United States v. Danfoss A/S, et al. Proposed Final Judgment and Competitive Impact Statement, 39059-39077 [2021-15728]

Download as PDF Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices khammond on DSKJM1Z7X2PROD with NOTICES Licensing Center, either by mail at 244 Needy Road, Martinsburg, WV 25405, by email at Shawn.Stevens@atf.gov, or by telephone at 304–616–4400. SUPPLEMENTARY INFORMATION: Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address one or more of the following four points: —Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; —Evaluate the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; —Evaluate whether and if so how the quality, utility, and clarity of the information to be collected can be enhanced; and —Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses. 5. An estimate of the total number of respondents and the amount of time estimated for an average respondent to respond: An estimated 2,500 respondents will use the form annually, and it will take each respondent approximately 20 minutes to complete their responses. 6. An estimate of the total public burden (in hours) associated with the collection: The estimated annual public burden associated with this collection is 825 hours, which is equal to 2,500 (# of respondents) * .33 (20 minutes). If additional information is required contact: Melody Braswell, Department Clearance Officer, United States Department of Justice, Justice Management Division, Policy and Planning Staff, Two Constitution Square, 145 N Street NE, Mail Stop 3E.405A, Washington, DC 20530. Dated: July 20, 2021. Melody Braswell, Department Clearance Officer for PRA, U.S. Department of Justice. [FR Doc. 2021–15715 Filed 7–22–21; 8:45 am] BILLING CODE 4410–FY–P DEPARTMENT OF JUSTICE Antitrust Division Overview of this Information Collection United States v. Danfoss A/S, et al. Proposed Final Judgment and Competitive Impact Statement 1. Type of Information Collection (check justification or form 83): Extension without change of a currently approved collection. 2. The Title of the Form/Collection: Federal Explosives License/Permit (FEL) Renewal Application. 3. The agency form number, if any, and the applicable component of the Department sponsoring the collection: Form number (if applicable): ATF Form 5400.14/5400.15, Part III. Component: Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Department of Justice. 4. Affected public who will be asked or required to respond, as well as a brief abstract: Primary: Business or other for-profit. Other (if applicable): Individuals or households. Abstract: Explosives licensees and permittees must file the Federal Explosives License/Permit (FEL) Renewal Application—ATF Form 5400.14/5400.15, Part III to maintain a valid license or permit, to continue engaging in the explosives material business, and/or transporting or buying explosives material in interstate commerce. 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. Danfoss A/S and Eaton Corporation plc, Civil Action No. 1:21–cv–1880–CJN. On July 14, 2021, the United States filed a Complaint alleging that Danfoss’s proposed acquisition of Eaton Corporation plc’s hydraulics business 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 Danfoss to divest three Danfoss hydraulic orbital motor and hydraulic steering unit manufacturing facilities and from Eaton two orbital motor production lines and one hydraulic steering unit production line. 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 VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 39059 Columbia. Copies of these materials may be obtained from the Antitrust Division upon request and payment of the copying fee set by Department of Justice regulations. Public comment is invited within 60 days of the date of this notice. Such comments, including the name of the submitter, and responses thereto, will be posted on the Antitrust Division’s website, filed with the Court, and, under certain circumstances, published in the Federal Register. Comments should be submitted in English and directed to Jay Owen, Acting Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, Department of Justice, 450 Fifth Street NW, Suite 8700, Washington, DC 20530 (email address: jay.owen@usdoj.gov). Suzanne Morris, Chief, Premerger and Division Statistics, Antitrust Division. 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. Eaton Corporation plc, Eaton House, 30 Pembroke Road, Dublin 4, Ireland and Danfoss A/S, Nordborgvej 81, DK–6430v Nordborg, Denmark, Defendants. Civil Action No.: 1:21–cv–1880–CJN 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 Eaton Corporation plc (‘‘Eaton’’) and Danfoss A/S (‘‘Danfoss’’) to enjoin Danfoss’s proposed acquisition of Eaton’s hydraulics business. The United States complains and alleges as follows: I. Nature of the Action 1. Pursuant to a Transaction Agreement dated January 21, 2020, Danfoss intends to acquire Eaton’s hydraulics business for approximately $3.3 billion. The hydraulic power components that Danfoss and Eaton manufacture make it possible to steer, propel, and operate equipment used to pave roads, harvest produce, construct buildings, and perform other heavy industrial and agricultural tasks across the United States every day. 2. Danfoss and Eaton are two of only three suppliers of hydraulic orbital motors (‘‘orbital motors’’) and hydraulic steering units (‘‘steering units’’) used in tractors, wheel loaders, lifts, and other types of mobile off-road equipment in the United States. Orbital motors, also E:\FR\FM\23JYN1.SGM 23JYN1 39060 Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices called ‘‘low-speed, high-torque’’ motors, are a low-cost way to move heavy loads in a slow, and thus controlled, way. Steering units direct hydraulic fluid in response to commands from equipment operators and are necessary for any hydraulic steering system to function. Three of every four orbital motors and four of every five steering units purchased in the United States are supplied by either Danfoss or Eaton. 3. Competition between Danfoss and Eaton has driven prices down and spurred the production of new and better orbital motors and steering units. The proposed merger would eliminate this competition, leading to higher prices, lower quality, and diminished innovation. 4. As a result, the proposed acquisition would substantially lessen competition in the market for the design, manufacture, and sale of orbital motors and steering units for mobile offroad equipment in the United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. khammond on DSKJM1Z7X2PROD with NOTICES II. Defendants and the Transaction 5. Danfoss is a global corporation headquartered in Nordborg, Denmark that specializes in the manufacturing of components and engineering technologies for, inter alia, hydraulics for off-road machinery. Danfoss’s Power Solutions division produces hydraulic pumps, motors, valves and steering solutions, as well as electronic components, software, motors, and converters. The Power Solutions division accounted for 35% of Danfoss’s Ö6.3 billion in revenue in 2019. 6. Eaton is a global corporation headquartered in Dublin, Ireland that focuses on power management solutions for electrical, hydraulics, aerospace, and vehicle applications. Eaton Hydraulics, based in Eden Prairie, Minnesota, consists of a Fluid Conveyance Division that sells hoses and other fluid conveyance products and a Power & Motion Controls Division offering hydraulic motors, power units, valves, and steering units. The Power & Motion Controls division had sales of $2.2 billion in 2019. 7. On January 21, 2020, Danfoss and Eaton signed an agreement under which Danfoss will acquire Eaton’s hydraulics business in exchange for $3.3 billion. III. Jurisdiction and Venue 8. The United States brings this action under Section 15 of the Clayton Act, 15 U.S.C. 25, to prevent and restrain Defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18. 9. Defendants design, manufacture, and sell orbital motors and steering VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 units for mobile off-road equipment throughout the United States, and their activities in these areas substantially affect interstate commerce. This Court therefore 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. 10. 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(b) and (c). IV. Industry Background A. Hydraulic Systems 11. Most heavy industrial and agricultural operations rely on specialized equipment to perform work ‘‘off-road’’ (e.g., in a construction site, a field, a forest, a mine, or on a golf course). The predominant drive technology for this equipment is a hydraulic system, which uses hydraulic fluid to generate power. 12. The basic architecture of a hydraulic system includes a reservoir for hydraulic fluid; a pump to move that fluid; valves to control the liquid in various ways (e.g., pressure, flow, or direction); a motor to convert hydraulic pressure into mechanical energy; and components that accomplish the intended task, such as cylinders. 13. Mobile off-road equipment often has multiple hydraulic systems. Each system serves one of three functions: To carry out the steering commands given by a driver, to propel equipment forward, or to make the equipment perform its intended work function (e.g., to operate the forks on a forklift or raise a scissor lift’s platform). 14. Original Equipment Manufacturers (‘‘OEMs’’) of mobile offroad equipment select components of hydraulic systems individually, considering the performance requirements of the equipment at issue, price, and the space available to house the components selected. To determine components for a new platform, OEMs may solicit bids, seek the services of a distributor, collaborate with a preferred provider, or use in-house engineers as experts. B. Orbital Motors 15. While all hydraulic motors turn hydraulic pressure into mechanical energy, there are different designs that can be used for mobile equipment: Gear motors, orbital motors, vane motors, and piston motors. Each design presents a different value proposition in terms of power, pressure, fluid displacement, torque, and rotational speed. OEMs PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 consider each of these performance characteristics, as well as price and physical size, when selecting a motor to be used in a particular hydraulic system. 16. There is a direct relationship between a motor’s power metrics and its price. In addition to being more expensive, a motor that is more powerful than necessary for the job has less operating efficiency. Thus, OEMs prefer products that meet, but do not exceed, their desired performance specifications. Once selected, it is difficult and expensive for an OEM to switch motor designs because of the need to retrofit the equipment to the new motor. 17. Orbital motors have a rotating gear design consisting of an external gear ring and an inner gear star. When the internal gear star rotates in a planetarytype movement, fluid that has been inserted by a pump is displaced between every gear tooth. The result is a high torque output at a low rotational speed. For this reason, orbital motors are also referred to as ‘‘low- speed, high torque’’ motors. 18. Orbital motors are in the ‘‘low-tomedium’’ power category of motors, generating fewer than 100 kilowatts of power. However, an orbital motor is efficient and generates high output levels of torque at low rotational speeds, which makes it easier to control the movement of heavy loads. Orbital motors are also uniquely attractive to OEMs because they come in a standard compact size, which OEMs can count on when designing mobile off-road equipment. 19. Because orbital motors are more commoditized and thus less expensive than other motors that produce similar amounts of torque, they are considered a ‘‘workhorse’’ motor for many OEMs that design mobile off-road equipment, and can be used for the ‘‘work’’ or ‘‘propel’’ functions for a long list of mobile off-road equipment, including potato harvesters, wheel loaders, skid steer loaders, aerial lifts, asphalt pavers, rollers, salt spreaders, harvesters, and street sweepers. 20. In contrast to orbital motors, piston motors are higher powered, higher priced, larger, and often inefficient for an application that is appropriate for an orbital motor. Similarly, gear and vane motors fail to meet an orbital motor’s performance metrics for torque. C. Hydraulic Steering Units 21. An OEM designing a power steering system for mobile off-road equipment can choose from three different steering technologies: E:\FR\FM\23JYN1.SGM 23JYN1 khammond on DSKJM1Z7X2PROD with NOTICES Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices Hydraulic, electrohydraulic, and electric. Hydraulic steering systems—by far the most common technology used in off-road equipment—use commands from a driver to turn a vehicle’s wheels using hydraulic fluid. Electrohydraulic steering systems build on hydraulic steering systems by adding electronically-controlled components that make steering with a joystick or GPS-guided steering function possible. Electric steering does not require hydraulics components and instead generates the power assist needed for steering through electric motors. 22. Hydraulic steering systems move pressurized hydraulic fluid through a circuit to control cylinders connected to the wheels of mobile off-road equipment. The piece of a hydraulic steering system that determines the direction that the fluid moves and provides pressure control is called a steering unit. 23. All hydraulic steering systems— even those with some electronic components—require a steering unit. If an OEM wished to design around a steering unit for mobile off-road equipment, it would have to shift the entirety of the steering system from hydraulic technology to the more expensive electric technology. 26. Similarly, an increase in the price of hydraulic steering systems would not cause OEM customers to replace a hydraulic steering system in mobile offroad equipment with electric steering technology. Electric steering technology—the only alternative steering system that does not require a hydraulic steering unit—is largely unproven and more expensive than hydraulic steering technology. Electric steering, for example, is vulnerable in wet terrains and often lacks the power necessary to move cylinders connected to the wheels of large off-road equipment. Finally, the switching costs from hydraulic steering to electric steering are high and would require a costly redesign by OEMs. 27. Because of these factors, in the event of a small but significant increase in price by a hypothetical monopolist of steering units, substitution away from steering units would be insufficient to render the price increase unprofitable. Steering units for mobile off-road equipment are therefore a line of commerce, or relevant product market, for purposes of analyzing the effects of the acquisition under Section 7 of the Clayton Act, 15 U.S.C. 18. V. The Relevant Markets Threatened by the Acquisition B. Geographic Markets A. Relevant Product Markets 24. An OEM in need of an orbital motor’s performance characteristics for a mobile off-road vehicle design would not simply substitute an alternative motor technology. No other motor offers the same combination of (1) efficiency (i.e., operating power necessary for the intended use), (2) torque output, and (3) low price. Vane and gear motors do not meet the torque output performance metrics of an orbital motor, and piston and electric motors are more expensive and less efficient than an orbital motor. In order for a customer to switch to any of these alternative technologies, that customer would need to downgrade its performance expectations, engage in a costly redesign, or spend significantly more money. 25. Because of these factors, in the event of a small but significant increase in price by a hypothetical monopolist of orbital motors, substitution away from orbital motors would be insufficient to render the price increase unprofitable. Orbital motors for mobile off-road equipment are therefore a line of commerce, or relevant product market, for purposes of analyzing the effects of the acquisition under Section 7 of the Clayton Act, 15 U.S.C. 18. VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 28. OEMs located in the United States cannot reasonably turn to suppliers without a U.S. presence for the supply of orbital motors or steering units for mobile off-road equipment. Long lead times due to international shipping and unexpected delays in the delivery of products can cause significant business disruption. Customers similarly require that suppliers warehouse new and replacement parts to avoid costly delays or interruptions to business operations and expect local service and support from suppliers. 29. A hypothetical monopolist of orbital motors or steering units sold in the United States could profitably impose a small but significant nontransitory increase in price for orbital motors or steering units without losing sufficient sales to render the price increase unprofitable. Nor would the price increase be defeated by arbitrage, e.g., by OEMs purchasing through subsidiaries located outside the United States. Accordingly, the relevant geographic market for the purposes of analyzing the effects of the acquisition on orbital motors and steering units for mobile off-road equipment under Section 7 of the Clayton Act, 15 U.S.C. 18, is the United States. PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 39061 VI. Danfoss’s Proposed Acquisition of Eaton’s Hydraulics Business Is Likely To Result in Anticompetitive Effects 30. The proposed transaction would lessen competition and harm customers for orbital motors and steering units for mobile off-road equipment in the United States by eliminating the substantial head-to-head competition that currently exists between Danfoss and Eaton. Customers would pay higher prices and receive lower quality and service for orbital motors and steering units as a result of the acquisition. 31. In the United States, Danfoss and Eaton are the two largest suppliers of orbital motors for mobile off-road equipment, with market shares of approximately 53% and 24%, respectively. The only other major supplier of orbital motors for mobile offroad equipment has a 9% share of the market. Together, Danfoss and Eaton would account for over 75% of sales of orbital motors in United States. 32. In the United States, Danfoss and Eaton are the two largest suppliers of steering units for mobile off-road equipment, with market shares of approximately 43% and 41%, respectively. The only other major supplier of steering units for mobile offroad equipment has a considerably smaller market share of less than 1%. Together, Danfoss and Eaton would account for approximately 84% of sales of steering units in the United States. 33. As articulated in the Horizontal Merger Guidelines issued by the Department of Justice and the Federal Trade Commission (the ‘‘Horizontal Merger Guidelines’’ 1), the HerfindahlHirschman Index (or ‘‘HHI,’’ as described in Appendix A) is a widely used measure of market concentration. Market concentration is often a useful way of measuring the likely anticompetitive effects of an acquisition. The more concentrated a market, the higher the likelihood that a transaction will result in a meaningful reduction in competition and harm customers. Markets in which the HHI exceeds 2,500 points are considered highly concentrated, and transactions that result in highly concentrated markets and increase the HHI by more than 200 points are presumed to be likely to enhance market power. 34. In the market for orbital motors for mobile off-road equipment, the premerger HHI is 3,605 and the post-merger HHI is 6,087, representing an increase in the HHI of 2,482. In the market for 1 U.S. Department of Justice and the Federal Trade Commission, Horizontal Merger Guidelines, available at https://www.justice.gov/atr/file/ 810276/download (Aug. 19, 2010). E:\FR\FM\23JYN1.SGM 23JYN1 39062 Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices khammond on DSKJM1Z7X2PROD with NOTICES steering units for mobile off-road equipment, the pre-merger HHI is 4,155 and the post-merger HHI is 8,273, representing an increase in the HHI of 4,118. Under the Horizontal Merger Guidelines, the proposed acquisition will result in highly concentrated markets for both orbital motors and steering units for mobile off-road equipment and is thus presumed likely to enhance market power. 35. The HHI indicators of highly concentrated markets and enhanced market power are consistent with historical head-to-head competition between Danfoss and Eaton to supply orbital motors and steering units for mobile off-road equipment. Danfoss and Eaton compete directly on price, quality, product innovation, delivery, and technical service, and the competition between them has benefited U.S. customers of orbital motors and steering units for mobile off-road equipment. Danfoss and Eaton have a reputation for high-quality orbital motors and steering units, product developments that benefit OEMs, an extensive network of distributors throughout the United States, and localized customer support and service. As a result, Danfoss and Eaton are considered to be the two primary—and sometimes the only two—suppliers of orbital motors and steering units to customers in the United States. 36. For all of these reasons, the proposed transaction between Danfoss and Eaton likely would substantially lessen competition in the design, manufacture, and sale of orbital motors and steering units for mobile off-road equipment sold to customers in the United States and lead to higher prices, decreased quality of delivery and service, and diminished innovation. VII. Absence of Countervailing Factors 37. Entry into the design, manufacture, and sale of orbital motors and steering units for mobile off-road equipment sold in United States is unlikely to be timely, likely, or sufficient to prevent the harm to competition caused by Danfoss’s acquisition of Eaton’s hydraulics business. A new entrant must have the technical capabilities necessary to design, manufacture, and sell orbital motors and steering units that meet customer requirements for quality, performance, and reliability. Additionally, a new entrant must have the requisite scale, an established reputation, and an extensive network of distributors to supply to all customers throughout the United States. 38. As a result of these entry barriers, entry into the market for the design, VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 manufacture, and sale of orbital motors and steering units for mobile off-road equipment sold to customers in United States would not be timely, likely, or sufficient to defeat the substantial lessening of competition that likely would result from Danfoss’s acquisition of Eaton’s hydraulics business. VIII. Violations Alleged 39. Danfoss’s proposed acquisition of Eaton’s hydraulics business likely would substantially lessen competition in the design, manufacture, and sale of orbital motors and steering units for mobile off-road equipment in the United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. 40. Unless enjoined, the proposed acquisition would likely have the following anticompetitive effects, among others, related to the relevant market: 1. A substantial lessening of competition generally; 2. an elimination of actual and potential head-to-head competition between Danfoss and Eaton; and 3. a likely increase in prices and decrease in quality and innovation. IX. Request for Relief 41. The United States requests that this Court: 1. Adjudge and decree that Danfoss’s acquisition of Eaton’s hydraulics business would be unlawful and violate Section 7 of the Clayton Act, 15 U.S.C. 18; 2. preliminarily and permanently enjoin and restrain Defendants and all persons acting on their behalf from consummating the proposed acquisition of Eaton’s hydraulics business by Danfoss, or from entering into or carrying out any other contract, agreement, plan, or understanding which would combine Eaton’s hydraulics business with Danfoss; 3. award the United States its costs for this action; and 4. award the United States such other and further relief as the Court deems just and proper. lllllllllllllllllllll SoYoung Choe, Acting Assistant Chief, Defense, Industrials, and Aerospace Section, Antitrust Division lllllllllllllllllllll Rebecca Valentine * (D.C. Bar #989607) Bashiri Wilson (D.C. Bar # 998075) Trial Attorneys Defense, Industrials, and Aerospace Section, Antitrust Division, 450 Fifth Street NW, Suite 8700, Washington, DC 20530, Telephone: (202) 476–0432, Facsimile: (202) 514–9033, Email: rebecca.valentine@usdoj.gov. * Lead Attorney To Be Noticed Appendix A Definition of the Herfindahl–Hirschman Index ‘‘HHI’’ means the Herfindahl-Hirschman Index, a commonly accepted measure of market concentration. It is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For example, for a market consisting of four firms with shares of 30 percent, 30 percent, 20 percent, and 20 percent, the HHI is 2,600 (302 + 302 + 202 + 202 = 2,600). The HHI takes into account the relative size distribution of the firms in a market and approaches zero when a market consists of a large number of small firms. The HHI increases both as the number of firms in the market decreases and as the disparity in size between those firms increases. Markets in which the HHI is above 2,500 are considered to be highly concentrated. See Horizontal Merger Guidelines § 5.3. Transactions that increase the HHI by more than 200 points in highly concentrated markets are presumed to be likely to enhance market power under the guidelines issued by the U.S. Department of Justice and Federal Trade Commission. See id. United States District Court for the District of Columbia United States of America, Plaintiff, v. Danfoss A/S, and Eaton Corporation PLC, Defendants. Case No: 1:21–cv–1880–CJN [Proposed] Final Judgment Whereas, Plaintiff, United States of America, filed its Complaint on July 14, 2021, And Whereas, the United States and Defendants, Danfoss A/S (‘‘Danfoss’’) Dated: July 14, 2021 and Eaton Corporation plc (‘‘Eaton’’), Respectfully submitted, have consented to entry of this Final Counsel for Plaintiff United States: Judgment without the taking of lllllllllllllllllllll testimony, without trial or adjudication Richard Powers, of any issue of fact or law, and without Acting Assistant Attorney General, Antitrust this Final Judgment constituting any Division evidence against or admission by any lllllllllllllllllllll party relating to any issue of fact or law; Kathleen S. O’Neill, And Whereas, Defendants agree to Senior Director of Investigation and make a divestiture to remedy the loss of Litigation, Antitrust Division competition alleged in the Complaint; lllllllllllllllllllll And Whereas, Defendants represent Jay D. Owen, that the divestiture and other relief Acting Chief, required by this Final Judgment can and Defense, Industrials, and Aerospace Section, will be made and that Defendants will Antitrust Division PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 E:\FR\FM\23JYN1.SGM 23JYN1 Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices not later raise a claim of hardship or difficulty as grounds for asking the Court to modify any provision of this Final Judgment; Now therefore, it is ordered, adjudged, and decreed: khammond on DSKJM1Z7X2PROD with NOTICES I. Jurisdiction The Court has jurisdiction over the subject matter of and each of the parties to this action. The Complaint states a claim upon which relief may be granted against Defendants under Section 7 of the Clayton Act (15 U.S.C. 18). II. Definitions As used in this Final Judgment: A. ‘‘Danfoss’’ means Defendant Danfoss A/S, a Danish corporation with its headquarters in Nordborg, Denmark, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees. B. ‘‘Eaton’’ means Defendant Eaton Corporation plc, an Irish corporation with its headquarters in Dublin, Ireland, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees. C. ‘‘Interpump’’ means Interpump Group S.p.A., an Italian corporation with its headquarters in Sant’llario d’Enza, Reggio Emilia, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees. D. ‘‘Acquirer’’ means Interpump Group S.p.A. or another entity approved by the United States in its sole discretion to which Defendants divest the Divestiture Assets. E. ‘‘Danfoss Orbital Motor Business’’ means Danfoss’s global business of designing, manufacturing, and selling its OMP X, OMR X, OMEW, OMH, OMS, OMM, OML, CE, RE, RC, RS, DH, DS, DT, DR, D9, HB, HK, and WS models of orbital motor products. F. ‘‘Danfoss Hydraulic Steering Unit Business’’ means Danfoss’s global business of designing, manufacturing, and selling its OSPM, OSPP, LAGB, LAGU, LAGS, LAGC, LAGL, and LAGZ models of hydraulic steering unit products. G. ‘‘Danfoss Hydraulic Steering Unit IP Licenses’’ means worldwide, nonexclusive, royalty-free, perpetual, paidup, irrevocable licenses to the intellectual property listed in Exhibit 1. H. ‘‘Eaton Orbital Motor Assets’’ means all of Eaton’s assets used to manufacture its HP 30, VIS 30, VIS 40, VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 and VIS 45 models of orbital motor products. I. ‘‘Eaton Hydraulic Steering Unit Assets’’ means all of Eaton’s assets used to manufacture its Series 10 and Series 20 models of hydraulic steering unit products. J. ‘‘Eaton Orbital Motor IP Licenses’’ means worldwide, non-exclusive, royalty-free, perpetual, paid-up, irrevocable licenses to the intellectual property listed in Exhibit 2. K. ‘‘Eaton Hydraulic Steering Unit IP Licenses’’ means worldwide, nonexclusive, royalty-free, perpetual, paidup, irrevocable licenses to the intellectual property listed in Exhibit 3. L. ‘‘Char Lynn IP License’’ means a non-exclusive, irrevocable, fully paidup, royalty-free, perpetual license to use the ‘‘Char Lynn’’ trademark to market models HP 30, VIS 30, VIS 40, and VIS 45, or their equivalents, of orbital motors. M. ‘‘Divestiture Assets’’ means the Danfoss Divestiture Assets and the Eaton Divestiture Assets. N. ‘‘Divestiture Date’’ means the date on which the Divestiture Assets are divested to the Acquirer pursuant to this Final Judgment. O. ‘‘Danfoss Divestiture Assets’’ means (i) all assets, located in Zhenjiang, China as of January 21, 2020, including lapping machines, grinders, testers, measurement devices, and any other assets that the United States, in its sole discretion, deems to be necessary for the manufacture of Danfoss’s S70 model hydraulic steering unit product and (ii) all of Defendants’ rights, titles, and interests in and to the Danfoss Orbital Motor Business, the Danfoss Hydraulic Steering Unit Business, and all other property and assets, tangible and intangible, wherever located, relating to or used in connection with the Danfoss Orbital Motor Business or Danfoss Hydraulic Steering Unit Business, including: 1. The facility located at 110 Bill Bryan Blvd., Hopkinsville, KY 42240 (the ‘‘Hopkinsville Facility’’); 2. the facility located at ul. Logistyezna 1, 55–040 Kobierzyce, Wroclaw (Poland) (the ‘‘Wroclaw Facility’’); 3. the facility located at Ludwigsluster Chaussee 5, 19370, Parchim (Germany) (the ‘‘Parchim Facility’’); 4. all other real property, including fee simple interests, real property leasehold interests and renewal rights thereto, improvements to real property, and options to purchase any adjoining or other property, together with all buildings, facilities, and other structures; PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 39063 6. all tangible personal property, including fixed assets, machinery and manufacturing equipment, tools, vehicles, inventory, materials, office equipment and furniture, computer hardware, and supplies; 7. all contracts, contractual rights, and customer relationships, and all other agreements, commitments, and understandings, including supply agreements, teaming agreements, and leases, and all outstanding offers or solicitations to enter into a similar arrangement; 8. all licenses, permits, certifications, approvals, consents, registrations, waivers, and authorizations issued or granted by any governmental organization, and all pending applications or renewals; 9. all records and data, including (a) customer lists, accounts, sales, and credits records, (b) production, repair, maintenance, and performance records, (c) manuals and technical information Defendants provide to their own employees, customers, suppliers, agents, or licensees, (d) records and research data concerning historic and current research and development activities, including designs of experiments and the results of successful and unsuccessful designs and experiments, and (e) drawings, blueprints, and designs; 10. the Danfoss Hydraulic Steering Unit IP Licenses; 11. all intellectual property owned, licensed, or sublicensed, either as licensor or licensee, including (a) patents, patent applications, and inventions and discoveries that may be patentable, (b) registered and unregistered copyrights and copyright applications, and (c) registered and unregistered trademarks, trade dress, service marks, trade names, and trademark applications; and 12. all other intangible property, including (a) commercial names and d/ b/a names, (b) technical information, (c) computer software and related documentation, know-how, trade secrets, design protocols, specifications for materials, specifications for parts, specifications for devices, safety procedures (e.g., for the handling of materials and substances), quality assurance and control procedures, and design tools, and (d) rights in internet websites and internet domain names. Provided, however, that the Danfoss Divestiture Assets do not include (i) rights, titles, or interests in real property or tangible personal property located in Zhenjiang, China that is used to manufacture CE, RE, RC, and WS model orbital motor products that, at the Divestiture Date, are sold exclusively to E:\FR\FM\23JYN1.SGM 23JYN1 khammond on DSKJM1Z7X2PROD with NOTICES 39064 Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices customers outside of the United States; (ii) rights, titles, or interests in real property or tangible personal property located in Nordborg, Denmark that is used to manufacture OMEWF model orbital motor products that, at the Divestiture Date, are sold exclusively to customers outside of the United States; or (iii) intellectual property listed in Exhibit 1. P. ‘‘Eaton Divestiture Assets’’ means all of Defendants’ rights, titles, and interests in and to the Eaton Orbital Motor Assets, the Eaton Hydraulic Steering Unit Assets, and all other property and assets, tangible and intangible, wherever located, relating to or used in connection with the Eaton Orbital Motor Assets or the Eaton Hydraulic Steering Unit Assets, including: 1. The Char Lynn IP License; 2. the Eaton Orbital Motor IP Licenses; 3. the Eaton Hydraulic Steering Unit IP Licenses; 4. the Eaton Divested Equipment and all other tangible personal property, including fixed assets, machinery and manufacturing equipment, tools, vehicles, inventory, materials, office equipment and furniture, computer hardware, and supplies; 5. all contracts, contractual rights, and customer relationships, and all other agreements, commitments, and understandings, including supply agreements, teaming agreements, and leases, and all outstanding offers or solicitations to enter into a similar arrangement; 6. all licenses, permits, certifications, approvals, consents, registrations, waivers, and authorizations issued or granted by any governmental organization, and all pending applications or renewals; 7. all records and data, including (a) customer lists, accounts, sales, and credits records, (b) production, repair, maintenance, and performance records, (c) manuals and technical information Defendants provide to their own employees, customers, suppliers, agents, or licensees, (d) records and research data concerning historic and current research and development activities, including designs of experiments and the results of successful and unsuccessful designs and experiments, and (e) drawings, blueprints, and designs; 8. all intellectual property owned, licensed, or sublicensed, either as licensor or licensee, including (a) patents, patent applications, and inventions and discoveries that may be patentable, (b) registered and unregistered copyrights and copyright VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 applications, and (c) registered and unregistered trademarks, trade dress, service marks, trade names, and trademark applications; and 9. all other intangible property, including (a) commercial names and d/ b/a names, (b) technical information, (c) computer software and related documentation, know-how, trade secrets, design protocols, specifications for materials, specifications for parts, specifications for devices, safety procedures (e.g., for the handling of materials and substances), quality assurance and control procedures, and design tools, and (d) rights in internet websites and internet domain names. Provided, however, that the Eaton Divestiture Assets do not include: (i) Real property, (ii) tangible property, including fixed assets, machinery, and manufacturing equipment, used to manufacture Eaton’s Series 20 model of hydraulic steering unit products; (iii) the Char Lynn trademark; (iv) intellectual property listed in Exhibit 2; (v) intellectual property listed in Exhibit 3; (vi) paint line assets used for the Eaton Orbital Motor Assets or Eaton Hydraulic Steering Unit Assets; or (vii) at the option of Acquirer, heat treat ovens, phosphate lines, or 80 ton broach used for the Eaton Orbital Motor Assets; or the HMS line used for the Eaton Hydraulic Steering Unit Assets. Q. ‘‘Eaton Divested Equipment’’ means machining, assembly, and test assets relating to or used in connection with the production lines used for the Eaton Orbital Motor Assets or Eaton Hydraulic Steering Unit Assets. Provided, however, that the Eaton Divested Equipment does not include paint line assets used for the Eaton Orbital Motor Assets or Eaton Hydraulic Steering Unit Assets. R. ‘‘Including’’ means including, but not limited to. S. ‘‘Relevant Personnel’’ means all full-time, part-time, or contract employees of Danfoss wherever located, that the United States, in its sole discretion, deems to be primarily involved in the design, manufacture, or sale of Danfoss’s OMP X, OMR X, OMEW, OMH, OMS, OMM, OML, CE, RE, RC, RS, DH, DS, DT, DR, D9, HB, HK, and WS models of orbital motor products and Danfoss’s S70, OSPM, OSPP, LAGB, LAGU, LAGS, LAGC, LAGL, and LAGZ models of hydraulic steering unit products, at any time between January 21, 2020, and the Divestiture Date. Provided, however, Relevant Personnel does not include employees of Danfoss that the United States, in its sole discretion, deems to be primarily engaged in human resources, legal, or PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 other general or administrative support functions. The United States, in its sole discretion, will resolve any disagreement relating to which employees are Relevant Personnel. T. ‘‘Regulatory Approvals’’ means any approvals or clearances pursuant to filings under antitrust, competition, or other U.S. or international laws that are required for Acquirer’s acquisition of the Divestiture Assets to proceed. U. ‘‘Transaction’’ means the proposed acquisition by Danfoss of certain assets and equity interests from Eaton, pursuant to the Stock and Asset Purchase Agreement between Eaton Corporation PLC as the Seller and Danfoss A/S as the Buyer, dated January 21, 2020. III. Applicability A. This Final Judgment applies to Danfoss and Eaton, as defined above, and all other persons in active concert or participation with any Defendant who receive actual notice of this Final Judgment. 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 business units that include the Divestiture Assets, Defendants must require any purchaser to be bound by the provisions of this Final Judgment. Defendants need not obtain such an agreement from Acquirer. IV. Divestitures A. Defendant Danfoss is ordered and directed, within sixty (60) calendar days after the Court’s entry of the Asset Preservation Stipulation and Order in this matter, to divest the Divestiture Assets in a manner consistent with this Final Judgment to Interpump or another 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 will notify the Court of any extensions. B. If Defendant Danfoss has not received all Regulatory Approvals within sixty (60) calendar days after the Court’s entry of the Asset Preservation Stipulation and Order in this matter, and Acquirer or Defendant Danfoss has initiated contact with any governmental entity to seek any Regulatory Approval within five (5) calendar days after the Court’s entry of the Asset Preservation Stipulation and Order in this matter, the time period provided in Paragraph IV.A will be extended until ten (10) calendar days after that Regulatory Approval is received. This extension allowed for securing Regulatory Approvals may be E:\FR\FM\23JYN1.SGM 23JYN1 khammond on DSKJM1Z7X2PROD with NOTICES Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices no longer than thirty (30) calendar days past the time period provided in Paragraph IV.A, unless the United States, in its sole discretion, consents to an additional extension. C. Defendants must use best efforts to divest the Divestiture Assets as expeditiously as possible. Defendants must take no action that would jeopardize the completion of the divestiture ordered by the Court, including any action to impede the permitting, operation, or divestiture of the Divestiture Assets. D. Unless the United States otherwise consents in writing, divestiture pursuant to this Final Judgment must include the entire Divestiture Assets and must be accomplished in such a way as to satisfy the United States, in its sole discretion, that the Divestiture Assets can and will be used by Acquirer as part of a viable, ongoing business of designing, manufacturing, and selling orbital motors and hydraulic steering units for mobile off-road equipment and that the divestiture to Acquirer will remedy the competitive harm alleged in the Complaint. E. The divestiture must be made to an Acquirer that, in the United States’ sole judgment, has the intent and capability, including the necessary managerial, operational, technical, and financial capability, to compete effectively in the design, manufacture and sale of orbital motors and hydraulic steering units for mobile off-road equipment. F. The divestiture must be accomplished in a manner that satisfies the United States, in its sole discretion, that none of the terms of any agreement between Acquirer and Defendant Danfoss gives Defendants the ability unreasonably to raise Acquirer’s costs, to lower Acquirer’s efficiency, or otherwise interfere in the ability of Acquirer to compete effectively in the design, manufacture, and sale of orbital motors and hydraulic steering units for mobile off-road equipment. G. In the event Defendant Danfoss is attempting to divest the Divestiture Assets to an Acquirer other than Interpump, Defendant Danfoss promptly must make known, by usual and customary means, the availability of the Divestiture Assets. Defendant Danfoss must inform any person making an inquiry relating to a possible purchase of the Divestiture Assets that the Divestiture Assets are being divested in accordance with this Final Judgment and must provide that person with a copy of this Final Judgment. Defendants must offer to furnish to all prospective Acquirers, subject to customary confidentiality assurances, all information and documents relating to VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 the Divestiture Assets that are customarily provided in a due diligence process; provided, however, that Defendants need not provide information or documents subject to the attorney-client privilege or workproduct doctrine. Defendants must make all information and documents available to the United States at the same time that the information and documents are made available to any other person. H. Defendants must provide prospective Acquirers with (1) access to make inspections of the Divestiture Assets; (2) access to all environmental, zoning, and other permitting documents and information relating to the Divestiture Assets; and (3) access to all financial, operational, or other documents and information relating to the Divestiture Assets that would customarily be provided as part of a due diligence process. Defendants also must disclose all encumbrances on any part of the Divestiture Assets, including on intangible property. I. Defendants must cooperate with and assist Acquirer in identifying and, at the option of Acquirer, in hiring all Relevant Personnel, including: 1. Within ten (10) business days following the filing of the Complaint in this matter, Defendant Danfoss must identify all Relevant Personnel to Acquirer and the United States, including by providing organization charts covering all Relevant Personnel. 2. Within ten (10) business days following receipt of a request by Acquirer, the United States, or the monitoring trustee, Defendant Danfoss must provide to Acquirer, the United States, and the monitoring trustee additional information relating to Relevant Personnel, including name, job title, reporting relationships, past experience, responsibilities, training and educational histories, relevant certifications, and job performance evaluations. Defendant Danfoss must also provide to Acquirer, the United States, and the monitoring trustee information relating to the current and accrued compensation and benefits of Relevant Personnel, including most recent bonuses paid, aggregate annual compensation, current target or guaranteed bonus, if any, any retention agreement or incentives, and any other payments due, compensation or benefit accrued, or promises made to the Relevant Personnel. If Defendant Danfoss is barred by any applicable law from providing any of this information, Defendant Danfoss must provide, within ten (10) business days following receipt of the request, the requested information to the full extent permitted by law and PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 39065 also must provide a written explanation of Defendant Danfoss’s inability to provide the remaining information, including specifically identifying the provisions of the applicable laws. 3. At the request of Acquirer, Defendants must promptly make Relevant Personnel available for private interviews with Acquirer during normal business hours at a mutually agreeable location. 4. Defendants must not interfere with any effort by Acquirer to employ any Relevant Personnel. Interference includes offering to increase the compensation or improve the benefits of Relevant Personnel unless (a) the offer is part of a company-wide increase in compensation or improvement in benefits that was announced prior to January 21, 2020 or (b) the offer is approved by the United States in its sole discretion. Defendants’ obligations under this Paragraph will expire six (6) months after the Divestiture Date. 5. For Relevant Personnel who elect employment with Acquirer within one hundred-eighty (180) calendar days of the Divestiture Date, Defendant Danfoss must waive all non-compete and nondisclosure agreements; vest and pay to the Relevant Personnel (or to Acquirer for payment to the employee) on a prorated basis any bonuses, incentives, other salary, benefits or other compensation fully or partially accrued at the time of the transfer of the employee to Acquirer; vest any unvested pension and other equity rights; and provide all other benefits that those Relevant Personnel otherwise would have been provided had the Relevant Personnel continued employment with Defendants, including any retention bonuses or payments. Defendants may maintain reasonable restrictions on disclosure by Relevant Personnel of Defendants’ proprietary non-public information that is unrelated to the design, manufacture, and sale of orbital motors and hydraulic steering units and not otherwise required to be disclosed by this Final Judgment. J. Defendant Danfoss must warrant to Acquirer that (1) the Divestiture Assets will be operational and without material defect on the date of their transfer to Acquirer; (2) there are no material defects in the environmental, zoning, or other permits relating to the operation of the Divestiture Assets; and (3) Defendant Danfoss has disclosed all encumbrances on any part of the Divestiture Assets, including on intangible property. Following the sale of the Divestiture Assets, Defendants must not undertake, directly or indirectly, challenges to the environmental, zoning, or other permits E:\FR\FM\23JYN1.SGM 23JYN1 khammond on DSKJM1Z7X2PROD with NOTICES 39066 Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices relating to the operation of the Divestiture Assets. K. Defendants must assign, subcontract, or otherwise transfer all contracts, agreements, and customer relationships (or portions of such contracts, agreements, and customer relationships) included in the Divestiture Assets, including all supply and sales contracts, to Acquirer; provided, however, that for any contract or agreement that requires the consent of another party to assign, subcontract, or otherwise transfer, Defendants must use best efforts to accomplish the assignment, subcontracting, or transfer. Defendants must not interfere with any negotiations between Acquirer and a contracting party. L. Defendants must use best efforts to assist Acquirer to obtain all necessary licenses, registrations, and permits to operate the Divestiture Assets. Until Acquirer obtains the necessary licenses, registrations, and permits, Defendants must provide Acquirer with the benefit of Defendants’ licenses, registrations, and permits to the full extent permissible by law. M. Within twelve (12) months after the Court’s entry of the Asset Preservation Stipulation and Order in this matter, Defendants must relocate the Eaton Divested Equipment to one or more locations as specified by Acquirer. In order to fulfill this obligation, the Eaton Divested Equipment must be fully operational at the new location(s). The United States, in its sole discretion, may agree to one or more extensions of this time period not to exceed six (6) months in total. N. At the option of Acquirer, and subject to approval by the United States in its sole discretion, on or before the Divestiture Date, Defendant Danfoss must enter into a supply contract or contracts for heat treatment services for the Danfoss Divestiture Assets located in Wroclaw, Poland; gerotors for Eaton’s S10 model of hydraulic steering units; spools, sleeves, and gear sets for Danfoss’s OSPP model of hydraulic steering units; shafts for Danfoss’s OMS model of orbital motors; and the components for Eaton’s HP30 2-speed model 22 orbital motor product listed in Exhibit 4, sufficient to meet Acquirer’s needs, as determined by Acquirer, for a period of up to twelve (12) months, on terms and conditions reasonably related to market conditions for the supply of heat treatment services, gerotors, spools, sleeves, gear sets, shafts, and the components listed in Exhibit 4. Any amendment to or modification of any provision of any such supply contract is subject to approval by the United States, in its sole discretion. The United States, VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 in its sole discretion, may approve one or more extensions of any supply contract for a total of up to an additional six (6) months. If Acquirer seeks an extension of the term of any supply contract, Defendants must notify the United States in writing at least sixty (60) days prior to the date the supply contract expires. Acquirer may terminate a supply contract, or any portion of a supply contract, without cost or penalty at any time upon commercially reasonable notice. O. At the option of Acquirer, and subject to approval by the United States in its sole discretion, on or before the Divestiture Date, Defendants must enter into a supply contract for HP 30, VIS 30, VIS 40, and VIS 45 models of orbital motor products and S10 and S20 models of hydraulic steering unit products sufficient to meet Acquirer’s needs, as determined by Acquirer, for a period of up to eighteen (18) months, on terms and conditions reasonably related to market conditions for the supply of HP/ VIS orbital motors and S10 and S20 Hydraulic Steering Units. Any amendment to or modification of any provision of any such supply contract is subject to approval by the United States, in its sole discretion. The United States, in its sole discretion, may approve one or more extensions of any supply contract for a total of up to an additional six (6) months. If Acquirer seeks an extension of the term of any supply contract, Defendants must notify the United States in writing at least sixty (60) days prior to the date the supply contract expires. Acquirer may terminate a supply contract, or any portion of a supply contract, without cost or penalty at any time upon commercially reasonable notice. P. At the option of Acquirer, and subject to approval by the United States in its sole discretion, on or before the Divestiture Date, Defendant Danfoss must enter into a contract to provide transition services for back office, accounting, human resources, information technology services and support, and employee health and safety for the Divestiture Assets, and technical training services and support for the Eaton Divestiture Assets for a period of up to twelve (12) months on terms and conditions reasonably related to market conditions for the provision of the transition services. Any amendment to or modification of any provision of a contract to provide transition services is subject to approval by the United States, in its sole discretion. The United States, in its sole discretion, may approve one or more extensions of any contract for transition services for a total of up to an additional six (6) months. If Acquirer PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 seeks an extension of the term of any contract for transition services, Defendants must notify the United States in writing at least three (3) months prior to the date the contract expires. Acquirer may terminate a contract for transition services, or any portion of a contract for transition services, without cost or penalty at any time upon commercially reasonable written notice. The employee(s) of Defendants tasked with providing transition services must not share any competitively sensitive information of Acquirer with any other employee of Defendants. Q. For a period of one (1) year following the Divestiture Date, Defendants must not initiate customerspecific communications to solicit any customer for the portion of that customer’s business covered by a contract, agreement, or relationship (or portion thereof) that is included in the Divestiture Assets; provided, however, that: (1) Defendants may respond to inquiries initiated by customers and enter into negotiations at the request of such customers (including responding to requests for quotation or proposal) to supply any business, whether or not such business was included in the Divestiture Assets; and (2) Defendants must maintain a log of telephonic, electronic, in-person, and other communications that constitute inquiries or requests from customers within the meaning of this Paragraph and make it available to the United States for inspection upon request. The United States, in its sole discretion, may agree to one or more extensions of this time period not to exceed six (6) months in total. R. If any term of an agreement between Defendants and Acquirer, including an agreement to effectuate the divestiture required by this Final Judgment, varies from a term of this Final Judgment, to the extent that Defendants cannot fully comply with both, this Final Judgment determines Defendants’ obligations. V. Appointment of Divestiture Trustee A. If Defendants have not divested the Divestiture Assets within the period specified in Paragraph IV.A, Defendants must immediately notify the United States of that fact in writing. Upon application of the United States, which Defendants may not oppose, the Court will appoint a divestiture trustee selected by the United States and approved by the Court to effect the divestiture of the Divestiture Assets. B. After the appointment of a divestiture trustee by the Court, only the divestiture trustee will have the right to E:\FR\FM\23JYN1.SGM 23JYN1 khammond on DSKJM1Z7X2PROD with NOTICES Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices sell the Divestiture Assets. The divestiture trustee will have the power and authority to accomplish the divestiture to an Acquirer acceptable to the United States, in its sole discretion, at a price and on terms obtainable through reasonable effort by the divestiture trustee, subject to the provisions of Sections IV, V, and VI of this Final Judgment, and will have other powers as the Court deems appropriate. The divestiture trustee must sell the Divestiture Assets as quickly as possible. C. Defendants may not object to a sale by the divestiture trustee on any ground other than malfeasance by the divestiture trustee. Objections by Defendants must be conveyed in writing to the United States and the divestiture trustee within ten (10) calendar days after the divestiture trustee has provided the notice of proposed divestiture required by Section VI. D. The divestiture trustee will serve at the cost and expense of Defendant Danfoss pursuant to a written agreement, on terms and conditions, including confidentiality requirements and conflict of interest certifications, approved by the United States in its sole discretion. E. The divestiture trustee may hire at the cost and expense of Defendant Danfoss any agents or consultants, including investment bankers, attorneys, and accountants, that are reasonably necessary in the divestiture trustee’s judgment to assist with the divestiture trustee’s duties. These agents or consultants will be accountable solely to the divestiture trustee and will serve on terms and conditions, including confidentiality requirements and conflict-of-interest certifications, approved by the United States in its sole discretion. F. The compensation of the divestiture trustee and agents or consultants hired by the divestiture trustee must be reasonable in light of the value of the Divestiture Assets and based on a fee arrangement that provides the divestiture trustee with incentives based on the price and terms of the divestiture and the speed with which it is accomplished. If the divestiture trustee and Defendant Danfoss are unable to reach agreement on the divestiture trustee’s compensation or other terms and conditions of engagement within fourteen (14) calendar days of the appointment of the divestiture trustee by the Court, the United States, in its sole discretion, may take appropriate action, including by making a recommendation to the Court. Within three (3) business days of hiring an VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 agent or consultant, the divestiture trustee must provide written notice of the hiring and rate of compensation to Defendant Danfoss and the United States. G. The divestiture trustee must account for all monies derived from the sale of the Divestiture Assets sold by the divestiture trustee and all costs and expenses so incurred. Within thirty (30) calendar days of the Divestiture Date, the divestiture trustee must submit that accounting to the Court for approval. After approval by the Court of the divestiture trustee’s accounting, including fees for unpaid services and those of agents or consultants hired by the divestiture trustee, all remaining money must be paid to Defendant Danfoss and the trust will then be terminated. H. Defendants must use best efforts to assist the divestiture trustee to accomplish the required divestiture. Subject to reasonable protection for trade secrets, other confidential research, development, or commercial information, or any applicable privileges, Defendants must provide the divestiture trustee and agents or consultants retained by the divestiture trustee with full and complete access to all personnel, books, records, and facilities of the Divestiture Assets. Defendants also must provide or develop financial and other information relevant to the Divestiture Assets that the divestiture trustee may reasonably request. Defendants must not take any action to interfere with or to impede the divestiture trustee’s accomplishment of the divestiture. I. The divestiture trustee must maintain complete records of all efforts made to sell the Divestiture Assets, including by filing monthly reports with the United States setting forth the divestiture trustee’s efforts to accomplish the divestiture ordered by this Final Judgment. The reports must include the name, address, and telephone number of each person who, during the preceding month, made an offer to acquire, expressed an interest in acquiring, entered into negotiations to acquire, or was contacted or made an inquiry about acquiring any interest in the Divestiture Assets and must describe in detail each contact. J. If the divestiture trustee has not accomplished the divestiture ordered by this Final Judgment within six (6) months of appointment, the divestiture trustee must promptly provide the United States with a report setting forth (1) the divestiture trustee’s efforts to accomplish the required divestiture; (2) the reasons, in the divestiture trustee’s judgment, why the required divestiture PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 39067 has not been accomplished; and (3) the divestiture trustee’s recommendations for completing the divestiture. Following receipt of that report, the United States may make additional recommendations to the Court. The Court thereafter may enter such orders as it deems appropriate to carry out the purpose of this Final Judgment, which may include extending the trust and the term of the divestiture trustee’s appointment by a period requested by the United States. K. The divestiture trustee will serve until divestiture of all Divestiture Assets is completed or for a term otherwise ordered by the Court. L. If the United States determines that the divestiture trustee is not acting diligently or in a reasonably costeffective manner, the United States may recommend that the Court appoint a substitute divestiture trustee. VI. Notice of Proposed Divestiture A. Within two (2) business days following execution of a definitive agreement with an Acquirer other than Interpump to divest the Divestiture Assets, Defendants or the divestiture trustee, whichever is then responsible for effecting the divestiture, must notify the United States of the proposed divestiture. If the divestiture trustee is responsible for completing the divestiture, the divestiture trustee also must notify Defendants. The notice must set forth the details of the proposed divestiture and list the name, address, and telephone number of each person not previously identified who offered or expressed an interest in or desire to acquire any ownership interest in the Divestiture Assets. B. Within fifteen (15) calendar days of receipt by the United States of the notice required by Paragraph VI.A, the United States may request from Defendants, the proposed Acquirer, other third parties, or the divestiture trustee additional information concerning the proposed divestiture, the proposed Acquirer, and other prospective Acquirers. Defendants and the divestiture trustee must furnish the additional information requested within fifteen (15) calendar days of the receipt of the request, unless the United States provides written agreement to a different period. C. Within forty-five (45) calendar days after receipt of the notice required by Paragraph VI.A or within twenty (20) calendar days after the United States has been provided the additional information requested pursuant to Paragraph VI.B, whichever is later, the United States will provide written notice to Defendants and any divestiture E:\FR\FM\23JYN1.SGM 23JYN1 khammond on DSKJM1Z7X2PROD with NOTICES 39068 Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices trustee that states whether the United States, in its sole discretion, objects to the proposed Acquirer or any other aspect of the proposed divestiture. Without written notice that the United States does not object, a divestiture may not be consummated. If the United States provides written notice that it does not object, the divestiture may be consummated, subject only to Defendants’ limited right to object to the sale under Paragraph V.C of this Final Judgment. Upon objection by Defendants pursuant to Paragraph V.C, a divestiture by the divestiture trustee may not be consummated unless approved by the Court. D. No information or documents obtained pursuant to this Section may be divulged by the United States to any person other than an authorized representative of the executive branch of the United States, except in the course of legal proceedings to which the United States is a party, including grand-jury proceedings, for the purpose of evaluating a proposed Acquirer or securing compliance with this Final Judgment, or as otherwise required by law. E. In the event of a request by a third party for disclosure of information under the Freedom of Information Act, 5 U.S.C. 552, the United States Department of Justice’s Antitrust Division will act in accordance with that statute, and the Department of Justice regulations at 28 CFR part 16, including the provision on confidential commercial information, at 28 CFR 16.7. Persons submitting information to the Antitrust Division should designate the confidential commercial information portions of all applicable documents and information under 28 CFR 16.7. Designations of confidentiality expire ten (10) years after submission, ‘‘unless the submitter requests and provides justification for a longer designation period.’’ See 28 CFR 16.7(b). F. If at the time that a person furnishes information or documents to the United States pursuant to this Section, that person represents and identifies in writing information or documents for which a claim of protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure, and marks each pertinent page of such material, ‘‘Subject to claim of protection under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure,’’ the United States must give that person ten (10) calendar days’ notice before divulging the material in any legal proceeding (other than a grand-jury proceeding). VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 VII. Financing Defendants may not finance all or any part of Acquirer’s purchase of all or part of the Divestiture Assets. VIII. Asset Preservation Defendants must take all steps necessary to comply with the Asset Preservation Stipulation and Order entered 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 required by this Final Judgment has been completed, each Defendant must deliver to the United States an affidavit, signed by each Defendant’s Chief Financial Officer and General Counsel, describing in reasonable detail the fact and manner of that Defendant’s compliance with this Final Judgment. The United States, in its sole discretion, may approve different signatories for the affidavits. Defendant Eaton’s obligations under this Paragraph IX.A shall cease thirty (30) calendar days after the closing of the Transaction. B. Each affidavit required by Paragraph IX.A must include: (1) The name, address, and telephone number of each person who, during the preceding thirty (30) calendar days, made an offer to acquire, expressed an interest in acquiring, entered into negotiations to acquire, or was contacted or made an inquiry about acquiring, an interest in the Divestiture Assets, and describe in detail each contact with such persons during that period; (2) a description of the efforts Defendants have taken to solicit buyers for and complete the sale of the Divestiture Assets and to provide required information to prospective Acquirers; and (3) a description of any limitations placed by Defendants on information provided to prospective Acquirers. Objection by the United States to information provided by Defendants to prospective Acquirers must be made within fourteen (14) calendar days of receipt of the affidavit, except that the United States may object at any time if the information set forth in the affidavit is not true or complete. C. Defendants must keep all records of any efforts made to divest the Divestiture Assets until one (1) year after the Divestiture Date. D. Within twenty (20) calendar days of the filing of the Complaint in this matter, each Defendant must deliver to the United States an affidavit signed by that Defendant’s Chief Financial Officer and General Counsel that describes in reasonable detail all actions that PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 Defendant has taken and all steps that Defendant has implemented on an ongoing basis to comply with Section VIII of this Final Judgment. The United States, in its sole discretion, may approve different signatories for the affidavits. E. If a Defendant makes any changes to the actions and steps described in affidavits provided pursuant to Paragraph IX.D, the Defendant must, within fifteen (15) calendar days after any change is implemented, deliver to the United States an affidavit describing those changes. F. Defendants must keep all records of any efforts made to comply with Section VIII until one (1) year after the Divestiture Date. X. Appointment of Monitoring Trustee A. Upon application of the United States, which Defendants may not oppose, the Court will appoint a monitoring trustee selected by the United States and approved by the Court. B. The monitoring trustee will have the power and authority to monitor Defendants’ compliance with the terms of this Final Judgment and the Asset Preservation Stipulation and Order entered by the Court and will have other powers as the Court deems appropriate. The monitoring trustee will have no responsibility or obligation for operation of the Divestiture Assets. C. Defendants may not object to actions taken by the monitoring trustee in fulfillment of the monitoring trustee’s responsibilities under any Order of the Court on any ground other than malfeasance by the monitoring trustee. Objections by Defendants must be conveyed in writing to the United States and the monitoring trustee within ten (10) calendar days of the monitoring trustee’s action that gives rise to Defendants’ objection. D. The monitoring trustee will serve at the cost and expense of Defendant Danfoss pursuant to a written agreement, on terms and conditions, including confidentiality requirements and conflict of interest certifications, approved by the United States in its sole discretion. E. The monitoring trustee may hire, at the cost and expense of Defendant Danfoss, any agents and consultants, including investment bankers, attorneys, and accountants, that are reasonably necessary in the monitoring trustee’s judgment to assist with the monitoring trustee’s duties. These agents or consultants will be solely accountable to the monitoring trustee and will serve on terms and conditions, including confidentiality requirements E:\FR\FM\23JYN1.SGM 23JYN1 khammond on DSKJM1Z7X2PROD with NOTICES Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices and conflict-of-interest certifications, approved by the United States in its sole discretion. F. The compensation of the monitoring trustee and agents or consultants retained by the monitoring trustee must be on reasonable and customary terms commensurate with the individuals’ experience and responsibilities. If the monitoring trustee and Defendant Danfoss are unable to reach agreement on the monitoring trustee’s compensation or other terms and conditions of engagement within fourteen (14) calendar days of the appointment of the monitoring trustee, the United States, in its sole discretion, may take appropriate action, including by making a recommendation to the Court. Within three (3) business days of hiring any agents or consultants, the monitoring trustee must provide written notice of the hiring and the rate of compensation to Defendant Danfoss and the United States. G. The monitoring trustee must account for all costs and expenses incurred. H. Defendants must use best efforts to assist the monitoring trustee to monitor Defendants’ compliance with their obligations under this Final Judgment and the Asset Preservation Stipulation and Order. Subject to reasonable protection for trade secrets, other confidential research, development, or commercial information, or any applicable privileges, Defendants must provide the monitoring trustee and any agents or consultants retained by the monitoring trustee with full and complete access to all personnel, books, records, and facilities of the Divestiture Assets. Defendants may not take any action to interfere with or to impede accomplishment of the monitoring trustee’s responsibilities. I. The monitoring trustee must investigate and report on Defendants’ compliance with this Final Judgment and the Asset Preservation Stipulation and Order, including compliance with all supply and transition service agreements and progress of production line transfers. The monitoring trustee must provide periodic reports to the United States setting forth Defendants’ efforts to comply with their obligations under this Final Judgment and under the Asset Preservation Stipulation and Order. The United States, in its sole discretion, will set the frequency of the monitoring trustee’s reports. J. The monitoring trustee will serve until the divestiture of all the Divestiture Assets is finalized pursuant to either Section IV or Section V of this Final Judgment, Defendants have VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 complied with the terms of the transition services agreements and supply contracts provided for in Paragraphs IV.N, IV.O, and IV.P of this Final Judgment, and Defendants have fulfilled all their obligations under Paragraphs IV.M and IV.Q of this Final Judgment, unless the United States, in its sole discretion, determines a different period is appropriate. K. If the United States determines that the monitoring trustee is not acting diligently or in a reasonably costeffective manner, the United States may recommend that the Court appoint a substitute. XI. Compliance Inspection A. For the purposes of determining or securing compliance with this Final Judgment or of related orders such as the Asset Preservation Stipulation and Order or of determining whether this Final Judgment should be modified or vacated, upon written request of an authorized representative of the Assistant Attorney General for the Antitrust Division, and reasonable notice to Defendants, Defendants must permit, from time to time and subject to legally recognized privileges, authorized representatives, including agents retained by the United States: 1. To have access during Defendants’ office hours to inspect and copy, or at the option of the United States, to require Defendants to provide electronic copies of all books, ledgers, accounts, records, data, and documents 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, relating to any matters contained in this Final Judgment. The interviews must be subject to the reasonable convenience of the interviewee and without restraint or interference by Defendants. B. Upon the written request of an authorized representative of the Assistant Attorney General for the Antitrust Division, Defendants must submit written reports or respond to written interrogatories, under oath if requested, relating to any matters contained in this Final Judgment. C. No information or documents obtained by the United States pursuant to this Section may be divulged by the United States to any person other than an authorized representative of the executive branch of the United States, except in the course of legal proceedings to which the United States is a party, including grand jury proceedings, for the purpose of securing compliance PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 39069 with this Final Judgment, or as otherwise required by law. D. In the event of a request by a third party for disclosure of information under the Freedom of Information Act, 5 U.S.C. 552, the Antitrust Division will act in accordance with that statute, and the Department of Justice regulations at 28 CFR part 16, including the provision on confidential commercial information, at 28 CFR 16.7. Defendants submitting information to the Antitrust Division should designate the confidential commercial information portions of all applicable documents and information under 28 CFR 16.7. Designations of confidentiality expire ten (10) years after submission, ‘‘unless the submitter requests and provides justification for a longer designation period.’’ See 28 CFR 16.7(b). E. If at the time that Defendants furnish information or documents to the United States pursuant to this Section, Defendants represent and identify in writing information or documents for which a claim of protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure, and Defendants mark each pertinent page of such material, ‘‘Subject to claim of protection under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure,’’ the United States must give Defendants ten (10) calendar days’ notice before divulging the material in any legal proceeding (other than a grand jury proceeding). XII. Firewall A. For a period of two (2) years following the filing of this Proposed Final Judgment, Defendants must implement and maintain procedures to prevent any employees of Defendants from sharing competitively sensitive information relating to the Divestiture Assets with personnel of Defendants with responsibilities relating to Danfoss’s or Eaton’s design, manufacture, and sale of hydraulic orbital motors or hydraulic steering units. B. Defendants, within thirty (30) calendar days of the Court’s entry of the Asset Preservation Stipulation and Order, must submit to the United States a document setting forth in detail the procedures implemented to effect compliance with this Section. Upon receipt of the document, the United States will inform Defendants within ten (10) business days whether, in its sole discretion, the United States approves or rejects Defendants’ compliance plan. Within ten (10) business days of receiving a notice of rejection, Defendants must submit a revised compliance plan. The United E:\FR\FM\23JYN1.SGM 23JYN1 39070 Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices States may request that the Court determine whether Defendants’ proposed compliance plan fulfills the requirements of Paragraph XII.A. XIII. Limitations on Reacquisitions Defendants may not reacquire any part of or any interest in the Divestiture Assets during the term of this Final Judgment without prior authorization of the United States. XIV. Retention of Jurisdiction The Court retains jurisdiction to enable any party to this Final Judgment to apply to the Court at any time for further orders and directions as may be necessary or appropriate to carry out or construe this Final Judgment, to modify any of its provisions, to enforce compliance, and to punish violations of its provisions. XV. Enforcement of Final Judgment A. The United States retains and reserves all rights to enforce the provisions of this Final Judgment, including the right to seek an order of contempt from the Court. Defendants agree that in a civil contempt action, a motion to show cause, or a similar action brought by the United States relating to an alleged violation of this Final Judgment, the United States may establish a violation of this Final Judgment and the appropriateness of a remedy therefor by a preponderance of the evidence, and Defendants waive any argument that a different standard of proof should apply. B. This Final Judgment should be interpreted to give full effect to the procompetitive purposes of the antitrust laws and to restore the competition the United States alleges was harmed by the challenged conduct. Defendants agree that they may be held in contempt of, and that the Court may enforce, any provision of this Final Judgment that, as interpreted by the Court in light of these procompetitive principles and applying ordinary tools of interpretation, is stated specifically and in reasonable detail, whether or not it is clear and unambiguous on its face. In any such interpretation, the terms of this Final Judgment should not be construed against either party as the drafter. C. In an enforcement proceeding in which the Court finds that Defendants have violated this Final Judgment, the United States may apply to the Court for an extension of this Final Judgment, together with other relief that may be appropriate. In connection with a successful effort by the United States to enforce this Final Judgment against a Defendant, whether litigated or resolved before litigation, that Defendant agrees to reimburse the United States for the fees and expenses of its attorneys, as well as all other costs including experts’ fees, incurred in connection with that effort to enforce this Final Judgment, including in the investigation of the potential violation. D. For a period of four (4) years following the expiration of this Final Judgment, if the United States has evidence that a Defendant violated this Final Judgment before it expired, the United States may file an action against that Defendant in this Court requesting that the Court order: (1) Defendant to comply with the terms of this Final Judgment for an additional term of at least four (4) years following the filing of the enforcement action; (2) all appropriate contempt remedies; (3) additional relief needed to ensure the Defendant complies with the terms of this Final Judgment; and (4) fees or expenses as called for by this Section. XVI. Expiration of Final Judgment Unless the Court grants an extension, this Final Judgment will expire ten (10) years from the date of its entry, except that after five (5) years from the date of its entry, this Final Judgment may be terminated upon notice by the United States to the Court and Defendants that the divestiture has been completed and continuation of this Final Judgment is no longer necessary or in the public interest. XVII. Public Interest Determination Entry of this Final Judgment is in the public interest. The parties have complied with the requirements of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16, including by making available to the public copies of this Final Judgment and the Competitive Impact Statement, public comments thereon, and any response to comments by the United States. Based upon the record before the Court, which includes the Competitive Impact Statement and, if applicable, any comments and response to comments filed with the Court, entry of this Final Judgment is in the public interest. Date: llllllllllllllllll Court approval subject to procedures of Antitrust Procedures and Penalties Act, 15 U.S.C. 16 lllllllllllllllllllll United States District Judge EXHIBIT 1—DANFOSS HYDRAULIC STEERING UNIT LICENSES GRANTED TO ACQUIRER Patent No. Title Country Grant date EP 1 910 151 ................... EP 1 910 151 ................... EP 1 910 151 ................... EP 1 910 151 ................... EP 1 910 151 ................... CN 101233040 ................. US 7,677,351 ................... 3410349 ........................... 304354829 ....................... Electrohydraulic Steering System with Cut-Off Valve and Sensor ................ Electrohydraulic Steering System with Cut-Off Valve and Sensor ................ Electrohydraulic Steering System with Cut-Off Valve and Sensor ................ Electrohydraulic Steering System with Cut-Off Valve and Sensor ................ Electrohydraulic Steering System with Cut-Off Valve and Sensor ................ Electrohydraulic Steering System with Cut-Off Valve and Sensor ................ Electrohydraulic Steering System with Cut-Off Valve and Sensor ................ Plug ................................................................................................................. Plug ................................................................................................................. Denmark ........................ France ............................ Germany ........................ Great Britain ................... Italy ................................ China .............................. USA ................................ European Design ........... China .............................. 6-Oct-10. 6-Oct-10. 6-Oct-10. 6-Oct-10. 6-Oct-10. 12-Oct-11. 16-Mar-10. 7-Oct-16. 14-Nov-17. EXHIBIT 2—EATON ORBITAL MOTOR LICENSES GRANTED TO ACQUIRER khammond on DSKJM1Z7X2PROD with NOTICES Patent No. 201380038257.X ....................... 2895739 .................................... 6214652 .................................... 9175563 .................................... VerDate Sep<11>2014 16:49 Jul 22, 2021 Title COMBINED MOTOR PISTON. COMBINED MOTOR PISTON. COMBINED MOTOR PISTON. COMBINED MOTOR LEASE PISTON. Jkt 253001 PO 00000 Country Grant date AND BRAKE ROTATING BRAKE–RELEASE China ........................... 28-Dec-16. AND BRAKE ROTATING BRAKE–RELEASE AND BRAKE ROTATING BRAKE–RELEASE European Patent Convention. Japan ........................... 29-Sep-17. AND BRAKE WITH ROTATING BRAKE–RE- United States ............... 3-Nov-15. Frm 00101 Fmt 4703 Sfmt 4703 E:\FR\FM\23JYN1.SGM 23JYN1 Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices 39071 EXHIBIT 2—EATON ORBITAL MOTOR LICENSES GRANTED TO ACQUIRER—Continued Patent No. Title Country Grant date EP2875237 ............................... FREEWHEEL HYDRAULIC MOTOR ...................................................... 28-Mar-18. 602013035067.1 ....................... EP2875237 ............................... 502018000016462 .................... 9551222 .................................... FREEWHEEL FREEWHEEL FREEWHEEL FREEWHEEL European Patent Convention. Germany ...................... Great Britain ................ Italy .............................. United States ............... HYDRAULIC HYDRAULIC HYDRAULIC HYDRAULIC MOTOR MOTOR MOTOR MOTOR ...................................................... ...................................................... ...................................................... ...................................................... 28-Mar-18. 28-Mar-18. 28-Mar-18. 24-Jan-17. EXHIBIT 3—EATON HYDRAULIC STEERING UNIT LICENSES TO ACQUIRER Patent No. Title Country 6769249 .................................... LOW SLIP STEERING SYSTEM AND IMPROVED FLUID CONTROLLER THEREFOR. POWER BEYOND STEERING UNIT WITH BYPASS ............................ STEERING CONTROL UNIT WITH LOW NULL BAND LOAD SENSING BOOST. FLUID CONTROLLER WITH MULTIPLE FLUID METERS .................... FLUID CONTROLLER WITH MULTIPLE FLUID METERS .................... FLUID CONTROLLER WITH MULTIPLE FLUID METERS .................... FLUID CONTROLLER WITH MULTIPLE FLUID METERS .................... FLUID CONTROLLER WITH MULTIPLE FLUID METERS .................... FLUID CONTROLLER WITH MULTIPLE FLUID METERS .................... FLUID CONTROLLER WITH MULTIPLE FLUID METERS .................... FLUID CONTROLLER WITH LOAD SENSE AND FLOW AMPLIFICATION. FLUID CONTROLLER WITH LOAD SENSE AND FLOW AMPLIFICATION. FLUID CONTROLLER AND FLUID METER BYPASS ARRANGEMENT. FLUID CONTROLLER AND FLUID METER BYPASS ARRANGEMENT. United States ............... 3-Aug-03. United States ............... United States ............... 3-Aug-03. 31-Aug-03. Denmark ...................... France .......................... Germany ...................... Great Britain ................ Italy .............................. Spain ............................ United States ............... European Patent Convention. United States ............... 10-Jul-13. 10-Jul-13. 10-Jul-13. 10-Jul-13. 10-Jul-13. 10-Jul-13. 24-Jul-12. 17-Jun-14. Japan ........................... 22-Apr-11. South Korea ................. 14-Nov-11. 6769451 .................................... 6782698 .................................... EP2250068 ............................... EP2250068 ............................... 602009017015.5 ....................... EP2250068 ............................... EP2250068 ............................... EP2250068 ............................... 8225603 .................................... 3010785B1 ................................ 9920776 .................................... 4725695 .................................... 529996 ...................................... EXHIBIT 4—ORBITAL MOTOR COMPO- Competitive Impact Statement NENTS FOR EATON’S HP30 2-SPEED In accordance with the Antitrust MODEL 22 ORBITAL MOTOR PROD- Procedures and Penalties Act, 15 U.S.C. UCT Component part No. khammond on DSKJM1Z7X2PROD with NOTICES 8483–000 ....... 8731–000 ....... 6037923–001 202879–004 ... 5992182–008 5992182–010 9004–002 ....... 8732–000 ....... 6212–000 ....... 6037922–001 6181–000 ....... 9001–002 ....... 9001–003 ....... 9001–004 ....... 9002–003 ....... 9002–004 ....... 9003–002 ....... 16292–100 ..... 15045–000 ..... 25001–046 ..... 16(b)–(h) (the ‘‘APPA’’ or ‘‘Tunney Act’’), the United States of America files this Competitive Impact Statement relating to the proposed Final Judgment filed in this civil antitrust proceeding. Part description Shaft. Front Retainer. Bearing Housing. Drive Spacer. Drive. Drive. Quad Ring. Backup Washer. Dust Seal. Adapter Plate. Bearing Spacer. Thrust Bearing Washer. Thrust Bearing Washer. Thrust Washer. Thrust Bearing. Thrust Bearing. Radial Bearing. Cap Screw. Seal. O Ring. I. Nature and Purpose of the Proceeding United States District Court for the District of Columbia United States of America, Plaintiff, v. Danfoss A/S, and Eaton Corporation PLC, Defendants. Civil Action No.: 1:21–cv–1880–CJN VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 On January 21, 2020, Defendant Danfoss A/S (‘‘Danfoss’’) entered into a binding agreement with Defendant Eaton Corporation (‘‘Eaton’’) to acquire Eaton’s hydraulics business for approximately $3.3 billion in cash. The United States filed a civil antitrust Complaint on July 14, 2021 seeking to enjoin the proposed transaction. The Complaint alleges that the likely effect of this transaction would be to substantially lessen competition in the design, manufacture, and sale of orbital motors and hydraulic steering units in the United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. At the same time the Complaint was filed, the United States filed a proposed Final Judgment and an Asset Preservation Stipulation and Order (‘‘Stipulation and Order’’), which are designed to remedy the loss of competition alleged in the Complaint. PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 Grant date 20-Mar-18. Under the proposed Final Judgment, which is explained more fully below, Defendant Danfoss is required to divest the following assets: The Danfoss Orbital Motor Business; the Danfoss Steering Unit Business; the Eaton Orbital Motor Assets; the Eaton Steering Unit Assets, and certain Intellectual Property (collectively ‘‘The Divestiture Assets’’). Under the terms of the Stipulation and Order, Defendants must take certain steps to ensure that the Divestiture Assets that must be divested are operated as ongoing, economically viable, competitive Divestiture Assets for the design, manufacture, and sale of orbital motors and steering units and must take all other actions to preserve and maintain the full economic viability, marketability, and competitiveness of the Divestiture Assets to be divested. 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. E:\FR\FM\23JYN1.SGM 23JYN1 39072 Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices II. Description of Events Giving Rise to the Alleged Violation (A) The Defendants and the Proposed Transaction Danfoss and Eaton are global corporations based in Nordborg, Denmark and Dublin, Ireland, respectively, that manufacture components of hydraulic power systems for industrial and agricultural use. Defendants’ hydraulic components make it possible to steer, propel, and operate equipment used to pave roads, harvest produce, construct buildings, and perform other heavy industrial and agricultural tasks across the United States every day. Pursuant to a Transaction Agreement dated January 21, 2020, Danfoss intends to acquire Eaton’s hydraulics business for approximately $3.3 billion. khammond on DSKJM1Z7X2PROD with NOTICES (B) The Competitive Effects of the Transaction The Complaint alleges that the transaction as proposed will lead to anticompetitive effects in the markets for the design, manufacture, and sale of hydraulic orbital motors (‘‘orbital motors’’) and hydraulic steering units (‘‘steering units’’). a. Relevant Product Markets The Complaint alleges that orbital motors for mobile off-road equipment and steering units for mobile off-road equipment are lines of commerce, or relevant product markets, for purposes of analyzing the effects of the acquisition under Section 7 of the Clayton Act, 15 U.S.C. 18. Orbital motors, also called ‘‘low-speed, hightorque’’ motors, are a low-cost way to move heavy loads in a slow, and thus controlled, way. Steering units direct hydraulic fluid in response to commands from equipment operators and are necessary for any hydraulic steering system to function. In the event of a small but significant increase in price by a hypothetical monopolist of orbital motors, the Complaint alleges that substitution away from orbital motors would be insufficient to render the price increase unprofitable. Other technologies, such as vane, gear, piston, or electric motors, do not offer the same level of performance, are less efficient, or cost more than an orbital motor. Therefore, these technologies are not reasonable substitutes for orbital motors. Orbital motors for mobile off-road equipment are therefore a line of commerce, or relevant product market, for purposes of analyzing the effects of the acquisition under Section 7 of the Clayton Act, 15 U.S.C. 18. VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 Similarly, in the event of a small but significant increase in price by a hypothetical monopolist of steering units, the Complaint alleges that substitution away from steering units would be insufficient to render the price increase unprofitable. Electric steering technology—the only alternative steering system that does not require a hydraulic steering unit—is largely unproven and more expensive than hydraulic steering technology. The switching costs from hydraulic steering to electric steering are high and would require a costly redesign by Original Equipment Manufacturers (‘‘OEMs’’). Steering units for mobile off-road equipment are therefore a line of commerce, or relevant product market, for purposes of analyzing the effects of the acquisition under Section 7 of the Clayton Act, 15 U.S.C. 18. b. Relevant Geographic Markets The Complaint alleges that OEMs located in the United States wish to avoid business disruption and cannot reasonably turn to suppliers without a U.S. presence for the supply of orbital motors or steering units for mobile offroad equipment. Long lead times due to international shipping and unexpected delays in the delivery of products can cause significant business disruption. Customers similarly require that suppliers warehouse new and replacement parts to avoid costly delays or interruptions to business operations and expect local service and support from suppliers. Thus, a hypothetical monopolist of orbital motors or steering units sold in the United States could profitably impose a small but significant non-transitory increase in price for orbital motors or steering units without losing sufficient sales to render the price increase unprofitable. Nor would the price increase be defeated by arbitrage, e.g., by OEMs purchasing through subsidiaries located outside the United States. Accordingly, the relevant geographic market for purposes of analyzing the effects of the acquisition on orbital motors and steering units for mobile off-road equipment under Section 7 of the Clayton Act, 15 U.S.C. 18, is the United States. c. Anticompetitive Effects of the Proposed Transaction The Complaint alleges that the transaction as proposed would lessen competition and harm customers for orbital motors and steering units for mobile off-road equipment in the United States. The Herfindahl-Hirschman Index (‘‘HHI’’), as articulated in the Horizontal Merger Guidelines issued by the Department of Justice and the Federal PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 Trade Commission, measures the likely anticompetitive effects of an acquisition by assessing how concentrated a market is. The more concentrated a market, the higher the likelihood that a transaction will result in a meaningful reduction in competition and harm customers. HHI calculations in the markets for both orbital motors and steering units indicate that the proposed acquisition will result in highly concentrated markets and is thus presumed likely to enhance market power. The HHI indicators of highly concentrated markets and enhanced market power are consistent with historical head-to-head competition between Danfoss and Eaton to supply orbital motors and steering units for mobile off-road equipment. Danfoss and Eaton compete directly on price, quality, product innovation, delivery, and technical service, and the competition between them has benefited U.S. customers of orbital motors and steering units for mobile off-road equipment. Danfoss and Eaton have a reputation for high-quality orbital motors and steering units, product developments that benefit OEMs, an extensive network of distributors throughout the United States, and localized customer support and service. As a result, Danfoss and Eaton are considered to be the two primary—and sometimes the only two—suppliers of orbital motors and steering units to customers in the United States. d. Difficulty of Entry The Complaint alleges that entry of additional competition into the design, manufacture, and sale of orbital motors and steering units sold in North America is unlikely to be timely, likely, or sufficient to prevent the harm to competition caused by Danfoss’s acquisition of Eaton’s hydraulics business. A new entrant must have the technical capabilities necessary to design, manufacture, and sell orbital motors and steering units that meet customer requirements for quality, performance, and reliability. Additionally, a new entrant must have the requisite scale, an established reputation, and an extensive network of distributors to supply to all customers throughout the United States. III. Explanation of the Proposed Final Judgment The relief 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 the design, manufacture, and sale of orbital motors and steering units. E:\FR\FM\23JYN1.SGM 23JYN1 Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices Paragraph IV.A of the proposed Final Judgment requires Defendant Danfoss, within 60 days after the entry of the Stipulation and Order by the Court, to divest the Divestiture Assets to Interpump Group S.p.A. (‘‘Interpump’’) or an alternative acquirer acceptable to the United States, in its sole discretion. If the 60 days expire while Defendants are waiting for regulatory approval from U.S. or international regulators, Paragraph IV.B extends the time allowed for the divestiture to take place to ten calendar days after the Regulatory Approval has been received. The extension may be no longer than 30 calendar days, unless the United States, in its sole discretion, consents to an additional extension. (A) Divestiture Assets The Divestiture Assets consist of the Danfoss Divestiture Assets and the Eaton Divestiture Assets. Taken together, the Divestiture Assets will form a viable, ongoing business that can compete effectively in the hands of an acquirer approved by the United States, in its sole discretion. The combination of product model lines from both Defendants ensures that an acquirer will have the breadth and scale necessary to succeed while preserving Danfoss’s headquarters in Nordborg, Denmark, which houses businesses that are not being divested. khammond on DSKJM1Z7X2PROD with NOTICES (B) Danfoss Divestiture Assets The Danfoss Divestiture Assets are defined in Paragraph II.O as all tangible and intangible assets relating to or used in connection with the Danfoss Orbital Motor Business or the Danfoss Hydraulic Steering Unit Business— including three facilities that are located in Hopkinsville, Kentucky; Wroclaw, Poland; and Parchim, Germany. The Danfoss Orbital Motor Business and Danfoss Hydraulic Steering Unit Business, in turn, are defined by model of orbital motor or steering unit in Paragraphs II.E and II.F and comprise Danfoss’s business of designing, manufacturing, and selling these orbital motors and steering units in the United States. The Danfoss Divestiture Assets also include assets necessary for the acquirer to manufacture Danfoss’ S70 model of steering unit, which currently is in development. Certain assets located in Zhenjiang, China and Nordborg, Denmark are excluded from the Danfoss Divestiture Assets because they are not used for the orbital motors and hydraulic units at issue for sale to U.S. customers. VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 (C) Eaton Divestiture Assets The Eaton Divestiture Assets are defined in Paragraph II.P as all tangible and intangible assets relating to or used in connection with the Eaton Orbital Motor Assets or the Eaton Hydraulic Steering Unit Assets. The Eaton Orbital Motor Assets and Eaton Hydraulic Steering Unit Asset, in turn, are defined by model of orbital motor or steering unit in Paragraphs II.H and II.I and comprise all the assets used to manufacture these models of orbital motors and steering units. Unlike the Danfoss Divestiture Assets, the Eaton Divestiture Assets do not include real property. Instead, the Eaton Orbital Motor Assets and Eaton Hydraulic Steering Unit Assets will move to the divested facility located in Hopkinsville, KY. The Eaton Divestiture Assets will include all fixed assets, machinery, and manufacturing equipment for the Eaton Orbital Motor Assets and Eaton Hydraulic Steering Unit Assets except Eaton’s Series 20 model of hydraulic steering unit products. The Eaton Divestiture Assets also do not include the transfer of paint line assets (see Paragraph II.Q), which are instead included in the Danfoss Divestiture Assets. (D) Intellectual Property With the exceptions of the intellectual property listed in Exhibits 1, 2, or 3, and the Char Lynn license, all Intellectual Property including, but not limited to (a) patents, patent applications, and inventions and discoveries that may be patentable, (b) registered and unregistered copyrights and copyright applications, and (c) registered and unregistered trademarks, trade dress, service marks, trade names, and trademark applications will be divested to the acquirer. The intellectual property listed in Exhibits 1, 2, and 3 is necessary for the Divestiture Assets as well as for assets that will be retained by Defendant Danfoss. Consequently, the acquirer will receive worldwide, non-exclusive, royalty-free, perpetual, paid-up, irrevocable licenses to the intellectual property listed in Exhibits 1, 2, and 3. Likewise, the acquirer will receive a worldwide, non-exclusive, royalty-free, perpetual, paid-up, irrevocable license to use the Char Lynn name, which is used for certain Eaton orbital motor models. This license will allow the acquirer to transition these products to its own product names. (E) Divestiture Provisions Section IV of the proposed Final Judgment contains additional detail PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 39073 about how the divestitures should be carried out. Defendants are required to act expeditiously (Paragraph IV.C), to divest the Divestiture Assets in such a way as to satisfy the United States, in its sole discretion, that the Divestiture Assets will be used as a part of a viable ongoing business and will remedy the competitive harm alleged in the Complaint (Paragraph IV.D). The divestiture must be made to an acquirer that, in the United States’ sole judgment, has the intent and capability to compete effectively in the design, manufacture and sale of orbital motors and hydraulic steering units for mobile off-road equipment (Paragraph IV.E) and must be done in such a manner that Defendants cannot interfere in the acquirer’s efforts to compete effectively in the design, manufacture, and sale of orbital motors and hydraulic steering units for mobile off-road equipment. If the Divestiture Assets are divested to an acquirer other than Interpump, Paragraphs IV.G and IV.H require Defendants to make certain information available to the prospective acquirer, including a copy of the proposed Final Judgment. Paragraph IV.I of the proposed Final Judgment contains provisions intended to facilitate the acquirer’s efforts to hire certain employees. Specifically, Paragraph IV.I of the proposed Final Judgment requires Defendant Danfoss to provide the acquirer and the United States with organization charts and information relating to these employees and to make them available for interviews. It also provides that Defendants must not interfere with any efforts by the acquirer to hire these employees. In addition, for employees who elect employment with the acquirer, Defendant Danfoss must waive all non-compete and non-disclosure agreements, vest and pay to these employees (or to the acquirer for payment to the employee) on a prorated basis any bonuses, incentives, other salary, benefits or other compensation fully or partially accrued at the time of the transfer of the employee to the acquirer; vest any unvested pension or other equity rights; and provide all other benefits that the employees would generally be provided had those employees continued employment with Defendants, including but not limited to any retention bonuses or payments. Paragraph IV.J of the proposed Final Judgment ensures that the Divestiture Assets are unencumbered and operable from the first day that the acquirer takes ownership. Paragraph IV.L ensures that the acquirer will receive all necessary licenses, registrations, and permits to E:\FR\FM\23JYN1.SGM 23JYN1 khammond on DSKJM1Z7X2PROD with NOTICES 39074 Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices operate the Divestiture Assets once they are transferred. Paragraph IV.K of the proposed Final Judgment will facilitate the transfer to the acquirer of customers and other contractual relationships that are included within the Divestiture Assets. Defendants must transfer all contracts, agreements, and relationships to the acquirer and must use best efforts to assign, subcontract, or otherwise transfer contracts or agreements that require the consent of another party before assignment, subcontracting, or other transfer. Paragraph IV.M of the proposed Final Judgment requires Defendants to accomplish the move of Eaton Divested Equipment, as defined in Paragraph II.Q, to the acquirer’s preferred location within 12 months after the Court’s entry of the Stipulation and Order. In the interim, the supply contracts mandated by Paragraph IV.O will ensure that the acquirer can serve its new customer base without disruption. Paragraphs IV.M and IV.O allow the United States to extend the time to move the Eaton Divested Equipment and the terms of the supply contracts up to an additional six months if necessary. Paragraphs IV.N and IV.O of the proposed Final Judgment address supply contracts between Defendant Danfoss and the acquirer. Paragraph IV.N requires Defendant Danfoss, at the acquirer’s option, to enter into a supply contract for certain services and components, such as heat treatment services and gerotors, sufficient to meet the acquirer’s needs, as determined by the acquirer, for a period of up to 12 months. The acquirer may terminate the supply contract, or any portion of it, without cost or penalty at any time upon commercially reasonable notice, and any amendments to or modifications of any provisions of a supply contract are subject to approval by the United States in its sole discretion. Paragraph IV.O requires Defendants to enter into a supply contract for certain models of orbital motor and steering unit products, for a period of up to 18 months. Upon the acquirer’s request, the United States, in its sole discretion, may approve one or more extensions of the supply contracts contemplated in Paragraphs IV.N and IV.O for up to an additional six months. This provision will help to ensure that the acquirer will not face disruption to its supply of these input products during an important transitional period. The proposed Final Judgment requires Defendant Danfoss to provide certain transition services to maintain the viability and competitiveness of the Divestiture Assets during the transition VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 to the acquirer. Paragraph IV.P of the proposed Final Judgment requires Defendant Danfoss, at the acquirer’s option, to enter into a transition services agreement for back office, accounting, human resources, information technology services and support, employee health and safety, and technical training services and support for a period of up to 12 months. The acquirer may terminate the transition services agreement, or any portion of it, without cost or penalty at any time upon commercially reasonable notice. The paragraph further provides that the United States, in its sole discretion, may approve one or more extensions of this transition services agreement for a total of up to an additional 6 months and that any amendments to or modifications of any provisions of a transition services agreement are subject to approval by the United States in its sole discretion. Paragraph IV.P also provides that employees of Defendants tasked with supporting this agreement must not share any competitively sensitive information of the acquirer with any other employee of Defendants, unless such sharing is for the sole purpose of providing transition services to the acquirer. Paragraph IV.Q of the proposed Final Judgment requires Defendants to refrain for one year from soliciting customers for the portion of the customer’s business that is transferring to the acquirer. Defendants may respond to inquiries initiated by such customers and enter into negotiations at the request of the customers but must maintain a log of any such inquiries and requests. This provision gives the acquirer time to establish a performance record with new customers without interference from Defendants. Paragraph IV.Q allows the United States to extend the time period of this provision up to an additional six months if necessary. Paragraph IV.R ensures that the terms of the proposed Final Judgment supersede any terms of agreement between Defendants and the acquirer that are inconsistent with the proposed Final Judgment. (F) Divestiture Trustee Provisions If Defendants do not accomplish the divestiture within the period prescribed in Paragraph IV.A or IV.B of the proposed Final Judgment, Section V of the proposed Final Judgment provides that the Court will appoint a divestiture trustee selected by the United States to effect the divestiture. If a divestiture trustee is appointed, the proposed Final Judgment provides that Defendant Danfoss must pay all costs and expenses of the trustee. The divestiture trustee’s PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 compensation must be structured so as to provide an incentive for the trustee based on the price and terms obtained and the speed with which the divestiture is accomplished. After the divestiture trustee’s appointment becomes effective, the trustee must provide monthly reports to the United States setting forth his or her efforts to accomplish the divestiture. If the divestiture has not been accomplished within six months of the divestiture trustee’s appointment, the United States may make recommendations to the Court, which will enter such orders as appropriate, in order to carry out the purpose of the Final Judgment, including by extending the trust or the term of the divestiture trustee’s appointment by a period requested by the United States. (G) Monitoring Trustee Provisions Section X of the proposed Final Judgment provides that the United States may appoint a monitoring trustee who will have the power and authority to investigate and report on Defendants’ compliance with the terms of the Final Judgment and the Stipulation and Order, including compliance with all supply and transition service agreements and progress of production line transfers, and will have other powers as the Court deems appropriate. The monitoring trustee will not have any responsibility or obligation for the operation of Defendants’ businesses. The monitoring trustee will serve at Defendant Danfoss’ expense, on such terms and conditions as the United States approves, and Defendants must assist the monitoring trustee in fulfilling his or her obligations. The monitoring trustee will provide periodic reports to the United States and will serve until the divestiture of all the Divestiture Assets is finalized pursuant to either Section IV or Section V of this Final Judgment and Defendant Danfoss has complied with the terms of the transition services agreements and supply contracts provided for in this Final Judgment, unless the United States, in its sole discretion, determines a different period is appropriate. (H) Firewall Provision The relocation of the Eaton Divested Equipment to a location specified by acquirer will require Defendants’ employees to train employees of the acquirer on how to properly operate the equipment. Section XII of the proposed Final Judgment requires Defendants to implement and maintain a firewall to prevent the exchange of competitively sensitive information between Defendants and the acquirer. E:\FR\FM\23JYN1.SGM 23JYN1 Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices khammond on DSKJM1Z7X2PROD with NOTICES Specifically, Defendants must implement and maintain procedures to prevent any employees of Defendants from sharing competitively sensitive information relating to the Divestiture Assets with personnel of Defendants with responsibilities relating to Danfoss’s or Eaton’s design, manufacture, and sale of hydraulic orbital motors or hydraulic steering units. Such a firewall will prevent competitively sensitive information about the Divestiture Assets from being used to influence business decisions relating to Danfoss’s or Eaton’s design, manufacturing, or sale of orbital motors or steering units. The implementation of these procedures for a two-year period will ensure that the information cannot be used while it is still competitively sensitive. After two years, any information will be sufficiently out of date to no longer pose a risk and the firewall can be eliminated. Under Paragraph XII.B, Defendants must, within 30 days of entry of the Stipulation and Order, submit to the United States a document setting forth in detail the procedures each has implemented to effect compliance with Section XII. The United States will determine, in its sole discretion, whether to approve or reject Defendants’ proposed compliance plans. (I) Compliance and Enforcement Provisions The proposed Final Judgment also contains provisions designed to promote compliance with and make enforcement of the Final Judgment as effective as possible. Paragraph XV.A provides that the United States retains and reserves all rights to enforce the Final Judgment, including the right to seek an order of contempt from the Court. Under the terms of this paragraph, Defendants have agreed that in any civil contempt action, any motion to show cause, or any similar action brought by the United States regarding an alleged violation of the Final Judgment, the United States may establish the violation and the appropriateness of any remedy by a preponderance of the evidence and that Defendants have waived any argument that a different standard of proof should apply. This provision aligns the standard for compliance with the Final Judgment with the standard of proof that applies to the underlying offense that the Final Judgment addresses. Paragraph XV.B provides additional clarification regarding the interpretation of the provisions of the proposed Final Judgment. The proposed Final Judgment is intended to remedy the loss of competition the United States alleges would otherwise be harmed by the VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 transaction. Defendants agree that they will abide by the proposed Final Judgment and that they may be held in contempt of the Court for failing to comply with any provision of the proposed Final Judgment that is stated specifically and in reasonable detail, as interpreted in light of this procompetitive purpose. Paragraph XV.C provides that if the Court finds in an enforcement proceeding that a Defendant has violated the Final Judgment, the United States may apply to the Court for an extension of the Final Judgment, together with such other relief as may be appropriate. In addition, to compensate American taxpayers for any costs associated with investigating and enforcing violations of the Final Judgment, Paragraph XV.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, the Defendant must reimburse the United States for attorneys’ fees, experts’ fees, and other costs incurred in connection with any effort to enforce the Final Judgment, including the investigation of the potential violation. Paragraph XV.D states that the United States may file an action against a Defendant for violating the Final Judgment for up to four years after the Final Judgment has expired or been terminated. 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. (J) Term of the Final Judgment Finally, Section XVI of the proposed Final Judgment provides that the Final Judgment will expire 10 years from the date of its entry, except that after five years from the date of its entry, the Final Judgment may be terminated upon notice by the United States to the Court and Defendants that the divestiture has been completed and that continuation of the Final Judgment is no longer necessary or in the public interest. PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 39075 IV. Remedies Available to Potential Private Plaintiffs Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any person who has been injured as a result of conduct prohibited by the antitrust laws may bring suit in federal court to recover three times the damages the person has suffered, as well as costs and reasonable attorneys’ fees. Entry of the proposed Final Judgment neither impairs nor assists the bringing of any private antitrust damage action. Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the proposed Final Judgment has no prima facie effect in any subsequent private lawsuit that may be brought against Defendants. V. Procedures Available for Modification of the Proposed Final Judgment The United States and Defendants have stipulated that the proposed Final Judgment may be entered by the Court after compliance with the provisions of the APPA, provided that the United States has not withdrawn its consent. The APPA conditions entry upon the Court’s determination that the proposed Final Judgment is in the public interest. The APPA provides a period of at least 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, the comments and the United States’ responses will be published in the Federal Register unless the Court agrees that the United States instead may publish them on the U.S. Department of Justice, Antitrust Division’s internet website. Written comments should be submitted in English to: Jay Owen, Acting Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street NW, Suite 8700, Washington, DC 20530. E:\FR\FM\23JYN1.SGM 23JYN1 39076 Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices The proposed Final Judgment provides that the Court retains jurisdiction over this action, and the parties may apply to the Court for any order necessary or appropriate for the modification, interpretation, or enforcement of the Final Judgment. VI. Alternatives to the Proposed Final Judgment As an alternative to the proposed Final Judgment, the United States considered a full trial on the merits against Defendants. The United States could have continued the litigation and sought preliminary and permanent injunctions against Danfoss’s acquisition of certain assets and equity interests of Eaton’s hydraulics business. The United States is satisfied, however, that the relief required by the proposed Final Judgment will remedy the anticompetitive effects alleged in the Complaint, preserving competition for the design, manufacture, and sale of orbital motors and hydraulic steering units. 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. khammond on DSKJM1Z7X2PROD with NOTICES VII. Standard of Review Under the APPA for the Proposed Final Judgment Under the Clayton Act and APPA, proposed Final Judgments or ‘‘consent decrees’’ in antitrust cases brought by the United States are subject to a 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 VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 ‘‘broad discretion to settle with the defendant within the reaches of the public interest.’’ United States v. Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); United States v. U.S. Airways Grp., Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (explaining that the ‘‘court’s inquiry is limited’’ in Tunney Act settlements); United States v. InBev N.V./S.A., No. 08–1965 (JR), 2009 U.S. Dist. LEXIS 84787, at *3 (D.D.C. Aug. 11, 2009) (noting that a court’s review of a proposed Final Judgment is limited and only inquires ‘‘into whether the government’s determination that the proposed remedies will cure the antitrust violations alleged in the complaint was reasonable, and whether the 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); see also United States v. Deutsche Telekom AG, No. 19–2232 (TJK), 2020 WL 1873555, at *7 (D.D.C. Apr. 14, 2020). More demanding requirements would ‘‘have enormous practical consequences for the government’s ability to negotiate future settlements,’’ contrary to congressional intent. Microsoft, 56 F.3d at 1456. ‘‘The PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 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. 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 E:\FR\FM\23JYN1.SGM 23JYN1 Federal Register / Vol. 86, No. 139 / Friday, July 23, 2021 / Notices that the United States did not pursue. Microsoft, 56 F.3d at 1459–60. In its 2004 amendments to the APPA, Congress made clear its intent to preserve the practical benefits of using judgments proposed by the United States in antitrust enforcement, Public Law 108–237 § 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). DEPARTMENT OF JUSTICE Drug Enforcement Administration [Docket No. DEA–861] Importer of Controlled Substances Application: Arizona Department of Corrections Drug Enforcement Administration, Justice. ACTION: Notice of application. AGENCY: Arizona Department of Corrections has applied to be registered as an importer of basic class(es) of controlled substance(s). Refer to Supplementary Information listed below for further drug information. DATES: Registered bulk manufacturers of the affected basic class(es), and applicants therefore, may file written comments on or objections to the issuance of the proposed registration on or before August 23, 2021. Such persons may also file a written request for a hearing on the application on or before August 23, 2021. ADDRESSES: Written comments should be sent to: Drug Enforcement Administration, Attention: DEA Federal Register Representative/DPW, 8701 Morrissette Drive, Springfield, Virginia 22152. All requests for a hearing must be sent to: Drug Enforcement Administration, Attn: Administrator, 8701 Morrissette Drive, Springfield, Virginia 22152. All requests for a hearing should also be sent to: (1) Drug VIII. Determinative Documents Enforcement Administration, Attn: Hearing Clerk/OALJ, 8701 Morrissette There are no determinative materials or documents within the meaning of the Drive, Springfield, Virginia 22152; and (2) Drug Enforcement Administration, APPA that were considered by the Attn: DEA Federal Register United States in formulating the Representative/DPW, 8701 Morrissette proposed Final Judgment. Drive, Springfield, Virginia 22152. Dated: July 14, 2021 SUPPLEMENTARY INFORMATION: In Respectfully submitted, accordance with 21 CFR 1301.34(a), this is notice that on June 7, 2021, Arizona For Plaintiff United States of America: lllllllllllllllllllll Department of Corrections, 1305 E Butte Avenue, ASPC-Florence, Florence, REBECCA VALENTINE* (D.C. Bar #989607), Arizona 85132–9221, applied to be Trial Attorney, registered as an importer of the Defense, Industrials, and Aerospace Section, Antitrust Division, 450 Fifth Street NW, Suite following basic class(es) of controlled substance(s): 8700, Washington, DC 20530, Telephone: khammond on DSKJM1Z7X2PROD with NOTICES [FR Doc. 2021–15728 Filed 7–22–21; 8:45 am] Drug code Controlled substance Pentobarbital .................... BILLING CODE 4410–11–P Schedule I 2270 I II The facility intends to import the above-listed controlled substance for legitimate use. This particular controlled substance is not available for the intended legitimate use within the current domestic supply of the United States. No other activity for this drug code is authorized for this registration. VerDate Sep<11>2014 16:49 Jul 22, 2021 Jkt 253001 PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 Approval of permit applications will occur only when the registrant’s business activity is consistent with what is authorized under 21 U.S.C. 952(a)(2). Authorization will not extend to the import of Food and Drug Administration-approved or nonapproved finished dosage forms for commercial sale. William T. McDermott, Assistant Administrator. SUMMARY: (202) 476–0432, Facsimile: (202) 514–9033, Email: rebecca.valentine@usdoj.gov. *Lead Attorney To Be Noticed 39077 [FR Doc. 2021–15710 Filed 7–22–21; 8:45 am] BILLING CODE P DEPARTMENT OF JUSTICE Office of Justice Programs [OMB Number 1121–0334] Agency Information Collection Activities; Proposed Collection Comments Requested; Reinstatement, With Change, of a Previously Approved Collection for Which Approval Has Expired: 2021 Survey of Campus Law Enforcement Agencies (SCLEA) Office of Justice Programs, Department of Justice. ACTION: 30-Day notice. AGENCY: The Department of Justice (DOJ), Office of Justice Programs, Bureau of Justice Statistics, will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. The proposed information collection was previously published in the Federal Register, Volume 86, Number 94, page 26944 on Tuesday, May 18, 2021, allowing a 60-day comment period. Following publication of the 60-day notice, BJS did not receive any comments on the proposed information collection. DATES: Comments are encouraged and will be accepted for 30 days until August 23, 2021. ADDRESSES: Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to www.reginfo.gov/public/do/ PRAMain. Find this particular information collection by selecting ‘‘Currently under 30-day Review—Open for Public Comments’’ or by using the search function. SUPPLEMENTARY INFORMATION: Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should SUMMARY: E:\FR\FM\23JYN1.SGM 23JYN1

Agencies

[Federal Register Volume 86, Number 139 (Friday, July 23, 2021)]
[Notices]
[Pages 39059-39077]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15728]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Danfoss A/S, 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. Danfoss A/S and Eaton Corporation plc, Civil 
Action No. 1:21-cv-1880-CJN. On July 14, 2021, the United States filed 
a Complaint alleging that Danfoss's proposed acquisition of Eaton 
Corporation plc's hydraulics business 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 Danfoss to divest three Danfoss 
hydraulic orbital motor and hydraulic steering unit manufacturing 
facilities and from Eaton two orbital motor production lines and one 
hydraulic steering unit production line.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's website at http://www.justice.gov/atr and at the Office of 
the Clerk of the United States District Court for the District of 
Columbia. Copies of these materials may be obtained from the Antitrust 
Division upon request and payment of the copying fee set by Department 
of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, including the name of the submitter, and 
responses thereto, will be posted on the Antitrust Division's website, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments should be submitted in English and 
directed to Jay Owen, Acting Chief, Defense, Industrials, and Aerospace 
Section, Antitrust Division, Department of Justice, 450 Fifth Street 
NW, Suite 8700, Washington, DC 20530 (email address: 
[email protected]).

Suzanne Morris,
Chief, Premerger and Division Statistics, Antitrust Division.

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. Eaton Corporation plc, Eaton House, 30 Pembroke Road, 
Dublin 4, Ireland and Danfoss A/S, Nordborgvej 81, DK-6430v Nordborg, 
Denmark, Defendants.

Civil Action No.: 1:21-cv-1880-CJN

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 Eaton Corporation plc 
(``Eaton'') and Danfoss A/S (``Danfoss'') to enjoin Danfoss's proposed 
acquisition of Eaton's hydraulics business. The United States complains 
and alleges as follows:

I. Nature of the Action

    1. Pursuant to a Transaction Agreement dated January 21, 2020, 
Danfoss intends to acquire Eaton's hydraulics business for 
approximately $3.3 billion. The hydraulic power components that Danfoss 
and Eaton manufacture make it possible to steer, propel, and operate 
equipment used to pave roads, harvest produce, construct buildings, and 
perform other heavy industrial and agricultural tasks across the United 
States every day.
    2. Danfoss and Eaton are two of only three suppliers of hydraulic 
orbital motors (``orbital motors'') and hydraulic steering units 
(``steering units'') used in tractors, wheel loaders, lifts, and other 
types of mobile off-road equipment in the United States. Orbital 
motors, also

[[Page 39060]]

called ``low-speed, high-torque'' motors, are a low-cost way to move 
heavy loads in a slow, and thus controlled, way. Steering units direct 
hydraulic fluid in response to commands from equipment operators and 
are necessary for any hydraulic steering system to function. Three of 
every four orbital motors and four of every five steering units 
purchased in the United States are supplied by either Danfoss or Eaton.
    3. Competition between Danfoss and Eaton has driven prices down and 
spurred the production of new and better orbital motors and steering 
units. The proposed merger would eliminate this competition, leading to 
higher prices, lower quality, and diminished innovation.
    4. As a result, the proposed acquisition would substantially lessen 
competition in the market for the design, manufacture, and sale of 
orbital motors and steering units for mobile off-road equipment in the 
United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 
18.

II. Defendants and the Transaction

    5. Danfoss is a global corporation headquartered in Nordborg, 
Denmark that specializes in the manufacturing of components and 
engineering technologies for, inter alia, hydraulics for off-road 
machinery. Danfoss's Power Solutions division produces hydraulic pumps, 
motors, valves and steering solutions, as well as electronic 
components, software, motors, and converters. The Power Solutions 
division accounted for 35% of Danfoss's [euro]6.3 billion in revenue in 
2019.
    6. Eaton is a global corporation headquartered in Dublin, Ireland 
that focuses on power management solutions for electrical, hydraulics, 
aerospace, and vehicle applications. Eaton Hydraulics, based in Eden 
Prairie, Minnesota, consists of a Fluid Conveyance Division that sells 
hoses and other fluid conveyance products and a Power & Motion Controls 
Division offering hydraulic motors, power units, valves, and steering 
units. The Power & Motion Controls division had sales of $2.2 billion 
in 2019.
    7. On January 21, 2020, Danfoss and Eaton signed an agreement under 
which Danfoss will acquire Eaton's hydraulics business in exchange for 
$3.3 billion.

III. Jurisdiction and Venue

    8. The United States brings this action under Section 15 of the 
Clayton Act, 15 U.S.C. 25, to prevent and restrain Defendants from 
violating Section 7 of the Clayton Act, 15 U.S.C. 18.
    9. Defendants design, manufacture, and sell orbital motors and 
steering units for mobile off-road equipment throughout the United 
States, and their activities in these areas substantially affect 
interstate commerce. This Court therefore 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.
    10. 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(b) and (c).

IV. Industry Background

A. Hydraulic Systems

    11. Most heavy industrial and agricultural operations rely on 
specialized equipment to perform work ``off-road'' (e.g., in a 
construction site, a field, a forest, a mine, or on a golf course). The 
predominant drive technology for this equipment is a hydraulic system, 
which uses hydraulic fluid to generate power.
    12. The basic architecture of a hydraulic system includes a 
reservoir for hydraulic fluid; a pump to move that fluid; valves to 
control the liquid in various ways (e.g., pressure, flow, or 
direction); a motor to convert hydraulic pressure into mechanical 
energy; and components that accomplish the intended task, such as 
cylinders.
    13. Mobile off-road equipment often has multiple hydraulic systems. 
Each system serves one of three functions: To carry out the steering 
commands given by a driver, to propel equipment forward, or to make the 
equipment perform its intended work function (e.g., to operate the 
forks on a forklift or raise a scissor lift's platform).
    14. Original Equipment Manufacturers (``OEMs'') of mobile off-road 
equipment select components of hydraulic systems individually, 
considering the performance requirements of the equipment at issue, 
price, and the space available to house the components selected. To 
determine components for a new platform, OEMs may solicit bids, seek 
the services of a distributor, collaborate with a preferred provider, 
or use in-house engineers as experts.

B. Orbital Motors

    15. While all hydraulic motors turn hydraulic pressure into 
mechanical energy, there are different designs that can be used for 
mobile equipment: Gear motors, orbital motors, vane motors, and piston 
motors. Each design presents a different value proposition in terms of 
power, pressure, fluid displacement, torque, and rotational speed. OEMs 
consider each of these performance characteristics, as well as price 
and physical size, when selecting a motor to be used in a particular 
hydraulic system.
    16. There is a direct relationship between a motor's power metrics 
and its price. In addition to being more expensive, a motor that is 
more powerful than necessary for the job has less operating efficiency. 
Thus, OEMs prefer products that meet, but do not exceed, their desired 
performance specifications. Once selected, it is difficult and 
expensive for an OEM to switch motor designs because of the need to 
retrofit the equipment to the new motor.
    17. Orbital motors have a rotating gear design consisting of an 
external gear ring and an inner gear star. When the internal gear star 
rotates in a planetary-type movement, fluid that has been inserted by a 
pump is displaced between every gear tooth. The result is a high torque 
output at a low rotational speed. For this reason, orbital motors are 
also referred to as ``low- speed, high torque'' motors.
    18. Orbital motors are in the ``low-to-medium'' power category of 
motors, generating fewer than 100 kilowatts of power. However, an 
orbital motor is efficient and generates high output levels of torque 
at low rotational speeds, which makes it easier to control the movement 
of heavy loads. Orbital motors are also uniquely attractive to OEMs 
because they come in a standard compact size, which OEMs can count on 
when designing mobile off-road equipment.
    19. Because orbital motors are more commoditized and thus less 
expensive than other motors that produce similar amounts of torque, 
they are considered a ``workhorse'' motor for many OEMs that design 
mobile off-road equipment, and can be used for the ``work'' or 
``propel'' functions for a long list of mobile off-road equipment, 
including potato harvesters, wheel loaders, skid steer loaders, aerial 
lifts, asphalt pavers, rollers, salt spreaders, harvesters, and street 
sweepers.
    20. In contrast to orbital motors, piston motors are higher 
powered, higher priced, larger, and often inefficient for an 
application that is appropriate for an orbital motor. Similarly, gear 
and vane motors fail to meet an orbital motor's performance metrics for 
torque.

C. Hydraulic Steering Units

    21. An OEM designing a power steering system for mobile off-road 
equipment can choose from three different steering technologies:

[[Page 39061]]

Hydraulic, electrohydraulic, and electric. Hydraulic steering systems--
by far the most common technology used in off-road equipment--use 
commands from a driver to turn a vehicle's wheels using hydraulic 
fluid. Electrohydraulic steering systems build on hydraulic steering 
systems by adding electronically-controlled components that make 
steering with a joystick or GPS-guided steering function possible. 
Electric steering does not require hydraulics components and instead 
generates the power assist needed for steering through electric motors.
    22. Hydraulic steering systems move pressurized hydraulic fluid 
through a circuit to control cylinders connected to the wheels of 
mobile off-road equipment. The piece of a hydraulic steering system 
that determines the direction that the fluid moves and provides 
pressure control is called a steering unit.
    23. All hydraulic steering systems--even those with some electronic 
components--require a steering unit. If an OEM wished to design around 
a steering unit for mobile off-road equipment, it would have to shift 
the entirety of the steering system from hydraulic technology to the 
more expensive electric technology.

V. The Relevant Markets Threatened by the Acquisition

A. Relevant Product Markets

    24. An OEM in need of an orbital motor's performance 
characteristics for a mobile off-road vehicle design would not simply 
substitute an alternative motor technology. No other motor offers the 
same combination of (1) efficiency (i.e., operating power necessary for 
the intended use), (2) torque output, and (3) low price. Vane and gear 
motors do not meet the torque output performance metrics of an orbital 
motor, and piston and electric motors are more expensive and less 
efficient than an orbital motor. In order for a customer to switch to 
any of these alternative technologies, that customer would need to 
downgrade its performance expectations, engage in a costly redesign, or 
spend significantly more money.
    25. Because of these factors, in the event of a small but 
significant increase in price by a hypothetical monopolist of orbital 
motors, substitution away from orbital motors would be insufficient to 
render the price increase unprofitable. Orbital motors for mobile off-
road equipment are therefore a line of commerce, or relevant product 
market, for purposes of analyzing the effects of the acquisition under 
Section 7 of the Clayton Act, 15 U.S.C. 18.
    26. Similarly, an increase in the price of hydraulic steering 
systems would not cause OEM customers to replace a hydraulic steering 
system in mobile off-road equipment with electric steering technology. 
Electric steering technology--the only alternative steering system that 
does not require a hydraulic steering unit--is largely unproven and 
more expensive than hydraulic steering technology. Electric steering, 
for example, is vulnerable in wet terrains and often lacks the power 
necessary to move cylinders connected to the wheels of large off-road 
equipment. Finally, the switching costs from hydraulic steering to 
electric steering are high and would require a costly redesign by OEMs.
    27. Because of these factors, in the event of a small but 
significant increase in price by a hypothetical monopolist of steering 
units, substitution away from steering units would be insufficient to 
render the price increase unprofitable. Steering units for mobile off-
road equipment are therefore a line of commerce, or relevant product 
market, for purposes of analyzing the effects of the acquisition under 
Section 7 of the Clayton Act, 15 U.S.C. 18.

B. Geographic Markets

    28. OEMs located in the United States cannot reasonably turn to 
suppliers without a U.S. presence for the supply of orbital motors or 
steering units for mobile off-road equipment. Long lead times due to 
international shipping and unexpected delays in the delivery of 
products can cause significant business disruption. Customers similarly 
require that suppliers warehouse new and replacement parts to avoid 
costly delays or interruptions to business operations and expect local 
service and support from suppliers.
    29. A hypothetical monopolist of orbital motors or steering units 
sold in the United States could profitably impose a small but 
significant non-transitory increase in price for orbital motors or 
steering units without losing sufficient sales to render the price 
increase unprofitable. Nor would the price increase be defeated by 
arbitrage, e.g., by OEMs purchasing through subsidiaries located 
outside the United States. Accordingly, the relevant geographic market 
for the purposes of analyzing the effects of the acquisition on orbital 
motors and steering units for mobile off-road equipment under Section 7 
of the Clayton Act, 15 U.S.C. 18, is the United States.

VI. Danfoss's Proposed Acquisition of Eaton's Hydraulics Business Is 
Likely To Result in Anticompetitive Effects

    30. The proposed transaction would lessen competition and harm 
customers for orbital motors and steering units for mobile off-road 
equipment in the United States by eliminating the substantial head-to-
head competition that currently exists between Danfoss and Eaton. 
Customers would pay higher prices and receive lower quality and service 
for orbital motors and steering units as a result of the acquisition.
    31. In the United States, Danfoss and Eaton are the two largest 
suppliers of orbital motors for mobile off-road equipment, with market 
shares of approximately 53% and 24%, respectively. The only other major 
supplier of orbital motors for mobile off-road equipment has a 9% share 
of the market. Together, Danfoss and Eaton would account for over 75% 
of sales of orbital motors in United States.
    32. In the United States, Danfoss and Eaton are the two largest 
suppliers of steering units for mobile off-road equipment, with market 
shares of approximately 43% and 41%, respectively. The only other major 
supplier of steering units for mobile off-road equipment has a 
considerably smaller market share of less than 1%. Together, Danfoss 
and Eaton would account for approximately 84% of sales of steering 
units in the United States.
    33. As articulated in the Horizontal Merger Guidelines issued by 
the Department of Justice and the Federal Trade Commission (the 
``Horizontal Merger Guidelines'' \1\), the Herfindahl-Hirschman Index 
(or ``HHI,'' as described in Appendix A) is a widely used measure of 
market concentration. Market concentration is often a useful way of 
measuring the likely anticompetitive effects of an acquisition. The 
more concentrated a market, the higher the likelihood that a 
transaction will result in a meaningful reduction in competition and 
harm customers. Markets in which the HHI exceeds 2,500 points are 
considered highly concentrated, and transactions that result in highly 
concentrated markets and increase the HHI by more than 200 points are 
presumed to be likely to enhance market power.
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    \1\ U.S. Department of Justice and the Federal Trade Commission, 
Horizontal Merger Guidelines, available at https://www.justice.gov/atr/file/810276/download (Aug. 19, 2010).
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    34. In the market for orbital motors for mobile off-road equipment, 
the pre-merger HHI is 3,605 and the post-merger HHI is 6,087, 
representing an increase in the HHI of 2,482. In the market for

[[Page 39062]]

steering units for mobile off-road equipment, the pre-merger HHI is 
4,155 and the post-merger HHI is 8,273, representing an increase in the 
HHI of 4,118. Under the Horizontal Merger Guidelines, the proposed 
acquisition will result in highly concentrated markets for both orbital 
motors and steering units for mobile off-road equipment and is thus 
presumed likely to enhance market power.
    35. The HHI indicators of highly concentrated markets and enhanced 
market power are consistent with historical head-to-head competition 
between Danfoss and Eaton to supply orbital motors and steering units 
for mobile off-road equipment. Danfoss and Eaton compete directly on 
price, quality, product innovation, delivery, and technical service, 
and the competition between them has benefited U.S. customers of 
orbital motors and steering units for mobile off-road equipment. 
Danfoss and Eaton have a reputation for high-quality orbital motors and 
steering units, product developments that benefit OEMs, an extensive 
network of distributors throughout the United States, and localized 
customer support and service. As a result, Danfoss and Eaton are 
considered to be the two primary--and sometimes the only two--suppliers 
of orbital motors and steering units to customers in the United States.
    36. For all of these reasons, the proposed transaction between 
Danfoss and Eaton likely would substantially lessen competition in the 
design, manufacture, and sale of orbital motors and steering units for 
mobile off-road equipment sold to customers in the United States and 
lead to higher prices, decreased quality of delivery and service, and 
diminished innovation.

VII. Absence of Countervailing Factors

    37. Entry into the design, manufacture, and sale of orbital motors 
and steering units for mobile off-road equipment sold in United States 
is unlikely to be timely, likely, or sufficient to prevent the harm to 
competition caused by Danfoss's acquisition of Eaton's hydraulics 
business. A new entrant must have the technical capabilities necessary 
to design, manufacture, and sell orbital motors and steering units that 
meet customer requirements for quality, performance, and reliability. 
Additionally, a new entrant must have the requisite scale, an 
established reputation, and an extensive network of distributors to 
supply to all customers throughout the United States.
    38. As a result of these entry barriers, entry into the market for 
the design, manufacture, and sale of orbital motors and steering units 
for mobile off-road equipment sold to customers in United States would 
not be timely, likely, or sufficient to defeat the substantial 
lessening of competition that likely would result from Danfoss's 
acquisition of Eaton's hydraulics business.

VIII. Violations Alleged

    39. Danfoss's proposed acquisition of Eaton's hydraulics business 
likely would substantially lessen competition in the design, 
manufacture, and sale of orbital motors and steering units for mobile 
off-road equipment in the United States in violation of Section 7 of 
the Clayton Act, 15 U.S.C. 18.
    40. Unless enjoined, the proposed acquisition would likely have the 
following anticompetitive effects, among others, related to the 
relevant market:
    1. A substantial lessening of competition generally;
    2. an elimination of actual and potential head-to-head competition 
between Danfoss and Eaton; and
    3. a likely increase in prices and decrease in quality and 
innovation.

IX. Request for Relief

    41. The United States requests that this Court:
    1. Adjudge and decree that Danfoss's acquisition of Eaton's 
hydraulics business would be unlawful and violate Section 7 of the 
Clayton Act, 15 U.S.C. 18;
    2. preliminarily and permanently enjoin and restrain Defendants and 
all persons acting on their behalf from consummating the proposed 
acquisition of Eaton's hydraulics business by Danfoss, or from entering 
into or carrying out any other contract, agreement, plan, or 
understanding which would combine Eaton's hydraulics business with 
Danfoss;
    3. award the United States its costs for this action; and
    4. award the United States such other and further relief as the 
Court deems just and proper.

Dated: July 14, 2021

Respectfully submitted,

Counsel for Plaintiff United States:

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Richard Powers,
Acting Assistant Attorney General, Antitrust Division

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Kathleen S. O'Neill,
Senior Director of Investigation and Litigation, Antitrust Division

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Jay D. Owen,
Acting Chief,
Defense, Industrials, and Aerospace Section, Antitrust Division

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SoYoung Choe,
Acting Assistant Chief, Defense, Industrials, and Aerospace Section, 
Antitrust Division

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Rebecca Valentine * (D.C. Bar #989607)
Bashiri Wilson (D.C. Bar # 998075)
Trial Attorneys

Defense, Industrials, and Aerospace Section, Antitrust Division, 450 
Fifth Street NW, Suite 8700, Washington, DC 20530, Telephone: (202) 
476-0432, Facsimile: (202) 514-9033, Email: 
[email protected].
* Lead Attorney To Be Noticed

Appendix A

Definition of the Herfindahl-Hirschman Index

    ``HHI'' means the Herfindahl-Hirschman Index, a commonly 
accepted measure of market concentration. It is calculated by 
squaring the market share of each firm competing in the market and 
then summing the resulting numbers. For example, for a market 
consisting of four firms with shares of 30 percent, 30 percent, 20 
percent, and 20 percent, the HHI is 2,600 (302 + 302 + 202 + 202 = 
2,600). The HHI takes into account the relative size distribution of 
the firms in a market and approaches zero when a market consists of 
a large number of small firms. The HHI increases both as the number 
of firms in the market decreases and as the disparity in size 
between those firms increases. Markets in which the HHI is above 
2,500 are considered to be highly concentrated. See Horizontal 
Merger Guidelines Sec.  5.3. Transactions that increase the HHI by 
more than 200 points in highly concentrated markets are presumed to 
be likely to enhance market power under the guidelines issued by the 
U.S. Department of Justice and Federal Trade Commission. See id.

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Danfoss A/S, and Eaton 
Corporation PLC, Defendants.

Case No: 1:21-cv-1880-CJN

[Proposed] Final Judgment

    Whereas, Plaintiff, United States of America, filed its Complaint 
on July 14, 2021,
    And Whereas, the United States and Defendants, Danfoss A/S 
(``Danfoss'') and Eaton Corporation plc (``Eaton''), have consented to 
entry of this Final Judgment without the taking of testimony, without 
trial or adjudication of any issue of fact or law, and without this 
Final Judgment constituting any evidence against or admission by any 
party relating to any issue of fact or law;
    And Whereas, Defendants agree to make a divestiture to remedy the 
loss of competition alleged in the Complaint;
    And Whereas, Defendants represent that the divestiture and other 
relief required by this Final Judgment can and will be made and that 
Defendants will

[[Page 39063]]

not later raise a claim of hardship or difficulty as grounds for asking 
the Court to modify any provision of this Final Judgment;
    Now therefore, it is ordered, adjudged, and decreed:

I. Jurisdiction

    The Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against Defendants under Section 7 of the Clayton 
Act (15 U.S.C. 18).

II. Definitions

    As used in this Final Judgment:
    A. ``Danfoss'' means Defendant Danfoss A/S, a Danish corporation 
with its headquarters in Nordborg, Denmark, its successors and assigns, 
and its subsidiaries, divisions, groups, affiliates, partnerships, and 
joint ventures, and their directors, officers, managers, agents, and 
employees.
    B. ``Eaton'' means Defendant Eaton Corporation plc, an Irish 
corporation with its headquarters in Dublin, Ireland, its successors 
and assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    C. ``Interpump'' means Interpump Group S.p.A., an Italian 
corporation with its headquarters in Sant'llario d'Enza, Reggio Emilia, 
its successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships, and joint ventures, and their directors, 
officers, managers, agents, and employees.
    D. ``Acquirer'' means Interpump Group S.p.A. or another entity 
approved by the United States in its sole discretion to which 
Defendants divest the Divestiture Assets.
    E. ``Danfoss Orbital Motor Business'' means Danfoss's global 
business of designing, manufacturing, and selling its OMP X, OMR X, 
OMEW, OMH, OMS, OMM, OML, CE, RE, RC, RS, DH, DS, DT, DR, D9, HB, HK, 
and WS models of orbital motor products.
    F. ``Danfoss Hydraulic Steering Unit Business'' means Danfoss's 
global business of designing, manufacturing, and selling its OSPM, 
OSPP, LAGB, LAGU, LAGS, LAGC, LAGL, and LAGZ models of hydraulic 
steering unit products.
    G. ``Danfoss Hydraulic Steering Unit IP Licenses'' means worldwide, 
non-exclusive, royalty-free, perpetual, paid-up, irrevocable licenses 
to the intellectual property listed in Exhibit 1.
    H. ``Eaton Orbital Motor Assets'' means all of Eaton's assets used 
to manufacture its HP 30, VIS 30, VIS 40, and VIS 45 models of orbital 
motor products.
    I. ``Eaton Hydraulic Steering Unit Assets'' means all of Eaton's 
assets used to manufacture its Series 10 and Series 20 models of 
hydraulic steering unit products.
    J. ``Eaton Orbital Motor IP Licenses'' means worldwide, non-
exclusive, royalty-free, perpetual, paid-up, irrevocable licenses to 
the intellectual property listed in Exhibit 2.
    K. ``Eaton Hydraulic Steering Unit IP Licenses'' means worldwide, 
non-exclusive, royalty-free, perpetual, paid-up, irrevocable licenses 
to the intellectual property listed in Exhibit 3.
    L. ``Char Lynn IP License'' means a non-exclusive, irrevocable, 
fully paid-up, royalty-free, perpetual license to use the ``Char Lynn'' 
trademark to market models HP 30, VIS 30, VIS 40, and VIS 45, or their 
equivalents, of orbital motors.
    M. ``Divestiture Assets'' means the Danfoss Divestiture Assets and 
the Eaton Divestiture Assets.
    N. ``Divestiture Date'' means the date on which the Divestiture 
Assets are divested to the Acquirer pursuant to this Final Judgment.
    O. ``Danfoss Divestiture Assets'' means (i) all assets, located in 
Zhenjiang, China as of January 21, 2020, including lapping machines, 
grinders, testers, measurement devices, and any other assets that the 
United States, in its sole discretion, deems to be necessary for the 
manufacture of Danfoss's S70 model hydraulic steering unit product and 
(ii) all of Defendants' rights, titles, and interests in and to the 
Danfoss Orbital Motor Business, the Danfoss Hydraulic Steering Unit 
Business, and all other property and assets, tangible and intangible, 
wherever located, relating to or used in connection with the Danfoss 
Orbital Motor Business or Danfoss Hydraulic Steering Unit Business, 
including:
    1. The facility located at 110 Bill Bryan Blvd., Hopkinsville, KY 
42240 (the ``Hopkinsville Facility'');
    2. the facility located at ul. Logistyezna 1, 55-040 Kobierzyce, 
Wroclaw (Poland) (the ``Wroclaw Facility'');
    3. the facility located at Ludwigsluster Chaussee 5, 19370, Parchim 
(Germany) (the ``Parchim Facility'');
    4. all other real property, including fee simple interests, real 
property leasehold interests and renewal rights thereto, improvements 
to real property, and options to purchase any adjoining or other 
property, together with all buildings, facilities, and other 
structures;
    6. all tangible personal property, including fixed assets, 
machinery and manufacturing equipment, tools, vehicles, inventory, 
materials, office equipment and furniture, computer hardware, and 
supplies;
    7. all contracts, contractual rights, and customer relationships, 
and all other agreements, commitments, and understandings, including 
supply agreements, teaming agreements, and leases, and all outstanding 
offers or solicitations to enter into a similar arrangement;
    8. all licenses, permits, certifications, approvals, consents, 
registrations, waivers, and authorizations issued or granted by any 
governmental organization, and all pending applications or renewals;
    9. all records and data, including (a) customer lists, accounts, 
sales, and credits records, (b) production, repair, maintenance, and 
performance records, (c) manuals and technical information Defendants 
provide to their own employees, customers, suppliers, agents, or 
licensees, (d) records and research data concerning historic and 
current research and development activities, including designs of 
experiments and the results of successful and unsuccessful designs and 
experiments, and (e) drawings, blueprints, and designs;
    10. the Danfoss Hydraulic Steering Unit IP Licenses;
    11. all intellectual property owned, licensed, or sublicensed, 
either as licensor or licensee, including (a) patents, patent 
applications, and inventions and discoveries that may be patentable, 
(b) registered and unregistered copyrights and copyright applications, 
and (c) registered and unregistered trademarks, trade dress, service 
marks, trade names, and trademark applications; and
    12. all other intangible property, including (a) commercial names 
and d/b/a names, (b) technical information, (c) computer software and 
related documentation, know-how, trade secrets, design protocols, 
specifications for materials, specifications for parts, specifications 
for devices, safety procedures (e.g., for the handling of materials and 
substances), quality assurance and control procedures, and design 
tools, and (d) rights in internet websites and internet domain names.
    Provided, however, that the Danfoss Divestiture Assets do not 
include (i) rights, titles, or interests in real property or tangible 
personal property located in Zhenjiang, China that is used to 
manufacture CE, RE, RC, and WS model orbital motor products that, at 
the Divestiture Date, are sold exclusively to

[[Page 39064]]

customers outside of the United States; (ii) rights, titles, or 
interests in real property or tangible personal property located in 
Nordborg, Denmark that is used to manufacture OMEWF model orbital motor 
products that, at the Divestiture Date, are sold exclusively to 
customers outside of the United States; or (iii) intellectual property 
listed in Exhibit 1.
    P. ``Eaton Divestiture Assets'' means all of Defendants' rights, 
titles, and interests in and to the Eaton Orbital Motor Assets, the 
Eaton Hydraulic Steering Unit Assets, and all other property and 
assets, tangible and intangible, wherever located, relating to or used 
in connection with the Eaton Orbital Motor Assets or the Eaton 
Hydraulic Steering Unit Assets, including:
    1. The Char Lynn IP License;
    2. the Eaton Orbital Motor IP Licenses;
    3. the Eaton Hydraulic Steering Unit IP Licenses;
    4. the Eaton Divested Equipment and all other tangible personal 
property, including fixed assets, machinery and manufacturing 
equipment, tools, vehicles, inventory, materials, office equipment and 
furniture, computer hardware, and supplies;
    5. all contracts, contractual rights, and customer relationships, 
and all other agreements, commitments, and understandings, including 
supply agreements, teaming agreements, and leases, and all outstanding 
offers or solicitations to enter into a similar arrangement;
    6. all licenses, permits, certifications, approvals, consents, 
registrations, waivers, and authorizations issued or granted by any 
governmental organization, and all pending applications or renewals;
    7. all records and data, including (a) customer lists, accounts, 
sales, and credits records, (b) production, repair, maintenance, and 
performance records, (c) manuals and technical information Defendants 
provide to their own employees, customers, suppliers, agents, or 
licensees, (d) records and research data concerning historic and 
current research and development activities, including designs of 
experiments and the results of successful and unsuccessful designs and 
experiments, and (e) drawings, blueprints, and designs;
    8. all intellectual property owned, licensed, or sublicensed, 
either as licensor or licensee, including (a) patents, patent 
applications, and inventions and discoveries that may be patentable, 
(b) registered and unregistered copyrights and copyright applications, 
and (c) registered and unregistered trademarks, trade dress, service 
marks, trade names, and trademark applications; and
    9. all other intangible property, including (a) commercial names 
and d/b/a names, (b) technical information, (c) computer software and 
related documentation, know-how, trade secrets, design protocols, 
specifications for materials, specifications for parts, specifications 
for devices, safety procedures (e.g., for the handling of materials and 
substances), quality assurance and control procedures, and design 
tools, and (d) rights in internet websites and internet domain names.
    Provided, however, that the Eaton Divestiture Assets do not 
include: (i) Real property, (ii) tangible property, including fixed 
assets, machinery, and manufacturing equipment, used to manufacture 
Eaton's Series 20 model of hydraulic steering unit products; (iii) the 
Char Lynn trademark; (iv) intellectual property listed in Exhibit 2; 
(v) intellectual property listed in Exhibit 3; (vi) paint line assets 
used for the Eaton Orbital Motor Assets or Eaton Hydraulic Steering 
Unit Assets; or (vii) at the option of Acquirer, heat treat ovens, 
phosphate lines, or 80 ton broach used for the Eaton Orbital Motor 
Assets; or the HMS line used for the Eaton Hydraulic Steering Unit 
Assets.
    Q. ``Eaton Divested Equipment'' means machining, assembly, and test 
assets relating to or used in connection with the production lines used 
for the Eaton Orbital Motor Assets or Eaton Hydraulic Steering Unit 
Assets. Provided, however, that the Eaton Divested Equipment does not 
include paint line assets used for the Eaton Orbital Motor Assets or 
Eaton Hydraulic Steering Unit Assets.
    R. ``Including'' means including, but not limited to.
    S. ``Relevant Personnel'' means all full-time, part-time, or 
contract employees of Danfoss wherever located, that the United States, 
in its sole discretion, deems to be primarily involved in the design, 
manufacture, or sale of Danfoss's OMP X, OMR X, OMEW, OMH, OMS, OMM, 
OML, CE, RE, RC, RS, DH, DS, DT, DR, D9, HB, HK, and WS models of 
orbital motor products and Danfoss's S70, OSPM, OSPP, LAGB, LAGU, LAGS, 
LAGC, LAGL, and LAGZ models of hydraulic steering unit products, at any 
time between January 21, 2020, and the Divestiture Date.
    Provided, however, Relevant Personnel does not include employees of 
Danfoss that the United States, in its sole discretion, deems to be 
primarily engaged in human resources, legal, or other general or 
administrative support functions. The United States, in its sole 
discretion, will resolve any disagreement relating to which employees 
are Relevant Personnel.
    T. ``Regulatory Approvals'' means any approvals or clearances 
pursuant to filings under antitrust, competition, or other U.S. or 
international laws that are required for Acquirer's acquisition of the 
Divestiture Assets to proceed.
    U. ``Transaction'' means the proposed acquisition by Danfoss of 
certain assets and equity interests from Eaton, pursuant to the Stock 
and Asset Purchase Agreement between Eaton Corporation PLC as the 
Seller and Danfoss A/S as the Buyer, dated January 21, 2020.

III. Applicability

    A. This Final Judgment applies to Danfoss and Eaton, as defined 
above, and all other persons in active concert or participation with 
any Defendant who receive actual notice of this Final Judgment.
    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 business units that include the 
Divestiture Assets, Defendants must require any purchaser to be bound 
by the provisions of this Final Judgment. Defendants need not obtain 
such an agreement from Acquirer.

IV. Divestitures

    A. Defendant Danfoss is ordered and directed, within sixty (60) 
calendar days after the Court's entry of the Asset Preservation 
Stipulation and Order in this matter, to divest the Divestiture Assets 
in a manner consistent with this Final Judgment to Interpump or another 
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 will notify the Court of any extensions.
    B. If Defendant Danfoss has not received all Regulatory Approvals 
within sixty (60) calendar days after the Court's entry of the Asset 
Preservation Stipulation and Order in this matter, and Acquirer or 
Defendant Danfoss has initiated contact with any governmental entity to 
seek any Regulatory Approval within five (5) calendar days after the 
Court's entry of the Asset Preservation Stipulation and Order in this 
matter, the time period provided in Paragraph IV.A will be extended 
until ten (10) calendar days after that Regulatory Approval is 
received. This extension allowed for securing Regulatory Approvals may 
be

[[Page 39065]]

no longer than thirty (30) calendar days past the time period provided 
in Paragraph IV.A, unless the United States, in its sole discretion, 
consents to an additional extension.
    C. Defendants must use best efforts to divest the Divestiture 
Assets as expeditiously as possible. Defendants must take no action 
that would jeopardize the completion of the divestiture ordered by the 
Court, including any action to impede the permitting, operation, or 
divestiture of the Divestiture Assets.
    D. Unless the United States otherwise consents in writing, 
divestiture pursuant to this Final Judgment must include the entire 
Divestiture Assets and must be accomplished in such a way as to satisfy 
the United States, in its sole discretion, that the Divestiture Assets 
can and will be used by Acquirer as part of a viable, ongoing business 
of designing, manufacturing, and selling orbital motors and hydraulic 
steering units for mobile off-road equipment and that the divestiture 
to Acquirer will remedy the competitive harm alleged in the Complaint.
    E. The divestiture must be made to an Acquirer that, in the United 
States' sole judgment, has the intent and capability, including the 
necessary managerial, operational, technical, and financial capability, 
to compete effectively in the design, manufacture and sale of orbital 
motors and hydraulic steering units for mobile off-road equipment.
    F. The divestiture must be accomplished in a manner that satisfies 
the United States, in its sole discretion, that none of the terms of 
any agreement between Acquirer and Defendant Danfoss gives Defendants 
the ability unreasonably to raise Acquirer's costs, to lower Acquirer's 
efficiency, or otherwise interfere in the ability of Acquirer to 
compete effectively in the design, manufacture, and sale of orbital 
motors and hydraulic steering units for mobile off-road equipment.
    G. In the event Defendant Danfoss is attempting to divest the 
Divestiture Assets to an Acquirer other than Interpump, Defendant 
Danfoss promptly must make known, by usual and customary means, the 
availability of the Divestiture Assets. Defendant Danfoss must inform 
any person making an inquiry relating to a possible purchase of the 
Divestiture Assets that the Divestiture Assets are being divested in 
accordance with this Final Judgment and must provide that person with a 
copy of this Final Judgment. Defendants must offer to furnish to all 
prospective Acquirers, subject to customary confidentiality assurances, 
all information and documents relating to the Divestiture Assets that 
are customarily provided in a due diligence process; provided, however, 
that Defendants need not provide information or documents subject to 
the attorney-client privilege or work-product doctrine. Defendants must 
make all information and documents available to the United States at 
the same time that the information and documents are made available to 
any other person.
    H. Defendants must provide prospective Acquirers with (1) access to 
make inspections of the Divestiture Assets; (2) access to all 
environmental, zoning, and other permitting documents and information 
relating to the Divestiture Assets; and (3) access to all financial, 
operational, or other documents and information relating to the 
Divestiture Assets that would customarily be provided as part of a due 
diligence process. Defendants also must disclose all encumbrances on 
any part of the Divestiture Assets, including on intangible property.
    I. Defendants must cooperate with and assist Acquirer in 
identifying and, at the option of Acquirer, in hiring all Relevant 
Personnel, including:
    1. Within ten (10) business days following the filing of the 
Complaint in this matter, Defendant Danfoss must identify all Relevant 
Personnel to Acquirer and the United States, including by providing 
organization charts covering all Relevant Personnel.
    2. Within ten (10) business days following receipt of a request by 
Acquirer, the United States, or the monitoring trustee, Defendant 
Danfoss must provide to Acquirer, the United States, and the monitoring 
trustee additional information relating to Relevant Personnel, 
including name, job title, reporting relationships, past experience, 
responsibilities, training and educational histories, relevant 
certifications, and job performance evaluations. Defendant Danfoss must 
also provide to Acquirer, the United States, and the monitoring trustee 
information relating to the current and accrued compensation and 
benefits of Relevant Personnel, including most recent bonuses paid, 
aggregate annual compensation, current target or guaranteed bonus, if 
any, any retention agreement or incentives, and any other payments due, 
compensation or benefit accrued, or promises made to the Relevant 
Personnel. If Defendant Danfoss is barred by any applicable law from 
providing any of this information, Defendant Danfoss must provide, 
within ten (10) business days following receipt of the request, the 
requested information to the full extent permitted by law and also must 
provide a written explanation of Defendant Danfoss's inability to 
provide the remaining information, including specifically identifying 
the provisions of the applicable laws.
    3. At the request of Acquirer, Defendants must promptly make 
Relevant Personnel available for private interviews with Acquirer 
during normal business hours at a mutually agreeable location.
    4. Defendants must not interfere with any effort by Acquirer to 
employ any Relevant Personnel. Interference includes offering to 
increase the compensation or improve the benefits of Relevant Personnel 
unless (a) the offer is part of a company-wide increase in compensation 
or improvement in benefits that was announced prior to January 21, 2020 
or (b) the offer is approved by the United States in its sole 
discretion. Defendants' obligations under this Paragraph will expire 
six (6) months after the Divestiture Date.
    5. For Relevant Personnel who elect employment with Acquirer within 
one hundred-eighty (180) calendar days of the Divestiture Date, 
Defendant Danfoss must waive all non-compete and non-disclosure 
agreements; vest and pay to the Relevant Personnel (or to Acquirer for 
payment to the employee) on a prorated basis any bonuses, incentives, 
other salary, benefits or other compensation fully or partially accrued 
at the time of the transfer of the employee to Acquirer; vest any 
unvested pension and other equity rights; and provide all other 
benefits that those Relevant Personnel otherwise would have been 
provided had the Relevant Personnel continued employment with 
Defendants, including any retention bonuses or payments. Defendants may 
maintain reasonable restrictions on disclosure by Relevant Personnel of 
Defendants' proprietary non-public information that is unrelated to the 
design, manufacture, and sale of orbital motors and hydraulic steering 
units and not otherwise required to be disclosed by this Final 
Judgment.
    J. Defendant Danfoss must warrant to Acquirer that (1) the 
Divestiture Assets will be operational and without material defect on 
the date of their transfer to Acquirer; (2) there are no material 
defects in the environmental, zoning, or other permits relating to the 
operation of the Divestiture Assets; and (3) Defendant Danfoss has 
disclosed all encumbrances on any part of the Divestiture Assets, 
including on intangible property. Following the sale of the Divestiture 
Assets, Defendants must not undertake, directly or indirectly, 
challenges to the environmental, zoning, or other permits

[[Page 39066]]

relating to the operation of the Divestiture Assets.
    K. Defendants must assign, subcontract, or otherwise transfer all 
contracts, agreements, and customer relationships (or portions of such 
contracts, agreements, and customer relationships) included in the 
Divestiture Assets, including all supply and sales contracts, to 
Acquirer; provided, however, that for any contract or agreement that 
requires the consent of another party to assign, subcontract, or 
otherwise transfer, Defendants must use best efforts to accomplish the 
assignment, subcontracting, or transfer. Defendants must not interfere 
with any negotiations between Acquirer and a contracting party.
    L. Defendants must use best efforts to assist Acquirer to obtain 
all necessary licenses, registrations, and permits to operate the 
Divestiture Assets. Until Acquirer obtains the necessary licenses, 
registrations, and permits, Defendants must provide Acquirer with the 
benefit of Defendants' licenses, registrations, and permits to the full 
extent permissible by law.
    M. Within twelve (12) months after the Court's entry of the Asset 
Preservation Stipulation and Order in this matter, Defendants must 
relocate the Eaton Divested Equipment to one or more locations as 
specified by Acquirer. In order to fulfill this obligation, the Eaton 
Divested Equipment must be fully operational at the new location(s). 
The United States, in its sole discretion, may agree to one or more 
extensions of this time period not to exceed six (6) months in total.
    N. At the option of Acquirer, and subject to approval by the United 
States in its sole discretion, on or before the Divestiture Date, 
Defendant Danfoss must enter into a supply contract or contracts for 
heat treatment services for the Danfoss Divestiture Assets located in 
Wroclaw, Poland; gerotors for Eaton's S10 model of hydraulic steering 
units; spools, sleeves, and gear sets for Danfoss's OSPP model of 
hydraulic steering units; shafts for Danfoss's OMS model of orbital 
motors; and the components for Eaton's HP30 2-speed model 22 orbital 
motor product listed in Exhibit 4, sufficient to meet Acquirer's needs, 
as determined by Acquirer, for a period of up to twelve (12) months, on 
terms and conditions reasonably related to market conditions for the 
supply of heat treatment services, gerotors, spools, sleeves, gear 
sets, shafts, and the components listed in Exhibit 4. Any amendment to 
or modification of any provision of any such supply contract is subject 
to approval by the United States, in its sole discretion. The United 
States, in its sole discretion, may approve one or more extensions of 
any supply contract for a total of up to an additional six (6) months. 
If Acquirer seeks an extension of the term of any supply contract, 
Defendants must notify the United States in writing at least sixty (60) 
days prior to the date the supply contract expires. Acquirer may 
terminate a supply contract, or any portion of a supply contract, 
without cost or penalty at any time upon commercially reasonable 
notice.
    O. At the option of Acquirer, and subject to approval by the United 
States in its sole discretion, on or before the Divestiture Date, 
Defendants must enter into a supply contract for HP 30, VIS 30, VIS 40, 
and VIS 45 models of orbital motor products and S10 and S20 models of 
hydraulic steering unit products sufficient to meet Acquirer's needs, 
as determined by Acquirer, for a period of up to eighteen (18) months, 
on terms and conditions reasonably related to market conditions for the 
supply of HP/VIS orbital motors and S10 and S20 Hydraulic Steering 
Units. Any amendment to or modification of any provision of any such 
supply contract is subject to approval by the United States, in its 
sole discretion. The United States, in its sole discretion, may approve 
one or more extensions of any supply contract for a total of up to an 
additional six (6) months. If Acquirer seeks an extension of the term 
of any supply contract, Defendants must notify the United States in 
writing at least sixty (60) days prior to the date the supply contract 
expires. Acquirer may terminate a supply contract, or any portion of a 
supply contract, without cost or penalty at any time upon commercially 
reasonable notice.
    P. At the option of Acquirer, and subject to approval by the United 
States in its sole discretion, on or before the Divestiture Date, 
Defendant Danfoss must enter into a contract to provide transition 
services for back office, accounting, human resources, information 
technology services and support, and employee health and safety for the 
Divestiture Assets, and technical training services and support for the 
Eaton Divestiture Assets for a period of up to twelve (12) months on 
terms and conditions reasonably related to market conditions for the 
provision of the transition services. Any amendment to or modification 
of any provision of a contract to provide transition services is 
subject to approval by the United States, in its sole discretion. The 
United States, in its sole discretion, may approve one or more 
extensions of any contract for transition services for a total of up to 
an additional six (6) months. If Acquirer seeks an extension of the 
term of any contract for transition services, Defendants must notify 
the United States in writing at least three (3) months prior to the 
date the contract expires. Acquirer may terminate a contract for 
transition services, or any portion of a contract for transition 
services, without cost or penalty at any time upon commercially 
reasonable written notice. The employee(s) of Defendants tasked with 
providing transition services must not share any competitively 
sensitive information of Acquirer with any other employee of 
Defendants.
    Q. For a period of one (1) year following the Divestiture Date, 
Defendants must not initiate customer-specific communications to 
solicit any customer for the portion of that customer's business 
covered by a contract, agreement, or relationship (or portion thereof) 
that is included in the Divestiture Assets; provided, however, that: 
(1) Defendants may respond to inquiries initiated by customers and 
enter into negotiations at the request of such customers (including 
responding to requests for quotation or proposal) to supply any 
business, whether or not such business was included in the Divestiture 
Assets; and (2) Defendants must maintain a log of telephonic, 
electronic, in-person, and other communications that constitute 
inquiries or requests from customers within the meaning of this 
Paragraph and make it available to the United States for inspection 
upon request. The United States, in its sole discretion, may agree to 
one or more extensions of this time period not to exceed six (6) months 
in total.
    R. If any term of an agreement between Defendants and Acquirer, 
including an agreement to effectuate the divestiture required by this 
Final Judgment, varies from a term of this Final Judgment, to the 
extent that Defendants cannot fully comply with both, this Final 
Judgment determines Defendants' obligations.

V. Appointment of Divestiture Trustee

    A. If Defendants have not divested the Divestiture Assets within 
the period specified in Paragraph IV.A, Defendants must immediately 
notify the United States of that fact in writing. Upon application of 
the United States, which Defendants may not oppose, the Court will 
appoint a divestiture trustee selected by the United States and 
approved by the Court to effect the divestiture of the Divestiture 
Assets.
    B. After the appointment of a divestiture trustee by the Court, 
only the divestiture trustee will have the right to

[[Page 39067]]

sell the Divestiture Assets. The divestiture trustee will have the 
power and authority to accomplish the divestiture to an Acquirer 
acceptable to the United States, in its sole discretion, at a price and 
on terms obtainable through reasonable effort by the divestiture 
trustee, subject to the provisions of Sections IV, V, and VI of this 
Final Judgment, and will have other powers as the Court deems 
appropriate. The divestiture trustee must sell the Divestiture Assets 
as quickly as possible.
    C. Defendants may not object to a sale by the divestiture trustee 
on any ground other than malfeasance by the divestiture trustee. 
Objections by Defendants must be conveyed in writing to the United 
States and the divestiture trustee within ten (10) calendar days after 
the divestiture trustee has provided the notice of proposed divestiture 
required by Section VI.
    D. The divestiture trustee will serve at the cost and expense of 
Defendant Danfoss pursuant to a written agreement, on terms and 
conditions, including confidentiality requirements and conflict of 
interest certifications, approved by the United States in its sole 
discretion.
    E. The divestiture trustee may hire at the cost and expense of 
Defendant Danfoss any agents or consultants, including investment 
bankers, attorneys, and accountants, that are reasonably necessary in 
the divestiture trustee's judgment to assist with the divestiture 
trustee's duties. These agents or consultants will be accountable 
solely to the divestiture trustee and will serve on terms and 
conditions, including confidentiality requirements and conflict-of-
interest certifications, approved by the United States in its sole 
discretion.
    F. The compensation of the divestiture trustee and agents or 
consultants hired by the divestiture trustee must be reasonable in 
light of the value of the Divestiture Assets and based on a fee 
arrangement that provides the divestiture trustee with incentives based 
on the price and terms of the divestiture and the speed with which it 
is accomplished. If the divestiture trustee and Defendant Danfoss are 
unable to reach agreement on the divestiture trustee's compensation or 
other terms and conditions of engagement within fourteen (14) calendar 
days of the appointment of the divestiture trustee by the Court, the 
United States, in its sole discretion, may take appropriate action, 
including by making a recommendation to the Court. Within three (3) 
business days of hiring an agent or consultant, the divestiture trustee 
must provide written notice of the hiring and rate of compensation to 
Defendant Danfoss and the United States.
    G. The divestiture trustee must account for all monies derived from 
the sale of the Divestiture Assets sold by the divestiture trustee and 
all costs and expenses so incurred. Within thirty (30) calendar days of 
the Divestiture Date, the divestiture trustee must submit that 
accounting to the Court for approval. After approval by the Court of 
the divestiture trustee's accounting, including fees for unpaid 
services and those of agents or consultants hired by the divestiture 
trustee, all remaining money must be paid to Defendant Danfoss and the 
trust will then be terminated.
    H. Defendants must use best efforts to assist the divestiture 
trustee to accomplish the required divestiture. Subject to reasonable 
protection for trade secrets, other confidential research, development, 
or commercial information, or any applicable privileges, Defendants 
must provide the divestiture trustee and agents or consultants retained 
by the divestiture trustee with full and complete access to all 
personnel, books, records, and facilities of the Divestiture Assets. 
Defendants also must provide or develop financial and other information 
relevant to the Divestiture Assets that the divestiture trustee may 
reasonably request. Defendants must not take any action to interfere 
with or to impede the divestiture trustee's accomplishment of the 
divestiture.
    I. The divestiture trustee must maintain complete records of all 
efforts made to sell the Divestiture Assets, including by filing 
monthly reports with the United States setting forth the divestiture 
trustee's efforts to accomplish the divestiture ordered by this Final 
Judgment. The reports must include the name, address, and telephone 
number of each person who, during the preceding month, made an offer to 
acquire, expressed an interest in acquiring, entered into negotiations 
to acquire, or was contacted or made an inquiry about acquiring any 
interest in the Divestiture Assets and must describe in detail each 
contact.
    J. If the divestiture trustee has not accomplished the divestiture 
ordered by this Final Judgment within six (6) months of appointment, 
the divestiture trustee must promptly provide the United States with a 
report setting forth (1) the divestiture trustee's efforts to 
accomplish the required divestiture; (2) the reasons, in the 
divestiture trustee's judgment, why the required divestiture has not 
been accomplished; and (3) the divestiture trustee's recommendations 
for completing the divestiture. Following receipt of that report, the 
United States may make additional recommendations to the Court. The 
Court thereafter may enter such orders as it deems appropriate to carry 
out the purpose of this Final Judgment, which may include extending the 
trust and the term of the divestiture trustee's appointment by a period 
requested by the United States.
    K. The divestiture trustee will serve until divestiture of all 
Divestiture Assets is completed or for a term otherwise ordered by the 
Court.
    L. If the United States determines that the divestiture trustee is 
not acting diligently or in a reasonably cost-effective manner, the 
United States may recommend that the Court appoint a substitute 
divestiture trustee.

VI. Notice of Proposed Divestiture

    A. Within two (2) business days following execution of a definitive 
agreement with an Acquirer other than Interpump to divest the 
Divestiture Assets, Defendants or the divestiture trustee, whichever is 
then responsible for effecting the divestiture, must notify the United 
States of the proposed divestiture. If the divestiture trustee is 
responsible for completing the divestiture, the divestiture trustee 
also must notify Defendants. The notice must set forth the details of 
the proposed divestiture and list the name, address, and telephone 
number of each person not previously identified who offered or 
expressed an interest in or desire to acquire any ownership interest in 
the Divestiture Assets.
    B. Within fifteen (15) calendar days of receipt by the United 
States of the notice required by Paragraph VI.A, the United States may 
request from Defendants, the proposed Acquirer, other third parties, or 
the divestiture trustee additional information concerning the proposed 
divestiture, the proposed Acquirer, and other prospective Acquirers. 
Defendants and the divestiture trustee must furnish the additional 
information requested within fifteen (15) calendar days of the receipt 
of the request, unless the United States provides written agreement to 
a different period.
    C. Within forty-five (45) calendar days after receipt of the notice 
required by Paragraph VI.A or within twenty (20) calendar days after 
the United States has been provided the additional information 
requested pursuant to Paragraph VI.B, whichever is later, the United 
States will provide written notice to Defendants and any divestiture

[[Page 39068]]

trustee that states whether the United States, in its sole discretion, 
objects to the proposed Acquirer or any other aspect of the proposed 
divestiture. Without written notice that the United States does not 
object, a divestiture may not be consummated. If the United States 
provides written notice that it does not object, the divestiture may be 
consummated, subject only to Defendants' limited right to object to the 
sale under Paragraph V.C of this Final Judgment. Upon objection by 
Defendants pursuant to Paragraph V.C, a divestiture by the divestiture 
trustee may not be consummated unless approved by the Court.
    D. No information or documents obtained pursuant to this Section 
may be divulged by the United States to any person other than an 
authorized representative of the executive branch of the United States, 
except in the course of legal proceedings to which the United States is 
a party, including grand-jury proceedings, for the purpose of 
evaluating a proposed Acquirer or securing compliance with this Final 
Judgment, or as otherwise required by law.
    E. In the event of a request by a third party for disclosure of 
information under the Freedom of Information Act, 5 U.S.C. 552, the 
United States Department of Justice's Antitrust Division will act in 
accordance with that statute, and the Department of Justice regulations 
at 28 CFR part 16, including the provision on confidential commercial 
information, at 28 CFR 16.7. Persons submitting information to the 
Antitrust Division should designate the confidential commercial 
information portions of all applicable documents and information under 
28 CFR 16.7. Designations of confidentiality expire ten (10) years 
after submission, ``unless the submitter requests and provides 
justification for a longer designation period.'' See 28 CFR 16.7(b).
    F. If at the time that a person furnishes information or documents 
to the United States pursuant to this Section, that person represents 
and identifies in writing information or documents for which a claim of 
protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules 
of Civil Procedure, and marks each pertinent page of such material, 
``Subject to claim of protection under Rule 26(c)(1)(G) of the Federal 
Rules of Civil Procedure,'' the United States must give that person ten 
(10) calendar days' notice before divulging the material in any legal 
proceeding (other than a grand-jury proceeding).

VII. Financing

    Defendants may not finance all or any part of Acquirer's purchase 
of all or part of the Divestiture Assets.

VIII. Asset Preservation

    Defendants must take all steps necessary to comply with the Asset 
Preservation Stipulation and Order entered 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 required by this Final Judgment has been completed, 
each Defendant must deliver to the United States an affidavit, signed 
by each Defendant's Chief Financial Officer and General Counsel, 
describing in reasonable detail the fact and manner of that Defendant's 
compliance with this Final Judgment. The United States, in its sole 
discretion, may approve different signatories for the affidavits. 
Defendant Eaton's obligations under this Paragraph IX.A shall cease 
thirty (30) calendar days after the closing of the Transaction.
    B. Each affidavit required by Paragraph IX.A must include: (1) The 
name, address, and telephone number of each person who, during the 
preceding thirty (30) calendar days, made an offer to acquire, 
expressed an interest in acquiring, entered into negotiations to 
acquire, or was contacted or made an inquiry about acquiring, an 
interest in the Divestiture Assets, and describe in detail each contact 
with such persons during that period; (2) a description of the efforts 
Defendants have taken to solicit buyers for and complete the sale of 
the Divestiture Assets and to provide required information to 
prospective Acquirers; and (3) a description of any limitations placed 
by Defendants on information provided to prospective Acquirers. 
Objection by the United States to information provided by Defendants to 
prospective Acquirers must be made within fourteen (14) calendar days 
of receipt of the affidavit, except that the United States may object 
at any time if the information set forth in the affidavit is not true 
or complete.
    C. Defendants must keep all records of any efforts made to divest 
the Divestiture Assets until one (1) year after the Divestiture Date.
    D. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, each Defendant must deliver to the United States an 
affidavit signed by that Defendant's Chief Financial Officer and 
General Counsel that describes in reasonable detail all actions that 
Defendant has taken and all steps that Defendant has implemented on an 
ongoing basis to comply with Section VIII of this Final Judgment. The 
United States, in its sole discretion, may approve different 
signatories for the affidavits.
    E. If a Defendant makes any changes to the actions and steps 
described in affidavits provided pursuant to Paragraph IX.D, the 
Defendant must, within fifteen (15) calendar days after any change is 
implemented, deliver to the United States an affidavit describing those 
changes.
    F. Defendants must keep all records of any efforts made to comply 
with Section VIII until one (1) year after the Divestiture Date.

X. Appointment of Monitoring Trustee

    A. Upon application of the United States, which Defendants may not 
oppose, the Court will appoint a monitoring trustee selected by the 
United States and approved by the Court.
    B. The monitoring trustee will have the power and authority to 
monitor Defendants' compliance with the terms of this Final Judgment 
and the Asset Preservation Stipulation and Order entered by the Court 
and will have other powers as the Court deems appropriate. The 
monitoring trustee will have no responsibility or obligation for 
operation of the Divestiture Assets.
    C. Defendants may not object to actions taken by the monitoring 
trustee in fulfillment of the monitoring trustee's responsibilities 
under any Order of the Court on any ground other than malfeasance by 
the monitoring trustee. Objections by Defendants must be conveyed in 
writing to the United States and the monitoring trustee within ten (10) 
calendar days of the monitoring trustee's action that gives rise to 
Defendants' objection.
    D. The monitoring trustee will serve at the cost and expense of 
Defendant Danfoss pursuant to a written agreement, on terms and 
conditions, including confidentiality requirements and conflict of 
interest certifications, approved by the United States in its sole 
discretion.
    E. The monitoring trustee may hire, at the cost and expense of 
Defendant Danfoss, any agents and consultants, including investment 
bankers, attorneys, and accountants, that are reasonably necessary in 
the monitoring trustee's judgment to assist with the monitoring 
trustee's duties. These agents or consultants will be solely 
accountable to the monitoring trustee and will serve on terms and 
conditions, including confidentiality requirements

[[Page 39069]]

and conflict-of-interest certifications, approved by the United States 
in its sole discretion.
    F. The compensation of the monitoring trustee and agents or 
consultants retained by the monitoring trustee must be on reasonable 
and customary terms commensurate with the individuals' experience and 
responsibilities. If the monitoring trustee and Defendant Danfoss are 
unable to reach agreement on the monitoring trustee's compensation or 
other terms and conditions of engagement within fourteen (14) calendar 
days of the appointment of the monitoring trustee, the United States, 
in its sole discretion, may take appropriate action, including by 
making a recommendation to the Court. Within three (3) business days of 
hiring any agents or consultants, the monitoring trustee must provide 
written notice of the hiring and the rate of compensation to Defendant 
Danfoss and the United States.
    G. The monitoring trustee must account for all costs and expenses 
incurred.
    H. Defendants must use best efforts to assist the monitoring 
trustee to monitor Defendants' compliance with their obligations under 
this Final Judgment and the Asset Preservation Stipulation and Order. 
Subject to reasonable protection for trade secrets, other confidential 
research, development, or commercial information, or any applicable 
privileges, Defendants must provide the monitoring trustee and any 
agents or consultants retained by the monitoring trustee with full and 
complete access to all personnel, books, records, and facilities of the 
Divestiture Assets. Defendants may not take any action to interfere 
with or to impede accomplishment of the monitoring trustee's 
responsibilities.
    I. The monitoring trustee must investigate and report on 
Defendants' compliance with this Final Judgment and the Asset 
Preservation Stipulation and Order, including compliance with all 
supply and transition service agreements and progress of production 
line transfers. The monitoring trustee must provide periodic reports to 
the United States setting forth Defendants' efforts to comply with 
their obligations under this Final Judgment and under the Asset 
Preservation Stipulation and Order. The United States, in its sole 
discretion, will set the frequency of the monitoring trustee's reports.
    J. The monitoring trustee will serve until the divestiture of all 
the Divestiture Assets is finalized pursuant to either Section IV or 
Section V of this Final Judgment, Defendants have complied with the 
terms of the transition services agreements and supply contracts 
provided for in Paragraphs IV.N, IV.O, and IV.P of this Final Judgment, 
and Defendants have fulfilled all their obligations under Paragraphs 
IV.M and IV.Q of this Final Judgment, unless the United States, in its 
sole discretion, determines a different period is appropriate.
    K. If the United States determines that the monitoring trustee is 
not acting diligently or in a reasonably cost-effective manner, the 
United States may recommend that the Court appoint a substitute.

XI. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment or of related orders such as the Asset Preservation 
Stipulation and Order or of determining whether this Final Judgment 
should be modified or vacated, upon written request of an authorized 
representative of the Assistant Attorney General for the Antitrust 
Division, and reasonable notice to Defendants, Defendants must permit, 
from time to time and subject to legally recognized privileges, 
authorized representatives, including agents retained by the United 
States:
    1. To have access during Defendants' office hours to inspect and 
copy, or at the option of the United States, to require Defendants to 
provide electronic copies of all books, ledgers, accounts, records, 
data, and documents 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, relating to any matters contained in this Final Judgment. The 
interviews must be subject to the reasonable convenience of the 
interviewee and without restraint or interference by Defendants.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General for the Antitrust Division, Defendants must 
submit written reports or respond to written interrogatories, under 
oath if requested, relating to any matters contained in this Final 
Judgment.
    C. No information or documents obtained by the United States 
pursuant to this Section may be divulged by the United States to any 
person other than an authorized representative of the executive branch 
of the United States, except in the course of legal proceedings to 
which the United States is a party, including grand jury proceedings, 
for the purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. In the event of a request by a third party for disclosure of 
information under the Freedom of Information Act, 5 U.S.C. 552, the 
Antitrust Division will act in accordance with that statute, and the 
Department of Justice regulations at 28 CFR part 16, including the 
provision on confidential commercial information, at 28 CFR 16.7. 
Defendants submitting information to the Antitrust Division should 
designate the confidential commercial information portions of all 
applicable documents and information under 28 CFR 16.7. Designations of 
confidentiality expire ten (10) years after submission, ``unless the 
submitter requests and provides justification for a longer designation 
period.'' See 28 CFR 16.7(b).
    E. If at the time that Defendants furnish information or documents 
to the United States pursuant to this Section, Defendants represent and 
identify in writing information or documents for which a claim of 
protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules 
of Civil Procedure, and Defendants mark each pertinent page of such 
material, ``Subject to claim of protection under Rule 26(c)(1)(G) of 
the Federal Rules of Civil Procedure,'' the United States must give 
Defendants ten (10) calendar days' notice before divulging the material 
in any legal proceeding (other than a grand jury proceeding).

XII. Firewall

    A. For a period of two (2) years following the filing of this 
Proposed Final Judgment, Defendants must implement and maintain 
procedures to prevent any employees of Defendants from sharing 
competitively sensitive information relating to the Divestiture Assets 
with personnel of Defendants with responsibilities relating to 
Danfoss's or Eaton's design, manufacture, and sale of hydraulic orbital 
motors or hydraulic steering units.
    B. Defendants, within thirty (30) calendar days of the Court's 
entry of the Asset Preservation Stipulation and Order, must submit to 
the United States a document setting forth in detail the procedures 
implemented to effect compliance with this Section. Upon receipt of the 
document, the United States will inform Defendants within ten (10) 
business days whether, in its sole discretion, the United States 
approves or rejects Defendants' compliance plan. Within ten (10) 
business days of receiving a notice of rejection, Defendants must 
submit a revised compliance plan. The United

[[Page 39070]]

States may request that the Court determine whether Defendants' 
proposed compliance plan fulfills the requirements of Paragraph XII.A.

XIII. Limitations on Reacquisitions

    Defendants may not reacquire any part of or any interest in the 
Divestiture Assets during the term of this Final Judgment without prior 
authorization of the United States.

XIV. Retention of Jurisdiction

    The Court retains jurisdiction to enable any party to this Final 
Judgment to apply to the Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XV. Enforcement of Final Judgment

    A. The United States retains and reserves all rights to enforce the 
provisions of this Final Judgment, including the right to seek an order 
of contempt from the Court. Defendants agree that in a civil contempt 
action, a motion to show cause, or a similar action brought by the 
United States relating to an alleged violation of this Final Judgment, 
the United States may establish a violation of this Final Judgment and 
the appropriateness of a remedy therefor by a preponderance of the 
evidence, and Defendants waive any argument that a different standard 
of proof should apply.
    B. This Final Judgment should be interpreted to give full effect to 
the procompetitive purposes of the antitrust laws and to restore the 
competition the United States alleges was harmed by the challenged 
conduct. Defendants agree that they may be held in contempt of, and 
that the Court may enforce, any provision of this Final Judgment that, 
as interpreted by the Court in light of these procompetitive principles 
and applying ordinary tools of interpretation, is stated specifically 
and in reasonable detail, whether or not it is clear and unambiguous on 
its face. In any such interpretation, the terms of this Final Judgment 
should not be construed against either party as the drafter.
    C. In an enforcement proceeding in which the Court finds that 
Defendants have violated this Final Judgment, the United States may 
apply to the Court for an extension of this Final Judgment, together 
with other relief that may be appropriate. In connection with a 
successful effort by the United States to enforce this Final Judgment 
against a Defendant, whether litigated or resolved before litigation, 
that Defendant agrees to reimburse the United States for the fees and 
expenses of its attorneys, as well as all other costs including 
experts' fees, incurred in connection with that effort to enforce this 
Final Judgment, including in the investigation of the potential 
violation.
    D. For a period of four (4) years following the expiration of this 
Final Judgment, if the United States has evidence that a Defendant 
violated this Final Judgment before it expired, the United States may 
file an action against that Defendant in this Court requesting that the 
Court order: (1) Defendant to comply with the terms of this Final 
Judgment for an additional term of at least four (4) years following 
the filing of the enforcement action; (2) all appropriate contempt 
remedies; (3) additional relief needed to ensure the Defendant complies 
with the terms of this Final Judgment; and (4) fees or expenses as 
called for by this Section.

XVI. Expiration of Final Judgment

    Unless the Court grants an extension, this Final Judgment will 
expire ten (10) years from the date of its entry, except that after 
five (5) years from the date of its entry, this Final Judgment may be 
terminated upon notice by the United States to the Court and Defendants 
that the divestiture has been completed and continuation of this Final 
Judgment is no longer necessary or in the public interest.

XVII. Public Interest Determination

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16, including by making available to the 
public copies of this Final Judgment and the Competitive Impact 
Statement, public comments thereon, and any response to comments by the 
United States. Based upon the record before the Court, which includes 
the Competitive Impact Statement and, if applicable, any comments and 
response to comments filed with the Court, entry of this Final Judgment 
is in the public interest.

Date:------------------------------------------------------------------
Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16

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


                     Exhibit 1--Danfoss Hydraulic Steering Unit Licenses Granted to Acquirer
----------------------------------------------------------------------------------------------------------------
            Patent No.                            Title                        Country            Grant date
----------------------------------------------------------------------------------------------------------------
EP 1 910 151.....................  Electrohydraulic Steering System     Denmark.............  6-Oct-10.
                                    with Cut-Off Valve and Sensor.
EP 1 910 151.....................  Electrohydraulic Steering System     France..............  6-Oct-10.
                                    with Cut-Off Valve and Sensor.
EP 1 910 151.....................  Electrohydraulic Steering System     Germany.............  6-Oct-10.
                                    with Cut-Off Valve and Sensor.
EP 1 910 151.....................  Electrohydraulic Steering System     Great Britain.......  6-Oct-10.
                                    with Cut-Off Valve and Sensor.
EP 1 910 151.....................  Electrohydraulic Steering System     Italy...............  6-Oct-10.
                                    with Cut-Off Valve and Sensor.
CN 101233040.....................  Electrohydraulic Steering System     China...............  12-Oct-11.
                                    with Cut-Off Valve and Sensor.
US 7,677,351.....................  Electrohydraulic Steering System     USA.................  16-Mar-10.
                                    with Cut-Off Valve and Sensor.
3410349..........................  Plug...............................  European Design.....  7-Oct-16.
304354829........................  Plug...............................  China...............  14-Nov-17.
----------------------------------------------------------------------------------------------------------------


                           Exhibit 2--Eaton Orbital Motor Licenses Granted to Acquirer
----------------------------------------------------------------------------------------------------------------
            Patent No.                            Title                        Country            Grant date
----------------------------------------------------------------------------------------------------------------
201380038257.X...................  COMBINED MOTOR AND BRAKE ROTATING    China...............  28-Dec-16.
                                    BRAKE-RELEASE PISTON.
2895739..........................  COMBINED MOTOR AND BRAKE ROTATING    European Patent
                                    BRAKE-RELEASE PISTON.                Convention.
6214652..........................  COMBINED MOTOR AND BRAKE ROTATING    Japan...............  29-Sep-17.
                                    BRAKE-RELEASE PISTON.
9175563..........................  COMBINED MOTOR AND BRAKE WITH        United States.......  3-Nov-15.
                                    ROTATING BRAKE-RELEASE PISTON.

[[Page 39071]]

 
EP2875237........................  FREEWHEEL HYDRAULIC MOTOR..........  European Patent       28-Mar-18.
                                                                         Convention.
602013035067.1...................  FREEWHEEL HYDRAULIC MOTOR..........  Germany.............  28-Mar-18.
EP2875237........................  FREEWHEEL HYDRAULIC MOTOR..........  Great Britain.......  28-Mar-18.
502018000016462..................  FREEWHEEL HYDRAULIC MOTOR..........  Italy...............  28-Mar-18.
9551222..........................  FREEWHEEL HYDRAULIC MOTOR..........  United States.......  24-Jan-17.
----------------------------------------------------------------------------------------------------------------


                          Exhibit 3--Eaton Hydraulic Steering Unit Licenses to Acquirer
----------------------------------------------------------------------------------------------------------------
            Patent No.                            Title                        Country            Grant date
----------------------------------------------------------------------------------------------------------------
6769249..........................  LOW SLIP STEERING SYSTEM AND         United States.......  3-Aug-03.
                                    IMPROVED FLUID CONTROLLER THEREFOR.
6769451..........................  POWER BEYOND STEERING UNIT WITH      United States.......  3-Aug-03.
                                    BYPASS.
6782698..........................  STEERING CONTROL UNIT WITH LOW NULL  United States.......  31-Aug-03.
                                    BAND LOAD SENSING BOOST.
EP2250068........................  FLUID CONTROLLER WITH MULTIPLE       Denmark.............  10-Jul-13.
                                    FLUID METERS.
EP2250068........................  FLUID CONTROLLER WITH MULTIPLE       France..............  10-Jul-13.
                                    FLUID METERS.
602009017015.5...................  FLUID CONTROLLER WITH MULTIPLE       Germany.............  10-Jul-13.
                                    FLUID METERS.
EP2250068........................  FLUID CONTROLLER WITH MULTIPLE       Great Britain.......  10-Jul-13.
                                    FLUID METERS.
EP2250068........................  FLUID CONTROLLER WITH MULTIPLE       Italy...............  10-Jul-13.
                                    FLUID METERS.
EP2250068........................  FLUID CONTROLLER WITH MULTIPLE       Spain...............  10-Jul-13.
                                    FLUID METERS.
8225603..........................  FLUID CONTROLLER WITH MULTIPLE       United States.......  24-Jul-12.
                                    FLUID METERS.
3010785B1........................  FLUID CONTROLLER WITH LOAD SENSE     European Patent       17-Jun-14.
                                    AND FLOW AMPLIFICATION.              Convention.
9920776..........................  FLUID CONTROLLER WITH LOAD SENSE     United States.......  20-Mar-18.
                                    AND FLOW AMPLIFICATION.
4725695..........................  FLUID CONTROLLER AND FLUID METER     Japan...............  22-Apr-11.
                                    BYPASS ARRANGEMENT.
529996...........................  FLUID CONTROLLER AND FLUID METER     South Korea.........  14-Nov-11.
                                    BYPASS ARRANGEMENT.
----------------------------------------------------------------------------------------------------------------


  Exhibit 4--Orbital Motor Components for Eaton's HP30 2-Speed Model 22
                          Orbital Motor Product
------------------------------------------------------------------------
            Component part No.                    Part description
------------------------------------------------------------------------
8483-000..................................  Shaft.
8731-000..................................  Front Retainer.
6037923-001...............................  Bearing Housing.
202879-004................................  Drive Spacer.
5992182-008...............................  Drive.
5992182-010...............................  Drive.
9004-002..................................  Quad Ring.
8732-000..................................  Backup Washer.
6212-000..................................  Dust Seal.
6037922-001...............................  Adapter Plate.
6181-000..................................  Bearing Spacer.
9001-002..................................  Thrust Bearing Washer.
9001-003..................................  Thrust Bearing Washer.
9001-004..................................  Thrust Washer.
9002-003..................................  Thrust Bearing.
9002-004..................................  Thrust Bearing.
9003-002..................................  Radial Bearing.
16292-100.................................  Cap Screw.
15045-000.................................  Seal.
25001-046.................................  O Ring.
------------------------------------------------------------------------

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Danfoss A/S, and Eaton 
Corporation PLC, Defendants.

Civil Action No.: 1:21-cv-1880-CJN

Competitive Impact Statement

    In accordance with the Antitrust Procedures and Penalties Act, 15 
U.S.C. 16(b)-(h) (the ``APPA'' or ``Tunney Act''), the United States of 
America files this Competitive Impact Statement relating to the 
proposed Final Judgment filed in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On January 21, 2020, Defendant Danfoss A/S (``Danfoss'') entered 
into a binding agreement with Defendant Eaton Corporation (``Eaton'') 
to acquire Eaton's hydraulics business for approximately $3.3 billion 
in cash. The United States filed a civil antitrust Complaint on July 
14, 2021 seeking to enjoin the proposed transaction. The Complaint 
alleges that the likely effect of this transaction would be to 
substantially lessen competition in the design, manufacture, and sale 
of orbital motors and hydraulic steering units in the United States in 
violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
    At the same time the Complaint was filed, the United States filed a 
proposed Final Judgment and an Asset Preservation Stipulation and Order 
(``Stipulation and Order''), which are designed to remedy the loss of 
competition alleged in the Complaint.
    Under the proposed Final Judgment, which is explained more fully 
below, Defendant Danfoss is required to divest the following assets: 
The Danfoss Orbital Motor Business; the Danfoss Steering Unit Business; 
the Eaton Orbital Motor Assets; the Eaton Steering Unit Assets, and 
certain Intellectual Property (collectively ``The Divestiture 
Assets''). Under the terms of the Stipulation and Order, Defendants 
must take certain steps to ensure that the Divestiture Assets that must 
be divested are operated as ongoing, economically viable, competitive 
Divestiture Assets for the design, manufacture, and sale of orbital 
motors and steering units and must take all other actions to preserve 
and maintain the full economic viability, marketability, and 
competitiveness of the Divestiture Assets to be divested.
    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.

[[Page 39072]]

II. Description of Events Giving Rise to the Alleged Violation

(A) The Defendants and the Proposed Transaction

    Danfoss and Eaton are global corporations based in Nordborg, 
Denmark and Dublin, Ireland, respectively, that manufacture components 
of hydraulic power systems for industrial and agricultural use. 
Defendants' hydraulic components make it possible to steer, propel, and 
operate equipment used to pave roads, harvest produce, construct 
buildings, and perform other heavy industrial and agricultural tasks 
across the United States every day. Pursuant to a Transaction Agreement 
dated January 21, 2020, Danfoss intends to acquire Eaton's hydraulics 
business for approximately $3.3 billion.

(B) The Competitive Effects of the Transaction

    The Complaint alleges that the transaction as proposed will lead to 
anticompetitive effects in the markets for the design, manufacture, and 
sale of hydraulic orbital motors (``orbital motors'') and hydraulic 
steering units (``steering units'').
a. Relevant Product Markets
    The Complaint alleges that orbital motors for mobile off-road 
equipment and steering units for mobile off-road equipment are lines of 
commerce, or relevant product markets, for purposes of analyzing the 
effects of the acquisition under Section 7 of the Clayton Act, 15 
U.S.C. 18. Orbital motors, also called ``low-speed, high-torque'' 
motors, are a low-cost way to move heavy loads in a slow, and thus 
controlled, way. Steering units direct hydraulic fluid in response to 
commands from equipment operators and are necessary for any hydraulic 
steering system to function.
    In the event of a small but significant increase in price by a 
hypothetical monopolist of orbital motors, the Complaint alleges that 
substitution away from orbital motors would be insufficient to render 
the price increase unprofitable. Other technologies, such as vane, 
gear, piston, or electric motors, do not offer the same level of 
performance, are less efficient, or cost more than an orbital motor. 
Therefore, these technologies are not reasonable substitutes for 
orbital motors. Orbital motors for mobile off-road equipment are 
therefore a line of commerce, or relevant product market, for purposes 
of analyzing the effects of the acquisition under Section 7 of the 
Clayton Act, 15 U.S.C. 18.
    Similarly, in the event of a small but significant increase in 
price by a hypothetical monopolist of steering units, the Complaint 
alleges that substitution away from steering units would be 
insufficient to render the price increase unprofitable. Electric 
steering technology--the only alternative steering system that does not 
require a hydraulic steering unit--is largely unproven and more 
expensive than hydraulic steering technology. The switching costs from 
hydraulic steering to electric steering are high and would require a 
costly redesign by Original Equipment Manufacturers (``OEMs''). 
Steering units for mobile off-road equipment are therefore a line of 
commerce, or relevant product market, for purposes of analyzing the 
effects of the acquisition under Section 7 of the Clayton Act, 15 
U.S.C. 18.
b. Relevant Geographic Markets
    The Complaint alleges that OEMs located in the United States wish 
to avoid business disruption and cannot reasonably turn to suppliers 
without a U.S. presence for the supply of orbital motors or steering 
units for mobile off-road equipment. Long lead times due to 
international shipping and unexpected delays in the delivery of 
products can cause significant business disruption. Customers similarly 
require that suppliers warehouse new and replacement parts to avoid 
costly delays or interruptions to business operations and expect local 
service and support from suppliers. Thus, a hypothetical monopolist of 
orbital motors or steering units sold in the United States could 
profitably impose a small but significant non-transitory increase in 
price for orbital motors or steering units without losing sufficient 
sales to render the price increase unprofitable. Nor would the price 
increase be defeated by arbitrage, e.g., by OEMs purchasing through 
subsidiaries located outside the United States. Accordingly, the 
relevant geographic market for purposes of analyzing the effects of the 
acquisition on orbital motors and steering units for mobile off-road 
equipment under Section 7 of the Clayton Act, 15 U.S.C. 18, is the 
United States.
c. Anticompetitive Effects of the Proposed Transaction
    The Complaint alleges that the transaction as proposed would lessen 
competition and harm customers for orbital motors and steering units 
for mobile off-road equipment in the United States. The Herfindahl-
Hirschman Index (``HHI''), as articulated in the Horizontal Merger 
Guidelines issued by the Department of Justice and the Federal Trade 
Commission, measures the likely anticompetitive effects of an 
acquisition by assessing how concentrated a market is. The more 
concentrated a market, the higher the likelihood that a transaction 
will result in a meaningful reduction in competition and harm 
customers. HHI calculations in the markets for both orbital motors and 
steering units indicate that the proposed acquisition will result in 
highly concentrated markets and is thus presumed likely to enhance 
market power.
    The HHI indicators of highly concentrated markets and enhanced 
market power are consistent with historical head-to-head competition 
between Danfoss and Eaton to supply orbital motors and steering units 
for mobile off-road equipment. Danfoss and Eaton compete directly on 
price, quality, product innovation, delivery, and technical service, 
and the competition between them has benefited U.S. customers of 
orbital motors and steering units for mobile off-road equipment. 
Danfoss and Eaton have a reputation for high-quality orbital motors and 
steering units, product developments that benefit OEMs, an extensive 
network of distributors throughout the United States, and localized 
customer support and service. As a result, Danfoss and Eaton are 
considered to be the two primary--and sometimes the only two--suppliers 
of orbital motors and steering units to customers in the United States.
d. Difficulty of Entry
    The Complaint alleges that entry of additional competition into the 
design, manufacture, and sale of orbital motors and steering units sold 
in North America is unlikely to be timely, likely, or sufficient to 
prevent the harm to competition caused by Danfoss's acquisition of 
Eaton's hydraulics business. A new entrant must have the technical 
capabilities necessary to design, manufacture, and sell orbital motors 
and steering units that meet customer requirements for quality, 
performance, and reliability. Additionally, a new entrant must have the 
requisite scale, an established reputation, and an extensive network of 
distributors to supply to all customers throughout the United States.

III. Explanation of the Proposed Final Judgment

    The relief 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 the 
design, manufacture, and sale of orbital motors and steering units.

[[Page 39073]]

Paragraph IV.A of the proposed Final Judgment requires Defendant 
Danfoss, within 60 days after the entry of the Stipulation and Order by 
the Court, to divest the Divestiture Assets to Interpump Group S.p.A. 
(``Interpump'') or an alternative acquirer acceptable to the United 
States, in its sole discretion. If the 60 days expire while Defendants 
are waiting for regulatory approval from U.S. or international 
regulators, Paragraph IV.B extends the time allowed for the divestiture 
to take place to ten calendar days after the Regulatory Approval has 
been received. The extension may be no longer than 30 calendar days, 
unless the United States, in its sole discretion, consents to an 
additional extension.

(A) Divestiture Assets

    The Divestiture Assets consist of the Danfoss Divestiture Assets 
and the Eaton Divestiture Assets. Taken together, the Divestiture 
Assets will form a viable, ongoing business that can compete 
effectively in the hands of an acquirer approved by the United States, 
in its sole discretion. The combination of product model lines from 
both Defendants ensures that an acquirer will have the breadth and 
scale necessary to succeed while preserving Danfoss's headquarters in 
Nordborg, Denmark, which houses businesses that are not being divested.

(B) Danfoss Divestiture Assets

    The Danfoss Divestiture Assets are defined in Paragraph II.O as all 
tangible and intangible assets relating to or used in connection with 
the Danfoss Orbital Motor Business or the Danfoss Hydraulic Steering 
Unit Business--including three facilities that are located in 
Hopkinsville, Kentucky; Wroclaw, Poland; and Parchim, Germany. The 
Danfoss Orbital Motor Business and Danfoss Hydraulic Steering Unit 
Business, in turn, are defined by model of orbital motor or steering 
unit in Paragraphs II.E and II.F and comprise Danfoss's business of 
designing, manufacturing, and selling these orbital motors and steering 
units in the United States. The Danfoss Divestiture Assets also include 
assets necessary for the acquirer to manufacture Danfoss' S70 model of 
steering unit, which currently is in development. Certain assets 
located in Zhenjiang, China and Nordborg, Denmark are excluded from the 
Danfoss Divestiture Assets because they are not used for the orbital 
motors and hydraulic units at issue for sale to U.S. customers.

(C) Eaton Divestiture Assets

    The Eaton Divestiture Assets are defined in Paragraph II.P as all 
tangible and intangible assets relating to or used in connection with 
the Eaton Orbital Motor Assets or the Eaton Hydraulic Steering Unit 
Assets. The Eaton Orbital Motor Assets and Eaton Hydraulic Steering 
Unit Asset, in turn, are defined by model of orbital motor or steering 
unit in Paragraphs II.H and II.I and comprise all the assets used to 
manufacture these models of orbital motors and steering units. Unlike 
the Danfoss Divestiture Assets, the Eaton Divestiture Assets do not 
include real property. Instead, the Eaton Orbital Motor Assets and 
Eaton Hydraulic Steering Unit Assets will move to the divested facility 
located in Hopkinsville, KY. The Eaton Divestiture Assets will include 
all fixed assets, machinery, and manufacturing equipment for the Eaton 
Orbital Motor Assets and Eaton Hydraulic Steering Unit Assets except 
Eaton's Series 20 model of hydraulic steering unit products. The Eaton 
Divestiture Assets also do not include the transfer of paint line 
assets (see Paragraph II.Q), which are instead included in the Danfoss 
Divestiture Assets.

(D) Intellectual Property

    With the exceptions of the intellectual property listed in Exhibits 
1, 2, or 3, and the Char Lynn license, all Intellectual Property 
including, but not limited to (a) patents, patent applications, and 
inventions and discoveries that may be patentable, (b) registered and 
unregistered copyrights and copyright applications, and (c) registered 
and unregistered trademarks, trade dress, service marks, trade names, 
and trademark applications will be divested to the acquirer.
    The intellectual property listed in Exhibits 1, 2, and 3 is 
necessary for the Divestiture Assets as well as for assets that will be 
retained by Defendant Danfoss. Consequently, the acquirer will receive 
worldwide, non-exclusive, royalty-free, perpetual, paid-up, irrevocable 
licenses to the intellectual property listed in Exhibits 1, 2, and 3. 
Likewise, the acquirer will receive a worldwide, non-exclusive, 
royalty-free, perpetual, paid-up, irrevocable license to use the Char 
Lynn name, which is used for certain Eaton orbital motor models. This 
license will allow the acquirer to transition these products to its own 
product names.

(E) Divestiture Provisions

    Section IV of the proposed Final Judgment contains additional 
detail about how the divestitures should be carried out. Defendants are 
required to act expeditiously (Paragraph IV.C), to divest the 
Divestiture Assets in such a way as to satisfy the United States, in 
its sole discretion, that the Divestiture Assets will be used as a part 
of a viable ongoing business and will remedy the competitive harm 
alleged in the Complaint (Paragraph IV.D). The divestiture must be made 
to an acquirer that, in the United States' sole judgment, has the 
intent and capability to compete effectively in the design, manufacture 
and sale of orbital motors and hydraulic steering units for mobile off-
road equipment (Paragraph IV.E) and must be done in such a manner that 
Defendants cannot interfere in the acquirer's efforts to compete 
effectively in the design, manufacture, and sale of orbital motors and 
hydraulic steering units for mobile off-road equipment. If the 
Divestiture Assets are divested to an acquirer other than Interpump, 
Paragraphs IV.G and IV.H require Defendants to make certain information 
available to the prospective acquirer, including a copy of the proposed 
Final Judgment.
    Paragraph IV.I of the proposed Final Judgment contains provisions 
intended to facilitate the acquirer's efforts to hire certain 
employees. Specifically, Paragraph IV.I of the proposed Final Judgment 
requires Defendant Danfoss to provide the acquirer and the United 
States with organization charts and information relating to these 
employees and to make them available for interviews. It also provides 
that Defendants must not interfere with any efforts by the acquirer to 
hire these employees. In addition, for employees who elect employment 
with the acquirer, Defendant Danfoss must waive all non-compete and 
non-disclosure agreements, vest and pay to these employees (or to the 
acquirer for payment to the employee) on a prorated basis any bonuses, 
incentives, other salary, benefits or other compensation fully or 
partially accrued at the time of the transfer of the employee to the 
acquirer; vest any unvested pension or other equity rights; and provide 
all other benefits that the employees would generally be provided had 
those employees continued employment with Defendants, including but not 
limited to any retention bonuses or payments.
    Paragraph IV.J of the proposed Final Judgment ensures that the 
Divestiture Assets are unencumbered and operable from the first day 
that the acquirer takes ownership. Paragraph IV.L ensures that the 
acquirer will receive all necessary licenses, registrations, and 
permits to

[[Page 39074]]

operate the Divestiture Assets once they are transferred.
    Paragraph IV.K of the proposed Final Judgment will facilitate the 
transfer to the acquirer of customers and other contractual 
relationships that are included within the Divestiture Assets. 
Defendants must transfer all contracts, agreements, and relationships 
to the acquirer and must use best efforts to assign, subcontract, or 
otherwise transfer contracts or agreements that require the consent of 
another party before assignment, subcontracting, or other transfer.
    Paragraph IV.M of the proposed Final Judgment requires Defendants 
to accomplish the move of Eaton Divested Equipment, as defined in 
Paragraph II.Q, to the acquirer's preferred location within 12 months 
after the Court's entry of the Stipulation and Order. In the interim, 
the supply contracts mandated by Paragraph IV.O will ensure that the 
acquirer can serve its new customer base without disruption. Paragraphs 
IV.M and IV.O allow the United States to extend the time to move the 
Eaton Divested Equipment and the terms of the supply contracts up to an 
additional six months if necessary.
    Paragraphs IV.N and IV.O of the proposed Final Judgment address 
supply contracts between Defendant Danfoss and the acquirer. Paragraph 
IV.N requires Defendant Danfoss, at the acquirer's option, to enter 
into a supply contract for certain services and components, such as 
heat treatment services and gerotors, sufficient to meet the acquirer's 
needs, as determined by the acquirer, for a period of up to 12 months. 
The acquirer may terminate the supply contract, or any portion of it, 
without cost or penalty at any time upon commercially reasonable 
notice, and any amendments to or modifications of any provisions of a 
supply contract are subject to approval by the United States in its 
sole discretion. Paragraph IV.O requires Defendants to enter into a 
supply contract for certain models of orbital motor and steering unit 
products, for a period of up to 18 months. Upon the acquirer's request, 
the United States, in its sole discretion, may approve one or more 
extensions of the supply contracts contemplated in Paragraphs IV.N and 
IV.O for up to an additional six months. This provision will help to 
ensure that the acquirer will not face disruption to its supply of 
these input products during an important transitional period.
    The proposed Final Judgment requires Defendant Danfoss to provide 
certain transition services to maintain the viability and 
competitiveness of the Divestiture Assets during the transition to the 
acquirer. Paragraph IV.P of the proposed Final Judgment requires 
Defendant Danfoss, at the acquirer's option, to enter into a transition 
services agreement for back office, accounting, human resources, 
information technology services and support, employee health and 
safety, and technical training services and support for a period of up 
to 12 months. The acquirer may terminate the transition services 
agreement, or any portion of it, without cost or penalty at any time 
upon commercially reasonable notice. The paragraph further provides 
that the United States, in its sole discretion, may approve one or more 
extensions of this transition services agreement for a total of up to 
an additional 6 months and that any amendments to or modifications of 
any provisions of a transition services agreement are subject to 
approval by the United States in its sole discretion. Paragraph IV.P 
also provides that employees of Defendants tasked with supporting this 
agreement must not share any competitively sensitive information of the 
acquirer with any other employee of Defendants, unless such sharing is 
for the sole purpose of providing transition services to the acquirer.
    Paragraph IV.Q of the proposed Final Judgment requires Defendants 
to refrain for one year from soliciting customers for the portion of 
the customer's business that is transferring to the acquirer. 
Defendants may respond to inquiries initiated by such customers and 
enter into negotiations at the request of the customers but must 
maintain a log of any such inquiries and requests. This provision gives 
the acquirer time to establish a performance record with new customers 
without interference from Defendants. Paragraph IV.Q allows the United 
States to extend the time period of this provision up to an additional 
six months if necessary.
    Paragraph IV.R ensures that the terms of the proposed Final 
Judgment supersede any terms of agreement between Defendants and the 
acquirer that are inconsistent with the proposed Final Judgment.

(F) Divestiture Trustee Provisions

    If Defendants do not accomplish the divestiture within the period 
prescribed in Paragraph IV.A or IV.B of the proposed Final Judgment, 
Section V of the proposed Final Judgment provides that the Court will 
appoint a divestiture trustee selected by the United States to effect 
the divestiture. If a divestiture trustee is appointed, the proposed 
Final Judgment provides that Defendant Danfoss must pay all costs and 
expenses of the trustee. The divestiture trustee's compensation must be 
structured so as to provide an incentive for the trustee based on the 
price and terms obtained and the speed with which the divestiture is 
accomplished. After the divestiture trustee's appointment becomes 
effective, the trustee must provide monthly reports to the United 
States setting forth his or her efforts to accomplish the divestiture. 
If the divestiture has not been accomplished within six months of the 
divestiture trustee's appointment, the United States may make 
recommendations to the Court, which will enter such orders as 
appropriate, in order to carry out the purpose of the Final Judgment, 
including by extending the trust or the term of the divestiture 
trustee's appointment by a period requested by the United States.

(G) Monitoring Trustee Provisions

    Section X of the proposed Final Judgment provides that the United 
States may appoint a monitoring trustee who will have the power and 
authority to investigate and report on Defendants' compliance with the 
terms of the Final Judgment and the Stipulation and Order, including 
compliance with all supply and transition service agreements and 
progress of production line transfers, and will have other powers as 
the Court deems appropriate. The monitoring trustee will not have any 
responsibility or obligation for the operation of Defendants' 
businesses. The monitoring trustee will serve at Defendant Danfoss' 
expense, on such terms and conditions as the United States approves, 
and Defendants must assist the monitoring trustee in fulfilling his or 
her obligations. The monitoring trustee will provide periodic reports 
to the United States and will serve until the divestiture of all the 
Divestiture Assets is finalized pursuant to either Section IV or 
Section V of this Final Judgment and Defendant Danfoss has complied 
with the terms of the transition services agreements and supply 
contracts provided for in this Final Judgment, unless the United 
States, in its sole discretion, determines a different period is 
appropriate.

(H) Firewall Provision

    The relocation of the Eaton Divested Equipment to a location 
specified by acquirer will require Defendants' employees to train 
employees of the acquirer on how to properly operate the equipment. 
Section XII of the proposed Final Judgment requires Defendants to 
implement and maintain a firewall to prevent the exchange of 
competitively sensitive information between Defendants and the 
acquirer.

[[Page 39075]]

Specifically, Defendants must implement and maintain procedures to 
prevent any employees of Defendants from sharing competitively 
sensitive information relating to the Divestiture Assets with personnel 
of Defendants with responsibilities relating to Danfoss's or Eaton's 
design, manufacture, and sale of hydraulic orbital motors or hydraulic 
steering units. Such a firewall will prevent competitively sensitive 
information about the Divestiture Assets from being used to influence 
business decisions relating to Danfoss's or Eaton's design, 
manufacturing, or sale of orbital motors or steering units. The 
implementation of these procedures for a two-year period will ensure 
that the information cannot be used while it is still competitively 
sensitive. After two years, any information will be sufficiently out of 
date to no longer pose a risk and the firewall can be eliminated. Under 
Paragraph XII.B, Defendants must, within 30 days of entry of the 
Stipulation and Order, submit to the United States a document setting 
forth in detail the procedures each has implemented to effect 
compliance with Section XII. The United States will determine, in its 
sole discretion, whether to approve or reject Defendants' proposed 
compliance plans.

(I) Compliance and Enforcement Provisions

    The proposed Final Judgment also contains provisions designed to 
promote compliance with and make enforcement of the Final Judgment as 
effective as possible. Paragraph XV.A provides that the United States 
retains and reserves all rights to enforce the Final Judgment, 
including the right to seek an order of contempt from the Court. Under 
the terms of this paragraph, Defendants have agreed that in any civil 
contempt action, any motion to show cause, or any similar action 
brought by the United States regarding an alleged violation of the 
Final Judgment, the United States may establish the violation and the 
appropriateness of any remedy by a preponderance of the evidence and 
that Defendants have waived any argument that a different standard of 
proof should apply. This provision aligns the standard for compliance 
with the Final Judgment with the standard of proof that applies to the 
underlying offense that the Final Judgment addresses.
    Paragraph XV.B provides additional clarification regarding the 
interpretation of the provisions of the proposed Final Judgment. The 
proposed Final Judgment is intended to remedy the loss of competition 
the United States alleges would otherwise be harmed by the transaction. 
Defendants agree that they will abide by the proposed Final Judgment 
and that they may be held in contempt of the Court for failing to 
comply with any provision of the proposed Final Judgment that is stated 
specifically and in reasonable detail, as interpreted in light of this 
procompetitive purpose.
    Paragraph XV.C provides that if the Court finds in an enforcement 
proceeding that a Defendant has violated the Final Judgment, the United 
States may apply to the Court for an extension of the Final Judgment, 
together with such other relief as may be appropriate. In addition, to 
compensate American taxpayers for any costs associated with 
investigating and enforcing violations of the Final Judgment, Paragraph 
XV.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, the Defendant must reimburse the United 
States for attorneys' fees, experts' fees, and other costs incurred in 
connection with any effort to enforce the Final Judgment, including the 
investigation of the potential violation.
    Paragraph XV.D states that the United States may file an action 
against a Defendant for violating the Final Judgment for up to four 
years after the Final Judgment has expired or been terminated. 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.

(J) Term of the Final Judgment

    Finally, Section XVI of the proposed Final Judgment provides that 
the Final Judgment will expire 10 years from the date of its entry, 
except that after five years from the date of its entry, the Final 
Judgment may be terminated upon notice by the United States to the 
Court and Defendants that the divestiture has been completed and that 
continuation of the Final Judgment is no longer necessary or in the 
public interest.

IV. Remedies Available to Potential Private Plaintiffs

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment neither impairs 
nor assists the bringing of any private antitrust damage action. Under 
the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the 
proposed Final Judgment has no prima facie effect in any subsequent 
private lawsuit that may be brought against Defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least 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, the comments and the United 
States' responses will be published in the Federal Register unless the 
Court agrees that the United States instead may publish them on the 
U.S. Department of Justice, Antitrust Division's internet website.
    Written comments should be submitted in English to: Jay Owen, 
Acting Chief, Defense, Industrials, and Aerospace Section, Antitrust 
Division, U.S. Department of Justice, 450 Fifth Street NW, Suite 8700, 
Washington, DC 20530.

[[Page 39076]]

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

VI. Alternatives to the Proposed Final Judgment

    As an alternative to the proposed Final Judgment, the United States 
considered a full trial on the merits against Defendants. The United 
States could have continued the litigation and sought preliminary and 
permanent injunctions against Danfoss's acquisition of certain assets 
and equity interests of Eaton's hydraulics business. The United States 
is satisfied, however, that the relief required by the proposed Final 
Judgment will remedy the anticompetitive effects alleged in the 
Complaint, preserving competition for the design, manufacture, and sale 
of orbital motors and hydraulic steering units. 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.

VII. Standard of Review Under the APPA for the Proposed Final Judgment

    Under the Clayton Act and APPA, proposed Final Judgments or 
``consent decrees'' in antitrust cases brought by the United States are 
subject to a 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 N.V./S.A., No. 08-1965 (JR), 2009 
U.S. Dist. LEXIS 84787, at *3 (D.D.C. Aug. 11, 2009) (noting that a 
court's review of a proposed Final Judgment is limited and only 
inquires ``into whether the government's determination that the 
proposed remedies will cure the antitrust violations alleged in the 
complaint was reasonable, and whether the 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); see also United States v. Deutsche Telekom AG, No. 19-2232 
(TJK), 2020 WL 1873555, at *7 (D.D.C. Apr. 14, 2020). More demanding 
requirements would ``have enormous practical consequences for the 
government's ability to negotiate future settlements,'' contrary to 
congressional intent. Microsoft, 56 F.3d at 1456. ``The Tunney Act was 
not intended to create a disincentive to the use of the consent 
decree.'' Id.
    The United States' predictions about the efficacy of the remedy are 
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at 
1461 (recognizing courts should give ``due respect to the Justice 
Department's . . . view of the nature of its case''); United States v. 
Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 2016) (``In 
evaluating objections to settlement agreements under the Tunney Act, a 
court must be mindful that [t]he government need not prove that the 
settlements will perfectly remedy the alleged antitrust harms[;] it 
need only provide a factual basis for concluding that the settlements 
are reasonably adequate remedies for the alleged harms.'' (internal 
citations omitted)); United States v. Republic Servs., Inc., 723 F. 
Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review to 
which the government's proposed remedy is accorded''); United States v. 
Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A 
district court must accord due respect to the government's prediction 
as to the effect of proposed remedies, its perception of the market 
structure, and its view of the nature of the case.''). The ultimate 
question is whether ``the remedies [obtained by the Final Judgment are] 
so inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest.' '' Microsoft, 56 F.3d at 1461 
(quoting W. Elec. Co., 900 F.2d at 309).
    Moreover, the Court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its complaint, and does not authorize the Court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways, 
38 F. Supp. 3d at 75 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``[T]he 
`public interest' is not to be measured by comparing the violations 
alleged in the complaint against those the court believes could have, 
or even should have, been alleged''). Because the ``court's authority 
to review the decree depends entirely on the government's exercising 
its prosecutorial discretion by bringing a case in the first place,'' 
it follows that ``the court is only authorized to review the decree 
itself,'' and not to ``effectively redraft the complaint'' to inquire 
into other matters

[[Page 39077]]

that the United States did not pursue. Microsoft, 56 F.3d at 1459-60.
    In its 2004 amendments to the APPA, Congress made clear its intent 
to preserve the practical benefits of using judgments proposed by the 
United States in antitrust enforcement, Public Law 108-237 Sec.  221, 
and added the unambiguous instruction that ``[n]othing in this section 
shall be construed to require the court to conduct an evidentiary 
hearing or to require the court to permit anyone to intervene.'' 15 
U.S.C. 16(e)(2); see also U.S. Airways, 38 F. Supp. 3d at 76 
(indicating that a court is not required to hold an evidentiary hearing 
or to permit intervenors as part of its review under the Tunney Act). 
This language explicitly wrote into the statute what Congress intended 
when it first enacted the Tunney Act in 1974. As Senator Tunney 
explained: ``[t]he court is nowhere compelled to go to trial or to 
engage in extended proceedings which might have the effect of vitiating 
the benefits of prompt and less costly settlement through the consent 
decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of Sen. 
Tunney). ``A court can make its public interest determination based on 
the competitive impact statement and response to public comments 
alone.'' U.S. Airways, 38 F. Supp. 3d at 76 (citing Enova Corp., 107 F. 
Supp. 2d at 17).

VIII. Determinative Documents

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

Dated: July 14, 2021

Respectfully submitted,

For Plaintiff United States of America:

-----------------------------------------------------------------------
REBECCA VALENTINE* (D.C. Bar #989607), Trial Attorney,
Defense, Industrials, and Aerospace Section, Antitrust Division, 450 
Fifth Street NW, Suite 8700, Washington, DC 20530, Telephone: (202) 
476-0432, Facsimile: (202) 514-9033, Email: 
[email protected].
*Lead Attorney To Be Noticed

[FR Doc. 2021-15728 Filed 7-22-21; 8:45 am]
BILLING CODE 4410-11-P