[Federal Register Volume 61, Number 120 (Thursday, June 20, 1996)]
[Notices]
[Pages 31526-31529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15731]
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FEDERAL TRADE COMMISSION
[File No. 961-0057]
Raytheon Company; Proposed Consent Agreement With Analysis To Aid
Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair or deceptive acts or practices and unfair methods of
competition, this consent agreement, accepted subject to final
Commission approval, would require the Lexington, Massachusetts-based
company to erect an information ``firewall'' between it and Chrysler
Technologies Holding, Inc. (CTH). The consent agreement settles
allegations that Raytheon's acquisition of CTH may compromise the
competitiveness of an upcoming procurement for the Navy's Submarine
High Data Rate system (Submarine HDR), on which Raytheon has bid. CTH
is presently a second-tier subcontractor to GTE Corporation, which also
bid on the Submarine HDR contract.
DATES: Comments must be received on or before August 19, 1996.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
James Holden, Federal Trade Commission, 6th and Pennsylvania Ave, NW.,
Washington, DC 20580, (202) 326-2682.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby
given that the following consent agreement containing a consent order
to cease and desist, having been filed with and accepted, subject to
final approval, by the Commission, has been placed on the public record
for a period of sixty (60) days. Public comment is invited. Such
comments or views will be considered by the Commission and will be
available for inspection and copying at its principal office in
accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of
Practice (16 CFR 4.9(b)(6)(ii)).
Agreement Containing Consent Order
The Federal Trade Commission (``Commission''), having initiated an
investigation of the proposed acquisition by Raytheon Company
(``Raytheon'') of Chrysler Technologies Holding, Inc. (``CTH''), and it
now appearing that Raytheon, hereinafter sometimes referred to as
``Proposed Respondent,'' is willing to enter into an agreement
containing an order to refrain from certain acts and to provide for
certain other relief:
It is hereby agreed by and between Proposed Respondent Raytheon, by
its duly authorized officers and attorneys, and counsel for the
Commission that:
1. Proposed Respondent Raytheon is a corporation organized,
existing and doing business under and by virtue of the laws of the
State of Delaware with its office and principal place of business
located at 141 Spring Street, Lexington, Massachusetts 02173.
2. Proposed Respondent admits all the jurisdictional facts set
forth in the draft of complaint.
3. Proposed Respondent waives:
a. Any further procedural steps;
b. The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
c. All rights to seek judicial review or otherwise to challenge or
contest the
[[Page 31527]]
validity of the order entered pursuant to this agreement; and
d. Any claim under the Equal Access to Justice Act.
4. Proposed Respondent shall submit within twenty (20) days of the
date this agreement is signed by Proposed Respondent, an initial
report, pursuant to Section 2.33 of the Commission's Rules, signed by
Proposed Respondent setting forth in detail the manner in which
Proposed Respondent will comply with Paragraph II. of the order when
and if entered. Such report will not become part of the public record
unless and until the accompanying agreement and order are accepted by
the Commission for public comment.
5. This agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
agreement is accepted by the Commission it, together with the draft of
complaint contemplated thereby, will be placed on the public record for
a period of sixty (60) days and information in respect thereto publicly
released. The Commission thereafter may either withdraw its acceptance
of this agreement and so notify Proposed Respondent, in which event it
will take such action as it may consider appropriate, or issue and
serve its complaint (in such form as the circumstances may require) and
decision, in disposition of the proceeding.
6. This agreement is for settlement purposes only and does not
constitute an admission by Proposed Respondent that the law has been
violated as alleged in the draft of complaint, or that the facts as
alleged in the draft complaint, other than jurisdictional facts, are
true.
7. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Section 2.34 of the
Commission's Rules, the Commission may, without further notice to
Proposed Respondent, (1) Issue its complaint corresponding in form and
substance with the draft of complaint and its decision containing the
following order to refrain from certain acts in disposition of the
proceeding, and (2) make information public with respect thereto. When
so entered, the order shall have the same force and effect and may be
altered, modified, or set aside in the same manner and within the same
time provided by statute for other orders. The order shall become final
upon service. Delivery by the U.S. Postal Service of the complaint and
decision containing the agreed-to-order to Proposed Respondent's
address as stated in the agreement shall constitute service. Proposed
Respondent waives any right it may have to any other manner of service.
The complaint may be used in construing the terms of the order, and no
agreement, understanding, representation or interpretation not
contained in the order or the agreement may be used to vary or
contradict the terms of the order.
8. Proposed Respondent has read the proposed complaint and order
contemplated hereby. Proposed Respondent understands that once the
order has been issued, it will be required to file one or more
compliance reports showing that it has fully complied with the order.
Proposed Respondent further understands it may be liable for civil
penalties in the amount provided by law for each violation of the order
after it becomes final.
Order
I
It is ordered that, as used in this order, the following
definitions shall apply:
A. ``Respondent'' or ``Raytheon'' means Raytheon Company, its
directors, officers, employees, agents, representatives, predecessors,
successors and assigns; its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures controlled by Raytheon
Company, and the respective directors, officers, employees, agents,
representatives, successors and assigns of each. For purposes of
Paragraph II. of this order, Raytheon does not include ESI.
B. ``CTH'' means Chrysler Technologies Holding, Inc., a corporation
organized, existing and doing business under and by virtue of the laws
of the State of Delaware with its principal office and place of
business located in 1000 Chrysler Drive, Auburn Hills, Michigan 48326-
2766, its directors, officers, employees, agents, representatives,
predecessors, successors and assigns; its subsidiaries, divisions,
groups, affiliates, partnerships and joint ventures controlled by CTH,
and the respective directors, officers, employees, agents,
representatives, successors and assigns of each.
C. ``ESI'' means Electrospace Systems, Inc., a wholly-owned
subsidiary of Chrysler Technologies Holding, Inc., with its principal
office and place of business located at 1301 East Collins Boulevard,
Richardson, Texas 75083, or by any other entity within or controlled by
Chrysler Technologies Holding, Inc. that is engaged in, among other
things, the research, development, manufacture or sale of Antenna and
Terminal Controls, its directors, officers, employees, agents,
representatives, predecessors, successors and assigns; its
subsidiaries, divisions, groups, affiliates, partnerships and joint
ventures controlled by ESI (or such similar entity), and the respective
directors, officers, employees, agents, representatives, successors and
assigns of each.
D. ``Commission'' means the Federal Trade Commission.
E. ``Submarine High Data Rate Satellite Communications Terminal''
means the system to be procured in the United States Department of the
Navy's scheduled competitive procurement of the Submarine High Data
Rate Satellite Communications Terminal, a satellite communications
system for use on U.S. Navy submarines that is capable of, among other
things, transmitting and receiving both super high frequency and
extremely high frequency signals.
F. ``Antenna and Terminal Controls'' means any current or future
equipment and services designed, developed, proposed or provided by ESI
in connection with the United States Department of the Navy's
procurement of the Submarine High Data Rate Satellite Communications
Terminal.
G. ``Non-Public Information of Raytheon'' mean any information not
in the public domain and in the possession or control of Raytheon
relating to the Submarine High Data Rate Satellite Communications
Terminal.
H. ``Non-Public Information of ESI'' means any information not in
the public domain and in the possession or control of ESI relating to
the Submarine High Data Rate Satellite Communications Terminal, and any
information not in the public domain furnished by Rockwell
International Corporation or GTE Corporation or any other company to
ESI in its capacity as subcontractor to Rockwell International
Corporation in connection with the U.S. Navy's procurement of the
Submarine High Data Rate Satellite Communications Terminal.
I. ``Acquisition'' means Raytheon's acquisition of all of the
voting securities of Chrysler Technologies Holding, Inc.
II
It is further ordered that:
A. Raytheon shall not provide, disclose or otherwise make
available, directly or indirectly, to ESI any Non-Public Information of
Raytheon until either: (1) The United States Department of the Navy
selects only one supplier for the Submarine High Data Rate Satellite
Communications Terminal; or (2) the
[[Page 31528]]
United States Department of the Navy cancels its procurement of the
Submarine High Data Rate Satellite Communications Terminal entirely.
B. Raytheon shall not obtain or seek to obtain, directly or
indirectly, any Non-Public Information of ESI until either: (1) the
United States Department of the Navy selects only one supplier for the
Submarine High Data Rate Satellite Communications Terminal; or (2) the
United States Department of the Navy cancels its procurement of the
Submarine High Data Rate Satellite Communications Terminal entirely.
III
It is further ordered that Respondent shall comply with all terms
of the Interim Agreement, attached to this order and made a part hereof
as Appendix I. Said Interim Agreement shall continue in effect until
the provisions in Paragraph II. of this order are complied with or
until such other time as is stated in said Interim Agreement.
IV
It is further ordered that within twenty (20) days of the date this
order becomes final, and annually on the anniversary of the date this
order become final until either the United States Department of the
Navy selects only one supplier for the Submarine High Data Rate
Satellite Communications Terminal or cancels its procurement of the
Submarine High Data Rate Satellite Communications Terminal entirely,
and at such other times as the Commission may require, Respondent shall
file a verified written report with the Commission setting forth in
detail the manner and form in which it has complied and it complying
with Paragraph II of this order.
V
It is further ordered that Respondent shall notify the Commission
at least thirty (30) days prior to any proposed change in the corporate
Respondent such as dissolution, assignment, sale resulting in the
emergence of a successor corporation, or the creation or dissolution of
subsidiaries or sale of any division or any other change in the
corporation, in each instance where such change may affect compliance
obligations arising out of the order.
VI
It is further ordered that, for the purpose of determining or
securing compliance with this order, and subject to any legally
recognized privilege and applicable United States Government national
security requirements, upon written request, and on reasonable notice,
Respondent shall permit any duly authorized representatives of the
Commission:
A. Access, during office hours and in the presence of counsel, to
inspect and copy all books, ledgers, accounts, correspondence,
memoranda and other records and documents in the possession or under
the control of Respondent, relating to any matters contained in this
order; and
B. Upon five (5) days' notice to Respondent, and without restraint
or interference from Respondent, to interview officers, directors, or
employees of Respondent, who may have counsel present, regarding any
such matters.
VII
It is further ordered that Respondent's obligations under this
order shall terminate when either: (1) the United States Department of
the Navy selects only one supplier for the Submarine High Data Rate
Satellite Communications Terminal; or (2) the United States Department
of the Navy cancels its procurement of the Submarine High Data Rate
Satellite Communications Terminal entirely.
Appendix I
Interim Agreement
This Interim Agreement is by and between Raytheon Company
(``Raytheon''), a corporation organized and existing under the laws of
the State of Delaware, and the Federal Trade Commission (the
``Commission''), an independent agency of the United States Government,
established under the Federal Trade Commission Act of 1914, 15 U.S.C.
Sec. 41, et seq.
Premises
Whereas, Raytheon has proposed to acquire all of the outstanding
voting securities of Chrysler Technologies Holding, Inc., and
Whereas, the Commission is now investigating the proposed
Acquisition to determine if it would violate any of the statutes the
Commission enforces; and
Whereas, if the Commission accepts the Agreement Containing Consent
Order (``Consent Agreement''), the Commission will place it on the
public record for a period of at least sixty (60) days and subsequently
may either withdraw such acceptance or issue and serve its Complaint
and decision in disposition of the proceeding pursuant to the
provisions of Section 2.34 of the Commission's Rules; and
Whereas, the Commission is concerned that if an understanding is
not reached during the period prior to the final issuance of the
Consent Agreement by the Commission (after the 60-day public notice
period), there may be interim competitive harm, and divestiture or
other relief resulting from a proceeding challenging the legality of
the proposed Acquisition might not be possible, or might be less than
an effective remedy; and
Whereas, Raytheon entering into this Interim Agreement shall in no
way be construed as an admission by Raytheon that the proposed
Acquisition constitutes a violation of any statute; and
Whereas, Raytheon understands that no act or transaction
contemplated by this Interim Agreement shall be deemed immune or exempt
from the provisions of the antitrust laws or the Federal Trade
Commission Act by reason of anything contained in this Interim
Agreement.
Now, therefore, Raytheon agrees, upon the understanding that the
Commission has not yet determined whether the proposed Acquisition will
be challenged, and in consideration of the Commission's agreement that,
at the time it accepts the Consent Agreement for public comment, it
will grant early termination of the Hart-Scott-Rodino waiting period,
as follows:
1. Raytheon agrees to execute and be bound by the terms of the
Order contained in the Consent Agreement, as if it were final, from the
date Raytheon signs the Consent Agreement.
2. Raytheon agrees to deliver, within three (3) days of the date
the Consent Agreement is accepted for public comment by the Commission,
a copy of the Consent Agreement and a copy of this Interim Agreement to
the United States Department of Defense, Rockwell International
Corporation, and GTE Corporation.
3. Raytheon agrees to submit, within twenty (20) days of the date
the Consent Agreement is signed by Raytheon, an initial report,
pursuant to Section 2.33 of the Commission's Rules, signed by Raytheon
setting forth in detail the manner in which Raytheon will comply with
Paragraph II. of the Consent Agreement.
4. Raytheon agrees that, from the date Raytheon signs the Consent
Agreement until the first of the dates listed in subparagraphs 4.a. and
4.b., it will comply with the provisions of this interim Agreement:
a. Ten (10) business days after the Commission withdraws its
acceptance of the Consent Agreement pursuant to the provisions of
Section 2.34 of the Commission's Rules; or
[[Page 31529]]
b. The date the Commission finally issues its Compliant and its
Decision and Order.
5. Raytheon waives all rights to contest the validity of this
Interim Agreement.
6. For the purpose of determining or securing compliance with this
Interim Agreement, subject to any legally recognized privilege and
applicable United States Government national security requirements, and
upon written request, and on reasonable notice, Raytheon shall permit
any duly authorized representative or representatives of the
Commission:
a. Access, during the office hours of Raytheon and in the presence
of counsel, to inspect and copy all books, ledgers, accounts,
correspondence, memoranda, and other records and documents in the
possession or under the control of Raytheon relating to compliance with
this Interim Agreement; and
b. Upon five (5) days' notice to Raytheon and without restraint or
interference from it, to interview officers, directors, or employees of
Raytheon, who may have counsel present, regarding any such matters.
7. This Interim Agreement shall not be binding until accepted by
the Commission.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted subject
to final approval an agreement containing a proposed Consent Order from
Raytheon Company (``Raytheon''), which prohibits Raytheon from gaining
access to any non-public information in the possession of Electrospace
Systems, Inc. (``ESI'') related to the Submarine High Data Rate
Satellite Communications Terminal (``Submarine HDR Terminal'') to be
procured by the United States Department of the Navy, or disclosing any
such information in its possession to ESI. In addition, the Commission
has accepted an Interim Agreement which prohibits Raytheon from
receiving any non-public information related to the Submarine HDR
Terminal from ESI, or giving any such non-public information in its
possession to ESI.
The proposed Consent Order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
agreement and the comments received, and will decide whether it should
withdraw from the agreement or make final the agreement's proposed
Order.
Pursuant to a Stock Purchase Agreement dated April 4, 1996,
Raytheon proposed to purchase all of the voting securities of Chrysler
Technologies Holding, Inc. (``CTH'') for approximately $455 million.
ESI is a wholly-owned subsidiary of CTH. The proposed Complaint alleges
that the acquisition, if consummated, would violate Section 7 of the
Clayton Act, as amended, 15 U.S.C. Sec. 18, and Section 5 of the
Federal Trade Commission Act, as amended, 15 U.S.C. Sec. 45, in the
market for the research, development, manufacture and sale of Submarine
HDR Terminals.
The Submarine HDR Terminal is a satellite communications system for
use on U.S. Navy submarines that is capable of, among other things,
transmitting and receiving both super high frequency and extremely high
frequency signals. Initial proposals (bids) for the Navy's procurement
of the Submarine HDR Terminal were due on April 15, 1996, and Raytheon
submitted an initial proposal. An initial proposal was also submitted
by GTE Corporation, for which ESI is a second-tier subcontractor
supplying the antenna/terminal controls (an extremely small portion of
the overall system). Having received initial proposals, the Navy now
intends to hold discussions that may culminate in a ``Best And Final
Offer'' competition. At this point in the competition for the Navy's
Submarine HDR Terminal, the market is highly concentrated, and
effective new entry is unlikely to occur in a timely manner.
In its capacity as supplier of the antenna/terminal controls for
the GTE proposal, ESI already possesses a significant amount of
competitively sensitive information concerning the GTE proposal, and
may be in a position to acquire even more such information during the
period from the present until the competition is concluded. The
upcoming competition for the Navy's Submarine HDR Terminal could be
jeopardized if either Raytheon or ESI gains access to competitively
sensitive information in the other's possession as a result of the
proposed acquisition. The proposed Consent Order remedies this
antitrust concern by prohibiting the exchange of competitively
sensitive information between Raytheon and ESI. Other than the exchange
of information, the proposed acquisition is unlikely to have an
anticompetitive effect due to, among other reasons, the fact that ESI's
role on the GTE proposal is extremely small.
Under the provisions of the Consent Order, Raytheon is also
required to provide the Commission with a report of compliance with the
Order within twenty (20) days of the date the Order becomes final, and
annually thereafter until the Navy either: (1) selects only one
Submarine HDR Terminal supplier; or (2) cancels the Submarine HDR
Terminal procurement entirely.
The purpose of this analysis is to facilitate public comment on the
proposed Consent Order, and it is not intended to constitute an
official interpretation of the agreement and proposed Order, or to
modify in any way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 96-15731 Filed 6-19-96; 8:45 am]
BILLING CODE 6750-01-M
