United States v. Harris Corporation and L3 Technologies, Inc.; Proposed Final Judgment and Competitive Impact Statement, 32951-32961 [2019-14659]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 84, Number 132 (Wednesday, July 10, 2019)]
[Notices]
[Pages 32951-32961]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-14659]


-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Harris Corporation and L3 Technologies, Inc.; 
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. Harris Corporation and L3 Technologies, Inc., 
Civil Action No. 1:19-cv-01809. On June 20, 2019, the United States 
filed a Complaint alleging that the proposed merger of Harris 
Corporation (``Harris'') and L3 Technologies, Inc. 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 Harris's night vision business.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's website at https://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 Fifth Street NW, Suite 8700, Washington, D.C. 20530, 
Plaintiff, v. HARRIS CORPORATION, 1025 West NASA Boulevard, 
Melbourne, FL 32919, and, L3 TECHNOLOGIES, INC., 600 Third Avenue, 
New York, NY 10016, Defendants.

Civil Action No.: 1:19-cv-01809
Judge: Hon. Thomas F. Hogan

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 Defendants Harris Corporation 
(``Harris'') and L3 Technologies, Inc. (``L3'') to enjoin the proposed 
merger of Harris and L3. The United States complains and alleges as 
follows:

I. NATURE OF THE ACTION

    1. Pursuant to an agreement and plan of merger dated October 12, 
2018, Harris and L3 propose to merge in a transaction that would create 
the sixth-largest defense contractor in the United States.
    2. Harris and L3 are the only suppliers of image intensifier tubes 
for use by the United States military. Image intensifier tubes are the 
key component in night vision devices such as goggles and weapon 
sights, which are purchased by the U.S. Department of Defense 
(``DoD''). Night vision devices amplify visible light and allow 
soldiers and aircrews to see their surroundings in dark conditions. The 
proposed merger would eliminate competition between Harris and L3 and 
create a monopoly for image intensifier tubes for night vision devices 
purchased by DoD (hereinafter ``U.S. military-grade image intensifier 
tubes'').
    3. As a result, the proposed transaction likely would substantially 
lessen competition in the market for the design, development, 
manufacture, sale, service, and distribution of U.S. military-grade 
image intensifier tubes in the United States in violation of Section 7 
of the Clayton Act, 15 U.S.C. Sec.  18.

II. THE DEFENDANTS

    4. Harris is incorporated in Delaware and has its headquarters in 
Melbourne, Florida. Harris provides night vision devices and image 
intensifier tubes, tactical communications solutions, electronic 
warfare solutions, and space and intelligence systems. In 2018, Harris 
had sales of approximately $6.2 billion.
    5. L3 is incorporated in Delaware and is headquartered in New York, 
New York. L3 provides night vision devices and image intensifier tubes; 
intelligence, surveillance, and reconnaissance systems; aircraft 
sustainment, simulation, and training; and security and detection 
systems. In 2018, L3 had sales of approximately $10.2 billion.

III. JURISDICTION AND VENUE

    6. 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.
    7. Defendants design, develop, manufacture, sell, service, and 
distribute U.S. military-grade image intensifier tubes. Defendants' 
activities in the design, development, manufacture, sale, service, and 
distribution of these products substantially affects interstate 
commerce. This Court has subject

[[Page 32952]]

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.
    8. 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. U.S. MILITARY-GRADE IMAGE INTENSIFIER TUBES

A. Background

    9. Image intensifier tubes amplify visible light and are integrated 
into night vision devices produced by Harris, L3, and other companies. 
Night vision devices allow the user to see in dark conditions, 
increasing the situational awareness, threat detection, and mission 
performance of soldiers and aircrews operating in low-light 
environments. Night vision devices come in the form of goggles, 
binoculars, and monoculars and can be handheld or mounted to objects 
like helmets or weapons. There are over half a million such devices in 
use today, and DoD expects to purchase at least one hundred thousand 
additional devices over the next few years.
    10. DoD also purchases significant quantities of image intensifier 
tubes as replacement parts for night vision devices currently in the 
field. In addition, as L3 and Harris innovate and develop improved 
image intensifier tubes with greater resolution and light 
amplification, DoD purchases these more advanced image intensifier 
tubes to upgrade existing night vision devices. DoD is likely to 
purchase half a million image intensifier tubes for replacements or 
upgrades over the next few years.

B. Relevant Markets

1. Product Market

    11. The quality and usefulness of an image intensifier tube is 
defined by several characteristics, the most important of which are 
size, weight, power consumption, and especially sensitivity, which 
relates to the ability of the tube to amplify low levels of visible 
light without producing excessive distortion in the resulting image. 
DoD requires highly capable image intensifier tubes, as the lives of 
soldiers and aircrews depend on the performance of the night vision 
devices incorporating these tubes. Less capable image intensifier tubes 
are therefore not a substitute for the highly capable image intensifier 
tubes that DoD views as U.S. military grade.
    12. Other night vision technologies such as thermal imaging devices 
and digital light amplification systems are not substitutes for U.S. 
military-grade image intensifier tubes. Thermal imaging devices, such 
as microbolometers and infrared focal plane arrays, detect infrared 
radiation emitted by warm objects rather than amplifying visible light. 
Thermal imaging devices also differ from image intensifier tubes in 
range and sensitivity to environmental factors such as humidity and 
dust. Night vision equipment incorporating thermal imaging devices 
tends to be larger, heavier, and substantially more expensive than 
similar equipment incorporating image intensifier tubes. Although some 
night vision devices incorporate both image intensifier tubes and 
thermal imaging devices to combine the benefits of the two and create a 
``fused'' image, thermal imaging devices cannot replicate the 
performance of image intensifier tubes or replace them in night vision 
devices.
    13. Digital light amplification systems based on charge-coupled 
device (``CCD'') or complementary metal oxide semiconductor (``CMOS'') 
detectors are also not adequate substitutes for U.S. military-grade 
image intensifier tubes. CCD- and CMOS-based devices tend to be 
heavier, consume more power, and cost significantly more than devices 
incorporating image intensifier tubes. Moreover, because such devices 
are digital, and therefore require a certain amount of signal 
processing, the images produced also tend to lag behind the actual 
scene being viewed, potentially creating disorientation in the user.
    14. For the foregoing reasons, DoD will not substitute less-capable 
image intensifier tubes, thermal imaging devices, or CCD- or CMOS-based 
digital light amplification systems for U.S. military-grade image 
intensifier tubes in response to a small but significant and non-
transitory increase in the price of U.S. military-grade image 
intensifier tubes. Accordingly, U.S. military-grade image intensifier 
tubes are a relevant product market and line of commerce under Section 
7 of the Clayton Act, 15 U.S.C. Sec.  18.

2. Geographic Market

    15. For national security reasons, DoD only considers domestic 
producers of U.S. military-grade image intensifier tubes. DoD is 
unlikely to turn to any foreign producers in the face of a small but 
significant and non-transitory price increase by domestic producers of 
U.S. military-grade image intensifier tubes.
    16. The United States is a relevant geographic market within the 
meaning of Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.

C. Anticompetitive Effects of the Proposed Transaction

    17. Harris and L3 are currently the only firms that develop, 
manufacture, and sell U.S. military-grade image intensifier tubes. The 
merger would therefore give the combined firm a monopoly in this 
product market, leaving DoD without a competitive alternative for this 
critical component of night vision devices.
    18. Harris and L3 compete for sales of U.S. military-grade image 
intensifier tubes on the basis of quality, price, and contractual terms 
such as delivery times. This competition has resulted in higher 
quality, lower prices, and shorter delivery times, and has fostered 
innovation, leading to U.S. military-grade image intensifier tubes with 
higher sensitivity and resolution. The combination of Harris and L3 
would eliminate this competition and its future benefits to DoD 
customers. Post-transaction, the merged firm likely would have the 
incentive and ability to reduce research and development efforts that 
lead to innovative and high-quality products and to increase prices and 
offer less favorable contractual terms.
    19. The proposed merger, therefore, likely would substantially 
lessen competition in the design, development, manufacture, sale, 
service, and distribution of U.S. military-grade image intensifier 
tubes in the United States in violation of Section 7 of the Clayton 
Act, 15 U.S.C. Sec.  18.

D. Difficulty of Entry

    20. Sufficient, timely entry of additional competitors into the 
market for U.S. military-grade image intensifier tubes is unlikely. 
Production facilities for U.S. military-grade image intensifier tubes 
require a substantial investment in both capital equipment and human 
resources. A new entrant would need to set up a foundry to produce 
electronic components, establish production lines capable of 
manufacturing fiber optic subcomponents, and build assembly lines and 
testing facilities. Engineering and research personnel would need to be 
assigned to develop, test, and troubleshoot the detailed manufacturing 
process, involving hundreds of steps, that is necessary to produce U.S. 
military-grade image intensifier tubes. Any new products would require 
extensive testing and qualification before they could be used in night 
vision devices for the U.S. military. As a result, entry would be 
costly and time-consuming.
    21. Moreover, a new entrant is unlikely to recover these costs. 
Although CMOS-based night vision

[[Page 32953]]

devices currently are not suitable for DoD uses and thus are not 
reasonable substitutes for night vision devices based on U.S. military-
grade image intensifier tubes, research and development on these 
devices is progressing. Industry observers expect these devices to 
begin replacing night vision devices based on U.S. military-grade image 
intensifier tubes at some point in the next five to ten years. Because 
the market for U.S. military-grade image intensifier tubes will likely 
decline as this transition takes place, an entrant is unlikely to 
produce sufficient revenue to recover its costs of entry. The prospect 
of a declining market for U.S. military-grade image intensifier tubes 
thus would discourage new companies from entering.
    22. As a result of these barriers, entry into the market for U.S. 
military-grade image intensifier tubes would not be timely, likely, or 
sufficient to defeat the anticompetitive effects likely to result from 
the merger of Harris and L3.

V. VIOLATIONS ALLEGED

    23. The merger of Harris and L3 likely would lessen competition 
substantially in the design, development, manufacture, sale, service, 
and distribution of U.S. military-grade image intensifier tubes in the 
United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 
Sec.  18.
    24. Unless enjoined, the merger likely would have the following 
anticompetitive effects, among others, related to U.S. military-grade 
image intensifier tubes:
    (a) actual and potential competition between Harris and L3 would be 
eliminated;
    (b) competition likely would be substantially lessened; and
    (c) prices likely would increase, innovation would decrease, and 
contractual terms likely would be less favorable to customers.

VI. REQUEST FOR RELIEF

    25. The United States requests that this Court:
    (a) adjudge and decree that Harris's merger with L3 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 
merger of L3 and Harris, or from entering into or carrying out any 
other contract, agreement, plan, or understanding, the effect of which 
would be to combine Harris with L3;
    (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: June 20, 2019

Respectfully submitted,

FOR PLAINTIFF UNITED STATES:

-----------------------------------------------------------------------

Makan Delrahim,
(D.C. Bar 457795),

Assistant Attorney General,
Antitrust Division.

-----------------------------------------------------------------------

Andrew C. Finch,
(D.C. Bar 494992),

Principal Deputy Assistant Attorney General,
Antitrust Division.

-----------------------------------------------------------------------

Bernard A. Nigro, Jr.,
(D.C. Bar 412357),

Deputy Assistant Attorney General,
Antitrust Division.

-----------------------------------------------------------------------

Patricia A. Brink,

Director of Civil Enforcement,
Antitrust Division.

-----------------------------------------------------------------------

Maribeth Petrizzi,
(D.C. Bar 435204),

Chief,
Defense, Industrials, and Aerospace Section,
Antitrust Division.

-----------------------------------------------------------------------

David E. Altschuler,
(D.C. Bar 983023),

Assistant Chief,
Defense, Industrials, and Aerospace Section,
Antitrust Division.

-----------------------------------------------------------------------

Kevin Quin *,
(D.C. Bar 415268),
Gabriella Moskowitz,

(D.C. Bar 1044309),
Thomas P. Dematteo,

Defense, Industrials, and Aerospace Section,
Antitrust Division, 450 Fifth Street NW, Suite 8700, Washington, 
D.C. 20530, Telephone: (202) 307-0922, Facsimile: (202) 514-9033, 
Email: [email protected].

* LEAD ATTORNEY TO BE NOTICED

United States District Court for the District of Columbia

UNITED STATES OF AMERICA, Plaintiff, v. HARRIS CORPORATION, and L3 
TECHNOLOGIES, INC., Defendants.

Civil Action No.: 1:19-cv-01809
Judge: Hon. Thomas F. Hogan

PROPOSED FINAL JUDGMENT

    WHEREAS, Plaintiff, United States of America, filed its Complaint 
on June 20, 2019, the United States and Defendants, Harris Corporation 
(``Harris'') and L3 Technologies, Inc. (``L3''), 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, and Defendants agree, to 
make a certain divestiture for the purpose of remedying the loss of 
competition alleged in the Complaint;
    AND WHEREAS, Defendants have represented to the United States that 
the divestiture required below can and will be made and that Defendants 
will not later raise any 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:
    A. ``Acquirer'' means the entity to which Defendants divest the 
Divestiture Assets.
    B. ``Harris'' means Defendant Harris Corporation, a Delaware 
corporation with its headquarters in Melbourne, Florida, its successors 
and assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    C. ``L3'' means Defendant L3 Technologies, Inc., a Delaware 
corporation with its headquarters in New York, New York, its successors 
and assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    D. ``Night Vision Business'' means Harris's business in the design, 
development, manufacture, sale, service, and distribution of image 
intensifier technology and night vision devices.

[[Page 32954]]

    E. ``Divestiture Assets'' means the Night Vision Business, 
including:
    1. the facilities located at 7625, 7635, and 7645 Plantation Road, 
Roanoke, Virginia; 7767 Lila Drive, Roanoke, Virginia; and 7671 Enon 
Drive, Roanoke, Virginia;
    2. all tangible assets, 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 for the Night Vision 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 of the Night Vision Business; and
    3. all intangible assets, 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, including but not limited to designs of 
experiments and the results of successful and unsuccessful designs and 
experiments.
    F. ``Regulatory Approvals'' means any approvals or clearances 
pursuant to filings with the Committee on Foreign Investment in the 
United States (``CFIUS''), or under antitrust, competition, or other 
U.S. or international laws required for Acquirer's acquisition of the 
Divestiture Assets to proceed.

III. APPLICABILITY

    A. This Final Judgment applies to Harris and L3, as defined above, 
and all other persons in active concert or participation with any of 
them who receive actual notice of this Final Judgment by personal 
service or otherwise.
    B. If, prior to complying with Section IV and Section V of this 
Final Judgment, Defendants sell or otherwise dispose of all or 
substantially all of their assets or of lesser business units that 
include the Divestiture Assets, Defendants shall require the purchaser 
to be bound by the provisions of this Final Judgment. Defendants need 
not obtain such an agreement from the Acquirer of the assets divested 
pursuant to this Final Judgment.

IV. DIVESTITURE

    A. Defendants are ordered and directed, within the later of forty-
five (45) calendar days after the entry of the Hold Separate 
Stipulation and Order by the Court or fifteen (15) calendar days after 
Regulatory Approvals have been received, to divest the Divestiture 
Assets in a manner consistent with this Final Judgment to an Acquirer 
acceptable to the United States, in its sole discretion. The United 
States, in its sole discretion, may agree to one or more extensions of 
this time period not to exceed sixty (60) calendar days in total, and 
shall notify the Court in such circumstances. Defendants agree to use 
their best efforts to divest the Divestiture Assets as expeditiously as 
possible.
    B. In accomplishing the divestiture ordered by this Final Judgment, 
Defendants promptly shall make known, by usual and customary means, the 
availability of the Divestiture Assets. Defendants shall inform any 
person making an inquiry regarding a possible purchase of the 
Divestiture Assets that they are being divested pursuant to this Final 
Judgment and provide that person with a copy of this Final Judgment. 
Defendants shall offer to furnish to all prospective Acquirers, subject 
to customary confidentiality assurances, all information and documents 
relating to the Divestiture Assets customarily provided in a due 
diligence process, except 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 and the United States all 
information relating to all personnel in the Night Vision Business to 
enable the Acquirer to make offers of employment. Defendants will not 
interfere in any way with any negotiations or effort by the Acquirer to 
hire any Defendant employee in the Night Vision Business.
    D. Defendants shall permit prospective Acquirers of the Divestiture 
Assets to have reasonable access to personnel and to make inspections 
of the physical facilities of the Night Vision Business; 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 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 Divestiture Assets.
    G. At the option of the Acquirer, Defendants shall enter into a 
transition services agreement for back office, human resource, and 
information technology services and support for the Night Vision 
Business 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 six (6) months. If the 
Acquirer seeks an extension of the term of this transition services 
agreement, Defendants shall notify the United States in writing at 
least three (3) months prior to the date the transition services 
contract expires. The terms and conditions of any contractual 
arrangement meant to satisfy this provision must be reasonably related 
to market value of the expertise of the personnel providing any needed 
assistance. The employee(s) of Defendants tasked with providing these 
transition services shall not share any competitively sensitive 
information of the Acquirer with any other employee of Defendants.
    H. At the option of the Acquirer, Defendants shall enter into a 
contract for wafer sawing and sensor packaging services. Such an 
agreement shall be 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 six (6) months. If 
the Acquirer seeks an extension of the term of this agreement, 
Defendants shall so notify the United States in writing at least three 
(3) months prior to the date the contract expires. The terms and 
conditions of any contractual arrangement meant to satisfy this 
provision must be reasonably related to the market value of the 
expertise of the personnel providing any needed assistance. The 
employee(s) of Defendants tasked with providing these services shall 
not share any competitively sensitive information of the Acquirer with 
any other employee of Defendants.

[[Page 32955]]

    I. Defendants shall warrant to the Acquirer (1) that there are no 
material defects in the environmental, zoning, or other permits 
pertaining to the operation of the Divestiture Assets, and (2) that 
following the sale of the Divestiture Assets, Defendants will not 
undertake, directly or indirectly, any challenges to the environmental, 
zoning, or other permits relating to the operation of the Divestiture 
Assets.
    J. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section IV or by Divestiture Trustee appointed 
pursuant to Section V of this Final Judgment shall include the entire 
Divestiture Assets and shall be accomplished in such a way as to 
satisfy the United States, in its sole discretion, that the Divestiture 
Assets can and will be used by the Acquirer as part of a viable, 
ongoing business of the design, development, manufacture, sale, 
service, and distribution of image intensifier technology and night 
vision devices. If any of the terms of an agreement between Defendants 
and the Acquirer to effectuate the divestiture required by the Final 
Judgment varies from the terms of this Final Judgment then, to the 
extent that Defendants cannot fully comply with both terms, this Final 
Judgment shall determine Defendants' obligations. The divestiture, 
whether pursuant to Section IV or Section V of this Final Judgment,

(1) shall be made to an Acquirer that, in the United States' sole 
judgment, has the intent and capability (including the necessary 
managerial, operational, technical, and financial capability) of 
competing effectively in the business of the design, development, 
manufacture, sale, service, and distribution of image intensifier 
technology and night vision devices; and
(2) shall be accomplished so as to satisfy the United States, in its 
sole discretion, that none of the terms of any agreement between an 
Acquirer and Defendants give Defendants the ability unreasonably to 
raise the Acquirer's costs, to lower the Acquirer's efficiency, or 
otherwise to interfere in the ability of the Acquirer to compete 
effectively.

V. APPOINTMENT OF DIVESTITURE TRUSTEE

    A. If Defendants have not divested the Divestiture Assets within 
the time period specified in Paragraph IV(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 of the Divestiture Assets.
    B. After the appointment of a Divestiture Trustee becomes 
effective, only the Divestiture Trustee shall have the right to sell 
the Divestiture Assets. The Divestiture Trustee shall have the power 
and authority to accomplish the divestiture to an Acquirer 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, and VI of this 
Final Judgment, and shall have such other powers as the Court deems 
appropriate. Subject to Paragraph V(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. 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 
VI.
    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 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 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. 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; 
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.
    F. After its appointment, the Divestiture Trustee shall file 
monthly reports with the United States setting forth the Divestiture 
Trustee's efforts to accomplish the divestiture ordered under this 
Final Judgment. 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 the Divestiture 
Assets.
    G. If the Divestiture Trustee has not accomplished the divestiture 
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 reports contain

[[Page 32956]]

information that the Divestiture Trustee deems confidential, such 
reports 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.

VI. 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 responsible for effecting the divestiture required herein, 
shall notify the United States of any proposed divestiture required by 
Section IV or Section V 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 and list 
the name, address, and telephone number of each person not previously 
identified who offered or expressed an interest in or desire to acquire 
any ownership interest in the Divestiture Assets, together with full 
details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States of such notice, the United States may request from Defendants, 
the proposed Acquirer, any other third party, or the Divestiture 
Trustee, if applicable, additional information concerning the proposed 
divestiture, the proposed Acquirer, 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, 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 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 V(C) of this Final Judgment. Absent written notice 
that the United States does not object to the proposed Acquirer or upon 
objection by the United States, a divestiture proposed under Section IV 
or Section V shall not be consummated. Upon objection by Defendants 
under Paragraph V(C), a divestiture proposed under Section V shall not 
be consummated unless approved by the Court.

VII. FINANCING

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

VIII. HOLD SEPARATE

    Until the divestiture required by this Final Judgment has 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 divestiture 
ordered by the Court.

IX. AFFIDAVITS

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

X. 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 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

[[Page 32957]]

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 X 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 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).

XI. NO REACQUISITION

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

XII. 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.

XIII. 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 Final Judgment 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. This Final Judgment should be interpreted to give full effect to 
the procompetitive purposes of the antitrust laws and to restore all 
competition the United States alleged was harmed by the challenged 
conduct. Defendants agree that they may be held in contempt of, and 
that the Court may enforce, any provision of this Final Judgment that, 
as interpreted by the Court in light of these procompetitive principles 
and applying ordinary tools of interpretation, is stated specifically 
and in reasonable detail, whether or not it is clear and unambiguous on 
its face. In any such interpretation, the terms of this Final Judgment 
should not be construed against either party as the drafter.
    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 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 before 
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.
    D. For a period of four (4) years following the expiration of the 
Final Judgment, if the United States has evidence that a Defendant 
violated this Final Judgment before it expired, the United States may 
file an action against that Defendant in this Court requesting that the 
Court order (1) Defendant to comply with the terms of this Final 
Judgment for an additional term of at least four years following the 
filing of the enforcement action under this Section, (2) any 
appropriate contempt remedies, (3) any additional relief needed to 
ensure the Defendant complies with the terms of the Final Judgment, and 
(4) fees or expenses as called for in Paragraph XIII(C).

XIV. 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 divestiture has been completed and that the continuation of 
the Final Judgment no longer is necessary or in the public interest.

I.

XV. 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:
-----------------------------------------------------------------------

United States District Judge

United States District Court for the District of Columbia

    UNITED STATES OF AMERICA, Plaintiff, v. HARRIS CORPORATION, and 
L3 TECHNOLOGIES, INC., Defendants.

Civil Action No.: 1:19-cv-01809
Judge: Hon. Thomas F. Hogan

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

    Defendants Harris Corporation (``Harris'') and L3 Technologies, 
Inc. (``L3'') entered into an agreement and plan of merger, dated 
October 12, 2018, pursuant to which Harris and L3 propose to combine in 
a transaction that would create the sixth-largest defense contractor in 
the United States. The United States filed a civil antitrust Complaint 
on June 20, 2019, seeking to enjoin the proposed transaction. The 
Complaint alleges that the likely effect of this merger would be to 
lessen competition substantially in the United States for the design, 
development, manufacture, sale, service, and distribution of U.S. 
military-grade image intensifier tubes in violation of Section 7 of the 
Clayton Act, 15 U.S.C. Sec.  18.
    At the same time the Complaint was filed, the United States also 
filed a Hold

[[Page 32958]]

Separate Stipulation and Order (``Hold Separate'') and proposed Final 
Judgment, which are designed to eliminate the anticompetitive effects 
of the transaction. Under the proposed Final Judgment, which is 
explained more fully below, Defendants are required to divest Harris's 
business in the design, development, manufacture, sale, service and 
distribution of image intensifier technology and night vision devices 
(the ``night vision business''). Under the terms of the Hold Separate 
Stipulation and Order, Defendants will take certain steps to ensure 
that Harris's night vision business is operated as a competitively 
independent, economically viable, and ongoing business concern that 
will remain independent and uninfluenced by Harris and that competition 
is maintained during the pendency of the required 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 proposed Final Judgment and to punish violations 
thereof.

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

A. The Defendants and the Proposed Transaction

    Harris is incorporated in Delaware and has its headquarters in 
Melbourne, Florida. Harris provides night vision devices and image 
intensifier tubes, tactical communications solutions, electronic 
warfare solutions, and space and intelligence systems. In 2018, Harris 
had sales of approximately $6.2 billion.
    L3 is incorporated in Delaware and is headquartered in New York, 
New York. L3 provides night vision devices and image intensifier tubes; 
intelligence, surveillance, and reconnaissance systems; aircraft 
sustainment, simulation, and training; and security and detection 
systems. In 2018, L3 had sales of approximately $10.2 billion.
    Harris and L3 entered into an agreement and plan of merger, dated 
October 12, 2018, pursuant to which Harris and L3 propose to merge.

B. The Competitive Effects of the Transaction

1. Background

    Image intensifier tubes amplify visible light and are integrated 
into night vision devices produced by Harris, L3, and other companies. 
Night vision devices allow the user to see better in dark conditions, 
increasing the situational awareness, threat detection, and mission 
performance of soldiers and aircrews operating in low-light 
environments. Night vision devices come in the form of goggles, 
binoculars, and monoculars and can be handheld or mounted to objects 
like helmets or weapons. There are over half a million such devices in 
use today, and the U.S. Department of Defense (``DoD'') expects to 
purchase at least one hundred thousand additional devices over the next 
few years.
    DoD also purchases significant quantities of image intensifier 
tubes as replacement parts for night vision devices currently in the 
field. In addition, as Harris and L3 innovate and develop improved 
image intensifier tubes with greater resolution and light 
amplification, DoD purchases these more advanced image intensifier 
tubes to upgrade existing night vision devices. DoD is likely to 
purchase half a million image intensifier tubes for replacements or 
upgrades over the next few years.

2. Relevant Markets

    As alleged in the Complaint, the quality and usefulness of an image 
intensifier tube is defined by several characteristics, the most 
important of which are size, weight, power consumption, and especially 
sensitivity, which relates to the ability of the tube to amplify low 
levels of visible light without producing excessive distortion in the 
resulting image. DoD requires highly capable image intensifier tubes, 
as the lives of soldiers and aircrews depend on the performance of the 
night vision devices incorporating these tubes. The Complaint alleges 
that less capable image intensifier tubes are therefore not a 
substitute for the highly capable image intensifier tubes that DoD 
views as U.S. military grade.
    According to the Complaint, other night vision technologies such as 
thermal imaging devices and digital light amplification systems are not 
substitutes for U.S. military-grade image intensifier tubes. Thermal 
imaging devices, such as microbolometers and infrared focal plane 
arrays, detect infrared radiation emitted by warm objects rather than 
amplifying visible light. Thermal imaging devices also differ from 
image intensifier tubes in range and sensitivity to environmental 
factors such as humidity and dust. Night vision equipment incorporating 
thermal imaging devices tends to be larger, heavier, and substantially 
more expensive than similar equipment incorporating image intensifier 
tubes. Although some night vision devices incorporate both image 
intensifier tubes and thermal imaging devices to combine the benefits 
of the two and create a ``fused'' image, thermal imaging devices cannot 
replicate the performance of image intensifier tubes or replace them in 
night vision devices.
    The Complaint further alleges that digital light amplification 
systems based on charge-coupled device (``CCD'') or complementary metal 
oxide semiconductor (``CMOS'') detectors are also not adequate 
substitutes for U.S. military-grade image intensifier tubes. CCD- and 
CMOS-based devices tend to be heavier, consume more power, and cost 
significantly more than devices incorporating image intensifier tubes. 
Moreover, because such devices are digital, and therefore require a 
certain amount of signal processing, the images produced also tend to 
lag behind the actual scene being viewed, potentially creating 
disorientation in the user.
    For the foregoing reasons, DoD would not substitute less-capable 
image intensifier tubes, thermal imaging devices, or CCD- or CMOS-based 
digital light amplification systems for U.S. military-grade image 
intensifier tubes in response to a small but significant and non-
transitory increase in the price of U.S. military-grade image 
intensifier tubes. Therefore, the Complaint alleges that U.S. military-
grade image intensifier tubes are a relevant product market and line of 
commerce under Section 7 of the Clayton Act.
    The Complaint alleges that the relevant geographic market for U.S. 
military-grade image intensifier tubes is the United States. For 
national security reasons, DoD only considers domestic producers of 
U.S. military-grade image intensifier tubes. DoD is unlikely to turn to 
any foreign producers in the face of a small but significant and non-
transitory price increase by domestic producers of U.S. military-grade 
image intensifier tubes.

3. Anticompetitive Effects

    As alleged in the Complaint, Harris and L3 are currently the only 
firms that develop, manufacture, and sell U.S. military-grade image 
intensifier tubes. The merger would therefore give the combined firm a 
monopoly in this product market, leaving DoD without a competitive 
alternative for this critical component of night vision devices.
    According to the Complaint, Harris and L3 compete for sales of U.S. 
military-grade image intensifier tubes on the basis of quality, price, 
and contractual terms such as delivery times. This competition has 
resulted in higher quality, lower prices, and shorter delivery times 
and has fostered

[[Page 32959]]

innovation, leading to U.S. military-grade image intensifier tubes with 
higher sensitivity and resolution. The Complaint alleges that the 
combination of Harris and L3 would eliminate this competition and its 
future benefits to DoD customers. Post-transaction, absent the required 
divestiture, the merged firm likely would have the incentive and 
ability to reduce research and development efforts that lead to 
innovative and high-quality products and to increase prices and offer 
less favorable contractual terms.

4. Difficulty of Entry

    According to the Complaint, sufficient, timely entry of additional 
competitors into the market for U.S. military-grade image intensifier 
tubes is unlikely. Production facilities for U.S. military-grade image 
intensifier tubes require a substantial investment in both capital 
equipment and human resources. A new entrant would need to set up a 
foundry to produce electronic components, establish production lines 
capable of manufacturing fiber optic subcomponents, and build assembly 
lines and testing facilities. Engineering and research personnel would 
need to be assigned to develop, test, and troubleshoot the detailed 
manufacturing process, involving hundreds of steps, that is necessary 
to produce U.S. military-grade image intensifier tubes. Any new 
products would require extensive testing and qualification before they 
could be used in night vision devices for the U.S. military. As a 
result, the Complaint alleges that entry would be costly and time 
consuming.
    Moreover, as alleged in the Complaint, a new entrant is unlikely to 
recover these costs. Although CMOS-based night vision devices currently 
are not suitable for DoD uses, and thus are not reasonable substitutes 
for night vision devices based on U.S. military-grade image intensifier 
tubes, research and development on these devices is progressing, and 
industry observers expect these devices to begin replacing night vision 
devices based on U.S. military-grade image intensifier tubes at some 
point in the next five to ten years. Because the market for U.S. 
military-grade image intensifier tubes will likely decline as this 
transition takes place, the Complaint alleges that an entrant is 
unlikely to produce sufficient revenue to recover its costs of entry. 
The prospect of a declining market for U.S. military-grade image 
intensifier tubes thus would discourage new companies from entering.

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The divestiture required by the proposed Final Judgment will 
eliminate the anticompetitive effects of the transaction in the market 
for U.S. military-grade image intensifier tubes by establishing an 
independent and economically viable competitor. Paragraph IV(A) of the 
proposed Final Judgment requires Defendants, within the later of 45 
calendar days after the entry of the Hold Separate by the Court or 15 
calendar days after Regulatory Approvals have been received, to divest 
Harris's night vision business.\1\ Paragraph IV(J) of the proposed 
Final Judgment provides that the business must be divested in such a 
way as to satisfy the United States, in its sole discretion, that the 
Divestiture Assets can and will be operated by the purchaser as a 
viable, ongoing business that can compete effectively in the design, 
development, manufacture, sale, service, and distribution of image 
intensifier technology and night vision devices. Defendants must take 
all reasonable steps necessary to accomplish the divestiture quickly 
and must cooperate with prospective purchasers.
---------------------------------------------------------------------------

    \1\ Paragraph II(F) of the proposed Final Judgment defines 
Regulatory Approvals as ``any approvals or clearances pursuant to 
filings with the Committee on Foreign Investment in the United 
States (``CFIUS''), or under antitrust, competition, or other U.S. 
or international laws required for Acquirer's acquisition of the 
Divestiture Assets to proceed.''
---------------------------------------------------------------------------

    In the event that Defendants do not accomplish the divestiture 
within the period prescribed in the proposed Final Judgment, Section V 
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 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 appropriate in order to carry out the 
purpose of the trust, including extending the trust or the term of the 
trustee's appointment.
    The proposed Final Judgment contains several provisions to 
facilitate the immediate use of the Divestiture Assets by the Acquirer. 
Paragraph IV(G) of the proposed Final Judgment requires Defendants, at 
the Acquirer's option, to enter into a transition services agreement 
for back office, human resource, and information technology services 
and support for the night vision business for a period of up to 12 
months. Paragraph IV(H) of the proposed Final Judgment requires 
Defendants, at the Acquirer's option, to enter into a contract for 
wafer sawing and sensor packaging services to help facilitate the 
development of the next-generation of U.S. military-grade image 
intensifier tubes, for a period of up to 12 months. With respect to any 
agreements entered into under Paragraph IV(G) or IV(H), the United 
States, in its sole discretion, may approve one or more extensions for 
a total of up to an additional six months. If the Acquirer seeks an 
extension of any such agreement, Defendants must notify the United 
States in writing at least three months prior to the date the 
underlying agreement expires. Paragraphs IV(G) and IV(H) further 
provide that employees of Defendants tasked with providing services 
under such agreements must not share any competitively sensitive 
information of the Acquirer with any other employee of Defendants.
    The proposed Final Judgment also contains provisions designed to 
promote compliance and make the enforcement of the Final Judgment as 
effective as possible. Paragraph XIII(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 XIII(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

[[Page 32960]]

and that they may be held in contempt of the Court for failing to 
comply with any provision of the proposed Final Judgment that is stated 
specifically and in reasonable detail, as interpreted in light of this 
procompetitive purpose.
    Paragraph XIII(C) of the proposed Final Judgment 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, Paragraph 
XIII(C) provides that, in any successful effort by the United States to 
enforce the Final Judgment against a Defendant, whether litigated or 
resolved prior to litigation, the 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.
    Paragraph XIII(D) states that the United States may file an action 
against a Defendant for violating the Final Judgment for up to four 
years after the Final Judgment has expired or been terminated under 
Section XIV. This provision is meant to address circumstances such as 
when evidence that a violation of the Final Judgment occurred during 
the term of the Final Judgment is not discovered until after the Final 
Judgment has expired or been terminated or when there is not sufficient 
time for the United States to complete an investigation of an alleged 
violation until after the Final Judgment has expired or been 
terminated. This provision, therefore, makes clear that, for four years 
after the Final Judgment has expired or been terminated, the United 
States may still challenge a violation that occurred during the term of 
the Final Judgment.
    Finally, Section XIV of the proposed Final Judgment 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 divestiture has been completed and that 
the continuation of the Final Judgment is no longer necessary or in the 
public interest.
    The divestiture provisions of the proposed Final Judgment will 
eliminate the anticompetitive effects of the merger in the provision of 
U.S. military-grade image intensifier tubes by establishing a new, 
independent, and economically viable competitor to the merged entity.

IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS

    Section 4 of the Clayton Act, 15 U.S.C. Sec.  15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
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 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 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 the Final 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, D.C. 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 the merger of Harris 
and L3. The United States is satisfied, however, that the divestiture 
of assets described in the proposed Final Judgment will preserve 
competition for the provision of U.S. military-grade image intensifier 
tubes in the relevant market identified by the United States. Thus, the 
proposed Final Judgment would achieve all, or substantially all, of the 
relief the United States would have obtained through litigation but 
avoids the time, expense, and uncertainty of a full trial on the merits 
of the Complaint.

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

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a 60-day comment period, after which the court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. 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

[[Page 32961]]

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); United States v. 
U.S. Airways Grp., Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) 
(explaining that the ``court's inquiry is limited'' in Tunney Act 
settlements); United States v. InBev N.V./S.A., No. 08-1965 (JR), 2009 
U.S. Dist. LEXIS 84787, at *3 (D.D.C. Aug. 11, 2009) (noting that 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'').
    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 in the government's complaint, whether the Final Judgment 
is sufficiently clear, whether its enforcement mechanisms are 
sufficient, and whether the Final Judgment may positively harm third 
parties. See Microsoft, 56 F.3d at 1458-62. With respect to the 
adequacy of the relief secured by the Final Judgment, 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. Instead:

[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 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).\2\
---------------------------------------------------------------------------

    \2\ See also 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'').
---------------------------------------------------------------------------

    The United States' predictions with respect to the efficacy of the 
remedy are to be afforded deference by the Court. See, e.g., Microsoft, 
56 F.3d at 1461 (recognizing courts should give ``due respect to the 
Justice Department's . . . view of the nature of its case' ''); United 
States v. Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 
2016) (``In evaluating objections to settlement agreements under the 
Tunney Act, a court must be mindful that [t]he government need not 
prove that the settlements will perfectly remedy the alleged antitrust 
harms[;] it need only provide a factual basis for concluding that the 
settlements are reasonably adequate remedies for the alleged harms.'' 
(internal citations omitted)); United States v. Republic Servs., Inc., 
723 F. Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review 
to which the government's proposed remedy is accorded''); United States 
v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A 
district court must accord due respect to the government's prediction 
as to the effect of proposed remedies, its perception of the market 
structure, and its view of the nature of the case.''). The ultimate 
question is whether ``the remedies [obtained in the Final Judgment are] 
so inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest.' '' Microsoft, 56 F.3d at 1461 
(quoting United States v. Western Elec. Co., 900 F.2d 283, 309 (D.C. 
Cir. 1990)).
    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its complaint, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways, 
38 F. Supp. 3d at 75 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``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[dash]60.
    In its 2004 amendments to the APPA,\3\ Congress made clear its 
intent to preserve the practical benefits of utilizing Final Judgments 
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 76 (indicating that a court is not required to hold an 
evidentiary hearing or to permit intervenors as part of its review 
under the Tunney Act). This language explicitly wrote into the statute 
what Congress intended when it first enacted the Tunney Act in 1974. As 
Senator Tunney explained: ``[t]he court is nowhere compelled to go to 
trial or to engage in extended proceedings which might have the effect 
of vitiating the benefits of prompt and less costly settlement through 
the consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement 
of Sen. Tunney). ``A court can make its public interest determination 
based on the competitive impact statement and response to public 
comments alone.'' U.S. Airways, 38 F. Supp. 3d at 76 (citing United 
States v. Enova Corp., 107 F. Supp. 2d 10, 17 (D.D.C. 2000)).
---------------------------------------------------------------------------

    \3\ Pub. L. 108[dash]237, Sec.  221.
---------------------------------------------------------------------------

VIII. DETERMINATIVE DOCUMENTS

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

Dated: June 20, 2019

Respectfully submitted,

-----------------------------------------------------------------------

Kevin Quin* (D.C. Bar 415268)

Defense, Industrials, and Aerospace Section, Antitrust Division, 450 
Fifth Street NW, Suite 8700, Washington, D.C. 20530, Telephone: 
(202) 307-0922, Facsimile: (202) 514[dash]9033, 
[email protected].

*Attorney of Record

[FR Doc. 2019-14659 Filed 7-9-19; 8:45 am]
 BILLING CODE 4410-11-P