[Federal Register Volume 61, Number 120 (Thursday, June 20, 1996)]
[Notices]
[Pages 31526-31529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15731]



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FEDERAL TRADE COMMISSION

[File No. 961-0057]


Raytheon Company; Proposed Consent Agreement With Analysis To Aid 
Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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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 require the Lexington, Massachusetts-based 
company to erect an information ``firewall'' between it and Chrysler 
Technologies Holding, Inc. (CTH). The consent agreement settles 
allegations that Raytheon's acquisition of CTH may compromise the 
competitiveness of an upcoming procurement for the Navy's Submarine 
High Data Rate system (Submarine HDR), on which Raytheon has bid. CTH 
is presently a second-tier subcontractor to GTE Corporation, which also 
bid on the Submarine HDR contract.

DATES: Comments must be received on or before August 19, 1996.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:
James Holden, Federal Trade Commission, 6th and Pennsylvania Ave, NW., 
Washington, DC 20580, (202) 326-2682.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of 
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby 
given that the following 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. 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 Section 4.9(b)(6)(ii) of the Commission's Rules of 
Practice (16 CFR 4.9(b)(6)(ii)).

Agreement Containing Consent Order

    The Federal Trade Commission (``Commission''), having initiated an 
investigation of the proposed acquisition by Raytheon Company 
(``Raytheon'') of Chrysler Technologies Holding, Inc. (``CTH''), and it 
now appearing that Raytheon, hereinafter sometimes referred to as 
``Proposed Respondent,'' is willing to enter into an agreement 
containing an order to refrain from certain acts and to provide for 
certain other relief:
    It is hereby agreed by and between Proposed Respondent Raytheon, by 
its duly authorized officers and attorneys, and counsel for the 
Commission that:
    1. Proposed Respondent Raytheon is a corporation organized, 
existing and doing business under and by virtue of the laws of the 
State of Delaware with its office and principal place of business 
located at 141 Spring Street, Lexington, Massachusetts 02173.
    2. Proposed Respondent admits all the jurisdictional facts set 
forth in the draft of complaint.
    3. Proposed Respondent waives:
    a. Any further procedural steps;
    b. The requirement that the Commission's decision contain a 
statement of findings of fact and conclusions of law;
    c. All rights to seek judicial review or otherwise to challenge or 
contest the

[[Page 31527]]

validity of the order entered pursuant to this agreement; and
    d. Any claim under the Equal Access to Justice Act.
    4. Proposed Respondent shall submit within twenty (20) days of the 
date this agreement is signed by Proposed Respondent, an initial 
report, pursuant to Section 2.33 of the Commission's Rules, signed by 
Proposed Respondent setting forth in detail the manner in which 
Proposed Respondent will comply with Paragraph II. of the order when 
and if entered. Such report will not become part of the public record 
unless and until the accompanying agreement and order are accepted by 
the Commission for public comment.
    5. This agreement shall not become part of the public record of the 
proceeding unless and until it is accepted by the Commission. If this 
agreement is accepted by the Commission it, together with the draft of 
complaint contemplated thereby, will be placed on the public record for 
a period of sixty (60) days and information in respect thereto publicly 
released. The Commission thereafter may either withdraw its acceptance 
of this agreement and so notify Proposed Respondent, in which event it 
will take such action as it may consider appropriate, or issue and 
serve its complaint (in such form as the circumstances may require) and 
decision, in disposition of the proceeding.
    6. This agreement is for settlement purposes only and does not 
constitute an admission by Proposed Respondent that the law has been 
violated as alleged in the draft of complaint, or that the facts as 
alleged in the draft complaint, other than jurisdictional facts, are 
true.
    7. This agreement contemplates that, if it is accepted by the 
Commission, and if such acceptance is not subsequently withdrawn by the 
Commission pursuant to the provisions of Section 2.34 of the 
Commission's Rules, the Commission may, without further notice to 
Proposed Respondent, (1) Issue its complaint corresponding in form and 
substance with the draft of complaint and its decision containing the 
following order to refrain from certain acts in disposition of the 
proceeding, and (2) make information public with respect thereto. When 
so entered, the order shall have the same force and effect and may be 
altered, modified, or set aside in the same manner and within the same 
time provided by statute for other orders. The order shall become final 
upon service. Delivery by the U.S. Postal Service of the complaint and 
decision containing the agreed-to-order to Proposed Respondent's 
address as stated in the agreement shall constitute service. Proposed 
Respondent waives any right it may have to any other manner of service. 
The complaint may be used in construing the terms of the order, and no 
agreement, understanding, representation or interpretation not 
contained in the order or the agreement may be used to vary or 
contradict the terms of the order.
    8. Proposed Respondent has read the proposed complaint and order 
contemplated hereby. Proposed Respondent understands that once the 
order has been issued, it will be required to file one or more 
compliance reports showing that it has fully complied with the order. 
Proposed Respondent further understands it may be liable for civil 
penalties in the amount provided by law for each violation of the order 
after it becomes final.

Order

I

    It is ordered that, as used in this order, the following 
definitions shall apply:
    A. ``Respondent'' or ``Raytheon'' means Raytheon Company, its 
directors, officers, employees, agents, representatives, predecessors, 
successors and assigns; its subsidiaries, divisions, groups, 
affiliates, partnerships and joint ventures controlled by Raytheon 
Company, and the respective directors, officers, employees, agents, 
representatives, successors and assigns of each. For purposes of 
Paragraph II. of this order, Raytheon does not include ESI.
    B. ``CTH'' means Chrysler Technologies Holding, Inc., a corporation 
organized, existing and doing business under and by virtue of the laws 
of the State of Delaware with its principal office and place of 
business located in 1000 Chrysler Drive, Auburn Hills, Michigan 48326-
2766, its directors, officers, employees, agents, representatives, 
predecessors, successors and assigns; its subsidiaries, divisions, 
groups, affiliates, partnerships and joint ventures controlled by CTH, 
and the respective directors, officers, employees, agents, 
representatives, successors and assigns of each.
    C. ``ESI'' means Electrospace Systems, Inc., a wholly-owned 
subsidiary of Chrysler Technologies Holding, Inc., with its principal 
office and place of business located at 1301 East Collins Boulevard, 
Richardson, Texas 75083, or by any other entity within or controlled by 
Chrysler Technologies Holding, Inc. that is engaged in, among other 
things, the research, development, manufacture or sale of Antenna and 
Terminal Controls, its directors, officers, employees, agents, 
representatives, predecessors, successors and assigns; its 
subsidiaries, divisions, groups, affiliates, partnerships and joint 
ventures controlled by ESI (or such similar entity), and the respective 
directors, officers, employees, agents, representatives, successors and 
assigns of each.
    D. ``Commission'' means the Federal Trade Commission.
    E. ``Submarine High Data Rate Satellite Communications Terminal'' 
means the system to be procured in the United States Department of the 
Navy's scheduled competitive procurement of the Submarine High Data 
Rate Satellite Communications Terminal, a satellite communications 
system for use on U.S. Navy submarines that is capable of, among other 
things, transmitting and receiving both super high frequency and 
extremely high frequency signals.
    F. ``Antenna and Terminal Controls'' means any current or future 
equipment and services designed, developed, proposed or provided by ESI 
in connection with the United States Department of the Navy's 
procurement of the Submarine High Data Rate Satellite Communications 
Terminal.
    G. ``Non-Public Information of Raytheon'' mean any information not 
in the public domain and in the possession or control of Raytheon 
relating to the Submarine High Data Rate Satellite Communications 
Terminal.
    H. ``Non-Public Information of ESI'' means any information not in 
the public domain and in the possession or control of ESI relating to 
the Submarine High Data Rate Satellite Communications Terminal, and any 
information not in the public domain furnished by Rockwell 
International Corporation or GTE Corporation or any other company to 
ESI in its capacity as subcontractor to Rockwell International 
Corporation in connection with the U.S. Navy's procurement of the 
Submarine High Data Rate Satellite Communications Terminal.
    I. ``Acquisition'' means Raytheon's acquisition of all of the 
voting securities of Chrysler Technologies Holding, Inc.

II

    It is further ordered that:
    A. Raytheon shall not provide, disclose or otherwise make 
available, directly or indirectly, to ESI any Non-Public Information of 
Raytheon until either: (1) The United States Department of the Navy 
selects only one supplier for the Submarine High Data Rate Satellite 
Communications Terminal; or (2) the

[[Page 31528]]

United States Department of the Navy cancels its procurement of the 
Submarine High Data Rate Satellite Communications Terminal entirely.
    B. Raytheon shall not obtain or seek to obtain, directly or 
indirectly, any Non-Public Information of ESI until either: (1) the 
United States Department of the Navy selects only one supplier for the 
Submarine High Data Rate Satellite Communications Terminal; or (2) the 
United States Department of the Navy cancels its procurement of the 
Submarine High Data Rate Satellite Communications Terminal entirely.

III

    It is further ordered that Respondent shall comply with all terms 
of the Interim Agreement, attached to this order and made a part hereof 
as Appendix I. Said Interim Agreement shall continue in effect until 
the provisions in Paragraph II. of this order are complied with or 
until such other time as is stated in said Interim Agreement.

IV

    It is further ordered that within twenty (20) days of the date this 
order becomes final, and annually on the anniversary of the date this 
order become final until either the United States Department of the 
Navy selects only one supplier for the Submarine High Data Rate 
Satellite Communications Terminal or cancels its procurement of the 
Submarine High Data Rate Satellite Communications Terminal entirely, 
and at such other times as the Commission may require, Respondent shall 
file a verified written report with the Commission setting forth in 
detail the manner and form in which it has complied and it complying 
with Paragraph II of this order.

V

    It is further ordered that Respondent shall notify the Commission 
at least thirty (30) days prior to any proposed change in the corporate 
Respondent such as dissolution, assignment, sale resulting in the 
emergence of a successor corporation, or the creation or dissolution of 
subsidiaries or sale of any division or any other change in the 
corporation, in each instance where such change may affect compliance 
obligations arising out of the order.

VI

    It is further ordered that, for the purpose of determining or 
securing compliance with this order, and subject to any legally 
recognized privilege and applicable United States Government national 
security requirements, upon written request, and on reasonable notice, 
Respondent shall permit any duly authorized representatives of the 
Commission:
    A. Access, during office hours and in the presence of counsel, to 
inspect and copy all books, ledgers, accounts, correspondence, 
memoranda and other records and documents in the possession or under 
the control of Respondent, relating to any matters contained in this 
order; and
    B. Upon five (5) days' notice to Respondent, and without restraint 
or interference from Respondent, to interview officers, directors, or 
employees of Respondent, who may have counsel present, regarding any 
such matters.

VII

    It is further ordered that Respondent's obligations under this 
order shall terminate when either: (1) the United States Department of 
the Navy selects only one supplier for the Submarine High Data Rate 
Satellite Communications Terminal; or (2) the United States Department 
of the Navy cancels its procurement of the Submarine High Data Rate 
Satellite Communications Terminal entirely.

Appendix I

Interim Agreement

    This Interim Agreement is by and between Raytheon Company 
(``Raytheon''), a corporation organized and existing under the laws of 
the State of Delaware, and the Federal Trade Commission (the 
``Commission''), an independent agency of the United States Government, 
established under the Federal Trade Commission Act of 1914, 15 U.S.C. 
Sec. 41, et seq.

Premises

    Whereas, Raytheon has proposed to acquire all of the outstanding 
voting securities of Chrysler Technologies Holding, Inc., and
    Whereas, the Commission is now investigating the proposed 
Acquisition to determine if it would violate any of the statutes the 
Commission enforces; and
    Whereas, if the Commission accepts the Agreement Containing Consent 
Order (``Consent Agreement''), the Commission will place it on the 
public record for a period of at least sixty (60) days and subsequently 
may either withdraw such acceptance or issue and serve its Complaint 
and decision in disposition of the proceeding pursuant to the 
provisions of Section 2.34 of the Commission's Rules; and
    Whereas, the Commission is concerned that if an understanding is 
not reached during the period prior to the final issuance of the 
Consent Agreement by the Commission (after the 60-day public notice 
period), there may be interim competitive harm, and divestiture or 
other relief resulting from a proceeding challenging the legality of 
the proposed Acquisition might not be possible, or might be less than 
an effective remedy; and
    Whereas, Raytheon entering into this Interim Agreement shall in no 
way be construed as an admission by Raytheon that the proposed 
Acquisition constitutes a violation of any statute; and
    Whereas, Raytheon understands that no act or transaction 
contemplated by this Interim Agreement shall be deemed immune or exempt 
from the provisions of the antitrust laws or the Federal Trade 
Commission Act by reason of anything contained in this Interim 
Agreement.
    Now, therefore, Raytheon agrees, upon the understanding that the 
Commission has not yet determined whether the proposed Acquisition will 
be challenged, and in consideration of the Commission's agreement that, 
at the time it accepts the Consent Agreement for public comment, it 
will grant early termination of the Hart-Scott-Rodino waiting period, 
as follows:
    1. Raytheon agrees to execute and be bound by the terms of the 
Order contained in the Consent Agreement, as if it were final, from the 
date Raytheon signs the Consent Agreement.
    2. Raytheon agrees to deliver, within three (3) days of the date 
the Consent Agreement is accepted for public comment by the Commission, 
a copy of the Consent Agreement and a copy of this Interim Agreement to 
the United States Department of Defense, Rockwell International 
Corporation, and GTE Corporation.
    3. Raytheon agrees to submit, within twenty (20) days of the date 
the Consent Agreement is signed by Raytheon, an initial report, 
pursuant to Section 2.33 of the Commission's Rules, signed by Raytheon 
setting forth in detail the manner in which Raytheon will comply with 
Paragraph II. of the Consent Agreement.
    4. Raytheon agrees that, from the date Raytheon signs the Consent 
Agreement until the first of the dates listed in subparagraphs 4.a. and 
4.b., it will comply with the provisions of this interim Agreement:
    a. Ten (10) business days after the Commission withdraws its 
acceptance of the Consent Agreement pursuant to the provisions of 
Section 2.34 of the Commission's Rules; or

[[Page 31529]]

    b. The date the Commission finally issues its Compliant and its 
Decision and Order.
    5. Raytheon waives all rights to contest the validity of this 
Interim Agreement.
    6. For the purpose of determining or securing compliance with this 
Interim Agreement, subject to any legally recognized privilege and 
applicable United States Government national security requirements, and 
upon written request, and on reasonable notice, Raytheon shall permit 
any duly authorized representative or representatives of the 
Commission:
    a. Access, during the office hours of Raytheon and in the presence 
of counsel, to inspect and copy all books, ledgers, accounts, 
correspondence, memoranda, and other records and documents in the 
possession or under the control of Raytheon relating to compliance with 
this Interim Agreement; and
    b. Upon five (5) days' notice to Raytheon and without restraint or 
interference from it, to interview officers, directors, or employees of 
Raytheon, who may have counsel present, regarding any such matters.
    7. This Interim Agreement shall not be binding until accepted by 
the Commission.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted subject 
to final approval an agreement containing a proposed Consent Order from 
Raytheon Company (``Raytheon''), which prohibits Raytheon from gaining 
access to any non-public information in the possession of Electrospace 
Systems, Inc. (``ESI'') related to the Submarine High Data Rate 
Satellite Communications Terminal (``Submarine HDR Terminal'') to be 
procured by the United States Department of the Navy, or disclosing any 
such information in its possession to ESI. In addition, the Commission 
has accepted an Interim Agreement which prohibits Raytheon from 
receiving any non-public information related to the Submarine HDR 
Terminal from ESI, or giving any such non-public information in its 
possession to ESI.
    The proposed Consent Order has been placed on the public record for 
sixty (60) days for reception of comments by 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.
    Pursuant to a Stock Purchase Agreement dated April 4, 1996, 
Raytheon proposed to purchase all of the voting securities of Chrysler 
Technologies Holding, Inc. (``CTH'') for approximately $455 million. 
ESI is a wholly-owned subsidiary of CTH. The proposed Complaint alleges 
that the acquisition, if consummated, would violate Section 7 of the 
Clayton Act, as amended, 15 U.S.C. Sec. 18, and Section 5 of the 
Federal Trade Commission Act, as amended, 15 U.S.C. Sec. 45, in the 
market for the research, development, manufacture and sale of Submarine 
HDR Terminals.
    The Submarine HDR Terminal is a satellite communications system for 
use on U.S. Navy submarines that is capable of, among other things, 
transmitting and receiving both super high frequency and extremely high 
frequency signals. Initial proposals (bids) for the Navy's procurement 
of the Submarine HDR Terminal were due on April 15, 1996, and Raytheon 
submitted an initial proposal. An initial proposal was also submitted 
by GTE Corporation, for which ESI is a second-tier subcontractor 
supplying the antenna/terminal controls (an extremely small portion of 
the overall system). Having received initial proposals, the Navy now 
intends to hold discussions that may culminate in a ``Best And Final 
Offer'' competition. At this point in the competition for the Navy's 
Submarine HDR Terminal, the market is highly concentrated, and 
effective new entry is unlikely to occur in a timely manner.
    In its capacity as supplier of the antenna/terminal controls for 
the GTE proposal, ESI already possesses a significant amount of 
competitively sensitive information concerning the GTE proposal, and 
may be in a position to acquire even more such information during the 
period from the present until the competition is concluded. The 
upcoming competition for the Navy's Submarine HDR Terminal could be 
jeopardized if either Raytheon or ESI gains access to competitively 
sensitive information in the other's possession as a result of the 
proposed acquisition. The proposed Consent Order remedies this 
antitrust concern by prohibiting the exchange of competitively 
sensitive information between Raytheon and ESI. Other than the exchange 
of information, the proposed acquisition is unlikely to have an 
anticompetitive effect due to, among other reasons, the fact that ESI's 
role on the GTE proposal is extremely small.
    Under the provisions of the Consent Order, Raytheon is also 
required to provide the Commission with a report of compliance with the 
Order within twenty (20) days of the date the Order becomes final, and 
annually thereafter until the Navy either: (1) selects only one 
Submarine HDR Terminal supplier; or (2) cancels the Submarine HDR 
Terminal procurement entirely.
    The purpose of this analysis is to facilitate public comment on the 
proposed Consent Order, and it is not intended to constitute an 
official interpretation of the agreement and proposed Order, or to 
modify in any way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 96-15731 Filed 6-19-96; 8:45 am]
BILLING CODE 6750-01-M