United States v. ZF Friedrichshafen AG, et al.; Proposed Final Judgment and Competitive Impact Statement, 5707-5719 [2020-01759]

Download as PDF Federal Register / Vol. 85, No. 21 / Friday, January 31, 2020 / Notices (HCSC), Chesapeake, VA; Indiana Microelectronics, LLC, West Lafayette, IN; Invitix LLC, dba Instant Technologies, Durham, NH; Minerva Systems & Technologies, LLC, Lexington, KY; Pacific Science & Engineering Group, Inc. San Diego, CA; Popily, Inc. d.b.a. New Knowledge, Austin, TX; Poplicus, Inc DBA Govini, Arlington, VA; Quantum Dimension, Inc., Huntington Beach, CA; Quest Government Services Inc. dba CenturyLink QGS, Arlington, VA; Spectral Analytics, LLC, San Diego, CA; and The Samraksh Company, Dublin, OH have withdrawn from this venture. No other changes have been made in either the membership or planned activity of the group research project. Membership in this group research project remains open and IWRP intends to file additional written notifications disclosing all changes in membership. On October 15, 2018, IWRP filed its original notification pursuant to Section 6(a) of the Act. The Department of Justice published a notice in the Federal Register pursuant to Section 6(b) of the Act on October 23, 2018 (83 FR 53499). The last notification was filed with the Department on October 16, 2019. A notice was published in the Federal Register pursuant to Section 6(b) of the Act on October 30, 2019 (84 FR 58174). Suzanne Morris, Chief, Premerger and Division Statistics Unit, Antitrust Division. [FR Doc. 2020–01819 Filed 1–30–20; 8:45 am] BILLING CODE 4410–11–P DEPARTMENT OF JUSTICE Antitrust Division jbell on DSKJLSW7X2PROD with NOTICES United States v. ZF Friedrichshafen AG, 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. ZF Friedrichshafen AG, et al., Civil Action No. 1:20–cv–00182. On January 23, 2020, the United States filed a Complaint alleging that ZF Friedrichshafen AG’s proposed acquisition of WABCO Holdings, 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 Defendants to divest WABCO’s R.H. Sheppard Co., VerDate Sep<11>2014 17:16 Jan 30, 2020 Jkt 250001 Inc. subsidiary, along with certain related WABCO assets. 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 John Read, Acting Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, Department of Justice, 450 Fifth Street NW, Suite 8700, Washington, DC 20530 (telephone: 202–307–0468). Amy Fitzpatrick, Counsel to the Senior, Director of Investigations and Litigation. 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, DC 20530, Plaintiff, v. ZF Friedrichshafen A.G., Lowentaler Strasse 20, 88046 Friedrichshafen, Germany, and WABCO Holdings, Inc., 1220 Pacific Drive, Auburn Hills, MI 48326, Defendants. Civil Action No.: 1:20–cv–00182 Judge: Hon. Ketanji B. Jackson 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 ZF Friedrichshafen AG (‘‘ZF’’) and WABCO Holdings, Inc. (‘‘WABCO’’) to enjoin the proposed merger of ZF and WABCO. The United States complains and alleges as follows: I. Nature of the Action 1. Pursuant to an agreement and plan of merger dated March 28, 2019, ZF and WABCO propose to merge in a transaction that would unite two of the leading global suppliers of components used in the manufacture of large commercial vehicles (‘‘LCVs’’), which include commercial trucks and buses. 2. ZF and WABCO are the only suppliers of steering gears for use in LCVs in North America. Steering gears PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 5707 are an essential part of the steering systems used to direct the front wheels of LCVs. They are also a key component of advanced driver-assisted steering systems that provide safer, more efficient vehicle operation, and could ultimately be developed to enable autonomous operation of LCVs. The proposed merger would eliminate competition between ZF and WABCO and likely create a monopoly for LCV steering gears in North America. 3. As a result, the proposed transaction likely would substantially lessen competition in the market for the design, manufacture, and sale of LCV steering gears in North America in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. II. The Defendants and the Transaction 4. ZF is a German company headquartered in Friedrichshafen, Germany. It has 149,000 employees in 40 countries, and had annual sales of $36.9 billion in 2018, $9.6 billion of which were in the United States. ZF’s North American business historically focused on the production and sale of transmissions to passenger and light vehicle manufacturers, but in 2015, ZF acquired a leading U.S. steering systems manufacturer, TRW, Inc. ZF’s U.S. headquarters are in Livonia, Michigan. 5. WABCO is a Delaware corporation with a North American headquarters in Auburn Hills, Michigan, and a global headquarters in Bern, Switzerland. WABCO descends from the original Westinghouse Air Brake Company formed in 1869. It has 16,000 employees in 40 countries, and had annual sales in 2018 of $3.8 billion, $850 million of which were in the United States. WABCO’s North American business historically focused on commercial vehicle air brake and air suspension components, but in 2017, WABCO acquired a leading U.S. commercial vehicle steering component company, R.H. Sheppard Co., Inc. 6. On March 28, 2019, pursuant to an agreement and plan of merger, ZF agreed to acquire WABCO in a deal valued at approximately $7 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 design, manufacture, and sell LCV steering gears in the United States that are used on LCVs in service throughout the United States. Defendants’ activities in the design, manufacture, and sale of these products E:\FR\FM\31JAN1.SGM 31JAN1 Federal Register / Vol. 85, No. 21 / Friday, January 31, 2020 / Notices therefore substantially affect 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. LCV Steering Gears A. Background 10. Steering system components work together to direct a vehicle, and include steering gears, steering pumps, pitman arms, steering columns, steering linkages, and electronic steering controls. Steering equipment suitable for LCVs is sophisticated and highly engineered, especially the key component: Steering gears. LCVs include all trucks, buses, and off-road vehicles that weigh over 19,501 pounds (defined as Class 6–8 vehicles by the United States Department of Transportation (49 CFR 565.15)). 11. Steering gears are located below the steering column (which is attached to the steering wheel) and translate direction to the steering linkage. Steering gears for LCVs have a complex hydraulic power recirculating ball gear. Steering gears must be tuned carefully to operate within the specifications of the individual LCV’s design and performance requirements, and must work together with the entire system of steering equipment. An example of an LCV steering gear system is pictured below: 12. Advanced LCV steering gears also include what is known as a torque overlay. A torque overlay adds hardware that enables the steering gear to quickly and independently direct the vehicle without the input of the steering column, and allows for advanced driver assistance system (‘‘ADAS’’) steering features. ADAS technology in general includes features such as lane keeping assist, adaptive cruise control, automated emergency braking, blind spot detection, and other similar features. For ADAS steering features, torque overlay steering gears work with sensors and electronic controls that detect the environment around the vehicle and then work with the steering hardware to keep the vehicle on the correct path and avoid collisions. Within the last five years, truck and bus manufacturers have begun to use steering-related ADAS features, and both Defendants are actively engaged in research and development to improve steering-related ADAS features for eventual use in autonomous trucks and buses. In the future, steering-related ADAS features may be developed to the point where they can be combined with VerDate Sep<11>2014 17:16 Jan 30, 2020 Jkt 250001 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 E:\FR\FM\31JAN1.SGM 31JAN1 EN31JA20.011</GPH> jbell on DSKJLSW7X2PROD with NOTICES 5708 Federal Register / Vol. 85, No. 21 / Friday, January 31, 2020 / Notices other ADAS technology related to braking and powertrain control, enabling the potential for fully autonomous operation of commercial vehicles. LCV steering gears will continue to be a key component as future ADAS technology is developed. 13. Truck and bus manufacturers are the primary customers for LCV steering gears. These customers incorporate LCV steering gears into the vehicle’s final assembly, and then sell to end-use customers. Other LCV steering gear customers include manufacturers of commercial vehicles for off-road, military, mining, and agriculture uses. Typically, customers purchase LCV steering gears separately from other steering components, although they also may choose to purchase a whole steering system. In some cases, another entity may buy the LCV steering gear from one of the merging parties and then integrate it into a whole steering system that it sells to truck or bus manufacturers. Customers generally buy steering gears either based on preestablished price lists or after a competitive bidding process. 14. The annual size of the North American market for LCV steering gears is approximately $220 million. B. Relevant Markets jbell on DSKJLSW7X2PROD with NOTICES 1. Product Market: LCV Steering Gears 15. LCV steering gears must be durable and powerful enough to move large trucks or buses that utilize hydraulic steering systems without electronic power-assisted steering, because electronic power-assisted steering is not used on LCVs. This distinguishes LCV steering gears from lighter and simpler electronic steering gears used for smaller vehicles such as passenger cars. The quality and usefulness of an LCV steering gear is defined by several special characteristics, the most important of which are size, weight, torque required to move, and sensitivity, which relates to the ability of the gear to respond quickly and accurately to the driver or inputs from electronic controls. 16. There are no other steering methods or technologies that can accomplish the required functions of LCV steering gears. Truck and bus manufacturers require the highlycapable LCV steering gears discussed above because the lives and safety of drivers and other motorists, pedestrians, and property depend on the unfailing performance of an LCV steering gear to direct the vehicle. Other steering gears are less capable, and are therefore not a substitute for LCV steering gears VerDate Sep<11>2014 17:16 Jan 30, 2020 Jkt 250001 purchased for use in LCVs in North America. 17. For the foregoing reasons, customers will not substitute lesscapable steering gears, or any other product, for LCV steering gears in response to a small but significant and non-transitory increase in the price of LCV steering gears. Accordingly, LCV steering gears are a relevant product market and line of commerce under Section 7 of the Clayton Act, 15 U.S.C. 18. 2. Geographic Market: North America 18. LCV steering gears used in North America require a different design and alignment than those used outside North America. This is because of distinct truck and bus design differences, such as those related to higher weight and power, and a common configuration in which the cab is located behind the axles rather than over them. Because of these differences, truck and bus manufacturers strongly prefer LCV steering gears that have performed successfully on North American commercial vehicles, and have been unwilling to purchase steering gears used only in foreign markets. Customers also require their steering gear manufacturers to have an established North American presence for sales, service, and aftermarket support. Having an installed North American base helps customers to ensure that both in-house and thirdparty service technicians have experience with the relevant steering gears and have an existing spare parts inventory when gears need to be repaired or replaced. In the face of a small but significant and non-transitory price increase by North American producers of LCV steering gears, customers, therefore, are unlikely to turn to manufacturers located outside North America and who produce LCV steering gears solely for markets outside North America. 19. North America, therefore, is a relevant geographic market within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 18. C. Anticompetitive Effects of the Proposed Transaction 20. ZF and WABCO are the only firms that design, manufacture, and sell LCV steering gears in North America. After its acquisition of TRW in 2015, ZF became the leading North American firm selling steering systems and components for commercial vehicles. In the market for LCV steering gears in North America, it is estimated to have a 54 percent market share. WABCO is the only other market participant and PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 5709 has an estimated 46 percent market share. WABCO sells LCV steering gears through its wholly-owned R.H. Sheppard subsidiary, which it acquired in 2017. The merger would give the combined firm a monopoly over LCV steering gears in North America, leaving North American customers without a sufficient competitive alternative for this critical component. 21. ZF and WABCO compete for sales of LCV steering gears on the basis of price, quality, service, innovation, and contractual terms such as delivery times. This competition has resulted in lower prices, higher quality, better service, and shorter delivery times. Competition between ZF and WABCO has also fostered innovation, leading to LCV steering gears with higher reliability and the innovative features such as torque overlay that are expected to be integral to the development of future ADAS technology, including features for autonomous LCVs. The combination of ZF and WABCO would eliminate this competition and its future benefits to truck and bus manufacturers and end-use customers. Posttransaction, the merged firm likely would have the incentive and ability to increase prices, lower quality or service, offer less favorable contractual terms, and reduce research and development efforts that would otherwise lead to innovative and high-quality products. 22. The proposed merger, therefore, likely would substantially lessen competition in the design, manufacture, and sale of LCV steering gears in North America 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 market for LCV steering gears in North America is unlikely. Truck and bus manufacturers have shown little interest in buying steering gears and other components from anyone other than the only two established suppliers, ZF and WABCO, because of their proven performance and North American presence. 24. Production facilities and sales and service infrastructure for LCV steering gears require a substantial investment in both capital equipment and human resources. To be competitively viable, a new entrant would need to construct a factory to produce a range of steering components, establish production lines capable of manufacturing the components, and build assembly lines and establish or acquire access to testing equipment and facilities. 25. A new entrant also would need to retain engineering and research E:\FR\FM\31JAN1.SGM 31JAN1 5710 Federal Register / Vol. 85, No. 21 / Friday, January 31, 2020 / Notices personnel to design, test, and troubleshoot the detailed manufacturing process necessary to produce LCV steering gears acceptable to North American customers. Any new LCV steering gears also would require extensive customer testing and qualification before they would be used by North American truck and bus manufacturers or accepted by end users. Moreover, because LCV steering gears now being designed and developed by ZF and WABCO are undergoing continuous technological improvement and innovation for use in the development of ADAS features, any new entrant would need to acquire equivalent expertise and proprietary technologies to enable steering-related ADAS features to be efficiently incorporated into the advanced electronic control components of future North American LCVs. 26. Finally, because customers prefer to use LCV steering gear manufacturers with an existing installed base to ensure efficient and quality service by customers’ in-house or third-party service centers, a new entrant lacking an installed base would be at a severe disadvantage. 27. As a result of the barriers described above, entry into the market for LCV steering gears would not be timely, likely, or sufficient to defeat the anticompetitive effects likely to result from the merger of ZF and WABCO. jbell on DSKJLSW7X2PROD with NOTICES V. Violations Alleged 28. The merger of ZF and WABCO likely would substantially lessen competition in the design, manufacture, and sale of LCV steering gears in the United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. 29. Unless enjoined, the merger likely would have the following anticompetitive effects, among others, related to the relevant market: (a) Actual and potential competition between ZF and WABCO would be eliminated; (b) competition likely would be substantially lessened; and (c) prices likely would increase, quality and the level of service would decrease, innovation would decrease, and contractual terms likely would be less favorable to customers. VI. Request for Relief 30. The United States requests that this Court: (a) Adjudge and decree that ZF’s merger with WABCO would be unlawful and violate Section 7 of the Clayton Act, 15 U.S.C. 18; (b) preliminarily and permanently enjoin and restrain Defendants and all VerDate Sep<11>2014 18:26 Jan 30, 2020 Jkt 250001 persons acting on their behalf from consummating the proposed merger of ZF and WABCO, or from entering into or carrying out any other contract, agreement, plan, or understanding, the effect of which would be to combine ZF and WABCO; (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. 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, Defendants agree 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 not Dated: January 23, 2020. later raise any claim of hardship or Respectfully submitted, difficulty as grounds for asking the FOR PLAINTIFF UNITED STATES: lllllllllllllllllllll Court to modify any of the divestiture provisions contained below; Makan Delrahim (DC Bar #457795) Now therefore, before any testimony Assistant Attorney General lllllllllllllllllllll is taken, without trial or adjudication of any issue of fact or law, and upon Bernard A. Nigro, Jr., (DC Bar #412357) consent of the parties, it is ordered, Principal Deputy Assistant Attorney General lllllllllllllllllllll adjudged, and decreed: Kathleen S. O’Neill, Senior Director of Investigations & Litigation lllllllllllllllllllll John R. Read, Acting Chief, Defense, Industrials, and Aerospace Section lllllllllllllllllllll David E. Altschuler, (DC Bar #983023) Assistant Chief, Defense, Industrials, and Aerospace Section lllllllllllllllllllll Daniel J. Monahan, Jr.,* James K. Foster, Janet A. Nash (DC Bar #1044309) Attorneys for the United States, U.S. Department of Justice, Antitrust Division, Defense, Industrials, and Aerospace Section, 450 Fifth Street NW, Suite 8700, Washington, DC 20530, Telephone: (202) 598–8774, Facsimile: (202) 514–9033, Email: daniel.monahan@usdoj.gov. *Lead Attorney to be Noticed United States District Court for the District of Columbia United States of America, Plaintiff, v. ZF Friedrichshafen AG, and WABCO Holdings, Inc., Defendants. Civil Action No.: 1:20–cv–00182 Judge: Hon. Ketanji B. Jackson [Proposed] Final Judgment Whereas, Plaintiff, United States of America, filed its Complaint on January 23, 2020, the United States and Defendants, ZF Friedrichshafen AG and WABCO Holdings, Inc., 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; PO 00000 Frm 00100 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: A. ‘‘Acquirer’’ means the entity to whom Defendants divest the Divestiture Assets. B. ‘‘ZF’’ means ZF Friedrichshafen AG, a German corporation with its headquarters in Friedrichshafen, Germany; its successors and assigns; and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees. C. ‘‘WABCO’’ means WABCO Holdings, Inc., a Delaware corporation with its headquarters in Auburn Hills, Michigan; its successors and assigns; and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees. D. ‘‘R.H. Sheppard’’ means R.H. Sheppard Co., Inc., a Pennsylvania corporation with its headquarters in Hanover, Pennsylvania; its successors and assigns; and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees. R.H. Sheppard is a wholly-owned subsidiary of WABCO. E. ‘‘Divestiture Assets’’ means all of Defendants’ rights, title, and interests in and to (i) R.H. Sheppard, and (ii) all other WABCO property and assets, tangible and intangible, wherever located, related to or used in connection E:\FR\FM\31JAN1.SGM 31JAN1 jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 21 / Friday, January 31, 2020 / Notices with R.H. Sheppard (except for assets primarily used for human resources, legal, or other general or administrative support functions), including but not limited to: 1. The manufacturing and support facilities located at 101 Philadelphia Street, Hanover, Pennsylvania, 17331 (the ‘‘Hanover Facility’’); 2. The manufacturing and support facilities located at 1400 StaffordUmberger Drive, Wytheville, Virginia, 24382 (the ‘‘Wytheville Facility’’); 3. 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 all other tangible property and assets; all licenses, permits, certifications, and authorizations issued by any governmental organization; all contracts, teaming arrangements, agreements, leases, commitments, certifications, and understandings, including supply agreements and development and production contracts; all customer lists, contracts, accounts, and credit records; all repair and performance records and all other records; and 4. All intangible assets, including, but not limited to: All patents; licenses and sublicenses; intellectual property; copyrights; trademarks; trade names; service marks; service names (excluding any trademark, trade name, service mark, or service name containing the name ‘‘WABCO’’); technical information; computer software (including software developed by third parties), 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 WABCO provides to its 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. ‘‘Relevant Employees’’ means all employees of (i) R.H. Sheppard, and (ii) all additional WABCO employees, wherever located, involved in the design, manufacture, or sale of large commercial vehicle (LCV) steering gears (except for employees primarily engaged in human resources, legal, or other VerDate Sep<11>2014 17:16 Jan 30, 2020 Jkt 250001 general or administrative support functions). G. ‘‘Regulatory Approvals’’ means (i) any approvals or clearances pursuant to filings with the Committee on Foreign Investment in the United States (‘‘CFIUS’’), or under antitrust or competition laws required for the Transaction to proceed; and (ii) any approvals or clearances pursuant to filings with CFIUS, or under antitrust, competition, or other U.S. or international laws required for Acquirer’s acquisition of the Divestiture Assets to proceed. H. ‘‘Transaction’’ means the proposed acquisition of WABCO by ZF. III. Applicability A. This Final Judgment applies to ZF and WABCO, 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 Divestiture Assets divested pursuant to this Final Judgment. IV. Divestitures A. Defendants are ordered and directed, within the later of ninety (90) calendar days after the filing of the Complaint in this matter, or thirty (30) 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. PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 5711 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 with reasonable access to Relevant Employees and with organization charts and information relating to Relevant Employees, including name, job title, past experience relating to the Divestiture Assets, responsibilities, training and educational history, relevant certifications, and to the extent permissible by law, job performance evaluations, and current salary and benefits information, to enable the Acquirer to make offers of employment. Upon request, Defendants shall make Relevant Employees available for interviews with the Acquirer during normal business hours at a mutually agreeable location and will not interfere with efforts by the Acquirer to employ Relevant Employees, such as by offering to increase the salary or benefits of Relevant Employees other than as part of a company-wide increase in salary or benefits granted in the ordinary course of business. D. For any Relevant Employees who elect employment with the Acquirer, Defendants shall waive all noncompete and nondisclosure agreements, vest all unvested pension and other equity rights, and provide all other benefits to which the Relevant Employees would generally be provided if transferred to a buyer of an ongoing business. For a period of twelve (12) months from the filing of the Complaint in this matter, Defendants may not solicit to hire, or hire, any Relevant Employee who was hired by the Acquirer, unless (1) the individual is terminated or laid off by the Acquirer or (2) the Acquirer agrees in writing that Defendants may solicit or hire that individual. Nothing in Paragraphs IV(C) and (D) shall prohibit Defendants from maintaining any reasonable restrictions on the disclosure by any Relevant Employee who accepts an offer of employment with the Acquirer of the Defendant’s proprietary non-public information that is (1) not otherwise required to be disclosed by this Final Judgment, (2) related solely to Defendants’ businesses and clients, and (3) unrelated to the Divestiture Assets. E:\FR\FM\31JAN1.SGM 31JAN1 jbell on DSKJLSW7X2PROD with NOTICES 5712 Federal Register / Vol. 85, No. 21 / Friday, January 31, 2020 / Notices E. Defendants shall permit prospective Acquirers of the Divestiture Assets to have reasonable access to make inspections of the physical facilities of the Divestiture Assets; 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 that the Divestiture Assets 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 Divestiture Assets. H. Defendants must make best efforts to assign, subcontract, or otherwise transfer all contracts related to the Divestiture Assets, including all supply and sales contracts, to Acquirer. Defendants must not interfere with any negotiations between Acquirer and a contracting party. I. At the option of the Acquirer, Defendants shall enter into a supply contract for the assembly of active steering electronic control units sufficient to meet all or part of the Acquirer’s needs for a period of up to six (6) months. Upon Acquirer’s request, the United States, in its sole discretion, may approve one or more extensions of any such agreement for a total of up to an additional six (6) months. The terms and conditions of any contractual arrangement meant to satisfy this provision must be reasonably related to market conditions for such assembly. J. 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 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 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 the 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. VerDate Sep<11>2014 17:16 Jan 30, 2020 Jkt 250001 K. Defendants shall warrant to the Acquirer (1) that there are no material defects in the environmental, zoning, or other permits relating 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. L. 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, manufacture, and sale of LCV steering gears. 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 divestitures, 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, manufacture, and sale of LCV steering gears; 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 PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 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 or consultants, including, but not limited to, investment bankers, attorneys, and accountants, 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 Divestiture 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 agents and consultants 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 agents and consultants 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 E:\FR\FM\31JAN1.SGM 31JAN1 jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 21 / Friday, January 31, 2020 / Notices 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 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 VerDate Sep<11>2014 17:16 Jan 30, 2020 Jkt 250001 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 or not, in its sole discretion, it objects to the Acquirer or any other aspect of 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 PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 5713 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 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 and complete the sale of 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 E:\FR\FM\31JAN1.SGM 31JAN1 5714 Federal Register / Vol. 85, No. 21 / Friday, January 31, 2020 / Notices 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 legallyrecognized 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: jbell on DSKJLSW7X2PROD with NOTICES (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 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 VerDate Sep<11>2014 17:16 Jan 30, 2020 Jkt 250001 (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 PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 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 divestitures have been completed and that the continuation of the Final Judgment no longer is necessary or in the public interest. 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. 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 E:\FR\FM\31JAN1.SGM 31JAN1 Federal Register / Vol. 85, No. 21 / Friday, January 31, 2020 / Notices The United States and Defendants have stipulated that the proposed Final Date: llllllllllllllllll Judgment may be entered after compliance with the APPA. Entry of the [Court approval subject to procedures of proposed Final Judgment will terminate Antitrust Procedures and Penalties Act, 15 this action, except that the Court will U.S.C. 16] lllllllllllllllllllll retain jurisdiction to construe, modify, or enforce the provisions of the United States District Judge proposed Final Judgment and to punish United States District Court for the violations thereof. District of Columbia II. Description of Events Giving Rise to United States of America, Plaintiff, v. ZF the Alleged Violation filed with the Court, entry of this Final Judgment is in the public interest. Friedrichshafen AG, and WABCO Holdings, Inc., Defendants. Civil Action No.: 1:20–cv–00182 Judge: Hon. Ketanji B. Jackson Competitive Impact Statement The United States of America, under Section 2(b) of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)–(h) (the ‘‘APPA’’ or ‘‘Tunney Act’’), files this Competitive Impact Statement relating to the proposed Final Judgment submitted for entry in this civil antitrust proceeding. jbell on DSKJLSW7X2PROD with NOTICES I. Nature and Purpose of the Proceeding On March 28, 2019, Defendant ZF Friedrichshafen AG (‘‘ZF’’) agreed to acquire Defendant WABCO Holdings, Inc. (‘‘WABCO’’) in a transaction that would unite two of the leading global suppliers of large commercial vehicle (‘‘LCV’’) components. The United States filed a civil antitrust Complaint on January 23, 2020, seeking to enjoin the proposed acquisition. The Complaint alleges that the likely effect of this acquisition would be to substantially lessen competition for the design, manufacture, and sale of LCV steering gears in North America, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. At the same time the Complaint was filed, the United States filed a Hold Separate Stipulation and Order (‘‘Hold Separate’’) and proposed Final Judgment, which are designed to address the anticompetitive effects of the acquisition. Under the proposed Final Judgment, which is explained more fully below, the Defendants are required to divest WABCO’s whollyowned subsidiary R.H. Sheppard Co., Inc. (‘‘R.H. Sheppard’’) and other WABCO assets related to LCV steering gears. Under the terms of the Hold Separate, the Defendants will take certain steps to ensure that R.H. Sheppard is operated as a competitively independent, economically viable, and ongoing business concern, which will remain independent and uninfluenced by ZF, and that competition is maintained during the pendency of the required divestiture. VerDate Sep<11>2014 17:16 Jan 30, 2020 Jkt 250001 A. The Defendants and the Proposed Transaction ZF is a German company headquartered in Friedrichshafen, Germany. It has 149,000 employees in 40 countries, and had annual sales of $36.9 billion in 2018, $9.6 billion of which were in the United States. ZF’s North American business historically focused on the production and sale of transmissions to passenger and light vehicle manufacturers, but in 2015, ZF acquired a leading U.S. steering systems manufacturer, TRW, Inc. ZF’s U.S. headquarters are in Livonia, Michigan. WABCO is a Delaware corporation with a North American headquarters in Auburn Hills, Michigan, and a global headquarters in Bern, Switzerland. WABCO descends from the original Westinghouse Air Brake Company formed in 1869. It has 16,000 employees in 40 countries, and had annual sales in 2018 of $3.8 billion, $850 million of which were in the United States. WABCO’s North American business historically focused on commercial vehicle air brake and air suspension components, but in 2017, WABCO acquired a leading U.S. commercial vehicle steering component company, R.H. Sheppard. On March 28, 2019, pursuant to an agreement and plan of merger, ZF agreed to acquire WABCO in a deal valued at approximately $7 billion. B. The Competitive Effects of the Transaction 1. Background on LCV Steering Gears Steering system components work together to direct a vehicle, and include steering gears, steering pumps, pitman arms, steering columns, steering linkages, and electronic steering controls. Steering equipment suitable for LCVs is sophisticated and highly engineered, especially the key component: Steering gears. LCVs include all trucks, buses, and off-road vehicles that weigh over 19,501 pounds (defined as Class 6–8 vehicles by the United States Department of Transportation (49 CFR 565.15)). PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 5715 Steering gears are located below the steering column (which is attached to the steering wheel) and translate direction to the steering linkage. Steering gears for LCVs have a complex hydraulic power recirculating ball gear. Steering gears must be tuned carefully to operate within the specifications of the individual LCV’s design and performance requirements, and must work together with the entire system of steering equipment. Advanced LCV steering gears also include what is known as a torque overlay. A torque overlay adds hardware that enables the steering gear to quickly and independently direct the vehicle without the input of the steering column, and allows for advanced driver assistance system (‘‘ADAS’’) steering features. ADAS technology in general includes features such as lane keeping assist, adaptive cruise control, automated emergency braking, blind spot detection, and other similar features. For ADAS steering features, torque overlay steering gears work with sensors and electronic controls that detect the environment around the vehicle and then work with the steering hardware to keep the vehicle on the correct path and avoid collisions. Within the last five years, truck and bus manufacturers have begun to use steering-related ADAS features, and both Defendants are actively engaged in research and development to improve steering-related ADAS features for eventual use in autonomous trucks and buses. In the future, steering-related ADAS features may be developed to the point where they can be combined with other ADAS technology related to braking and powertrain control, enabling the potential for fully autonomous operation of commercial vehicles. LCV steering gears will continue to be a key component as future ADAS technology is developed. Truck and bus manufacturers are the primary customers for LCV steering gears. These customers incorporate LCV steering gears into the vehicle’s final assembly, and then sell to end-use customers. Other LCV steering gear customers include manufacturers of commercial vehicles for off-road, military, mining, and agriculture uses. Typically, customers purchase LCV steering gears separately from other steering components, although they also may choose to purchase a whole steering system. In some cases, another entity may buy the LCV steering gear from one of the merging parties and then integrate it into a whole steering system that it sells to truck or bus manufacturers. Customers generally buy steering gears either based on pre- E:\FR\FM\31JAN1.SGM 31JAN1 5716 Federal Register / Vol. 85, No. 21 / Friday, January 31, 2020 / Notices established price lists or after a competitive bidding process. The annual size of the North American market for LCV steering gears is approximately $220 million. jbell on DSKJLSW7X2PROD with NOTICES 2. Relevant Product Market: LCV Steering Gears As alleged in the Complaint, LCV steering gears must be durable and powerful enough to move large trucks or buses that utilize hydraulic steering systems without electronic powerassisted steering, because electronic power-assisted steering is not used on LCVs. This distinguishes LCV steering gears from lighter and simpler electronic steering gears used for smaller vehicles such as passenger cars. The quality and usefulness of an LCV steering gear is defined by several special characteristics, the most important of which are size, weight, torque required to move, and sensitivity, which relates to the ability of the gear to respond quickly and accurately to the driver or inputs from electronic controls. The Complaint alleges that there are no other steering methods or technologies that can accomplish the required functions of LCV steering gears. Truck and bus manufacturers require the highly-capable LCV steering gears discussed above, because the lives and safety of drivers and other motorists, pedestrians, and property depend on the unfailing performance of an LCV steering gear to direct the vehicle. Other steering gears are less capable, and are therefore not a substitute for LCV steering gears purchased for use in LCVs in North America. For the foregoing reasons, according to the Complaint, customers will not substitute less-capable steering gears, or any other product, for LCV steering gears in response to a small but significant and non-transitory increase in the price of LCV steering gears. The Complaint, therefore, alleges that LCV steering gears are a relevant product market and line of commerce under Section 7 of the Clayton Act, 15 U.S.C. 18. 3. Relevant Geographic Market: North America As alleged in the Complaint, LCV steering gears used in North America require a different design and alignment than those used outside North America. This is because of distinct truck and bus design differences, such as those related to higher weight and power, and a common configuration in which the cab is located behind the axles rather than over them. Because of these differences, the Complaint alleges that truck and bus VerDate Sep<11>2014 17:16 Jan 30, 2020 Jkt 250001 manufacturers strongly prefer LCV steering gears that have performed successfully on North American commercial vehicles, and have been unwilling to purchase steering gears used only in foreign markets. Customers also require their steering gear manufacturers to have an established North American presence for sales, service, and aftermarket support. Having an installed North American base helps customers to ensure that both in-house and third-party service technicians have experience with the relevant steering gears and have an existing spare parts inventory when gears need to be repaired or replaced. According to the Complaint, in the face of a small but significant and non-transitory price increase by North American producers of LCV steering gears, customers are unlikely to turn to manufacturers located outside North America and who produce LCV steering gears solely for markets outside North America. The Complaint therefore alleges that North America is a relevant geographic market within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 18. 4. Anticompetitive Effects of the Proposed Transaction As alleged in the Complaint, ZF and WABCO are the only firms that design, manufacture, and sell LCV steering gears in North America. After its acquisition of TRW in 2015, ZF became the leading North American firm selling steering systems and components for commercial vehicles. In the market for LCV steering gears in North America, it is estimated to have a 54 percent market share. WABCO is the only other market participant and has an estimated 46 percent market share. WABCO sells LCV steering gears through its wholly-owned R.H. Sheppard subsidiary, which it acquired in 2017. The Complaint alleges that the merger would give the combined firm a monopoly over LCV steering gears in North America, leaving North American customers without a sufficient competitive alternative for this critical component. According to the Complaint, ZF and WABCO compete for sales of LCV steering gears on the basis of price, quality, service, innovation, and contractual terms such as delivery times. This competition has resulted in lower prices, higher quality, better service, and shorter delivery times. Competition between ZF and WABCO has also fostered innovation, leading to LCV steering gears with higher reliability and the innovative features such as torque overlay that are expected to be integral to the development of future ADAS technology, including PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 features for autonomous LCVs. The Complaint alleges that the combination of ZF and WABCO would eliminate this competition and its future benefits to truck and bus manufacturers and enduse customers. Post-transaction, the merged firm likely would have the incentive and ability to increase prices, lower quality or service, offer less favorable contractual terms, and reduce research and development efforts that would otherwise lead to innovative and high-quality products. According to the Complaint, the proposed merger, therefore, likely would substantially lessen competition in the design, manufacture, and sale of LCV steering gears in North America in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. 5. Difficulty of Entry The Complaint alleges that sufficient, timely entry of additional competitors into the market for LCV steering gears in North America is unlikely. Truck and bus manufacturers have shown little interest in buying steering gears and other components from anyone other than the only two established suppliers, ZF and WABCO, because of these companies’ proven performance and North American presence. According to the Complaint, production facilities and sales and service infrastructure for LCV steering gears require a substantial investment in both capital equipment and human resources. To be competitively viable, a new entrant would need to construct a factory to produce a range of steering components, establish production lines capable of manufacturing the components, and build assembly lines and establish or acquire access to testing equipment and facilities. A new entrant also would need to retain engineering and research personnel to design, test, and troubleshoot the detailed manufacturing process necessary to produce LCV steering gears acceptable to North American customers. Any new LCV steering gears also would require extensive customer testing and qualification before they would be used by North American truck and bus manufacturers or accepted by end users. Moreover, because LCV steering gears now being designed and developed by ZF and WABCO are undergoing continuous technological improvement and innovation for use in the development of ADAS features, any new entrant would need to acquire equivalent expertise and proprietary technologies to enable steering-related ADAS features to be efficiently incorporated into the advanced E:\FR\FM\31JAN1.SGM 31JAN1 Federal Register / Vol. 85, No. 21 / Friday, January 31, 2020 / Notices electronic control components of future North American LCVs. Finally, because customers prefer to use LCV steering gear manufacturers with an existing installed base to ensure efficient and quality service by customers’ in-house or third-party service centers, a new entrant lacking an installed base would be at a severe disadvantage. The Complaint alleges that as a result of all of these barriers, entry would be costly and time-consuming. The Complaint alleges that as a result of the barriers described above, entry into the market for LCV steering gears would not be timely, likely, or sufficient to defeat the anticompetitive effects likely to result from the merger of ZF and WABCO. jbell on DSKJLSW7X2PROD with NOTICES III. Explanation of the Proposed Final Judgment The divestiture required by the proposed Final Judgment will remedy the loss of competition alleged in the Complaint by establishing an independent and economically viable competitor in the market for LCV steering gears in North America. Paragraph IV(A) of the proposed Final Judgment requires the Defendants, within the later of ninety (90) calendar days after the filing of the Complaint in this matter or thirty (30) calendar days after Regulatory Approvals have been received, to divest the entirety of WABCO’s subsidiary R.H. Sheppard, as well as related WABCO assets, to an Acquirer acceptable to the United States it its sole discretion.1 Paragraph IV(L) of the proposed Final Judgment requires that the Divestiture Assets must be divested in such a way as to satisfy the United States in its sole discretion that they can and will be operated by the purchaser as a viable, ongoing business that can compete effectively in the design, manufacture, and sale of LCV steering gears. Defendants must take all reasonable steps necessary to accomplish the divestiture quickly and must cooperate with prospective purchasers. If the 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 divestiture trustee 1 Paragraph II(G) of the proposed Final Judgment defines Regulatory Approvals as ‘‘(i) any approvals or clearances pursuant to filings with the Committee on Foreign Investment in the United States (‘‘CFIUS’’), or under antitrust or competition laws required for the Transaction to proceed; and (ii) any approvals or clearances pursuant to filings with CFIUS, or under antitrust, competition, or other U.S. or international laws required for Acquirer’s acquisition of the Divestiture Assets to proceed.’’ VerDate Sep<11>2014 17:16 Jan 30, 2020 Jkt 250001 selected by the United States to effect the divestiture. If a divestiture trustee is appointed, the proposed Final Judgment provides that the Defendants will pay all costs and expenses of the trustee. The divestiture 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 the divestiture trustee’s appointment becomes effective, the trustee will provide periodic reports to 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 divestiture trustee and the United States will make recommendations to the Court, which will enter such orders as appropriate, in order to carry out the purpose of the trust, including by extending the trust or the term of the divestiture trustee’s appointment. The proposed Final Judgment contains several provisions to facilitate the immediate use of the Divestiture Assets by the Acquirer. Paragraph IV(I) of the proposed Final Judgment requires Defendants, at the Acquirer’s option, to enter into a supply contract for the assembly of active steering electronic control units sufficient to meet all or part of the Acquirer’s needs for a period of up to six (6) months. Upon Acquirer’s request, the United States, in its sole discretion, may approve one or more extensions of any such agreement for a total of up to an additional six (6) months. In addition, Paragraph IV(J) 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 Divestiture Assets for a period of up to twelve (12) months. The paragraph further provides that the United States, in its sole discretion, may approve one or more extensions for a total of up to an additional six (6) months if the Defendants notify the United States in writing at least three (3) months prior to the date the transition services contract expires. Finally, Paragraph IV(J) provides that employees of the Defendants tasked with providing any transition services must not share any competitively sensitive information of the Acquirer with any other employee of the Defendants. The proposed Final Judgment also contains provisions intended to facilitate the Acquirer’s efforts to hire the employees involved in the R.H. Sheppard business, including any additional WABCO employees, wherever located, involved in the PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 5717 design, manufacture, or sale of LCV steering gears. Paragraph IV(C) of the proposed Final Judgment requires the Defendants to provide the Acquirer with organization charts and information relating to these employees and make them available for interviews, and provides that Defendants will not interfere with any negotiations by the Acquirer to hire them. In addition, Paragraph IV(D) provides that for employees who elect employment with the Acquirer, the Defendants, subject to exceptions, shall waive all noncompete and nondisclosure agreements, vest all unvested pension and other equity rights, and provide all benefits to which the employees would generally be provided if transferred to a buyer of an ongoing business. The paragraph further provides that, for a period of 12 months from the filing of the Complaint, the Defendants may not solicit to hire, or hire any such person who was hired by the Acquirer, unless such individual is terminated or laid off by the Acquirer or the Acquirer agrees in writing that Defendants may solicit or hire that individual. 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, the 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 the 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 competition that would otherwise be harmed by the transaction. The 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 E:\FR\FM\31JAN1.SGM 31JAN1 5718 Federal Register / Vol. 85, No. 21 / Friday, January 31, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES interpreted in light of this procompetitive purpose. Paragraph XIII(C) of the proposed Final Judgment provides that if the Court finds in an enforcement proceeding that the 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, to compensate American taxpayers for any costs associated with investigating and enforcing 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 before litigation, that the Defendants will reimburse the United States for attorneys’ fees, experts’ fees, and other 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 (4) years after the Final Judgment has expired or been terminated. This provision is meant to address circumstances such as when evidence that a violation of the Final Judgment occurred during the term of the Final Judgment is not discovered until after the Final Judgment has expired or been terminated or when there is not sufficient time for the United States to complete an investigation of an alleged violation until after the Final Judgment has expired or been terminated. This provision, therefore, makes clear that, for four 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 will 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 the Defendants that the divestiture has 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 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 VerDate Sep<11>2014 17:16 Jan 30, 2020 Jkt 250001 suffered, as well as costs and reasonable attorneys’ fees. Entry of the proposed Final Judgment neither impairs nor assists the bringing of any private antitrust damage action. Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the proposed Final Judgment has no prima facie effect in any subsequent private lawsuit that may be brought against the Defendants. V. Procedures Available for Modification of the Proposed Final Judgment The United States and the 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 U.S. Department of Justice, which remains free to withdraw its consent to the proposed Final Judgment at any time before the Court’s entry of the Final Judgment. The comments and the response of the United States will be filed with the Court. In addition, 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: John R. Read, Acting Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, U.S. 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. PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 VI. Alternatives to the Proposed Final Judgment As an alternative to the proposed Final Judgment, the United States considered a full trial on the merits against the Defendants. The United States could have continued the litigation and sought preliminary and permanent injunctions against ZF’s acquisition of WABCO. The United States is satisfied, however, that the divestiture of assets described in the proposed Final Judgment will remedy the anticompetitive effects alleged in the Complaint, preserving competition for the design, manufacture, and sale of LCV steering gears in North America. Thus, the proposed Final Judgment achieves 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. 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 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 E:\FR\FM\31JAN1.SGM 31JAN1 jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 21 / Friday, January 31, 2020 / Notices N.V./S.A., No. 08–1965 (JR), 2009 U.S. Dist. LEXIS 84787, at *3 (D.D.C. Aug. 11, 2009) (noting that a court’s review of a 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 U.S. Court of Appeals for the District of Columbia Circuit has held, under the APPA a court considers, among other things, the relationship between the remedy secured and the specific allegations in the government’s complaint, whether the proposed Final Judgment is sufficiently clear, whether its enforcement mechanisms are sufficient, and whether it may positively harm third parties. See Microsoft, 56 F.3d at 1458–62. With respect to the adequacy of the relief secured by the proposed Final Judgment, a court may not ‘‘make de novo determination of facts and issues.’’ United States v. W. Elec. Co., 993 F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also Microsoft, 56 F.3d at 1460–62; United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F. Supp. 2d 10, 16 (D.D.C. 2000); InBev, 2009 U.S. Dist. LEXIS 84787, at *3. Instead, ‘‘[t]he balancing of competing social and political interests affected by a proposed antitrust consent decree must be left, in the first instance, to the discretion of the Attorney General.’’ W. Elec. Co., 993 F.2d at 1577 (quotation marks omitted). ‘‘The court should bear in mind the flexibility of the public interest inquiry: The court’s function is not to determine whether the resulting array of rights and liabilities is one that will best serve society, but only to confirm that the resulting settlement is within the reaches of the public interest.’’ Microsoft, 56 F.3d at 1460 (quotation marks omitted). More demanding requirements would ‘‘have enormous practical consequences for the government’s ability to negotiate future settlements,’’ contrary to congressional intent. Id. at 1456. ‘‘The Tunney Act was not intended to create a disincentive to the use of the consent decree.’’ Id. The United States’ predictions about the efficacy of the remedy are to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at 1461 (recognizing courts should give ‘‘due respect to the Justice Department’s . . . view of the nature of its case’’); United States v. Iron Mountain, Inc., 217 F. Supp. 3d 146, 152–53 (D.D.C. 2016) (‘‘In evaluating objections to settlement VerDate Sep<11>2014 17:16 Jan 30, 2020 Jkt 250001 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. ArcherDaniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (‘‘A district court must accord due respect to the government’s prediction as to the effect of proposed remedies, its perception of the market structure, and its view of the nature of the case.’’). The ultimate question is whether ‘‘the remedies [obtained by the Final Judgment are] so inconsonant with the allegations charged as to fall outside of the ‘reaches of the public interest.’ ’’ Microsoft, 56 F.3d at 1461 (quoting W. Elec. Co., 900 F.2d at 309). Moreover, the Court’s role under the APPA is limited to reviewing the remedy in relationship to the violations that the United States has alleged in its complaint, and does not authorize the Court to ‘‘construct [its] own hypothetical case and then evaluate the decree against that case.’’ Microsoft, 56 F.3d at 1459; see also U.S. Airways, 38 F. Supp. 3d at 75 (noting that the court must simply determine whether there is a factual foundation for the government’s decisions such that its conclusions regarding the proposed settlements are reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (‘‘[T]he ‘public interest’ is not to be measured by comparing the violations alleged in the complaint against those the court believes could have, or even should have, been alleged.’’). Because the ‘‘court’s authority to review the decree depends entirely on the government’s exercising its prosecutorial discretion by bringing a case in the first place,’’ it follows that ‘‘the court is only authorized to review the decree itself,’’ and not to ‘‘effectively redraft the complaint’’ to inquire into other matters that the United States did not pursue. Microsoft, 56 F.3d at 1459–60. In its 2004 amendments to the APPA, Congress made clear its intent to preserve the practical benefits of using consent judgments proposed by the United States in antitrust enforcement, Pub. L. 108–237 § 221, and added the unambiguous instruction that ‘‘[n]othing in this section shall be construed to require the court to conduct an evidentiary hearing or to require the court to permit anyone to intervene.’’ 15 PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 5719 U.S.C. 16(e)(2); see also U.S. Airways, 38 F. Supp. 3d at 76 (indicating that a court is not required to hold an evidentiary hearing or to permit intervenors as part of its review under the Tunney Act). This language explicitly wrote into the statute what Congress intended when it first enacted the Tunney Act in 1974. As Senator Tunney explained: ‘‘[t]he court is nowhere compelled to go to trial or to engage in extended proceedings which might have the effect of vitiating the benefits of prompt and less costly settlement through the consent decree process.’’ 119 Cong. Rec. 24,598 (1973) (statement of Sen. Tunney). ‘‘A court can make its public interest determination based on the competitive impact statement and response to public comments alone.’’ U.S. Airways, 38 F. Supp. 3d at 76 (citing Enova Corp., 107 F. Supp. 2d at 17). VIII. Determinative Documents There are no determinative materials or documents within the meaning of the APPA that were considered by the United States in formulating the proposed Final Judgment. Dated: January 23, 2020 Respectfully submitted, lllllllllllllllllllll Daniel J. Monahan, Jr.,* U.S. Department of Justice, Antitrust Division, Defense, Industrials, and Aerospace Section, 450 Fifth Street NW, Suite 8700, Washington, DC 20530, Telephone: (202) 598–8774, Facsimile: (202) 514–9033, daniel.monahan@usdoj.gov. *Attorney of Record [FR Doc. 2020–01759 Filed 1–30–20; 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—Southwest Research Institute—Cooperative Research Group on Mechanical Stratigraphy and Natural Deformation in the Permian Strata of Texas and New Mexico: Implications for Exploitation of the Permian Basin—Phase 2 Notice is hereby given that, on January 10, 2020, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301 et seq. (‘‘the Act’’), Southwest Research Institute—Cooperative Research Group on Mechanical Stratigraphy and Natural Deformation in the Permian Strata of Texas and New Mexico: Implications for E:\FR\FM\31JAN1.SGM 31JAN1

Agencies

[Federal Register Volume 85, Number 21 (Friday, January 31, 2020)]
[Notices]
[Pages 5707-5719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-01759]


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

DEPARTMENT OF JUSTICE

Antitrust Division


United States v. ZF Friedrichshafen AG, 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. ZF Friedrichshafen AG, et al., Civil Action No. 
1:20-cv-00182. On January 23, 2020, the United States filed a Complaint 
alleging that ZF Friedrichshafen AG's proposed acquisition of WABCO 
Holdings, 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 Defendants to divest WABCO's R.H. Sheppard Co., 
Inc. subsidiary, along with certain related WABCO assets.
    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 John Read, Acting 
Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, 
Department of Justice, 450 Fifth Street NW, Suite 8700, Washington, DC 
20530 (telephone: 202-307-0468).

Amy Fitzpatrick,
Counsel to the Senior, Director of Investigations and Litigation.

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, DC 20530, 
Plaintiff, v. ZF Friedrichshafen A.G., Lowentaler Strasse 20, 88046 
Friedrichshafen, Germany, and WABCO Holdings, Inc., 1220 Pacific 
Drive, Auburn Hills, MI 48326, Defendants.

Civil Action No.: 1:20-cv-00182
Judge: Hon. Ketanji B. Jackson

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 ZF Friedrichshafen AG 
(``ZF'') and WABCO Holdings, Inc. (``WABCO'') to enjoin the proposed 
merger of ZF and WABCO. The United States complains and alleges as 
follows:

I. Nature of the Action

    1. Pursuant to an agreement and plan of merger dated March 28, 
2019, ZF and WABCO propose to merge in a transaction that would unite 
two of the leading global suppliers of components used in the 
manufacture of large commercial vehicles (``LCVs''), which include 
commercial trucks and buses.
    2. ZF and WABCO are the only suppliers of steering gears for use in 
LCVs in North America. Steering gears are an essential part of the 
steering systems used to direct the front wheels of LCVs. They are also 
a key component of advanced driver-assisted steering systems that 
provide safer, more efficient vehicle operation, and could ultimately 
be developed to enable autonomous operation of LCVs. The proposed 
merger would eliminate competition between ZF and WABCO and likely 
create a monopoly for LCV steering gears in North America.
    3. As a result, the proposed transaction likely would substantially 
lessen competition in the market for the design, manufacture, and sale 
of LCV steering gears in North America in violation of Section 7 of the 
Clayton Act, 15 U.S.C. 18.

II. The Defendants and the Transaction

    4. ZF is a German company headquartered in Friedrichshafen, 
Germany. It has 149,000 employees in 40 countries, and had annual sales 
of $36.9 billion in 2018, $9.6 billion of which were in the United 
States. ZF's North American business historically focused on the 
production and sale of transmissions to passenger and light vehicle 
manufacturers, but in 2015, ZF acquired a leading U.S. steering systems 
manufacturer, TRW, Inc. ZF's U.S. headquarters are in Livonia, 
Michigan.
    5. WABCO is a Delaware corporation with a North American 
headquarters in Auburn Hills, Michigan, and a global headquarters in 
Bern, Switzerland. WABCO descends from the original Westinghouse Air 
Brake Company formed in 1869. It has 16,000 employees in 40 countries, 
and had annual sales in 2018 of $3.8 billion, $850 million of which 
were in the United States. WABCO's North American business historically 
focused on commercial vehicle air brake and air suspension components, 
but in 2017, WABCO acquired a leading U.S. commercial vehicle steering 
component company, R.H. Sheppard Co., Inc.
    6. On March 28, 2019, pursuant to an agreement and plan of merger, 
ZF agreed to acquire WABCO in a deal valued at approximately $7 
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 design, manufacture, and sell LCV steering gears in 
the United States that are used on LCVs in service throughout the 
United States. Defendants' activities in the design, manufacture, and 
sale of these products

[[Page 5708]]

therefore substantially affect 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. LCV Steering Gears

A. Background

    10. Steering system components work together to direct a vehicle, 
and include steering gears, steering pumps, pitman arms, steering 
columns, steering linkages, and electronic steering controls. Steering 
equipment suitable for LCVs is sophisticated and highly engineered, 
especially the key component: Steering gears. LCVs include all trucks, 
buses, and off-road vehicles that weigh over 19,501 pounds (defined as 
Class 6-8 vehicles by the United States Department of Transportation 
(49 CFR 565.15)).
    11. Steering gears are located below the steering column (which is 
attached to the steering wheel) and translate direction to the steering 
linkage. Steering gears for LCVs have a complex hydraulic power 
recirculating ball gear. Steering gears must be tuned carefully to 
operate within the specifications of the individual LCV's design and 
performance requirements, and must work together with the entire system 
of steering equipment. An example of an LCV steering gear system is 
pictured below:
[GRAPHIC] [TIFF OMITTED] TN31JA20.011

    12. Advanced LCV steering gears also include what is known as a 
torque overlay. A torque overlay adds hardware that enables the 
steering gear to quickly and independently direct the vehicle without 
the input of the steering column, and allows for advanced driver 
assistance system (``ADAS'') steering features. ADAS technology in 
general includes features such as lane keeping assist, adaptive cruise 
control, automated emergency braking, blind spot detection, and other 
similar features. For ADAS steering features, torque overlay steering 
gears work with sensors and electronic controls that detect the 
environment around the vehicle and then work with the steering hardware 
to keep the vehicle on the correct path and avoid collisions. Within 
the last five years, truck and bus manufacturers have begun to use 
steering-related ADAS features, and both Defendants are actively 
engaged in research and development to improve steering-related ADAS 
features for eventual use in autonomous trucks and buses. In the 
future, steering-related ADAS features may be developed to the point 
where they can be combined with

[[Page 5709]]

other ADAS technology related to braking and powertrain control, 
enabling the potential for fully autonomous operation of commercial 
vehicles. LCV steering gears will continue to be a key component as 
future ADAS technology is developed.
    13. Truck and bus manufacturers are the primary customers for LCV 
steering gears. These customers incorporate LCV steering gears into the 
vehicle's final assembly, and then sell to end-use customers. Other LCV 
steering gear customers include manufacturers of commercial vehicles 
for off-road, military, mining, and agriculture uses. Typically, 
customers purchase LCV steering gears separately from other steering 
components, although they also may choose to purchase a whole steering 
system. In some cases, another entity may buy the LCV steering gear 
from one of the merging parties and then integrate it into a whole 
steering system that it sells to truck or bus manufacturers. Customers 
generally buy steering gears either based on pre-established price 
lists or after a competitive bidding process.
    14. The annual size of the North American market for LCV steering 
gears is approximately $220 million.

B. Relevant Markets

1. Product Market: LCV Steering Gears
    15. LCV steering gears must be durable and powerful enough to move 
large trucks or buses that utilize hydraulic steering systems without 
electronic power-assisted steering, because electronic power-assisted 
steering is not used on LCVs. This distinguishes LCV steering gears 
from lighter and simpler electronic steering gears used for smaller 
vehicles such as passenger cars. The quality and usefulness of an LCV 
steering gear is defined by several special characteristics, the most 
important of which are size, weight, torque required to move, and 
sensitivity, which relates to the ability of the gear to respond 
quickly and accurately to the driver or inputs from electronic 
controls.
    16. There are no other steering methods or technologies that can 
accomplish the required functions of LCV steering gears. Truck and bus 
manufacturers require the highly-capable LCV steering gears discussed 
above because the lives and safety of drivers and other motorists, 
pedestrians, and property depend on the unfailing performance of an LCV 
steering gear to direct the vehicle. Other steering gears are less 
capable, and are therefore not a substitute for LCV steering gears 
purchased for use in LCVs in North America.
    17. For the foregoing reasons, customers will not substitute less-
capable steering gears, or any other product, for LCV steering gears in 
response to a small but significant and non-transitory increase in the 
price of LCV steering gears. Accordingly, LCV steering gears are a 
relevant product market and line of commerce under Section 7 of the 
Clayton Act, 15 U.S.C. 18.
2. Geographic Market: North America
    18. LCV steering gears used in North America require a different 
design and alignment than those used outside North America. This is 
because of distinct truck and bus design differences, such as those 
related to higher weight and power, and a common configuration in which 
the cab is located behind the axles rather than over them. Because of 
these differences, truck and bus manufacturers strongly prefer LCV 
steering gears that have performed successfully on North American 
commercial vehicles, and have been unwilling to purchase steering gears 
used only in foreign markets. Customers also require their steering 
gear manufacturers to have an established North American presence for 
sales, service, and aftermarket support. Having an installed North 
American base helps customers to ensure that both in-house and third-
party service technicians have experience with the relevant steering 
gears and have an existing spare parts inventory when gears need to be 
repaired or replaced. In the face of a small but significant and non-
transitory price increase by North American producers of LCV steering 
gears, customers, therefore, are unlikely to turn to manufacturers 
located outside North America and who produce LCV steering gears solely 
for markets outside North America.
    19. North America, therefore, is a relevant geographic market 
within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 18.

C. Anticompetitive Effects of the Proposed Transaction

    20. ZF and WABCO are the only firms that design, manufacture, and 
sell LCV steering gears in North America. After its acquisition of TRW 
in 2015, ZF became the leading North American firm selling steering 
systems and components for commercial vehicles. In the market for LCV 
steering gears in North America, it is estimated to have a 54 percent 
market share. WABCO is the only other market participant and has an 
estimated 46 percent market share. WABCO sells LCV steering gears 
through its wholly-owned R.H. Sheppard subsidiary, which it acquired in 
2017. The merger would give the combined firm a monopoly over LCV 
steering gears in North America, leaving North American customers 
without a sufficient competitive alternative for this critical 
component.
    21. ZF and WABCO compete for sales of LCV steering gears on the 
basis of price, quality, service, innovation, and contractual terms 
such as delivery times. This competition has resulted in lower prices, 
higher quality, better service, and shorter delivery times. Competition 
between ZF and WABCO has also fostered innovation, leading to LCV 
steering gears with higher reliability and the innovative features such 
as torque overlay that are expected to be integral to the development 
of future ADAS technology, including features for autonomous LCVs. The 
combination of ZF and WABCO would eliminate this competition and its 
future benefits to truck and bus manufacturers and end-use customers. 
Post-transaction, the merged firm likely would have the incentive and 
ability to increase prices, lower quality or service, offer less 
favorable contractual terms, and reduce research and development 
efforts that would otherwise lead to innovative and high-quality 
products.
    22. The proposed merger, therefore, likely would substantially 
lessen competition in the design, manufacture, and sale of LCV steering 
gears in North America 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 
market for LCV steering gears in North America is unlikely. Truck and 
bus manufacturers have shown little interest in buying steering gears 
and other components from anyone other than the only two established 
suppliers, ZF and WABCO, because of their proven performance and North 
American presence.
    24. Production facilities and sales and service infrastructure for 
LCV steering gears require a substantial investment in both capital 
equipment and human resources. To be competitively viable, a new 
entrant would need to construct a factory to produce a range of 
steering components, establish production lines capable of 
manufacturing the components, and build assembly lines and establish or 
acquire access to testing equipment and facilities.
    25. A new entrant also would need to retain engineering and 
research

[[Page 5710]]

personnel to design, test, and troubleshoot the detailed manufacturing 
process necessary to produce LCV steering gears acceptable to North 
American customers. Any new LCV steering gears also would require 
extensive customer testing and qualification before they would be used 
by North American truck and bus manufacturers or accepted by end users. 
Moreover, because LCV steering gears now being designed and developed 
by ZF and WABCO are undergoing continuous technological improvement and 
innovation for use in the development of ADAS features, any new entrant 
would need to acquire equivalent expertise and proprietary technologies 
to enable steering-related ADAS features to be efficiently incorporated 
into the advanced electronic control components of future North 
American LCVs.
    26. Finally, because customers prefer to use LCV steering gear 
manufacturers with an existing installed base to ensure efficient and 
quality service by customers' in-house or third-party service centers, 
a new entrant lacking an installed base would be at a severe 
disadvantage.
    27. As a result of the barriers described above, entry into the 
market for LCV steering gears would not be timely, likely, or 
sufficient to defeat the anticompetitive effects likely to result from 
the merger of ZF and WABCO.

V. Violations Alleged

    28. The merger of ZF and WABCO likely would substantially lessen 
competition in the design, manufacture, and sale of LCV steering gears 
in the United States in violation of Section 7 of the Clayton Act, 15 
U.S.C. 18.
    29. Unless enjoined, the merger likely would have the following 
anticompetitive effects, among others, related to the relevant market:
    (a) Actual and potential competition between ZF and WABCO would be 
eliminated;
    (b) competition likely would be substantially lessened; and
    (c) prices likely would increase, quality and the level of service 
would decrease, innovation would decrease, and contractual terms likely 
would be less favorable to customers.

VI. Request for Relief

    30. The United States requests that this Court:
    (a) Adjudge and decree that ZF's merger with WABCO would be 
unlawful and violate Section 7 of the Clayton Act, 15 U.S.C. 18;
    (b) preliminarily and permanently enjoin and restrain Defendants 
and all persons acting on their behalf from consummating the proposed 
merger of ZF and WABCO, or from entering into or carrying out any other 
contract, agreement, plan, or understanding, the effect of which would 
be to combine ZF and WABCO;
    (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: January 23, 2020.
Respectfully submitted,

FOR PLAINTIFF UNITED STATES:
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Makan Delrahim (DC Bar #457795)

Assistant Attorney General
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Bernard A. Nigro, Jr., (DC Bar #412357)
Principal Deputy Assistant Attorney General

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Kathleen S. O'Neill,
Senior Director of Investigations & Litigation

-----------------------------------------------------------------------
John R. Read,
Acting Chief, Defense, Industrials, and Aerospace Section
-----------------------------------------------------------------------
David E. Altschuler, (DC Bar #983023)
Assistant Chief, Defense, Industrials, and Aerospace Section

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Daniel J. Monahan, Jr.,*
James K. Foster,
Janet A. Nash (DC Bar #1044309)

Attorneys for the United States, U.S. Department of Justice, 
Antitrust Division, Defense, Industrials, and Aerospace Section, 450 
Fifth Street NW, Suite 8700, Washington, DC 20530, Telephone: (202) 
598-8774, 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. ZF Friedrichshafen AG, 
and WABCO Holdings, Inc., Defendants.

Civil Action No.: 1:20-cv-00182
Judge: Hon. Ketanji B. Jackson

[Proposed] Final Judgment

    Whereas, Plaintiff, United States of America, filed its Complaint 
on January 23, 2020, the United States and Defendants, ZF 
Friedrichshafen AG and WABCO Holdings, Inc., 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, Defendants agree 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 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. 18).

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means the entity to whom Defendants divest the 
Divestiture Assets.
    B. ``ZF'' means ZF Friedrichshafen AG, a German corporation with 
its headquarters in Friedrichshafen, Germany; its successors and 
assigns; and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    C. ``WABCO'' means WABCO Holdings, Inc., a Delaware corporation 
with its headquarters in Auburn Hills, Michigan; its successors and 
assigns; and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    D. ``R.H. Sheppard'' means R.H. Sheppard Co., Inc., a Pennsylvania 
corporation with its headquarters in Hanover, Pennsylvania; its 
successors and assigns; and its subsidiaries, divisions, groups, 
affiliates, partnerships, and joint ventures, and their directors, 
officers, managers, agents, and employees. R.H. Sheppard is a wholly-
owned subsidiary of WABCO.
    E. ``Divestiture Assets'' means all of Defendants' rights, title, 
and interests in and to (i) R.H. Sheppard, and (ii) all other WABCO 
property and assets, tangible and intangible, wherever located, related 
to or used in connection

[[Page 5711]]

with R.H. Sheppard (except for assets primarily used for human 
resources, legal, or other general or administrative support 
functions), including but not limited to:
    1. The manufacturing and support facilities located at 101 
Philadelphia Street, Hanover, Pennsylvania, 17331 (the ``Hanover 
Facility'');
    2. The manufacturing and support facilities located at 1400 
Stafford-Umberger Drive, Wytheville, Virginia, 24382 (the ``Wytheville 
Facility'');
    3. 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 all other tangible property and assets; all licenses, 
permits, certifications, and authorizations issued by any governmental 
organization; all contracts, teaming arrangements, agreements, leases, 
commitments, certifications, and understandings, including supply 
agreements and development and production contracts; all customer 
lists, contracts, accounts, and credit records; all repair and 
performance records and all other records; and
    4. All intangible assets, including, but not limited to: All 
patents; licenses and sublicenses; intellectual property; copyrights; 
trademarks; trade names; service marks; service names (excluding any 
trademark, trade name, service mark, or service name containing the 
name ``WABCO''); technical information; computer software (including 
software developed by third parties), 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 WABCO provides to its 
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. ``Relevant Employees'' means all employees of (i) R.H. Sheppard, 
and (ii) all additional WABCO employees, wherever located, involved in 
the design, manufacture, or sale of large commercial vehicle (LCV) 
steering gears (except for employees primarily engaged in human 
resources, legal, or other general or administrative support 
functions).
    G. ``Regulatory Approvals'' means (i) any approvals or clearances 
pursuant to filings with the Committee on Foreign Investment in the 
United States (``CFIUS''), or under antitrust or competition laws 
required for the Transaction to proceed; and (ii) any approvals or 
clearances pursuant to filings with CFIUS, or under antitrust, 
competition, or other U.S. or international laws required for 
Acquirer's acquisition of the Divestiture Assets to proceed.
    H. ``Transaction'' means the proposed acquisition of WABCO by ZF.

III. Applicability

    A. This Final Judgment applies to ZF and WABCO, 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 Divestiture 
Assets divested pursuant to this Final Judgment.

IV. Divestitures

    A. Defendants are ordered and directed, within the later of ninety 
(90) calendar days after the filing of the Complaint in this matter, or 
thirty (30) 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 with 
reasonable access to Relevant Employees and with organization charts 
and information relating to Relevant Employees, including name, job 
title, past experience relating to the Divestiture Assets, 
responsibilities, training and educational history, relevant 
certifications, and to the extent permissible by law, job performance 
evaluations, and current salary and benefits information, to enable the 
Acquirer to make offers of employment. Upon request, Defendants shall 
make Relevant Employees available for interviews with the Acquirer 
during normal business hours at a mutually agreeable location and will 
not interfere with efforts by the Acquirer to employ Relevant 
Employees, such as by offering to increase the salary or benefits of 
Relevant Employees other than as part of a company-wide increase in 
salary or benefits granted in the ordinary course of business.
    D. For any Relevant Employees who elect employment with the 
Acquirer, Defendants shall waive all noncompete and nondisclosure 
agreements, vest all unvested pension and other equity rights, and 
provide all other benefits to which the Relevant Employees would 
generally be provided if transferred to a buyer of an ongoing business. 
For a period of twelve (12) months from the filing of the Complaint in 
this matter, Defendants may not solicit to hire, or hire, any Relevant 
Employee who was hired by the Acquirer, unless (1) the individual is 
terminated or laid off by the Acquirer or (2) the Acquirer agrees in 
writing that Defendants may solicit or hire that individual. Nothing in 
Paragraphs IV(C) and (D) shall prohibit Defendants from maintaining any 
reasonable restrictions on the disclosure by any Relevant Employee who 
accepts an offer of employment with the Acquirer of the Defendant's 
proprietary non-public information that is (1) not otherwise required 
to be disclosed by this Final Judgment, (2) related solely to 
Defendants' businesses and clients, and (3) unrelated to the 
Divestiture Assets.

[[Page 5712]]

    E. Defendants shall permit prospective Acquirers of the Divestiture 
Assets to have reasonable access to make inspections of the physical 
facilities of the Divestiture Assets; 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 that the Divestiture 
Assets 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 Divestiture Assets.
    H. Defendants must make best efforts to assign, subcontract, or 
otherwise transfer all contracts related to the Divestiture Assets, 
including all supply and sales contracts, to Acquirer. Defendants must 
not interfere with any negotiations between Acquirer and a contracting 
party.
    I. At the option of the Acquirer, Defendants shall enter into a 
supply contract for the assembly of active steering electronic control 
units sufficient to meet all or part of the Acquirer's needs for a 
period of up to six (6) months. Upon Acquirer's request, the United 
States, in its sole discretion, may approve one or more extensions of 
any such agreement for a total of up to an additional six (6) months. 
The terms and conditions of any contractual arrangement meant to 
satisfy this provision must be reasonably related to market conditions 
for such assembly.
    J. 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 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 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 the 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.
    K. Defendants shall warrant to the Acquirer (1) that there are no 
material defects in the environmental, zoning, or other permits 
relating 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.
    L. 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, manufacture, and sale of LCV steering 
gears. 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 divestitures, 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, 
manufacture, and sale of LCV steering gears; 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 or consultants, including, but not limited to, investment 
bankers, attorneys, and accountants, 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 
Divestiture 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 agents and consultants 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 agents and consultants 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

[[Page 5713]]

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 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 or not, in its sole discretion, it objects to the Acquirer or 
any other aspect of 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(s) 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 and complete the sale of 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

[[Page 5714]]

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 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 divestitures have been completed and that the continuation of 
the Final Judgment no longer is necessary or in the public interest.

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. 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

[[Page 5715]]

filed with the Court, entry of this Final Judgment is in the public 
interest.

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

[Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16]

-----------------------------------------------------------------------
United States District Judge

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. ZF Friedrichshafen AG, 
and WABCO Holdings, Inc., Defendants.

Civil Action No.: 1:20-cv-00182
Judge: Hon. Ketanji B. Jackson

Competitive Impact Statement

    The United States of America, under Section 2(b) of the Antitrust 
Procedures and Penalties Act, 15 U.S.C. 16(b)-(h) (the ``APPA'' or 
``Tunney Act''), 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 March 28, 2019, Defendant ZF Friedrichshafen AG (``ZF'') agreed 
to acquire Defendant WABCO Holdings, Inc. (``WABCO'') in a transaction 
that would unite two of the leading global suppliers of large 
commercial vehicle (``LCV'') components. The United States filed a 
civil antitrust Complaint on January 23, 2020, seeking to enjoin the 
proposed acquisition. The Complaint alleges that the likely effect of 
this acquisition would be to substantially lessen competition for the 
design, manufacture, and sale of LCV steering gears in North America, 
in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
    At the same time the Complaint was filed, the United States filed a 
Hold Separate Stipulation and Order (``Hold Separate'') and proposed 
Final Judgment, which are designed to address the anticompetitive 
effects of the acquisition. Under the proposed Final Judgment, which is 
explained more fully below, the Defendants are required to divest 
WABCO's wholly-owned subsidiary R.H. Sheppard Co., Inc. (``R.H. 
Sheppard'') and other WABCO assets related to LCV steering gears. Under 
the terms of the Hold Separate, the Defendants will take certain steps 
to ensure that R.H. Sheppard is operated as a competitively 
independent, economically viable, and ongoing business concern, which 
will remain independent and uninfluenced by ZF, 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 will terminate this action, except that the 
Court will retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. Description of Events Giving Rise to the Alleged Violation

A. The Defendants and the Proposed Transaction

    ZF is a German company headquartered in Friedrichshafen, Germany. 
It has 149,000 employees in 40 countries, and had annual sales of $36.9 
billion in 2018, $9.6 billion of which were in the United States. ZF's 
North American business historically focused on the production and sale 
of transmissions to passenger and light vehicle manufacturers, but in 
2015, ZF acquired a leading U.S. steering systems manufacturer, TRW, 
Inc. ZF's U.S. headquarters are in Livonia, Michigan.
    WABCO is a Delaware corporation with a North American headquarters 
in Auburn Hills, Michigan, and a global headquarters in Bern, 
Switzerland. WABCO descends from the original Westinghouse Air Brake 
Company formed in 1869. It has 16,000 employees in 40 countries, and 
had annual sales in 2018 of $3.8 billion, $850 million of which were in 
the United States. WABCO's North American business historically focused 
on commercial vehicle air brake and air suspension components, but in 
2017, WABCO acquired a leading U.S. commercial vehicle steering 
component company, R.H. Sheppard.
    On March 28, 2019, pursuant to an agreement and plan of merger, ZF 
agreed to acquire WABCO in a deal valued at approximately $7 billion.

B. The Competitive Effects of the Transaction

1. Background on LCV Steering Gears
    Steering system components work together to direct a vehicle, and 
include steering gears, steering pumps, pitman arms, steering columns, 
steering linkages, and electronic steering controls. Steering equipment 
suitable for LCVs is sophisticated and highly engineered, especially 
the key component: Steering gears. LCVs include all trucks, buses, and 
off-road vehicles that weigh over 19,501 pounds (defined as Class 6-8 
vehicles by the United States Department of Transportation (49 CFR 
565.15)).
    Steering gears are located below the steering column (which is 
attached to the steering wheel) and translate direction to the steering 
linkage. Steering gears for LCVs have a complex hydraulic power 
recirculating ball gear. Steering gears must be tuned carefully to 
operate within the specifications of the individual LCV's design and 
performance requirements, and must work together with the entire system 
of steering equipment.
    Advanced LCV steering gears also include what is known as a torque 
overlay. A torque overlay adds hardware that enables the steering gear 
to quickly and independently direct the vehicle without the input of 
the steering column, and allows for advanced driver assistance system 
(``ADAS'') steering features. ADAS technology in general includes 
features such as lane keeping assist, adaptive cruise control, 
automated emergency braking, blind spot detection, and other similar 
features. For ADAS steering features, torque overlay steering gears 
work with sensors and electronic controls that detect the environment 
around the vehicle and then work with the steering hardware to keep the 
vehicle on the correct path and avoid collisions. Within the last five 
years, truck and bus manufacturers have begun to use steering-related 
ADAS features, and both Defendants are actively engaged in research and 
development to improve steering-related ADAS features for eventual use 
in autonomous trucks and buses. In the future, steering-related ADAS 
features may be developed to the point where they can be combined with 
other ADAS technology related to braking and powertrain control, 
enabling the potential for fully autonomous operation of commercial 
vehicles. LCV steering gears will continue to be a key component as 
future ADAS technology is developed.
    Truck and bus manufacturers are the primary customers for LCV 
steering gears. These customers incorporate LCV steering gears into the 
vehicle's final assembly, and then sell to end-use customers. Other LCV 
steering gear customers include manufacturers of commercial vehicles 
for off-road, military, mining, and agriculture uses. Typically, 
customers purchase LCV steering gears separately from other steering 
components, although they also may choose to purchase a whole steering 
system. In some cases, another entity may buy the LCV steering gear 
from one of the merging parties and then integrate it into a whole 
steering system that it sells to truck or bus manufacturers. Customers 
generally buy steering gears either based on pre-

[[Page 5716]]

established price lists or after a competitive bidding process. The 
annual size of the North American market for LCV steering gears is 
approximately $220 million.
2. Relevant Product Market: LCV Steering Gears
    As alleged in the Complaint, LCV steering gears must be durable and 
powerful enough to move large trucks or buses that utilize hydraulic 
steering systems without electronic power-assisted steering, because 
electronic power-assisted steering is not used on LCVs. This 
distinguishes LCV steering gears from lighter and simpler electronic 
steering gears used for smaller vehicles such as passenger cars. The 
quality and usefulness of an LCV steering gear is defined by several 
special characteristics, the most important of which are size, weight, 
torque required to move, and sensitivity, which relates to the ability 
of the gear to respond quickly and accurately to the driver or inputs 
from electronic controls.
    The Complaint alleges that there are no other steering methods or 
technologies that can accomplish the required functions of LCV steering 
gears. Truck and bus manufacturers require the highly-capable LCV 
steering gears discussed above, because the lives and safety of drivers 
and other motorists, pedestrians, and property depend on the unfailing 
performance of an LCV steering gear to direct the vehicle. Other 
steering gears are less capable, and are therefore not a substitute for 
LCV steering gears purchased for use in LCVs in North America.
    For the foregoing reasons, according to the Complaint, customers 
will not substitute less-capable steering gears, or any other product, 
for LCV steering gears in response to a small but significant and non-
transitory increase in the price of LCV steering gears. The Complaint, 
therefore, alleges that LCV steering gears are a relevant product 
market and line of commerce under Section 7 of the Clayton Act, 15 
U.S.C. 18.
3. Relevant Geographic Market: North America
    As alleged in the Complaint, LCV steering gears used in North 
America require a different design and alignment than those used 
outside North America. This is because of distinct truck and bus design 
differences, such as those related to higher weight and power, and a 
common configuration in which the cab is located behind the axles 
rather than over them. Because of these differences, the Complaint 
alleges that truck and bus manufacturers strongly prefer LCV steering 
gears that have performed successfully on North American commercial 
vehicles, and have been unwilling to purchase steering gears used only 
in foreign markets. Customers also require their steering gear 
manufacturers to have an established North American presence for sales, 
service, and aftermarket support. Having an installed North American 
base helps customers to ensure that both in-house and third-party 
service technicians have experience with the relevant steering gears 
and have an existing spare parts inventory when gears need to be 
repaired or replaced. According to the Complaint, in the face of a 
small but significant and non-transitory price increase by North 
American producers of LCV steering gears, customers are unlikely to 
turn to manufacturers located outside North America and who produce LCV 
steering gears solely for markets outside North America. The Complaint 
therefore alleges that North America is a relevant geographic market 
within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 18.
4. Anticompetitive Effects of the Proposed Transaction
    As alleged in the Complaint, ZF and WABCO are the only firms that 
design, manufacture, and sell LCV steering gears in North America. 
After its acquisition of TRW in 2015, ZF became the leading North 
American firm selling steering systems and components for commercial 
vehicles. In the market for LCV steering gears in North America, it is 
estimated to have a 54 percent market share. WABCO is the only other 
market participant and has an estimated 46 percent market share. WABCO 
sells LCV steering gears through its wholly-owned R.H. Sheppard 
subsidiary, which it acquired in 2017. The Complaint alleges that the 
merger would give the combined firm a monopoly over LCV steering gears 
in North America, leaving North American customers without a sufficient 
competitive alternative for this critical component.
    According to the Complaint, ZF and WABCO compete for sales of LCV 
steering gears on the basis of price, quality, service, innovation, and 
contractual terms such as delivery times. This competition has resulted 
in lower prices, higher quality, better service, and shorter delivery 
times. Competition between ZF and WABCO has also fostered innovation, 
leading to LCV steering gears with higher reliability and the 
innovative features such as torque overlay that are expected to be 
integral to the development of future ADAS technology, including 
features for autonomous LCVs. The Complaint alleges that the 
combination of ZF and WABCO would eliminate this competition and its 
future benefits to truck and bus manufacturers and end-use customers. 
Post-transaction, the merged firm likely would have the incentive and 
ability to increase prices, lower quality or service, offer less 
favorable contractual terms, and reduce research and development 
efforts that would otherwise lead to innovative and high-quality 
products.
    According to the Complaint, the proposed merger, therefore, likely 
would substantially lessen competition in the design, manufacture, and 
sale of LCV steering gears in North America in violation of Section 7 
of the Clayton Act, 15 U.S.C. 18.
5. Difficulty of Entry
    The Complaint alleges that sufficient, timely entry of additional 
competitors into the market for LCV steering gears in North America is 
unlikely. Truck and bus manufacturers have shown little interest in 
buying steering gears and other components from anyone other than the 
only two established suppliers, ZF and WABCO, because of these 
companies' proven performance and North American presence.
    According to the Complaint, production facilities and sales and 
service infrastructure for LCV steering gears require a substantial 
investment in both capital equipment and human resources. To be 
competitively viable, a new entrant would need to construct a factory 
to produce a range of steering components, establish production lines 
capable of manufacturing the components, and build assembly lines and 
establish or acquire access to testing equipment and facilities.
    A new entrant also would need to retain engineering and research 
personnel to design, test, and troubleshoot the detailed manufacturing 
process necessary to produce LCV steering gears acceptable to North 
American customers. Any new LCV steering gears also would require 
extensive customer testing and qualification before they would be used 
by North American truck and bus manufacturers or accepted by end users. 
Moreover, because LCV steering gears now being designed and developed 
by ZF and WABCO are undergoing continuous technological improvement and 
innovation for use in the development of ADAS features, any new entrant 
would need to acquire equivalent expertise and proprietary technologies 
to enable steering-related ADAS features to be efficiently incorporated 
into the advanced

[[Page 5717]]

electronic control components of future North American LCVs. Finally, 
because customers prefer to use LCV steering gear manufacturers with an 
existing installed base to ensure efficient and quality service by 
customers' in-house or third-party service centers, a new entrant 
lacking an installed base would be at a severe disadvantage. The 
Complaint alleges that as a result of all of these barriers, entry 
would be costly and time-consuming.
    The Complaint alleges that as a result of the barriers described 
above, entry into the market for LCV steering gears would not be 
timely, likely, or sufficient to defeat the anticompetitive effects 
likely to result from the merger of ZF and WABCO.

III. Explanation of the Proposed Final Judgment

    The divestiture required by the proposed Final Judgment will remedy 
the loss of competition alleged in the Complaint by establishing an 
independent and economically viable competitor in the market for LCV 
steering gears in North America. Paragraph IV(A) of the proposed Final 
Judgment requires the Defendants, within the later of ninety (90) 
calendar days after the filing of the Complaint in this matter or 
thirty (30) calendar days after Regulatory Approvals have been 
received, to divest the entirety of WABCO's subsidiary R.H. Sheppard, 
as well as related WABCO assets, to an Acquirer acceptable to the 
United States it its sole discretion.\1\ Paragraph IV(L) of the 
proposed Final Judgment requires that the Divestiture Assets must be 
divested in such a way as to satisfy the United States in its sole 
discretion that they can and will be operated by the purchaser as a 
viable, ongoing business that can compete effectively in the design, 
manufacture, and sale of LCV steering gears. Defendants must take all 
reasonable steps necessary to accomplish the divestiture quickly and 
must cooperate with prospective purchasers.
---------------------------------------------------------------------------

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

    If the 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 
divestiture trustee selected by the United States to effect the 
divestiture. If a divestiture trustee is appointed, the proposed Final 
Judgment provides that the Defendants will pay all costs and expenses 
of the trustee. The divestiture 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 the divestiture trustee's appointment becomes effective, the 
trustee will provide periodic reports to 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 
divestiture trustee and the United States will make recommendations to 
the Court, which will enter such orders as appropriate, in order to 
carry out the purpose of the trust, including by extending the trust or 
the term of the divestiture trustee's appointment.
    The proposed Final Judgment contains several provisions to 
facilitate the immediate use of the Divestiture Assets by the Acquirer. 
Paragraph IV(I) of the proposed Final Judgment requires Defendants, at 
the Acquirer's option, to enter into a supply contract for the assembly 
of active steering electronic control units sufficient to meet all or 
part of the Acquirer's needs for a period of up to six (6) months. Upon 
Acquirer's request, the United States, in its sole discretion, may 
approve one or more extensions of any such agreement for a total of up 
to an additional six (6) months. In addition, Paragraph IV(J) 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 
Divestiture Assets for a period of up to twelve (12) months. The 
paragraph further provides that the United States, in its sole 
discretion, may approve one or more extensions for a total of up to an 
additional six (6) months if the Defendants notify the United States in 
writing at least three (3) months prior to the date the transition 
services contract expires. Finally, Paragraph IV(J) provides that 
employees of the Defendants tasked with providing any transition 
services must not share any competitively sensitive information of the 
Acquirer with any other employee of the Defendants.
    The proposed Final Judgment also contains provisions intended to 
facilitate the Acquirer's efforts to hire the employees involved in the 
R.H. Sheppard business, including any additional WABCO employees, 
wherever located, involved in the design, manufacture, or sale of LCV 
steering gears. Paragraph IV(C) of the proposed Final Judgment requires 
the Defendants to provide the Acquirer with organization charts and 
information relating to these employees and make them available for 
interviews, and provides that Defendants will not interfere with any 
negotiations by the Acquirer to hire them. In addition, Paragraph IV(D) 
provides that for employees who elect employment with the Acquirer, the 
Defendants, subject to exceptions, shall waive all noncompete and 
nondisclosure agreements, vest all unvested pension and other equity 
rights, and provide all benefits to which the employees would generally 
be provided if transferred to a buyer of an ongoing business. The 
paragraph further provides that, for a period of 12 months from the 
filing of the Complaint, the Defendants may not solicit to hire, or 
hire any such person who was hired by the Acquirer, unless such 
individual is terminated or laid off by the Acquirer or the Acquirer 
agrees in writing that Defendants may solicit or hire that individual.
    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, the 
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 the 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 competition that would 
otherwise be harmed by the transaction. The 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

[[Page 5718]]

interpreted in light of this procompetitive purpose.
    Paragraph XIII(C) of the proposed Final Judgment provides that if 
the Court finds in an enforcement proceeding that the 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, to compensate American 
taxpayers for any costs associated with investigating and enforcing 
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 before 
litigation, that the Defendants will reimburse the United States for 
attorneys' fees, experts' fees, and other 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 (4) 
years after the Final Judgment has expired or been terminated. This 
provision is meant to address circumstances such as when evidence that 
a violation of the Final Judgment occurred during the term of the Final 
Judgment is not discovered until after the Final Judgment has expired 
or been terminated or when there is not sufficient time for the United 
States to complete an investigation of an alleged violation until after 
the Final Judgment has expired or been terminated. This provision, 
therefore, makes clear that, for four 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 will 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 the Defendants that the divestiture has 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 who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment neither impairs 
nor assists the bringing of any private antitrust damage action. Under 
the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the 
proposed Final Judgment has no prima facie effect in any subsequent 
private lawsuit that may be brought against the Defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and the 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 U.S. 
Department of Justice, which remains free to withdraw its consent to 
the proposed Final Judgment at any time before the Court's entry of the 
Final Judgment. The comments and the response of the United States will 
be filed with the Court. In addition, 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: John R. Read, Acting 
Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, 
U.S. 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

    As an alternative to the proposed Final Judgment, the United States 
considered a full trial on the merits against the Defendants. The 
United States could have continued the litigation and sought 
preliminary and permanent injunctions against ZF's acquisition of 
WABCO. The United States is satisfied, however, that the divestiture of 
assets described in the proposed Final Judgment will remedy the 
anticompetitive effects alleged in the Complaint, preserving 
competition for the design, manufacture, and sale of LCV steering gears 
in North America. Thus, the proposed Final Judgment achieves 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. 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 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

[[Page 5719]]

N.V./S.A., No. 08-1965 (JR), 2009 U.S. Dist. LEXIS 84787, at *3 (D.D.C. 
Aug. 11, 2009) (noting that a court's review of a 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 U.S. Court of Appeals for the District of Columbia Circuit 
has held, under the APPA a court considers, among other things, the 
relationship between the remedy secured and the specific allegations in 
the government's complaint, whether the proposed Final Judgment is 
sufficiently clear, whether its enforcement mechanisms are sufficient, 
and whether it may positively harm third parties. See Microsoft, 56 
F.3d at 1458-62. With respect to the adequacy of the relief secured by 
the proposed Final Judgment, a court may not ``make de novo 
determination of facts and issues.'' United States v. W. Elec. Co., 993 
F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also 
Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F. 
Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F. 
Supp. 2d 10, 16 (D.D.C. 2000); InBev, 2009 U.S. Dist. LEXIS 84787, at 
*3. Instead, ``[t]he balancing of competing social and political 
interests affected by a proposed antitrust consent decree must be left, 
in the first instance, to the discretion of the Attorney General.'' W. 
Elec. Co., 993 F.2d at 1577 (quotation marks omitted). ``The court 
should bear in mind the flexibility of the public interest inquiry: The 
court's function is not to determine whether the resulting array of 
rights and liabilities is one that will best serve society, but only to 
confirm that the resulting settlement is within the reaches of the 
public interest.'' Microsoft, 56 F.3d at 1460 (quotation marks 
omitted). More demanding requirements would ``have enormous practical 
consequences for the government's ability to negotiate future 
settlements,'' contrary to congressional intent. Id. at 1456. ``The 
Tunney Act was not intended to create a disincentive to the use of the 
consent decree.'' Id.
    The United States' predictions about the efficacy of the remedy are 
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at 
1461 (recognizing courts should give ``due respect to the Justice 
Department's . . . view of the nature of its case''); United States v. 
Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 2016) (``In 
evaluating objections to settlement agreements under the Tunney Act, a 
court must be mindful that [t]he government need not prove that the 
settlements will perfectly remedy the alleged antitrust harms[;] it 
need only provide a factual basis for concluding that the settlements 
are reasonably adequate remedies for the alleged harms.'') (internal 
citations omitted); United States v. Republic Servs., Inc., 723 F. 
Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review to 
which the government's proposed remedy is accorded''); United States v. 
Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A 
district court must accord due respect to the government's prediction 
as to the effect of proposed remedies, its perception of the market 
structure, and its view of the nature of the case.''). The ultimate 
question is whether ``the remedies [obtained by the Final Judgment are] 
so inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest.' '' Microsoft, 56 F.3d at 1461 
(quoting W. Elec. Co., 900 F.2d at 309).
    Moreover, the Court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its complaint, and does not authorize the Court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways, 
38 F. Supp. 3d at 75 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``[T]he 
`public interest' is not to be measured by comparing the violations 
alleged in the complaint against those the court believes could have, 
or even should have, been alleged.''). Because the ``court's authority 
to review the decree depends entirely on the government's exercising 
its prosecutorial discretion by bringing a case in the first place,'' 
it follows that ``the court is only authorized to review the decree 
itself,'' and not to ``effectively redraft the complaint'' to inquire 
into other matters that the United States did not pursue. Microsoft, 56 
F.3d at 1459-60.
    In its 2004 amendments to the APPA, Congress made clear its intent 
to preserve the practical benefits of using consent judgments proposed 
by the United States in antitrust enforcement, Pub. L. 108-237 Sec.  
221, and added the unambiguous instruction that ``[n]othing in this 
section shall be construed to require the court to conduct an 
evidentiary hearing or to require the court to permit anyone to 
intervene.'' 15 U.S.C. 16(e)(2); see also U.S. Airways, 38 F. Supp. 3d 
at 76 (indicating that a court is not required to hold an evidentiary 
hearing or to permit intervenors as part of its review under the Tunney 
Act). This language explicitly wrote into the statute what Congress 
intended when it first enacted the Tunney Act in 1974. As Senator 
Tunney explained: ``[t]he court is nowhere compelled to go to trial or 
to engage in extended proceedings which might have the effect of 
vitiating the benefits of prompt and less costly settlement through the 
consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of 
Sen. Tunney). ``A court can make its public interest determination 
based on the competitive impact statement and response to public 
comments alone.'' U.S. Airways, 38 F. Supp. 3d at 76 (citing Enova 
Corp., 107 F. Supp. 2d at 17).

VIII. Determinative Documents

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

Dated: January 23, 2020

Respectfully submitted,

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Daniel J. Monahan, Jr.,*
U.S. Department of Justice, Antitrust Division, Defense, 
Industrials, and Aerospace Section, 450 Fifth Street NW, Suite 8700, 
Washington, DC 20530, Telephone: (202) 598-8774, Facsimile: (202) 
514-9033, [email protected].

*Attorney of Record

[FR Doc. 2020-01759 Filed 1-30-20; 8:45 am]
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