[Federal Register Volume 74, Number 229 (Tuesday, December 1, 2009)]
[Notices]
[Pages 62778-62780]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-28745]
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FEDERAL TRADE COMMISSION
[File No. 091 0050]
Panasonic Corporation and Sanyo Electric Co., Ltd; Analysis of
Agreement Containing Consent Orders to Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint and the terms of the consent order -- embodied in the consent
agreement -- that would settle these allegations.
DATES: Comments must be received on or before December 24, 2009.
ADDRESSES: Interested parties are invited to submit written comments
electronically or in paper form. Comments should refer to ``Panasonic
Sanyo, File No. 091 0050'' to facilitate the organization of comments.
Please note that your comment -- including your name and your state --
will be placed on the public record of this proceeding, including on
the publicly accessible FTC website, at (http://www.ftc.gov/os/publiccomments.shtm).
Because comments will be made public, they should not include any
sensitive personal information, such as an individual's Social Security
Number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. Comments also
should not include any sensitive health information, such as medical
records or other individually identifiable health information. In
addition, comments should not include any ``[t]rade secret or any
commercial or financial information which is obtained from any person
and which is privileged or confidential. . . .,'' as provided in
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and Commission Rule
4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing material for which
confidential treatment is requested must be filed in paper form, must
be clearly labeled ``Confidential,'' and must comply with FTC Rule
4.9(c), 16 CFR 4.9(c).\1\
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\1\The comment must be accompanied by an explicit request for
confidential treatment, including the factual and legal basis for
the request, and must identify the specific portions of the comment
to be withheld from the public record. The request will be granted
or denied by the Commission's General Counsel, consistent with
applicable law and the public interest. See FTC Rule 4.9(c), 16 CFR
4.9(c).
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Because paper mail addressed to the FTC is subject to delay due to
heightened security screening, please consider submitting your comments
in electronic form. Comments filed in electronic form should be
submitted by using the following weblink: (https://public.commentworks.com/ftc/0910050) and following the instructions on
the web-based form. To ensure that the Commission considers an
electronic comment, you must file it on the web-based form at the
weblink: (https://public.commentworks.com/ftc/0910050). If this Notice
appears at (http://www.regulations.gov/search/index.jsp), you may also
file an electronic comment through that website. The Commission will
consider all comments that regulations.gov forwards to it. You may also
visit the FTC website at (http://www.ftc.gov/) to read the Notice and
the news release describing it.
A comment filed in paper form should include the ``Panasonic Sanyo,
File No. 091 0050'' reference both in the text and on the envelope, and
should be mailed or delivered to the following address: Federal Trade
Commission, Office of the Secretary, Room H-135 (Annex D), 600
Pennsylvania Avenue, NW, Washington, DC 20580. The FTC is requesting
that any comment filed in paper form be sent by courier or overnight
service, if possible, because U.S. postal mail in the Washington area
and at the Commission is subject to delay due to heightened security
precautions.
The Federal Trade Commission Act (``FTC Act'') and other laws the
Commission administers permit the collection of public comments to
consider and use in this proceeding as appropriate. The Commission will
consider all timely and responsive public comments that it receives,
whether filed in paper or electronic form. Comments received will be
available to the public on the FTC website, to the extent practicable,
at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of
discretion, the Commission makes every effort to remove home contact
information for individuals from the public comments it receives before
placing those comments on the FTC website. More information, including
routine uses permitted by the Privacy Act, may be found in the FTC's
privacy policy, at (http://www.ftc.gov/ftc/privacy.shtm).
FOR FURTHER INFORMATION CONTACT: Brendan McNamara (202-326-3703),
Bureau of Competition, 600 Pennsylvania Avenue, NW, Washington, D.C.
20580.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec. 2.34 the
Commission 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 thirty (30) days. The following Analysis to Aid Public
Comment describes the terms of the consent agreement, and the
allegations in the complaint. An electronic copy of the full text of
the consent agreement package can be obtained from the FTC Home Page
(for November 24, 2009), on the World Wide Web, at (http://www.ftc.gov/os/actions.shtm). A paper copy can be obtained from the FTC Public
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW, Washington,
D.C. 20580, either in person or by calling (202) 326-2222.
Public comments are invited, and may be filed with the Commission
in either paper or electronic form. All comments should be filed as
prescribed in the ADDRESSES section above, and must be received on or
before the date specified in the DATES section.
[[Page 62779]]
Analysis of Agreement Containing Consent Order to Aid Public Comment
I. Introduction
The Federal Trade Commission (``Commission'') has accepted from
Panasonic Corporation (``Panasonic''), subject to final approval, an
Agreement Containing Consent Orders (``Consent Agreement''), which is
designed to remedy the anticompetitive effects resulting from
Panasonic's proposed acquisition of 100% of the voting securities of
Sanyo Electric Co., Ltd. (``Sanyo''). Under the terms of the Consent
Agreement, Sanyo will divest its assets relating to the manufacture and
sale of portable NiMH batteries to FDK Corporation (``FDK''), a
subsidiary of Fujitsu, Ltd.
The proposed Consent Agreement has been placed on the public record
for 30 days to solicit comments from interested persons. Comments
received during this period will become part of the public record.
After 30 days, the Commission will again review the proposed Consent
Agreement, and will decide whether it should withdraw from the proposed
Consent Agreement or make final the accompanying Decision and Order
(``Order'').
Pursuant to an agreement concluded on December 19, 2008 (the
``Agreement''), Panasonic announced its intention to commence a cash
tender offer to acquire 100 percent of the voting securities of Sanyo
for an aggregate purchase price of approximately $9 billion (the
``Acquisition''). The Commission's complaint alleges the facts
described below and that the proposed 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, by lessening competition in the market for portable
NiMH batteries.
II. The Parties
Panasonic, headquartered in Osaka, Japan, is a leading manufacturer
of consumer electronics such as televisions, DVD players, and
computers. Panasonic's Components and Devices Division produces
rechargeable batteries, as well as semiconductors and mechanical
components.
Headquartered in Osaka, Japan, Sanyo Electric Co., Ltd., is a
leading producer of electronic devices and components, including
digital cameras, televisions, car navigation systems, home appliances,
and consumer electronics. Sanyo's rechargeable battery business is
operated out of its Components Division, which also manufacturers
batteries, semiconductors, capacitors, small motors, and optical
pickups.
III. Portable NiMH Batteries
There are three rechargeable battery chemistries: nickel cadmium
(``NiCd''), nickel metal hydride (``NiMH'') and lithium-ion (``Li-
ion''). While each battery chemistry is used in varying degrees to
power batteries for portable electronic devices, the evidence shows
that portable NiMH batteries are a relevant antitrust market. First of
all, there are a number of products, most notably two-way radios, that
have a large installed base of customers that cannot switch to another
type of rechargeable battery because the products were designed
specifically to accommodate portable NiMH batteries. Second, even for
customers who use NiMH batteries but are not locked in to purchasing
them, there is a strong preference for portable NiMH batteries for
performance and cost reasons. Both sets of customers would not switch
to a different battery technology in response to a five to ten percent
increase in the price of portable NiMH batteries.
The relevant geographic market for portable NiMH batteries is
worldwide. Manufacturing of portable NiMH batteries is concentrated in
Asia, and orders are shipped to customers located throughout the world.
Panasonic and Sanyo produce the highest quality portable NiMH
batteries, and consequently the two firms are uniquely close
competitors. The remaining suppliers of portable NiMH batteries produce
lower quality batteries and are therefore more distant competitors to
Panasonic and Sanyo. As the only suppliers of high quality portable
NiMH batteries, Panasonic and Sanyo control the vast majority of the
market. The lower quality suppliers have fringe positions and do not
affect competition between Panasonic and Sanyo.
As each other's most significant competitors for portable NiMH
batteries, Panasonic and Sanyo respond directly to competition from
each other with lower prices, better services and improved products, to
the benefit of consumers. By eliminating this direct and substantial
competition, the proposed acquisition would allow Panasonic to exercise
market power unilaterally, thereby increasing the likelihood that
purchasers of portable NiMH batteries would be forced to pay higher
prices and restraining the direct competition that promoted innovation
and high quality service. The proposed acquisition eliminates a
competitor to which customers otherwise could have diverted their sales
- in a market where the alternative sources of supply are usually not
viable options.
Neither new entry nor repositioning and expansion sufficient to
deter or counteract the anticompetitive effects of the proposed
acquisition in the portable NiMH market is likely to occur within two
years. Existing competitors would have to significantly improve their
portable NiMH production facilities, improve the quality of their
portable NiMH batteries, and overcome the resistance of customers to
switch to a portable NiMH battery supplier that lacks the track record
of effectively meeting the needs of those customers served by Panasonic
and Sanyo. Also, because NiMH is an older battery technology, it has a
relatively small growth potential for the sale of portable NiMH
batteries, so it is unlikely that a potential competitor would be able
to justify the investments necessary to enter the market for portable
NiMH batteries.
IV. The Consent Agreement
The proposed Order eliminates the competitive concerns raised by
Panasonic's proposed acquisition of Sanyo by requiring the divestiture
of Sanyo's assets relating to the manufacture and sale of portable NiMH
batteries to FDK Corporation (``FDK''), a subsidiary of Fujitsu, Ltd.
This divestiture must occur with fifteen days after the Acquisition but
may be extended an additional thirty days, if necessary, to allow
European Commission approval of the divestiture to FDK.
FDK has the industry experience, reputation, and resources to
replace Sanyo as an effective competitor in the portable NiMH battery
market. Headquartered in Tokyo, Japan, FDK manufactures and sells
electronic components and batteries worldwide, and is a subsidiary of
Fujitsu, a multinational computing, telecommunications and electronics
company. FDK does not currently compete against Panasonic and Sanyo in
the sale of portable NiMH batteries, but it does manufacture and sell
alkaline batteries. FDK also sources and resells a broad range of
batteries, including carbon-zinc, lithium primary, and manganese
batteries.
Pursuant to the Order, FDK would receive all the assets necessary
to operate Sanyo's current portable NiMH battery business, including
most importantly, the NiMH battery manufacturing facility in Takasaki,
Japan (``Takasaki plant''). The Takasaki plant is a premier
manufacturing facility for portable NiMH batteries, producing
approximately 30 percent of the
[[Page 62780]]
portable NiMH batteries worldwide. The Order also requires Sanyo to
supply to FDK sizes Sub C/D portable NiMH batteries, which are the only
sizes of Sanyo's portable NiMH batteries not produced at the Takasaki
plant and account for a tiny fraction of Sanyo's overall portable NiMH
sales. In addition to the employees of the Takasaki plant, who would
automatically transfer to FDK, the Order requires Sanyo to provide FDK
access to certain other key Sanyo employees needed to successfully
operate the business. The Order also requires Sanyo to transfer all
intellectual property necessary to make and sell portable NiMH
batteries, including Sanyo patents and licenses related to portable
NiMH batteries. A divestiture of Sanyo's portable NiMH assets will
ensure that FDK has a full line of high-quality portable NiMH
batteries, enabling it to compete immediately with the merged entity.
The Commission has appointed Philip Comerford, Jr., Managing
Director of ING Capital LLC and Head of the Mergers & Acquisitions
Group, as the interim monitor to oversee the divestiture of the NiMH
battery business. In order to ensure that the Commission remains
informed about the status of the proposed divestitures, the proposed
Consent Agreement requires the parties to file periodic reports with
the Commission until the divestiture is accomplished.
If the Commission determines that FDK is not an acceptable
purchaser, or the manner of the divestiture is not acceptable, the
parties must unwind the sale to FDK and divest the portable NiMH
battery assets within six months of the date the Order becomes final to
another Commission-approved acquirer. If the parties fail to divest
within six months, the Commission may appoint a trustee to divest the
portable NiMH battery assets.
The purpose of this analysis is to facilitate public comment on the
Consent Agreement, and it is not intended to constitute an official
interpretation of the proposed Decision and Order or the Order To
Maintain Assets, or to modify their terms in any way.
By direction of the Commission.
Donald S. Clark
Secretary.
[FR Doc. E9-28745 Filed 11-30-09: 8:45 am]
BILLING CODE 6750-01-S