[Federal Register Volume 75, Number 98 (Friday, May 21, 2010)]
[Notices]
[Pages 28616-28619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-12183]
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FEDERAL TRADE COMMISSION
[File No. 091 0135]
Agilent Technologies, Inc.; Analysis of the Agreement Containing
Consent Order 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 June 17, 2010.
ADDRESSES: Interested parties are invited to submit written comments
electronically or in paper form. Comments should refer to``Agilent
Technologies, File No. 091 0135'' 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
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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/agilent) 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/agilent). 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 ``Agilent
Technologies, File No. 091 0135'' 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: Lisa De Marchi Sleigh (202-326-2535),
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 May 14, 2010), 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.
Analysis of Agreement Containing Consent Order to Aid Public Comment
I. Introduction
The Federal Trade Commission (``Commission'') has accepted from
Agilent Technologies, Inc. (``Agilent''), subject to final approval, an
Agreement Containing Consent Orders (``Consent Agreement''), which is
designed to remedy the anticompetitive effects resulting from Agilent's
proposed acquisition of Varian, Inc. (``Varian''). Under the terms of
the Consent Agreement, Agilent will: (1) divest the assets of its Micro
Gas Chromatography (``Micro GC'') instruments business to Inficon Group
(``Inficon''), a subsidiary of Inficon Holding AG; and (2) divest the
assets of Varian's Triple Quadrupole Gas Chromatography-Mass
Spectrometry (``3Q GC-MS'') and Inductively Coupled Plasma-Mass
Spectrometry (``ICP-MS'') instruments businesses to Bruker Corp.
(``Bruker''), within ten days of closing its acquisition of Varian.
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, modify it, or make it final.
Pursuant to an Agreement and Plan of Merger dated July 26, 2009,
Agilent plans to acquire Varian for approximately $1.5 billion. The
Commission's Complaint alleges 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 FTC Act, as amended, 15 U.S.C.
Sec. 45, by lessening competition in the markets for Micro GC, 3Q GC-
MS and ICP-MS instruments (``the Products'').
II. The Parties
Agilent, headquartered in Santa Clara, California, is a global
supplier of scientific measurement instruments and related products and
services. Agilent's broad range of products and services includes
equipment used to test cell phones and communications equipment,
machines that determine the contents of human tissue and environmental
samples, and microarrays that are used to analyze gene expression,
which are commonly used in cancer research.
Varian is headquartered in Palo Alto, California, and supplies
scientific instruments and chemical analysis technologies to customers
worldwide. Varian's products, which employ various analytical
techniques to test samples of many types, are used by academic
researchers, forensics laboratories, food safety and agriculture
laboratories, pharmaceutical companies, and chemical and oil and gas
firms. Varian also offers a line of vacuum pumps, which are important
components in a variety of scientific instruments and industrial
processes.
III. The Products and Structure of the Markets
Micro GCs are portable gas chromatography instruments that are used
primarily in the oil, mining, and waste disposal industries to detect
the presence of toxins in the air or in emissions. Micro GC instruments
are designed for field use and, accordingly, must be small and light
enough to be
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portable and sufficiently robust to withstand travel and use in a
variety of environments. Because Micro GC customers strongly value
portability, they would not switch to any other analytical technique or
product if the price of Micro GCs were to increase by five to ten
percent. In the United States, Agilent and Varian are the sole
competitors in the market for Micro GC instruments. Agilent and Varian
account for approximately 75 percent and 25 percent of the market by
revenue, respectively, and directly compete for sales on the basis of
price, service, and product innovation.
3Q GC-MS instruments combine a front-end gas chromatograph with a
triple quadrupole mass spectrometer. 3Q GC-MSs offer extraordinarily
high sensitivity and are used to identify and quantify trace amounts of
substances in a wide variety of samples, such as performance-enhancing
drugs in blood and pesticides in food. Less sensitive GC-MSs are widely
available, and substantially less expensive, but they are not
substitutes for 3Q GC-MSs because they lack the capability to detect
compounds at very low concentrations and cannot differentiate among
structurally-similar compounds. Where the significantly greater
performance of a 3Q GC-MS is required, customers would not switch to
other instruments or technologies even if the price of 3Q GC-MSs
increased by five to ten percent. In the United States, there are four
competitors supplying 3Q GC-MS instruments. Post-acquisition, the
combined Agilent and Varian would have in excess of a 48 percent share
of the U.S. market by revenue. The other two competitors, Thermo Fisher
Scientific, Inc. (``Thermo'') and Waters Corp., have market shares of
approximately 36 percent and 16 percent, respectively.
ICP-MS instruments combine inductively coupled plasma technology
and mass spectrometry technology and are used for the analysis of
inorganic materials. The most common application for ICP-MS is testing
water samples, such as drinking, ground or waste water, for the
presence of toxic metals, like arsenic, mercury, or lead. ICP-MS is the
only technology approved by the Environmental Protection Agency for
testing drinking water. Because customers require the sensitivity
provided by ICP-MS, and because many customers perform tests pursuant
to regulatory guidelines, they would not switch to any other technique
or device if the price of ICP-MS instruments were to increase by five
to ten percent. In the United States, there are only four suppliers of
ICP-MS instruments. Agilent accounts for 40 percent of the ICP-MS
market by revenue, and a combined Agilent and Varian would have in
excess of a 48 percent share of the U.S. market. The other two
competitors, Thermo and PerkinElmer, Inc. have market shares of
approximately 14 percent and 37 percent, respectively.
The relevant geographic area in which to evaluate the markets for
Micro GC, 3Q GC-MS, and ICP-MS instruments is the United States.
Because Micro GC, 3Q GC-MS, and ICP-MS customers require local sales,
service, and support, a supplier that lacks the local infrastructure
necessary to provide these services is not a viable alternative for
U.S. customers.
IV. Entry
Neither new entry nor repositioning and expansion sufficient to
deter or counteract the anticompetitive effects of the proposed
acquisition is likely to occur within two years. A new entrant to the
Micro GC, 3Q GC-MS, or ICP-MS instrument markets would face significant
barriers to entry. A new entrant would have to design, develop, and
test a product, and would have to establish a service and support
infrastructure in the United States. Perhaps most importantly, a new
entrant would have to develop a reputation for quality and reliability,
and it would take at least several years to acquire a reputation on par
with the current Micro GC, 3Q GC-MS, and ICP-MS suppliers. Accordingly,
new entry by a domestic or foreign firm would not be timely, likely, or
sufficient to counteract the anticompetitive effects that would arise
as a result of the acquisition.
V. Effects of the Acquisition
Agilent and Varian are the only two competitors in the market for
Micro GC instruments. By creating a monopoly and eliminating the
substantial competition between Agilent and Varian, the proposed
acquisition would cause the purchasers of Micro GC instruments to pay
higher prices and experience reduced levels of service and slower
innovation rates.
With only four suppliers, the market for 3Q GC-MS instruments is
highly concentrated. 3Q GC-MSs are generally purchased through a
competitive evaluation process, which fosters competition for features,
reliability, performance, price, and service. Agilent and Varian's 3Q
GC-MSs are positioned similarly in terms of their features, price, and
performance. The elimination of the direct competition between the
Agilent and Varian 3Q GC-MS products would allow Agilent to increase
prices, slow the pace of innovation, and/or decrease service levels. In
addition, the fact that there would be only three suppliers after the
proposed acquisition leads to an increased likelihood of coordination
among the remaining competitors.
The market for ICP-MS instruments is also highly concentrated, and
Agilent's acquisition of Varian would leave only three suppliers. The
ICP-MS instruments of the various suppliers compete on the basis of
reliability, price, product features, performance, and service. Because
Agilent and Varian directly compete with each other for many sales, and
because Varian is frequently the low-priced competitor, Agilent would
have a strong post-acquisition incentive to increase ICP-MS prices. The
transaction would also facilitate coordination among the three
remaining firms.
VI. The Consent Agreement
The proposed Consent Agreement eliminates the competitive concerns
raised by Agilent's proposed acquisition of Varian by requiring the
divestiture of Agilent's assets relating to the manufacture and sale of
Micro GC instruments and Varian's assets relating to the manufacture
and sale of 3Q GC-MS and ICP-MS instruments. Agilent and Varian have
reached agreements to sell the Micro GC assets to Inficon and the 3Q
GC-MS and ICP-MS assets to Bruker, within ten days of closing the
acquisition.
Inficon possesses the resources and capability to acquire the Micro
GC assets and replace Agilent as an effective competitor in the Micro
GC market. Inficon, headquartered in Switzerland, manufactures
analytical instruments for gas analysis, measurement, and control.
Inficon currently supplies several products complementary to Micro GC
instruments, including portable GC-MS analyzers. Inficon has an
existing worldwide infrastructure for the marketing and sales of its
analyzers, and therefore is well-positioned to replace the competition
that will be lost as a result of the proposed transaction.
Headquartered in Billerica, Massachusetts, Bruker is a global
provider of life-sciences scientific instruments, as well as solutions
for molecular and materials research and industrial and applied
analysis. Bruker's acquisition of the Varian 3Q GC-MS and ICP-MS
product lines will complement Bruker's existing strengths in the
analytical instruments market. Bruker manufactures a variety of high-
performance mass spectrometry
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instruments, including product lines adjacent to the 3Q GC-MS and ICP-
MS businesses. As a result, Bruker has a significant existing global
infrastructure that will enable it to quickly support additional
business expansion and replace the loss of competition posed by
Agilent's acquisition of Varian.
Pursuant to the Consent Agreement, Inficon will receive the assets
necessary to replicate Agilent's Micro GC instrument business, and
Bruker will receive the assets necessary to replicate Varian's 3Q GC-MS
and ICP-MS instrument businesses. In addition to ensuring that the
employees of the relevant businesses will continue their employment
with the acquirers, the Consent Agreement requires Agilent to provide
Inficon and Bruker with access to additional Agilent employees who may
be needed to facilitate the transition of the assets associated with
each of the Products. The Consent Agreement also requires Agilent to
transfer all relevant intellectual property and all contracts and
confidential business information associated with each of the Products.
Combined, these provisions ensure that Inficon and Bruker fully and
immediately restore the competition that will be eliminated by the
acquisition.
The Commission may appoint an interim monitor to oversee the
divestiture of the Products at any time after the Consent Agreement has
been signed. 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 Agilent has not fully complied with its obligations
under the Decision and Order within ten days after the date the
Decision and Order becomes final, the Commission may appoint a
divestiture trustee to divest the Micro GC, 3Q GC-MS, and ICP-MS assets
to a Commission-approved acquirer.
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 to modify its
terms in any way.
By direction of the Commission.
Donald S. Clark
Secretary.
[FR Doc. 2010-12183 Filed 5-20-10; 11:55 am]
BILLING CODE 6750-01-S