Autodesk, Inc., has agreed to settle Federal Trade Commission charges that its $90 million acquisition of Softdesk, Inc., as originally proposed, would have substantially lessened competition in the development and sale of computer-aided design (CAD) software engines. Autodesk sells the premier CAD engine for Windows-based computers and controls nearly 70% of the market. Softdesk, which primarily sells CAD application software, was also developing and testing its own CAD engine, "IntelliCADD," which it has now divested to Boomerang Technology, Inc.
Under the terms of the settlement with the Federal Trade Commission, Autodesk will be barred from reacquiring "IntelliCADD" or any entity that owns or controls the IntelliCadd technology, without prior notice to the FTC for 10 years.
Autodesk is based in San Rafael, California. Softdesk is located in Henniker, New Hampshire. Boomerang is based in LaMesa, California.
According to the complaint detailing the FTC charges, Autodesk develops and markets computer-aided design software for use in the architecture, engineering and construction industries, including "AutoCAD," a design engine for use on Windows-based personal computers. Autodesk is the dominant provider of Windows-based CAD engines, accounting for nearly 70% of the installed base with approximately 1.4 million users. Softdesk was within months of introducing IntelliCADD in the market when the Autodesk acquisition of Softdesk was announced.
The Softdesk product, IntelliCADD, if brought to market, would have provided substantial direct competition to AutoCAD because it offered compatibility and transferability with AutoCAD generated files and application software -- features other CAD engines do not offer, according to the FTC complaint. The large installed base of AutoCAD users necessitates that any new CAD engine developed and offered in the market offer file compatibility and transferability with AutoCAD in order to be an effective competitor, the complaint alleges. Users of AutoCAD have a large number of drawings in the AutoCAD format and many users must share files they create with others who must be able to read and edit those files using their CAD software. This situation creates barriers to entry to CAD engines that cannot read AutoCAD files without losing data or information.
Softdesk has transferred all of its rights and title to IntelliCADD to Boomerang, which in turn has assigned and sold its rights and title to Visio Corporation. As a result, the IntelliCADD product is now under the control of an entity independent of Autodesk and Softdesk, which is free to fully develop and market the competing CAD product.
Absent divestiture of IntelliCADD, the complaint alleges that the Autodesk acquisition of Softdesk would have substantially lessened competition by, among other things, eliminating actual and potential competition to Autodesk’s AutoCAD product, likely resulting in continued high prices for Windows-based CAD engines.
To maintain the competition in the development and sale of CAD engines, and to remedy the lessening of competition alleged in the FTC complaint, the proposed consent agreement would prohibit Autodesk or Softdesk from re-acquiring the IntelliCADD product or any entity that owns or controls it, without prior notice to the Commission for a 10 year period. In addition, Autodesk and Softdesk would be prohibited from interfering with the ability of Boomerang to recruit or hire employees of Softdesk who worked on the development of IntelliCADD.
The Commission vote to accept the proposed consent agreement for a 60 day public comment period was 5-0.
NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.
Copies of the complaint, consent and an analysis to aid public comment are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov
(FTC No. 971 0049)
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Bureau of Competition