[Federal Register Volume 90, Number 112 (Thursday, June 12, 2025)]
[Notices]
[Pages 24870-24950]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-10536]
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Vol. 90
Thursday,
No. 112
June 12, 2025
Part II
Department of Justice
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Antitrust Division
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United States v. Keysight Technologies Inc., et al.; Proposed Final
Judgment and Competitive Impact Statement; Notice
Federal Register / Vol. 90, No. 112 / Thursday, June 12, 2025 /
Notices
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Keysight Technologies Inc., 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,
Stipulation, and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America v. Keysight Technologies, Inc., et al., Civil Action
No. 1:25-cv-01734-CJN. On June 2, 2025 the United States filed a
Complaint alleging that Keysight's proposed acquisition of Spirent
Communications plc 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 Keysight and Spirent to: divest to Viavi Solutions,
Inc. property and assets related to or used in connection with three of
Spirent's communications testing and measurement business lines (high-
speed ethernet, network security and channel emulation); provide to
Viavi the opportunity to employ relevant personnel of the businesses
being divested; and obtain various transitional services from Keysight
and Spirent to support the divested businesses for limited periods.
Copies of the Complaint, proposed Final Judgment, and Competitive
Impact Statement are available for inspection on the Antitrust
Division's website at http://www.justice.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, including the name of the submitter, and
responses thereto, will be posted on the Antitrust Division's website,
filed with the Court, and, under certain circumstances, published in
the Federal Register. Comments should be submitted in English and
directed to Jared Hughes, Assistant Chief, Media, Entertainment and
Communications Section, Antitrust Division, Department of Justice, 450
Fifth Street NW, Suite 7000, Washington, DC 20530 (email address:
[email protected]).
Suzanne Morris,
Deputy Director of Civil Enforcement Operations, Antitrust Division.
United States District Court for the District of Columbia
United States of America, 450 Fifth Street NW, Washington, DC
20530, Plaintiff, v. Keysight Technologies, Inc., 1400 Fountaingrove
Parkway, Santa Rosa, CA 95403; and Spirent Communications PLC, 180
High Street, Crawley, West Sussex RH10 1BD, United Kingdom,
Defendants.
Civil Action No. 1:25-cv-01734-CJN
Judge: Carl J. Nichols
Complaint
Keysight Technologies, Inc. (``Keysight'') and Spirent
Communications plc (``Spirent'') are two of the largest global
providers of three key types of communications testing and measurement
equipment--high speed ethernet testing, network security testing, and
radio frequency (``RF'') channel emulators--and are significant direct
competitors in the United States. Keysight's proposed acquisition of
Spirent threatens to substantially lessen competition and harm
customers in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
It should be enjoined to avoid harm to competition.
I. Nature of the Action
1. Communications networks connect the world, moving significant
volumes of data around the clock. Keysight and Spirent provide
critical, highly-specialized equipment used to test various components
of communications networks and measure and validate network
performance. Network equipment manufacturers, communications network
operators, and large cloud computing providers purchase and use this
specialized testing equipment to ensure their products and networks
operate effectively and securely under normal conditions, and to
prepare them to withstand the real-world strain of interruptions,
cyberattacks, interference, and high user demand. Because
communications technologies are rapidly evolving, the communications
industry invests millions of dollars annually in researching,
developing, and implementing upgrades to their products to keep pace
with technological advancement.
2. Together, Keysight and Spirent dominate three testing and
measurement markets in the United States: high-speed ethernet testing,
network security testing, and RF channel emulators. Keysight and
Spirent are each other's closest competitors in these markets. For
years, competition between them has resulted in each company offering
discounts, maintaining valuable aftermarket support services, and
investing in new and advanced products and features--all to the benefit
of their customers and the broader public. Keysight's proposed
acquisition of Spirent would eliminate this competition, leading to
higher prices; lower quality products, support, and service; and less
innovation.
II. Defendants and the Proposed Transaction
3. Keysight is a Delaware corporation with its headquarters in
Santa Rosa, California. It reported $4.979 billion in global revenues
in 2024, $1.769 billion of which were from the United States.
Keysight's Communications Solutions Group produces and sells the
products in the relevant markets at issue. The Communications Solutions
Group includes two main areas: (i) commercial communications and (ii)
aerospace, defense and government.
4. Spirent is a United Kingdom corporation headquartered in
Crawley, England, with offices in Calabasas, California and other
locations in and outside the United States. It earned $460 million in
global revenues in 2024, $257 million of which were from the United
States.
5. On March 28, 2024, Keysight offered to purchase Spirent for $1.5
billion. Spirent's board recommended that Spirent shareholders accept
Keysight's offer, which they did on May 22, 2024.
III. Jurisdiction and Venue
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
Keysight and Spirent from violating Section 7 of the Clayton Act, 15
U.S.C. 18.
7. Both Keysight and Spirent are corporations that transact
business within this District through, among other things, their sales
of communications testing and measurement products.
8. Defendants Keysight and Spirent are engaged in a regular,
continuous, and substantial flow of interstate commerce and their sales
have a substantial effect on interstate commerce, including within this
District. The Court has subject-matter jurisdiction pursuant to Section
15 of the Clayton Act, as amended, 15 U.S.C. 25, and 28 U.S.C. 1331,
1337(a), and 1345.
9. Defendants Keysight and Spirent have consented to venue and
personal
[[Page 24871]]
jurisdiction in this district. Venue is proper in this district under
Section 12 of the Clayton Act, 15 U.S.C. 22 and 28 U.S.C. 1391.
IV. Background
10. Communications networks link together different entities and
devices, referred to as ``endpoints,'' to enable the exchange of
information between them. Communications networks include computer
networks in a large enterprise organization; telecommunications
networks that power mobile phones; satellite networks that enable GPS-
enabled devices; and cloud-computing networks that store and transmit
vast quantities of data. These endpoints can be connected via hardwire
(e.g., optical fiber/copper) or wirelessly using radio spectrum. Today,
a complex system of interconnected and separate networks allow
consumers to store, access, and move data across the world.
11. The communications industry uses specialized testing equipment
to verify the performance of communications networks and the devices
connected to them. This testing is essential to validate that a network
performs as expected, even under non-ideal conditions, such as
conditions that interfere with a wireless signal, or to ensure that
networks and equipment can handle increasing loads of traffic. Testing
also helps ensure that user data is securely protected against the
threat of cyberattack. To complete this testing, equipment
manufacturers and network operators purchase specialized hardware and
software equipment, and they rely on periodic software updates and
multi-year services contracts to provide regular maintenance and system
upgrades.
12. High-speed ethernet testing, network security testing, and RF
channel emulators are used in a lab environment to test network
elements before they are deployed in the field. Lab testing equipment
is complex, costly, and relatively fixed. By contrast, equipment used
to test networks and devices already in operation--known as live
testing equipment--is generally more portable and less expensive than
lab testing equipment.
13. Customers use lab testing equipment throughout the lifecycle of
a network, even after the network or devices in it have been deployed.
Lab testing ensures that communications networks can support updated
devices, comply with revised industry standards, and maintain data
security as the cybersecurity landscape changes.
14. Lab testing equipment requires constant engineering investment.
Network technology changes rapidly: data moves faster, mobile wireless
providers deploy new spectrum and new wireless technologies, would-be
hackers develop new lines of attack, and device manufacturers make each
iteration of their product more sophisticated. Lab testing equipment
providers, including Keysight and Spirent, spend millions of dollars
each year on research and development to ensure their products keep
pace with market changes and employ hundreds of specialized experts
dedicated to improving their testing equipment and responding to
customer requests.
15. Accurate lab testing capabilities are critical to the
development, validation, and maintenance of wireline and wireless
communications devices and networks. A wide range of customers depend
on specialized lab testing equipment to successfully deploy their
networks and devices, including network equipment manufacturers,
network operators, chipset manufacturers, ``hyperscalers'' that offer
cloud computing services, research labs, government testing centers,
and large companies operating secure internal networks. Equipment
cannot be effectively deployed in these complex networks without such
testing.
V. Relevant Markets
16. Each of the three product markets identified below constitutes
a line of commerce as that term is used in Section 7 of the Clayton
Act, 15 U.S.C. 18, and each is a relevant product market in which
competitive effects can be assessed. The geographic market for each
relevant product market is comprised of sales to customers within the
United States.
A. High-Speed Ethernet Testing Equipment
17. High-speed ethernet testing equipment tests the performance of
both the hardware and software components of high-speed wireline
communications networks. Specifically, it tests the functionality of
communications both within a given network and across different
networks. This testing ensures that wireline networks can support high-
bandwidth use cases, such as running artificial intelligence
algorithms. These testing products are crucial to ensure that large
network operators can support data usage at scale.
18. Customers using high-speed ethernet testing equipment have no
reasonable alternatives for testing their wireline network equipment.
Solutions developed in-house or relying on open-source software would
not provide an adequate alternative for most customers. Attempting to
use such options would require costly investments in engineering and
other technical resources, can take years to develop, and would not be
as reliable or robust as the high-speed ethernet testing equipment
available from Keysight or Spirent.
19. A hypothetical monopolist could profitably impose a small but
significant and non-transitory price increase for, or otherwise degrade
quality of, high-speed ethernet testing equipment customers in the
United States. A degradation of quality could entail any dimension of
competition, including service, capacity investment, choice of product
variety or features, or innovation. Accordingly, high-speed ethernet
testing equipment sold to U.S. customers constitutes a relevant market
and line of commerce under Section 7 of the Clayton Act, 15 U.S.C. 18.
B. Network Security Testing Equipment
20. Network security testing equipment assesses the cybersecurity
of wireline networks through laboratory simulation of attacks, testing
firewalls as well as other security-related features like proxy and
secure content gateways. These products simulate real-world conditions,
such as high traffic volumes, to ensure that a network's security
policies protect it from attack without impacting performance.
21. Customers that purchase network security testing equipment have
no reasonable alternatives. Although some companies make use of open-
source software or internally developed tools for limited purposes,
self-supply is not a viable option for most customers due to the high
costs involved. Customers rely on network security testing equipment to
ensure sensitive data are protected from cyberattacks, and they are
thus unlikely to rely on unproven and untested solutions in the
ordinary course of business.
22. A hypothetical monopolist could profitably impose a small but
significant and non-transitory price increase for, or otherwise degrade
the quality of, network security testing equipment offered to customers
in the United States. A quality degradation could entail any dimension
of competition, including service, capacity investment, choice of
product variety or features, or innovation. Accordingly, network
security testing equipment sold to U.S. customers constitutes a
relevant market and line of commerce under Section 7 of the Clayton
Act, 15 U.S.C. 18.
C. RF Channel Emulators
23. RF channel emulators evaluate how wireless networks and devices
will
[[Page 24872]]
react when deployed in the real world, where a wireless signal may not
be perfect. Wireless networks transmit data using radio frequency
spectrum. Wireless communication networks are used across multiple
important industries, including cellular networks, satellite networks,
and radar and navigation systems. Unlike in a wireline environment,
signal transmission through radio frequency can be subject to
substantial interference from weather, large objects, topographical
features, and the presence of other competing radio signals.
24. RF channel emulators, also known as ``faders,'' are used in a
lab setting. They test whether wireless receivers, such as cell phones
or radar handsets, can effectively receive and decode RF signals. A
channel emulator adds various impairments to the intended communication
path to simulate real-world challenges, such as dense urban settings,
mountainous regions, or long distances. This performance testing
enables engineers to adjust and optimize designs in a controlled
environment to ensure wireless networks perform as expected once they
are deployed.
25. Customers that purchase RF channel emulators have no reasonable
alternatives. Although some companies make use of open-source software
or internally developed tools for limited purposes, self-supply is not
a viable option for most customers due to the high costs and technical
expertise required to develop internal solutions. Customers rely on RF
channel emulators to ensure networks will operate effectively in real-
world conditions.
26. A hypothetical monopolist could profitably impose a small but
significant and non-transitory price increase for, or otherwise degrade
the quality of, RF channel emulators sold to customers in the United
States. A degradation of quality could entail any dimension of
competition, including quality, service, capacity investment, choice of
product variety or features, or innovation. Accordingly, RF channel
emulators sold to U.S. customers constitutes a relevant market and line
of commerce under Section 7 of the Clayton Act, 15 U.S.C. 18.
VI. Anticompetitive Effects
27. Keysight and Spirent are the dominant providers of high-speed
ethernet testing equipment, network security testing equipment, and RF
channel emulators in the United States. Their proposed merger would
extinguish the competition between them and would presumptively result
in a substantial lessening of competition in each market.
28. The transaction would substantially lessen competition in the
market for high-speed ethernet testing equipment in the United States.
Keysight and Spirent are the two principal suppliers of high-speed
ethernet testing equipment in the United States and have remained the
market leaders in this area for many years. In the United States,
Keysight and Spirent have a combined market share of approximately 85%.
The market for high-speed ethernet testing equipment is already highly
concentrated and would become significantly more concentrated as a
result of the proposed merger.
29. Keysight and Spirent compete directly against one another to
provide high-speed ethernet testing equipment to customers. The handful
of other market participants serve far fewer customers and offer much
less robust technical solutions than Defendants do. Customers have
benefited from competition between Defendants through lower prices,
higher quality services, and more robust innovation--an essential
feature as technology and network hardware testing components
continuously evolve to meet and enable customer innovations.
30. The transaction also would substantially lessen competition in
the market for network security testing equipment in the United States.
Keysight and Spirent are the two largest suppliers of network security
testing equipment in the United States and have remained the market
leaders in this market for many years. In this market, each Defendant
earns more than double the revenue of any other competitor; together,
Keysight and Spirent would have a combined market share of at least 60%
in the United States. The market for network security testing equipment
is already highly concentrated and would become significantly more
concentrated after the proposed merger.
31. Keysight and Spirent compete head-to-head to provide network
security testing equipment to customers. This competition has resulted
in lower prices, higher-quality services, and faster product
improvements. These updates are essential to keep pace as cybersecurity
attackers develop increasingly more sophisticated methods of accessing
secure networks.
32. The transaction also would substantially lessen competition in
the market for RF channel emulators in the United States. Keysight and
Spirent are two of the leading providers of RF channel emulators in the
United States, with a combined market share of more than 50%. The
market for RF channel emulators is already highly concentrated and
would become significantly more concentrated after the proposed merger.
33. Keysight and Spirent compete head-to-head to provide RF channel
emulators to customers. This competition has resulted in lower prices,
higher-quality services, and robust product improvements. These updates
are essential to keep pace as technology improves and wireless networks
are used for increasingly more data traffic.
34. Keysight and Spirent are especially close competitors for
customers who use RF channel emulators to test terrestrial wireless
networks (as opposed to satellite networks) and for customers who need
``external'' hardware-based faders able to test a full array of RF
channel emulation capabilities. Other providers of RF channel emulators
only support satellite networks and/or only emulate simple interference
with ``internal'' software-based products. Keysight and Spirent are the
only providers in the United States of RF channel emulators capable of
supporting the full array of test environments for terrestrial wireless
networks. For U.S. customers that require these capabilities, Keysight
and Spirent are the only options.
VII. Absence of Countervailing Factors
35. It is unlikely that any firm would enter the relevant markets
in a timely manner sufficient to prevent the proposed transaction's
anticompetitive effects. Successful entry into these specialized
markets is difficult, time-consuming, and costly.
36. A prospective entrant would need to invest significant time and
capital to design and develop testing products comparable to the
Defendants' product lines. In each of the relevant markets, Keysight
and Spirent have spent millions of dollars and many years acquiring,
building, and refining their products. Moreover, the underlying
communications technologies are governed by evolving standards,
requiring substantial ongoing investment to ensure that a new product
functions effectively with new features and meets new standards.
Finally, given that these products impact the performance, security,
and reliability of networks that handle sensitive data, a prospective
entrant would need to devote significant resources to demonstrate its
ability to provide a high-quality product and high-quality service and
support, including regular updates. Purchasers of high-speed ethernet
lab testing equipment, network security testing equipment, and RF
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channel emulators have complex needs and are reluctant to rely on any
company without an established brand and reputation.
37. Defendants cannot demonstrate verifiable, merger-specific
efficiencies sufficient to offset the proposed merger's anticompetitive
effects.
VIII. Violations Alleged
38. Keysight's proposed acquisition of Spirent will eliminate
competition between them and would substantially lessen competition in
three critical communications testing and measurement equipment markets
in the United States in violation of Section 7 of the Clayton Act, 15
U.S.C. 18.
39. Among other things, the transaction would:
i. eliminate competition between Keysight and Spirent;
ii. likely cause prices of critical communications testing and
measurement equipment to be higher than they would be otherwise; and
iii. likely reduce quality, service, choice, and innovation.
IX. Request for Relief
40. The United States requests:
i. that Keysight's proposed acquisition of Spirent be adjudged to
violate Section 7 of the Clayton Act, 15 U.S.C. 18;
ii. that the Defendants be permanently enjoined and restrained from
carrying out the proposed acquisition of Spirent by Keysight or any
other transaction that would combine the two companies;
iii. that the United States be awarded costs of this action; and
iv. that the United States be awarded such other relief as the
Court may deem just and proper.
Dated: June 2, 2025.
Respectfully submitted,
For Plaintiff United States of America:
Abigail A. Slater (D.C. Bar #90027189), Assistant Attorney General.
Roger P. Alford (D.C. Bar #445158), Principal Deputy Assistant
Attorney General.
William J. Rinner (D.C. Bar #997485), Deputy Assistant Attorney
General.
Ryan Danks, Director of Civil Enforcement.
George C. Nierlich (D.C. Bar #1004528), Deputy Director of Civil
Enforcement.
Jared A. Hughes, Cory Brader Leuchten, Assistant Chiefs, Media,
Entertainment, and Communications Section.
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Carl Willner* (D.C. Bar #412841), Carmel Arikat (D.C. Bar #1018208),
Katherine Clemons (D.C. Bar #1014137), Curtis Strong (D.C. Bar
#1005093), Isabel Agnew, Attorneys.
U.S. Department of Justice, Antitrust Division, Media,
Entertainment, and Communications Section, 450 Fifth Street NW,
Suite 7000, Washington, DC 20530, Tel.: 202-514-5813, Fax: 202-514-
6381, Email: [email protected].
* Lead Attorney to be Noticed.
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Keysight Technologies,
Inc. and Spirent Communications PLC, Defendants.
Civil Action No. 1:25-cv-01734-CJN
Judge: Carl J. Nichols
[Proposed] Final Judgment
Whereas, Plaintiff, United States of America, filed its Complaint
against Keysight Technologies, Inc. (``Keysight'') and Spirent
Communications plc (``Spirent'') (together ``Defendants'') on June 2,
2025;
And whereas, the United States and Defendants have consented to
entry of this Final Judgment without the taking of testimony, 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 relating to any issue of fact or law;
And whereas, Defendants agree to make a divestiture and to
undertake certain actions related to the divestiture to remedy the loss
of competition alleged in the Complaint;
And whereas, Defendants represent that the divestiture and other
relief required by this Final Judgment can and will be made and that
Defendants will not later raise a claim of hardship or difficulty as
grounds for asking the Court to modify any provision of this Final
Judgment;
Now Therefore, it is Ordered, Adjudged, and Decreed:
I. Jurisdiction
The 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).
II. Definitions
As used in this Final Judgment:
A. ``Acquirer'' means Viavi or another entity approved by the
United States in its sole discretion to which Defendants divest the
Divestiture Assets.
B. ``Divestiture Assets'' means all of Defendants' rights, titles,
and interests in and to all property and assets, tangible and
intangible, wherever located, relating to or used in connection with
the Divestiture Business, including the following:
1. the real property leasehold interests and associated renewal
rights in the facilities located at (a) 27349 Agoura Road, Calabasas,
California 91301 (United States); (b) 47-53 Lascar Catargiu Blvd., 1st
District, Bucharest (Romania); (c) Pacific Guardian Center--Mauka
Tower, 737 Bishop Street, Suite 1900, Honolulu, Hawaii 96813 (United
States); (d) Unit 1301, 1302, 1303, 1305, 1306, 1307, 1309, 13th Floor,
Shining Building, No. 35 Xueyuan Road, Haidian District, Beijing
(China); (e) Unit B4-09, 4th Underground Floor, Shining Building, No.
35 Xueyuan Road, Haidian District, Beijing (China); and (f) 2nd Floor,
Quadrant 2 of Tower 1, Umiya Business Bay, Sarjapur Outer Ring Road,
Bangalore East Taluk 560 103 (India);
2. all inventory (whether raw materials, work in process,
semifinished goods, finished goods, packaging, labels, scrap or
supplies);
3. all furniture, fixtures, furnishings, vehicles, equipment,
machines, computers, tools, spare parts and tooling, office and other
supplies, technical documentation, and other tangible personal property
(including third party software embedded therein) including as set
forth on Annex 1, Schedule II.B.3 hereto;
4. all contracts, including all development contracts with XRComm
and VVDN Technologies for Spirent's channel emulation business,
contractual rights, and customer relationships, including Spirent's
relationship with Calnex as a reseller and all other agreements,
commitments and purchase orders, including those related to
intellectual property, suppliers, or customers, and all outstanding
offers or solicitations to enter into a similar arrangement; provided,
however, that for any contracts that relate to both the Divestiture
Business and to businesses not included in the Divestiture Assets, only
the portion of the contract related to the Divestiture Business is a
Divestiture Asset; provided, further, that none of the following
contracts form part of the Divestiture Assets: (i) insurance contracts
and policies, (ii) real property lease contracts with respect to real
property not listed in Paragraph II.B.1 of this definition and (iii)
any contract set forth on Annex 2, Schedule II.B.4.
5. all licenses, permits, certifications, approvals, consents,
registrations, waivers, and authorizations, including all pending
applications or renewals of the same;
6. data and information (including technical information) held or
controlled by Defendants;
7. all books and records, including (i) customer and supplier
lists, accounts, sales, and credits records; (ii) budgets, pricing
guidelines, ledgers, journals, deeds, title policies, minute books, and
[[Page 24874]]
operating plans; (iii) financial statements and related work papers and
letters from accountants; (iv) environmental studies and plans; (v)
records and research data concerning historic and current research and
development activities, including designs of experiments and the
results of successful and unsuccessful designs and experiments; and
(vi) safety procedures (e.g., for the handling of materials and
substances) and quality assurance and control procedures; provided,
however, that minute books, corporate charter, stock or equity record
books, and books and records that pertain to the organization,
existence or capitalization of Spirent and its affiliates, do not form
part of the Divestiture Assets;
8. copies of all tax returns related to taxes on or with respect to
the Divestiture Business or the Divestiture Assets;
9. all intellectual property owned, licensed, or sublicensed,
either as licensor or licensee, including (a) patents, patent
applications, and inventions and discoveries that may be patentable,
(b) registered and unregistered copyrights and copyright applications,
(c) registered and unregistered trademarks, trade dress, service marks,
trade names, and trademark applications (including commercial names and
d/b/a names), and (d) rights in internet websites and internet domain
names, in each case, set forth on Annex 3, Schedule II.B.9 hereto;
provided, however, that trademarks, service marks, trade names,
internet domain names, logos, slogans, trade dress, and other similar
designations of source or origin of the Defendants (including the
goodwill symbolized thereby) containing the following marks do not form
part of the Divestiture Assets: ``Spirent'', ``Spirent Communications''
and the Spirent circle device;
10. tangible and electronic embodiments of know-how, documentation
of ideas, research and development files, laboratory notebooks and
other similar tangible or electronic materials (including trade
secrets, design protocols, specifications for materials, specifications
for parts, specifications for devices, design tools and simulation
capabilities), or proprietary software;
11. all rights to causes of action, lawsuits, judgments, claims,
defenses, indemnities, guarantees, refunds, rights of recovery, rights
of set off and other rights and privileges against third parties and
demands of any nature, except for claims for refunds of any taxes;
12. all goodwill in respect of, or arising primarily out of, the
conduct of the Divestiture Business (including the exclusive right for
Acquirer to represent itself as carrying on the operation of the
Divestiture Business in succession of Spirent);
13. all guaranties, warranties, indemnities and similar rights
granted by any third party relating to the Divestiture Business or a
Divestiture Asset to the extent required to be performed during the
period on and after the Divestiture Date; and
14. originals of all personnel records relating to Relevant
Personnel.
Provided, however, that except as otherwise specifically addressed
in this Paragraph II.B (including the assets listed in Paragraph II.B.1
and the Schedules in Paragraph II.B), for any property or assets that
relate to, are used in the operation of, or contain information for,
both the Divestiture Business and Defendants' other businesses
(``Shared Assets''), only the portion of such property or assets
related to or necessary for the operation of the Divestiture Business
constitutes Divestiture Assets. The United States, in its sole
discretion, will determine whether Shared Assets are necessary for the
operation of the Divestiture Business.
C. ``Divestiture Business'' means the high-speed ethernet, network
security, and channel emulation business lines of Spirent, Spirent
TestCenter, and the following product lines and projects, each
including the products listed in Annex 4, Schedule II.C:
1. network infrastructure testing applications offering network
access/switching/routing/SDN protocol coverage, cloud and data-center
infrastructure test (including compute, storage, network) and service
provider scale test; automotive V2X test and in-vehicle networking
test;
2. application and security testing solutions providing network
application performance and security attacks at performance load for
testing converged multi-play services, application delivery and network
security controls, including the Avalanche and Cyberflood branded
product lines; and
3. Spirent's channel emulation business, including the Vertex
branded channel emulation testing product line and development projects
for (i) an updated radio frequency card and (ii) an updated channel
emulation product code named ``Project Aspen.''
D. ``Divestiture Date'' means the date on which the Divestiture
Assets are divested to Acquirer pursuant to this Final Judgment.
E. ``Including'' means including but not limited to.
F. ``Keysight'' means Defendant Keysight Technologies, Inc.,
incorporated in Delaware with its headquarters in Santa Rosa,
California, its successors and assigns, and its subsidiaries,
divisions, groups, affiliates, partnerships, and joint ventures, and
their directors, officers, managers, agents, and employees.
G. ``Regulatory Approvals'' means (1) any approvals or clearances
under antitrust, competition, or foreign direct investment laws that
are required for the Transaction to proceed; (2) any approvals or
clearances under antitrust, competition, or foreign direct investment
laws that are required for Acquirer's acquisition of the Divestiture
Assets to proceed; and (3) the sanctioning by the High Court of Justice
in England and Wales of the scheme of arrangement pursuant to which the
Defendants are effecting the Transaction.
H. ``Relevant Personnel'' means all full-time, part-time, or
contract employees of Spirent, wherever located, whose job
responsibilities relate in any way to the Divestiture Assets or the
design, production, and sale of high-speed ethernet testing, network
security testing, and radio frequency (RF) channel emulators, except to
the extent Acquirer determines that such employees are not necessary to
the operation of the Divestiture Business. The United States, in its
sole discretion, will resolve any disagreement regarding which
employees are Relevant Personnel.
I. ``Spirent'' means Defendant Spirent Communications, plc, which
is registered in England and Wales with its headquarters in Crawley,
West Sussex RH10 1BD, United Kingdom, its successors and assigns, and
its subsidiaries, divisions, groups, affiliates, partnerships, and
joint ventures, and their directors, officers, managers, agents, and
employees.
J. ``Transaction'' means the proposed acquisition of Spirent by
Keysight.
K. ``Viavi'' means Viavi Solutions, Inc., a Delaware corporation
with its headquarters in Chandler, Arizona, its successors and assigns,
and its subsidiaries, divisions, groups, affiliates, partnerships, and
joint ventures, and their directors, officers, managers, agents, and
employees.
III. Applicability
A. This Final Judgment applies to Defendants, as defined above, and
all other persons in active concert or participation with any Defendant
who
[[Page 24875]]
receive actual notice of this Final Judgment.
B. If, prior to complying with Section IV of this Final Judgment,
Defendants sell or otherwise dispose of all or substantially all of the
assets or of business units that include the Divestiture Assets,
Defendants must require any purchaser to be bound by the provisions of
this Final Judgment.
IV. Divestiture
A. Defendants are ordered and directed, within ten (10) calendar
days after the Court's entry of the Asset Preservation and Hold
Separate Stipulation and Order in this matter or within ten (10)
calendar days after Regulatory Approvals are received, whichever is
later, to divest the Divestiture Assets in a manner consistent with
this Final Judgment to Acquirer. The United States, in its sole
discretion, may agree to one or more extensions of this time period not
to exceed ninety (90) calendar days in total and will notify the Court
of any extension.
B. For all contracts, agreements, and customer relationships (or
portions of such contracts, agreements, and customer relationships)
included in the Divestiture Assets, Defendants must assign or otherwise
transfer all contracts, agreements, and customer relationships to
Acquirer within the deadlines set forth in Paragraph IV.A; provided,
however, that for any contract or agreement that requires the consent
of another party to assign or otherwise transfer, Defendants must use
best efforts to accomplish the assignment or transfer. Defendants must
not interfere with any negotiations between Acquirer and a contracting
party.
C. Defendants must use best efforts to divest the Divestiture
Assets as expeditiously as possible. Defendants must take no action
that would jeopardize the completion of the divestiture ordered by the
Court, including any action to impede the permitting, operation, or
divestiture of the Divestiture Assets.
D. Unless the United States otherwise consents in writing,
divestiture pursuant to this Final Judgment must include the entire
Divestiture Assets and must 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 Acquirer as part of a viable, ongoing business
of the design, production, and sale of high-speed ethernet testing,
network security testing, and radio frequency (RF) channel emulators
and that the divestiture to Acquirer will remedy the competitive harm
alleged in the Complaint.
E. The divestiture must be made to an Acquirer that, in the United
States' sole judgment, has the intent and capability, including the
necessary managerial, operational, technical, and financial capability,
to compete effectively in the design, production, and sale of high-
speed ethernet testing, network security testing, and radio frequency
(RF) channel emulators.
F. The divestiture must be accomplished in a manner that satisfies
the United States, in its sole discretion, that none of the terms of
any agreement between Acquirer and Defendants give Defendants the
ability unreasonably to raise Acquirer's costs, to lower Acquirer's
efficiency, or otherwise interfere in the ability of Acquirer to
compete effectively in the design, production, and sale of high-speed
ethernet testing, network security testing, and radio frequency (RF)
channel emulators.
G. In the event Defendants are attempting to divest the Divestiture
Assets to an Acquirer other than Viavi, Defendants promptly must make
known, by usual and customary means, the availability of the
Divestiture Assets. Defendants must inform any person making an inquiry
relating to a possible purchase of the Divestiture Assets that the
Divestiture Assets are being divested in accordance with this Final
Judgment and must provide that person with a copy of this Final
Judgment. Defendants must offer to furnish to all prospective
Acquirers, subject to customary confidentiality assurances, all
information and documents relating to the Divestiture Assets that are
customarily provided in a due diligence process; provided, however,
that Defendants need not provide information or documents subject to
the attorney-client privilege or work-product doctrine. Defendants must
make all information and documents available to the United States at
the same time that the information and documents are made available to
any other person.
H. Defendants must provide prospective Acquirers with (1) access to
make inspections of the Divestiture Assets; (2) access to all
environmental, zoning, and other permitting documents and information
relating to the Divestiture Assets; and (3) access to all financial,
operational, or other documents and information relating to the
Divestiture Assets that would customarily be provided as part of a due
diligence process. Defendants also must disclose all encumbrances on
any part of the Divestiture Assets, including on intangible property.
I. Defendants must cooperate with and assist Acquirer in
identifying and, at the option of Acquirer, hiring all Relevant
Personnel, including:
1. No later than the date that is the later of (a) ten (10)
business days following the entry of the Asset Preservation and Hold
Separate Stipulation and Order in this matter and (b) ten (10) business
days prior to the Divestiture Date, Defendants must identify all
Relevant Personnel to Acquirer and the United States, including by
providing organization charts or equivalent information to show how all
Relevant Personnel fit into Spirent's existing organizational
structure.
2. Within ten (10) business days following receipt of a request by
Acquirer or the United States, Defendants must provide to Acquirer and
the United States additional information relating to Relevant
Personnel, including name, job title, reporting relationships, past
experience, responsibilities, training and educational histories,
relevant certifications, and job performance evaluations. Defendants
must also provide to Acquirer and the United States information showing
current and accrued compensation and benefits of Relevant Personnel,
including most recent bonuses paid, aggregate annual compensation,
current target or guaranteed bonus, if any, any retention agreement or
incentives, any equity or equity-based incentive compensation
arrangements, any commission-based compensation arrangements, and any
other payments due, compensation or benefits accrued, or promises made
to the Relevant Personnel. If Defendants are barred by any applicable
law from providing any of this information, Defendants must provide,
within ten (10) business days following receipt of the request, the
requested information to the full extent permitted by law and also must
provide a written explanation of Defendants' inability to provide the
remaining information, including specifically identifying the
provisions of the applicable laws.
3. At the request of Acquirer, Defendants must promptly make
Relevant Personnel available for private interviews with Acquirer
during normal business hours at a mutually agreeable location.
4. Defendants must not interfere with any effort by Acquirer to
employ any Relevant Personnel. Interference includes offering to
increase the compensation or improve the benefits of Relevant Personnel
unless (a) the offer
[[Page 24876]]
is part of a company-wide increase in compensation or improvement in
benefits that was announced prior to March 28, 2024, or (b) the offer
is approved by the United States in its sole discretion. Defendants'
obligations under this Paragraph IV.I.4 will expire one hundred and
eighty (180) calendar days after the Divestiture Date.
5. For Relevant Personnel who elect employment with Acquirer within
one hundred and eighty (180) calendar days of the Divestiture Date or
whose employment transfers automatically to Acquirer as of the
Divestiture Date, Defendants must waive all non-compete and
nondisclosure agreements with respect to the Divestiture Assets and the
Divestiture Business; vest and pay to the Relevant Personnel (or to
Acquirer for payment to the employee) on a prorated basis any bonuses,
incentives, other salary, benefits or other compensation fully or
partially accrued at the time of the transfer of the employee to
Acquirer; vest any unvested pension and other equity rights; and
provide all other benefits, if any, that those Relevant Personnel
otherwise would have been provided had the Relevant Personnel continued
employment with Defendants, including any retention bonuses or
payments. Notwithstanding the foregoing, Defendants may maintain
reasonable restrictions on disclosure by Relevant Personnel of
Defendants' proprietary non-public information that is unrelated to the
Divestiture Assets or the provision of commodity price assessments and
related news and analysis and not otherwise required to be disclosed by
this Final Judgment.
6. For a period of twelve (12) months from the Divestiture Date,
Defendants may not solicit to rehire Relevant Personnel who were hired
by Acquirer within ninety (90) calendar days of the Divestiture Date
unless (a) an individual is terminated or laid off by Acquirer or (b)
Acquirer agrees in writing that Defendants may solicit to re-hire that
individual. Nothing in this Paragraph IV.I.6 prohibits Defendants from
advertising employment openings using general solicitations or
advertisements and re-hiring Relevant Personnel who apply for an
employment opening through a general solicitation or advertisement.
J. Defendants must warrant to Acquirer that (1) the Divestiture
Assets will be operational and without material defect on the date of
their transfer to Acquirer; (2) there are no material defects in the
environmental, zoning, or other permits relating to the operation of
the Divestiture Assets; and (3) Defendants have disclosed all
encumbrances on any part of the Divestiture Assets, including on
intangible property. Following the sale of the Divestiture Assets,
Defendants must not undertake, directly or indirectly, challenges to
the environmental, zoning, or other permits relating to the operation
of the Divestiture Assets.
K. Defendants must use best efforts to assist Acquirer to obtain
all necessary licenses, registrations, and permits to operate the
Divestiture Business. Defendants must coordinate and cooperate with
Acquirer in exchanging information and assistance in connection with
making all filings or notifications necessary to transfer any permits
and any permit applications that are part of the Divestiture Assets to
Acquirer, or in connection with any applications for new permits
relating to the Divestiture Business. Until Acquirer obtains the
necessary licenses, registrations, and permits, Defendants must provide
Acquirer with the benefit of Defendants' licenses, registrations, and
permits to the full extent permissible by law.
L. At the option of Acquirer, and subject to approval by the United
States in its sole discretion, on or before the Divestiture Date,
Defendants must enter into a contract or contracts with Acquirer to
provide transition services (1) for a period of up to ninety (90)
calendar days, for cross-docking and warehousing support, access to
Divestiture Assets in Defendants' facilities, marketing, information
technology services, human resources, accounting, payroll, accounts
payable, accounts receivable, and revenue recognition, and export
control, and (2) for a period of up to twelve (12) months, for customer
service and support. All transition services contracts must be on terms
and conditions reasonably related to market conditions for the
provision of the transition services. Any amendment to or modification
of any provision of a contract to provide transition services is
subject to approval by the United States, in its sole discretion. The
United States, in its sole discretion, may approve one or more
extensions of any contract for transition services for a total of up to
an additional ninety (90) calendar days. If Acquirer seeks an extension
of the term of any contract for transition services, Defendants must
notify the United States in writing at least five (5) business days
after receipt of an extension notice from Acquirer. Acquirer may
terminate a contract for transition services, or any portion of a
contract for transition services (including all interdependent
services), without cost or penalty, at any time upon thirty (30)
calendar days' written notice to Defendants. The employee(s) of
Defendants tasked with providing transition services must not share any
competitively sensitive information of Acquirer with any other employee
of Defendants.
M. If any term of an agreement between Defendants and Acquirer,
including an agreement to effectuate the divestiture required by this
Final Judgment, varies from a term of this Final Judgment, to the
extent that Defendants cannot fully comply with both, this Final
Judgment determines Defendants' obligations.
V. Appointment of Divestiture Trustee
A. If Defendants have not divested the Divestiture Assets within
the period specified in Paragraph IV.A, Defendants must immediately
notify the United States of that fact in writing. Upon application of
the United States, which Defendants may not oppose, the Court will
appoint a divestiture 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 divestiture trustee by the Court,
only the divestiture trustee will have the right to sell those
Divestiture Assets that the divestiture trustee has been appointed to
sell. The divestiture trustee will have the power and authority to
accomplish the divestiture to Acquirer, at a price and on terms
obtainable through reasonable effort by the divestiture trustee,
subject to the provisions of Sections IV, V and VI of this Final
Judgment, and will have other powers as the Court deems appropriate.
The divestiture trustee must sell the Divestiture Assets as quickly as
possible.
C. Defendants may not object to a sale by the divestiture trustee
on any ground other than malfeasance by the divestiture trustee.
Objections by Defendants must be conveyed in writing to the United
States and the divestiture trustee within ten (10) calendar days after
the divestiture trustee has provided the notice of proposed divestiture
required by Section VI.
D. The divestiture trustee will serve at the cost and expense of
Defendants pursuant to a written agreement, on terms and conditions,
including confidentiality requirements and conflict of interest
certifications, approved by the United States in its sole discretion.
E. The divestiture trustee may hire at the cost and expense of
Defendants any agents or consultants, including investment bankers,
attorneys, and accountants, that are reasonably necessary in the
divestiture trustee's
[[Page 24877]]
judgment to assist with the divestiture trustee's duties. These agents
or consultants will be accountable solely to the divestiture trustee
and will serve on terms and conditions, including confidentiality
requirements and conflict-of-interest certifications, approved by the
United States in its sole discretion.
F. The compensation of the divestiture trustee and agents or
consultants hired by the divestiture trustee must be reasonable in
light of the value of the Divestiture Assets and based on a fee
arrangement that provides the divestiture trustee with incentives based
on the price and terms of the divestiture and the speed with which it
is accomplished. If the divestiture trustee and Defendants are unable
to reach agreement on the divestiture trustee's compensation or other
terms and conditions of engagement within fourteen (14) calendar days
of the appointment of the divestiture trustee by the Court, the United
States, in its sole discretion, may take appropriate action, including
by making a recommendation to the Court. Within three (3) business days
of hiring an agent or consultant, the divestiture trustee must provide
written notice of the hiring and rate of compensation to Defendants and
the United States.
G. The divestiture trustee must account for all monies derived from
the sale of the Divestiture Assets sold by the divestiture trustee and
all costs and expenses incurred. Within thirty (30) calendar days of
the Divestiture Date, the divestiture trustee must submit that
accounting to the Court for approval. After approval by the Court of
the divestiture trustee's accounting, including fees for unpaid
services and those of agents or consultants hired by the divestiture
trustee, all remaining money must be paid to Defendants and the trust
will then be terminated.
H. Defendants must use best efforts to assist the divestiture
trustee to accomplish the required divestiture. Subject to reasonable
protection for trade secrets, other confidential research, development,
or commercial information, or any applicable privileges, Defendants
must provide the divestiture trustee and agents or consultants retained
by the divestiture trustee with full and complete access to all
personnel, books, records, and facilities of the Divestiture Assets.
Defendants also must provide or develop financial and other information
relevant to the Divestiture Assets that the divestiture trustee may
reasonably request. Defendants must not take any action to interfere
with or to impede the divestiture trustee's accomplishment of the
divestiture.
I. The divestiture trustee must maintain complete records of all
efforts made to sell the Divestiture Assets, including by filing
monthly reports with the United States setting forth the divestiture
trustee's efforts to accomplish the divestiture ordered by this Final
Judgment. The reports must 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 must describe in detail each
contact.
J. If the divestiture trustee has not accomplished the divestiture
ordered by this Final Judgment within one hundred and eighty (180)
calendar days of appointment, the divestiture trustee must promptly
provide the United States with a report setting forth: (1) the
divestiture trustee's efforts to accomplish the required divestiture;
(2) the reasons, in the divestiture trustee's judgment, why the
required divestiture has not been accomplished; and (3) the divestiture
trustee's recommendations for completing the divestiture. Following
receipt of that report, the United States may make additional
recommendations to the Court. The Court thereafter may enter such
orders as it deems appropriate to carry out the purpose of this Final
Judgment, which may include extending the trust and the term of the
divestiture trustee's appointment by a period requested by the United
States.
K. The divestiture trustee will serve until divestiture of all
Divestiture Assets to Acquirer is completed or for a term otherwise
ordered by the Court.
L. If the United States determines that the divestiture trustee is
not acting diligently or in a reasonably cost-effective manner, the
United States may recommend that the Court appoint a substitute
divestiture trustee.
VI. Notice of Proposed Divestiture
A. Within two (2) business days following execution of a definitive
agreement with an Acquirer other than Viavi to divest the Divestiture
Assets, Defendants or the divestiture trustee, whichever is then
responsible for effecting the divestiture, must notify the United
States of the proposed divestiture. If the divestiture trustee is
responsible for completing the divestiture, the divestiture trustee
also must notify Defendants. The notice must 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.
B. After receipt by the United States of the notice required by
Paragraph VI.A, the United States may make one or more requests to
Defendants or the divestiture trustee for additional information
concerning the proposed divestiture, the proposed Acquirer, and other
prospective Acquirers. Defendants and the divestiture trustee must
furnish any additional information requested within fifteen (15)
calendar days of the receipt of each request unless the United States
provides written agreement to a different period.
C. Within forty-five (45) calendar days after receipt of the notice
required by Paragraph VI.A or within twenty (20) calendar days after
the United States has been provided the additional information
requested pursuant to Paragraph VI.B, whichever is later, the United
States will provide written notice to Defendants and any divestiture
trustee that states whether the United States, in its sole discretion,
objects to the proposed Acquirer or any other aspect of the proposed
divestiture. Without written notice that the United States does not
object, a divestiture may not be consummated. 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 Paragraph V.C of this Final Judgment. Upon objection by
Defendants pursuant to Paragraph V.C, a divestiture by the divestiture
trustee may not be consummated unless approved by the Court.
VII. Financing
Defendants may not finance all or any part of Acquirer's purchase
of all or part of the Divestiture Assets.
VIII. Asset Preservation and Hold Separate Obligations
Defendants must take all steps necessary to comply with the Asset
Preservation and Hold Separate Stipulation and Order entered by the
Court.
IX. Affidavits
A. Within twenty (20) calendar days of the entry of the Asset
Preservation and Hold Separate Stipulation and Order in this matter,
and every thirty (30) calendar days thereafter until the divestiture
required by this Final Judgment has been completed, each Defendant must
deliver to the United States an affidavit, signed by each
[[Page 24878]]
Defendant's Chief Financial Officer and General Counsel, describing in
reasonable detail the fact and manner of each Defendant's compliance
with this Final Judgment. The United States, in its sole discretion,
may approve different signatories for the affidavits.
B. In the event Defendants are attempting to divest the Divestiture
Assets to an Acquirer other than Viavi, each affidavit required by
Paragraph IX.A must include: (1) 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, an interest in the Divestiture Assets and
describe in detail each contact with such persons during that period;
(2) a description of the efforts Defendants have taken to solicit
buyers for and complete the sale of the Divestiture Assets and to
provide required information to prospective Acquirers; and (3) a
description of any limitations placed by Defendants on information
provided to prospective Acquirers. Objection by the United States to
information provided by Defendants to prospective Acquirers must be
made within fourteen (14) calendar days of receipt of the affidavit,
except that the United States may object at any time if the information
set forth in the affidavit is not true or complete.
C. Defendants must keep all records of any efforts made to divest
the Divestiture Assets until one year after the Divestiture Date.
D. Within twenty (20) calendar days of the Asset Preservation and
Hold Separate Stipulation and Order in this matter, each Defendant must
deliver to the United States an affidavit signed by each Defendant's
Chief Financial Officer and General Counsel, that describes in
reasonable detail all actions that Defendant has taken and all steps
that Defendant has implemented on an ongoing basis to comply with
Section VIII of this Final Judgment. The United States, in its sole
discretion, may approve different signatories for the affidavits.
E. If a Defendant makes any changes to actions and steps described
in affidavits provided pursuant to Paragraph IX.D, that Defendant must,
within fifteen (15) calendar days after any change is implemented,
deliver to the United States an affidavit describing those changes.
F. Defendants must keep all records of any efforts made to comply
with Section VIII until one year after the Divestiture Date.
X. Compliance Inspection
A. For the purposes of determining or securing compliance with this
Final Judgment or of related orders such as the Asset Preservation and
Hold Separate Stipulation and Order or of determining whether this
Final Judgment should be modified or vacated, upon written request of
an authorized representative of the Assistant Attorney General for the
Antitrust Division, and reasonable notice to Defendants, Defendants
must permit, from time to time and subject to legally recognized
privileges, authorized representatives, including agents retained by
the United States:
1. to have access during Defendants' office hours to inspect and
copy, or at the option of the United States, to require Defendants to
provide electronic copies of all books, ledgers, accounts, records,
data, and documents, wherever located, 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, wherever located, who may have their
individual counsel present, relating to any matters contained in this
Final Judgment. The interviews must 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 for the Antitrust Division, Defendants must
submit written reports or respond to written interrogatories, under
oath if requested, relating to any matters contained in this Final
Judgment.
XI. Firewalls
A. Defendants must implement and maintain effective procedures to
prevent Acquirer's competitively sensitive information from being
shared or disclosed, by or through implementation and execution of the
obligations required by this Final Judgment and any associated
agreements, including agreements entered pursuant to Paragraph IV.L, by
the employees of Defendants tasked with providing transition services
to Acquirer (collectively ``Firewall Employees'') and any other
employees of Defendants.
B. Defendants must, within thirty (30) calendar days of the entry
of the Asset Preservation Stipulation and Order, submit to the United
States a compliance plan setting forth in detail the procedures
Defendants propose to implement to effect compliance with this Section
XI. The United States must inform Defendants within ten (10) business
days of receipt whether, in its sole discretion, the United States
approves or rejects Defendants' compliance plan. Within ten (10)
business days of receiving a notice of rejection, Defendants must
submit a revised compliance plan. The United States may request that
the Court determine whether Defendants' proposed compliance plan
fulfills the requirements of this Section XI.
C. At minimum, an effective compliance plan must include, for all
Firewall Employees, (1) initial written notice on or before the
Divestiture Date followed by quarterly written reminders, (2) training
within thirty (30) calendar days of the Divestiture Date, and (3)
provision of written acknowledgment of the obligations of this Section
XI within thirty (30) calendar days of the Divestiture Date. The form
of all written notifications must be approved by the United States, in
its sole discretion. Defendants must maintain complete records of all
written notices, training, employee acknowledgments, and all other
efforts made to comply with this Section XI until the expiration of all
transition services agreements between Keysight and Acquirer or twelve
(12) months after the Divestiture Date, whichever is later.
XII. No Reacquisition
Defendants may not reacquire any part of or any interest in the
Divestiture Assets during the term of this Final Judgment without prior
written authorization of the United States.
XIII. Public Disclosure
A. No information or documents obtained pursuant to any provision
this Final Judgment, may 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, for the
purpose of evaluating a proposed Acquirer or securing compliance with
this Final Judgment, or as otherwise required by law.
B. In the event of a request by a third party, pursuant to the
Freedom of Information Act, 5 U.S.C. 552, for disclosure of information
obtained pursuant to any provision of this Final Judgment, the
Antitrust Division will act in accordance with that statute, and the
Department of Justice regulations at 28 CFR part 16, including the
provision on confidential commercial information,
[[Page 24879]]
at 28 CFR 16.7. Defendants submitting information to the Antitrust
Division should designate the confidential commercial information
portions of all applicable documents and information under 28 CFR 16.7.
Designations of confidentiality expire ten (10) years after submission,
``unless the submitter requests and provides justification for a longer
designation period.'' See 28 CFR 16.7(b).
C. If at the time that Defendants furnish information or documents
to the United States pursuant to any provision of this Final Judgment,
Defendants represent and identify in writing information or documents
for 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,'' the United
States must give Defendants ten (10) calendar days' notice before
divulging the material in any legal proceeding (other than a grand jury
proceeding).
XIV. Retention of Jurisdiction
The Court retains jurisdiction to enable any party to this Final
Judgment to apply to the 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.
XV. Enforcement of Final Judgment
A. If any time during the five-year period following entry of this
Final Judgment, the United States determines at its sole discretion
that the Final Judgment has failed to fully redress the violations
alleged in the Complaint, then the United States may re-open this
proceeding to seek additional relief, including divestiture of
additional assets. Such additional relief may be ordered by this Court
upon a finding by a preponderance of the evidence that there is a
reasonable probability that the proposed Final Judgment did not fully
redress the violations alleged in the Complaint.
B. The United States retains and reserves all rights to enforce the
provisions of this Final Judgment, including the right to seek an order
of contempt from the Court. Defendants agree that in a civil contempt
action, a motion to show cause, or a similar action brought by the
United States relating to an alleged violation of this Final Judgment,
the United States may establish a violation of this Final Judgment and
the appropriateness of a remedy therefor by a preponderance of the
evidence, and Defendants waive any argument that a different standard
of proof should apply.
C. This Final Judgment should be interpreted to give full effect to
the procompetitive purposes of the antitrust laws and to restore the
competition the United States alleges was harmed by the challenged
conduct. Defendants agree that they may be held in contempt of, and
that the Court may enforce, any provision of this Final Judgment that,
as interpreted by the Court in light of these procompetitive principles
and applying ordinary tools of interpretation, is stated specifically
and in reasonable detail, whether or not it is clear and unambiguous on
its face. In any such interpretation, the terms of this Final Judgment
should not be construed against either party as the drafter.
D. In an enforcement proceeding in which the Court finds that
Defendants have violated this Final Judgment, the United States may
apply to the Court for an extension of this Final Judgment, together
with other relief that may be appropriate. In connection with a
successful effort by the United States to enforce this Final Judgment
against a Defendant, whether litigated or resolved before litigation,
that Defendant agrees to reimburse the United States for the fees and
expenses of its attorneys, as well as all other costs including
experts' fees, incurred in connection with that effort to enforce this
Final Judgment, including in the investigation of the potential
violation.
E. For a period of four (4) years following the expiration of this
Final Judgment, if the United States has evidence that a Defendant
violated this Final Judgment before it expired, the United States may
file an action against that Defendant in this Court requesting that the
Court order: (1) Defendant to comply with the terms of this Final
Judgment for an additional term of at least four (4) years following
the filing of the enforcement action; (2) all appropriate contempt
remedies; (3) additional relief needed to ensure the Defendant complies
with the terms of this Final Judgment; and (4) fees or expenses as
called for by this Section XV.
XVI. Expiration of Final Judgment
Unless the Court grants an extension, this Final Judgment will
expire ten (10) years from the date of its entry, except that after
five (5) years from the date of its entry, this Final Judgment may be
terminated upon notice by the United States to the Court and Defendants
that the divestiture has been completed and continuation of this Final
Judgment is no longer necessary or in the public interest.
XVII. 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 by making available to the
public copies of this Final Judgment and the Competitive Impact
Statement, public comments thereon, and any response to comments by the
United States. Based upon the record before the Court, which includes
the Competitive Impact Statement and, if applicable, 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
Annex 1
Schedule to II.B.3--Transferred Fixtures
Revised HSE and CE PPE Listing as at 31 December 2024 Stated as at
May 15th, 2025
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BILLING CODE 4410-11-C
Annex 2
Schedule to II.B.4--Excluded Contracts
(i)
1. Spirent Intermediary/Partner Code of Conduct, dated as of
June 9, 2023, by [Counterparty 1].\1\
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\1\ Counterparty names have been omitted for confidentiality
purposes.
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2. Intermediary Framework Agreement, dated as of March 2, 2023,
by and between Spirent UK and [Counterparty 1].
3. Pace Partner Program Master Distributor Agreement, dated as
of September 23, 2019, by and between Spirent US and [Counterparty
2].
4. Intermediary Framework Agreement, dated as of August 17,
2021, by and among Spirent UK, octoScope, Inc., Spirent US and
[Counterparty 3].
5. International Distributer Agreement, dated as of June 4,
2001, by and between Spirent US and [Counterparty 4], as amended by
Amendment No.1, dated as of March 27, 2003, Amendment No. 2, dated
as of July 10, 2006, and Amendment No. 3, dated as of December 1,
2010.
6. Pace Partner Program Reseller Agreement, dated as of March
13, 2019, by and between Spirent Asia and [Counterparty 5].
7. Pace Partner Program Authorized Representative Agreement,
dated as of March 25, 2019, by and between Spirent US and
[Counterparty 6].
8. Intermediary Framework Agreement, dated as of February 25,
2021, by and between Spirent UK and [Counterparty 7].
9. International Non-Exclusive Distributor Agreement, dated as
of December 1, 2011, by and between Spirent Communications
(International) Limited and [Counterparty 7], as amended by
Amendment No. 1, July 1, 2016.
10. Software License, dated as of December 1, 2011, by and
between Spirent Communications (International) Limited and
[Counterparty 7].
11. Intermediary Framework Agreement, dated as of December 8,
2020, by and between Spirent UK and [Counterparty 8].
12. Intermediary Framework Agreement, dated as of December 3,
2020, by and between Spirent Asia and [Counterparty 9].
13. Exclusive Reseller Agreement, dated as of June 22, 2014, by
and between octoScope, Inc. and [Counterparty 10].
14. Pace Partner Program Reseller Agreement, dated as of April
29, 2019, by and between Spirent UK and [Counterparty 11].
15. Distributor Agreement, dated as of September 22, 2020, by
and between Spirent Asia and [Counterparty 12].
16. Spirent Security Testing and Monitoring Consulting Services
for SecurityLabs Services Agreement, dated as of September 22, 2020,
by and between Spirent Asia and [Counterparty 12].
17. Spirent Professional Services Agreement, dated as of
September 22, 2020, by and between Spirent Asia and [Counterparty
12].
18. Intermediary Framework Agreement, dated as of June 14, 2023,
by and among Spirent Positioning, Spirent France, and [Counterparty
13].
19. Intermediary Framework Agreement, dated as of April 26,
2024, by and among Spirent Asia, Spirent Positioning and
[Counterparty 14].
20. Pace Partner Program Reseller Agreement, dated as of April
13, 2020, by and between Spirent Asia and [Counterparty 15].
21. Intermediary Framework Agreement, dated as of December 22,
2021, by and between Spirent Asia and [Counterparty 15], as amended
by Amendment No. 1, dated as of September 27, 2022.
22. Pace Partner Program Reseller Agreement, dated as of
September 29, 2020, by and between Spirent Asia and [Counterparty
16].
23. Intermediary Framework Agreement, dated as of January 1,
2022, by and among Spirent Asia, octoScope, Inc. and [Counterparty
17].
24. Distribution Agreement, dated as of March 9, 2007, by and
between Spirent Communications Plc and [Counterparty 18], as amended
by Amendment No. 1, dated as of November 24, 2010.
25. Pace Partner Program Reseller Agreement, dated as of June
28, 2019, by and between Spirent US and [Counterparty 19].
26. Authorized Representative Agreement, dated as of August 25,
2020, by and between Spirent US and [Counterparty 20].
27. Pace Partner Program Reseller Agreement, dated as of August
18, 2018, by and between Spirent Asia and [Counterparty 21].
28. Pace Partner Program Reseller Agreement, dated as of May 13,
2019, by and between Spirent US and [Counterparty 22].
29. Intermediary Framework Agreement, dated as of August 16,
2022, by and between Spirent UK and [Counterparty 22].
30. Distributor Agreement, dated as of March 25, 2010, by and
between Spirent Communications plc and [Counterparty 23], as amended
by Amendment No. 1, dated as of November 24, 2010.
31. International No-Exclusive Distributor Agreement, dated as
of January 1, 2013, by and between Spirent Communications
(International) Limited and [Counterparty 23], as amended by
Amendment No. 1, dated as of August 1, 2016.
32. Pace Partner Program Reseller Agreement, dated as of May 28,
2019, by and between Spirent Asia and [Counterparty 24], as amended
by Amendment No. 1, dated as of March 13, 2020.
33. Pace Partner Program Reseller Agreement, dated as of May 14,
2020, by and between Spirent Asia and [Counterparty 25].
34. Pace Partner Program Reseller Agreement, dated as of May 14,
2020, by and between Spirent Positioning and [Counterparty 25].
35. Reseller Agreement, dated as of September 15, 2014, by and
between Spirent US and [Counterparty 26].
36. Software License, dated as of September 15, 2014, by and
between Spirent US and [Counterparty 26].
37. Sales Representation Agreement, dated as of August 20, 2009,
by and between [Counterparty 27].
38. Intermediary Framework Agreement, dated as of April 28,
2022, by and between Spirent Asia and [Counterparty 28], as amended
by Amendment No. 1., dated as of December 20, 2022.
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39. Intermediary Framework Agreement, dated as of January 1,
2022, by and among [Counterparty 29], Spirent Positioning,
octoScope, Inc. and Spirent Asia, as amended by Amendment #1, dated
as of October 27, 2022.
40. Pace Partner Program Authorized Representative Agreement,
dated as of April 24, 2020, by and between Spirent Asia and
[Counterparty 30].
(ii)
1. Corporate Services Commercial Account Agreement, dated as of
January 9, 2012, by and between Spirent and [Counterparty 31].
2. Annual Billing Commitment under Microsoft Agreement, dated as
of April 6, 2023, by and between Spirent and [Counterparty 32].
3. Annual Billing Commitment under Microsoft Agreement, dated as
of April 1, 2024, by and between Spirent and [Counterparty 32].
4. Wireless Consulting and Services Agreement, dated as of
August 30, 2023, by and between Spirent US and [Counterparty 33].
Annex 3
Schedule to II.B.9--Transferred Intellectual Property
Registered Company Patents
STC, Automotive and Security:
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Channel Emulation:
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Unregistered Company Brand Names
``TestCenter''
``Avalanche''
``Cyberflood''
``Vertex''
Domain Names
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BILLING CODE 4410-11-C
Annex 4
Schedule to II.C--Divestiture Business Products
High-speed ethernet solutions
Spirent TestCenter
SX
AX
AION
Smartbits
Spirent Vnimble
Automotive testing solutions
TTworkbench
TTman
TTsuite
TTthree
Network security solutions
Avalanche
Cyberflood
Cyberflood Virtual
Spirent Studio
Channel emulation solutions
Vertex
Legacy channel emulation products (WIRELESS VCE6;
WIRELESS VR5; WIRELESS FADER TOOLS; WIRELESS SR 5500)
[[Page 24945]]
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Keysight Technologies,
Inc. and Spirent Communications PLC, Defendants.
Civil Action No. 1:25-cv-01734-CJN
Judge: Carl J. Nichols
Competitive Impact Statement
In accordance with the Antitrust Procedures and Penalties Act, 15
U.S.C. 16(b)-(h) (the ``APPA'' or ``Tunney Act''), the United States of
America files this Competitive Impact Statement related to the proposed
Final Judgment filed in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
On March 28, 2024, Keysight Technologies Inc. (``Keysight'')
offered to acquire Spirent Communications plc (``Spirent'') for
approximately $1.5 billion, and Spirent's shareholders voted to accept
this offer on May 22, 2024. The United States filed a civil antitrust
Complaint on June 2, 2025, seeking to enjoin the proposed acquisition.
The Complaint alleges that the likely effect of this acquisition would
be to substantially lessen competition for the development,
manufacture, and sale of three key types of communications testing and
measurement equipment--high-speed ethernet testing equipment, network
security testing equipment, and radiofrequency (``RF'') channel
emulators--to customers in the United States, in violation of Section 7
of the Clayton Act, 15 U.S.C. 18.
At the same time the Complaint was filed, the United States filed a
proposed Final Judgment and an Asset Preservation and Hold Separate
Stipulation and Order (``Stipulation and Order''), which are designed
to remedy the loss of competition alleged in the Complaint.
Under the proposed Final Judgment, which is explained more fully
below, Defendants are required to divest the identified Divestiture
Assets in each of the three Divestiture Businesses where competitive
harm is alleged. The Divestiture Businesses are high-speed ethernet
testing, network security testing, and RF channel emulators, as
detailed in the proposed Final Judgment. These assets must be divested
to a third-party acquirer approved by the United States. Viavi
Solutions, Inc. has already entered into an agreement with Defendants
to acquire the Divestiture Assets and is an approved acquirer, and
divestiture could also be made to an alternative acquirer if approved
by the United States.
The Stipulation and Order requires Defendants to take certain steps
to preserve competition and to ensure the competitiveness of the
Divestiture Assets pending entry of final judgment by this Court.
Specifically, Defendants must operate, preserve, and maintain the
Divestiture Assets as ongoing, economically fully viable, marketable,
and competitive assets until the required divestiture is complete. In
addition, management, sales, and operations of Divestiture Assets must
be held entirely separate, distinct, and apart from Defendants' other
operations. The Stipulation and Order also provides firewalls to ensure
Keysight cannot access competitively sensitive information from the
Divestiture Businesses.
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 will terminate this action, except that the
Court will retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II. Description of Events Giving Rise to the Alleged Violation
A. The Defendants and the Proposed Transaction
Keysight is a Delaware corporation headquartered in Santa Rosa,
California. It is a leading provider of communications testing and
measurement equipment in the U.S. and worldwide. Keysight's fiscal year
2024 global revenues were approximately $4.979 billion, $1.769 billion
of which were from the United States. Keysight's Communications
Solutions Group produces and sells the products in the relevant markets
at issue. The Communications Solutions Group includes two main areas:
(i) commercial communications and (ii) aerospace, defense and
government.
Spirent is a United Kingdom corporation headquartered in Crawley,
England, with offices in Calabasas, California and other locations in
and outside the United States. It is also a leading provider of
communications testing and measurement equipment in the U.S. and
worldwide. Spirent earned $460 million in global revenues in 2024, $257
million of which were from the United States.
On March 28, 2024, Keysight offered to purchase Spirent for $1.5
billion. Spirent's board recommended that Spirent shareholders accept
Keysight's offer, which they did on May 22, 2024.
B. The Competitive Effects of the Transaction
Keysight and Spirent provide critical, highly-specialized equipment
used to test various components of communications networks and measure
and validate network performance. Together, they dominate three key
communications testing and measurement markets in the United States:
high-speed ethernet testing, network security testing, and RF channel
emulators. Keysight and Spirent are each other's closest competitors in
these markets. For years, competition between them has resulted in each
company offering discounts, maintaining valuable aftermarket support
services, and investing in new and advanced products and features--all
to the benefit of their customers and the broader public. Keysight's
proposed acquisition of Spirent would eliminate this competition,
leading to higher prices; lower quality products, support, and service;
and less innovation.
1. Industry Overview
Communications networks connect the world, moving significant
volumes of data around the clock. The communications industry uses
specialized testing equipment to verify the performance of
communications networks and the devices connected to them. This testing
is essential to validate that a network performs as expected, even
under non-ideal conditions, such as conditions that interfere with a
wireless signal, or to ensure that networks and equipment can handle
increasing loads of traffic. Testing also helps ensure that user data
is securely protected against the threat of cyberattack. To complete
this testing, equipment manufacturers and network operators purchase
specialized hardware and software equipment, and they rely on periodic
software updates and multi-year services contracts to provide regular
maintenance and system upgrades.
Network equipment manufacturers, communications network operators,
and large cloud computing providers purchase and use this specialized
testing equipment to ensure their products and networks operate
effectively and securely under normal conditions, and to prepare them
to withstand the real-world strain of interruptions, cyberattacks,
interference, and high user demand. Because communications technologies
are rapidly evolving, the communications industry invests millions of
dollars annually in researching, developing, and implementing upgrades
to their
[[Page 24946]]
products to keep pace with technological advancement.
Customers use lab testing equipment throughout the lifecycle of a
network, even after the network or devices in it have been deployed.
Lab testing ensures that communications networks can support updated
devices, comply with revised industry standards, and maintain data
security as the cybersecurity landscape changes.
Lab testing equipment requires constant engineering investment.
Network technology changes rapidly: data moves faster, mobile wireless
providers deploy new spectrum and new wireless technologies, would-be
hackers develop new lines of attack, and device manufacturers make each
iteration of their product more sophisticated. Lab testing equipment
providers, including Keysight and Spirent, spend millions of dollars
each year on research and development to ensure their products keep
pace with market changes and employ hundreds of specialized experts
dedicated to improving their testing equipment and responding to
customer requests.
Accurate lab testing capabilities are critical to the development,
validation, and maintenance of wireline and wireless communications
devices and networks. A wide range of customers depend on specialized
lab testing equipment to successfully deploy their networks and
devices, including network equipment manufacturers, network operators,
chipset manufacturers, ``hyperscalers'' that offer cloud computing
services, research labs, government testing centers, and large
companies operating secure internal networks. Equipment cannot be
effectively deployed in these complex networks without such testing.
2. Relevant Markets Affected by the Proposed Acquisition
The Complaint alleges likely harm to competition in three distinct
product markets within the communications testing and measurement
industry: (1) high-speed ethernet testing; (2) network security
testing; and (3) radiofrequency (``RF'') channel emulation.
a. High-Speed Ethernet Testing
High-speed ethernet testing equipment tests the performance of both
the hardware and software components of high-speed wireline
communications networks. Specifically, it tests the functionality of
communications both within a given network and across different
networks. This testing ensures that wireline networks can support high-
bandwidth use cases, such as running artificial intelligence
algorithms. These testing products are crucial to ensure that large
network operators can support data usage at scale.
Customers using high-speed ethernet testing equipment have no
reasonable alternatives for testing their wireline network equipment.
Solutions developed in-house or relying on open-source software would
not provide an adequate alternative for most customers. Attempting to
use such options would require costly investments in engineering and
other technical resources, can take years to develop, and would not be
as reliable or robust as the high-speed ethernet testing equipment
available from Keysight or Spirent. A hypothetical monopolist could
profitably impose a small but significant and non-transitory price
increase for, or otherwise degrade quality of, high-speed ethernet
testing equipment sold to customers in the United States. A degradation
of quality could entail any dimension of competition, including
service, capacity investment, choice of product variety or features, or
innovation. Accordingly, high-speed ethernet testing equipment sold to
U.S. customers constitutes a relevant market and line of commerce under
Section 7 of the Clayton Act, 15 U.S.C. 18.
b. Network Security Testing
Network security testing equipment assesses the cybersecurity of
wireline networks through laboratory simulation of attacks, testing
firewalls as well as other security-related features like proxy and
secure content gateways. These products simulate real-world conditions,
such as high traffic volumes, to ensure that a network's security
policies protect it from attack without impacting performance.
Customers that purchase network security testing equipment have no
reasonable alternatives. Although some companies make use of open-
source software or internally developed tools for limited purposes,
self-supply is not a viable option for most customers due to the high
costs involved. Customers rely on network security testing equipment to
ensure sensitive data are protected from cyberattacks and are thus
unlikely to rely on unproven and untested solutions in the ordinary
course of business. A hypothetical monopolist could profitably impose a
small but significant and non-transitory price increase for, or
otherwise degrade quality of, network security testing equipment sold
to customers in the United States. A quality degradation could entail
any dimension of competition, including service, capacity investment,
choice of product variety or features, or innovation. Accordingly,
network security testing equipment sold to U.S. customers constitutes a
relevant market and line of commerce under Section 7 of the Clayton
Act, 15 U.S.C. 18.
c. RF Channel Emulation
RF channel emulators evaluate how wireless networks and devices
will react when deployed in the real world, where a wireless signal may
not be perfect. Wireless networks transmit data using radio frequency
spectrum. Wireless communication networks are used across multiple
important industries, including cellular networks, satellite networks,
and radar and navigation systems. Unlike in a wireline environment,
signal transmission through radio frequency can be subject to
substantial interference from weather, large objects, topographical
features, and the presence of other competing radio signals. RF channel
emulators, also known as ``faders,'' are used in a lab setting. They
test whether wireless receivers, such as cell phones or radar handsets,
can effectively receive and decode RF signals. A channel emulator adds
various impairments to the intended communication path to simulate
real-world challenges, such as dense urban settings, mountainous
regions, or long distances. This performance testing enables engineers
to adjust and optimize designs in a controlled environment to ensure
wireless networks perform as expected once they are deployed.
Customers that purchase RF channel emulators have no reasonable
competitive alternatives. Although some companies make use of open-
source software or internally developed tools for limited purposes,
self-supply is not a viable option for most customers due to the high
costs and technical expertise required to develop internal solutions.
Customers rely on RF channel emulators to ensure networks will operate
effectively in real-world conditions. A hypothetical monopolist could
profitably impose a small but significant and non-transitory price
increase for, or otherwise degrade quality of, RF channel emulators
sold to customers in the United States. A degradation of quality could
entail any dimension of competition, including quality, service,
capacity investment, choice of product variety or features, or
innovation. Accordingly, RF channel emulators sold to U.S. customers
constitutes a relevant market and line of commerce under Section 7 of
the Clayton Act, 15 U.S.C. 18.
[[Page 24947]]
3. Anticompetitive Effects
Keysight and Spirent are the dominant providers of high-speed
ethernet testing equipment, network security testing equipment, and RF
channel emulators in the United States. Their proposed merger would
extinguish the competition between them and would presumptively result
in a substantial lessening of competition in each market.
a. High-Speed Ethernet Testing
The transaction would substantially lessen competition in the
market for high-speed ethernet testing equipment in the United States.
Keysight and Spirent are the two principal suppliers of high-speed
ethernet testing equipment in the United States and have remained the
market leaders in this area for many years. In the United States,
Keysight and Spirent have a combined market share of approximately 85%.
The market for high-speed ethernet testing equipment is already highly
concentrated and would become significantly more concentrated as a
result of the proposed merger.
Keysight and Spirent compete directly against one another to
provide high-speed ethernet testing equipment to customers. The handful
of other market participants serve far fewer customers and offer much
less robust solutions than Defendants do. Customers have benefited from
competition between Defendants through lower prices, higher quality
services, and more robust innovation--an essential feature as
technology and network hardware testing components continuously evolve
to meet and enable customer innovations.
b. Network Security Testing
The transaction also would substantially lessen competition in the
market for network security testing equipment. Keysight and Spirent are
the two largest suppliers of network security testing equipment in the
United States and have remained the market leaders for many years. In
this market, each Defendant earns more than double the revenue of any
other competitor; together, Keysight and Spirent would have a combined
market share of at least 60% in the United States. The market for
network security testing equipment is already highly concentrated and
would become significantly more concentrated after the proposed merger.
Keysight and Spirent compete head-to-head to provide network
security testing equipment to customers. This competition has resulted
in lower prices, higher-quality services, and faster product
improvements. These updates are essential to keep pace as cybersecurity
attackers develop increasingly more sophisticated methods of accessing
secure networks.
c. RF Channel Emulation
The transaction also would substantially lessen competition in the
market for RF channel emulators in the United States. Keysight and
Spirent are two of the leading providers of RF channel emulators in the
United States, with a combined market share of more than 50%. The
market for RF channel emulators is already highly concentrated and
would become significantly more concentrated after the proposed merger.
Keysight and Spirent compete head-to-head to provide RF channel
emulators to customers. This competition has resulted in lower prices,
higher-quality services, and faster product improvements. These updates
are essential to keep pace as technology improves and wireless networks
are used for increasingly more data traffic.
Keysight and Spirent are especially close competitors for customers
who use RF channel emulators to test terrestrial wireless networks (as
opposed to satellite networks) and for customers who need ``external''
hardware-based faders able to test a full array of RF channel emulation
capabilities. Other providers of RF channel emulators only support
satellite networks and/or only emulate simple interference with
``internal'' software-based products. Keysight and Spirent are the only
providers in the United States of RF channel emulators capable of
supporting the full array of test environments for terrestrial wireless
networks. For U.S. customers that require these capabilities, Keysight
and Spirent are their only options.
4. Barriers to Entry and Expansion
It is unlikely that any firm would enter the relevant markets in a
timely manner sufficient to prevent the proposed transaction's
anticompetitive effects. Successful entry into these specialized
markets is difficult, time-consuming, and costly.
A prospective entrant would need to invest significant time and
capital to design and develop testing products comparable to the
Defendants' product lines. In each of the relevant markets, Keysight
and Spirent have spent millions of dollars and many years acquiring,
building, and refining their products. Moreover, the underlying
communications technologies are governed by evolving standards,
requiring substantial ongoing investment to ensure that a new product
functions effectively with new features and meets new standards.
Finally, given that these products impact the performance, security,
and reliability of networks that handle sensitive data, a prospective
entrant would need to devote significant resources to demonstrate its
ability to provide a high-quality product and high-quality service and
support, including regular updates. Purchasers of high-speed ethernet
lab testing equipment, network security testing equipment, and RF
channel emulators have complex needs and are reluctant to rely on any
company without an established brand and reputation.
5. Absence of Efficiencies
Defendants cannot demonstrate verifiable, merger-specific
efficiencies sufficient to offset the proposed merger's anticompetitive
effects.
III. Explanation of the Proposed Final Judgment
Paragraph IV.A of the proposed Final Judgment requires Defendants,
within ten (10) calendar days after the Court's entry of the Asset
Preservation and Hold Separate Stipulation and Order, or within ten
(10) calendar days after Regulatory Approvals (as defined in Paragraph
II.G of the proposed Final Judgment) are received, whichever is later,
to divest all rights, title and interests in and to all property and
assets (collectively, the ``Divestiture Assets'') related to or used in
connection with (i) Spirent's high-speed ethernet testing business,
(ii) Spirent's network security testing business, and (iii) Spirent's
RF channel emulation business (collectively, the ``Divestiture
Businesses'') to Viavi Solutions, Inc. or another acquirer approved by
the United States in its sole discretion. Defendants must take all
reasonable steps necessary to accomplish the divestiture quickly and
must cooperate with the acquirer.
The proposed Final Judgment identifies fourteen categories of
Divestiture Assets in Paragraph II.B required to be divested,
including: (1) real property interests at several specified locations
used in the Divestiture Businesses, in Calabasas, California;
Bucharest, Romania; Honolulu, Hawaii; Beijing, China; and Bangalore,
India; (2) all inventory; (3) all tangible personal property; (4) all
contracts, contractual rights and customer relationships as discussed
in more detail below, and with certain specified exceptions; (5) all
licenses,
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permits, certifications, approvals, consents, registrations, waivers,
and authorizations; (6) data and information held or controlled by
Defendants; (7) all books and records, with certain specified
exceptions pertaining to the organization, existence or capitalization
of Spirent or its affiliates; (8) copies of all tax returns related to
taxes on or with respect to the Divestiture Businesses or Divestiture
Assets; (9) all intellectual property owned, licensed or sublicensed,
including patents, copyrights, trademarks, and rights in internet
websites and internet domain names, with certain specified exceptions
related to Spirent's own name and device; (10) tangible and electronic
embodiments of know-how, documentation of ideas, research and
development files, laboratory notebooks and similar materials, or
proprietary software; (11) legal causes of action, judgments, claims,
and other rights and privileges against third parties, except tax
refund claims; (12) goodwill arising out of the Divestiture Businesses;
(13) guaranties, warranties, indemnities and similar rights granted by
any third party regarding the Divestiture Businesses or a Divestiture
Asset to the extent required to be performed during the period on or
after the divestiture date; and (14) originals of all personal records
related to Relevant Personnel (as defined in Paragraph II.H of the
proposed Final Judgment). These Divestiture Assets are broadly defined
to ensure a complete divestiture of all assets needed for the Divested
Businesses, while any exceptions to the divestiture obligations are
specified in the proposed Final Judgment. Except as otherwise
specifically addressed in the definition of Divestiture Assets, only
the portion of Shared Assets (ones that relate to, are used in the
operation of, or contain information for, both the Divestiture
Businesses and other businesses to be retained by Defendants) related
to or necessary to the operation of the Divestiture Businesses
constitutes Divestiture Assets. The United States, in its sole
discretion, will determine whether any Shared Asset is necessary for
the operation of a Divestiture Business. Certain shared contracts may
relate to both Divestiture Businesses and to businesses not included in
the Divestiture Assets, and if so, only the portion of the contract
related to the Divestiture Business is considered a Divestiture Asset
under Paragraph II.B.4 of the proposed Final Judgment.
Paragraph IV.I of the proposed Final Judgment requires Defendants
to identify all Relevant Personnel to the acquirer and the United
States, including by providing the acquirer and the United States with
organization charts and information relating to these employees and
making them available for interviews. It also provides that Defendants
must not interfere with any negotiations by the acquirer to hire these
employees. In addition, for employees who elect employment with the
acquirer, Defendants must waive all non-compete and non-disclosure
agreements, vest all unvested pension and other equity rights, provide
any pay pro rata, provide all compensation and benefits that those
employees have fully or partially accrued, and provide all other
benefits that the employees would generally be provided had those
employees continued employment with Defendants, including but not
limited to any retention bonuses or payments. This paragraph further
provides that Defendants may not solicit to hire any of those employees
who were hired by the acquirer, unless an employee is terminated or
laid off by the acquirer or the acquirer agrees in writing that
Defendants may solicit to hire that individual. The non-solicitation
period in the proposed Final Judgment runs for twelve (12) months from
the date of the divestiture, but Defendants and the acquirer can
negotiate a longer period by private contract.
Paragraph IV.B of the proposed Final Judgment requires Defendants
to transfer all contracts, agreements, and relationships to the
acquirer and must make best efforts to assign or otherwise transfer
contracts or agreements that require the consent of another party
before assignment or other transfer.
The proposed Final Judgment requires Defendants to provide certain
transition services to maintain the viability and competitiveness of
the Divestiture Assets during the transition to the acquirer. Paragraph
IV.L of the proposed Final Judgment requires Defendants, at the
acquirer's option, to enter into transition services agreements (i) for
a period of up to ninety (90) calendar days, for cross-docking and
warehousing support, access to Divestiture Assets in Defendants'
facilities, marketing, information technology services, human
resources, accounting, payroll, accounts payable, accounts receivable,
and revenue recognition, and export control, and (ii) for a period of
up to twelve (12) months, for customer service and support. The
acquirer may terminate the transition services agreement, or any
portion of it, without cost or penalty at any time upon thirty (30)
calendar days' written notice to Defendants. The paragraph further
provides that the United States, in its sole discretion, may approve
one or more extensions of this transition services agreement for a
total of up to an additional ninety (90) days and that any amendments
to or modifications of any provisions of a transition services
agreement are subject to approval by the United States in its sole
discretion. Paragraph IV.L also provides that employees of Defendants
tasked with supporting this agreement must not share any competitively
sensitive information of the acquirer with any other employee of
Defendants, unless such sharing is for the sole purpose of providing
transition services to the acquirer.
If Defendants do not accomplish the divestiture within the period
prescribed in Paragraph IV.A of the proposed Final Judgment, Section V
of the proposed Final Judgment provides that the Court will appoint a
divestiture trustee selected by the United States to effect the
divestiture. If a divestiture trustee is appointed, the proposed Final
Judgment provides that Defendants must pay all costs and expenses of
the trustee. The divestiture trustee's commission must 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 the
divestiture trustee's appointment becomes effective, the trustee must
provide monthly reports to the United States setting forth his or her
efforts to accomplish the divestiture. If the divestiture has not been
accomplished within one hundred and eighty (180) days of the
divestiture trustee's appointment, the United States may make
recommendations to the Court, which will enter such orders as
appropriate, in order to carry out the purpose of the Final Judgment,
including by extending the trust or the term of the divestiture
trustee's appointment.
Paragraph XV.A of the proposed Final Judgment provides that, if at
any time during the five (5) year period following entry of the Final
Judgment, the United States determines at its sole discretion that the
Final Judgment has failed to fully redress the violations alleged in
the Complaint, then the United States may re-open the proceeding to
seek additional relief, including divestiture of additional assets.
Paragraph XV.B of the proposed Final Judgment provides that the
United States retains and reserves all rights to enforce the Final
Judgment, including the right to seek an order of contempt from the
Court. Under the terms of this paragraph, Defendants have agreed that
in any civil contempt action, any motion to show cause, or any similar
action brought by the United States
[[Page 24949]]
regarding an alleged violation of the Final Judgment, the United States
may establish the violation and the appropriateness of any remedy by a
preponderance of the evidence and that Defendants have waived any
argument that a different standard of proof should apply. This
provision aligns the standard for compliance with the Final Judgment
with the standard of proof that applies to the underlying offense that
the Final Judgment addresses.
Paragraph XV.C of the proposed Final Judgment provides additional
clarification regarding the interpretation of the provisions of the
proposed Final Judgment. The proposed Final Judgment is intended to
remedy the loss of competition the United States alleges would
otherwise be harmed by the transaction. Defendants agree that they will
abide by the proposed Final Judgment and that they may be held in
contempt of the Court for failing to comply with any provision of the
proposed Final Judgment that is stated specifically and in reasonable
detail, as interpreted in light of this procompetitive purpose.
Paragraph XV.D of the proposed Final Judgment provides that if the
Court finds in an enforcement proceeding that a Defendant has violated
the Final Judgment, the United States may apply to the Court for an
extension of the Final Judgment, together with such other relief as may
be appropriate. In addition, to compensate American taxpayers for any
costs associated with investigating and enforcing violations of the
Final Judgment, Paragraph XV.D provides that, in any successful effort
by the United States to enforce the Final Judgment against a Defendant,
whether litigated or resolved before litigation, the Defendant must
reimburse the United States for attorneys' fees, experts' fees, and
other costs incurred in connection with that effort to enforce this
Final Judgment, including the investigation of the potential violation.
Paragraph XV.E of the proposed Final Judgment states that the
United States may file an action against a Defendant for violating the
Final Judgment for up to four (4) years after the Final Judgment has
expired or been terminated. This provision is meant to address
circumstances such as when evidence that a violation of the Final
Judgment occurred during the term of the Final Judgment is not
discovered until after the Final Judgment has expired or been
terminated or when there is not sufficient time for the United States
to complete an investigation of an alleged violation until after the
Final Judgment has expired or been terminated. This provision,
therefore, makes clear that, for four (4) years after the Final
Judgment has expired or been terminated, the United States may still
challenge a violation that occurred during the term of the Final
Judgment.
Finally, Section XVI of the proposed Final Judgment provides that
the Final Judgment will expire ten (10) years from the date of its
entry, except that after five (5) years from the date of its entry, the
Final Judgment may be terminated upon notice by the United States to
the Court and Defendants that the divestiture has been completed and
continuation of the Final Judgment is no longer necessary or in the
public interest.
IV. Remedies Available to Potential Private Plaintiffs
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 neither impairs
nor assists 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 within sixty (60) days of
the first 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 U.S. Department of
Justice, which remains free to withdraw its consent to the proposed
Final Judgment at any time before the Court's entry of the Final
Judgment. The comments and the response of the United States will be
filed with the Court. In addition, the comments and the United States'
responses will be published in the Federal Register unless the Court
agrees that the United States instead may publish them on the U.S.
Department of Justice, Antitrust Division's internet website.
Written comments should be submitted in English to: Jared Hughes,
Assistant Chief, Media, Entertainment and Communications Section,
Antitrust Division, United States Department of Justice, 450 Fifth
Street NW, Suite 7000, 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
As an alternative to the proposed Final Judgment, the United States
considered a full trial on the merits against Defendants. The United
States could have continued the litigation and sought preliminary and
permanent injunctions against Keysight's acquisition of Spirent. Under
the circumstances present here, however, the United States concludes
that entry of the proposed Final Judgment is in the public interest
insofar as it avoids the time, expense, and uncertainty of a full trial
on the merits.
VII. Standard of Review Under the APPA for the Proposed Final Judgment
Under the Clayton Act and APPA, proposed Final Judgments, or
``consent decrees,'' in antitrust cases brought by the United States
are subject to a sixty (60) 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, the Court, in accordance with the statute as amended in
2004, 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
[[Page 24950]]
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); United States v. U.S. Airways Grp.,
Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (explaining that the
``court's inquiry is limited'' in Tunney Act settlements); United
States v. InBev N.V./S.A., No. 08-1965 (JR), 2009 U.S. Dist. LEXIS
84787, at *3 (D.D.C. Aug. 11, 2009) (noting that a court's review of a
proposed Final 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 U.S. Court of Appeals for the District of Columbia Circuit
has held, under the APPA a court considers, among other things, the
relationship between the remedy secured and the specific allegations in
the government's Complaint, whether the proposed Final Judgment is
sufficiently clear, whether its enforcement mechanisms are sufficient,
and whether it may positively harm third parties. See Microsoft, 56
F.3d at 1458-62. With respect to the adequacy of the relief secured by
the proposed Final Judgment, a court may not ``make de novo
determination of facts and issues.'' United States v. W. Elec. Co., 993
F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also
Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F.
Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F.
Supp. 2d 10, 16 (D.D.C. 2000); InBev, 2009 U.S. Dist. LEXIS 84787, at
*3. Instead, ``[t]he balancing of competing social and political
interests affected by a proposed antitrust decree must be left, in the
first instance, to the discretion of the Attorney General.'' W. Elec.
Co., 993 F.2d at 1577 (quotation marks omitted). ``The court should
also bear in mind the flexibility of the public interest inquiry: the
court's function is not to determine whether the resulting array of
rights and liabilities is the one that will best serve society, but
only to confirm that the resulting settlement is within the reaches of
the public interest.'' Microsoft, 56 F.3d at 1460 (quotation marks
omitted); see also United States v. Deutsche Telekom AG, No. 19-2232
(TJK), 2020 WL 1873555, at *7 (D.D.C. Apr. 14, 2020). More demanding
requirements would ``have enormous practical consequences for the
government's ability to negotiate future settlements,'' contrary to
congressional intent. Microsoft, 56 F.3d at 1456. ``The Tunney Act was
not intended to create a disincentive to the use of the consent
decree.'' Id.
The United States' predictions about the efficacy of the remedy are
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at
1461 (recognizing courts should give ``due respect to the Justice
Department's . . . view of the nature of its case''); United States v.
Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 2016) (``In
evaluating objections to settlement agreements under the Tunney Act, a
court must be mindful that [t]he government need not prove that the
settlements will perfectly remedy the alleged antitrust harms[;] it
need only provide a factual basis for concluding that the settlements
are reasonably adequate remedies for the alleged harms.'' (internal
citations omitted)); United States v. Republic Servs., Inc., 723 F.
Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review to
which the government's proposed remedy is accorded''); United States v.
Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A
district court must accord due respect to the government's prediction
as to the effect of proposed remedies, its perception of the market
structure, and its view of the nature of the case.''). The ultimate
question is whether ``the remedies [obtained by the Final Judgment are]
so inconsonant with the allegations charged as to fall outside of the
`reaches of the public interest.' '' Microsoft, 56 F.3d at 1461
(quoting W. Elec. Co., 900 F.2d at 309).
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 U.S. Airways,
38 F. Supp. 3d at 75 (noting that the court must simply determine
whether there is a factual foundation for the government's decisions
such that its conclusions regarding the proposed settlements are
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``[T]he
`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.
In its 2004 amendments to the APPA, Congress made clear its intent
to preserve the practical benefits of using judgments proposed by the
United States in antitrust enforcement, Public Law 108-237 Sec. 221,
and added the unambiguous instruction that ``[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); see also U.S. Airways, 38 F. Supp. 3d at 76
(indicating that a court is not required to hold an evidentiary hearing
or to permit intervenors as part of its review under the Tunney Act).
This language explicitly wrote into the statute what Congress intended
when it first 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 Sen.
Tunney). ``A court can make its public interest determination based on
the competitive impact statement and response to public comments
alone.'' U.S. Airways, 38 F. Supp. 3d at 76 (citing Enova Corp., 107 F.
Supp. 2d at 17).
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: June 2, 2025.
Respectfully submitted,
For Plaintiff United States of America:
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Carl Willner (D.C. Bar #412841),
Carmel Arikat (D.C. Bar #1018208),
Curtis Strong (D.C. Bar #1005093),
U.S. Department of Justice, Antitrust Division, Media,
Entertainment, and Communications Section, 450 Fifth Street NW,
Suite 7000, Washington, DC 20530, Telephone: 202-514-5813.
[FR Doc. 2025-10536 Filed 6-11-25; 8:45 am]
BILLING CODE 4410-11-P