UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the matter of

ABB AB, a corporation; and
ABB AG, a corporation.

File No. 991-0040

AGREEMENT CONTAINING CONSENT ORDER

The Federal Trade Commission ("Commission"), having initiated an investigation of the proposed acquisition by ABB AB and ABB AG of all of the outstanding shares of Elsag Bailey Process Automation, N.V., and it now appearing that ABB AB and ABB AG, hereinafter sometimes referred to as "proposed respondents," are willing to enter into an agreement containing an order to divest certain assets and providing for other relief:

IT IS HEREBY AGREED by and between proposed respondents, by their duly authorized officers and attorney, and counsel for the Commission that:

1. Proposed respondent ABB AB is a corporation organized, existing and doing business under and by virtue of the laws of Sweden, with its office and principal place of business located at P.O. Box 7373, S-10391, Stockholm, Sweden.

2. Proposed respondent ABB AG is a corporation organized, existing and doing business under and by virtue of the laws of Switzerland, with its office and principal place of business located at P.O. Box 58, CH-5441 Baden, Switzerland.

3. Elsag Bailey Process Automation, N.V. is a corporation organized, existing and doing business under and by virtue of the laws of The Netherlands, with its office and principal place of business located at World Trade Center, Schiphol Boulevard 157, 1118 BG Luchthaven Schiphol, The Netherlands.

4. Proposed respondents admit all the jurisdictional facts set forth in the draft of complaint here attached.

5. Proposed respondents waive:

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 validity of the order entered pursuant to this agreement; and
 
d. any claim under the Equal Access to Justice Act.

6. Proposed respondents shall submit within thirty (30) days of the date this agreement is signed by proposed respondents an initial report, pursuant to Section 2.33 of the Commission’s Rules, signed by the proposed respondents setting forth in detail the manner in which the proposed respondents have complied and will comply with Paragraph II. of the order. 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.

7. 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 the proposed respondents, 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.

8. This agreement is for settlement purposes only and does not constitute an admission by proposed respondents that the law has been violated as alleged in the draft of complaint here attached, or that the facts as alleged in the draft complaint, other than jurisdictional facts, are true.

9. 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 2.34 of the Commission's Rules, the Commission may, without further notice to the proposed respondents, (1) issue its complaint corresponding in form and substance with the draft of complaint here attached and its decision containing the following order to divest 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 respondents' United States counsel named in this agreement shall constitute service. Proposed respondents waive any right they 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.

10. By signing this agreement containing consent order, proposed respondents represent that the full relief contemplated by this agreement can be accomplished.

11. Proposed respondents have read the proposed complaint and order contemplated hereby. Proposed respondents understand that once the order has been issued, they will be required to file one or more compliance reports showing that they have fully complied with the order. Proposed respondents agree to comply with the terms of the proposed order from the date they sign this agreement. Proposed respondents further understand that they 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. "ABB AB" means ABB AB, its directors, officers, employees, agents and representatives, predecessors, successors, and assigns; the subsidiaries, including Elsag Bailey after the proposed acquisition, divisions, groups and affiliates controlled by ABB AB, and the respective directors, officers, employees, agents, and representatives, successors, and assigns of each.
 
B. "ABB AG" means ABB AG, its directors, officers, employees, agents and representatives, predecessors, successors, and assigns; the subsidiaries, including Elsag Bailey after the proposed acquisition, divisions, groups and affiliates controlled by ABB AG, and the respective directors, officers, employees, agents, and representatives, successors, and assigns of each.
 
C. "Respondents" means ABB AB and ABB AG.
 
D. "Elsag Bailey" means Elsag Bailey Process Automation, N.V., a corporation organized, existing and doing business under and by virtue of the laws of The Netherlands, having its principal place of business at World Trade Center, Schiphol Boulevard 157, 1118 BG Luchthaven Schiphol, The Netherlands.
 
E. "Applied Automation" means Applied Automation, Inc., a Delaware corporation having its principal office and place of business located at Pawhuska Road, Bartlesville, Oklahoma, 74005.
 
F. "Commission" means the Federal Trade Commission.
 
G. "Analytical Division Assets" means:

1. all assets, properties, businesses and goodwill, tangible and intangible, of Applied Automation relating to the research, development, manufacture or sale of Process Gas Chromatographs and Process Mass Spectrometers, including, without limitation, the following:

a. all buildings, plants, manufacturing operations, machinery, fixtures, equipment, furniture, tools and other tangible personal property located in Applied Automation’s Bartlesville Facility, Chicago Facility and Houston Facility;

b. all intellectual property, inventions, technology, know-how, patents, trademarks, trade names, trade secrets and copyrights;

c. all research materials, technical information, management information systems, software, specifications, designs, drawings, processes and quality control data;

d. all customer lists, vendor lists, catalogs, sales promotion literature and advertising materials;

e. inventory and storage capacity;

f. all rights, titles and interests in and to owned or leased real property, together with appurtenances, licenses and permits;

g. all rights, titles and interests in and to contracts relating to the research and development of any Process Gas Chromatograph or Process Mass Spectrometer, including, but not limited to, the August 1, 1992 Research and Development Agreement between Applied Automation and Jencourt, Inc., as amended; the August 1, 1992 Stockholders Agreement by and among Duane P. Littlejohn, Fritz H. Schlereth, Bary Schlereth, and Applied Automation, as amended; the August 1, 1992 Management Agreement by and among Applied Automation, Jencourt, Inc., Duane P. Littlejohn, and Fritz H. Schlereth, as amended; the August 1, 1992 Employment Agreement between Jencourt, Inc. and Duane P. Littlejohn, as amended; and the July 1992 Development Agreement between Leybold Inficon, Inc. and Jencourt Inc.;

h. all rights, titles and interests in and to the contracts entered into in the ordinary course of business with customers (together with associated bid and performance bonds), suppliers, sales representatives, distributors, agents, personal property lessors, personal property lessees, licensors, licensees, consignors and consignees;

i. all rights under warranties and guarantees, express or implied;

j. all books, records and files;

k. all items of prepaid expense; and

2. all additional assets of Elsag Bailey or any of its subsidiaries relating to Process Gas Chromatographs and Process Mass Spectrometers, including, but not limited to:

a. all Sales and Service Operations;

b. all Systems Integration Operations; and

c. all intellectual property, inventions, technology, know-how, patents, trademarks, trade names, trade secrets and copyrights.

H. “Applied Automation Assets” means:

1. all assets, properties, business and goodwill, tangible and intangible, of Applied Automation, including, without limitation, the following:

a. all buildings, plants, manufacturing operations, machinery, fixtures, equipment, furniture, tools and other tangible personal property located in Applied Automation’s Bartlesville Facility, Chicago Facility and Houston Facility;

b. all intellectual property, inventions, technology, know-how, patents, trademarks, trade names, trade secrets and copyrights;

c. all research materials, technical information, management information systems, software, specifications, designs, drawings, processes and quality control data;

d. all customer lists, vendor lists, catalogs, sales promotion literature and advertising materials;

e. inventory and storage capacity;

f. all rights, titles and interests in and to owned or leased real property, together with appurtenances, licenses and permits;

g. all rights, titles and interests in and to the contracts entered into for the research and development of any Process Gas Chromatograph or Process Mass Spectrometer, including, but not limited to, the August 1, 1992 Research and Development Agreement between Applied Automation and Jencourt, Inc., as amended; the August 1, 1992 Stockholders Agreement by and among Duane P. Littlejohn, Fritz H. Schlereth, Bary Schlereth, and Applied Automation, as amended; the August 1, 1992 Management Agreement by and among Applied Automation, Jencourt, Inc., Duane P. Littlejohn, and Fritz H. Schlereth, as amended; the August 1, 1992 Employment Agreement between Jencourt, Inc. and Duane P. Littlejohn, as amended; and the July 1992 Development Agreement between Leybold Inficon, Inc. and Jencourt Inc.;

h. all rights, titles and interests in and to the contracts entered into in the ordinary course of business with customers (together with associated bid and performance bonds), suppliers, sales representatives, distributors, agents, personal property lessors, personal property lessees, licensors, licensees, consignors and consignees;

i. all rights under warranties and guarantees, express or implied;

j. all books, records and files;

k. all items of prepaid expense; and

2. all additional assets of Elsag Bailey or any of its subsidiaries relating to Process Gas Chromatographs and Process Mass Spectrometers, including, but not limited to:

a. all Sales and Service Operations;

b. all Systems Integration Operations; and

c. all intellectual property, inventions, technology, know-how, patents, trademarks, trade names, trade secrets and copyrights.

I. “Acquisition” means the proposed acquisition by ABB AB and ABB AG of all of the voting securities of Elsag Bailey.
 
J. "Bartlesville Facility" means Applied Automation’s manufacturing plant located at Pawhuska Road, Bartlesville, Oklahoma.
 
K. "Chicago Facility" means Applied Automation’s sales and service facility located at 500 Joliet Road, Willowbrook, Illinois.
 
L. "Houston Facility" means Applied Automation’s manufacturing plant located at 7101 Hollister Street, Houston, Texas.
 
M. "Process Gas Chromatograph" means an analytical instrument used in process manufacturing to measure the chemical composition of a gas or a liquid using gas chromatography.
 
N. "Process Mass Spectrometer" means an analytical instrument used in process manufacturing to measure the chemical composition of a gas or a liquid using mass spectrometry.
 
O. "Sales and Services Operations" means all of Elsag Bailey’s assets, properties, business and goodwill, tangible and intangible, used in the sale or service of Applied Automation’s Process Gas Chromatographs or Process Mass Spectrometers, including all contracts with employees or independent contractors but excluding leased or owned real property.
 
P. "Systems Integration Operations" means all of Elsag Bailey’s assets, properties, business and goodwill, tangible and intangible, located in Telford (United Kingdom), Praunheim (Germany) and Singapore, used to provide systems integration services for Applied Automation’s Process Gas Chromatographs or Process Mass Spectrometers, but excluding leased or owned real property.

II.

IT IS FURTHER ORDERED that:

A. Respondents shall divest, absolutely and in good faith, within six months from the date this agreement containing consent order is signed by Respondents, the Analytical Division Assets.
 
B. Respondents shall divest the Analytical Division Assets only to an acquirer that receives the prior approval of the Commission and only in a manner that receives the prior approval of the Commission. The purpose of the divestiture of the Analytical Division Assets is to ensure the continued use of the Analytical Division Assets in the same business in which the Analytical Division Assets are engaged at the time of the acquisition, and to remedy the lessening of competition resulting from the acquisition as alleged in the Commission's complaint.
 
C. Pending divestiture of the Analytical Division Assets or the Applied Automation Assets as required by this order, Respondents shall take such actions as are necessary to maintain the viability and marketability of the Analytical Division Assets and the Applied Automation Assets and to prevent the destruction, removal, wasting, deterioration, or impairment of any of the Analytical Division Assets or Applied Automation Assets except for ordinary wear and tear.
 
D. Respondents shall comply with all of the terms of the Agreement to Hold Separate attached to this order and made a part hereof as Appendix I. The Agreement to Hold Separate shall continue in effect until such time as Respondents have divested all the Analytical Division Assets or the Applied Automation Assets as required by this order.
 
E. At the time of the execution of a purchase agreement between Respondents and a proposed acquirer of the Analytical Division Assets or the Applied Automation Assets, Respondents shall provide the proposed acquirer with a complete list of all non-clerical, salaried employees of Applied Automation or Elsag Bailey who have been involved in the research, development, manufacture, sale, service or customization of any Process Gas Chromatograph or Process Mass Spectrometer at any time during the period from January 1, 1998 until the date of the purchase agreement. Respondents shall also provide the proposed acquirer with a complete list of all independent contractors involved in the research, development, manufacture, sale, service or customization of Process Gas Chromatographs or Process Mass Spectrometers from January 1, 1998 until the date of the purchase agreement. The lists shall state each individual’s name, position or positions held from January 1, 1998 until the date of the purchase agreement, address, telephone number, and a description of the duties and work performed by the individual in connection with any Process Gas Chromatograph or Process Mass Spectrometer researched, developed, manufactured or sold by Applied Automation or Elsag Bailey.
 
F. Respondents shall provide the proposed acquirer with an opportunity to inspect the personnel files and other documentation relating to the individuals identified in Paragraph II.E. of this order to the extent permissible under applicable laws, at the request of the proposed acquirer any time after the execution of the purchase agreement.
 
G. Respondents shall provide the individuals identified in Paragraph II.E. of this order with financial incentives to continue in their employment positions during the period covered by the Hold Separate Agreement, hereto attached, and to accept employment with the Commission-approved acquirer at the time of the divestiture. Such incentives shall include:
  1. continuation of all employee benefits offered by Applied Automation or Elsag Bailey until the date of the divestiture; and
  2. a bonus equal to 20 percent of an employee’s annual salary (including any other bonuses) as of the date this order becomes final for any individual who agrees to accept an offer of employment from the Commission-approved acquirer, payable by Respondents upon the beginning of the employee’s employment by the Commission- approved acquirer.
H. For a period of one (1) year commencing on the date of the individual’s employment by the Commission-approved acquirer, Respondents shall not re-hire any of the individuals identified in Paragraph II.E. of this order who accept employment with the Commission-approved acquirer, unless the individual’s employment has been terminated by the acquirer.

III.

IT IS FURTHER ORDERED that:

A. If Respondents have not divested, absolutely and in good faith and with the Commission's prior approval, the Analytical Division Assets within six months from the date this agreement containing consent order is signed, the Commission may appoint a trustee to divest the Applied Automation Assets. In the event that the Commission or the Attorney General brings an action pursuant to 5(l) of the Federal Trade Commission Act, 15 U.S.C. 45(l), or any other statute enforced by the Commission, Respondents shall consent to the appointment of a trustee in such action to divest the Applied Automation Assets. Neither the appointment of a trustee nor a decision not to appoint a trustee under this Paragraph shall preclude the Commission or the Attorney General from seeking civil penalties or any other relief available to it, including a court-appointed trustee, pursuant to 5(l) of the Federal Trade Commission Act, or any other statute enforced by the Commission, for any failure by the Respondents to comply with this order.
 
B. If a trustee is appointed by the Commission or a court pursuant to Paragraph III.A. of this order, Respondents shall consent to the following terms and conditions regarding the trustee's powers, duties, authority, and responsibilities:
  1. The Commission shall select the trustee, subject to the consent of Respondents, which consent shall not be unreasonably withheld. The trustee shall be a person with experience and expertise in acquisitions and divestitures. If Respondents have not opposed, in writing, including the reasons for opposing, the selection of any proposed trustee within ten (10) days after notice by the staff of the Commission to Respondents of the identity of any proposed trustee, Respondents shall be deemed to have consented to the selection of the proposed trustee.
  2. Subject to the prior approval of the Commission, the trustee shall have the exclusive power and authority to divest the Applied Automation Assets.
  3. Within ten (10) days after appointment of the trustee, Respondents shall execute a trust agreement that, subject to the prior approval of the Commission and, in the case of a court-appointed trustee, of the court, transfers to the trustee all rights and powers necessary to permit the trustee to effect the divestiture required by this order.
  4. The trustee shall have twelve (12) months from the date the Commission approves the trust agreement described in Paragraph III. B. 3. to accomplish the divestiture, which shall be subject to the prior approval of the Commission. If, however, at the end of the twelve-month period, the trustee has submitted a plan of divestiture or believes that divestiture can be achieved within a reasonable time, the divestiture period may be extended by the Commission, or, in the case of a court-appointed trustee, by the court; provided, however, the Commission may extend this period only two (2) times.
  5. The trustee shall have full and complete access to the personnel, books, records and facilities related to the Applied Automation Assets or to any other relevant information, as the trustee may request. Respondents shall develop such financial or other information as such trustee may request and shall cooperate with the trustee. Respondents shall take no action to interfere with or impede the trustee's accomplishment of the divestiture. Any delays in divestiture caused by Respondents shall extend the time for divestiture under this Paragraph in an amount equal to the delay, as determined by the Commission or, for a court-appointed trustee, by the court.
  6. The trustee shall use his or her best efforts to negotiate the most favorable price and terms available in each contract that is submitted to the Commission, subject to Respondents' absolute and unconditional obligation to divest at no minimum price. The divestiture shall be made in the manner and to an acquirer as set out in Paragraph II. of this order; provided, however, if the trustee receives bona fide offers from more than one acquiring entity, and if the Commission determines to approve more than one such acquiring entity, the trustee shall divest to the acquiring entity selected by Respondents from among those approved by the Commission; provided further, however, that Respondents shall select such entity within five (5) business days of receiving notification of the Commission's approval.
  7. The trustee shall serve, without bond or other security, at the cost and expense of Respondents, on such reasonable and customary terms and conditions as the Commission or a court may set. The trustee shall have the authority to employ, at the cost and expense of Respondents, such consultants, accountants, attorneys, investment bankers, business brokers, appraisers, and other representatives and assistants as are necessary to carry out the trustee's duties and responsibilities. The trustee shall account for all monies derived from the divestiture and all expenses incurred. After approval by the Commission and, in the case of a court-appointed trustee, by the court, of the account of the trustee, including fees for his or her services, all remaining monies shall be paid at the direction of the Respondents, and the trustee's power shall be terminated. The trustee's compensation shall be based at least in significant part on a commission arrangement contingent on the trustee's divesting the Applied Automation Assets.
  8. Respondents shall indemnify the trustee and hold the trustee harmless against any losses, claims, damages, liabilities, or expenses arising out of, or in connection with, the performance of the trustee's duties, including all reasonable fees of counsel and other expenses incurred in connection with the preparation for, or defense of any claim, whether or not resulting in any liability, except to the extent that such liabilities, losses, damages, claims, or expenses result from misfeasance, gross negligence, willful or wanton acts, or bad faith by the trustee.
  9. If the trustee ceases to act or fails to act diligently, a substitute trustee shall be appointed in the same manner as provided in Paragraph III.A. of this order.
  10. The Commission or, in the case of a court-appointed trustee, the court, may on its own initiative or at the request of the trustee issue such additional orders or directions as may be necessary or appropriate to accomplish the divestiture required by this order.
  11. The trustee shall have no obligation or authority to operate or maintain the Applied Automation Assets.
  12. The trustee shall report in writing to Respondents and the Commission every sixty (60) days concerning the trustee's efforts to accomplish divestiture.

IV.

IT IS FURTHER ORDERED that:

Within thirty (30) days after the date this order becomes final and every thirty (30) days thereafter until Respondents have fully complied with the provisions of Paragraphs II. or III. of this order, Respondents shall submit to the Commission a verified written report setting forth in detail the manner and form in which they intend to comply, are complying, and have complied with Paragraphs II. and III. of this order. Respondents shall include in their compliance reports, among other things that are required from time to time, a full description of the efforts being made to comply with Paragraphs II. and III. of the order, including a description of all substantive contacts or negotiations for the divestiture and the identity of all parties contacted. Respondents shall include in their compliance reports copies of all written communications to and from such parties, all internal memoranda, and all reports and recommendations concerning divestiture.

V.

IT IS FURTHER ORDERED that Respondents shall notify the Commission at least thirty (30) days prior to any proposed change in the corporate Respondents such as dissolution, assignment, sale resulting in the emergence of a successor corporation, or the creation or dissolution of subsidiaries or any other change in the corporation that 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, upon written request, Respondents shall permit any duly authorized representative 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 Respondents relating to any matters contained in this order; and
 
B. Upon five days' notice to Respondents and without restraint or interference from it, to interview officers, directors, or employees of Respondents.

Signed this______ day of _______________, 19____.

ABB AB

By: ___________________
Beat Hess, General Counsel
Mats Sacklen, Vice President, Legal

 

 

ABB AG

By: ___________________
Beat Hess, General Counsel
Mats Sacklen, Vice President, Legal

___________________
M. Elaine Johnston
White & Case LLP
Counsel for ABB AB and
ABB AG

ELSAG BAILEY PROCESS
AUTOMATION, N.V.

By: ___________________
Vincenzo Cannatelli
Managing Director and Chief
Executive Officer

___________________
Joseph P. Griffin
Morgan, Lewis & Bockius LLP
Counsel for Elsag Bailey Process
Automation, N.V.

FEDERAL TRADE COMMISSION

By: ___________________
Pamela L. Taylor
Attorney
Bureau of Competition

Approved:

___________________
Ann Malester
Assistant Director

___________________
Richard G. Parker
Senior Deputy Director

___________________
William J. Baer
Director
Bureau of Competition