[Federal Register Volume 90, Number 108 (Friday, June 6, 2025)]
[Notices]
[Pages 24139-24144]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-10290]
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FEDERAL TRADE COMMISSION
[File No. 241 0059; Docket No. C-4820]
Synopsys, Inc. and ANSYS, Inc.; Analysis of Agreement Containing
Consent Orders To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement; request for comment.
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SUMMARY: The consent agreement in this matter settles alleged
violations of Federal law prohibiting unfair methods of competition.
The attached Analysis of Proposed Consent Order to Aid Public Comment
describes both the allegations in the complaint and the terms of the
consent order--embodied in the consent agreement--that would settle
these allegations.
DATES: Comments must be received on or before July 7, 2025.
ADDRESSES: Interested parties may file comments online or on paper by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Please write: ``Synopsys and
ANSYS; File No. 241 0059'' on your comment and file your comment online
at https://www.regulations.gov by following the instructions on the
web-based form. If you prefer to file your comment on paper, please
mail your comment to the following address: Federal Trade Commission,
Office of the Secretary, 600 Pennsylvania Avenue NW, Mail Stop H-144
(Annex S), Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Kara Monahan (202-326-2018), Health
Care Division, Bureau of Competition, Federal Trade Commission, 400 7th
Street SW, Washington, DC 20024.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule Sec. 2.34, 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 30 days. The following
Analysis of Agreement Containing Consent Order 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 website at this web address:
https://www.ftc.gov/news-events/commission-actions.
The public is invited to submit comments on this document. For the
Commission to consider your comment, we must receive it on or before
July 7, 2025. Write ``Synopsys and ANSYS; File No. 241 0059'' on your
comment. Your comment--including your name and your State--will be
placed on the public record of this proceeding, including, to the
extent practicable, on the https://www.regulations.gov website.
Because of the agency's heightened security screening, postal mail
addressed to the Commission will be delayed. We strongly encourage you
to submit your comments online through the https://www.regulations.gov
website. If you prefer to file your comment on paper, write ``Synopsys
and Ansys; File No. 241 0059'' on your comment and on the envelope, and
mail your comment by overnight service to: Federal Trade Commission,
Office of the Secretary, 600 Pennsylvania Avenue NW, Mail Stop H-144
(Annex S), Washington, DC 20580.
Because your comment will be placed on the publicly accessible
website at https://www.regulations.gov, you are solely responsible for
making sure your comment does not include any sensitive or confidential
information. In particular, your comment should not include sensitive
personal information, such as your or anyone else'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. You are also
solely responsible for making sure your comment does not include
sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``trade secret or any commercial or financial
information which . . . is privileged or confidential''--as provided by
section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule Sec.
4.10(a)(2), 16 CFR 4.10(a)(2)--including competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule Sec. 4.9(c). In
particular, the written request for confidential treatment that
accompanies the comment must include the factual and legal basis for
the request and must identify the specific portions of the comment to
be withheld from the public record. See FTC Rule Sec. 4.9(c). Your
comment will be kept confidential only if the General Counsel grants
your request in accordance with the law and the public interest. Once
your comment has been posted on https://www.regulations.gov--as legally
required by FTC Rule Sec. 4.9(b)--we cannot redact or remove your
comment from that website, unless you submit a confidentiality request
that meets the requirements for such treatment under FTC Rule Sec.
4.9(c), and the General Counsel grants that request.
Visit the FTC website at https://www.ftc.gov to read this document
and the news release describing this matter. The 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 it receives on
or before July 7, 2025. For information on the Commission's privacy
policy, including routine uses permitted by the Privacy Act, see
https://www.ftc.gov/site-information/privacy-policy.
Analysis of Agreement Containing Consent Orders To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted for
public comment, subject to final approval, an Agreement Containing
Consent Orders (``Consent Agreement'') from Synopsys, Inc.
(``Synopsys'') and ANSYS, Inc. (``Ansys'') (collectively,
``Respondents'') that is designed to remedy the anticompetitive effects
that may result from Synopsys' acquisition of Ansys. Pursuant to an
Agreement and Plan of Merger dated January 15, 2024, Synopsys proposes
to acquire Ansys in a transaction valued at approximately $35 billion
(the ``Proposed Acquisition''). The Commission alleges in its Complaint
that the Proposed Acquisition, if consummated, would violate section 7
of the Clayton Act, as amended, 15 U.S.C. 18, and section 5 of the
Federal Trade Commission Act, as amended, 15 U.S.C. 45, by
substantially lessening competition in the following markets: (1)
optical software tools; (2) photonic software tools for the design and
simulation of photonic devices; and (3) Register Transfer Level
(``RTL'') power consumption analysis tools. The Consent Agreement will
remedy the alleged violations by preserving the
[[Page 24140]]
competition that otherwise would be eliminated by the Proposed
Acquisition.
Under the terms of the proposed Decision and Order (``Order''),
Respondents are required to divest (1) Synopsys' optics and photonics
design products, which includes Synopsys' optical software products and
photonic software products for the design and simulation of photonic
devices, related assets, and facilities in California, New York,
France, and Germany; and (2) Ansys' RTL power consumption analysis
product, PowerArtist, along with all associated assets necessary to
compete in the market. The Commission and Respondents have agreed to an
Order to Maintain Assets that requires Respondents to operate and
maintain all divestiture assets in the normal course of business until
the assets are ultimately divested. The Commission issued the Order to
Maintain Assets as final.
The Commission has placed the Consent Agreement, along with the
proposed Order and the Order to Maintain Assets, on the public record
for thirty days for receipt of comments from interested persons.
Comments received during this period will become part of the public
record. After thirty days, the Commission will again review the
proposed Order, along with the comments received, to make a final
decision as to whether it should withdraw, modify, or make final the
proposed Order. The Commission is issuing the Order to Maintain Assets
when the Consent Agreement is placed on the public record.
I. The Respondents
Respondent Synopsys is a corporation organized, existing, and doing
business under and by virtue of the laws of the State of Delaware with
its executive offices and principal place of business located at 675
Almanor Avenue, Sunnyvale, California 94085. Synopsys is a leading
developer and supplier of Electronic Design Automation (``EDA'')
software principally used to design semiconductors, including
integrated circuits and systems-on-chips.
Respondent Ansys is a corporation organized, existing, and doing
business under and by virtue of the laws of the State of Delaware with
its executive offices and principal place of business located at 2600
ANSYS Drive, Canonsburg, Pennsylvania 15317. Ansys is a leading
provider of Simulation and Analysis (``S&A'') software tools, which
model physical effects for an array of products, including
semiconductors.
II. The Products and Structure of the Markets
The Proposed Acquisition raises competitive concerns in markets for
optical software tools, photonic software tools for designing and
simulating photonic devices, and RTL power consumption analysis tools.
Optical software tools are S&A software products that enable
engineers to design and simulate optical devices. Optical devices
generate, reflect, or refract light, and include LED screens, mirrors,
and lenses. Photonic software tools for the design and simulation of
photonic devices are S&A software products that enable engineers to
design and simulate photonic devices. Photonic devices are those that
use photons as a signal to transmit information. Relevant photonic
applications include fiber optic cables, LiDAR technology, and solar
panels. Synopsys competes in these markets with its optical software
tools Code V, LightTools, LucidShape, and ImSym, and its photonic
software tool RSoft. Ansys competes in these markets with its optical
software tools Zemax and SPEOS and its photonic software tool
Lumerical.
RTL power consumption analysis tools are EDA software products used
to measure and optimize the power consumption of digital chips at an
early stage of the design flow known as Register Transfer Level design.
Chip designers value the ability to obtain early readings of a chip's
power consumption through RTL power consumption analysis. Other EDA
tools cannot perform RTL power consumption analysis. Ansys offers an
RTL power consumption analysis tool called PowerArtist, while Synopsys
competes with a tool called PrimePower-RTL.
The relevant geographic area in which the Proposed Acquisition may
substantially lessen competition in all three markets is global. The
major suppliers of optical software tools, photonic software tools for
designing and simulating photonic devices, and RTL power consumption
analysis tools license those tools in substantially the same form to
customers worldwide. All three global markets are highly concentrated,
with Respondents holding the largest and second-largest share in each
market.
III. Competitive Effects
The Proposed Acquisition will eliminate substantial head-to-head
competition between Synopsys and Ansys in each of the three relevant
markets. In the market for optical software tools, customers view
Respondents' tools as their only two options, and the Proposed
Acquisition would leave a single firm with the ability to set prices in
the market. In the market for photonics software tools used for design
and simulation of photonic devices, Respondents closely monitor each
other's tools and compete against each other to win customers. In the
RTL power consumption analysis market, Respondents similarly recognize
each other's tools as their closest competitors and have innovated in
response to that competition. By removing the competitive constraint
that Respondents face from direct competition in each of the relevant
markets, the Proposed Acquisition is likely to result in higher prices
and decreased innovation to the detriment of customers.
Entry into the three markets at issue would not be timely, likely,
or sufficient in magnitude, character, and scope to deter or counteract
the anticompetitive effects of the Proposed Acquisition. Developing EDA
and S&A software tools is capital-intensive, requiring significant
time, technical expertise, and investment in research and development.
In addition, customers face high switching costs and tend to keep the
same tools in their design flows for long periods.
IV. The Proposed Order and the Order To Maintain Assets
The proposed Order and the Order to Maintain Assets (collectively,
``Orders'') effectively remedy the competitive concerns raised by the
Proposed Acquisition in each of the three relevant product markets.
Pursuant to the proposed Order, the parties are required to divest
Synopsys' optical software products and assets and photonic software
products and assets aiding the design and simulation of photonic
devices, as well as Ansys' PowerArtist product and assets, including
certain real property interests, intellectual property, contracts,
business information, and intangible rights and property to Keysight
Technologies, Inc. (``Keysight''). The parties must accomplish these
divestitures no later than 10 days after Synopsys consummates the
Proposed Acquisition. The proposed Order allows the Commission to
appoint a monitor to oversee the implementation of the Orders and a
divestiture trustee in the event the parties fail to divest the
products.
Keysight appears to be a suitable purchaser with experience
acquiring and improving technological assets. It is financially sound
and well positioned to integrate the divestiture assets quickly
[[Page 24141]]
and effectively. Keysight already has existing relationships with many
customers who purchase the divestiture products; it is a strong
purchaser for these products. To aid in the transition to Keysight, the
Respondents will provide a limited amount of technological support,
enabling Keysight to compete immediately with the divestiture assets to
the same extent as Respondents absent the Proposed Acquisition.
The proposed Order contains several provisions to help ensure that
the divestitures are successful. The proposed Order requires
Respondents Synopsys and Ansys to provide transition services to
Keysight as it integrates the divestiture assets to enable Keysight to
operate similarly to how the Respondents operated. The proposed Order
requires Respondents to operate and maintain the divestiture assets in
the ordinary course of business consistent with past practices until
such assets are fully transferred to Keysight. For assets that cannot
be fully divested, including certain intellectual property and a
limited number of customer contracts, the proposed Order provides
protections to ensure Keysight can operate the business independent of
the Respondents. The proposed Order also protects the confidential
information of the divestiture assets. These safeguards include
limiting the purposes for which Respondents may use such confidential
information and the employees to whom the information may be disclosed.
The proposed Order contains certain provisions to facilitate that
the employees most familiar with the divestiture businesses move to
Keysight, such as requiring that Respondents for one year facilitate
Keysight's hiring of relevant employees of the Respondents' divisions
responsible for the divestiture assets. The proposed Order similarly
creates a three-year prohibition on Respondents soliciting employees
who moved to Keysight to work in the divestiture businesses. With
certain limited exceptions, it also prohibits Respondents from
enforcing noncompete or non-solicit provisions or agreements against
employees who seek or obtain a position at Keysight working on the
divestiture businesses.
Under the proposed Order, the Commission appoints a Monitor to
ensure that Synopsys complies with its obligations under the Orders and
to report to the Commission regarding the same. The Commission appoints
S&W Partners LLP (formerly known as Evelyn Partners LLP) as the
Monitor. Among the individuals from S&W Partners who will comprise the
Monitor team is the head of the firm's Monitoring Trustee Services
practice with experience overseeing merger remedies. The monitor team
has prior monitoring experience in Commission-ordered divestitures.
In addition to requiring divestitures, the proposed Order prohibits
Synopsys from reacquiring any of the divestiture assets for ten years.
The proposed Order also includes provisions designed to ensure the
effectiveness of the relief, including requirements that the
Respondents report on how they are complying with the Order, submit
compliance reports, maintain specific written communications, and grant
representatives of the Commission access to information and personnel
for purposes of determining compliance with the Order.
The purpose of this analysis is to facilitate public comment on the
Consent Agreement and proposed Order to aid the Commission in
determining whether it should make the proposed Order final. This
analysis is not an official interpretation of the proposed Order and
does not modify its terms in any way.
By direction of the Commission.
April J. Tabor,
Secretary.
Statement of Chairman Andrew N. Ferguson Joined by Commissioner Melissa
Holyoak and Commissioner Mark R. Meador
Today, the Commission unanimously authorizes the filing of an
administrative complaint and proposed decision and order requiring
Synopsys, Inc. and Ansys, Inc. to divest several lines of business, and
publishes that order for public comment.\1\ It does so because it has
concluded that the merger without the divestitures would have violated
the Clayton Act's prohibition on mergers ``the effect of [which] may be
substantially to lessen competition, or to tend to create a monopoly.''
\2\ Because this order is the first settlement of a merger-enforcement
action by this Commission under President Donald J. Trump, I write to
explain briefly my understanding of the role that remedies should play
in the Commission's mission to protect competition in the American
economy. But this will not be the Commission's last word on the
subject. In due course, this Commission will publish a policy statement
on its understanding of the role of remedies.
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\1\ 16 CFR 2.34(c).
\2\ 15 U.S.C. 18.
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Competition makes the American economy great. It promotes economic
freedom by preventing barriers to new businesses and new ideas. It
breeds entrepreneurialism and innovation. The American entrepreneurial
spirit is what sets our economy apart from the rest of the world.
America is an engine of innovation in no small part because our economy
is built on competition--on the drive to create and build better than
your opponent in order to convince consumers to buy your product or
service, rather than those of your competitor.
The Federal Trade Commission's mandate is to promote economic
freedom, innovation, and dynamism by protecting competition. One of the
Commission's most vital tasks in protecting competition is to guard
against anticompetitive mergers. The danger that mergers and
acquisitions could pose to a healthy business environment is obvious.
For example, if two rival companies were to merge, the intensity of
competition in that market may diminish. With fewer competitors and
less competitive pressure, consumers may suffer. Prices may increase.
Product quality may decline as firms feel less pressure to maintain the
same standard of their products or services in order to win over
consumers. The rate of innovation may diminish as companies feel less
pressure to develop new products or industrial techniques to improve
their product offerings. Consumers may have fewer choices in a market
with fewer companies fighting to win their business. And by reducing
the number of buyers of labor in a given market, mergers can undermine
labor competition and injure American workers too. Safeguarding the
markets from mergers that ``may . . . substantially . . . lessen
competition, or . . . tend to create a monopoly,'' \3\ then, is
critical to protecting the vibrancy of the American economy.
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\3\ 15 U.S.C. 18.
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But for all these possibilities, the Commission must not
reflexively oppose mergers and acquisitions. Innovation does not occur
randomly. New ideas do not appear in the market on their own. Taking an
idea from its inception to a product offering requires capital, and
lots of it. Innovation and competition therefore require healthy
capital markets. Upstarts cannot take on dominant incumbents without
tremendous resources. And investors will not contribute these resources
if they cannot realize a return on that investment.
Mergers and acquisitions are a critical way in which capital fuels
innovation because they are part of how investors realize returns on
their investments.
[[Page 24142]]
After all, the majority of startup firms in the U.S.--which bring many
innovative ideas to market--expect to be acquired rather than go
public.\4\ If acquisition by a larger company is not a realistic
potential exit strategy, investors will have less incentive to invest.
Less investment means less fuel for the fires of innovation, which in
turn could stunt the development of new technology and economic
growth.\5\ The benefits of mergers are not limited to startups. If a
business is underperforming, an acquisition of that business and
replacement of its management can unleash new vitality, innovation, and
growth.
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\4\ See Silicon Valley Bank, 2020 Global Startup Outlook, at 7
(last accessed May 28, 2025), https://www.svb.com/startup-outlook-report-2020/ (58% of U.S. startups surveyed reported acquisition as
the most realistic long-term goal); Silicon Valley Bank, 2019
Startup Outlook, US Report (last accessed May 28, 2025) (``2019
Startup Outlook''), https://www.svb.com/startup-outlook-report-2019/us/ (in 2019, 50% of U.S. startups surveyed report acquisition as
the most realistic long-term goal, down from 57% in 2018); National
Venture Capital Association, 2019 Yearbook (March 2019), https://nvca.org/wp-content/uploads/2019/08/NVCA-2019-Yearbook.pdf (in 2018,
85 venture-backed companies went public, whereas 799 were acquired--
nearly ten times as many).
\5\ Cf. 2019 Startup Outlook, supra note 4 (venture capital is
the go-to source of funding with over half of U.S. startups
expecting their next source of funding to be from venture capital
from 2017 through 2019; fewer than 10% expected their funding to
come from organic growth during that same timeframe).
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But the Commission does not implement industrial policy. It is not
a central planner. It is a cop on the beat. When it sees a violation of
the competition laws, it blows the whistle and takes the offending
businesses to court. When a merger would not violate the antitrust
laws, the Commission must get out of the way quickly to avoid bogging
down innovation and interfering with the forces of a free and
competitive market.
The Commission has a single tool to prevent anticompetitive
mergers: litigation to block the merger's consummation.\6\ If the
Commission pursues litigation to block an anticompetitive deal and
successfully litigates it to judgment, the court enjoins the proposed
merger.\7\ But the Commission, like any litigant, also has the option
of settling litigation. A settlement may be the best way to protect
competition in some cases for two reasons. First, settlement can temper
the potentially over-inclusive effects of an injunction blocking an
entire merger. If, for example, a merger has anticompetitive and
procompetitive features, a lawsuit blocking the entire merger would
protect the public from the merger's anticompetitive effects but would
also deny the public the benefit of the procompetitive effects. A
settlement that successfully prevents the merger's anticompetitive
features can strike a balance that permits the procompetitive aspects
to proceed. Assuming the settlement would in fact prevent the merger's
anticompetitive effects, the settlement would fully protect the
competitive process while also promoting the innovation and growth that
the remainder of the merger might foment.
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\6\ 15 U.S.C. 53(b); 15 U.S.C. 21(b); Merger Review, FTC (last
accessed May 28, 2025), https://www.ftc.gov/enforcement/merger-review (``When necessary, the FTC may take formal legal action to
stop the merger, either in [F]ederal court or before an FTC
administrative law judge.'').
\7\ See, e.g., FTC v. Kroger., No. 3:24-CV-00347-AN, 2024 WL
5053016, at *39 (D. Or. Dec. 10, 2024) (enjoining preliminarily the
proposed merger between Kroger and Albertsons in its entirety).
Generally, of course, the Commission files an administrative action
to block the deal, and simultaneously seeks a preliminary injunction
of the merger pending the resolution of the administrative action.
See 15 U.S.C. 53(b); FTC, A Brief Overview of the Federal Trade
Commission's Investigative, Law Enforcement, and Rulemaking
Authority (last accessed May 28, 2025), https://www.ftc.gov/about-ftc/mission/enforcement-authority (``In the competition context, the
Commission has used section 13(b) primarily to obtain preliminary
injunctive relief against corporate mergers or acquisitions pending
completion of an FTC administrative proceeding.''). For nearly all
of the Commission's merger-enforcement actions, however, the
preliminary-injunction litigation and subsequent appeal are
dispositive. See, e.g., In re Hackensack Meridian Health, Inc., Dkt.
9399, 2021 WL 2379546, at *2 (FTC May 25, 2021) (recognizing that
the resolution of a district court action ``could obviate the need
for an administrative hearing.''). If the Commission prevails in
Federal court, the parties generally abandon the merger and the
administrative action is moot. See, e.g., FTC v. Tapestry, 755 F.
Supp. 3d 386 (S.D.N.Y. 2024) (granting FTC's motion for preliminary
injunction); Capri and Tapestry abandon plans to merge, citing
regulatory hurdles (Nov. 14, 2024), https://www.cnbc.com/2024/11/14/capri-and-tapestry-abandon-plans-to-merge.html. If the Commission
loses, the merger closes and the Commission appropriately dismisses
the pending administrative action. See, e.g., FTC v. Tempur Sealy
Int'l, No. 4:24-CV-02508, 2025 WL 617735 (S.D. Tex. Feb. 26, 2025)
(denying FTC's motion for preliminary injunction); Order Returning
Matter to Adjudication and Dismissing Complaint, In the Matter of
Tempur Sealy Intn'l, Inc. and Mattress Firm Group Inc., Matter No.
2310016 (April 11, 2025).
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Second, settlement maximizes the Commission's finite enforcement
resources. Antitrust litigation is expensive.\8\ It is also uncertain.
Even when the Commission is confident that a merger will lessen
competition, it may have difficulty convincing a district judge of that
fact. If the Commission's only option when confronting an
anticompetitive merger is litigating a case all the way to judgment,
the Commission may have no choice but to decline bringing winnable
suits in order to conserve its resources, or to avoid the risk of a
loss in a close case. Settlement, by contrast, is much cheaper. If the
Commission can successfully settle merger cases that are likely to
result in anticompetitive harm, it can block more anticompetitive
effects in the aggregate than it would if its only choice were
litigating every one of those cases to judgment.
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\8\ New York v. Deutsche Telekom AG, 439 F. Supp. 3d 179, 187
(S.D.N.Y. 2020) (``Perhaps most remarkable about antitrust
litigation is the blurry product that not infrequently emerges from
the parties' huge expenditures and correspondingly exhaustive
efforts.''); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 546
(2007) (``[P]roceeding to antitrust discovery can be expensive.'');
FTC v. Dean Foods Co., 384 U.S. 597, 633 (1966) (Fortas, J.,
dissenting) (``[T]here is no quick and easy, short and simple way to
resolve the complexities of most antitrust litigation.''); Kimberly
L. King, An Antitrust Primer for Trade Association Counsel, 75 Fla.
B.J. 26 (May 2001) (``No litigation is more complex, drawn out, or
expensive than antitrust litigation.''); Donald I. Baker & Mark R.
Stabile, Arbitration of Antitrust Claims: Opportunities and Hazards
for Corporate Counsel, 48 Bus. Law 395, 396 (1993) (``Antitrust
litigation is notoriously fact-intensive, time-consuming and
expensive.''); Assistant Attorney General Jonathan Kanter Delivers
Farewell Address (Dec. 17, 2024), https://www.justice.gov/archives/opa/speech/assistant-attorney-general-jonathan-kanter-delivers-farewell-address (DOJ can ``accrue expert fees of up to 30 million
dollars--just for a single case.'').
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In antitrust parlance, a settlement in a merger case is called a
``remedy'' because it is supposed to remedy a merger's anticompetitive
effects.\9\ Because most of the Commission's merger-enforcement actions
involve horizontal mergers--mergers between direct competitors at the
same place in the supply chain--the classic example of a remedy is a
divestiture of each competing line of business of the merging parties,
such that the consummated merger will not involve the combination of
directly competing products or services.\10\ We generally call this
sort of remedy a ``structural remedy,'' because it affects the
structure of the market in which the merged firm operates.\11\ A
``behavioral remedy'' or ``conduct remedy,'' by contrast, is an
enforceable commitment by the merged firm to engage in some behavior,
or not to engage in some behavior.\12\
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\9\ See, e.g., FTC, Statement of the Federal Trade Commission's
Bureau of Competition on Negotiating Merger Remedies, at 17 (Jan.
2012), https://www.ftc.gov/advice-guidance/competition-guidance/negotiating-merger-remedies (``BC Remedies Statement'').
\10\ Ibid.
\11\ See United States Note on Remedies in Merger Cases, OECD
Working Party No. 3 on Co-operation and Enforcement, at 3 (June 24,
2011), https://www.ftc.gov/sites/default/files/attachments/us-submissions-oecd-and-other-international-competition-fora/1106usremediesmergers.pdf.
\12\ Ibid.
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The Biden FTC expressed hostility to settlements in merger cases.
The former Chairwoman said that the FTC should focus on litigating to
block
[[Page 24143]]
anticompetitive mergers rather than negotiating fixes.\13\ And a former
Director of the Bureau of Competition lamented that previous FTC
structural remedies had not worked as well as had been hoped and
announced that the FTC would not spend inordinate time helping merging
companies work out a resolution of anticompetitive aspects of their
deal.\14\ ``Executives should not presume,'' she warned, ``that the FTC
will agree to piecemeal divestitures that would allow the remainder of
the merger to proceed. The FTC has neither the resources nor the
mandate to function as an industrial planner.'' \15\
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\13\ FTC's new stance: Litigate, don't negotiate, Axios (June 8,
2022), https://www.axios.com/2022/06/09/ftcs-new-stance-litigate-dont-negotiate-lina-khan.
\14\ Remarks by Holly Vedova, Director, Bureau of Competition,
FTC, at 12th Annual GCR Live: Law Leaders Global Conference, at 10-
12 (Feb. 3, 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/vedova-gcr-law-leaders-global-conference.pdf.
\15\ Id. at 12.
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I am sympathetic to this view. In the past, the Commission became
too comfortable with behavioral remedies that were difficult or
impossible to enforce.\16\ And although research demonstrates that a
majority of divestiture settlements succeeded,\17\ some did not. One
very prominent divestiture package--Albertsons/Safeway--failed
spectacularly, with the company that divested the stores buying many of
them back at bargain-basement prices after the divestiture buyer went
bankrupt.\18\
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\16\ See, e.g., The Courage to Learn, A Retrospective on
Antitrust and Competition Policy During the Obama Administration and
Framework for a New, Structuralist Approach, American Economic
Liberties Project, at 49 (2021) (``Evaluating this experiment [with
more behavioral remedies] after the end of the Obama administration,
the American Antitrust Institute concluded that it was largely a
failure--providing little in the way of deterrence and actually
encouraging corporations to circumvent the remedy and creating a
situation that precluded realistic oversight and enforcement of the
remedy.'').
\17\ See The FTC's Merger Remedies 2006-2012, FTC (Jan. 2017),
https://www.ftc.gov/system/files/documents/reports/ftcs-merger-remedies-2006-2012-report-bureaus-competition-economics/p143100_ftc_merger_remedies_2006-2012.pdf.
\18\ Decision and Order, In the Matter of Cerberus Institutional
Partners V, LP., AB Acquisition LLC, and Safeway Inc., Matter No.
1410108 (July 2, 2015); West Coast Grocer Haggen Files for Chapter
11 Bankruptcy, Wall. St. J. (Sept. 9, 2015), https://www.wsj.com/articles/west-coast-grocer-haggen-files-for-chapter-11-bankruptcy-1441798163; Albertsons to Buy Back 33 Stores It Sold as Part of
Merger With Safeway, Wall. St. J. (Nov. 24, 2015), https://www.wsj.com/articles/albertsons-to-buy-back-33-stores-it-sold-as-part-of-merger-with-safeway-1448411193; FTC attorney shines light on
failed Albertsons/Safeway remedy, Glob. Competition Rev. (June 17,
2016), https://globalcompetitionreview.com/gcr-usa/article/ftc-attorney-shines-light-failed-albertsons-safeway-remedy.
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Nevertheless, remedies must be an option for the FTC as it fulfills
its mission of protecting competition. First, for all of the Biden
FTC's hostile rhetoric against merger settlements, it accepted them in
lieu of suing--and it did so even after 2022, when it publicly
expressed hostility toward such remedies.\19\ Indeed, in the final
months of the Biden Administration, the Commission accepted novel
remedies in two oil mergers.\20\ The Commission also accepted
settlements in the middle of litigation.\21\
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\19\ Three years running: Merger enforcement activity continues
at historically low levels according to the agencies' most recent
HSR report, Westlaw Today (Oct. 23, 2024), https://www.cov.com/-/media/files/corporate/publications/2024/10/three-years-running-merger-enforcement-activity-continues-at-historically-low-levels-according-to-the-agencies-most-recent-hsr-report.pdf (``From 2001 to
2020, the agencies averaged almost 20 consent decrees per year; in
2023 they entered two, and in 2024 they entered zero.''); FTC,
Merger Enforcement Actions (last accessed May 28, 2025), https://www.ftc.gov/competition-enforcement-database (showing that as part
of its merger enforcement activity, the FTC accepted five Part 2
consents in 2021, 12 in 2022, and two in 2023).
\20\ Decision & Order, In the Matter of Chevron Corporation,
Matter No. 2410008 (Jan. 17, 2025), https://www.ftc.gov/system/files/ftc_gov/pdf/2410008c4814chevronhessorder.pdf (settlement
propounding section 7 theory entirely unsupported by judicial
precedent); Decision & Order, In the Matter of ExxonMobil
Corporation, Matter No. 2410004 (Jan. 17, 2025), https://www.ftc.gov/system/files/ftc_gov/pdf/2410004-c4815-exxonpioneerfinalorderpublic.pdf (same).
\21\ Decision & Order, In the Matter of Amgen, Inc. and Horizon
Therapeutics plc, Matter No. 2310037 (Dec. 14, 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/d09414amgenhorizonfinalorderpublic.pdf (no divestiture during
litigation); Decision & Order, In the Matter of Intercontinental
Exchange, Inc./Black Knight, Inc., Matter No. 2210142 (Nov. 3,
2023), https://www.ftc.gov/system/files/ftc_gov/pdf/D09413ICEBKFinalOrderPublic.pdf (divestiture during litigation--five
months after complaint).
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Second, a categorical refusal to consider settlement complicates
subsequent litigation. If the Commission simply disregards proposed
settlements that would have addressed a merger's competition problems,
nothing stops the parties from presenting that settlement as a remedy
to the court during litigation.\22\ And nothing stops parties from
proposing or executing remedies after the agencies have already
initiated litigation. In these circumstances, courts often choose to
adjudicate whether the transaction, as modified by the proposed
structural or behavioral remedies, would violate section 7 of the
Clayton Act. Litigation over a proposed remedy is widely known as
``litigating the fix,'' \23\ and it does not always play out well for
the agencies.\24\ Of course, that is not to say that any and all remedy
proposals may lead to the agencies losing their case--inadequate or
uncertain remedies will not fare well before a court either.\25\
Additionally, antagonism toward remedies may spur firms to employ a
``fix it first'' strategy, meaning that parties purport to address
potential competitive concerns before submitting their merger
notifications to the Commission for formal review.\26\ This may sound
like a good approach, but it involves serious risks. For example, the
parties may craft and execute their own remedies beyond the oversight
and involvement of the Commission. Those remedies may not be adequate
to address fully the competitive problems posed by the merger--for
example, involving divestiture sales to subpar buyers--but may be
sufficient to make litigation challenging the ``fixed'' merger
difficult or impossible. A settlement with the Commission, by contrast,
ensures that
[[Page 24144]]
the Commission can bring its expertise and experience to bare, while
also promoting transparency and accountability on merger remedies.
Thus, if the Commission takes remedies off the table, it will find
itself fighting a more complex battle in court, and effectively little
by little relegates its judgment about what constitutes an acceptable
remedy to the parties themselves and the judiciary.
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\22\ Parties are More Willing Than Ever to `Litigate the Fix' in
the United States, Glob. Competition Rev. (Oct. 25, 2023), https://globalcompetitionreview.com/guide/the-guide-merger-remedies/fifth-edition/article/parties-are-more-willing-ever-litigate-the-fix-in-the-united-states (``[T]he FTC or DOJ may determine that the fix is
insufficient to address its concerns and decide to sue to block
consummation of the proposed transaction. When the latter occurs,
the parties are said to be litigating the fix.'').
\23\ Id.
\24\ See, e.g., FTC v. Microsoft, 681 F. Supp. 3d 1069, 1095
(N.D. Cal. 2023), aff'd, No. 23-15992, 2025 WL 1319069 (9th Cir. May
7, 2025) (denying the FTC's motion for preliminary injunction,
highlighting Microsoft's decision, after the FTC filed its
complaint, to enter into contracts that mitigate concerns about an
intent to foreclose access to the product at issue); United States
v. UnitedHealth Grp. Inc., 630 F. Supp. 3d 118, 135 (D.D.C. 2022),
dismissed, No. 22-5301, 2023 WL 2717667 (D.C. Cir. Mar. 27, 2023)
(denying DOJ's bid to block merger, holding proposed divestiture
will preserve competition in relevant market); United States v.
AT&T, 310 F. Supp. 3d 161, 251 & n.51, 254 (D.D.C. 2018), aff'd sub
nom. United States v. AT&T, 916 F.3d 1029 (D.C. Cir. 2019) (denying
DOJ's bid to block merger, where parties' arbitration agreement
undercut governments' theory of competitive harm).
\25\ FTC v. Sysco Corp., 113 F. Supp. 3d 1 (D.D.C. 2015)
(enjoining the proposed transaction, noting that the proposed remedy
was not sufficient to eliminate the anticompetitive effects of the
transaction); FTC v. Libbey, Inc., 211 F. Supp. 2d 34 (D.D.C. 2002)
(enjoining the proposed transaction, finding that even as modified
the proposed deal was likely to substantially lessen competition);
Transcript of Pre-Hearing Conference at 18, 21-29, FTC v. Ardagh
Grp., No. 13-1021 (D.D.C. Sept. 24, 2013), https://www.ftc.gov/sites/default/files/documents/cases/130924ardaghtranscript.pdf
(bench ruling to not consider proposed divestiture where initial
contours of parties' structural remedy proposal came after the close
of discovery on the eve of the CEO's deposition and without an
identified buyer so that it was not definitive enough for the FTC to
evaluate).
\26\ Fix-it-first: navigating a seismic shift in US antitrust
agency approaches to merger remedies, Financier Worldwide (Aug.
2023), https://www.financierworldwide.com/fix-it-first-navigating-a-seismic-shift-in-us-antitrust-agency-approaches-to-merger-remedies.
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Finally, categorically refusing to settle merger cases diminishes
the effect of the FTC's finite enforcement resources. As already noted,
litigating antitrust cases is expensive--in terms of the costs the
Commission must bear for experts and other costs related to discovery
and trial, but also in terms of staff's time. Such litigation can tie
up staff for six to eight months or even longer.\27\ Every litigation
entails costly tradeoffs. Every case the Commission brings forecloses
other potential merger cases or actions challenging anticompetitive
conduct. Thus settlements, where they resolve the competitive concerns
that a proposed transaction creates, save the Commission time and money
that it can then deploy toward other matters. Settlements therefore
must be on the table if the FTC is to protect competition efficiently
and as fully as its resources allow.
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\27\ See, e.g., FTC v. Tempur Sealy Int'l, No. 4:24-CV-02508,
2025 WL 617735, at *9 (S.D. Tex. Feb. 26, 2025) (roughly seven
months from filing of complaint and motion for preliminary
injunction to district court ruling); FTC v. Tapestry, 755 F. Supp.
3d 386, 406 (S.D.N.Y. 2024) (roughly six months from filing of
complaint and motion for preliminary injunction to district court
ruling); FTC v. Kroger Company, No. 3:24-cv-00347-AN, 2024 WL
5053016, at *5 (D. Or. Dec. 10, 2024) (roughly ten months from
filing of complaint and motion for preliminary injunction to
district court ruling); FTC v. Cmty. Health Sys., 736 F. Supp. 3d
335, 350 (W.D.N.C. 2024), opinion vacated, appeal dismissed sub nom.
FTC v. Novant Health, No. 24-1526, 2024 WL 3561941 (4th Cir. July
24, 2024) (roughly four and a half months from filing of complaint
and motion for preliminary injunction to district court ruling, and
another month for appellate resolution after which parties abandoned
transaction); FTC v. IQVIA Holdings, 710 F. Supp. 3d 329, 346
(S.D.N.Y. 2024) (just under six months from filing of complaint and
motion for preliminary injunction to district court ruling). See
also Farrell J. Malone & Ian C. Thresher, Leaving Time to Litigate:
Lessons from Recent Merger Challenge, Antitrust Source (Oct. 2018)
(``among the 13 cases that were litigated to a decision in 2011-
2017, the average time from the filing of a complaint until a
district court's decision on the merits has increased from 99 days
in 2011 to as high as 221 days in 2017.'').
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Although I believe the Trump FTC must be open to settling merger
cases, I am clear-eyed about the dangers of inadequate or unworkable
settlements. The object of settlement is to protect competition as
fully as would successful litigation without the expense and risk of
litigation. It is not to paper over an anticompetitive transaction.
Accordingly, I believe that the Commission should accept settlements in
merger cases only when it is confident that the settlement will protect
competition in the relevant market to the same extent that successful
litigation would. Specifically, experience teaches that behavioral
remedies should be treated with substantial caution. They are often
difficult or impossible for the Commission to enforce effectively and
can lock the Commission into the status of a monitor for individual
firms rather than a guardian of competition across the entire economy.
They are therefore disfavored.
Nor should the Commission ordinarily accept a structural remedy
unless it involves the sale of a standalone or discrete business, or
something very close to it, along with all tangible and intangible
assets necessary (1) to make that line of business viable, (2) to give
the divestiture buyer the incentive and ability to compete vigorously
against the merged firm, and (3) to eliminate to the to the extent
possible any ongoing entanglements between the divested business and
the merged firm. The Commission must also be confident that the
divestiture buyer has the resources and experience necessary to make
that standalone business competitive in the market. Unless these
conditions obtain, the Commission should proceed to litigation. When
confronted with an anticompetitive merger, I will favor litigation to
guarantee that competition will be protected rather than accepting an
uncertain settlement.
Today's settlement satisfies these requirements. Staff conducted a
thorough investigation and identified substantial anticompetitive
effects likely to flow from the proposed transaction across three
relevant markets.\28\ Had the Commission proceeded to litigation, I am
confident the Commission would have prevailed in demonstrating that the
merger as originally filed would have violated section 7 of the Clayton
Act. But the parties proposed divestitures in the three relevant
markets,\29\ and the divestitures satisfy the conditions of a
successful structural remedy.\30\ They involve the sale of standalone
or discrete business units, or as close to it as possible, with all
tangible and intangible assets necessary for a buyer to succeed in the
market after the divestiture.\31\ And the divestiture buyer has a long
track record of acquiring assets in related markets and making them
successful, as well as the financial resources to compete effectively
after the divestiture.\32\
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\28\ Complaint, In the Matter of Synopsys, Inc. and ANSYS, Inc.,
Matter No. 2410059, ]] 5-18 (May 27, 2025).
\29\ See Decision and Order, In the Matter of Synopsys, Inc. and
ANSYS, Inc., Matter No. 2410059 (May 27, 2025) (``Decision and
Order''); Analysis of Agreement Containing Consent Orders, In the
Matter of Synopsys, Inc. and ANSYS, Inc., Matter No. 2410059, at 3-4
(May 27, 2025) (``AAOC'').
\30\ See, e.g., BC Remedies Statement, supra note 9.
\31\ See Decision and Order.
\32\ AAOC at 3-4.
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The upshot of today's Commission action for the American people and
business community is that the Commission is willing to consider
settlements in merger cases. But it must do so consistently with its
mission to protect competition to the fullest extent possible,
maximizing its resources, and in light of the lessons learned from
remedies of the past. If the Commission is confident that a settlement
will prevent a substantial lessening of competition as fully as would
litigation, while sparing the Commission and the American people the
expense and uncertainty of litigation, then it should accept that
settlement.
But the Commission's standards for evaluating remedies should be
exacting, and its strong preference should be for structural remedies
over conduct remedies. The Commission must learn the lessons of
unsuccessful past remedies and avoid returning to an era when it
sometimes accepted weak remedies in lieu of the hard work of litigating
to protect competition. Learning from the past, the Trump FTC should
err in favor of litigating to protect competition where it believes it
can prevail, rather than accepting a questionable settlement. But I am
confident that accepting sound remedies in the right cases will allow
the Commission to support a strong American economy that promotes human
flourishing through competition and economic freedom.
[FR Doc. 2025-10290 Filed 6-5-25; 8:45 am]
BILLING CODE 6750-01-P