speed, reducing energy losses. By comparison, an 
induction motor would require significantly larger amounts of 
electricity to perform the same amount of work.
    17. A small but significant increase in the price of LSSMs would 
not cause a sufficient number of customers to substitute another type 
of motor or to a motor built to IEC standards so as to make such a 
price increase unprofitable. Accordingly, the development, manufacture, 
and sale of LSSMs is a line of commerce and a relevant product market 
within the meaning of Section 7 of the Clayton Act.
2. Geographic Market
    18. GE and Converteam compete on bids to customers for LSSMs in 
North America. GE manufactures LSSMs at facilities in Peterborough, 
Ontario, Canada for sale in North America. Converteam manufactures 
LSSMs in Minneapolis, Minnesota for sale in North America. Virtually 
all LSSMs purchased by oil and gas customers in North America are 
manufactured in facilities located in North America.
    19. Those competitors that could constrain GE from raising prices 
to customers on bids for LSSMs in North America typically are suppliers 
with a physical presence in North America, including manufacturing, 
sales, technical and support personnel, and parts distribution. These 
competitors are most familiar with NEMA regulatory standards.
    20. Refineries prefer such suppliers because, during the bid, 
design, assembly, and installation phases of a LSSM project, customers 
interact with suppliers to address design recommendations and changes, 
track assembly progress, and ensure successful installation. Further, 
customers purchasing LSSMs can avoid costly delays or down time in 
refinery operations by selecting a LSSM supplier that is able to 
respond quickly to requests for service or replacement parts during the 
operating life of the LSSM.
    21. A small but significant increase in the price of LSSMs would 
not cause a significant number of customers in North America to turn to 
manufacturers of LSSMs that do not conform to North American standards 
so as to make such a price increase unprofitable. Accordingly, sales to 
customers in North America is a relevant geographic market within the 
meaning of Section 7 of the Clayton Act.

C. Anticompetitive Effect of the Acquisition

    22. GE's acquisition of Converteam likely would substantially 
lessen competition in the North American LSSM market. GE and Converteam 
have consistently bid against each other on

[[Page 55113]]

nearly all LSSM projects since 2007. The competition between GE and 
Converteam in the development, production, and sale of LSSMs has 
benefited customers. GE and Converteam compete directly on price, terms 
of sale, and service. For many oil refineries, Converteam is the 
preferred alternative to GE. The proposed acquisition would eliminate 
GE's most significant competitor in the sale of LSSMs to customers in 
North America.
    23. Only three competitors, including GE and Converteam, have sold 
LSSMs in North America since 2007. The third company often does not 
submit bids on North American LSSM projects, and has failed to achieve 
a significant share of the market. The fact that the third company 
rarely wins against GE and Converteam suggests that customers find GE 
and Converteam's products more attractive relative to the third 
provider.
    24. GE's acquisition of Converteam would eliminate many customers' 
preferred alternative to GE and reduce from three to two--or for some 
bids, reduce from two to one--the number of bidders. Post-acquisition, 
GE would gain the incentive and ability to profitably raise its bid 
prices significantly above pre-acquisition levels.
    25. The response of the remaining LSSM manufacturer would not be 
sufficient to constrain a unilateral exercise of market power by GE 
after the acquisition. GE would be aware that many customers strongly 
prefer it as a supplier, allowing it to raise prices above pre-
acquisition levels. No longer constrained by Converteam's price, post-
acquisition, GE would raise its prices to the monopoly level for 
customers that require either GE or Converteam. For customers that can 
consider an option other than the parties, prices would rise to the 
level of the third bidder. Thus, the acquisition of Converteam by GE 
creates an incentive for GE to bid a higher amount than it would if 
Converteam were still a competitor. Elimination of Converteam as a 
competitor also would reduce the remaining bidders' incentives to offer 
quick delivery or other terms of sale favorable to customers and to 
invest in service, quality and technology improvements.
    26. Therefore, the acquisition would substantially lessen 
competition in the development, manufacture, and sale of LSSMs to 
customers in North America and lead to higher prices, less favorable 
terms of sale, and decreased quality of service in the LSSM market, in 
violation of Section 7 of the Clayton Act.

D. Entry into the Low Speed Synchronous Electric Motor Market

    27. Substantial, timely entry of additional competitors is unlikely 
and, therefore, will not prevent the harm to competition caused by the 
elimination of Converteam as a bidder.
    28. A small number of companies have sold LSSMs outside North 
America, but these companies have no relevant, substantial North 
American presence. Given the small size of the North American LSSM 
market, they are unlikely to invest in the capital infrastructure 
required to compete effectively in North America.
    29. Firms attempting to enter the development, manufacture, and 
sale of LSSMs to customers in North America face barriers to entry. 
Establishing a reputation for successful performance and gaining 
customer confidence in a specific firm's LSSM are significant barriers 
to entry. North American customers require equipment built to NEMA 
standards. Many suppliers that operate globally do not have familiarity 
with these standards. North American oil and gas refineries are 
reluctant to purchase a LSSM from a supplier that does not have a 
reputation and track record of successful performance on reciprocating 
compressors operating in North America. Establishing a reputation for 
successful performance and/or gaining customer confidence can take 
years and the expenditure of substantial sunk costs.
    30. Financial scale is an additional barrier to entry. Customers 
prefer suppliers able to stand financially behind the LSSM order, to 
respond quickly and effectively to a request for service or parts, and 
to meet warranty obligations years after the initial sale. A supplier 
of LSSMs therefore must be able to prove that it is financially sound.
    31. For these reasons, entry or expansion by other firms into the 
North American market for the development, manufacture, and sale of 
LSSMs would not be timely, likely or sufficient to defeat the 
substantial lessening of competition that likely would result if GE 
acquires Converteam.

V. Violation Alleged

    32. The acquisition of Converteam by GE would substantially lessen 
competition in the market for the development, manufacture, and sale of 
LSSMs to customers in North America in violation of Section 7 of the 
Clayton Act, 15 U.S.C. 18.
    33. Unless restrained, the transaction will have the following 
anticompetitive effects, among others:
    a. actual and potential competition between GE and Converteam in 
the market for the development, manufacture, and sale of LSSMs to 
customers in North American will be eliminated;
    b. competition generally in the market for the development, 
manufacture, and sale of LSSMs to customers in North America will be 
substantially lessened; and
    c. prices for LSSMs in North America likely will increase, the 
terms of sale to customers in North America likely will be less 
favorable, and quality of service relating to LSSMs in North America 
likely will decline.

VI. Requested Relief

    34. Plaintiff requests that this Court:
    a. Adjudge and decree GE's proposed acquisition of Converteam to be 
unlawful and in violation of Section 7 of the Clayton Act, 15 U.S.C. 
18;
    b. Preliminarily and permanently enjoin and restrain defendants and 
all persons acting on their behalf from consummating the proposed 
acquisition of Converteam by GE or from entering into or carrying out 
any contract, agreement, plan, or understanding, the effect of which 
would be to combine Converteam with the operations of GE;
    c. Award the United States its costs for this action; and
    d. Award the United States such other and further relief as the 
Court deems just and proper.

Respectfully submitted,

For Plaintiff United States of America

/s/--------------------------------------------------------------------
Sharis A. Pozen,
Acting Assistant Attorney General.

/s/--------------------------------------------------------------------
Patricia A. Brink,
Director of Civil Enforcement.

/s/--------------------------------------------------------------------
Maribeth Petrizzi
Chief, Litigation II Section, D.C. Bar #435204.

/s/--------------------------------------------------------------------
Dorothy B. Fountain
Assistant Chief, Litigation II Section, D.C. Bar #439469.

/s/--------------------------------------------------------------------
Suzanne Morris
D.C. Bar 450208,
Michael K. Hammaker,
Brain Rafkin
Attorneys, U.S. Department of Justice, Antitrust Division, 
Litigation II Section, 450 Fifth Street, N.W, Suite 8700, 
Washington, D.C. 20530, Tel.: (202) 307-1188, Fax: (202) 514-9033, 
E-mail: [email protected].

Dated: August 29, 2011

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. General Electric 
Company, and CVT Holding SAS, Financi[egrave]re CVT SAS, and 
Converteam Group SAS, Defendants.

Case: 1:11-cv-01549.

[[Page 55114]]

Assigned To: Boasberg, James E.
Assign. Date: 8/29/2011.
Description: Antitrust.

Competitive Impact Statement

    Plaintiff United States of America (``United States''), pursuant to 
Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or 
``Tunney Act''), 15 U.S.C. 16(b)-(h), files this Competitive Impact 
Statement relating to the proposed Final Judgment submitted for entry 
in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    Pursuant to a share purchase agreement dated March 28, 2011, 
defendant General Electric Company (``GE'') intends to acquire control 
of defendant Converteam Group SAS by purchasing approximately 90 
percent of the shares of CVT Holding SAS and all of the shares of 
Financi[egrave]re CVT SAS (collectively ``Converteam'') for 
approximately $3.2 billion.
    The United States filed a civil antitrust Complaint on August 29, 
2011, seeking to enjoin the proposed acquisition. The Complaint alleges 
that the acquisition likely would substantially lessen competition in 
violation of Section 7 of the Clayton Act, 15 U.S.C. 18, in North 
America for the development, manufacture, and sale of low-speed 
synchronous electric motors used in reciprocating compressors in the 
oil and gas industry (hereafter ``LSSMs''). That loss of competition 
likely would result in higher prices and decreased quality of service 
in the North American market for LSSMs.
    At the same time the Complaint was filed, the United States filed a 
Hold Separate Stipulation and Order and proposed Final Judgment, which 
are designed to eliminate the anticompetitive effects of GE's 
acquisition of Converteam. Under the proposed Final Judgment, which is 
explained more fully below, the defendants are required to divest the 
Converteam Electric Machinery Holding Company (``Electric Machinery'') 
business, which includes its Minneapolis, Minnesota manufacturing 
facility that produces all of its LSSMs, all of the tangible assets 
necessary to operate the facility, and all of the intangible assets 
(i.e., intellectual property and know-how) related to the facility. 
Under the terms of the Hold Separate Stipulation and Order, defendants 
will take certain steps to ensure that the Converteam Electric 
Machinery business is operated as a competitively independent, 
economically viable and ongoing business concern; that it will remain 
independent and uninfluenced by the consummation of the acquisition, 
and that competition is maintained during the pendency of the ordered 
divestiture.
    The United States and defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the Final Judgment and to punish violations thereof.

II. Description of the Events Giving Rise to the Alleged Violation

A. The Defendants

    Defendant General Electric Company is a New York corporation with 
its principal offices in Fairfield, Connecticut. GE is a global 
manufacturing, technology and services company. GE's subsidiary, GE 
Energy, provides power generation and energy delivery technologies in a 
number of areas in the energy industry, including coal, oil, natural 
gas, and nuclear energy, as well as in renewable resources such as 
water, wind, solar and alternative fuels. GE Energy also manufactures a 
full range of electric motors, including LSSMs. GE's facility in 
Peterborough, Canada manufactures LSSMs sold in North America. In 2010, 
GE's worldwide revenues were $150 billion and revenues from its 
Peterborough large motor and generator facility were $139.1 million.
    Defendant Converteam Group SAS, headquarted in Massy Cedex, France, 
is a wholly and directly owned subsidiary of Financi[egrave]re CVT SAS, 
a French corporation, which is itself owned by CVT Holding SAS, a 
French corporation. CVT Holding SAS's equity is held by Barclays 
Private Equity France, LBO France, and Converteam Group SAS management. 
Converteam is a power conversion engineering company focusing on 
motors, generators, drives, converters and automation controls. 
Converteam manufactures and assembles medium-voltage large electric 
motors in facilities located in France, the United Kingdom, and the 
United States. Converteam's indirectly held United States subsidiary, 
Electric Machinery Holding Company, manufactures LSSMs in Minneapolis, 
Minnesota. In 2010, Converteam's worldwide revenues were $1.5 billion 
and revenues from its Minneapolis facility were $47.7 million.

B. Anticompetitive Effects in the North American Market for Low-Speed 
Synchronous Electric Motors for Reciprocating Compressors

(1) Electric Motors in the Oil and Gas Industry
    Oil and gas refineries and certain other petrochemical operations 
utilize reciprocating compressors for processes requiring high-pressure 
delivery of gases. A reciprocating compressor uses mechanical drivers 
(motors) to turn its crankshafts and move its pistons, thereby 
compressing low-pressure gas and making it higher-pressure. Compressor 
drivers fall into three categories--electric, steam, and gas. The 
production facility requiring a reciprocating compressor will choose 
the type of driver based on the facility's available energy or waste 
supply.
    Due to the availability of a steady supply of electricity, North 
American oil refineries generally require an electric driver--a large 
electric motor--for their reciprocating compressors. Large electric 
motors consist of a stator and a rotor, with the speed (rotation per 
minute) of the motor dependent upon the number of rotor poles. Motors 
that contain more poles operate at slower speeds.
    Electric motors are either synchronous or induction (also known as 
asynchronous). Induction motors are easier to manufacture and cheaper 
to purchase and maintain than synchronous motors. Synchronous motors 
are more expensive and involve a sophisticated engineering process. 
They are used in applications that require precise speed regulation; 
the motor rotates at a speed proportional to and accurately 
synchronized with the frequency of the power supply. An induction motor 
may run slightly slower or faster than the power supply frequency, and 
will slip as the load increases. Synchronous motors are more efficient 
than induction motors, will operate at a fixed speed, without any 
slippage, and provide higher performance at higher power ratings.
    In processing and refining crude oil into petroleum products, oil 
refineries use low-speed reciprocating compressors for hydrogen 
compression to support different refinery operations. For optimal 
performance and reliability, this application requires a LSSM to drive 
the compressor. Each LSSM is custom-designed to meet technical 
performance requirements related to specific facility characteristics. 
These LSSMs generally operate between 277 to 400 revolutions per 
minute, meaning they have between 18 to 26 poles, are typically 
operating at medium voltage,

[[Page 55115]]

and generate horsepower in the range of 1,500 to 15,000.
    LSSMs are sold pursuant to bids, which are based on technical 
specifications from the customer. Suppliers of LSSMs use patented or 
proprietary technology and know-how--including expertise gained through 
years or decades of trial and error and expertise with prior 
installations--to custom design LSSMs that satisfy the customers' 
technical specifications. LSSMs for use in North America must meet 
specific National Electrical Manufacturers Association (``NEMA'') 
regulatory standards, as opposed to the International Electrotechnical 
Commission (``IEC'') standards applicable to the rest of the world.
    Customers (in conjunction with the engineering firms that consult 
for them) evaluate competing bids based on their compliance with 
technical specifications and on commercial considerations such as 
price, delivery schedule, and terms of sale. The combined technical and 
commercial needs of the customer differ for each LSSM project.
    LSSMs have a useful life ranging from 30 to 40 years. New 
construction of refineries is uncommon in North America. Purchases of 
new LSSMs in North America are therefore infrequent; customers 
typically purchase new reciprocating compressors only when a refinery 
is expanded or overhauled.
(2) The North American Market for Low-Speed Synchronous Motors Used in 
Reciprocating Compressors in the Oil and Gas Industry
    Oil refineries rely on heavy equipment that consumes large amounts 
of electricity twenty-four hours per day. To operate effectively, 
refineries generally are connected directly to the electricity grid, in 
lieu of receiving power through distribution lines, which are less 
efficient. This direct connection to the grid means that equipment in 
the refinery usually operates at a much higher power level than 
equipment not so connected. In order to minimize energy costs, 
refineries require a LSSM, which uses electrical energy more 
efficiently than other types of motors. Use of a LSSM guarantees that 
the motor always will operate at precisely the power factor of the 
refinery and that the refinery's reciprocating compressor will be 
driven at a fixed speed, reducing energy losses. By comparison, an 
induction motor would require significantly larger amounts of 
electricity to perform the same amount of work.
    A small but significant increase in the price of LSSMs would not 
cause a sufficient number of customers to substitute another type of 
motor or to a motor built to IEC standards so as to make such a price 
increase unprofitable. Accordingly, the development, manufacture, and 
sale of LSSMs is a line of commerce and a relevant product market 
within the meaning of Section 7 of the Clayton Act.
    GE and Converteam compete on bids to customers for LSSMs in North 
America. GE manufactures LSSMs at facilities in Peterborough, Ontario, 
Canada for sale in North America. Converteam manufactures LSSMs in 
Minneapolis, Minnesota for sale in North America. Virtually all LSSMs 
purchased by oil and gas customers in North America are manufactured in 
facilities located in North America.
    Those competitors that could constrain GE from raising prices to 
customers on bids for LSSMs in North America typically are suppliers 
with a physical presence in North America, including manufacturing, 
sales, technical and support personnel, and parts distribution. These 
competitors are most familiar with NEMA regulatory standards.
    Refineries prefer such suppliers because, during the bid, design, 
assembly, and installation phases of a LSSM project, customers interact 
with suppliers to address design recommendations and changes, track 
assembly progress, and ensure successful installation. Further, 
customers purchasing LSSMs can avoid costly delays or down time in 
refinery operations by selecting a LSSM supplier that is able to 
respond quickly to requests for service or replacement parts during the 
operating life of the LSSM.
    A small but significant increase in the price of LSSMs would not 
cause a significant number of customers in North America to turn to 
manufacturers of LSSMs that do not conform to North American standards 
so as to make such a price increase unprofitable. Accordingly, sales to 
customers in North America is a relevant geographic market within the 
meaning of Section 7 of the Clayton Act.
(3) Anticompetitive Effects
    GE's acquisition of Converteam likely would substantially lessen 
competition in the North American LSSM market. GE and Converteam have 
consistently bid against each other on nearly all LSSM projects since 
2007. The competition between GE and Converteam in the development, 
production, and sale of LSSMs has benefited customers. GE and 
Converteam compete directly on price, terms of sale, and service. For 
many oil refineries, Converteam is the preferred alternative to GE. The 
proposed acquisition would eliminate GE's most significant competitor 
in the sale of LSSMs to customers in North America.
    Only three competitors, including GE and Converteam, have sold 
LSSMs in North America since 2007. The third company often does not 
submit bids on North American LSSM projects, and has failed to achieve 
a significant share of the market. The fact that the third company 
rarely wins against GE and Converteam suggests that customers find GE 
and Converteam's products more attractive relative to the third 
provider.
    GE's acquisition of Converteam would eliminate many customers' 
preferred alternative to GE and reduce from three to two--or for some 
bids, reduce from two to one--the number of bidders. Post-acquisition, 
GE would gain the incentive and ability to profitably raise its bid 
prices significantly above pre-acquisition levels.
    The response of the remaining LSSM manufacturer would not be 
sufficient to constrain a unilateral exercise of market power by GE 
after the acquisition. GE would be aware that many customers strongly 
prefer it as a supplier, allowing it to raise prices above pre-
acquisition levels. No longer constrained by Converteam's price, post-
acquisition, GE would raise its prices to the monopoly level for 
customers that require either GE or Converteam. For customers that can 
consider an option other than the parties, prices would rise to the 
level of the third bidder. Thus, the acquisition of Converteam by GE 
creates an incentive for GE to bid a higher amount than it would if 
Converteam were still a competitor. Elimination of Converteam as a 
competitor also would reduce the remaining bidders' incentives to offer 
quick delivery or other terms of sale favorable to customers and to 
invest in service, quality and technology improvements.
    Therefore, the acquisition would substantially lessen competition 
in the development, manufacture, and sale of LSSMs to customers in 
North America and lead to higher prices, less favorable terms of sale, 
and decreased quality of service in the LSSM market, in violation of 
Section 7 of the Clayton Act.
(4) Entry
    Substantial, timely entry of additional competitors is unlikely 
and, therefore, will not prevent the harm to competition caused by the 
elimination of Converteam as a bidder.
    A small number of companies have sold LSSMs outside North America, 
but these companies have no relevant,

[[Page 55116]]

substantial North American presence. Given the small size of the North 
American LSSM market, they are unlikely to invest in the capital 
infrastructure required to compete effectively in North America.
    Firms attempting to enter the development, manufacture, and sale of 
LSSMs to customers in North America face barriers to entry. 
Establishing a reputation for successful performance and gaining 
customer confidence in a specific firm's LSSM are significant barriers 
to entry. North American customers require equipment built to NEMA 
standards. Many suppliers that operate globally do not have familiarity 
with these standards. North American oil and gas refineries are 
reluctant to purchase a LSSM from a supplier that does not have a 
reputation and track record of successful performance on reciprocating 
compressors operating in North America. Establishing a reputation for 
successful performance and/or gaining customer confidence can take 
years and the expenditure of substantial sunk costs.
    Financial scale is an additional barrier to entry. Customers prefer 
suppliers able to stand financially behind the LSSM order, to respond 
quickly and effectively to a request for service or parts, and to meet 
warranty obligations years after the initial sale. A supplier of LSSMs 
therefore must be able to prove that it is financially sound.
    For these reasons, entry or expansion by other firms into the North 
American market for the development, manufacture, and sale of LSSMs 
would not be timely, likely or sufficient to defeat the substantial 
lessening of competition that likely would result if GE acquires 
Converteam.

III. Explanation of the Proposed Final Judgment

    The divestiture required by the proposed Final Judgment will 
eliminate the anticompetitive effects of the acquisition in the North 
American market for LSSMs by establishing a new, independent, and 
economically viable competitor. The proposed Final Judgment requires 
defendants, within sixty (60) days after the filing of the complaint, 
or five (5) days after notice of the entry of the Final Judgment by the 
Court, whichever is later, to divest the Converteam Electric Machinery 
Business, which includes the one plant currently producing LSSMs, as 
well as all of the tangible and intangible assets associated with the 
business. The assets must be divested in such a way as to satisfy the 
United States in its sole discretion that the Converteam Electric 
Machinery Business can and will be operated by the purchaser as a 
viable, ongoing business that can compete effectively in the relevant 
market.
    In the event that defendants do not accomplish the divestiture 
within the periods prescribed in the proposed Final Judgment, the Final 
Judgment provides that the Court will appoint a trustee selected by the 
United States to effect the divestiture. If a trustee is appointed, the 
proposed Final Judgment provides that GE will pay all costs and 
expenses of the trustee. The trustee's commission will be structured so 
as to provide an incentive for the trustee based on the price obtained 
and the speed with which the divestiture is accomplished. After his or 
her appointment becomes effective, the trustee will file monthly 
reports with the Court and the United States setting forth his or her 
efforts to accomplish the divestiture. At the end of six (6) months, if 
the divestiture has not been accomplished, the trustee and the United 
States will make recommendations to the Court, which shall enter such 
orders as appropriate, in order to carry out the purpose of the trust, 
including extending the trust or the term of the trustee's appointment.
    The divestiture required by the proposed Final Judgment will 
eliminate the anticompetitive effects of the acquisition in the North 
American market for LSSMs. To that end, the Divestiture Assets include 
the entire Converteam Electric Machinery Business, including its 
production facility located at 800 Central Avenue, Minneapolis, 
Minnesota 55413 (``Minneapolis Facility''). This facility produces 
Converteam LSSMs sold to customers in North America. In addition, the 
facility has an established record as a high-quality, efficient 
production facility with product offerings that have been qualified by 
its customers and sufficient capacity to meet current and future demand 
for its products.
    The Converteam Electric Machinery Business produces other products 
at its Minneapolis Facility, including other types of synchronous 
motors, induction motors, brushless exciters, turbo generators, and 
synchronous generators; it also provides services and parts associated 
with these products. Although these products are not areas of concern, 
their divestiture was necessary to create a viable competitor, and 
their inclusion as Divestiture Assets will ensure that the Converteam 
Electric Machinery Business will remain a profitable, stand-alone 
entity with a broad range of products and services.
    The proposed Final Judgment also requires divestiture of tangible 
and intangible assets associated with the Converteam Electric Machinery 
Business. These assets will provide the acquirer with the physical 
tools (e.g., equipment, inventory, business records, and the like), and 
the bank of knowledge and rights (e.g., manufacturing know-how, 
contractual rights, and the like) needed to create an independent 
producer of LSSMs equivalent to Converteam's current operations. The 
Divestiture Assets also include all intangible assets owned, 
controlled, or maintained by the Converteam Electric Machinery Business 
used in the design, development, production, marketing, servicing, 
distribution or sale of any product produced by the Converteam Electric 
Machinery Business. In addition, the Divestiture Assets include a non-
exclusive, non-transferable license for any intangible assets not 
owned, controlled, or maintained by the Converteam Electric Machinery 
Business, but that prior to the filing of the Complaint in this matter 
were used in connection with the design, development, production, 
marketing, servicing, or sale of any product produced by the Converteam 
Electric Machinery Business; this license is transferable to any future 
purchaser of all or substantially all of the Converteam Electric 
Machinery Business.
    The Converteam Electric Machinery Business, in addition to 
manufacturing LSSMs, manufactures several other products for which 
competition will not be reduced by GE's acquisition of Converteam. So 
that GE can enter these markets and compete, the Final Judgment 
requires that the acquirer of the Converteam Electric Machinery 
Business grant to GE a non-exclusive, non-transferable license for any 
intangible assets that, prior to the filing of the Complaint, were used 
in the design, development, manufacture, marketing, servicing, or sale 
of induction motors, brushless exciters, turbo generators, and 
synchronous generators designed, developed, produced, or sold by the 
Converteam Electric Machinery Business. This license is transferable to 
any future purchaser of all or substantially all of the GE business 
unit using this license, and does not include LSSMs or any other type 
of synchronous motors.
    Lastly, the Final Judgment permits GE to retain Converteam's SAP 
business management server, which is used by both the Converteam 
Electric Machinery Business and Converteam's other businesses. To 
ensure a smooth transition of the Converteam Electric Machinery 
Business's information to the acquirer, at the option of the acquirer,

[[Page 55117]]

and for a period not to exceed one (1) year, the Final Judgment 
requires that GE grant access and use rights to the SAP business 
management server and provide transition services and technical 
assistance to the acquirer of the Converteam Electric Machinery 
Business. In addition, the Final Judgment requires that GE prevent GE 
or Converteam employees from accessing Converteam Electric Machinery 
Business information, except for the purpose of providing transition 
services or technical assistance to the acquirer. Finally, upon 
termination of the agreements, GE is required to take all steps 
necessary to purge information related to the Converteam Electric 
Machinery Business from the SAP business management server.
    The divestiture provisions of the proposed Final Judgment will 
eliminate the anticompetitive effects that likely would result if GE 
acquired Converteam because the acquirer will have the ability to 
develop, produce, and sell LSSMs to customers in North America in 
competition with GE.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
16(a), the proposed Final Judgment has no prima facie effect in any 
subsequent private lawsuit that may be brought against Defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register, or the last date of 
publication in a newspaper of the summary of this Competitive Impact 
Statement, whichever is later. All comments received during this period 
will be considered by the United States Department of Justice, which 
remains free to withdraw its consent to the proposed Final Judgment at 
any time prior to the Court's entry of judgment. The comments and the 
response of the United States will be filed with the Court and 
published in the Federal Register. Written comments should be submitted 
to: Maribeth Petrizzi, Chief, Litigation II Section, Antitrust 
Division, United States Department of Justice, 450 Fifth Street, NW., 
Suite 8700, Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against Defendants. The 
United States could have continued the litigation and sought 
preliminary and permanent injunctions against GE's acquisition of 
Converteam. The United States is satisfied, however, that the 
divestiture of assets described in the proposed Final Judgment will 
preserve competition for the development, manufacture and sale of LSSMs 
in the United States. Thus, the proposed Final Judgment would achieve 
all or substantially all of the relief the United States would have 
obtained through litigation, but avoids the time, expense, and 
uncertainty of a full trial on the merits of the Complaint.

VII. Standard of Review Under the APPA for the Proposed Final Judgment

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a sixty-day comment period, after which the court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. 16(e)(1). In making that determination in 
accordance with the statute, the court is required to consider:
    (A) The competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative remedies 
actually considered, whether its terms are ambiguous, and any other 
competitive considerations bearing upon the adequacy of such judgment 
that the court deems necessary to a determination of whether the 
consent judgment is in the public interest; and
    (B) The impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and individuals 
alleging specific injury from the violations set forth in the complaint 
including consideration of the public benefit, if any, to be derived 
from a determination of the issues at trial.

15 U.S.C. 16(e)(1)(A)-(B). In considering these statutory factors, the 
court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (D.C. Cir. 1995); see generally United States v. SBC 
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public 
interest standard under the Tunney Act); United States v. InBev N.V./
S.A., 2009-2 Trade Cas. (CCH) ]76,736, 2009 U.S. Dist. LEXIS 84787, No. 
08-1965 (JR), at *3 (D.D.C. Aug. 11, 2009) (noting that the court's 
review of a consent judgment is limited and only inquires ``into 
whether the government's determination that the proposed remedies will 
cure the antitrust violations alleged in the complaint was reasonable, 
and whether the mechanisms to enforce the final judgment are clear and 
manageable.'').
    As the United States Court of Appeals for the District of Columbia 
has held, under the APPA, a court considers, among other things, the 
relationship between the remedy secured and the specific allegations 
set forth in the government's complaint, whether the decree is 
sufficiently clear, whether enforcement mechanisms are sufficient, and 
whether the decree may positively harm third parties. See Microsoft, 56 
F.3d at 1458-62. With respect to the adequacy of the relief secured by 
the decree, a court may not ``engage in an unrestricted evaluation of 
what relief would best serve the public.'' United States v. BNS, Inc., 
858 F.2d 456, 462 (9th Cir. 1988) (citing United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d 
at 1460-62; United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 
(D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, at *3. Courts have 
held that:

[t]he balancing of competing social and political interests affected 
by a proposed antitrust consent decree must be left, in the

[[Page 55118]]

first instance, to the discretion of the Attorney General. The 
court's role in protecting the public interest is one of insuring 
that the government has not breached its duty to the public in 
consenting to the decree. The court is required to determine not 
whether a particular decree is the one that will best serve society, 
but whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.

    Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\1\ 
In determining whether a proposed settlement is in the public interest, 
the court ``must accord deference to the government's predictions about 
the efficacy of its remedies, and may not require that the remedies 
perfectly match the alleged violations.'' SBC Commc'ns, 489 F. Supp. 2d 
at 17; see also Microsoft, 56 F.3d at 1461 (noting the need for courts 
to be ``deferential to the government's predictions as to the effect of 
the proposed remedies''); United States v. Archer-Daniels-Midland Co., 
272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the court should grant 
due respect to the United States's prediction as to the effect of 
proposed remedies, its perception of the market structure, and its 
views of the nature of the case); United States v. Republic Serv., 
Inc., 2010-2 Trade Cas. (CCH) ] 77,097, 2010 U.S. Dist. LEXIS 70895, 
No. 08-2076 (RWR), at *10 (D.D.C. July 15, 2010) (finding that ``[i]n 
light of the deferential review to which the government's proposed 
remedy is accorded, [amicus curiae's] argument that an alternative 
remedy may be comparably superior, even if true, is not a sufficient 
basis for finding that the proposed final judgment is not in the public 
interest.'').
---------------------------------------------------------------------------

    \1\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest''').
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is `within the 
reaches of public interest.''' United States v. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also 
United States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 
1985) (approving the consent decree even though the court would have 
imposed a greater remedy). Therefore, the United States ``need only 
provide a factual basis for concluding that the settlements are 
reasonably adequate remedies for the alleged harms.'' SBC Commc'ns, 489 
F. Supp. 2d at 17; Republic Serv., 2010 U.S. Dist. LEXIS 70895, at *2-3 
(entering final judgment ``[b]ecause there is an adequate factual 
foundation upon which to conclude that the government's proposed 
divestitures will remedy the antitrust violations alleged in the 
complaint.'').
    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its Complaint, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also InBev, 2009 
U.S. Dist. LEXIS 84787, at *20 (``the `public interest' is not to be 
measured by comparing the violations alleged in the complaint against 
those the court believes could have, or even should have, been 
alleged''). Because the ``court's authority to review the decree 
depends entirely on the government's exercising its prosecutorial 
discretion by bringing a case in the first place,'' it follows that 
``the court is only authorized to review the decree itself,'' and not 
to ``effectively redraft the complaint'' to inquire into other matters 
that the United States did not pursue. Microsoft, 56 F.3d at 1459-60. 
As this Court confirmed in SBC Communications, courts ``cannot look 
beyond the complaint in making the public interest determination unless 
the complaint is drafted so narrowly as to make a mockery of judicial 
power.'' 489 F. Supp. 2d at 15.
    In its 2004 amendments to the Tunney Act,\2\ Congress made clear 
its intent to preserve the practical benefits of utilizing consent 
decrees in antitrust enforcement, stating: ``[n]othing in this section 
shall be construed to require the court to conduct an evidentiary 
hearing or to require the court to permit anyone to intervene.'' 15 
U.S.C. 16(e)(2). The language wrote into the statute what Congress 
intended when it enacted the Tunney Act in 1974, as Senator Tunney 
explained: ``[t]he court is nowhere compelled to go to trial or to 
engage in extended proceedings which might have the effect of vitiating 
the benefits of prompt and less costly settlement through the consent 
decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of Senator 
Tunney). Rather, the procedure for the public interest determination is 
left to the discretion of the court, with the recognition that the 
court's ``scope of review remains sharply proscribed by precedent and 
the nature of Tunney Act proceedings.'' SBC Commc'ns, 489 F. Supp. 2d 
at 11.\3\
---------------------------------------------------------------------------

    \2\ The 2004 amendments substituted the word ``shall'' for 
``may'' when directing the courts to consider the enumerated factors 
and amended the list of factors to focus on competitive 
considerations and address potentially ambiguous judgment terms. 
Compare 15 U.S.C. 16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see 
also SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004 
amendments ``effected minimal changes'' to Tunney Act review).
    \3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade Cas. (CCH) ] 
61,508, at 71,980 (W.D. Mo. 1977) (``Absent a showing of corrupt 
failure of the government to discharge its duty, the Court, in 
making its public interest finding, should * * * carefully consider 
the explanations of the government in the competitive impact 
statement and its responses to comments in order to determine 
whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, 93d Cong., 1st Sess., at 6 
(1973) (``Where the public interest can be meaningfully evaluated 
simply on the basis of briefs and oral arguments, that is the 
approach that should be utilized.'').
---------------------------------------------------------------------------

VIII. Determinative Documents

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

Dated: August 29, 2011.

Respectfully submitted,

/s/
-----------------------------------------------------------------------
Suzanne Morris,United States Department of Justice, Antitrust 
Division, Litigation II Section, 450 Fifth Street, NW., Suite 8700, 
Washington, DC 20530, (202) 307-1188 [email protected].

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. General Electric 
Company, and CVT Holding SAS, Financi[egrave]re CVT SAS, and 
Converteam Group SAS, Defendants.
Case no.:
Judge:

Proposed Final Judgment

    Whereas, Plaintiff, United States of America, filed its Complaint 
on August 29, 2011, and the United States and defendants, General 
Electric Company (``GE'') and CVT Holding SAS, Financi[egrave]re CVT 
SAS, and Converteam

[[Page 55119]]

Group SAS (``Converteam''), by their respective attorneys, have 
consented to the entry of this Final Judgment without trial or 
adjudication of any issue of fact or law, and without this Final 
Judgment constituting any evidence against or admission by any party 
regarding any issue of fact or law;
    And whereas, defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    And whereas, the essence of this Final Judgment is the prompt and 
certain divestiture of certain rights or assets by GE to assure that 
competition is not substantially lessened;
    And whereas, the United States requires GE to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    And whereas, defendants have represented to the United States that 
the divestitures required below can and will be made and that 
defendants will later raise no claim of hardship or difficulty as 
grounds for asking the Court to modify any of the divestiture 
provisions contained below;
    Now therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ordered, adjudged, and decreed:

I. Jurisdiction

    This Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against defendants under Section 7 of the Clayton 
Act, 15 U.S.C. 18, as amended.

II. Definitions

    As used in this Final Judgment:
    A. ``GE'' means defendant General Electric Company, a New York 
corporation with its headquarters in Fairfield, Connecticut, its 
successors, assigns, subsidiaries, divisions, groups, affiliates, 
partnerships and joint ventures, and their directors, officers, 
managers, agents, and employees.
    B. ``Converteam'' means defendants CVT Holding SAS, 
Financi[egrave]re CVT SAS, and French corporations with their 
headquarters in Massy Cedex, France, and their successors, assigns, 
subsidiaries, divisions, groups, affiliates, partnerships and joint 
ventures, and their directors, officers, managers, agents, and 
employees.
    C. ``Converteam Electric Machinery Business'' means Converteam's 
wholly owned subsidiary Electric Machinery Holding Co., a Delaware 
corporation with its principal place of business in Minneapolis, 
Minnesota, and its subsidiaries.
    D. ``Acquirer'' means the entity to whom GE shall divest the 
Divestiture Assets.
    E. ``Low Speed Synchronous Motors'' means medium-voltage 
synchronous electric motors generating horsepower in the range of 1,500 
to 15,000 and operating between 277 to 400 revolutions per minute, 
which are used to drive reciprocating compressors in the oil and gas 
industry.
    F. ``SAP Business Management Server'' means Converteam's SAP 
business management database, and any related servers and hardware 
located in Pittsburgh, Pennsylvania, that are used in connection with 
Converteam's enterprise resource planning system.
    G. ``Divestiture Assets'' means the Converteam Electric Machinery 
Business, including:
    (1) The Converteam Electric Machinery Business production facility 
located at 800 Central Avenue, Minneapolis, Minnesota 55413;
    (2) All tangible assets that comprise the Converteam Electric 
Machinery Business, including research and development activities; all 
manufacturing equipment, tooling and fixed assets, personal property, 
inventory, office furniture, materials, supplies, and other tangible 
property and all assets used in connection with the Converteam Electric 
Machinery Business; all licenses, permits and authorizations issued by 
any governmental organization relating to the Converteam Electric 
Machinery Business; all contracts, teaming arrangements, agreements, 
leases, commitments, certifications, and understandings, relating to 
the Converteam Electric Machinery Business, including supply 
agreements; all customer lists, contracts, accounts, and credit 
records; all repair and performance records and all other records 
relating to the Converteam Electric Machinery Business; and
    (3) The following intangible assets:
    (a) All intangible assets owned, controlled, or maintained by the 
Converteam Electric Machinery Business, including, but not limited to, 
all patents, licenses and sublicenses, intellectual property, 
copyrights, trademarks, trade names, service marks, service names, 
technical information, computer software and related documentation, 
know-how, trade secrets, drawings, blueprints, designs, design 
protocols, specifications for materials, specifications for parts and 
devices, safety procedures for the handling of materials and 
substances, all research data concerning historic and current research 
and development relating to the Converteam Electric Machinery Business, 
quality assurance and control procedures, design tools and simulation 
capability, all manuals and technical information provided to 
Converteam Electric Machinery Business employees, customers, suppliers, 
agents or licensees, and all research data concerning historic and 
current research and development efforts relating to the Converteam 
Electric Machinery Business, including, but not limited to, designs of 
experiments, and the results of successful and unsuccessful designs and 
experiments.
    (b) With respect to any intangible assets that are not included in 
paragraph II(G)(3)(a) above, and that prior to the filing of the 
Complaint in this matter were used in connection with the design, 
development, production, marketing, servicing, and/or sale of any 
product produced by the Converteam Electric Machinery Business, a non-
exclusive, perpetual, worldwide, non-transferrable, royalty-free 
license for such intangible assets to be used for the design, 
development, manufacture, marketing, servicing, and/or sale of any of 
product produced by the Converteam Electric Machinery Business; 
provided, however, that any such license is transferrable to any future 
purchaser of all or substantially all of the Converteam Electric 
Machinery Business. Any improvements or modifications to these 
intangible assets developed by the Acquirer of the Converteam Electric 
Machinery Business shall be owned solely by that acquirer.

The Divestiture Assets shall not include Converteam's SAP Business 
Management Server and related applications, information, and 
documentation not used primarily by the Converteam Electric Machinery 
Business.

III. Applicability

    A. This Final Judgment applies to GE and Converteam, as defined 
above, and all other persons in active concert or participation with 
any of them who receive actual notice of this Final Judgment by 
personal service or otherwise.
    B. If, prior to complying with Section IV and V of this Final 
Judgment, defendants sell or otherwise dispose of all or substantially 
all of their assets or of lesser business units that include the 
Divestiture Assets, they shall require the purchaser to be bound by the 
provisions of this Final Judgment. Defendants need not obtain such an 
agreement from the acquirers of the assets divested pursuant to this 
Final Judgment.

[[Page 55120]]

IV. Divestitures

    A. GE is ordered and directed, within sixty (60) calendar days 
after the filing of the Complaint in this matter, or five (5) calendar 
days after notice of the entry of this Final Judgment by the Court, 
whichever is later, to divest the Divestiture Assets in a manner 
consistent with this Final Judgment to an Acquirer acceptable to the 
United States, in its sole discretion. The United States, in its sole 
discretion, may agree to one or more extensions of this time period not 
to exceed sixty (60) calendar days in total, and shall notify the Court 
in such circumstances. GE agrees to use its best efforts to divest the 
Divestiture Assets as expeditiously as possible.
    B. In accomplishing the divestiture ordered by this Final Judgment, 
GE promptly shall make known, by usual and customary means, the 
availability of the Divestiture Assets. GE shall inform any person 
making inquiry regarding a possible purchase of the Divestiture Assets 
that they are being divested pursuant to this Final Judgment and 
provide that person with a copy of this Final Judgment. GE shall offer 
to furnish to all prospective Acquirers, subject to customary 
confidentiality assurances, all information and documents relating to 
the Divestiture Assets customarily provided in a due diligence process, 
except such information or documents subject to the attorney-client 
privilege or work-product doctrine. GE shall make available such 
information to the United States at the same time that such information 
is made available to any other person.
    C. GE shall provide the Acquirer and the United States information 
relating to the personnel involved in the production, operation, 
development and sale of the Divestiture Assets to enable the Acquirer 
to make offers of employment. Defendants shall not interfere with any 
negotiations by the Acquirer to employ any defendant employee whose 
primary responsibility is the operation of the Divestiture Assets, and 
the development, manufacture, and sale of any product produced by the 
Divestiture Assets.
    D. GE shall permit prospective Acquirers of the Divestiture Assets 
to have reasonable access to personnel and to make inspections of the 
physical facilities of the business to be divested; access to any and 
all environmental, zoning, and other permit documents and information; 
and access to any and all financial, operational, or other documents 
and information customarily provided as part of a due diligence 
process.
    E. GE shall warrant to the Acquirer that the Divestiture Assets 
will be operational on the date of sale.
    F. Defendants shall not take any action that will impede in any way 
the permitting, operation, use, or divestiture of the Divestiture 
Assets.
    G. Notwithstanding paragraphs II(G)(3)(a) and (b) above, the 
Acquirer shall grant to defendants a non-exclusive, perpetual, 
worldwide, non-transferrable, royalty-free license to patents, 
copyrights, know-how, and other intellectual property (including but 
not limited to product designs, drawings, manufacturing techniques, 
specifications, product bills of materials, and supply chain 
information) owned by the Converteam Electric Machinery Business that 
prior to the filing of the Complaint in this matter were used in the 
design, development, manufacture, marketing, servicing, and/or sale of 
induction motors, brushless exciters, turbo generators, and/or 
synchronous generators designed, developed, produced, or sold by the 
Converteam Electric Machinery Business. This license is transferrable 
to any future purchaser of all or substantially all of the GE business 
unit using this license. This paragraph shall not be deemed to require 
the Acquirer to grant a license to defendants for any intellectual 
property owned by the Converteam Electric Machinery Business that is 
used primarily or exclusively in the design, development, manufacture, 
marketing, servicing, and/or sale of synchronous motors.
    H. At the option of the Acquirer, GE shall, for a period not to 
exceed one (1) year: (1) allow the Acquirer to access and use the SAP 
Business Management Server in the same manner that the Converteam 
Electric Machinery Business had accessed and used the server prior to 
the filing of the Complaint in this matter, and (2) provide to the 
Acquirer transition services and technical assistance for the SAP 
Business Management Server that are reasonably necessary for the 
Acquirer to operate the Converteam Electric Machinery Business. Except 
for the provision of transition services and technical assistance to 
the Acquirer, GE shall not allow any GE or Converteam employee to 
access Converteam Electric Machinery Business information on the 
server. Upon the termination of the access and use rights and the 
transition services and technical support agreement, GE shall take all 
steps necessary to purge any information related to the Converteam 
Electric Machinery Business from the SAP Business Management Server.
    I. Defendants shall warrant to the Acquirer that there are no 
material defects in the environmental, zoning or other permits 
pertaining to the operation of each asset, and that following the sale 
of the Divestiture Assets, defendants will not undertake, directly or 
indirectly, any challenges to the environmental, zoning, or other 
permits relating to the operation of the Divestiture Assets.
    J. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section IV, or by trustee appointed pursuant to 
Section V, of this Final Judgment, shall include the entire Divestiture 
Assets, and shall be accomplished in such a way as to satisfy the 
United States, in its sole discretion, that the Divestiture Assets can 
and will be used by the Acquirer as part of a viable, ongoing business 
in the development, production, and sale of low-speed synchronous 
motors to customers in North America. The divestitures, whether 
pursuant to Section IV or Section V of this Final Judgment:
    (1) shall be made to an Acquirer that, in the United States's sole 
judgment, has the intent and capability (including the necessary 
managerial, operational, technical and financial capability) of 
competing effectively in the development, manufacture, and sale of low-
speed synchronous motors to customers in North America; and
    (2) shall be accomplished so as to satisfy the United States, in 
its sole discretion, that none of the terms of any agreement between an 
Acquirer and defendants give defendants the ability unreasonably to 
raise the Acquirer's costs, to lower the Acquirer's efficiency, or 
otherwise to interfere in the ability of the Acquirer to compete 
effectively.

V. Appointment of Trustee

    A. If GE has not divested the Divestiture Assets within the time 
period specified in Section IV(A), GE shall notify the United States of 
that fact in writing. Upon application of the United States, the Court 
shall appoint a trustee selected by the United States and approved by 
the Court to effect the divestiture of the Divestiture Assets.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the Divestiture Assets. The 
trustee shall have the power and authority to accomplish the 
divestiture to an Acquirer acceptable to the United States at such 
price and on such terms as are then obtainable upon reasonable effort 
by the trustee, subject to the provisions of Sections IV, V, and VI of 
this Final Judgment, and shall have such other powers as this Court

[[Page 55121]]

deems appropriate. Subject to Section V(D) of this Final Judgment, the 
trustee may hire at the cost and expense of GE any investment bankers, 
attorneys, or other agents, who shall be solely accountable to the 
trustee, reasonably necessary in the trustee's judgment to assist in 
the divestiture.
    C. Defendants shall not object to a sale by the trustee on any 
ground other than the trustee's malfeasance. Any such objections by 
defendants must be conveyed in writing to the United States and the 
trustee within ten (10) calendar days after the trustee has provided 
the notice required under Section VI.
    D. The trustee shall serve at the cost and expense of GE, on such 
terms and conditions as the United States approves, and shall account 
for all monies derived from the sale of the assets sold by the trustee 
and all costs and expenses so incurred. After approval by the Court of 
the trustee's accounting, including fees for its services and those of 
any professionals and agents retained by the trustee, all remaining 
money shall be paid to GE and the trust shall then be terminated. The 
compensation of the trustee and any professionals and agents retained 
by the trustee shall be reasonable in light of the value of the 
Divestiture Assets and based on a fee arrangement providing the trustee 
with an incentive based on the price and terms of the divestiture and 
the speed with which it is accomplished, but timeliness is paramount.
    E. Defendants shall use their best efforts to assist the trustee in 
accomplishing the required divestiture. The trustee and any 
consultants, accountants, attorneys, and other persons retained by the 
trustee shall have full and complete access to the personnel, books, 
records, and facilities of the business to be divested, and defendants 
shall develop financial and other information relevant to such business 
as the trustee may reasonably request, subject to reasonable protection 
for trade secret or other confidential research, development, or 
commercial information. Defendants shall take no action to interfere 
with or to impede the trustee's accomplishment of the divestiture.
    F. After its appointment, the trustee shall file monthly reports 
with the United States and the Court setting forth the trustee's 
efforts to accomplish the divestiture ordered under this Final 
Judgment. To the extent such reports contain information that the 
trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. Such reports shall include the name, 
address, and telephone number of each person who, during the preceding 
month, made an offer to acquire, expressed an interest in acquiring, 
entered into negotiations to acquire, or was contacted or made an 
inquiry about acquiring, any interest in the Divestiture Assets, and 
shall describe in detail each contact with any such person. The trustee 
shall maintain full records of all efforts made to divest the 
Divestiture Assets.
    G. If the trustee has not accomplished the divestiture ordered 
under this Final Judgment within six (6) months after the trustee's 
appointment, the trustee shall promptly file with the Court a report 
setting forth: (1) The trustee's efforts to accomplish the required 
divestiture; (2) the reasons, in the trustee's judgment, why the 
required divestiture has not been accomplished; and (3) the trustee's 
recommendations. To the extent such reports contain information that 
the trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. The trustee shall at the same time furnish 
such report to the United States, which shall have the right to make 
additional recommendations consistent with the purpose of the trust. 
The Court thereafter shall enter such orders as it shall deem 
appropriate to carry out the purpose of the Final Judgment, which may, 
if necessary, include extending the trust and the term of the trustee's 
appointment by a period requested by the United States.

VI. Notice of Proposed Divestiture

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, GE shall notify the United States of any 
proposed divestiture required by Section IV of this Final Judgment. 
Within two (2) business days following execution of a definitive 
divestiture agreement, the trustee shall notify the United States and 
defendants of any proposed divestiture required by Section V of this 
Final Judgment. The notice shall set forth the details of the proposed 
divestiture and list the name, address, and telephone number of each 
person not previously identified who offered or expressed an interest 
in or desire to acquire any ownership interest in the Divestiture 
Assets, together with full details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States of such notice, the United States may request from defendants, 
the proposed Acquirer, any other third party, or the trustee, if 
applicable, additional information concerning the proposed divestiture, 
the proposed Acquirer, and any other potential Acquirer. Defendants and 
the trustee shall furnish any additional information requested within 
fifteen (15) calendar days of the receipt of the request, unless the 
parties shall otherwise agree.
    C. Within thirty (30) calendar days after receipt of the notice or 
within twenty (20) calendar days after the United States has been 
provided the additional information requested from defendants, the 
proposed Acquirer, any third party, and the trustee, whichever is 
later, the United States shall provide written notice to defendants and 
the trustee, if there is one, stating whether or not it objects to the 
proposed divestiture. If the United States provides written notice that 
it does not object, the divestiture may be consummated, subject only to 
defendants' limited right to object to the sale under Section V(C) of 
this Final Judgment. Absent written notice that the United States does 
not object to the proposed Acquirer or upon objection by the United 
States, a divestiture proposed under Section IV or Section V shall not 
be consummated. Upon objection by defendants under Section V(C), a 
divestiture proposed under Section V shall not be consummated unless 
approved by the Court.

VII. Financing

    Defendants shall not finance all or any part of any divestiture 
made pursuant to Section IV of this Final Judgment.

VIII. Hold Separate

    Until the divestitures required by this Final Judgment have been 
accomplished, Defendants shall take all steps necessary to comply with 
the Hold Separate Stipulation and Order entered by this Court. 
Defendants shall take no action that would jeopardize the divestitures 
ordered by this Court.

IX. Affidavits

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestiture has been completed under Section IV or V, GE shall 
deliver to the United States an affidavit as to the fact and manner of 
its compliance with Section IV or V of this Final Judgment. Each such 
affidavit shall include the name, address, and telephone number of each 
person who, during the preceding thirty (30) calendar days, made an 
offer to acquire, expressed an interest in acquiring, entered into 
negotiations to acquire, or was contacted or made an inquiry about 
acquiring, any interest in the Divestiture Assets, and shall describe 
in detail each contact with any such person during

[[Page 55122]]

that period. Each such affidavit shall also include a description of 
the efforts GE has taken to solicit buyers for the Divestiture Assets, 
and to provide required information to prospective Acquirers, including 
the limitations, if any, on such information. Assuming the information 
set forth in the affidavit is true and complete, any objection by the 
United States to information provided by GE, including limitations on 
information, shall be made within fourteen (14) calendar days of 
receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, GE shall deliver to the United States an affidavit that 
describes in reasonable detail all actions defendants have taken and 
all steps defendants have implemented on an ongoing basis to comply 
with Section VIII of this Final Judgment. GE shall deliver to the 
United States an affidavit describing any changes to the efforts and 
actions outlined in defendants' earlier affidavits filed pursuant to 
this Section within fifteen (15) calendar days after the change is 
implemented.
    C. Defendants shall keep all records of all efforts made to 
preserve and divest the Divestiture Assets until one year after such 
divestiture has been completed.

X. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of determining whether the Final Judgment should be 
modified or vacated, and subject to any legally recognized privilege, 
from time to time authorized representatives of the United States 
Department of Justice Antitrust Division, including consultants and 
other persons retained by the United States, shall, upon written 
request of an authorized representative of the Assistant Attorney 
General in charge of the Antitrust Division, and on reasonable notice 
to defendants, be permitted:
    (1) Access during defendants' office hours to inspect and copy, or 
at the option of the United States, to require defendants to provide 
hard copy or electronic copies of, all books, ledgers, accounts, 
records, data, and documents in the possession, custody, or control of 
defendants, relating to any matters contained in this Final Judgment; 
and
    (2) To interview, either informally or on the record, defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by defendants.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
defendants shall submit written reports or respond to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), or for the 
purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. If, at the time information or documents are furnished by 
defendants to the Antitrust Division, defendants represent and identify 
in writing the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(1)(G) of the 
Federal Rules of Civil Procedure, and defendants mark each pertinent 
page of such material, ``Subject to claim of protection under Rule 
26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the United 
States shall give defendants ten calendar days notice prior to 
divulging such material in any legal proceeding (other than a grand 
jury proceeding).

XI. No Reacquisition

    Defendants may not reacquire any part of the Divestiture Assets 
during the term of this Final Judgment.

XII. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XIII. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire ten (10) years from the date of its entry.

XIV. Public Interest Determination

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16, including making copies available to the 
public of this Final Judgment, the Competitive Impact Statement, and 
any comments thereon and the United States's responses to comments. 
Based upon the record before the Court, which includes the Competitive 
Impact Statement and any comments and response to comments filed with 
the Court, entry of this Final Judgment is in the public interest.

Date:------------------------------------------------------------------

Court Approval Subject to Procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16
-----------------------------------------------------------------------

United States District Judge

[FR Doc. 2011-22623 Filed 9-2-11; 8:45 am]
BILLING CODE P