9910040
B254817

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of

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

Docket No. C-3867

COMPLAINT

The Federal Trade Commission ("Commission"), having reason to believe that Respondents, ABB AB and ABB AG (collectively hereinafter "ABB"), corporations subject to the jurisdiction of the Commission, have agreed to acquire Elsag Bailey Process Automation N.V. (hereinafter "Elsag Bailey"), a corporation subject to the jurisdiction of the Commission, in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C.  18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C.  45, and it appearing to the Commission that a proceeding in respect thereof would be in the public interest, hereby issues its Complaint, stating its charges as follows:

I. DEFINITIONS

1. "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.

2. "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.

    II. RESPONDENTS

3. Respondent ABB AB is a corporation organized, existing, and doing business under and by virtue of the laws of Sweden with its principal place of business located at P.O. Box 7373, S10391, Stockholm, Sweden. ABB AB owns 50% of ABB Asea Brown Boveri, Ltd., which is the holding company for the ABB Group. The ABB Group includes approximately 1,000 companies around the world.

4. Respondent ABB AG is a corporation organized, existing, and doing business under and by virtue of the laws of Switzerland with its principal place of business located at P.O. Box 58, CH-5441, Baden, Switzerland. ABB AG owns 50% of ABB Asea Brown Boveri, Ltd.

5. Respondents are engaged in, among other things, the research, development, manufacture and sale of Process Gas Chromatographs and Process Mass Spectrometers.

6. Respondents are, and at all times relevant herein have been, engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C.  12, and are corporations whose businesses are in or affect commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C.  44.

III. THE ACQUIRED COMPANY

7. 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 principal place of business located at Schiphol Boulevard 157, 1118 BG Luchthaven Schiphol, The Netherlands.

8. Elsag Bailey, through its Applied Automation, Inc. division, is engaged in, among other things, the research, development, manufacture and sale of Process Gas Chromatographs and the research and development of Process Mass Spectrometers.

9. Elsag Bailey is, and at all times relevant herein has been, engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C.  12, and is a corporation whose business is in or affects commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C.  44.

IV. THE ACQUISITION

10. Pursuant to an October 26, 1998 cash tender offer, ABB has agreed to acquire 100% of the issued and outstanding voting securities of Elsag Bailey for $1.1 billion ("Acquisition").

V. THE RELEVANT MARKETS

11. For purposes of this Complaint, the relevant lines of commerce in which to analyze the effects of the Acquisition are:

(a) the manufacture and sale of Process Gas Chromatographs; and

(b) the manufacture and sale of Process Mass Spectrometers.

12. For purposes of this Complaint, the world is the relevant geographic area in which to analyze the effects of the Acquisition in the relevant lines of commerce.

VI. STRUCTURE OF THE MARKETS

13. The market for the manufacture and sale of Process Gas Chromatographs is highly concentrated as measured by the Herfindahl-Hirschman Index ("HHI"). The post-acquisition HHI is 4,764 points, which is an increase of 2,310 points over the pre-acquisition HHI level. ABB and Elsag Bailey are the two leading suppliers of Process Gas Chromatographs in the world, and combined would have a market share of almost 70%.

14. ABB and Elsag Bailey are actual competitors in the relevant market for the manufacture and sale of Process Gas Chromatographs.

15. The market for the manufacture and sale of Process Mass Spectrometers is highly concentrated as measured by the HHI. The pre-acquisition HHI is 4,150. ABB is the world's leading supplier of Process Mass Spectrometers, and Elsag Bailey is involved in the research and development of a Process Mass Spectrometer which it plans to begin manufacturing and selling in 1999.

16. ABB is an actual competitor in the relevant market for the manufacture and sale of Process Mass Spectrometers. Elsag Bailey is an actual potential competitor in the relevant market for the manufacture and sale of Process Mass Spectrometers.

VII. BARRIERS TO ENTRY

17. Entry into either of the relevant markets, other than Elsag Bailey's imminent introduction of a new Process Mass Spectrometer, would not occur in a timely manner to deter or counteract the adverse competitive effects described in Paragraph 18 because of, among other things, the difficulty of designing and developing a new product, performing product testing, establishing a track record for product quality, and developing a service and support network.

VIII. EFFECTS OF THE ACQUISITION

18. The effects of the Acquisition, if consummated, may be substantially to lessen competition and to tend to create a monopoly in the relevant markets in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C.  18, and Section 5 of the FTC Act, as amended, 15 U.S.C.  45, in the following ways, among others:

(a) by eliminating actual, direct, and substantial competition between ABB and Elsag Bailey in the relevant market for the manufacture and sale of Process Gas Chromatographs;

(b) by increasing the likelihood that ABB will unilaterally exercise market power in the relevant market for the manufacture and sale of Process Gas Chromatographs;

(c) by increasing the likelihood that customers of Process Gas Chromatographs would be forced to pay higher prices;

(d) by reducing innovation in the relevant market for the manufacture and sale of Process Gas Chromatographs;

(e) by eliminating actual potential competition between ABB and Elsag Bailey in the relevant market for the manufacture and sale of Process Mass Spectrometers;

(f) by increasing the likelihood that customers of Process Mass Spectrometers would be forced to pay higher prices;

(g) by reducing innovation in the relevant market for the manufacture and sale of Process Mass Spectrometers.

IX. VIOLATIONS CHARGED

19. The Acquisition agreement described in Paragraph 10 constitutes a violation of Section 5 of the FTC Act, as amended, 15 U.S.C. 45.

20. The Acquisition described in Paragraph 10, if consummated, would constitute a violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the FTC Act, as amended, 15 U.S.C. 45.

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on this fourteenth day of April, 1999, issues its Complaint against said respondents.

By the Commission.

Donald S. Clark
Secretary

SEAL: