United States v. United Technologies Corporation, et al.; Proposed Final Judgment and Competitive Impact Statement, 52542-52557 [2018-22555]

Download as PDF 52542 Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices Dated: September 14, 2018. Melanie O’Brien, Manager, National NAGPRA Program. 8700, Washington, DC 20530 (telephone: (202) 307–0924). Patricia A. Brink, Director of Civil Enforcement. [FR Doc. 2018–22594 Filed 10–16–18; 8:45 am] BILLING CODE 4312–52–P United States District Court for the District of Columbia DEPARTMENT OF JUSTICE Antitrust Division daltland on DSKBBV9HB2PROD with NOTICES United States v. United Technologies Corporation, 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. United Technologies Corporation, et al., Civil Action No. 1:18–cv–02279. On October 1, 2018, the United States filed a Complaint alleging that United Technologies Corporation’s proposed acquisition of Rockwell Collins, Inc. (‘‘Rockwell Collins’’) 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 the Defendants to divest Rockwell Collins’ ice protection systems business and trimmable horizontal stabilizer business, including Rockwell Collins’ pilot controls business. 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 directed to Maribeth Petrizzi, Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, Department of Justice, 450 Fifth Street NW, Suite VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 United States of America, U.S. Department of Justice, Antitrust Division, 450 5th Street NW, Suite 8700, Washington, DC 20530, Plaintiff, v., United Technologies Corporation, 10 Farm Springs Road, Farmington, CT 06032, and, Rockwell Collins, Inc., 400 Collins Road NE, Cedar Rapids, IA 52498, Defendants. Civil Action No: 1:18-cv-02279, Judge: Rudolph Contreras COMPLAINT The United States of America (‘‘United States’’), acting under the direction of the Attorney General of the United States, brings this civil antitrust action against United Technologies Corporation (‘‘UTC’’) and Rockwell Collins, Inc. (‘‘Rockwell Collins’’) to enjoin UTC’s proposed acquisition of Rockwell Collins. The United States complains and alleges as follows: I. NATURE OF THE ACTION 1. Pursuant to an asset purchase agreement dated September 4, 2017, UTC proposes to acquire all the shares of Rockwell Collins. The transaction is valued at approximately $30 billion. The acquisition would constitute one of the largest aerospace acquisitions in history. 2. UTC and Rockwell Collins are two of three suppliers in the world for pneumatic ice protection systems for fixed-wing aircraft (‘‘aircraft’’). Ice protection systems are critical to aircraft safety, as aircraft icing is a major hazard to aviation. The proposed acquisition would eliminate competition between UTC and Rockwell Collins for these systems. 3. UTC and Rockwell Collins are two of the leading suppliers in the worldwide market for trimmable horizontal stabilizer actuators (‘‘THSAs’’) for large aircraft. THSAs help an aircraft maintain the proper altitude during flight and are critical to the safe operation of the aircraft. The proposed acquisition would eliminate competition between UTC and Rockwell Collins for THSAs for large aircraft. 4. As a result, the proposed acquisition likely would substantially lessen competition in the worldwide markets for the development, manufacture, and sale of pneumatic ice protection systems for aircraft and THSAs for large aircraft in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18. PO 00000 Frm 00167 Fmt 4703 Sfmt 4703 II. THE DEFENDANTS 5. UTC is incorporated in Delaware and has its headquarters in Farmington, Connecticut. UTC produces a wide range of products for the aerospace industry and other industries, including pneumatic ice protection systems for aircraft and THSAs for large aircraft. In 2017, UTC had sales of approximately $59.8 billion. 6. Rockwell Collins is incorporated in Delaware and is headquartered in Cedar Rapids, Iowa. Rockwell Collins is a major provider of aerospace and defense electronics systems. Rockwell Collins produces, among other products, pneumatic ice protection systems for aircraft and THSAs for large aircraft. In fiscal year 2017, Rockwell Collins had sales of approximately $6.8 billion. III. JURISDICTION AND VENUE 7. The United States brings this action under Section 15 of the Clayton Act, 15 U.S.C. § 25, as amended, to prevent and restrain Defendants from violating Section 7 of the Clayton Act, 15 U.S.C. § 18. 8. Defendants develop, manufacture, and sell pneumatic ice protection systems for aircraft and THSAs for large aircraft in the flow of interstate commerce. Defendants’ activities in the development, manufacture, and sale of these products substantially affects interstate commerce. This Court has subject matter jurisdiction over this action pursuant to Section 15 of the Clayton Act, 15 U.S.C. § 25, and 28 U.S.C. §§ 1331, 1337(a), and 1345. 9. Defendants have consented to venue and personal jurisdiction in this judicial district. Venue is therefore proper in this district under Section 12 of the Clayton Act, 15 U.S.C. § 22 and under 28 U.S.C. § 1391(c). IV. PNEUMATIC ICE PROTECTION SYSTEMS A. Background 10. During flight, ice can accumulate on an aircraft’s leading edge surfaces, such as the part of the aircraft’s wings that first contact the air during flight. Such accumulation affects an aircraft’s maneuverability, increases drag, and decreases lift. If it remains untreated, surface ice accumulation can lead to a catastrophic flight event. 11. A pneumatic ice protection system is engineered to remove accumulated ice on an aircraft’s wings. A pneumatic ice protection system consists of two main elements, a de-icing boot and pneumatic system hardware. A de-icing boot is an inflatable tube made of rubber or a similar material that is physically bonded to the leading edge of the E:\FR\FM\17OCN1.SGM 17OCN1 daltland on DSKBBV9HB2PROD with NOTICES Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices aircraft’s wings. The pneumatic system hardware consists of equipment designed to control the flow of air into the de-icing boot. When ice begins to accumulate on the wings, the de-icing boot is inflated. The expansion of the de-icing boot cracks the ice off the leading edge. The de-icing boot may be inflated and deflated manually (by the pilot) or automatically (by a timer). 12. Pneumatic ice protection systems are one form of ice protection technology. Ice protection systems are selected at the aircraft design stage based on the characteristics of the aircraft. The specific design features of an aircraft, such as the availability of electrical power, determines which type of ice protection system will be used on the aircraft. For example, some aircraft use electrothermal systems, but such systems require significant electrical power to heat aircraft surfaces; other aircraft may use engine bleed air systems, but those systems require significant hot air bled from engines to heat aircraft surfaces. Aircraft using pneumatic ice protection systems generally have low availability of electrical power and insufficient bleed air from the aircraft engines, and also generally require lightweight and lowcost systems. This compels manufacturers of aircraft, such as the Gulfstream G150, the Cessna Citation M2, the Beechcraft King Air, and the ATR 42, to use pneumatic ice protection systems. Once an aircraft manufacturer has selected a particular pneumatic ice protection system, that system is certified as an Original Equipment Manufacturer (‘‘OEM’’) part of the aircraft’s manufacturing design. Aircraft manufacturers generally only certify one supplier for ice protection systems for a particular aircraft model. 13. Pneumatic ice protection systems, and components thereof, are also sold in the aftermarket, as their components require repair or replacement after extended use. Most of the revenues related to pneumatic ice protection systems are derived from aftermarket sales. Aftermarket purchasers include aircraft manufacturers, aircraft operators, and service centers. Although generally only one particular pneumatic ice protection system is certified with the aircraft model as original equipment, pneumatic ice protection system suppliers often procure additional certifications that allow their pneumatic ice protection system components to replace their competitors’ OEM pneumatic ice protection components in the aftermarket. 14. Because surface ice accumulation may lead to a catastrophic flight event, VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 pneumatic ice protection systems are considered critical flight components. An aircraft manufacturer or aftermarket purchaser is therefore likely to prefer proven suppliers of pneumatic ice protection systems. B. Relevant Markets 1. Product Market 15. Pneumatic ice protection systems have numerous attributes (lightweight, low-cost, and low-power requirements) that make them an attractive option for aircraft manufacturers of aircraft with certain design requirements. Certain aircraft models can only use pneumatic ice protection systems. For the customers that produce that model, pneumatic ice protection systems are the best option, as they cannot effectively use other types of ice protection systems such as an electrothermal system, which requires a significant amount of electrical power, or an engine bleed air system, which requires engines large enough to generate significant excess heat. 16. Once an aircraft is certified, switching the ice protection system on a particular model of aircraft to a different type of ice protection system, even if technologically feasible, would require some re-design of the ice protection portion of the aircraft and recertification of the aircraft, potentially costing millions of dollars, requiring additional flight testing, and consuming years of time. Therefore, a small but significant increase in the price of pneumatic ice protection systems would not cause customers of those ice protection systems to substitute an alternative type of ice protection system for the original aircraft or in the aftermarket in volumes sufficient to make such a price increase unprofitable. Accordingly, pneumatic ice protection systems are a relevant product market and line of commerce under Section 7 of the Clayton Act, 15 U.S.C. § 18. 17. Although the pneumatic ice protection system installed on each model of aircraft may be unique, and each system could therefore be deemed a separate product market, in each such market there are few competitors. The proposed acquisition of Rockwell Collins by UTC would affect competition for each pneumatic ice protection system in the same manner, as the competitive conditions are the same for each pneumatic ice protection system. It is therefore appropriate to aggregate the different systems to one pneumatic ice protection market for purposes of analyzing the effects of the acquisition. PO 00000 Frm 00168 Fmt 4703 Sfmt 4703 52543 2. Geographic Market 18. The relevant geographic market is worldwide within the meaning of Section 7 of the Clayton Act, 15 U.S.C. § 18. Pneumatic ice protection systems are marketed internationally and may be sourced economically from suppliers globally, because transportation costs are a small proportion of the cost of the system and thus are not a major factor in supplier selection. C. Anticompetitive Effects of the Proposed Transaction 19. There are only three competitors in the market for the development, manufacture, and sale of pneumatic ice protection systems. These three firms are the only sources for both OEM systems and aftermarket systems and parts. Based on historical sales results, a combined UTC-Rockwell Collins would control a majority share of OEM and aftermarket sales. Therefore, UTC’s acquisition of Rockwell Collins would significantly increase concentration in an already highly concentrated market. 20. UTC and Rockwell Collins compete directly on price. In some cases, one of the companies has replaced the other’s pneumatic ice protection system or components thereof on a particular aircraft in the aftermarket. This acquisition threatens to extinguish that competition, likely leading to price increases and significant harm to aircraft manufacturers and aftermarket customers that require pneumatic ice protection systems. 21. Customers have benefited from the competition between UTC and Rockwell Collins for sales of pneumatic ice protection systems by receiving lower prices, more favorable contractual terms, and shorter delivery times. The combination of UTC and Rockwell Collins would eliminate this competition and its future benefits to customers. Post-acquisition, UTC likely would have the incentive and the ability to increase prices profitably and offer less favorable contractual terms. 22. The proposed acquisition, therefore, likely would substantially lessen competition in the development, manufacture, and sale of pneumatic ice protection systems for aircraft worldwide in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18. D. Difficulty of Entry 23. Sufficient, timely entry of additional competitors into the markets for pneumatic ice protection systems is unlikely to prevent the harm to competition that is likely to result if the proposed acquisition is consummated. E:\FR\FM\17OCN1.SGM 17OCN1 52544 Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices Entry of a new competitor into the development, manufacture, and sale of a pneumatic ice protection system is unlikely and cannot happen in a time period that would prevent significant competitive harm. 24. Entry is unlikely due to the small size of the pneumatic ice protection system market. In addition, competitions for aircraft suitable for pneumatic ice protection systems are infrequent. Accordingly, there are limited bidding opportunities for OEM sales and less incentive for a new competitor to enter, which means that a supplier would be less likely to enter the market. 25. Pneumatic ice protection systems generally are not built by aircraft manufacturers, in part because pneumatic technology tends to be complicated and technically different from other aircraft systems. Therefore aircraft manufacturers are unlikely to bring production of such systems inhouse in response to a price increase. 26. Although aftermarket replacement opportunities for existing pneumatic ice protection system suppliers are available in certain cases, entry is costly due to the associated certification costs. Aircraft manufacturers, operators, and servicers also hesitate to purchase aircraft systems and parts from new suppliers, particularly for critical flight components like ice protection systems. 27. As a result of these barriers, entry into the markets for pneumatic ice protection systems would not be timely, likely, or sufficient to defeat the substantial lessening of competition that is likely to result from UTC’s acquisition of Rockwell Collins. V. TRIMMABLE HORIZONTAL STABILIZER ACTUATORS FOR LARGE AIRCRAFT daltland on DSKBBV9HB2PROD with NOTICES A. Background 28. Actuators are responsible for the proper positions of an aircraft by manipulating the ‘‘control surfaces’’ on its wings and tail section. A trimmable horizontal stabilizer actuator (‘‘THSA’’) helps an aircraft maintain the proper altitude during flight by adjusting (‘‘trimming’’) the angle of the horizontal stabilizer, the control surface of the aircraft’s tail responsible for aircraft pitch. This control surface is critical to the safety and performance of the aircraft, as a loss of control could cause the aircraft to crash. The stabilizer encounters significant aerodynamic loads for extended periods of time, and the THSA must be capable of handling these loads. THSAs thus tend to be the largest and most technically demanding actuators on an aircraft. VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 29. THSAs vary based on the size and type of the aircraft on which they are used. Because large aircraft encounter significantly higher aerodynamic loads than smaller aircraft, THSAs for large aircraft are considerably larger, more complex, and more expensive than those used on smaller aircraft. Large aircraft primarily include commercial aircraft that seat at least six passengers abreast (such as the Airbus A320 and A350 and the Boeing 737 and 787) and military transport aircraft, but exclude regional jets, business jets, and tactical military aircraft. B. Relevant Markets 1. Product Market 30. THSAs for large aircraft do not have technical substitutes. Large aircraft manufacturers cannot switch to THSAs for smaller aircraft, or actuators for other aircraft control surfaces, because those products cannot adequately control the lift and manage the load generated by the horizontal stabilizer of a large aircraft. A small but significant increase in the price of THSAs for large aircraft would not cause aircraft manufacturers to substitute THSAs designed for smaller aircraft or actuators for other control surfaces in volumes sufficient to make such a price increase unprofitable. Accordingly, THSAs for large aircraft are a line of commerce and a relevant product market within the meaning of Section 7 of the Clayton Act, 15 U.S.C. § 18. 2. Geographic Market 31. The relevant geographic market within the meaning of Section 7 of the Clayton Act, 15 U.S.C. § 18 is worldwide. THSAs for large aircraft are marketed internationally and may be sourced from suppliers globally, because transportation costs are a small proportion of the cost of the product and thus are not a major factor in supplier selection. C. Anticompetitive Effects of the Proposed Acquisition 32. UTC and Rockwell Collins are each other’s closest competitors for THSAs for large aircraft. UTC and Rockwell Collins have won two of the most significant recent contract awards for THSAs for large aircraft: the Boeing 777X and the Airbus A350. Boeing and Airbus are the world’s largest manufacturers of passenger aircraft, and these aircraft represent two of only three THSA awards by these manufacturers in this century. 33. While there are other producers of THSAs for large aircraft, those producers tend to concentrate on THSAs for smaller aircraft, such as PO 00000 Frm 00169 Fmt 4703 Sfmt 4703 business jets or regional jets, or to focus on products for other aircraft control surfaces. 34. UTC and Rockwell Collins each view the other firm as the most significant competitive threat for THSAs for large aircraft. The two companies are among the few that have demonstrated expertise in designing and producing THSAs for large aircraft. Each firm considers the other company’s offering when planning bids. 35. Customers have benefitted from the competition between UTC and Rockwell Collins for THSAs for large aircraft by receiving lower prices, more favorable contractual terms, more innovative products, and shorter delivery times. The combination of UTC and Rockwell Collins would eliminate this competition and its future benefits to customers. Post-acquisition, UTC likely would have the incentive and the ability to increase prices profitably and offer less favorable contractual terms. 36. UTC and Rockwell Collins also invest significantly to remain leading suppliers of new THSAs for large aircraft, and aircraft manufacturers expect them to remain leading suppliers of new products in the future. The combination of UTC and Rockwell Collins would likely eliminate this competition, depriving large aircraft customers of the benefit of future innovation and product development. 37. The proposed acquisition, therefore, likely would substantially lessen competition for the development, manufacture, and sale of THSAs worldwide for large aircraft in violation of Section 7 of the Clayton Act. D. Difficulty of Entry 38. Sufficient, timely entry of additional competitors into the market for THSAs for large aircraft is unlikely to prevent the harm to competition that is likely to result if the proposed transaction is consummated. 39. Developing a THSA for large aircraft is technically difficult. Even manufacturers of THSAs for smaller aircraft face significant technical hurdles in designing and developing THSAs for large aircraft. As aerodynamic loads are a major design consideration for THSAs, and such loads are tightly correlated with the size of the aircraft, THSAs for large aircraft present more demanding technical challenges than those for smaller aircraft. 40. Opportunities to enter are limited. Because certification of a THSA is expensive and time-consuming, once a THSA is certified for a particular aircraft type, it is rarely replaced in the aftermarket by a different THSA. E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES Accordingly, competition between suppliers of THSAs generally only occurs when an aircraft manufacturer is designing a new aircraft or an upgraded version of an existing aircraft, which are infrequent occurrences because development costs for such aircraft can be tens of billions of dollars. As a result, several years usually pass between contract awards for THSAs for a new aircraft design. 41. Potential entrants into the production of THSAs for large aircraft face several additional obstacles. First, manufacturers of large aircraft are more likely to purchase THSAs from those firms already supplying THSAs for other large aircraft. The important connection between THSAs and aircraft safety drives aircraft manufacturers toward suppliers experienced with production of THSAs of the relevant type and size. While some companies may have demonstrated experience in THSAs for smaller aircraft, such experience is not considered by customers to be as relevant as experience in THSAs for large aircraft. A new entrant would face significant costs and time to be considered a potential alternative to the existing suppliers. 42. Substantial time and significant financial investment would be required for a company to design and develop a THSA for large aircraft. Even companies that already make other types of THSAs would require years of effort and an investment of many millions of dollars to develop a product that is competitive with those offered by existing large aircraft THSA suppliers. 43. As a result of these barriers, entry into the market for THSAs for large aircraft would not be timely, likely, or sufficient to defeat the substantial lessening of competition that would likely result from UTC’s acquisition of Rockwell Collins. VI. VIOLATIONS ALLEGED 44. UTC’s acquisition of Rockwell Collins likely would lessen competition substantially in the development, manufacture, and sale of pneumatic ice protection systems for aircraft and THSAs for large aircraft, in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18. 45. Unless enjoined, the acquisition likely would have the following anticompetitive effects, among others, relating to pneumatic ice protection systems for aircraft: (a) actual and potential competition between UTC and Rockwell Collins would be eliminated; (b) competition likely would be substantially lessened; and VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 (c) prices likely would increase and contractual terms likely would be less favorable to the customers. 46. Unless enjoined, the proposed acquisition likely would have the following anticompetitive effects relating to THSAs for large aircraft, among others: (a) actual and potential competition between UTC and Rockwell Collins would be eliminated; (b) competition likely would be substantially lessened; (c) prices would likely increase, contractual terms likely would be less favorable to the customers, and innovation likely would decrease. 52545 Defense, Industrials, and Aerospace Section, Antitrust Division, 450 Fifth Street NW, Suite 8700, Washington, DC 20530, Telephone: (202) 598–2436, Facsimile: (202) 514–9033, soyoung.choe@usdoj.gov * LEAD ATTORNEY TO BE NOTICED United States District Court for the District of Columbia UNITED STATES OF AMERICA, Plaintiff, v. United Technologies Corporation and Rockwell Collins, Inc., Defendants. Civil Action No: 1:18-cv-02279 Judge: Rudolph Contreras PROPOSED FINAL JUDGMENT WHEREAS, Plaintiff, United States of America, filed its Complaint on October 1, 2018, the United States and VII. REQUEST FOR RELIEF Defendants, United Technologies Corporation (‘‘UTC’’) and Rockwell 47. The United States requests that Collins, Inc. (‘‘Rockwell Collins’’), by this Court: their respective attorneys, have (a) adjudge and decree that UTC’s consented to the entry of this Final acquisition of Rockwell Collins Judgment without trial or adjudication would be unlawful and violate of any issue of fact or law and without Section 7 of the Clayton Act, 15 this Final Judgment constituting any U.S.C. § 18; evidence against or admission by any (b) preliminarily and permanently party regarding any issue of fact or law; enjoin and restrain Defendants and AND WHEREAS, Defendants agree to all persons acting on their behalf be bound by the provisions of this Final from consummating the proposed Judgment pending its approval by the acquisition of Rockwell Collins by Court; UTC, or from entering into or AND WHEREAS, the essence of this carrying out any other contract, Final Judgment is the prompt and agreement, plan, or understanding, certain divestiture of certain rights or the effect of which would be to assets by Defendants to assure that combine UTC with Rockwell competition is not substantially Collins; lessened; (c) award the United States its costs AND WHEREAS, the United States for this action; and (d) award the United States such other requires Defendants to make certain divestitures for the purpose of and further relief as the Court remedying the loss of competition deems just and proper. alleged in the Complaint; Dated: October 1, 2018 AND WHEREAS, Defendants have Respectfully submitted, represented to the United States that the FOR PLAINTIFF UNITED STATES: divestitures required below can and will lllllllllllllllllllll be made and that Defendants will later MAKAN DELRAHIM (DC Bar #457795) raise no claim of hardship or difficulty Assistant Attorney General, Chief Antitrust as grounds for asking the Court to Division modify any of the divestiture provisions lllllllllllllllllllll contained below; ANDREW C. FINCH (DC Bar #494992) NOW THEREFORE, before any Principal Deputy Assistant Attorney General, testimony is taken, without trial or Antitrust Division adjudication of any issue of fact or law, lllllllllllllllllllll and upon consent of the parties, it is PATRICIA A. BRINK ORDERED, ADJUDGED, AND Director of Civil Enforcement DECREED: lllllllllllllllllllll MARIBETH PETRIZZI (DC Bar #435204) Chief, Defense, Industrials, and Aerospace Section, Antitrust Division lllllllllllllllllllll STEPHANIE A. FLEMING Assistant Chief, Defense, Industrials, and Aerospace Section, Antitrust Division lllllllllllllllllllll SOYOUNG CHOE * SIDDHARTH DADHICH KEVIN QUIN (D.C. Bar #415268) PO 00000 Frm 00170 Fmt 4703 Sfmt 4703 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, as amended (15 U.S.C. § 18). II. DEFINITIONS As used in this Final Judgment: E:\FR\FM\17OCN1.SGM 17OCN1 daltland on DSKBBV9HB2PROD with NOTICES 52546 Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices A. ‘‘Acquirer’’ or ‘‘Acquirers’’ means the entity or entities to whom Defendants divest any of the Divestiture Assets. B. ‘‘Acquirer of the Ice Protection Divestiture Assets’’ means the entity to which Defendants divest the Ice Protection Divestiture Assets. C. ‘‘Acquirer of the THSA Divestiture Assets’’ means Safran S.A. or the entity to which Defendants divest the THSA Divestiture Assets. D. ‘‘UTC’’ means defendant United Technologies Corporation, a Delaware corporation with its headquarters in Farmington, Connecticut, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees. E. ‘‘Rockwell Collins’’ means defendant Rockwell Collins, Inc., a Delaware corporation with its headquarters in Cedar Rapids, Iowa, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees. F. ‘‘Ice Protection Business’’ means Rockwell Collins’ SMR Technologies division, including Rockwell’s business in the development, manufacture, and sale of pneumatic ice protection systems and other ice protection products. G. ‘‘WEMAC Product Line’’ means the Rockwell Collins products sold under the WEMAC name, including air gasper valves and interior signage components. H. ‘‘Ice Protection Divestiture Assets’’ means Rockwell Collins’ Ice Protection Business, including: 1. The facility located at 93 NettieFenwick Road, Fenwick, West Virginia (‘‘Fenwick Facility’’); 2. All tangible assets primarily related to the Ice Protection Business, with the exception of those used exclusively in the WEMAC Product Line, including but not limited to research and development activities; all manufacturing equipment, tooling and fixed assets, personal property, inventory, office furniture, materials, supplies, and other tangible property; all licenses, permits, certifications, and authorizations issued by any governmental organization relating to the Ice Protection Business; all contracts, teaming arrangements, agreements, leases, commitments, certifications, and understandings, including supply agreements; all customer lists, contracts, accounts, and credit records; all repair and performance records and all other records relating to the Ice Protection Business; VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 3. All intangible assets primarily related to the Ice Protection Business, with the exception of those used exclusively in the WEMAC Product Line, including, but not limited to, all patents; licenses and sublicenses; intellectual property; copyrights; trademarks; trade names; service marks; service names; technical information; computer software and related documentation; know-how; trade secrets; drawings; blueprints; designs; design protocols; specifications for materials; specifications for parts and devices; safety procedures for the handling of materials and substances; quality assurance and control procedures; design tools and simulation capability; all manuals and technical information Defendants provide to their own employees, customers, suppliers, agents, or licensees; and all research data concerning historic and current research and development efforts relating to the Ice Protection Business, including, but not limited to, designs of experiments and the results of successful and unsuccessful designs and experiments. I. ‘‘THSA Divestiture Business’’ means Rockwell Collins’ business in the design, development, manufacture, sale, service, or distribution of: (i) trimmable horizontal stabilizer actuators (‘‘THSAs’’), legacy flap actuation, and nose wheel steering gear boxes; and (ii) pilot control systems, including center yokes, rudder brake pedal units, throttle quadrant assemblies, auto-throttles, and control stand modules. J. ‘‘THSA Divestiture Assets’’ means, subject to the terms of Paragraph V(D) of this Final Judgment: 1. The facilities located at 1833 Alton Parkway, Irvine, California (‘‘Building 518’’) and Ave. Sierra San Agustin #2498, Col. El Porvenir C.P. 21185, Mexicali, Mexico (‘‘Building 1’’); 2. At the option of the Acquirer of the THSA Divestiture Assets, the facilities located at 1733 Alton Parkway, Irvine, California (‘‘Building 517’’), 1100 W. Hibiscus Boulevard, Melbourne, Florida (‘‘Building 213’’), and Ave. Sierra San Agustin #2498, Col. El Porvenir C.P. 21185, Mexicali, Mexico (‘‘Building 2’’); 3. All tangible assets primarily related to or necessary for the operation of the THSA Divestiture Business, including but not limited to research and development activities, all manufacturing equipment, tooling and fixed assets, personal property, inventory, office furniture, materials, supplies, and other tangible property; all licenses, permits, certifications, and authorizations issued by any governmental organization relating to the THSA Divestiture Business; all PO 00000 Frm 00171 Fmt 4703 Sfmt 4703 contracts; all teaming arrangements, agreements, leases, commitments, certifications, and understandings, including supply agreements; all customer lists, contracts, accounts, and credit records; all repair and performance records and all other records relating to the THSA Divestiture Business; 4. All intangible assets primarily related to or necessary for the operation of the THSA Divestiture Business, including, but not limited to, all patents; licenses and sublicenses; intellectual property; copyrights; trademarks; trade names; service marks; service names; technical information; computer software and related documentation; know-how; trade secrets; drawings; blueprints; designs; design protocols; specifications for materials; specifications for parts and devices; safety procedures for the handling of materials and substances; quality assurance and control procedures; design tools and simulation capability; all manuals and technical information Defendants provide to their own employees, customers, suppliers, agents, or licensees; and all research data concerning historic and current research and development efforts relating to the THSA Divestiture Business, including, but not limited to, designs of experiments and the results of successful and unsuccessful designs and experiments. K. ‘‘Divestiture Assets’’ means the Ice Protection Divestiture Assets and the THSA Divestiture Assets. L. ‘‘Required Regulatory Approvals’’ means (1) clearance pursuant to any Committee on Foreign Investment in the United States (‘‘CFIUS’’) filing or similar foreign investment filing, if any, made by the Defendants and/or any Acquirer of the Divestiture Assets; and (2) any approvals or clearances required under antitrust or competition laws. III. APPLICABILITY A. This Final Judgment applies to UTC and Rockwell Collins, as defined above, and all other persons in active concert or participation with any of them who receive actual notice of this Final Judgment by personal service or otherwise. B. If, prior to complying with Section IV, Section V, and Section VI of this Final Judgment, Defendants sell or otherwise dispose of all or substantially all of their assets or of lesser business units that include the Divestiture Assets, Defendants shall require the purchaser to be bound by the provisions of this Final Judgment. Defendants need not obtain such an agreement from the E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices Acquirers of the assets divested pursuant to this Final Judgment. daltland on DSKBBV9HB2PROD with NOTICES IV. DIVESTITURE OF THE ICE PROTECTION DIVESTITURE ASSETS A. Defendants are ordered and directed, within the later of (1) five (5) calendar days after notice of entry of this Final Judgment by the Court or (2) fifteen (15) calendar days after Required Regulatory Approvals have been received to divest the Ice Protection Divestiture Assets in a manner consistent with this Final Judgment to an Acquirer acceptable to the United States, in its sole discretion. The United States, in its sole discretion, may agree to one or more extensions of this time period not to exceed sixty (60) calendar days in total, and shall notify the Court in such circumstances. Defendants agree to use their best efforts to divest the Ice Protection Divestiture Assets as expeditiously as possible. B. In accomplishing the divestiture of the Ice Protection Divestiture Assets ordered by this Final Judgment, Defendants promptly shall make known, by usual and customary means, the availability of the Ice Protection Divestiture Assets. Defendants shall inform any person making an inquiry regarding a possible purchase of the Ice Protection Divestiture Assets that they are being divested pursuant to this Final Judgment and provide that person with a copy of this Final Judgment. Defendants shall offer to furnish to all prospective Acquirers, subject to customary confidentiality assurances, all information and documents relating to the Ice Protection Divestiture Assets customarily provided in a due diligence process, except information or documents subject to the attorney-client privilege or work-product doctrine. Defendants shall make available such information to the United States at the same time that such information is made available to any other person. C. Defendants shall provide the Acquirer of the Ice Protection Divestiture Assets and the United States information relating to the personnel involved in the design, development, production, distribution, sale, or service of products by or under any of the Ice Protection Divestiture Assets to enable the Acquirer of the Ice Protection Divestiture Assets to make offers of employment. Defendants will not interfere with any negotiations by the Acquirer of the Ice Protection Divestiture Assets to employ any Defendant employee whose primary responsibility is the design, development, production, distribution, sale, or service of products by or under VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 any of the Ice Protection Divestiture Assets. D. Defendants shall permit prospective Acquirers of the Ice Protection Divestiture Assets to have reasonable access to personnel and to make inspections of the physical facilities to be divested; access to any and all environmental, zoning, and other permit documents and information; and access to any and all financial, operational, or other documents and information customarily provided as part of a due diligence process. E. Defendants shall warrant to the Acquirer of the Ice Protection Divestiture Assets that each asset will be operational on the date of sale. F. Defendants shall not take any action that will impede in any way the permitting, operation, or divestiture of the Ice Protection Divestiture Assets. G. Defendants shall warrant to the Acquirer of the Ice Protection Divestiture Assets (1) that there are no material defects in the environmental, zoning, or other permits pertaining to the operation of the Ice Protection Divestiture Assets, and (2) that following the sale of the Ice Protection Divestiture Assets, Defendants will not undertake, directly or indirectly, any challenges to the environmental, zoning, or other permits relating to the operation of the Ice Protection Divestiture Assets. H. At the option of the Acquirer of the Ice Protection Divestiture Assets, Defendants shall enter into a transition services agreement with the Acquirer of the Ice Protection Divestiture Assets to provide back office and information technology services and support for the Ice Protection Divestiture Assets for a period of up to twelve (12) months. The United States, in its sole discretion, may approve one or more extensions of this agreement for a total of up to an additional twelve (12) months. If the Acquirer of the Ice Protection Divestiture Assets seeks an extension of the term of this transition services agreement, it shall so notify the United States in writing at least three (3) months prior to the date the transition services contract expires. If the United States approves such an extension, it shall so notify the Acquirer of the Ice Protection Divestiture Assets in writing at least two (2) months prior to the date the transition services contract expires. The terms and conditions of any contractual arrangement intended to satisfy this provision must be reasonably related to the market value of the expertise of the personnel providing any needed assistance. The UTC employee(s) tasked with providing these PO 00000 Frm 00172 Fmt 4703 Sfmt 4703 52547 transition services may not share any competitively sensitive information of the Acquirer of the Ice Protection Divestiture Assets with any other UTC employee. I. Defendants shall remove from the Fenwick Facility the assets used exclusively with the WEMAC Product Line within nine (9) months of the divestiture of the Ice Protection Divestiture Assets. The United States, in its sole discretion, may agree to one or more extensions of this time period not to exceed three (3) months in total. J. Unless the United States otherwise consents in writing, the divestiture pursuant to Section IV, or by Divestiture Trustee appointed pursuant to Section VI, of this Final Judgment, shall include the entire Ice Protection Divestiture Assets, and shall be accomplished in such a way as to satisfy the United States, in its sole discretion, that the Ice Protection Divestiture Assets can and will be used by the Acquirer of the Ice Protection Divestiture Assets as part of a viable, ongoing business of the development, manufacture, sale, service, or distribution of pneumatic ice protection systems. The divestiture, whether pursuant to Section IV or Section V of this Final Judgment, (1) shall be made to an Acquirer of the Ice Protection Divestiture Assets that, in the United States’ sole judgment, has the intent and capability (including the necessary managerial, operational, technical, and financial capability) of competing effectively in the business of the development, manufacture, and sale of pneumatic ice protection systems; and (2) shall be accomplished so as to satisfy the United States, in its sole discretion, that none of the terms of any agreement between an Acquirer of the Ice Protection Divestiture Assets and Defendants give Defendants the ability unreasonably to raise the Acquirer’s costs, to lower the Acquirer’s efficiency, or otherwise to interfere in the ability of the Acquirer to compete effectively. V. DIVESTITURE OF THE THSA DIVESTITURE ASSETS A. Defendants are ordered and directed, within the later of (1) five (5) calendar days after notice of entry of this Final Judgment or (2) fifteen (15) calendar days after Required Regulatory Approvals have been received, to divest the THSA Divestiture Assets in a manner consistent with this Final Judgment to an Acquirer acceptable to the United States, in its sole discretion. At the option of the Acquirer of the E:\FR\FM\17OCN1.SGM 17OCN1 daltland on DSKBBV9HB2PROD with NOTICES 52548 Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices THSA Divestiture Assets, and subject to the review and approval by the United States, Building 518 may be transferred via a sublease in lieu of a divestiture. The United States, in its sole discretion, may agree to one or more extensions of this time period not to exceed sixty (60) calendar days in total, and shall notify the Court in such circumstances. Defendants agree to use their best efforts to divest the Divestiture Assets as expeditiously as possible. B. In the event Defendants are attempting to divest the THSA Divestiture Assets to an Acquirer other than Safran S.A., Defendants promptly shall make known, by usual and customary means, the availability of the THSA Divestiture Assets. Defendants shall inform any person making an inquiry regarding a possible purchase of the THSA Divestiture Assets that they are being divested pursuant to this Final Judgment and provide that person with a copy of this Final Judgment. Defendants shall offer to furnish to all prospective Acquirers, subject to customary confidentiality assurances, all information and documents relating to the THSA Divestiture Assets customarily provided in a due diligence process except information or documents subject to the attorney-client privilege or work-product doctrine. Defendants shall make available such information to the United States at the same time that such information is made available to any other person. C. Defendants shall provide the Acquirer of the THSA Divestiture Assets and the United States information relating to the personnel involved in the design, development, production, distribution, sale, or service of products by or under any of the THSA Divestiture Assets to enable the Acquirer of the THSA Divestiture Assets to make offers of employment. Defendants will not interfere with any negotiations by the Acquirer of the THSA Divestiture Assets to employ any Defendant employee whose primary responsibility is the design, development, production, distribution, sale, or service of products by or under any of the THSA Divestiture Assets. D. Defendants shall use reasonable best efforts to obtain any approvals required from United States government customers for the transfer of proprietary contracts to the Acquirer of the THSA Divestiture Assets. If such approvals cannot be obtained, notwithstanding anything to the contrary in this Final Judgment, Defendants may: 1. Retain the proprietary contracts and those portions thereof that cannot be subcontracted to the Acquirer of the THSA Divestiture Assets; and VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 2 Retain those tangible and intangible assets that have been used exclusively in the performance of the proprietary contracts. E. Defendants shall permit prospective Acquirers of the THSA Divestiture Assets to have reasonable access to personnel and to make inspections of the physical facilities to be divested; access to any and all environmental, zoning, and other permit documents and information; and access to any and all financial, operational, or other documents and information customarily provided as part of a due diligence process. F. Defendants shall warrant to the Acquirer of the THSA Divestiture Assets that each asset will be operational on the date of sale. G. Defendants shall not take any action that will impede in any way the permitting, operation, or divestiture of the THSA Divestiture Assets. H. Defendants shall warrant to the Acquirer of the THSA Divestiture Assets (1) that there are no material defects in the environmental, zoning, or other permits pertaining to the operation of the THSA Divestiture Assets, and (2) that following the sale of the THSA Divestiture Assets, Defendants will not undertake, directly or indirectly, any challenges to the environmental, zoning, or other permits relating to the operation of the THSA Divestiture Assets. I. At the option of the Acquirer of the THSA Divestiture Assets, Defendants shall enter into a transition services agreement with the Acquirer of the THSA Divestiture Assets to provide services related to facility management and upkeep, facility and asset transition, government compliance, accounting and finance, information technology and human resources for the THSA Divestiture Assets for a period of up to twelve (12) months. The United States, in its sole discretion, may approve one or more extensions of this agreement for a total of up to an additional twelve (12) months. If the Acquirer of the THSA Divestiture Assets seeks an extension of the term of this transition services agreement, it shall so notify the United States in writing at least three (3) months prior to the date the transition services contract expires. If the United States approves such an extension, it shall so notify the Acquirer of the THSA Divestiture Assets in writing at least two (2) months prior to the date the transition services contract expires. The terms and conditions of any contractual arrangement intended to satisfy this provision must be reasonably related to the market value of the expertise of the personnel providing any needed PO 00000 Frm 00173 Fmt 4703 Sfmt 4703 assistance. The UTC employee(s) tasked with providing these transition services may not share any competitively sensitive information of the Acquirer of the THSA Divestiture Assets with any other UTC employee. J. During the term of the transition services agreement in Paragraph V(I), Defendants shall use their best efforts to assist the Acquirer of the THSA Divestiture Assets with the transition of the THSA Divestiture Assets to locations chosen by the Acquirer of the THSA Divestiture Assets and the Defendants shall not impede this transition of the THSA Divestiture Assets. K. At the option of the Acquirer of the THSA Divestiture Assets, Defendants shall enter into a supply agreement to provide services related to the manufacture of THSAs in Building 213 and Rockwell Collins’ Iowa C Ave Complex facility located at 400 Collins Road NE, Cedar Rapids, Iowa sufficient to meet all or part of the needs of the Acquirer of the THSA Assets for a period of up to twelve months. The United States, in its sole discretion, may approve one or more extensions of this agreement for a total of up to an additional twelve (12) months. If the Acquirer of the THSA Divestiture Assets seeks an extension of the term of this agreement, it shall so notify the United States in writing at least three (3) months prior to the date the contract expires. If the United States approves such an extension, it shall so notify the Acquirer of the THSA Divestiture Assets in writing at least two (2) months prior to the date the agreement expires. The terms and conditions of any contractual arrangement meant to satisfy this provision must be reasonably related to market conditions for such services. L. Unless the United States otherwise consents in writing, the divestiture pursuant to Section V, or by Divestiture Trustee appointed pursuant to Section VI, of this Final Judgment, shall include the entire THSA Divestiture Assets, and shall be accomplished in such a way as to satisfy the United States, in its sole discretion, that the THSA Divestiture Assets can and will be used by the Acquirer of the THSA Divestiture Assets as part of a viable, ongoing business of the development, manufacture, and sale of THSAs. The divestiture, whether pursuant to Section V or Section VI of this Final Judgment, (1) shall be made to an Acquirer of the THSA Divestiture Assets that, in the United States’ sole judgment, has the intent and capability (including the necessary managerial, operational, technical, and financial E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES capability) of competing effectively in the business of the development, manufacture, and sale of THSAs; and (2) shall be accomplished so as to satisfy the United States, in its sole discretion, that none of the terms of any agreement between an Acquirer of the THSA Divestiture Assets and Defendants give Defendants the ability unreasonably to raise the Acquirer’s costs, to lower the Acquirer’s efficiency, or otherwise to interfere in the ability of the Acquirer to compete effectively. VI. APPOINTMENT OF DIVESTITURE TRUSTEE A. If Defendants have not divested all of the Divestiture Assets within the time periods specified in Paragraphs IV(A) and V(A), Defendants shall notify the United States of that fact in writing. Upon application of the United States, the Court shall appoint a Divestiture Trustee selected by the United States and approved by the Court to effect the divestiture(s) of any of the Divestiture Assets that have not been sold during the time periods specified in Paragraphs IV(A) and V(A). B. After the appointment of a Divestiture Trustee becomes effective, only the Divestiture Trustee shall have the right to sell those Divestiture Assets that the Divestiture Trustee has been appointed to sell. The Divestiture Trustee shall have the power and authority to accomplish the divestiture(s) to an Acquirer(s) acceptable to the United States, in its sole discretion at such price and on such terms as are then obtainable upon reasonable effort by the Divestiture Trustee, subject to the provisions of Sections IV, V, VI, and VII of this Final Judgment, and shall have such other powers as the Court deems appropriate. Subject to Paragraph VI(D) of this Final Judgment, the Divestiture Trustee may hire at the cost and expense of Defendants any agents, investment bankers, attorneys, accountants, or consultants, who shall be solely accountable to the Divestiture Trustee, reasonably necessary in the Divestiture Trustee’s judgment to assist in the divestiture(s). Any such agents or consultants shall serve on such terms and conditions as the United States approves, including confidentiality requirements and conflict of interest certifications. C. Defendants shall not object to a sale by the Divestiture Trustee on any ground other than the Divestiture Trustee’s malfeasance. Any such objections by Defendants must be conveyed in writing to the United States VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 and the Divestiture Trustee within ten (10) calendar days after the Divestiture Trustee has provided the notice required under Section VII. D. The Divestiture Trustee shall serve at the cost and expense of Defendants pursuant to a written agreement, on such terms and conditions as the United States approves, including confidentiality requirements and conflict of interest certifications. The Divestiture Trustee shall account for all monies derived from the sale of the assets sold by the Divestiture Trustee and all costs and expenses so incurred. After approval by the Court of the Divestiture Trustee’s accounting, including fees for any of its services yet unpaid and those of any professionals and agents retained by the Divestiture Trustee, all remaining money shall be paid to Defendants and the trust shall then be terminated. The compensation of the Divestiture Trustee and any professionals and agents retained by the Divestiture Trustee shall be reasonable in light of the value of the Divestiture Assets that are being sold by the Divestiture Trustee 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, but the timeliness of the divestiture(s) is paramount. If the Divestiture Trustee and Defendants are unable to reach agreement on the Divestiture Trustee’s or any agents’ or consultants’ compensation or other terms and conditions of engagement within fourteen (14) calendar days of the appointment of the Divestiture Trustee, the United States may, in its sole discretion, take appropriate action, including making a recommendation to the Court. The Divestiture Trustee shall, within three (3) business days of hiring any other agents or consultants, provide written notice of such hiring and the rate of compensation to Defendants and the United States. E. Defendants shall use their best efforts to assist the Divestiture Trustee in accomplishing the required divestiture(s). The Divestiture Trustee and any agents or consultants retained by the Divestiture Trustee shall have full and complete access to the personnel, books, records, and facilities of the business to be divested, and Defendants shall provide or develop financial and other information relevant to such business as the Divestiture Trustee may reasonably request, subject to reasonable protection for trade secrets or other confidential research, development, or commercial information or any applicable privileges. Defendants shall take no PO 00000 Frm 00174 Fmt 4703 Sfmt 4703 52549 action to interfere with or to impede the Divestiture Trustee’s accomplishment of the divestiture(s). F. After its appointment, the Divestiture Trustee shall file monthly reports with the United States and, as appropriate, the Court setting forth the Divestiture Trustee’s efforts to accomplish the divestiture(s) ordered under this Final Judgment. To the extent such reports contain information that the Divestiture Trustee deems confidential, such reports shall not be filed in the public docket of the Court. Such reports shall include the name, address, and telephone number of each person who, during the preceding month, made an offer to acquire, expressed an interest in acquiring, entered into negotiations to acquire, or was contacted or made an inquiry about acquiring, any interest in the Divestiture Assets, and shall describe in detail each contact with any such person. The Divestiture Trustee shall maintain full records of all efforts made to divest any of the Divestiture Assets. G. If the Divestiture Trustee has not accomplished the divestitures ordered under this Final Judgment within six months after its appointment, the Divestiture Trustee shall promptly file with the Court 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. To the extent such report contain information that the Divestiture Trustee deems confidential, such report shall not be filed in the public docket of the Court. The Divestiture Trustee shall at the same time furnish such report to the United States which shall have the right to make additional recommendations consistent with the purpose of the trust. The Court thereafter shall enter such orders as it shall deem appropriate to carry out the purpose of the Final Judgment, which may, if necessary, include extending the trust and the term of the Divestiture Trustee’s appointment by a period requested by the United States. H. If the United States determines that the Divestiture Trustee has ceased to act or failed to act diligently or in a reasonably cost-effective manner, the United States may recommend the Court appoint a substitute Divestiture Trustee. VII. NOTICE OF PROPOSED DIVESTITURE A. Within two (2) business days following execution of a definitive divestiture agreement, Defendants or the Divestiture Trustee, whichever is then E:\FR\FM\17OCN1.SGM 17OCN1 52550 Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES responsible for effecting the divestitures required herein, shall notify the United States of any proposed divestiture required by Sections IV, V or VI of this Final Judgment. If the Divestiture Trustee is responsible, it shall similarly notify Defendants. The notice shall set forth the details of the proposed divestiture(s) and list the name, address, and telephone number of each person not previously identified who offered or expressed an interest in or desire to acquire any ownership interest in the Divestiture Assets, together with full details of the same. B. Within fifteen (15) calendar days of receipt by the United States of such notice, the United States may request from Defendants, the proposed Acquirer(s), any other third party, or the Divestiture Trustee, if applicable, additional information concerning the proposed divestiture, the proposed Acquirer(s), and any other potential Acquirer. Defendants and the Divestiture Trustee shall furnish any additional information requested within fifteen (15) calendar days of the receipt of the request, unless the parties shall otherwise agree. C. Within thirty (30) calendar days after receipt of the notice or within twenty (20) calendar days after the United States has been provided the additional information requested from Defendants, the proposed Acquirer(s), any third party, and the Divestiture Trustee, whichever is later, the United States shall provide written notice to Defendants and the Divestiture Trustee, if there is one, stating whether or not it objects to the proposed divestiture. If the United States provides written notice that it does not object, the divestiture may be consummated, subject only to Defendants’ limited right to object to the sale under Paragraph VI(C) of this Final Judgment. Absent written notice that the United States does not object to the proposed Acquirer(s) or upon objection by the United States, a divestiture proposed under Sections IV, V, or VI shall not be consummated. Upon objection by Defendants under Paragraph VI(C), a divestiture proposed under Section VI shall not be consummated unless approved by the Court. VIII. FINANCING Defendants shall not finance all or any part of any purchase made pursuant to Section IV, Section V, or Section VI of this Final Judgment. IX. HOLD SEPARATE Until the divestitures required by this Final Judgment have been accomplished, Defendants shall take all VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 steps necessary to comply with the Hold Separate Stipulation and Order entered by the Court. Defendants shall take no action that would jeopardize the divestitures ordered by the Court. X. AFFIDAVITS A. Within twenty (20) calendar days of the filing of the Complaint in this matter, and every thirty (30) calendar days thereafter until the divestitures have been completed under Sections IV, V, or VI, Defendants shall deliver to the United States an affidavit, signed by UTC’s Executive Vice President, Operations & Strategy and General Counsel, and Rockwell Collins’ Chief Financial Officer and General Counsel, which shall describe the fact and manner of Defendants’ compliance with Sections IV, V or VI of this Final Judgment. Each such affidavit shall include the name, address, and telephone number of each person who, during the preceding thirty (30) calendar days, made an offer to acquire, expressed an interest in acquiring, entered into negotiations to acquire, or was contacted or made an inquiry about acquiring, any interest in the Divestiture Assets, and shall describe in detail each contact with any such person during that period. Each such affidavit shall also include a description of the efforts Defendants have taken to solicit buyers for the Divestiture Assets, and to provide required information to prospective Acquirers, including the limitations, if any, on such information. Assuming the information set forth in the affidavit is true and complete, any objection by the United States to information provided by Defendants, including limitation on information, shall be made within fourteen (14) calendar days of receipt of such affidavit. B. Within twenty (20) calendar days of the filing of the Complaint in this matter, Defendants shall deliver to the United States an affidavit that describes in reasonable detail all actions Defendants have taken and all steps Defendants have implemented on an ongoing basis to comply with Section IX of this Final Judgment. Defendants shall deliver to the United States an affidavit describing any changes to the efforts and actions outlined in Defendants’ earlier affidavits filed pursuant to this Section within fifteen (15) calendar days after the change is implemented. C. Defendants shall keep all records of all efforts made to preserve and divest the Divestiture Assets until one year after such divestiture has been completed. PO 00000 Frm 00175 Fmt 4703 Sfmt 4703 XI. COMPLIANCE INSPECTION A. For the purposes of determining or securing compliance with this Final Judgment, or of any related orders such as any Hold Separate Stipulation and Order, or of determining whether the Final Judgment should be modified or vacated, and subject to any legallyrecognized privilege, from time to time authorized representatives of the United States, including agents and consultants retained by the United States, shall, upon written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division, and on reasonable notice to Defendants, be permitted: (1) access during Defendants’ office hours to inspect and copy or, at the option of the United States, to require Defendants to provide electronic copies of, all books, ledgers, accounts, records, data, and documents in the possession, custody, or control of Defendants, relating to any matters contained in this Final Judgment; and (2) to interview, either informally or on the record, Defendants’ officers, employees, or agents, who may have their individual counsel present, regarding such matters. The interviews shall be subject to the reasonable convenience of the interviewee and without restraint or interference by Defendants. B. Upon the written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division, Defendants shall submit written reports or response to written interrogatories, under oath if requested, relating to any of the matters contained in this Final Judgment as may be requested. C. No information or documents obtained by the means provided in Section XI shall be divulged by the United States to any person other than an authorized representative of the executive branch of the United States, except in the course of legal proceedings to which the United States is a party (including grand jury proceedings), for the purpose of securing compliance with this Final Judgment, or as otherwise required by law. D. If at the time that Defendants furnish information or documents to the United States, Defendants represent and identify in writing the material in any such information or documents to which a claim of protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure, and Defendants mark each pertinent page of such material, ‘‘Subject to claim of protection under Rule 26(c)(1)(G) of the E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES Federal Rules of Civil Procedure,’’ then the United States shall give Defendants ten (10) calendar days’ notice prior to divulging such material in any legal proceeding (other than a grand jury proceeding). XII. NOTIFICATION A. Unless such transaction is otherwise subject to the reporting and waiting period requirements of the HartScott-Rodino Antitrust Improvements Act of 1976, as amended, 15 U.S.C. § 18a (the ‘‘HSR Act’’), Defendants, without providing advance notification to the United States, shall not directly or indirectly acquire any assets of or any interest in, including any financial, security, loan, equity, or management interest, any business in the global pneumatic ice protection market valued over $25 million during the term of this Final Judgment. B. Such notification shall be provided to the United States in the same format as, and per the instructions relating to, the Notification and Report Form set forth in the Appendix to Part 803 of Title 16 of the Code of Federal Regulations as amended, except that the information requested in Items 5 through 8 of the instructions must be provided only about pneumatic ice protection systems. Notification shall be provided at least thirty (30) calendar days prior to acquiring any such interest, and shall include, beyond what may be required by the applicable instructions, the names of the principal representatives of the parties to the agreement who negotiated the agreement, and any management or strategic plans discussing the proposed transaction. If within the 30-day period after notification, representatives of the United States make a written request for additional information, Defendants shall not consummate the proposed transaction or agreement until thirty (30) calendar days after submitting all such additional information. Early termination of the waiting periods in this Paragraph may be requested and, where appropriate, granted in the same manner as is applicable under the requirements and provisions of the HSR Act and rules promulgated thereunder. Section XII shall be broadly construed and any ambiguity or uncertainty regarding the filing of notice under Section XII shall be resolved in favor of filing notice. XIII. NO REACQUISITION Defendants may not reacquire any part of the Divestiture Assets during the term of this Final Judgment. The Acquirer of the Ice Protection Divestiture Assets may not acquire from VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 Defendants during the term of this Final Judgment any assets or businesses that compete with the Ice Protection Divestiture Assets. The Acquirer of the THSA Divestiture Assets may not acquire from Defendants during the term of this Final Judgment any assets or businesses that compete with the THSA Divestiture Assets. 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. 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 any civil contempt action, any motion to show cause, or any similar action brought by the United States regarding an alleged violation of this Final Judgment, the United States may establish a violation of the decree and the appropriateness of any remedy therefor by a preponderance of the evidence, and Defendants waive any argument that a different standard of proof should apply. B. The Final Judgment should be interpreted to give full effect to the procompetitive purposes of the antitrust laws and to restore all competition 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. C. In any enforcement proceeding in which the Court finds that Defendants have violated this Final Judgment, the United States may apply to the Court for a one-time extension of this Final Judgment, together with such other relief as may be appropriate. In connection with any successful effort by the United States to enforce this Final Judgment against a Defendant, whether litigated or resolved prior to litigation, that Defendant agrees to reimburse the PO 00000 Frm 00176 Fmt 4703 Sfmt 4703 52551 United States for the fees and expenses of its attorneys, as well as any other costs including experts’ fees, incurred in connection with that enforcement effort, including in the investigation of the potential violation. XVI. EXPIRATION OF FINAL JUDGMENT Unless the Court grants an extension, this Final Judgment shall 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 divestitures have been completed and that the continuation of the Final Judgment no longer is 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 making copies available to the public of this Final Judgment, the Competitive Impact Statement, any comments thereon, and the United States’ responses to comments. Based upon the record before the Court, which includes the Competitive Impact Statement and any comments and responses to comments filed with the Court, entry of this Final Judgment is in the public interest. Date: llllllllllllllllll Court approval subject to procedures of Antitrust Procedures and Penalties Act, 15 U.S.C. § 16: Date: llllllllllllllllll United States District Judge United States District Court For The District of Columbia United States of America, Plaintiff, v. United Technologies Corporation, and Rockwell Collins, Inc., Defendants. Case No.: 1:18–cv–02279–RC JUDGE: Rudolph Contreras Deck Type: Antitrust COMPETITIVE IMPACT STATEMENT Plaintiff United States of America (‘‘United States’’), pursuant to Section 2(b) of the Antitrust Procedures and Penalties Act (‘‘APPA’’ or ‘‘Tunney Act’’), 15 U.S.C. § 16(b)–(h), files this Competitive Impact Statement relating to the proposed Final Judgment submitted for entry in this civil antitrust proceeding. I. NATURE AND PURPOSE OF THE PROCEEDING On September 4, 2017, Defendants United Technologies Corporation E:\FR\FM\17OCN1.SGM 17OCN1 52552 Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices (‘‘UTC’’) and Rockwell Collins, Inc. (‘‘Rockwell Collins’’) entered into an agreement whereby UTC proposes to acquire Rockwell Collins for approximately $30 billion. The United States filed a civil antitrust Complaint against UTC and Rockwell Collins on October 1, 2018, seeking to enjoin the proposed acquisition. The Complaint alleges that the proposed acquisition likely would substantially lessen competition in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18, in the worldwide markets for the development, manufacture, and sale of pneumatic ice protection systems for fixed-wing aircraft (‘‘aircraft’’) and trimmable horizontal stabilizer actuators (‘‘THSAs’’) for large aircraft. That loss of competition likely would result in increased prices, less favorable contractual terms, and decreased innovation in the markets for these products. Concurrent with the filing of the Complaint, the United States filed a Hold Separate Stipulation and Order (‘‘Hold Separate’’) and proposed Final Judgment, which are designed to eliminate the anticompetitive effects that would have resulted from UTC’s acquisition of Rockwell Collins. Under the proposed Final Judgment, which is explained more fully below, Defendants are required to divest assets relating to Rockwell Collins’ pneumatic ice protection systems business and its THSA business. Under the Hold Separate, Defendants will take certain steps to ensure that the businesses will operate as competitively independent, economically viable and ongoing business concerns, that will remain independent and uninfluenced by the consummation of the acquisition, and that competition is maintained during the pendency of the ordered divestiture. The United States and Defendants have stipulated that the proposed Final Judgment may be entered after compliance with the APPA. Entry of the proposed Final Judgment would terminate this action, except that the Court would retain jurisdiction to construe, modify, or enforce the provisions of the Final Judgment and to punish violations thereof. daltland on DSKBBV9HB2PROD with NOTICES II. DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATIONS A. The Defendants UTC is incorporated in Delaware and has its headquarters in Farmington, Connecticut. UTC produces a wide range of products for the aerospace industry and other industries, including, among other products, VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 pneumatic ice protection systems for aircraft and THSAs for large aircraft. In 2017, UTC had sales of approximately $59.8 billion. Rockwell Collins is incorporated in Delaware and is headquartered in Cedar Rapids, Iowa. Rockwell Collins is a major provider of aerospace and defense electronics systems. Rockwell Collins produces, among other products, pneumatic ice protection systems for aircraft and THSAs for large aircraft. In fiscal year 2017, Rockwell Collins had sales of approximately $6.8 billion. B. Pneumatic Ice Protection Systems for Aircraft 1. Background During flight, ice can accumulate on an aircraft’s leading edge surfaces, such as the part of the aircraft’s wings that first contact the air during flight. Surface ice accumulation affects an aircraft’s maneuverability, increases drag, and decreases lift. If it remains untreated, surface ice accumulation can lead to a catastrophic flight event. A pneumatic ice protection system is engineered to remove accumulated ice on an aircraft’s wings. Such a system consists of two main elements, a deicing boot, which is inflated to crack ice off an aircraft leading edge, and pneumatic system hardware. The pneumatic system hardware consists of equipment designed to control the flow of air into the de-icing boot. Pneumatic ice protection systems are one form of ice protection technology. The specific design features of an aircraft, such as the availability of electrical power, determine which type of ice protection system will be used on the aircraft. Once an aircraft manufacturer has selected a particular pneumatic ice protection system, that system is certified as an Original Equipment Manufacturer (‘‘OEM’’) part for flight worthiness as a part of the aircraft’s manufacturing design. Aircraft manufacturers generally only certify one supplier for ice protection systems for a particular aircraft model. Pneumatic ice protection systems, and components thereof, are also sold in the aftermarket, as their components require repair or replacement after significant use. Most of the revenues related to pneumatic ice protection systems are derived from aftermarket sales. Although generally only one particular pneumatic ice protection system is certified with the aircraft model as original equipment, pneumatic ice protection system suppliers often procure additional certifications that allow their pneumatic ice protection system components to replace their PO 00000 Frm 00177 Fmt 4703 Sfmt 4703 competitors’ OEM pneumatic ice protection system in the aftermarket. Because surface ice accumulation may lead to a catastrophic flight event, pneumatic ice protection systems are considered critical flight components. An aircraft manufacturer or aftermarket purchaser is therefore likely to prefer proven suppliers of pneumatic ice protection systems. 2. Relevant Markets Pneumatic ice protection systems for aircraft are a relevant product market and line of commerce under Section 7 of the Clayton Act. Ice protection systems are selected at the aircraft design stage based on the characteristics of the aircraft. Pneumatic ice protection systems have numerous attributes (light weight, low cost, and low power requirements) that make them an attractive option for aircraft manufacturers of aircraft with certain design requirements. Certain aircraft models can use only pneumatic ice protection systems. For these customers that produce those models, pneumatic ice protection systems are the best option, as such customers cannot effectively use other types of ice protection systems such as an electrothermal or bleed air ice protection system. Once an aircraft is certified, switching the ice protection system on a particular model of aircraft to a different type of ice protection system, even if technologically feasible, would require some re-design of the ice protection portion of the aircraft and recertification of the aircraft. Such re-design and recertification may cost millions of dollars, require additional flight testing, and consume multiple years of time. Therefore, a small but significant increase in the price of pneumatic ice protection systems would not cause customers of those ice protection systems to substitute an alternative type of ice protection system for the original aircraft or in the aftermarket in volumes sufficient to make such a price increase unprofitable. Although the pneumatic ice protection system installed on each type of aircraft may be deemed a separate product market, in each such market there are few competitors. The proposed acquisition of Rockwell Collins by UTC would affect competition for each aircraft pneumatic ice protection system in the same manner. It is therefore appropriate to aggregate pneumatic ice protection markets for purposes of analyzing the effects of the acquisition. The relevant geographic market for pneumatic ice protection systems for aircraft is worldwide. Pneumatic ice E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices protection systems are marketed internationally and may be sourced economically from suppliers globally. Transportation costs are a small proportion of the cost of the finished product and thus are not a major factor in supplier selection. 3. Anticompetitive Effects There are only three competitors in the market for the development, manufacture, and sale of pneumatic ice protection systems for aircraft. These three firms are the only sources for both OEM systems and aftermarket systems and parts. Based on historical sales results, a combined UTC-Rockwell Collins would control a majority share of OEM and aftermarket sales. Therefore, UTC’s acquisition of Rockwell Collins would significantly increase concentration in an already highly concentrated market. UTC and Rockwell Collins compete directly on price. In some cases, one of the companies has replaced the other’s pneumatic ice protection system or components thereof on a particular aircraft. Customers have benefited from the competition between UTC and Rockwell Collins for sales of pneumatic ice protection systems by receiving lower prices, more favorable contractual terms, and shorter delivery times. The combination of UTC and Rockwell Collins would eliminate this competition and its future benefits to customers. Therefore, post-acquisition, UTC likely would have the incentive and the ability to increase prices profitably and offer less favorable contractual terms, resulting in significant harm to aircraft manufacturers and aftermarket customers that require pneumatic ice protection systems. daltland on DSKBBV9HB2PROD with NOTICES 4. Difficulty of Entry Sufficient, timely entry of additional competitors into the markets for pneumatic ice protection systems is unlikely to prevent the harm to competition that is likely to result if the proposed acquisition is consummated. The small size of the market makes it difficult for new entrants to recover the cost of entry, which is high in part due to the costs of obtaining certification for new equipment. In addition, opportunities to enter are rare, as new aircraft designs are themselves quite infrequent. Moreover, aircraft manufacturers, operators, and servicers are hesitant to purchase aircraft components from newer suppliers, particularly for critical flight components like ice protection systems. VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 Pneumatic ice protection systems generally are not built by aircraft manufacturers, in part because pneumatic technology tends to be complicated and technically different from other aircraft systems. As a result, aircraft manufacturers are unlikely to move production of such systems inhouse in response to a price increase. C. Trimmable Horizontal Stabilizer Actuators for Large Aircraft 1. Background Actuators are responsible for the proper in-flight positions of an aircraft by manipulating the ‘‘control surfaces’’ on its wings and tail section. A trimmable horizontal stabilizer actuator (‘‘THSA’’) helps an aircraft maintain the proper altitude during flight by adjusting (‘‘trimming’’) the angle of the horizontal stabilizer, the control surface of the aircraft’s tail responsible for aircraft pitch. THSAs vary based on the size and type of the aircraft on which they are used. Because large aircraft encounter significantly higher aerodynamic loads than smaller aircraft, THSAs for large aircraft are considerably larger, more complex, and more expensive than those used on smaller aircraft. Large aircraft primarily include commercial aircraft that seat at least six passengers abreast, such as the Airbus A320 and A350 and the Boeing 737 and 787, and military transport aircraft. 2. Relevant Markets THSAs for large aircraft do not have technical substitutes. Large aircraft manufacturers cannot switch to THSAs for smaller aircraft, or actuators for other aircraft control surfaces, because those products cannot adequately control the lift and manage the load encountered by the horizontal stabilizer of a large aircraft. A small but significant increase in the price of THSAs for large aircraft would not cause aircraft manufacturers to substitute THSAs designed for smaller aircraft or actuators for other control surfaces in volumes sufficient to make such a price increase unprofitable. Accordingly, THSAs for large aircraft are a relevant product market and line of commerce under Section 7 of the Clayton Act. The relevant geographic market for THSAs for large aircraft is worldwide. THSAs for large aircraft are marketed internationally and may be sourced economically from suppliers globally. Transportation costs are a small proportion of the cost of the finished product and thus are not a major factor in supplier selection. PO 00000 Frm 00178 Fmt 4703 Sfmt 4703 52553 3. Anticompetitive Effects UTC and Rockwell Collins are each other’s closest competitors for THSAs for large aircraft. UTC and Rockwell Collins have won two of the most significant recent contract awards for THSAs for large aircraft: the Boeing 777X and the Airbus A350. Boeing and Airbus are the world’s largest manufacturers of passenger aircraft, and these aircraft represent two of the only three THSA awards by these manufacturers in this century. While there are other producers of THSAs for large aircraft, those firms tend to concentrate most of their THSA business on smaller aircraft, such as business jets or regional jets, or focus on products for other aircraft control surfaces. UTC and Rockwell Collins each view the other firm as the most significant competitive threat for THSAs for large aircraft. The two companies are among the few that have demonstrated experience in designing and producing THSAs for large aircraft. Each firm considers the other company’s offering when planning bids. Customers have benefitted from the competition between UTC and Rockwell Collins for sales of THSAs for large aircraft by receiving lower prices, more favorable contractual terms, more innovative products, and shorter delivery times. The combination of UTC and Rockwell Collins would eliminate this competition and its future benefits to customers. Post-acquisition, UTC likely would have the incentive and the ability to increase prices profitably and offer less favorable contractual terms. UTC and Rockwell Collins also invest significantly to remain leading suppliers of new THSAs for large aircraft, and customers expect them to remain leading suppliers of new products in the future. The combination of UTC and Rockwell Collins would likely eliminate this competition, depriving large aircraft customers of the benefit of future innovation and product development. 4. Difficulty of Entry Sufficient, timely entry of additional competitors into the market for THSAs for large aircraft is unlikely to prevent the harm to competition that is likely to result if the proposed transaction is consummated. Opportunities to enter are limited. Because certification of a THSA is expensive and timeconsuming, once a THSA is certified for a particular aircraft type it is rarely replaced in the aftermarket by a different THSA. Accordingly, competition between suppliers of THSAs generally occurs only when an E:\FR\FM\17OCN1.SGM 17OCN1 52554 Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES aircraft manufacturer is designing a new aircraft or an upgraded version of an existing aircraft. New designs for large aircraft are infrequent, as development costs for such aircraft can amount to tens of billions of dollars. As a result, several years usually pass between contract awards for THSAs for a new aircraft design. Potential entrants face several additional obstacles. First, manufacturers of large aircraft are more likely to purchase THSAs from those firms already supplying THSAs for other large aircraft. The important connection between THSAs and aircraft safety drives aircraft manufacturers toward suppliers experienced with production of THSAs of the relevant type and size. While some companies may have demonstrated experience in THSAs for smaller aircraft or in other actuators, such experience is not considered by customers to be as relevant as experience in THSAs for large aircraft. A new entrant would face significant costs and time to be considered as a potential alternative to the existing suppliers. Developing a THSA for large aircraft is technically difficult. Manufacturers of THSAs for smaller aircraft face significant technical hurdles in designing and developing THSAs for large aircraft. As aerodynamic loads are a major design consideration for THSAs, and such loads are tightly correlated with the size of the aircraft, THSAs for large aircraft present more demanding technical challenges than those for smaller aircraft. Substantial time and significant financial investment would be required for a company to design and develop a THSA for large aircraft. Companies that already make other types of THSAs would require years of effort and an investment of many millions of dollars to develop a product that is competitive with those offered by existing large aircraft THSA suppliers. As a result of these barriers, entry into the market for THSAs for large aircraft would not be timely, likely, or sufficient to defeat the substantial lessening of competition that likely would result from UTC’s acquisition of Rockwell Collins. III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT The divestitures required by the proposed Final Judgment will eliminate the anticompetitive effects that likely would result from UTC’s acquisition of Rockwell Collins. The assets must be divested in such a way as to satisfy the United States in its sole discretion that the assets can and will be operated by VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 the purchaser as a viable, ongoing business that can compete effectively in the relevant market. Defendants must take all reasonable steps necessary to accomplish the divestitures quickly and shall cooperate with prospective purchasers. A. Divestitures 1. Pneumatic Ice Protection Systems for Aircraft a. The Divestiture The proposed Final Judgment requires Defendants to divest Rockwell Collins’ SMR Technologies division, including Rockwell Collins’ business in the development, manufacture, and sale of pneumatic ice protection systems and other ice protection products (the ‘‘Ice Protection Divestiture Assets’’) to an Acquirer acceptable to the United States, in its sole discretion.1 The assets to be divested include Rockwell Collins’ facility located in Fenwick, West Virginia, and all tangible and intangible assets primarily related to the ice protection business. The divestiture of the ice protection business will provide the Acquirer with all the assets it needs to successfully develop, manufacture, and sell pneumatic ice protection systems for aircraft. Paragraph IV(A) of the proposed Final Judgment requires Defendants to divest the Ice Protection Divestiture Assets as a viable ongoing business within the later of five (5) calendar days after notice of entry of this Final Judgment by the Court or fifteen (15) calendar days after Required Regulatory Approvals have been received. b. Transition Services Agreement To facilitate the Acquirer’s immediate use of the Ice Protection Divestiture Assets, the proposed Final Judgment provides the Acquirer with the option to enter into a transition services agreement with Defendants to obtain back office and information technology services and support for the Ice Protection Divestiture Assets for a period of up to twelve (12) months. The United States, in its sole discretion, may approve one or more extensions of this agreement for a total of up to an additional twelve (12) months. 2. THSAs for Large Aircraft a. The Divestiture The proposed Final Judgment requires Defendants to divest Rockwell Collins’ business in the design, development, 1 In addition to pneumatic ice protection systems, the Ice Protection Divestiture Assets include other ice protection products, fueling systems and other industrial products, hovercraft skirts, composites, and commercial aviation products. PO 00000 Frm 00179 Fmt 4703 Sfmt 4703 manufacture, sale, service, or distribution of THSAs (the ‘‘THSA Divestiture Assets’’) to an Acquirer acceptable to the United States, in its sole discretion.2 Because the assets are distributed among multiple sites in two countries, the United States required an upfront buyer to provide additional certainty that the transition can be accomplished without disruption to the business. The United States has approved Safran S.A. as the Acquirer. Safran S.A. is an established aerospace industry supplier. The assets to be divested include two Rockwell Collins’ facilities (Building 518 in Irvine, California and Building 1 in Mexicali, Mexico), and, at the option of the Acquirer, three additional facilities (Building 517 in Irvine, Building 2 in Mexicali, and Building 213 in Melbourne, Florida). The option of acquiring the latter three facilities is designed to allow the Acquirer to consolidate facilities if needed. The THSA Divestiture Assets also include all tangible and intangible assets primarily related to or necessary for the operation of the THSA business. Regardless of whether particular assets have been primarily used for the THSA business, all assets necessary to successfully develop, manufacture, and sell THSAs must be conveyed with the divestiture. The proposed Final Judgment provides that, at the option of the Acquirer of the THSA Divestiture Assets, and subject to the review and approval of the United States, Building 518 may be transferred via a sublease in lieu of a divestiture. Rockwell Collins currently holds a single lease on Buildings 517 and 518, and this provision allows the Acquirer to use Building 518 without assuming responsibility for both properties. In addition, Defendants are required to use reasonable best efforts to obtain approvals required from United States government customers for the transfer of certain proprietary contracts. If the necessary approvals cannot be obtained, Defendants may retain those contracts and portions thereof that cannot be subcontracted to the Acquirer, as well as those tangible and intangible assets that have been used exclusively in the performance of those contracts. Paragraph V(A) of the proposed Final Judgment requires Defendants to divest the THSA Divestiture Assets as a viable ongoing business within the later of five 2 In addition to THSAs for large aircraft, the THSA Divestiture Assets also include legacy flap actuation, nose wheel steering gear boxes, and pilot control systems, including center yokes, rudder brake pedal units, throttle quadrant assemblies, auto-throttles, and control stand modules. E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices (5) calendar days after notice of entry of this Final Judgment by the Court or fifteen (15) calendar days after Required Regulatory Approvals have been received. b. Transition Services Agreement and Transition Obligation To facilitate the transfer of the divestiture assets between facilities without a supply interruption, the proposed Final Judgment provides the Acquirer of the THSA Divestiture Assets with the option to enter into a transition services agreement with Defendants to obtain services related to facility management and upkeep, facility and asset transition, government compliance, accounting and finance, information technology and human resources for the THSA Divestiture Assets for a period of up to twelve (12) months. The United States, in its sole discretion, may approve one or more extensions of this agreement for a total of up to an additional twelve (12) months. Defendants must use their best efforts to assist the Acquirer with the transition of the THSA Divestiture Assets to locations of the Acquirer’s choosing and to not impede that transition. c. Supply Agreement Under the proposed Final Judgment, the Acquirer of the THSA Divestiture Assets has the option to obtain a supply agreement from Defendants to provide services related to the manufacture of THSA components in Melbourne, Florida and Cedar Rapids, Iowa sufficient to meet all or part of the Acquirer’s needs for a period of up to twelve months. The United States, in its sole discretion, may approve one or more extensions of this agreement for a total of up to an additional twelve (12) months. This supply agreement may be necessary to permit the Acquirer to fill existing orders during the time period that manufacturing is being transitioned to other facilities. This is necessary due to the extended manufacturing process and the long lead time required for many components, and acceptable given that these assets will be dedicated to filling existing contracts that are unlikely to be subject to competition during the pendency of this supply agreement. daltland on DSKBBV9HB2PROD with NOTICES B. Other Provisions 1. Use of Divestiture Trustee In the event that Defendants do not accomplish the divestitures within the specified time periods, Section VI of the proposed Final Judgment provides that the Court will appoint a trustee selected by the United States to effect the VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 divestiture. If a trustee is appointed, the proposed Final Judgment provides that Defendants will pay all costs and expenses of the trustee. The trustee’s commission will be structured so as to provide an incentive for the trustee based on the price obtained and the speed with which the divestiture is accomplished. After his or her appointment becomes effective, the trustee will file monthly reports with the Court and the United States setting forth his or her efforts to accomplish the divestiture. At the end of six months, if the divestiture has not been accomplished, the trustee and the United States will make recommendations to the Court, which shall enter such orders as are appropriate to carry out the purpose of the trust, including extending the trust or the term of the trustee’s appointment. 2. Prohibition on Reacquisition Section XIII of the proposed Final Judgment prohibits Defendants from reacquiring any part of the Divestiture Assets during the term of the Final Judgment. In addition, this section prohibits an Acquirer from acquiring from Defendants during the term of the Final Judgment any assets or businesses that compete with the assets acquired by that Acquirer. 3. Notification Section XII of the proposed Final Judgment requires Defendants to provide notification to the Antitrust Division of certain proposed acquisitions not otherwise subject to filing under the Hart-Scott-Rodino Act, 15 U.S.C. 18a (the ‘‘HSR Act’’) in the format and pursuant to the instructions provided under that statute for notification. The notification requirement applies in the case of any direct or indirect acquisitions of any assets of or interest in any entity engaged in the development, manufacture, or sale of pneumatic ice protection systems valued over $25 million. Section XII further provides for waiting periods and opportunities for the United States to obtain additional information similar to the provisions of the HSR Act before such acquisitions can be consummated. 4. Compliance and Enforcement Provisions The proposed Final Judgment also contains provisions designed to promote compliance and make the enforcement of Division consent decrees as effective as possible. Paragraph XV(A) provides that the United States retains and reserves all rights to enforce the provisions of the proposed Final PO 00000 Frm 00180 Fmt 4703 Sfmt 4703 52555 Judgment, including its rights 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 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 obligations with the standard of proof that applies to the underlying offense that the compliance commitments address. Paragraph XV(B) provides additional clarification regarding the interpretation of the provisions of the proposed Final Judgment. The proposed Final Judgment was drafted to restore all competition that would otherwise be harmed by the merger. Defendants agree that they will abide by the proposed Final Judgment, and that they may be held in contempt of this 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(C) further provides that should the Court find in an enforcement proceeding that Defendants have violated the Final Judgment, the United States may apply to the Court for a onetime extension of the Final Judgment, together with such other relief as may be appropriate. In addition, in order to compensate American taxpayers for any costs associated with the investigation and enforcement of violations of the proposed Final Judgment, in any successful effort by the United States to enforce the Final Judgment against a Defendant, whether litigated or resolved prior to litigation, that Defendant agrees to reimburse the United States for attorneys’ fees, experts’ fees, or costs incurred in connection with any enforcement effort, including the investigation of the potential violation. Finally, Section XVI provides that the Final Judgment shall expire ten years from the date of its entry, except that after five 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 divestitures have been completed and that the continuation of the Final Judgment is no longer necessary or in the public interest. IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS Section 4 of the Clayton Act, 15 U.S.C. § 15, provides that any person E:\FR\FM\17OCN1.SGM 17OCN1 52556 Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices who has been injured as a result of conduct prohibited by the antitrust laws may bring suit in federal court to recover three times the damages the person has suffered, as well as costs and reasonable attorneys’ fees. Entry of the proposed Final Judgment will neither impair nor assist the bringing of any private antitrust damage action. Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. § 16(a), the proposed Final Judgment has no prima facie effect in any subsequent private lawsuit that may be brought against Defendants. daltland on DSKBBV9HB2PROD with NOTICES V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT The United States and Defendants have stipulated that the proposed Final Judgment may be entered by the Court after compliance with the provisions of the APPA, provided that the United States has not withdrawn its consent. The APPA conditions entry upon the Court’s determination that the proposed Final Judgment is in the public interest. The APPA provides a period of at least sixty (60) days preceding the effective date of the proposed Final Judgment within which any person may submit to the United States written comments regarding the proposed Final Judgment. Any person who wishes to comment should do so within sixty (60) days of the date of publication of this Competitive Impact Statement in the Federal Register, or the last date of publication in a newspaper of the summary of this Competitive Impact Statement, whichever is later. All comments received during this period will be considered by the United States Department of Justice, which remains free to withdraw its consent to the proposed Final Judgment at any time prior to the Court’s entry of judgment. The comments and the response of the United States will be filed with the Court. In addition, comments will be posted on the U.S. Department of Justice, Antitrust Division’s internet website, and, under certain circumstances, published in the Federal Register. Written comments should be submitted to: Maribeth Petrizzi, Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, United States Department of Justice, 450 Fifth Street NW, Suite 8700, Washington, DC 20530 The proposed Final Judgment provides that the Court retains jurisdiction over this action and the parties may apply to the Court for any order necessary or appropriate for the VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 modification, interpretation, or enforcement of the Final Judgment. VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT The United States considered, as an alternative to the proposed Final Judgment, a full trial on the merits against Defendants. The United States could have continued the litigation and sought preliminary and permanent injunctions preventing UTC’s acquisition of Rockwell Collins. The United States is satisfied, however, that the divestiture of the assets described in the proposed Final Judgment will preserve competition for the development, manufacture, and sale of pneumatic ice protection systems for aircraft and THSAs for large aircraft. Thus, the proposed Final Judgment would achieve all or substantially all of the relief the United States would have obtained through litigation, but avoids the time, expense, and uncertainty of a full trial on the merits of the Complaint. VII. STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENT The Clayton Act, as amended by the APPA, requires that proposed consent judgments in antitrust cases brought by the United States be subject to a sixtyday 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 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 PO 00000 Frm 00181 Fmt 4703 Sfmt 4703 one as the government is entitled to ‘‘broad discretion to settle with the defendant within the reaches of the public interest.’’ United States v. Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally United States v. SBC Commc’ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public interest standard under the Tunney Act); United States v. U.S. Airways Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (noting the court has broad discretion of the adequacy of the relief at issue); United States v. InBev N.V./S.A., No. 08–1965 (JR), 2009–2 Trade Cas. (CCH) ¶ 76,736, 2009 U.S. Dist. LEXIS 84787, at *3, (D.D.C. Aug. 11, 2009) (noting that the court’s review of a consent judgment is limited and only inquires ‘‘into whether the government’s determination that the proposed remedies will cure the antitrust violations alleged in the complaint was reasonable, and whether the mechanism to enforce the final judgment are clear and manageable.’’).3 As the United States 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 set forth in the government’s complaint, whether the decree is sufficiently clear, whether enforcement mechanisms are sufficient, and whether the decree may positively harm third parties. See Microsoft, 56 F.3d at 1458–62. With respect to the adequacy of the relief secured by the decree, a court may not ‘‘engage in an unrestricted evaluation of what relief would best serve the public.’’ United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (quoting United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d at 1460–62; United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, at *3. Courts have held that: [t]he balancing of competing social and political interests affected by a proposed antitrust consent decree must be left, in the first instance, to the discretion of the Attorney General. The court’s role in protecting the public interest is one of insuring that the government has not breached its duty to the public in consenting to the decree. The court is required to determine not whether a 3 The 2004 amendments substituted ‘‘shall’’ for ‘‘may’’ in directing relevant factors for court to consider and amended the list of factors to focus on competitive considerations and to address potentially ambiguous judgment terms. Compare 15 U.S.C. § 16(e) (2004), with 15 U.S.C. § 16(e)(1) (2006); see also SBC Commc’ns, 489 F. Supp. 2d at 11 (concluding that the 2004 amendments ‘‘effected minimal changes’’ to Tunney Act review). E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES particular decree is the one that will best serve society, but whether the settlement is ‘‘within the reaches of the public interest.’’ More elaborate requirements might undermine the effectiveness of antitrust enforcement by consent decree. Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).4 In determining whether a proposed settlement is in the public interest, a district court ‘‘must accord deference to the government’s predictions about the efficacy of its remedies, and may not require that the remedies perfectly match the alleged violations.’’ SBC Commc’ns, 489 F. Supp. 2d at 17; see also U.S. Airways, 38 F. Supp. 3d at 75 (noting that a court should not reject the proposed remedies because it believes others are preferable); Microsoft, 56 F.3d at 1461 (noting the need for courts to be ‘‘deferential to the government’s predictions as to the effect of the proposed remedies’’); United States v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the court should grant due respect to the United States’ prediction as to the effect of proposed remedies, its perception of the market structure, and its views of the nature of the case). Courts have greater flexibility in approving proposed consent decrees than in crafting their own decrees following a finding of liability in a litigated matter. ‘‘[A] proposed decree must be approved even if it falls short of the remedy the court would impose on its own, as long as it falls within the range of acceptability or is ‘within the reaches of public interest.’ ’’ United States v. Am. Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff’d sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also U.S. Airways, 38 F. Supp. 3d at 74 (noting that room must be made for the government to grant concessions in the negotiation process for settlements (citing Microsoft, 56 F.3d at 1461)); United States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving the consent decree even though the court would have imposed a greater remedy). To meet this standard, 4 Cf. BNS, 858 F.2d at 464 (holding that the court’s ‘‘ultimate authority under the [APPA] is limited to approving or disapproving the consent decree’’); United States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the court is constrained to ‘‘look at the overall picture not hypercritically, nor with a microscope, but with an artist’s reducing glass’’). See generally Microsoft, 56 F.3d at 1461 (discussing whether ‘‘the remedies [obtained in the decree are] so inconsonant with the allegations charged as to fall outside of the ‘reaches of the public interest’’’). VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 the United States ‘‘need only provide a factual basis for concluding that the settlements are reasonably adequate remedies for the alleged harms.’’ SBC Commc’ns, 489 F. Supp. 2d at 17. 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 74 (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 (‘‘the ‘public interest’ is not to be measured by comparing the violations alleged in the complaint against those the court believes could have, or even should have, been alleged’’). Because the ‘‘court’s authority to review the decree depends entirely on the government’s exercising its prosecutorial discretion by bringing a case in the first place,’’ it follows that ‘‘the court is only authorized to review the decree itself,’’ and not to ‘‘effectively redraft the complaint’’ to inquire into other matters that the United States did not pursue. Microsoft, 56 F.3d at 1459–60. As this Court recently confirmed in SBC Communications, courts ‘‘cannot look beyond the complaint in making the public interest determination unless the complaint is drafted so narrowly as to make a mockery of judicial power.’’ SBC Commc’ns, 489 F. Supp. 2d at 15. In its 2004 amendments, Congress made clear its intent to preserve the practical benefits of utilizing consent decrees in antitrust enforcement, adding 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 75 (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). The language wrote into the statute what Congress intended when it enacted the Tunney Act in 1974, as Senator Tunney explained: ‘‘[t]he court is nowhere compelled to go to trial or to engage in extended proceedings which might have the effect of vitiating the benefits of prompt and less costly settlement through the consent decree process.’’ 119 Cong. Rec. 24,598 (1973) (statement of Sen. Tunney). Rather, the procedure PO 00000 Frm 00182 Fmt 4703 Sfmt 4703 52557 for the public interest determination is left to the discretion of the court, with the recognition that the court’s ‘‘scope of review remains sharply proscribed by precedent and the nature of Tunney Act proceedings.’’ SBC Commc’ns, 489 F. Supp. 2d at 11.5 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 75. 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: October 10, 2018 Respectfully submitted, lllllllllllllllllllll SOYOUNG CHOE * Defense, Industrials, and Aerospace Section, Antitrust Division, 450 Fifth Street NW, Suite 8700, Washington, DC 20530, Telephone: (202) 598–2436, Facsimile: (202) 514–9033, soyoung.choe@usdoj.gov * Attorney of Record [FR Doc. 2018–22555 Filed 10–16–18; 8:45 am] BILLING CODE 4410–11–P DEPARTMENT OF JUSTICE Antitrust Division Notice Pursuant to the National Cooperative Research and Production Act of 1993—UHD Alliance, Inc. Notice is hereby given that, on September 6, 2018, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301 et seq. (‘‘the Act’’), UHD Alliance, Inc. (‘‘UHD Alliance’’) filed written notifications simultaneously with the Attorney General and the Federal Trade Commission disclosing changes in its membership. The notifications were filed for the purpose of extending the Act’s provisions 5 See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 (D.D.C. 2000) (noting that the ‘‘Tunney Act expressly allows the court to make its public interest determination on the basis of the competitive impact statement and response to comments alone’’); United States v. Mid-Am. Dairymen, Inc., No. 73–CV–681–W–1, 1977–1 Trade Cas. (CCH) ¶ 61,508, at 71,980, *22 (W.D. Mo. 1977) (‘‘Absent a showing of corrupt failure of the government to discharge its duty, the Court, in making its public interest finding, should . . . carefully consider the explanations of the government in the competitive impact statement and its responses to comments in order to determine whether those explanations are reasonable under the circumstances.’’); S. Rep. No. 93–298, at 6 (1973) (‘‘Where the public interest can be meaningfully evaluated simply on the basis of briefs and oral arguments, that is the approach that should be utilized.’’). E:\FR\FM\17OCN1.SGM 17OCN1

Agencies

[Federal Register Volume 83, Number 201 (Wednesday, October 17, 2018)]
[Notices]
[Pages 52542-52557]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-22555]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. United Technologies Corporation, 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. United Technologies Corporation, et al., Civil 
Action No. 1:18-cv-02279. On October 1, 2018, the United States filed a 
Complaint alleging that United Technologies Corporation's proposed 
acquisition of Rockwell Collins, Inc. (``Rockwell Collins'') 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 the 
Defendants to divest Rockwell Collins' ice protection systems business 
and trimmable horizontal stabilizer business, including Rockwell 
Collins' pilot controls business.
    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 directed to Maribeth Petrizzi, 
Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, 
Department of Justice, 450 Fifth Street NW, Suite 8700, Washington, DC 
20530 (telephone: (202) 307-0924).

Patricia A. Brink,
Director of Civil Enforcement.

United States District Court for the District of Columbia

    United States of America, U.S. Department of Justice, Antitrust 
Division, 450 5th Street NW, Suite 8700, Washington, DC 20530, 
Plaintiff, v., United Technologies Corporation, 10 Farm Springs 
Road, Farmington, CT 06032, and, Rockwell Collins, Inc., 400 Collins 
Road NE, Cedar Rapids, IA 52498, Defendants.

Civil Action No: 1:18-cv-02279,
Judge: Rudolph Contreras

COMPLAINT

    The United States of America (``United States''), acting under the 
direction of the Attorney General of the United States, brings this 
civil antitrust action against United Technologies Corporation 
(``UTC'') and Rockwell Collins, Inc. (``Rockwell Collins'') to enjoin 
UTC's proposed acquisition of Rockwell Collins. The United States 
complains and alleges as follows:

I. NATURE OF THE ACTION

    1. Pursuant to an asset purchase agreement dated September 4, 2017, 
UTC proposes to acquire all the shares of Rockwell Collins. The 
transaction is valued at approximately $30 billion. The acquisition 
would constitute one of the largest aerospace acquisitions in history.
    2. UTC and Rockwell Collins are two of three suppliers in the world 
for pneumatic ice protection systems for fixed-wing aircraft 
(``aircraft''). Ice protection systems are critical to aircraft safety, 
as aircraft icing is a major hazard to aviation. The proposed 
acquisition would eliminate competition between UTC and Rockwell 
Collins for these systems.
    3. UTC and Rockwell Collins are two of the leading suppliers in the 
worldwide market for trimmable horizontal stabilizer actuators 
(``THSAs'') for large aircraft. THSAs help an aircraft maintain the 
proper altitude during flight and are critical to the safe operation of 
the aircraft. The proposed acquisition would eliminate competition 
between UTC and Rockwell Collins for THSAs for large aircraft.
    4. As a result, the proposed acquisition likely would substantially 
lessen competition in the worldwide markets for the development, 
manufacture, and sale of pneumatic ice protection systems for aircraft 
and THSAs for large aircraft in violation of Section 7 of the Clayton 
Act, 15 U.S.C. Sec.  18.

II. THE DEFENDANTS

    5. UTC is incorporated in Delaware and has its headquarters in 
Farmington, Connecticut. UTC produces a wide range of products for the 
aerospace industry and other industries, including pneumatic ice 
protection systems for aircraft and THSAs for large aircraft. In 2017, 
UTC had sales of approximately $59.8 billion.
    6. Rockwell Collins is incorporated in Delaware and is 
headquartered in Cedar Rapids, Iowa. Rockwell Collins is a major 
provider of aerospace and defense electronics systems. Rockwell Collins 
produces, among other products, pneumatic ice protection systems for 
aircraft and THSAs for large aircraft. In fiscal year 2017, Rockwell 
Collins had sales of approximately $6.8 billion.

III. JURISDICTION AND VENUE

    7. The United States brings this action under Section 15 of the 
Clayton Act, 15 U.S.C. Sec.  25, as amended, to prevent and restrain 
Defendants from violating Section 7 of the Clayton Act, 15 U.S.C. Sec.  
18.
    8. Defendants develop, manufacture, and sell pneumatic ice 
protection systems for aircraft and THSAs for large aircraft in the 
flow of interstate commerce. Defendants' activities in the development, 
manufacture, and sale of these products substantially affects 
interstate commerce. This Court has subject matter jurisdiction over 
this action pursuant to Section 15 of the Clayton Act, 15 U.S.C. Sec.  
25, and 28 U.S.C. Sec. Sec.  1331, 1337(a), and 1345.
    9. Defendants have consented to venue and personal jurisdiction in 
this judicial district. Venue is therefore proper in this district 
under Section 12 of the Clayton Act, 15 U.S.C. Sec.  22 and under 28 
U.S.C. Sec.  1391(c).

IV. PNEUMATIC ICE PROTECTION SYSTEMS

A. Background

    10. During flight, ice can accumulate on an aircraft's leading edge 
surfaces, such as the part of the aircraft's wings that first contact 
the air during flight. Such accumulation affects an aircraft's 
maneuverability, increases drag, and decreases lift. If it remains 
untreated, surface ice accumulation can lead to a catastrophic flight 
event.
    11. A pneumatic ice protection system is engineered to remove 
accumulated ice on an aircraft's wings. A pneumatic ice protection 
system consists of two main elements, a de-icing boot and pneumatic 
system hardware. A de-icing boot is an inflatable tube made of rubber 
or a similar material that is physically bonded to the leading edge of 
the

[[Page 52543]]

aircraft's wings. The pneumatic system hardware consists of equipment 
designed to control the flow of air into the de-icing boot. When ice 
begins to accumulate on the wings, the de-icing boot is inflated. The 
expansion of the de-icing boot cracks the ice off the leading edge. The 
de-icing boot may be inflated and deflated manually (by the pilot) or 
automatically (by a timer).
    12. Pneumatic ice protection systems are one form of ice protection 
technology. Ice protection systems are selected at the aircraft design 
stage based on the characteristics of the aircraft. The specific design 
features of an aircraft, such as the availability of electrical power, 
determines which type of ice protection system will be used on the 
aircraft. For example, some aircraft use electrothermal systems, but 
such systems require significant electrical power to heat aircraft 
surfaces; other aircraft may use engine bleed air systems, but those 
systems require significant hot air bled from engines to heat aircraft 
surfaces. Aircraft using pneumatic ice protection systems generally 
have low availability of electrical power and insufficient bleed air 
from the aircraft engines, and also generally require lightweight and 
low-cost systems. This compels manufacturers of aircraft, such as the 
Gulfstream G150, the Cessna Citation M2, the Beechcraft King Air, and 
the ATR 42, to use pneumatic ice protection systems. Once an aircraft 
manufacturer has selected a particular pneumatic ice protection system, 
that system is certified as an Original Equipment Manufacturer 
(``OEM'') part of the aircraft's manufacturing design. Aircraft 
manufacturers generally only certify one supplier for ice protection 
systems for a particular aircraft model.
    13. Pneumatic ice protection systems, and components thereof, are 
also sold in the aftermarket, as their components require repair or 
replacement after extended use. Most of the revenues related to 
pneumatic ice protection systems are derived from aftermarket sales. 
Aftermarket purchasers include aircraft manufacturers, aircraft 
operators, and service centers. Although generally only one particular 
pneumatic ice protection system is certified with the aircraft model as 
original equipment, pneumatic ice protection system suppliers often 
procure additional certifications that allow their pneumatic ice 
protection system components to replace their competitors' OEM 
pneumatic ice protection components in the aftermarket.
    14. Because surface ice accumulation may lead to a catastrophic 
flight event, pneumatic ice protection systems are considered critical 
flight components. An aircraft manufacturer or aftermarket purchaser is 
therefore likely to prefer proven suppliers of pneumatic ice protection 
systems.

B. Relevant Markets

1. Product Market

    15. Pneumatic ice protection systems have numerous attributes 
(lightweight, low-cost, and low-power requirements) that make them an 
attractive option for aircraft manufacturers of aircraft with certain 
design requirements. Certain aircraft models can only use pneumatic ice 
protection systems. For the customers that produce that model, 
pneumatic ice protection systems are the best option, as they cannot 
effectively use other types of ice protection systems such as an 
electrothermal system, which requires a significant amount of 
electrical power, or an engine bleed air system, which requires engines 
large enough to generate significant excess heat.
    16. Once an aircraft is certified, switching the ice protection 
system on a particular model of aircraft to a different type of ice 
protection system, even if technologically feasible, would require some 
re-design of the ice protection portion of the aircraft and 
recertification of the aircraft, potentially costing millions of 
dollars, requiring additional flight testing, and consuming years of 
time. Therefore, a small but significant increase in the price of 
pneumatic ice protection systems would not cause customers of those ice 
protection systems to substitute an alternative type of ice protection 
system for the original aircraft or in the aftermarket in volumes 
sufficient to make such a price increase unprofitable. Accordingly, 
pneumatic ice protection systems are a relevant product market and line 
of commerce under Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.
    17. Although the pneumatic ice protection system installed on each 
model of aircraft may be unique, and each system could therefore be 
deemed a separate product market, in each such market there are few 
competitors. The proposed acquisition of Rockwell Collins by UTC would 
affect competition for each pneumatic ice protection system in the same 
manner, as the competitive conditions are the same for each pneumatic 
ice protection system. It is therefore appropriate to aggregate the 
different systems to one pneumatic ice protection market for purposes 
of analyzing the effects of the acquisition.

2. Geographic Market

    18. The relevant geographic market is worldwide within the meaning 
of Section 7 of the Clayton Act, 15 U.S.C. Sec.  18. Pneumatic ice 
protection systems are marketed internationally and may be sourced 
economically from suppliers globally, because transportation costs are 
a small proportion of the cost of the system and thus are not a major 
factor in supplier selection.

C. Anticompetitive Effects of the Proposed Transaction

    19. There are only three competitors in the market for the 
development, manufacture, and sale of pneumatic ice protection systems. 
These three firms are the only sources for both OEM systems and 
aftermarket systems and parts. Based on historical sales results, a 
combined UTC-Rockwell Collins would control a majority share of OEM and 
aftermarket sales. Therefore, UTC's acquisition of Rockwell Collins 
would significantly increase concentration in an already highly 
concentrated market.
    20. UTC and Rockwell Collins compete directly on price. In some 
cases, one of the companies has replaced the other's pneumatic ice 
protection system or components thereof on a particular aircraft in the 
aftermarket. This acquisition threatens to extinguish that competition, 
likely leading to price increases and significant harm to aircraft 
manufacturers and aftermarket customers that require pneumatic ice 
protection systems.
    21. Customers have benefited from the competition between UTC and 
Rockwell Collins for sales of pneumatic ice protection systems by 
receiving lower prices, more favorable contractual terms, and shorter 
delivery times. The combination of UTC and Rockwell Collins would 
eliminate this competition and its future benefits to customers. Post-
acquisition, UTC likely would have the incentive and the ability to 
increase prices profitably and offer less favorable contractual terms.
    22. The proposed acquisition, therefore, likely would substantially 
lessen competition in the development, manufacture, and sale of 
pneumatic ice protection systems for aircraft worldwide in violation of 
Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.

D. Difficulty of Entry

    23. Sufficient, timely entry of additional competitors into the 
markets for pneumatic ice protection systems is unlikely to prevent the 
harm to competition that is likely to result if the proposed 
acquisition is consummated.

[[Page 52544]]

Entry of a new competitor into the development, manufacture, and sale 
of a pneumatic ice protection system is unlikely and cannot happen in a 
time period that would prevent significant competitive harm.
    24. Entry is unlikely due to the small size of the pneumatic ice 
protection system market. In addition, competitions for aircraft 
suitable for pneumatic ice protection systems are infrequent. 
Accordingly, there are limited bidding opportunities for OEM sales and 
less incentive for a new competitor to enter, which means that a 
supplier would be less likely to enter the market.
    25. Pneumatic ice protection systems generally are not built by 
aircraft manufacturers, in part because pneumatic technology tends to 
be complicated and technically different from other aircraft systems. 
Therefore aircraft manufacturers are unlikely to bring production of 
such systems in-house in response to a price increase.
    26. Although aftermarket replacement opportunities for existing 
pneumatic ice protection system suppliers are available in certain 
cases, entry is costly due to the associated certification costs. 
Aircraft manufacturers, operators, and servicers also hesitate to 
purchase aircraft systems and parts from new suppliers, particularly 
for critical flight components like ice protection systems.
    27. As a result of these barriers, entry into the markets for 
pneumatic ice protection systems would not be timely, likely, or 
sufficient to defeat the substantial lessening of competition that is 
likely to result from UTC's acquisition of Rockwell Collins.

V. TRIMMABLE HORIZONTAL STABILIZER ACTUATORS FOR LARGE AIRCRAFT

A. Background

    28. Actuators are responsible for the proper positions of an 
aircraft by manipulating the ``control surfaces'' on its wings and tail 
section. A trimmable horizontal stabilizer actuator (``THSA'') helps an 
aircraft maintain the proper altitude during flight by adjusting 
(``trimming'') the angle of the horizontal stabilizer, the control 
surface of the aircraft's tail responsible for aircraft pitch. This 
control surface is critical to the safety and performance of the 
aircraft, as a loss of control could cause the aircraft to crash. The 
stabilizer encounters significant aerodynamic loads for extended 
periods of time, and the THSA must be capable of handling these loads. 
THSAs thus tend to be the largest and most technically demanding 
actuators on an aircraft.
    29. THSAs vary based on the size and type of the aircraft on which 
they are used. Because large aircraft encounter significantly higher 
aerodynamic loads than smaller aircraft, THSAs for large aircraft are 
considerably larger, more complex, and more expensive than those used 
on smaller aircraft. Large aircraft primarily include commercial 
aircraft that seat at least six passengers abreast (such as the Airbus 
A320 and A350 and the Boeing 737 and 787) and military transport 
aircraft, but exclude regional jets, business jets, and tactical 
military aircraft.

B. Relevant Markets

1. Product Market

    30. THSAs for large aircraft do not have technical substitutes. 
Large aircraft manufacturers cannot switch to THSAs for smaller 
aircraft, or actuators for other aircraft control surfaces, because 
those products cannot adequately control the lift and manage the load 
generated by the horizontal stabilizer of a large aircraft. A small but 
significant increase in the price of THSAs for large aircraft would not 
cause aircraft manufacturers to substitute THSAs designed for smaller 
aircraft or actuators for other control surfaces in volumes sufficient 
to make such a price increase unprofitable. Accordingly, THSAs for 
large aircraft are a line of commerce and a relevant product market 
within the meaning of Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.

2. Geographic Market

    31. The relevant geographic market within the meaning of Section 7 
of the Clayton Act, 15 U.S.C. Sec.  18 is worldwide. THSAs for large 
aircraft are marketed internationally and may be sourced from suppliers 
globally, because transportation costs are a small proportion of the 
cost of the product and thus are not a major factor in supplier 
selection.

C. Anticompetitive Effects of the Proposed Acquisition

    32. UTC and Rockwell Collins are each other's closest competitors 
for THSAs for large aircraft. UTC and Rockwell Collins have won two of 
the most significant recent contract awards for THSAs for large 
aircraft: the Boeing 777X and the Airbus A350. Boeing and Airbus are 
the world's largest manufacturers of passenger aircraft, and these 
aircraft represent two of only three THSA awards by these manufacturers 
in this century.
    33. While there are other producers of THSAs for large aircraft, 
those producers tend to concentrate on THSAs for smaller aircraft, such 
as business jets or regional jets, or to focus on products for other 
aircraft control surfaces.
    34. UTC and Rockwell Collins each view the other firm as the most 
significant competitive threat for THSAs for large aircraft. The two 
companies are among the few that have demonstrated expertise in 
designing and producing THSAs for large aircraft. Each firm considers 
the other company's offering when planning bids.
    35. Customers have benefitted from the competition between UTC and 
Rockwell Collins for THSAs for large aircraft by receiving lower 
prices, more favorable contractual terms, more innovative products, and 
shorter delivery times. The combination of UTC and Rockwell Collins 
would eliminate this competition and its future benefits to customers. 
Post-acquisition, UTC likely would have the incentive and the ability 
to increase prices profitably and offer less favorable contractual 
terms.
    36. UTC and Rockwell Collins also invest significantly to remain 
leading suppliers of new THSAs for large aircraft, and aircraft 
manufacturers expect them to remain leading suppliers of new products 
in the future. The combination of UTC and Rockwell Collins would likely 
eliminate this competition, depriving large aircraft customers of the 
benefit of future innovation and product development.
    37. The proposed acquisition, therefore, likely would substantially 
lessen competition for the development, manufacture, and sale of THSAs 
worldwide for large aircraft in violation of Section 7 of the Clayton 
Act.

D. Difficulty of Entry

    38. Sufficient, timely entry of additional competitors into the 
market for THSAs for large aircraft is unlikely to prevent the harm to 
competition that is likely to result if the proposed transaction is 
consummated.
    39. Developing a THSA for large aircraft is technically difficult. 
Even manufacturers of THSAs for smaller aircraft face significant 
technical hurdles in designing and developing THSAs for large aircraft. 
As aerodynamic loads are a major design consideration for THSAs, and 
such loads are tightly correlated with the size of the aircraft, THSAs 
for large aircraft present more demanding technical challenges than 
those for smaller aircraft.
    40. Opportunities to enter are limited. Because certification of a 
THSA is expensive and time-consuming, once a THSA is certified for a 
particular aircraft type, it is rarely replaced in the aftermarket by a 
different THSA.

[[Page 52545]]

Accordingly, competition between suppliers of THSAs generally only 
occurs when an aircraft manufacturer is designing a new aircraft or an 
upgraded version of an existing aircraft, which are infrequent 
occurrences because development costs for such aircraft can be tens of 
billions of dollars. As a result, several years usually pass between 
contract awards for THSAs for a new aircraft design.
    41. Potential entrants into the production of THSAs for large 
aircraft face several additional obstacles. First, manufacturers of 
large aircraft are more likely to purchase THSAs from those firms 
already supplying THSAs for other large aircraft. The important 
connection between THSAs and aircraft safety drives aircraft 
manufacturers toward suppliers experienced with production of THSAs of 
the relevant type and size. While some companies may have demonstrated 
experience in THSAs for smaller aircraft, such experience is not 
considered by customers to be as relevant as experience in THSAs for 
large aircraft. A new entrant would face significant costs and time to 
be considered a potential alternative to the existing suppliers.
    42. Substantial time and significant financial investment would be 
required for a company to design and develop a THSA for large aircraft. 
Even companies that already make other types of THSAs would require 
years of effort and an investment of many millions of dollars to 
develop a product that is competitive with those offered by existing 
large aircraft THSA suppliers.
    43. As a result of these barriers, entry into the market for THSAs 
for large aircraft would not be timely, likely, or sufficient to defeat 
the substantial lessening of competition that would likely result from 
UTC's acquisition of Rockwell Collins.

VI. VIOLATIONS ALLEGED

    44. UTC's acquisition of Rockwell Collins likely would lessen 
competition substantially in the development, manufacture, and sale of 
pneumatic ice protection systems for aircraft and THSAs for large 
aircraft, in violation of Section 7 of the Clayton Act, 15 U.S.C. Sec.  
18.
    45. Unless enjoined, the acquisition likely would have the 
following anticompetitive effects, among others, relating to pneumatic 
ice protection systems for aircraft:

    (a) actual and potential competition between UTC and Rockwell 
Collins would be eliminated;
    (b) competition likely would be substantially lessened; and
    (c) prices likely would increase and contractual terms likely would 
be less favorable to the customers.

    46. Unless enjoined, the proposed acquisition likely would have the 
following anticompetitive effects relating to THSAs for large aircraft, 
among others:

    (a) actual and potential competition between UTC and Rockwell 
Collins would be eliminated;
    (b) competition likely would be substantially lessened;
    (c) prices would likely increase, contractual terms likely would be 
less favorable to the customers, and innovation likely would decrease.

VII. REQUEST FOR RELIEF

    47. The United States requests that this Court:

    (a) adjudge and decree that UTC's acquisition of Rockwell Collins 
would be unlawful and violate Section 7 of the Clayton Act, 15 U.S.C. 
Sec.  18;
    (b) preliminarily and permanently enjoin and restrain Defendants 
and all persons acting on their behalf from consummating the proposed 
acquisition of Rockwell Collins by UTC, or from entering into or 
carrying out any other contract, agreement, plan, or understanding, the 
effect of which would be to combine UTC with Rockwell Collins;
    (c) award the United States its costs for this action; and
    (d) award the United States such other and further relief as the 
Court deems just and proper.

Dated: October 1, 2018

Respectfully submitted,
FOR PLAINTIFF UNITED STATES:
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MAKAN DELRAHIM (DC Bar #457795)

Assistant Attorney General, Chief Antitrust Division
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ANDREW C. FINCH (DC Bar #494992)

Principal Deputy Assistant Attorney General, Antitrust Division
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PATRICIA A. BRINK

Director of Civil Enforcement
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MARIBETH PETRIZZI (DC Bar #435204)

Chief, Defense, Industrials, and Aerospace Section, Antitrust 
Division
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STEPHANIE A. FLEMING

Assistant Chief, Defense, Industrials, and Aerospace Section, 
Antitrust Division
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SOYOUNG CHOE *
SIDDHARTH DADHICH
KEVIN QUIN (D.C. Bar #415268)

Defense, Industrials, and Aerospace Section, Antitrust Division, 450 
Fifth Street NW, Suite 8700, Washington, DC 20530, Telephone: (202) 
598-2436, Facsimile: (202) 514-9033, [email protected]

* LEAD ATTORNEY TO BE NOTICED

United States District Court for the District of Columbia

    UNITED STATES OF AMERICA, Plaintiff, v. United Technologies 
Corporation and Rockwell Collins, Inc., Defendants.

Civil Action No: 1:18-cv-02279
Judge: Rudolph Contreras

PROPOSED FINAL JUDGMENT

    WHEREAS, Plaintiff, United States of America, filed its Complaint 
on October 1, 2018, the United States and Defendants, United 
Technologies Corporation (``UTC'') and Rockwell Collins, Inc. 
(``Rockwell Collins''), by their respective attorneys, have consented 
to the entry of this Final Judgment without trial or adjudication of 
any issue of fact or law and without this Final Judgment constituting 
any evidence against or admission by any party regarding any issue of 
fact or law;
    AND WHEREAS, Defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    AND WHEREAS, the essence of this Final Judgment is the prompt and 
certain divestiture of certain rights or assets by Defendants to assure 
that competition is not substantially lessened;
    AND WHEREAS, the United States requires Defendants to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    AND WHEREAS, Defendants have represented to the United States that 
the divestitures required below can and will be made and that 
Defendants will later raise no claim of hardship or difficulty as 
grounds for asking the Court to modify any of the divestiture 
provisions contained below;
    NOW THEREFORE, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ORDERED, ADJUDGED, AND DECREED:

I. JURISDICTION

    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, as amended (15 U.S.C. Sec.  18).

II. DEFINITIONS

    As used in this Final Judgment:

[[Page 52546]]

    A. ``Acquirer'' or ``Acquirers'' means the entity or entities to 
whom Defendants divest any of the Divestiture Assets.
    B. ``Acquirer of the Ice Protection Divestiture Assets'' means the 
entity to which Defendants divest the Ice Protection Divestiture 
Assets.
    C. ``Acquirer of the THSA Divestiture Assets'' means Safran S.A. or 
the entity to which Defendants divest the THSA Divestiture Assets.
    D. ``UTC'' means defendant United Technologies Corporation, a 
Delaware corporation with its headquarters in Farmington, Connecticut, 
its successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships, and joint ventures, and their directors, 
officers, managers, agents, and employees.
    E. ``Rockwell Collins'' means defendant Rockwell Collins, Inc., a 
Delaware corporation with its headquarters in Cedar Rapids, Iowa, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships, and joint ventures, and their directors, 
officers, managers, agents, and employees.
    F. ``Ice Protection Business'' means Rockwell Collins' SMR 
Technologies division, including Rockwell's business in the 
development, manufacture, and sale of pneumatic ice protection systems 
and other ice protection products.
    G. ``WEMAC Product Line'' means the Rockwell Collins products sold 
under the WEMAC name, including air gasper valves and interior signage 
components.
    H. ``Ice Protection Divestiture Assets'' means Rockwell Collins' 
Ice Protection Business, including:
    1. The facility located at 93 Nettie-Fenwick Road, Fenwick, West 
Virginia (``Fenwick Facility'');
    2. All tangible assets primarily related to the Ice Protection 
Business, with the exception of those used exclusively in the WEMAC 
Product Line, including but not limited to research and development 
activities; all manufacturing equipment, tooling and fixed assets, 
personal property, inventory, office furniture, materials, supplies, 
and other tangible property; all licenses, permits, certifications, and 
authorizations issued by any governmental organization relating to the 
Ice Protection Business; all contracts, teaming arrangements, 
agreements, leases, commitments, certifications, and understandings, 
including supply agreements; all customer lists, contracts, accounts, 
and credit records; all repair and performance records and all other 
records relating to the Ice Protection Business;
    3. All intangible assets primarily related to the Ice Protection 
Business, with the exception of those used exclusively in the WEMAC 
Product Line, including, but not limited to, all patents; licenses and 
sublicenses; intellectual property; copyrights; trademarks; trade 
names; service marks; service names; technical information; computer 
software and related documentation; know-how; trade secrets; drawings; 
blueprints; designs; design protocols; specifications for materials; 
specifications for parts and devices; safety procedures for the 
handling of materials and substances; quality assurance and control 
procedures; design tools and simulation capability; all manuals and 
technical information Defendants provide to their own employees, 
customers, suppliers, agents, or licensees; and all research data 
concerning historic and current research and development efforts 
relating to the Ice Protection Business, including, but not limited to, 
designs of experiments and the results of successful and unsuccessful 
designs and experiments.
    I. ``THSA Divestiture Business'' means Rockwell Collins' business 
in the design, development, manufacture, sale, service, or distribution 
of: (i) trimmable horizontal stabilizer actuators (``THSAs''), legacy 
flap actuation, and nose wheel steering gear boxes; and (ii) pilot 
control systems, including center yokes, rudder brake pedal units, 
throttle quadrant assemblies, auto-throttles, and control stand 
modules.
    J. ``THSA Divestiture Assets'' means, subject to the terms of 
Paragraph V(D) of this Final Judgment:
    1. The facilities located at 1833 Alton Parkway, Irvine, California 
(``Building 518'') and Ave. Sierra San Agustin #2498, Col. El Porvenir 
C.P. 21185, Mexicali, Mexico (``Building 1'');
    2. At the option of the Acquirer of the THSA Divestiture Assets, 
the facilities located at 1733 Alton Parkway, Irvine, California 
(``Building 517''), 1100 W. Hibiscus Boulevard, Melbourne, Florida 
(``Building 213''), and Ave. Sierra San Agustin #2498, Col. El Porvenir 
C.P. 21185, Mexicali, Mexico (``Building 2'');
    3. All tangible assets primarily related to or necessary for the 
operation of the THSA Divestiture Business, including but not limited 
to research and development activities, all manufacturing equipment, 
tooling and fixed assets, personal property, inventory, office 
furniture, materials, supplies, and other tangible property; all 
licenses, permits, certifications, and authorizations issued by any 
governmental organization relating to the THSA Divestiture Business; 
all contracts; all teaming arrangements, agreements, leases, 
commitments, certifications, and understandings, including supply 
agreements; all customer lists, contracts, accounts, and credit 
records; all repair and performance records and all other records 
relating to the THSA Divestiture Business;
    4. All intangible assets primarily related to or necessary for the 
operation of the THSA Divestiture Business, including, but not limited 
to, all patents; licenses and sublicenses; intellectual property; 
copyrights; trademarks; trade names; service marks; service names; 
technical information; computer software and related documentation; 
know-how; trade secrets; drawings; blueprints; designs; design 
protocols; specifications for materials; specifications for parts and 
devices; safety procedures for the handling of materials and 
substances; quality assurance and control procedures; design tools and 
simulation capability; all manuals and technical information Defendants 
provide to their own employees, customers, suppliers, agents, or 
licensees; and all research data concerning historic and current 
research and development efforts relating to the THSA Divestiture 
Business, including, but not limited to, designs of experiments and the 
results of successful and unsuccessful designs and experiments.
    K. ``Divestiture Assets'' means the Ice Protection Divestiture 
Assets and the THSA Divestiture Assets.
    L. ``Required Regulatory Approvals'' means (1) clearance pursuant 
to any Committee on Foreign Investment in the United States (``CFIUS'') 
filing or similar foreign investment filing, if any, made by the 
Defendants and/or any Acquirer of the Divestiture Assets; and (2) any 
approvals or clearances required under antitrust or competition laws.

III. APPLICABILITY

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

[[Page 52547]]

Acquirers of the assets divested pursuant to this Final Judgment.

IV. DIVESTITURE OF THE ICE PROTECTION DIVESTITURE ASSETS

    A. Defendants are ordered and directed, within the later of (1) 
five (5) calendar days after notice of entry of this Final Judgment by 
the Court or (2) fifteen (15) calendar days after Required Regulatory 
Approvals have been received to divest the Ice Protection Divestiture 
Assets in a manner consistent with this Final Judgment to an Acquirer 
acceptable to the United States, in its sole discretion. The United 
States, in its sole discretion, may agree to one or more extensions of 
this time period not to exceed sixty (60) calendar days in total, and 
shall notify the Court in such circumstances. Defendants agree to use 
their best efforts to divest the Ice Protection Divestiture Assets as 
expeditiously as possible.
    B. In accomplishing the divestiture of the Ice Protection 
Divestiture Assets ordered by this Final Judgment, Defendants promptly 
shall make known, by usual and customary means, the availability of the 
Ice Protection Divestiture Assets. Defendants shall inform any person 
making an inquiry regarding a possible purchase of the Ice Protection 
Divestiture Assets that they are being divested pursuant to this Final 
Judgment and provide that person with a copy of this Final Judgment. 
Defendants shall offer to furnish to all prospective Acquirers, subject 
to customary confidentiality assurances, all information and documents 
relating to the Ice Protection Divestiture Assets customarily provided 
in a due diligence process, except information or documents subject to 
the attorney-client privilege or work-product doctrine. Defendants 
shall make available such information to the United States at the same 
time that such information is made available to any other person.
    C. Defendants shall provide the Acquirer of the Ice Protection 
Divestiture Assets and the United States information relating to the 
personnel involved in the design, development, production, 
distribution, sale, or service of products by or under any of the Ice 
Protection Divestiture Assets to enable the Acquirer of the Ice 
Protection Divestiture Assets to make offers of employment. Defendants 
will not interfere with any negotiations by the Acquirer of the Ice 
Protection Divestiture Assets to employ any Defendant employee whose 
primary responsibility is the design, development, production, 
distribution, sale, or service of products by or under any of the Ice 
Protection Divestiture Assets.
    D. Defendants shall permit prospective Acquirers of the Ice 
Protection Divestiture Assets to have reasonable access to personnel 
and to make inspections of the physical facilities to be divested; 
access to any and all environmental, zoning, and other permit documents 
and information; and access to any and all financial, operational, or 
other documents and information customarily provided as part of a due 
diligence process.
    E. Defendants shall warrant to the Acquirer of the Ice Protection 
Divestiture Assets that each asset will be operational on the date of 
sale.
    F. Defendants shall not take any action that will impede in any way 
the permitting, operation, or divestiture of the Ice Protection 
Divestiture Assets.
    G. Defendants shall warrant to the Acquirer of the Ice Protection 
Divestiture Assets (1) that there are no material defects in the 
environmental, zoning, or other permits pertaining to the operation of 
the Ice Protection Divestiture Assets, and (2) that following the sale 
of the Ice Protection Divestiture Assets, Defendants will not 
undertake, directly or indirectly, any challenges to the environmental, 
zoning, or other permits relating to the operation of the Ice 
Protection Divestiture Assets.
    H. At the option of the Acquirer of the Ice Protection Divestiture 
Assets, Defendants shall enter into a transition services agreement 
with the Acquirer of the Ice Protection Divestiture Assets to provide 
back office and information technology services and support for the Ice 
Protection Divestiture Assets for a period of up to twelve (12) months. 
The United States, in its sole discretion, may approve one or more 
extensions of this agreement for a total of up to an additional twelve 
(12) months. If the Acquirer of the Ice Protection Divestiture Assets 
seeks an extension of the term of this transition services agreement, 
it shall so notify the United States in writing at least three (3) 
months prior to the date the transition services contract expires. If 
the United States approves such an extension, it shall so notify the 
Acquirer of the Ice Protection Divestiture Assets in writing at least 
two (2) months prior to the date the transition services contract 
expires. The terms and conditions of any contractual arrangement 
intended to satisfy this provision must be reasonably related to the 
market value of the expertise of the personnel providing any needed 
assistance. The UTC employee(s) tasked with providing these transition 
services may not share any competitively sensitive information of the 
Acquirer of the Ice Protection Divestiture Assets with any other UTC 
employee.
    I. Defendants shall remove from the Fenwick Facility the assets 
used exclusively with the WEMAC Product Line within nine (9) months of 
the divestiture of the Ice Protection Divestiture Assets. The United 
States, in its sole discretion, may agree to one or more extensions of 
this time period not to exceed three (3) months in total.
    J. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section IV, or by Divestiture Trustee appointed 
pursuant to Section VI, of this Final Judgment, shall include the 
entire Ice Protection Divestiture Assets, and shall be accomplished in 
such a way as to satisfy the United States, in its sole discretion, 
that the Ice Protection Divestiture Assets can and will be used by the 
Acquirer of the Ice Protection Divestiture Assets as part of a viable, 
ongoing business of the development, manufacture, sale, service, or 
distribution of pneumatic ice protection systems. The divestiture, 
whether pursuant to Section IV or Section V of this Final Judgment,

    (1) shall be made to an Acquirer of the Ice Protection Divestiture 
Assets that, in the United States' sole judgment, has the intent and 
capability (including the necessary managerial, operational, technical, 
and financial capability) of competing effectively in the business of 
the development, manufacture, and sale of pneumatic ice protection 
systems; and
    (2) shall be accomplished so as to satisfy the United States, in 
its sole discretion, that none of the terms of any agreement between an 
Acquirer of the Ice Protection Divestiture Assets and Defendants give 
Defendants the ability unreasonably to raise the Acquirer's costs, to 
lower the Acquirer's efficiency, or otherwise to interfere in the 
ability of the Acquirer to compete effectively.

V. DIVESTITURE OF THE THSA DIVESTITURE ASSETS

    A. Defendants are ordered and directed, within the later of (1) 
five (5) calendar days after notice of entry of this Final Judgment or 
(2) fifteen (15) calendar days after Required Regulatory Approvals have 
been received, to divest the THSA Divestiture Assets in a manner 
consistent with this Final Judgment to an Acquirer acceptable to the 
United States, in its sole discretion. At the option of the Acquirer of 
the

[[Page 52548]]

THSA Divestiture Assets, and subject to the review and approval by the 
United States, Building 518 may be transferred via a sublease in lieu 
of a divestiture. The United States, in its sole discretion, may agree 
to one or more extensions of this time period not to exceed sixty (60) 
calendar days in total, and shall notify the Court in such 
circumstances. Defendants agree to use their best efforts to divest the 
Divestiture Assets as expeditiously as possible.
    B. In the event Defendants are attempting to divest the THSA 
Divestiture Assets to an Acquirer other than Safran S.A., Defendants 
promptly shall make known, by usual and customary means, the 
availability of the THSA Divestiture Assets. Defendants shall inform 
any person making an inquiry regarding a possible purchase of the THSA 
Divestiture Assets that they are being divested pursuant to this Final 
Judgment and provide that person with a copy of this Final Judgment. 
Defendants shall offer to furnish to all prospective Acquirers, subject 
to customary confidentiality assurances, all information and documents 
relating to the THSA Divestiture Assets customarily provided in a due 
diligence process except information or documents subject to the 
attorney-client privilege or work-product doctrine. Defendants shall 
make available such information to the United States at the same time 
that such information is made available to any other person.
    C. Defendants shall provide the Acquirer of the THSA Divestiture 
Assets and the United States information relating to the personnel 
involved in the design, development, production, distribution, sale, or 
service of products by or under any of the THSA Divestiture Assets to 
enable the Acquirer of the THSA Divestiture Assets to make offers of 
employment. Defendants will not interfere with any negotiations by the 
Acquirer of the THSA Divestiture Assets to employ any Defendant 
employee whose primary responsibility is the design, development, 
production, distribution, sale, or service of products by or under any 
of the THSA Divestiture Assets.
    D. Defendants shall use reasonable best efforts to obtain any 
approvals required from United States government customers for the 
transfer of proprietary contracts to the Acquirer of the THSA 
Divestiture Assets. If such approvals cannot be obtained, 
notwithstanding anything to the contrary in this Final Judgment, 
Defendants may:
    1. Retain the proprietary contracts and those portions thereof that 
cannot be subcontracted to the Acquirer of the THSA Divestiture Assets; 
and
    2 Retain those tangible and intangible assets that have been used 
exclusively in the performance of the proprietary contracts.
    E. Defendants shall permit prospective Acquirers of the THSA 
Divestiture Assets to have reasonable access to personnel and to make 
inspections of the physical facilities to be divested; access to any 
and all environmental, zoning, and other permit documents and 
information; and access to any and all financial, operational, or other 
documents and information customarily provided as part of a due 
diligence process.
    F. Defendants shall warrant to the Acquirer of the THSA Divestiture 
Assets that each asset will be operational on the date of sale.
    G. Defendants shall not take any action that will impede in any way 
the permitting, operation, or divestiture of the THSA Divestiture 
Assets.
    H. Defendants shall warrant to the Acquirer of the THSA Divestiture 
Assets (1) that there are no material defects in the environmental, 
zoning, or other permits pertaining to the operation of the THSA 
Divestiture Assets, and (2) that following the sale of the THSA 
Divestiture Assets, Defendants will not undertake, directly or 
indirectly, any challenges to the environmental, zoning, or other 
permits relating to the operation of the THSA Divestiture Assets.
    I. At the option of the Acquirer of the THSA Divestiture Assets, 
Defendants shall enter into a transition services agreement with the 
Acquirer of the THSA Divestiture Assets to provide services related to 
facility management and upkeep, facility and asset transition, 
government compliance, accounting and finance, information technology 
and human resources for the THSA Divestiture Assets for a period of up 
to twelve (12) months. The United States, in its sole discretion, may 
approve one or more extensions of this agreement for a total of up to 
an additional twelve (12) months. If the Acquirer of the THSA 
Divestiture Assets seeks an extension of the term of this transition 
services agreement, it shall so notify the United States in writing at 
least three (3) months prior to the date the transition services 
contract expires. If the United States approves such an extension, it 
shall so notify the Acquirer of the THSA Divestiture Assets in writing 
at least two (2) months prior to the date the transition services 
contract expires. The terms and conditions of any contractual 
arrangement intended to satisfy this provision must be reasonably 
related to the market value of the expertise of the personnel providing 
any needed assistance. The UTC employee(s) tasked with providing these 
transition services may not share any competitively sensitive 
information of the Acquirer of the THSA Divestiture Assets with any 
other UTC employee.
    J. During the term of the transition services agreement in 
Paragraph V(I), Defendants shall use their best efforts to assist the 
Acquirer of the THSA Divestiture Assets with the transition of the THSA 
Divestiture Assets to locations chosen by the Acquirer of the THSA 
Divestiture Assets and the Defendants shall not impede this transition 
of the THSA Divestiture Assets.
    K. At the option of the Acquirer of the THSA Divestiture Assets, 
Defendants shall enter into a supply agreement to provide services 
related to the manufacture of THSAs in Building 213 and Rockwell 
Collins' Iowa C Ave Complex facility located at 400 Collins Road NE, 
Cedar Rapids, Iowa sufficient to meet all or part of the needs of the 
Acquirer of the THSA Assets for a period of up to twelve months. The 
United States, in its sole discretion, may approve one or more 
extensions of this agreement for a total of up to an additional twelve 
(12) months. If the Acquirer of the THSA Divestiture Assets seeks an 
extension of the term of this agreement, it shall so notify the United 
States in writing at least three (3) months prior to the date the 
contract expires. If the United States approves such an extension, it 
shall so notify the Acquirer of the THSA Divestiture Assets in writing 
at least two (2) months prior to the date the agreement expires. The 
terms and conditions of any contractual arrangement meant to satisfy 
this provision must be reasonably related to market conditions for such 
services.
    L. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section V, or by Divestiture Trustee appointed 
pursuant to Section VI, of this Final Judgment, shall include the 
entire THSA Divestiture Assets, and shall be accomplished in such a way 
as to satisfy the United States, in its sole discretion, that the THSA 
Divestiture Assets can and will be used by the Acquirer of the THSA 
Divestiture Assets as part of a viable, ongoing business of the 
development, manufacture, and sale of THSAs. The divestiture, whether 
pursuant to Section V or Section VI of this Final Judgment,

    (1) shall be made to an Acquirer of the THSA Divestiture Assets 
that, in the United States' sole judgment, has the intent and 
capability (including the necessary managerial, operational, technical, 
and financial

[[Page 52549]]

capability) of competing effectively in the business of the 
development, manufacture, and sale of THSAs; and
    (2) shall be accomplished so as to satisfy the United States, in 
its sole discretion, that none of the terms of any agreement between an 
Acquirer of the THSA Divestiture Assets and Defendants give Defendants 
the ability unreasonably to raise the Acquirer's costs, to lower the 
Acquirer's efficiency, or otherwise to interfere in the ability of the 
Acquirer to compete effectively.

VI. APPOINTMENT OF DIVESTITURE TRUSTEE

    A. If Defendants have not divested all of the Divestiture Assets 
within the time periods specified in Paragraphs IV(A) and V(A), 
Defendants shall notify the United States of that fact in writing. Upon 
application of the United States, the Court shall appoint a Divestiture 
Trustee selected by the United States and approved by the Court to 
effect the divestiture(s) of any of the Divestiture Assets that have 
not been sold during the time periods specified in Paragraphs IV(A) and 
V(A).
    B. After the appointment of a Divestiture Trustee becomes 
effective, only the Divestiture Trustee shall have the right to sell 
those Divestiture Assets that the Divestiture Trustee has been 
appointed to sell. The Divestiture Trustee shall have the power and 
authority to accomplish the divestiture(s) to an Acquirer(s) acceptable 
to the United States, in its sole discretion at such price and on such 
terms as are then obtainable upon reasonable effort by the Divestiture 
Trustee, subject to the provisions of Sections IV, V, VI, and VII of 
this Final Judgment, and shall have such other powers as the Court 
deems appropriate. Subject to Paragraph VI(D) of this Final Judgment, 
the Divestiture Trustee may hire at the cost and expense of Defendants 
any agents, investment bankers, attorneys, accountants, or consultants, 
who shall be solely accountable to the Divestiture Trustee, reasonably 
necessary in the Divestiture Trustee's judgment to assist in the 
divestiture(s). Any such agents or consultants shall serve on such 
terms and conditions as the United States approves, including 
confidentiality requirements and conflict of interest certifications.
    C. Defendants shall not object to a sale by the Divestiture Trustee 
on any ground other than the Divestiture Trustee's malfeasance. Any 
such 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 required under Section 
VII.
    D. The Divestiture Trustee shall serve at the cost and expense of 
Defendants pursuant to a written agreement, on such terms and 
conditions as the United States approves, including confidentiality 
requirements and conflict of interest certifications. The Divestiture 
Trustee shall account for all monies derived from the sale of the 
assets sold by the Divestiture Trustee and all costs and expenses so 
incurred. After approval by the Court of the Divestiture Trustee's 
accounting, including fees for any of its services yet unpaid and those 
of any professionals and agents retained by the Divestiture Trustee, 
all remaining money shall be paid to Defendants and the trust shall 
then be terminated. The compensation of the Divestiture Trustee and any 
professionals and agents retained by the Divestiture Trustee shall be 
reasonable in light of the value of the Divestiture Assets that are 
being sold by the Divestiture Trustee 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, but the timeliness of the divestiture(s) is paramount. If 
the Divestiture Trustee and Defendants are unable to reach agreement on 
the Divestiture Trustee's or any agents' or consultants' compensation 
or other terms and conditions of engagement within fourteen (14) 
calendar days of the appointment of the Divestiture Trustee, the United 
States may, in its sole discretion, take appropriate action, including 
making a recommendation to the Court. The Divestiture Trustee shall, 
within three (3) business days of hiring any other agents or 
consultants, provide written notice of such hiring and the rate of 
compensation to Defendants and the United States.
    E. Defendants shall use their best efforts to assist the 
Divestiture Trustee in accomplishing the required divestiture(s). The 
Divestiture Trustee and any agents or consultants retained by the 
Divestiture Trustee shall have full and complete access to the 
personnel, books, records, and facilities of the business to be 
divested, and Defendants shall provide or develop financial and other 
information relevant to such business as the Divestiture Trustee may 
reasonably request, subject to reasonable protection for trade secrets 
or other confidential research, development, or commercial information 
or any applicable privileges. Defendants shall take no action to 
interfere with or to impede the Divestiture Trustee's accomplishment of 
the divestiture(s).
    F. After its appointment, the Divestiture Trustee shall file 
monthly reports with the United States and, as appropriate, the Court 
setting forth the Divestiture Trustee's efforts to accomplish the 
divestiture(s) ordered under this Final Judgment. To the extent such 
reports contain information that the Divestiture Trustee deems 
confidential, such reports shall not be filed in the public docket of 
the Court. Such reports shall include the name, address, and telephone 
number of each person who, during the preceding month, made an offer to 
acquire, expressed an interest in acquiring, entered into negotiations 
to acquire, or was contacted or made an inquiry about acquiring, any 
interest in the Divestiture Assets, and shall describe in detail each 
contact with any such person. The Divestiture Trustee shall maintain 
full records of all efforts made to divest any of the Divestiture 
Assets.
    G. If the Divestiture Trustee has not accomplished the divestitures 
ordered under this Final Judgment within six months after its 
appointment, the Divestiture Trustee shall promptly file with the Court 
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. 
To the extent such report contain information that the Divestiture 
Trustee deems confidential, such report shall not be filed in the 
public docket of the Court. The Divestiture Trustee shall at the same 
time furnish such report to the United States which shall have the 
right to make additional recommendations consistent with the purpose of 
the trust. The Court thereafter shall enter such orders as it shall 
deem appropriate to carry out the purpose of the Final Judgment, which 
may, if necessary, include extending the trust and the term of the 
Divestiture Trustee's appointment by a period requested by the United 
States.
    H. If the United States determines that the Divestiture Trustee has 
ceased to act or failed to act diligently or in a reasonably cost-
effective manner, the United States may recommend the Court appoint a 
substitute Divestiture Trustee.

VII. NOTICE OF PROPOSED DIVESTITURE

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, Defendants or the Divestiture Trustee, whichever 
is then

[[Page 52550]]

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

VIII. FINANCING

    Defendants shall not finance all or any part of any purchase made 
pursuant to Section IV, Section V, or Section VI of this Final 
Judgment.

IX. HOLD SEPARATE

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

X. AFFIDAVITS

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestitures have been completed under Sections IV, V, or VI, 
Defendants shall deliver to the United States an affidavit, signed by 
UTC's Executive Vice President, Operations & Strategy and General 
Counsel, and Rockwell Collins' Chief Financial Officer and General 
Counsel, which shall describe the fact and manner of Defendants' 
compliance with Sections IV, V or VI of this Final Judgment. Each such 
affidavit shall include the name, address, and telephone number of each 
person who, during the preceding thirty (30) calendar days, made an 
offer to acquire, expressed an interest in acquiring, entered into 
negotiations to acquire, or was contacted or made an inquiry about 
acquiring, any interest in the Divestiture Assets, and shall describe 
in detail each contact with any such person during that period. Each 
such affidavit shall also include a description of the efforts 
Defendants have taken to solicit buyers for the Divestiture Assets, and 
to provide required information to prospective Acquirers, including the 
limitations, if any, on such information. Assuming the information set 
forth in the affidavit is true and complete, any objection by the 
United States to information provided by Defendants, including 
limitation on information, shall be made within fourteen (14) calendar 
days of receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, Defendants shall deliver to the United States an 
affidavit that describes in reasonable detail all actions Defendants 
have taken and all steps Defendants have implemented on an ongoing 
basis to comply with Section IX of this Final Judgment. Defendants 
shall deliver to the United States an affidavit describing any changes 
to the efforts and actions outlined in Defendants' earlier affidavits 
filed pursuant to this Section within fifteen (15) calendar days after 
the change is implemented.
    C. Defendants shall keep all records of all efforts made to 
preserve and divest the Divestiture Assets until one year after such 
divestiture has been completed.

XI. COMPLIANCE INSPECTION

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of any related orders such as any Hold Separate 
Stipulation and Order, or of determining whether the Final Judgment 
should be modified or vacated, and subject to any legally-recognized 
privilege, from time to time authorized representatives of the United 
States, including agents and consultants retained by the United States, 
shall, upon written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, and on 
reasonable notice to Defendants, be permitted:

    (1) access during Defendants' office hours to inspect and copy or, 
at the option of the United States, to require Defendants to provide 
electronic copies of, all books, ledgers, accounts, records, data, and 
documents in the possession, custody, or control of Defendants, 
relating to any matters contained in this Final Judgment; and
    (2) to interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by Defendants.

    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
Defendants shall submit written reports or response to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
Section XI shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), for the purpose 
of securing compliance with this Final Judgment, or as otherwise 
required by law.
    D. If at the time that Defendants furnish information or documents 
to the United States, Defendants represent and identify in writing the 
material in any such information or documents to which a claim of 
protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules 
of Civil Procedure, and Defendants mark each pertinent page of such 
material, ``Subject to claim of protection under Rule 26(c)(1)(G) of 
the

[[Page 52551]]

Federal Rules of Civil Procedure,'' then the United States shall give 
Defendants ten (10) calendar days' notice prior to divulging such 
material in any legal proceeding (other than a grand jury proceeding).

XII. NOTIFICATION

    A. Unless such transaction is otherwise subject to the reporting 
and waiting period requirements of the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976, as amended, 15 U.S.C. Sec.  18a (the ``HSR 
Act''), Defendants, without providing advance notification to the 
United States, shall not directly or indirectly acquire any assets of 
or any interest in, including any financial, security, loan, equity, or 
management interest, any business in the global pneumatic ice 
protection market valued over $25 million during the term of this Final 
Judgment.
    B. Such notification shall be provided to the United States in the 
same format as, and per the instructions relating to, the Notification 
and Report Form set forth in the Appendix to Part 803 of Title 16 of 
the Code of Federal Regulations as amended, except that the information 
requested in Items 5 through 8 of the instructions must be provided 
only about pneumatic ice protection systems. Notification shall be 
provided at least thirty (30) calendar days prior to acquiring any such 
interest, and shall include, beyond what may be required by the 
applicable instructions, the names of the principal representatives of 
the parties to the agreement who negotiated the agreement, and any 
management or strategic plans discussing the proposed transaction. If 
within the 30-day period after notification, representatives of the 
United States make a written request for additional information, 
Defendants shall not consummate the proposed transaction or agreement 
until thirty (30) calendar days after submitting all such additional 
information. Early termination of the waiting periods in this Paragraph 
may be requested and, where appropriate, granted in the same manner as 
is applicable under the requirements and provisions of the HSR Act and 
rules promulgated thereunder. Section XII shall be broadly construed 
and any ambiguity or uncertainty regarding the filing of notice under 
Section XII shall be resolved in favor of filing notice.

XIII. NO REACQUISITION

    Defendants may not reacquire any part of the Divestiture Assets 
during the term of this Final Judgment. The Acquirer of the Ice 
Protection Divestiture Assets may not acquire from Defendants during 
the term of this Final Judgment any assets or businesses that compete 
with the Ice Protection Divestiture Assets. The Acquirer of the THSA 
Divestiture Assets may not acquire from Defendants during the term of 
this Final Judgment any assets or businesses that compete with the THSA 
Divestiture Assets.

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. 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 any civil contempt 
action, any motion to show cause, or any similar action brought by the 
United States regarding an alleged violation of this Final Judgment, 
the United States may establish a violation of the decree and the 
appropriateness of any remedy therefor by a preponderance of the 
evidence, and Defendants waive any argument that a different standard 
of proof should apply.
    B. The Final Judgment should be interpreted to give full effect to 
the procompetitive purposes of the antitrust laws and to restore all 
competition 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.
    C. In any enforcement proceeding in which the Court finds that 
Defendants have violated this Final Judgment, the United States may 
apply to the Court for a one-time extension of this Final Judgment, 
together with such other relief as may be appropriate. In connection 
with any successful effort by the United States to enforce this Final 
Judgment against a Defendant, whether litigated or resolved prior to 
litigation, that Defendant agrees to reimburse the United States for 
the fees and expenses of its attorneys, as well as any other costs 
including experts' fees, incurred in connection with that enforcement 
effort, including in the investigation of the potential violation.

XVI. EXPIRATION OF FINAL JUDGMENT

    Unless the Court grants an extension, this Final Judgment shall 
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 divestitures have been completed and that the continuation of 
the Final Judgment no longer is 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. Sec.  16, including making copies available to 
the public of this Final Judgment, the Competitive Impact Statement, 
any comments thereon, and the United States' responses to comments. 
Based upon the record before the Court, which includes the Competitive 
Impact Statement and any comments and responses 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. Sec.  16:

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

United States District Judge

United States District Court For The District of Columbia

    United States of America, Plaintiff, v. United Technologies 
Corporation, and Rockwell Collins, Inc., Defendants.

Case No.: 1:18-cv-02279-RC
JUDGE: Rudolph Contreras
Deck Type: Antitrust

COMPETITIVE IMPACT STATEMENT

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

I. NATURE AND PURPOSE OF THE PROCEEDING

    On September 4, 2017, Defendants United Technologies Corporation

[[Page 52552]]

(``UTC'') and Rockwell Collins, Inc. (``Rockwell Collins'') entered 
into an agreement whereby UTC proposes to acquire Rockwell Collins for 
approximately $30 billion. The United States filed a civil antitrust 
Complaint against UTC and Rockwell Collins on October 1, 2018, seeking 
to enjoin the proposed acquisition. The Complaint alleges that the 
proposed acquisition likely would substantially lessen competition in 
violation of Section 7 of the Clayton Act, 15 U.S.C. Sec.  18, in the 
worldwide markets for the development, manufacture, and sale of 
pneumatic ice protection systems for fixed-wing aircraft (``aircraft'') 
and trimmable horizontal stabilizer actuators (``THSAs'') for large 
aircraft. That loss of competition likely would result in increased 
prices, less favorable contractual terms, and decreased innovation in 
the markets for these products.
    Concurrent with the filing of the Complaint, the United States 
filed a Hold Separate Stipulation and Order (``Hold Separate'') and 
proposed Final Judgment, which are designed to eliminate the 
anticompetitive effects that would have resulted from UTC's acquisition 
of Rockwell Collins. Under the proposed Final Judgment, which is 
explained more fully below, Defendants are required to divest assets 
relating to Rockwell Collins' pneumatic ice protection systems business 
and its THSA business. Under the Hold Separate, Defendants will take 
certain steps to ensure that the businesses will operate as 
competitively independent, economically viable and ongoing business 
concerns, that will remain independent and uninfluenced by the 
consummation of the acquisition, and that competition is maintained 
during the pendency of the ordered divestiture.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the Final Judgment and to punish violations thereof.

II. DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATIONS

A. The Defendants

    UTC is incorporated in Delaware and has its headquarters in 
Farmington, Connecticut. UTC produces a wide range of products for the 
aerospace industry and other industries, including, among other 
products, pneumatic ice protection systems for aircraft and THSAs for 
large aircraft. In 2017, UTC had sales of approximately $59.8 billion.
    Rockwell Collins is incorporated in Delaware and is headquartered 
in Cedar Rapids, Iowa. Rockwell Collins is a major provider of 
aerospace and defense electronics systems. Rockwell Collins produces, 
among other products, pneumatic ice protection systems for aircraft and 
THSAs for large aircraft. In fiscal year 2017, Rockwell Collins had 
sales of approximately $6.8 billion.

B. Pneumatic Ice Protection Systems for Aircraft

1. Background

    During flight, ice can accumulate on an aircraft's leading edge 
surfaces, such as the part of the aircraft's wings that first contact 
the air during flight. Surface ice accumulation affects an aircraft's 
maneuverability, increases drag, and decreases lift. If it remains 
untreated, surface ice accumulation can lead to a catastrophic flight 
event.
    A pneumatic ice protection system is engineered to remove 
accumulated ice on an aircraft's wings. Such a system consists of two 
main elements, a de-icing boot, which is inflated to crack ice off an 
aircraft leading edge, and pneumatic system hardware. The pneumatic 
system hardware consists of equipment designed to control the flow of 
air into the de-icing boot.
    Pneumatic ice protection systems are one form of ice protection 
technology. The specific design features of an aircraft, such as the 
availability of electrical power, determine which type of ice 
protection system will be used on the aircraft. Once an aircraft 
manufacturer has selected a particular pneumatic ice protection system, 
that system is certified as an Original Equipment Manufacturer 
(``OEM'') part for flight worthiness as a part of the aircraft's 
manufacturing design. Aircraft manufacturers generally only certify one 
supplier for ice protection systems for a particular aircraft model.
    Pneumatic ice protection systems, and components thereof, are also 
sold in the aftermarket, as their components require repair or 
replacement after significant use. Most of the revenues related to 
pneumatic ice protection systems are derived from aftermarket sales. 
Although generally only one particular pneumatic ice protection system 
is certified with the aircraft model as original equipment, pneumatic 
ice protection system suppliers often procure additional certifications 
that allow their pneumatic ice protection system components to replace 
their competitors' OEM pneumatic ice protection system in the 
aftermarket.
    Because surface ice accumulation may lead to a catastrophic flight 
event, pneumatic ice protection systems are considered critical flight 
components. An aircraft manufacturer or aftermarket purchaser is 
therefore likely to prefer proven suppliers of pneumatic ice protection 
systems.

2. Relevant Markets

    Pneumatic ice protection systems for aircraft are a relevant 
product market and line of commerce under Section 7 of the Clayton Act. 
Ice protection systems are selected at the aircraft design stage based 
on the characteristics of the aircraft. Pneumatic ice protection 
systems have numerous attributes (light weight, low cost, and low power 
requirements) that make them an attractive option for aircraft 
manufacturers of aircraft with certain design requirements. Certain 
aircraft models can use only pneumatic ice protection systems. For 
these customers that produce those models, pneumatic ice protection 
systems are the best option, as such customers cannot effectively use 
other types of ice protection systems such as an electrothermal or 
bleed air ice protection system.
    Once an aircraft is certified, switching the ice protection system 
on a particular model of aircraft to a different type of ice protection 
system, even if technologically feasible, would require some re-design 
of the ice protection portion of the aircraft and recertification of 
the aircraft. Such re-design and recertification may cost millions of 
dollars, require additional flight testing, and consume multiple years 
of time. Therefore, a small but significant increase in the price of 
pneumatic ice protection systems would not cause customers of those ice 
protection systems to substitute an alternative type of ice protection 
system for the original aircraft or in the aftermarket in volumes 
sufficient to make such a price increase unprofitable.
    Although the pneumatic ice protection system installed on each type 
of aircraft may be deemed a separate product market, in each such 
market there are few competitors. The proposed acquisition of Rockwell 
Collins by UTC would affect competition for each aircraft pneumatic ice 
protection system in the same manner. It is therefore appropriate to 
aggregate pneumatic ice protection markets for purposes of analyzing 
the effects of the acquisition.
    The relevant geographic market for pneumatic ice protection systems 
for aircraft is worldwide. Pneumatic ice

[[Page 52553]]

protection systems are marketed internationally and may be sourced 
economically from suppliers globally. Transportation costs are a small 
proportion of the cost of the finished product and thus are not a major 
factor in supplier selection.

3. Anticompetitive Effects

    There are only three competitors in the market for the development, 
manufacture, and sale of pneumatic ice protection systems for aircraft. 
These three firms are the only sources for both OEM systems and 
aftermarket systems and parts. Based on historical sales results, a 
combined UTC-Rockwell Collins would control a majority share of OEM and 
aftermarket sales. Therefore, UTC's acquisition of Rockwell Collins 
would significantly increase concentration in an already highly 
concentrated market.
    UTC and Rockwell Collins compete directly on price. In some cases, 
one of the companies has replaced the other's pneumatic ice protection 
system or components thereof on a particular aircraft.
    Customers have benefited from the competition between UTC and 
Rockwell Collins for sales of pneumatic ice protection systems by 
receiving lower prices, more favorable contractual terms, and shorter 
delivery times. The combination of UTC and Rockwell Collins would 
eliminate this competition and its future benefits to customers. 
Therefore, post-acquisition, UTC likely would have the incentive and 
the ability to increase prices profitably and offer less favorable 
contractual terms, resulting in significant harm to aircraft 
manufacturers and aftermarket customers that require pneumatic ice 
protection systems.

4. Difficulty of Entry

    Sufficient, timely entry of additional competitors into the markets 
for pneumatic ice protection systems is unlikely to prevent the harm to 
competition that is likely to result if the proposed acquisition is 
consummated. The small size of the market makes it difficult for new 
entrants to recover the cost of entry, which is high in part due to the 
costs of obtaining certification for new equipment. In addition, 
opportunities to enter are rare, as new aircraft designs are themselves 
quite infrequent. Moreover, aircraft manufacturers, operators, and 
servicers are hesitant to purchase aircraft components from newer 
suppliers, particularly for critical flight components like ice 
protection systems.
    Pneumatic ice protection systems generally are not built by 
aircraft manufacturers, in part because pneumatic technology tends to 
be complicated and technically different from other aircraft systems. 
As a result, aircraft manufacturers are unlikely to move production of 
such systems in-house in response to a price increase.

C. Trimmable Horizontal Stabilizer Actuators for Large Aircraft

1. Background

    Actuators are responsible for the proper in-flight positions of an 
aircraft by manipulating the ``control surfaces'' on its wings and tail 
section. A trimmable horizontal stabilizer actuator (``THSA'') helps an 
aircraft maintain the proper altitude during flight by adjusting 
(``trimming'') the angle of the horizontal stabilizer, the control 
surface of the aircraft's tail responsible for aircraft pitch.
    THSAs vary based on the size and type of the aircraft on which they 
are used. Because large aircraft encounter significantly higher 
aerodynamic loads than smaller aircraft, THSAs for large aircraft are 
considerably larger, more complex, and more expensive than those used 
on smaller aircraft. Large aircraft primarily include commercial 
aircraft that seat at least six passengers abreast, such as the Airbus 
A320 and A350 and the Boeing 737 and 787, and military transport 
aircraft.

2. Relevant Markets

    THSAs for large aircraft do not have technical substitutes. Large 
aircraft manufacturers cannot switch to THSAs for smaller aircraft, or 
actuators for other aircraft control surfaces, because those products 
cannot adequately control the lift and manage the load encountered by 
the horizontal stabilizer of a large aircraft. A small but significant 
increase in the price of THSAs for large aircraft would not cause 
aircraft manufacturers to substitute THSAs designed for smaller 
aircraft or actuators for other control surfaces in volumes sufficient 
to make such a price increase unprofitable. Accordingly, THSAs for 
large aircraft are a relevant product market and line of commerce under 
Section 7 of the Clayton Act.
    The relevant geographic market for THSAs for large aircraft is 
worldwide. THSAs for large aircraft are marketed internationally and 
may be sourced economically from suppliers globally. Transportation 
costs are a small proportion of the cost of the finished product and 
thus are not a major factor in supplier selection.

3. Anticompetitive Effects

    UTC and Rockwell Collins are each other's closest competitors for 
THSAs for large aircraft. UTC and Rockwell Collins have won two of the 
most significant recent contract awards for THSAs for large aircraft: 
the Boeing 777X and the Airbus A350. Boeing and Airbus are the world's 
largest manufacturers of passenger aircraft, and these aircraft 
represent two of the only three THSA awards by these manufacturers in 
this century. While there are other producers of THSAs for large 
aircraft, those firms tend to concentrate most of their THSA business 
on smaller aircraft, such as business jets or regional jets, or focus 
on products for other aircraft control surfaces.
    UTC and Rockwell Collins each view the other firm as the most 
significant competitive threat for THSAs for large aircraft. The two 
companies are among the few that have demonstrated experience in 
designing and producing THSAs for large aircraft. Each firm considers 
the other company's offering when planning bids.
    Customers have benefitted from the competition between UTC and 
Rockwell Collins for sales of THSAs for large aircraft by receiving 
lower prices, more favorable contractual terms, more innovative 
products, and shorter delivery times. The combination of UTC and 
Rockwell Collins would eliminate this competition and its future 
benefits to customers. Post-acquisition, UTC likely would have the 
incentive and the ability to increase prices profitably and offer less 
favorable contractual terms.
    UTC and Rockwell Collins also invest significantly to remain 
leading suppliers of new THSAs for large aircraft, and customers expect 
them to remain leading suppliers of new products in the future. The 
combination of UTC and Rockwell Collins would likely eliminate this 
competition, depriving large aircraft customers of the benefit of 
future innovation and product development.

4. Difficulty of Entry

    Sufficient, timely entry of additional competitors into the market 
for THSAs for large aircraft is unlikely to prevent the harm to 
competition that is likely to result if the proposed transaction is 
consummated. Opportunities to enter are limited. Because certification 
of a THSA is expensive and time-consuming, once a THSA is certified for 
a particular aircraft type it is rarely replaced in the aftermarket by 
a different THSA. Accordingly, competition between suppliers of THSAs 
generally occurs only when an

[[Page 52554]]

aircraft manufacturer is designing a new aircraft or an upgraded 
version of an existing aircraft. New designs for large aircraft are 
infrequent, as development costs for such aircraft can amount to tens 
of billions of dollars. As a result, several years usually pass between 
contract awards for THSAs for a new aircraft design.
    Potential entrants face several additional obstacles. First, 
manufacturers of large aircraft are more likely to purchase THSAs from 
those firms already supplying THSAs for other large aircraft. The 
important connection between THSAs and aircraft safety drives aircraft 
manufacturers toward suppliers experienced with production of THSAs of 
the relevant type and size. While some companies may have demonstrated 
experience in THSAs for smaller aircraft or in other actuators, such 
experience is not considered by customers to be as relevant as 
experience in THSAs for large aircraft. A new entrant would face 
significant costs and time to be considered as a potential alternative 
to the existing suppliers.
    Developing a THSA for large aircraft is technically difficult. 
Manufacturers of THSAs for smaller aircraft face significant technical 
hurdles in designing and developing THSAs for large aircraft. As 
aerodynamic loads are a major design consideration for THSAs, and such 
loads are tightly correlated with the size of the aircraft, THSAs for 
large aircraft present more demanding technical challenges than those 
for smaller aircraft.
    Substantial time and significant financial investment would be 
required for a company to design and develop a THSA for large aircraft. 
Companies that already make other types of THSAs would require years of 
effort and an investment of many millions of dollars to develop a 
product that is competitive with those offered by existing large 
aircraft THSA suppliers.
    As a result of these barriers, entry into the market for THSAs for 
large aircraft would not be timely, likely, or sufficient to defeat the 
substantial lessening of competition that likely would result from 
UTC's acquisition of Rockwell Collins.

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The divestitures required by the proposed Final Judgment will 
eliminate the anticompetitive effects that likely would result from 
UTC's acquisition of Rockwell Collins. The assets must be divested in 
such a way as to satisfy the United States in its sole discretion that 
the assets can and will be operated by the purchaser as a viable, 
ongoing business that can compete effectively in the relevant market. 
Defendants must take all reasonable steps necessary to accomplish the 
divestitures quickly and shall cooperate with prospective purchasers.

A. Divestitures

1. Pneumatic Ice Protection Systems for Aircraft

a. The Divestiture

    The proposed Final Judgment requires Defendants to divest Rockwell 
Collins' SMR Technologies division, including Rockwell Collins' 
business in the development, manufacture, and sale of pneumatic ice 
protection systems and other ice protection products (the ``Ice 
Protection Divestiture Assets'') to an Acquirer acceptable to the 
United States, in its sole discretion.\1\ The assets to be divested 
include Rockwell Collins' facility located in Fenwick, West Virginia, 
and all tangible and intangible assets primarily related to the ice 
protection business. The divestiture of the ice protection business 
will provide the Acquirer with all the assets it needs to successfully 
develop, manufacture, and sell pneumatic ice protection systems for 
aircraft.
---------------------------------------------------------------------------

    \1\ In addition to pneumatic ice protection systems, the Ice 
Protection Divestiture Assets include other ice protection products, 
fueling systems and other industrial products, hovercraft skirts, 
composites, and commercial aviation products.
---------------------------------------------------------------------------

    Paragraph IV(A) of the proposed Final Judgment requires Defendants 
to divest the Ice Protection Divestiture Assets as a viable ongoing 
business within the later of five (5) calendar days after notice of 
entry of this Final Judgment by the Court or fifteen (15) calendar days 
after Required Regulatory Approvals have been received.

b. Transition Services Agreement

    To facilitate the Acquirer's immediate use of the Ice Protection 
Divestiture Assets, the proposed Final Judgment provides the Acquirer 
with the option to enter into a transition services agreement with 
Defendants to obtain back office and information technology services 
and support for the Ice Protection Divestiture Assets for a period of 
up to twelve (12) months. The United States, in its sole discretion, 
may approve one or more extensions of this agreement for a total of up 
to an additional twelve (12) months.

2. THSAs for Large Aircraft

a. The Divestiture

    The proposed Final Judgment requires Defendants to divest Rockwell 
Collins' business in the design, development, manufacture, sale, 
service, or distribution of THSAs (the ``THSA Divestiture Assets'') to 
an Acquirer acceptable to the United States, in its sole discretion.\2\ 
Because the assets are distributed among multiple sites in two 
countries, the United States required an upfront buyer to provide 
additional certainty that the transition can be accomplished without 
disruption to the business. The United States has approved Safran S.A. 
as the Acquirer. Safran S.A. is an established aerospace industry 
supplier.
---------------------------------------------------------------------------

    \2\ In addition to THSAs for large aircraft, the THSA 
Divestiture Assets also include legacy flap actuation, nose wheel 
steering gear boxes, and pilot control systems, including center 
yokes, rudder brake pedal units, throttle quadrant assemblies, auto-
throttles, and control stand modules.
---------------------------------------------------------------------------

    The assets to be divested include two Rockwell Collins' facilities 
(Building 518 in Irvine, California and Building 1 in Mexicali, 
Mexico), and, at the option of the Acquirer, three additional 
facilities (Building 517 in Irvine, Building 2 in Mexicali, and 
Building 213 in Melbourne, Florida). The option of acquiring the latter 
three facilities is designed to allow the Acquirer to consolidate 
facilities if needed. The THSA Divestiture Assets also include all 
tangible and intangible assets primarily related to or necessary for 
the operation of the THSA business. Regardless of whether particular 
assets have been primarily used for the THSA business, all assets 
necessary to successfully develop, manufacture, and sell THSAs must be 
conveyed with the divestiture.
    The proposed Final Judgment provides that, at the option of the 
Acquirer of the THSA Divestiture Assets, and subject to the review and 
approval of the United States, Building 518 may be transferred via a 
sublease in lieu of a divestiture. Rockwell Collins currently holds a 
single lease on Buildings 517 and 518, and this provision allows the 
Acquirer to use Building 518 without assuming responsibility for both 
properties.
    In addition, Defendants are required to use reasonable best efforts 
to obtain approvals required from United States government customers 
for the transfer of certain proprietary contracts. If the necessary 
approvals cannot be obtained, Defendants may retain those contracts and 
portions thereof that cannot be subcontracted to the Acquirer, as well 
as those tangible and intangible assets that have been used exclusively 
in the performance of those contracts.
    Paragraph V(A) of the proposed Final Judgment requires Defendants 
to divest the THSA Divestiture Assets as a viable ongoing business 
within the later of five

[[Page 52555]]

(5) calendar days after notice of entry of this Final Judgment by the 
Court or fifteen (15) calendar days after Required Regulatory Approvals 
have been received.

b. Transition Services Agreement and Transition Obligation

    To facilitate the transfer of the divestiture assets between 
facilities without a supply interruption, the proposed Final Judgment 
provides the Acquirer of the THSA Divestiture Assets with the option to 
enter into a transition services agreement with Defendants to obtain 
services related to facility management and upkeep, facility and asset 
transition, government compliance, accounting and finance, information 
technology and human resources for the THSA Divestiture Assets for a 
period of up to twelve (12) months. The United States, in its sole 
discretion, may approve one or more extensions of this agreement for a 
total of up to an additional twelve (12) months. Defendants must use 
their best efforts to assist the Acquirer with the transition of the 
THSA Divestiture Assets to locations of the Acquirer's choosing and to 
not impede that transition.

c. Supply Agreement

    Under the proposed Final Judgment, the Acquirer of the THSA 
Divestiture Assets has the option to obtain a supply agreement from 
Defendants to provide services related to the manufacture of THSA 
components in Melbourne, Florida and Cedar Rapids, Iowa sufficient to 
meet all or part of the Acquirer's needs for a period of up to twelve 
months. The United States, in its sole discretion, may approve one or 
more extensions of this agreement for a total of up to an additional 
twelve (12) months. This supply agreement may be necessary to permit 
the Acquirer to fill existing orders during the time period that 
manufacturing is being transitioned to other facilities. This is 
necessary due to the extended manufacturing process and the long lead 
time required for many components, and acceptable given that these 
assets will be dedicated to filling existing contracts that are 
unlikely to be subject to competition during the pendency of this 
supply agreement.

B. Other Provisions

1. Use of Divestiture Trustee

    In the event that Defendants do not accomplish the divestitures 
within the specified time periods, Section VI of the proposed Final 
Judgment provides that the Court will appoint a trustee selected by the 
United States to effect the divestiture. If a trustee is appointed, the 
proposed Final Judgment provides that Defendants will pay all costs and 
expenses of the trustee. The trustee's commission will be structured so 
as to provide an incentive for the trustee based on the price obtained 
and the speed with which the divestiture is accomplished. After his or 
her appointment becomes effective, the trustee will file monthly 
reports with the Court and the United States setting forth his or her 
efforts to accomplish the divestiture. At the end of six months, if the 
divestiture has not been accomplished, the trustee and the United 
States will make recommendations to the Court, which shall enter such 
orders as are appropriate to carry out the purpose of the trust, 
including extending the trust or the term of the trustee's appointment.

2. Prohibition on Reacquisition

    Section XIII of the proposed Final Judgment prohibits Defendants 
from reacquiring any part of the Divestiture Assets during the term of 
the Final Judgment. In addition, this section prohibits an Acquirer 
from acquiring from Defendants during the term of the Final Judgment 
any assets or businesses that compete with the assets acquired by that 
Acquirer.

3. Notification

    Section XII of the proposed Final Judgment requires Defendants to 
provide notification to the Antitrust Division of certain proposed 
acquisitions not otherwise subject to filing under the Hart-Scott-
Rodino Act, 15 U.S.C. 18a (the ``HSR Act'') in the format and pursuant 
to the instructions provided under that statute for notification. The 
notification requirement applies in the case of any direct or indirect 
acquisitions of any assets of or interest in any entity engaged in the 
development, manufacture, or sale of pneumatic ice protection systems 
valued over $25 million. Section XII further provides for waiting 
periods and opportunities for the United States to obtain additional 
information similar to the provisions of the HSR Act before such 
acquisitions can be consummated.

4. Compliance and Enforcement Provisions

    The proposed Final Judgment also contains provisions designed to 
promote compliance and make the enforcement of Division consent decrees 
as effective as possible. Paragraph XV(A) provides that the United 
States retains and reserves all rights to enforce the provisions of the 
proposed Final Judgment, including its rights 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 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 obligations with the 
standard of proof that applies to the underlying offense that the 
compliance commitments address.
    Paragraph XV(B) provides additional clarification regarding the 
interpretation of the provisions of the proposed Final Judgment. The 
proposed Final Judgment was drafted to restore all competition that 
would otherwise be harmed by the merger. Defendants agree that they 
will abide by the proposed Final Judgment, and that they may be held in 
contempt of this 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(C) further provides that should the Court find in an 
enforcement proceeding that Defendants have violated the Final 
Judgment, the United States may apply to the Court for a one-time 
extension of the Final Judgment, together with such other relief as may 
be appropriate. In addition, in order to compensate American taxpayers 
for any costs associated with the investigation and enforcement of 
violations of the proposed Final Judgment, in any successful effort by 
the United States to enforce the Final Judgment against a Defendant, 
whether litigated or resolved prior to litigation, that Defendant 
agrees to reimburse the United States for attorneys' fees, experts' 
fees, or costs incurred in connection with any enforcement effort, 
including the investigation of the potential violation.
    Finally, Section XVI provides that the Final Judgment shall expire 
ten years from the date of its entry, except that after five 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 divestitures 
have been completed and that the continuation of the Final Judgment is 
no longer necessary or in the public interest.

IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS

    Section 4 of the Clayton Act, 15 U.S.C. Sec.  15, provides that any 
person

[[Page 52556]]

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

V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT

    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register, or the last date of 
publication in a newspaper of the summary of this Competitive Impact 
Statement, whichever is later. All comments received during this period 
will be considered by the United States Department of Justice, which 
remains free to withdraw its consent to the proposed Final Judgment at 
any time prior to the Court's entry of judgment. The comments and the 
response of the United States will be filed with the Court. In 
addition, comments will be posted on the U.S. Department of Justice, 
Antitrust Division's internet website, and, under certain 
circumstances, published in the Federal Register.
    Written comments should be submitted to:

    Maribeth Petrizzi, Chief, Defense, Industrials, and Aerospace 
Section, Antitrust Division, United States Department of Justice, 450 
Fifth Street NW, Suite 8700, Washington, DC 20530

    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT

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

VII. STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENT

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a sixty-day comment period, after which the court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. Sec.  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 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. Sec.  16(e)(1)(A) & (B). In considering these statutory 
factors, the court's inquiry is necessarily a limited one as the 
government is entitled to ``broad discretion to settle with the 
defendant within the reaches of the public interest.'' United States v. 
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally 
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) 
(assessing public interest standard under the Tunney Act); United 
States v. U.S. Airways Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) 
(noting the court has broad discretion of the adequacy of the relief at 
issue); United States v. InBev N.V./S.A., No. 08-1965 (JR), 2009-2 
Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, at *3, (D.D.C. 
Aug. 11, 2009) (noting that the court's review of a consent judgment is 
limited and only inquires ``into whether the government's determination 
that the proposed remedies will cure the antitrust violations alleged 
in the complaint was reasonable, and whether the mechanism to enforce 
the final judgment are clear and manageable.'').\3\
---------------------------------------------------------------------------

    \3\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for court to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
Sec.  16(e) (2004), with 15 U.S.C. Sec.  16(e)(1) (2006); see also 
SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004 
amendments ``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------

    As the United States 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 set forth in the government's complaint, whether the decree 
is sufficiently clear, whether enforcement mechanisms are sufficient, 
and whether the decree may positively harm third parties. See 
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the 
relief secured by the decree, a court may not ``engage in an 
unrestricted evaluation of what relief would best serve the public.'' 
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (quoting 
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see 
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, 
at *3. Courts have held that:

[t]he balancing of competing social and political interests affected by 
a proposed antitrust consent decree must be left, in the first 
instance, to the discretion of the Attorney General. The court's role 
in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to the 
decree. The court is required to determine not whether a

[[Page 52557]]

particular decree is the one that will best serve society, but whether 
the settlement is ``within the reaches of the public interest.'' More 
elaborate requirements might undermine the effectiveness of antitrust 
enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\4\ In 
determining whether a proposed settlement is in the public interest, a 
district court ``must accord deference to the government's predictions 
about the efficacy of its remedies, and may not require that the 
remedies perfectly match the alleged violations.'' SBC Commc'ns, 489 F. 
Supp. 2d at 17; see also U.S. Airways, 38 F. Supp. 3d at 75 (noting 
that a court should not reject the proposed remedies because it 
believes others are preferable); Microsoft, 56 F.3d at 1461 (noting the 
need for courts to be ``deferential to the government's predictions as 
to the effect of the proposed remedies''); United States v. Archer-
Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that 
the court should grant due respect to the United States' prediction as 
to the effect of proposed remedies, its perception of the market 
structure, and its views of the nature of the case).
---------------------------------------------------------------------------

    \4\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest''').
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is `within the 
reaches of public interest.' '' United States v. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also U.S. 
Airways, 38 F. Supp. 3d at 74 (noting that room must be made for the 
government to grant concessions in the negotiation process for 
settlements (citing Microsoft, 56 F.3d at 1461)); United States v. 
Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving 
the consent decree even though the court would have imposed a greater 
remedy). To meet this standard, the United States ``need only provide a 
factual basis for concluding that the settlements are reasonably 
adequate remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp. 
2d at 17.
    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 74 (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 (``the `public 
interest' is not to be measured by comparing the violations alleged in 
the complaint against those the court believes could have, or even 
should have, been alleged''). Because the ``court's authority to review 
the decree depends entirely on the government's exercising its 
prosecutorial discretion by bringing a case in the first place,'' it 
follows that ``the court is only authorized to review the decree 
itself,'' and not to ``effectively redraft the complaint'' to inquire 
into other matters that the United States did not pursue. Microsoft, 56 
F.3d at 1459-60. As this Court recently confirmed in SBC 
Communications, courts ``cannot look beyond the complaint in making the 
public interest determination unless the complaint is drafted so 
narrowly as to make a mockery of judicial power.'' SBC Commc'ns, 489 F. 
Supp. 2d at 15.
    In its 2004 amendments, Congress made clear its intent to preserve 
the practical benefits of utilizing consent decrees in antitrust 
enforcement, adding 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. Sec.  16(e)(2); see also U.S. Airways, 38 F. 
Supp. 3d at 75 (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). The language wrote into the statute what 
Congress intended when it enacted the Tunney Act in 1974, as Senator 
Tunney explained: ``[t]he court is nowhere compelled to go to trial or 
to engage in extended proceedings which might have the effect of 
vitiating the benefits of prompt and less costly settlement through the 
consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of 
Sen. Tunney). Rather, the procedure for the public interest 
determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11.\5\ 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 75.
---------------------------------------------------------------------------

    \5\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1 
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (W.D. Mo. 1977) (``Absent 
a showing of corrupt failure of the government to discharge its 
duty, the Court, in making its public interest finding, should . . . 
carefully consider the explanations of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, at 6 (1973) (``Where the 
public interest can be meaningfully evaluated simply on the basis of 
briefs and oral arguments, that is the approach that should be 
utilized.'').
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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: October 10, 2018

Respectfully submitted,
-----------------------------------------------------------------------

SOYOUNG CHOE *
Defense, Industrials, and Aerospace Section, Antitrust Division, 450 
Fifth Street NW, Suite 8700, Washington, DC 20530, Telephone: (202) 
598-2436, Facsimile: (202) 514-9033, [email protected]

* Attorney of Record

[FR Doc. 2018-22555 Filed 10-16-18; 8:45 am]
BILLING CODE 4410-11-P