16814 Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Notices

15 In addition, the Commission often works with

the State Attorneys General and other federal

agencies, such as the United States Post Office, to

investigate conduct that may violate laws enforced

by the Commission. In cases where we work with

certain agencies, the Commission must often enter

conduct Orders to ensure that the violative behavior

is prohibited nationwide.

Commission has broadened this

category to include entities that have

been subject to actions for the same or

similar conduct by other federal

agencies or state or local agencies. The

law violations prosecuted by the

Commission are frequently very similar

to violations prosecuted by other

federal, state, and local law enforcement

agencies.15 It is therefore appropriate, in

considering whether to exclude entities

from lenient treatment, to consider

whether similar conduct has been

subject to enforcement efforts by such

agencies.

Second, SBREFA also suggests

excluding violations that pose serious

health, safety, or environmental threats.

The Commission will, in addition to

such risks, also consider serious

economic injury, as that form of injury

is the type most often encountered in

Commission cases, and in many

instances may cause as much serious

injury as that arising from health, safety,

or environmental threats.

Part C—Request for Comments

Members of the public are invited to

comment on any issues or concerns that

they believe are relevant or appropriate

to the policies described above. The

Commission requests that factual data

upon which the comments are based be

submitted with the comments. In this

section, the Commission identifies

specific issues on which it solicits

public comments. The identification of

issues is designed to assist the public

and should not be construed as a

limitation on the issues on which public

comment may be submitted.

Questions

(1) Should the Commission revise in

any way the policies that it has adopted

to assist small businesses and other

small entities? If so, please provide

specific suggestions.

(2) How would the revisions affect the

benefits provided by the current

policies?

(3) Are any of the criteria or means of

guidance that the Commission has used

in establishing small business

compliance assistance and civil penalty

leniency policies for small businesses

and other small entities inappropriate?

If so, please explain.

(4) Are there any other criteria or

economical means of guidance that the

Commission should use? If so, please

elaborate.

Authority: Secs. 213 and 223, Pub. L. 104–

121, 110 Stat. 847.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 97–8941 Filed 4–7–97; 8:45 am]

BILLING CODE 6750–01–P

FEDERAL TRADE COMMISSION

[File No. 971–0049]

Autodesk, Inc.; Softdesk, Inc.; Analysis

to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

SUMMARY: In settlement of alleged

violations of federal law prohibiting

unfair or deceptive acts or practices and

unfair methods of competition, this

consent agreement, accepted subject to

final Commission approval, would

prohibit, among other things,

Autodesk—a San Rafael, Californiabased developer and marketer of

computer-aided design (CAD) software

which intends to acquire Softdesk,

Inc.—from reacquiring the

‘‘IntelliCADD’’ CAD engine that

Softdesk recently sold to Boomerang

Technology, Inc. The complaint

accompanying the consent agreement

alleged that Autodesk’s $90 million

acquisition of Softdesk, as originally

proposed, would have substantially

lessened competition in the

development and sale of CAD software

engines.

DATES: Comments must be received on

or before June 9, 1997.

ADDRESSES: Comments should be

directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pennsylvania

Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

Howard Morse, Federal Trade

Commission, S–3627, 6th St. and

Pennsylvania Ave., NW., Washington,

DC 20580. (202) 326–2949.

SUPPLEMENTARY INFORMATION: Pursuant

to section 6(f) of the Federal Trade

Commission Act, 38 Stat. 721, 15 U.S.C.

46, and § 2.34 of the Commission’s rules

of practice (16 CFR 2.34), notice is

hereby given that the above-captioned

consent agreement containing a consent

order to cease and desist, having been

filed with and accepted, subject to final

approval, by the Commission, has been

placed on the public record for a period

of sixty (60) days. The following

Analysis to Aid Public Comment

describes the terms of the consent

agreement, and the allegations in the

accompanying complaint. An electronic

copy of the full text of the consent

agreement package can be obtained from

the Commission Actions section of the

FTC Home Page (for March 31, 1997), on

the World Wide Web, at ‘‘http://

www.ftc.gov/os/actions/htm.’’ A paper

copy can be obtained from the FTC

Public Reference Room, Room H–130,

6th Street and Pennsylvania Avenue,

NW., Washington, DC 20580, either in

person or by calling (202) 326–3627.

Public comment is invited. Such

comments or views will be considered

by the Commission and will be available

for inspection and copying at its

principal office in accordance with

§ 4.9(b)(6)(ii) of the Commission’s rules

of practice (16 CFR 4.9(b)(6)(ii)).

Analysis to Aid Public Comment on the

Provisionally Accepted Consent Order

The Federal Trade Commission (‘‘the

Commission’’) has accepted, subject to

final approval, an Agreement

Containing Consent Order

(‘‘Agreement’’) from Autodesk, Inc.

(‘‘Autodesk’’) and Softdesk, Inc.

(‘‘Softdesk’’).

The proposed Order has been placed

on the public record for sixty (60) days

for reception of comments from

interested persons. Comments received

during this period will become part of

the public record. After sixty (60) days,

the Commission will again review the

Agreement and the comments received

and will decide whether it should

withdraw from the Agreement or make

final the Agreement’s proposed Order.

The Commission’s investigation of

this matter concerns a proposed

acquisition by Autodesk of Softdesk. In

December 1996, Autodesk and Softdesk

entered into an Agreement and Plan of

Reorganization whereby Autodesk will

acquire 100% of the voting securities of

Softdesk in exchange for share of

Autodesk common stock with a value of

$90 million (the ‘‘Acquisition’’).

The Agreement Containing Consent

Order would, if finally accepted by the

Commission, settle charges that the

Autodesk acquisition of Softdesk as

originally proposed may have

substantially lessened competition in

the development and sale of computer

aided design (‘‘CAD’’) engines for

Windows-based personal computers in

the United States or in North America.

The Commission has reason to believe

that Autodesk’s original proposal to

acquire Softdesk violates Section 5 of

the Federal Trade Commission Act and

that the acquisition, if consummated,

would have violated Section 7 of the

Clayton Act and Section 5 of the Federal

Trade Commission Act, unless an
Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Notices 16815

effective remedy eliminates likely

anticompetitive effects.

The Proposed Complaint

According to the Commission’s

proposed complaint, Autodesk is a

public company that develops and

markets computer-aided design (‘‘CAD’’)

software for use in the architecture,

engineering and construction (the

‘‘AEC’’) industry. Autodesk offers a

portfolio of software products including

a CAD engine marketed and sold under

the name ‘‘AutoCAD,’’ for use on

Windows-based personal computers.

Autodesk has had annual sales in excess

of $530 million. Softdesk has had

annual sales in excess of $40 million.

Softdesk offers a portfolio of

applications software that is used in

conjunction with and to supplement

CAD engines, primarily AutoCAD.

Softdesk also was developing and had

tested a CAD engine, referred to as

‘‘IntelliCADD,’’ for use on personal

computers that would be used as a

substitute and replacement of AutoCAD.

According to the Commission’s

proposed complaint, a relevant line of

commerce within which to analyze the

effects of Autodesk’s acquisition of

Softdesk is the market for CAD engines

for Windows-based personal computers.

CAD engines are critical to architects

and engineers to plan and design

everything from manufactured products,

to buildings, to utilities, and water

treatment plants. The complaint alleges

that there are no economic substitutes

for CAD engines for Windows-based

personal computers. CAD engines for

Unix-based computers, the only

theoretical alternative, are inadequate

substitutes because of the higher costs to

acquire the hardware and software and

higher costs to maintain and service.

The Commission’s proposed

complaint further alleges that Autodesk

is the dominant provider of Windowsbased CAD engines, accounting for

nearly 70% of the installed base, and

alleges that the relevant U.S. or world

market for Windows-based CAD engines

is highly concentrated.

The complaint further alleges that de

novo entry or fringe expansion into the

relevant market sufficient to deter or

defeat reductions in competition

resulting from Autodesk’s acquisition of

Softdesk and the IntelliCADD

technology would not be timely or

likely. According to the proposed

complaint, developing a CAD engine

would require an expenditure of

substantial sunk costs and would be

time-consuming. The large installed

base of AutoCAD users necessitates that

any new CAD engine developed and

offered in the market offer file

compatibility and transferability to

AutoCAD in order to gain sales. Users

of AutoCAD have a large number of

drawings in the AutoCAD format.

Moreover, many users must share files

they create with others who must be

able to read and edit those files using

their CAD software. Since most

engineers use AutoCAD, any alternative

CAD engine must have the capability to

read and be compatible with AutoCAD

files without losing substantial amounts

of data or information.

According to the complaint,

Softdesk’s IntelliCADD product was

being developed to compete directly

with and to replace AutoCAD as a pcbased CAD engine. IntelliCADD was in

the final stages of testing and was

within months of introduction to the

market when the current proposal by

Autodesk to acquire Softdesk was

announced. The IntelliCADD product, if

brought to market, would have provided

direct and significant competition to

Autodesk in that it offered file

compatibility and file transferability

with AutoCAD, a feature that other pcbased CAD engines currently in the

market do not offer. Furthermore, the

Commission’s complaint also alleges

that some customers have already

altered their buying decisions in

anticipation of the introduction of

IntelliCADD by delaying or postponing

purchasing AutoCAD.

After being advised by Commission

staff of these competitive concerns,

Softdesk sold and transferred all of its

rights and title to the IntelliCADD

product to Boomerang Technology, Inc.

(‘‘Boomerang’’) on February 21, 1997.

Boomerang is a company created and

owned by the developer of the

IntelliCADD product, a former Softdesk

employee. Boomerang now has full

rights and title to the IntelliCADD

product and has assigned its rights to

Visio Corporation (‘‘Visio’’). As a result,

the IntelliCADD product is now under

the control of an entity independent of

Autodesk and Softdesk, which is free to

fully develop and market the

IntelliCADD product.

The proposed complaint alleges that

the acquisition by Autodesk of the

IntelliCADD product would have

substantially lessened competition by,

among other things, eliminating actual

and potential competition to Autodesk’s

AutoCAD product, likely resulting in

continued high prices for CAD engines.

The Proposed Consent Agreement

The proposed Order accepted for

public comment contains provisions

that would prohibit either Autodesk or

Softdesk from re-acquiring the

IntelliCADD product, or any entity that

owns or controls the IntelliCADD

technology, without prior notice to the

Commission for a period of ten (10)

years. The purpose of this prohibition is

to ensure the continued development

and sale of the IntelliCADD product to

compete with the merged Autodesk/

Softdesk, to ensure that the IntelliCADD

product remains in the hands of an

independent competitor in the

development and sale of CAD engines

for Windows-based personal computers,

and to remedy the lessening of

competition as alleged in the

Commission’s complaint.

The proposed order would also

prohibit Autodesk or Softdesk from

enforcing any non-compete or

confidentiality agreements against any

former employees of Softdesk whose

primary responsibility was the

development of the IntelliCADD

product that may now or in the future

be an employee of Boomerang or its

assigns. The purpose of these provisions

is to ensure that Boomerang or its

assigns remain a viable competitor to

Autodesk and Softdesk in the

development and sale of the

IntelliCADD product, thereby fostering a

competitive environment for the sale of

CAD engines for Windows-based

personal computers.

Pending final issuance of this

proposed order, Autodesk and Softdesk

have also entered into an Interim

Agreement whereby they have agreed to

be bound to the provisions and terms of

the proposed Order pending and until

final issuance by the Commission.

The purpose of this analysis is to

facilitate public comment on all aspects

of the proposed Order. This analysis is

not intended to constitute an official

interpretation of the Agreement or the

proposed Order or in any way to modify

the terms of the Agreement or the

proposed Order.

Donald S. Clark,

Secretary.

[FR Doc. 97–8940 Filed 4–7–97; 8:45 am]

BILLING CODE 6750–01–M