001-0092 UNITED STATES OF AMERICA In the Matter of The Boeing Company, a corporation. Docket No. C-3992 COMPLAINT The Federal Trade Commission ("Commission"), having reason to believe that Respondent The Boeing Company ("Boeing"), a corporation subject to the jurisdiction of the Commission, has agreed to acquire certain assets of General Motors Corporation, a company 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. "SETA Services" means systems engineering, technical assistance and support services relating to a certain classified contract between the United States Department of Defense and Boeing identified for purposes of this Complaint as Contract 4208. 2. "Satellite" means an unmanned machine that is launched from the Earth's surface for the purpose of transmitting data back to Earth and is designed either to orbit the Earth or to travel away from the Earth. 3. "Commercial Low Earth Orbit Satellite" means a Satellite that is designed to orbit at approximately 100 miles to 300 miles above the Earth's surface in low earth orbit for the purpose of transmitting data back to Earth, which is sold to any customer other than the U.S. government. 4. "Commercial Medium Earth Orbit Satellite" means a Satellite that is designed to orbit approximately 10,000 miles above the Earth's surface in medium earth orbit for the purpose of transmitting data back to Earth, which is sold to any customer other than the U.S. government. 5. "Commercial Geosynchronous Earth Orbit Satellite" means a Satellite that is designed to orbit approximately 22,300 miles above the Earth's surface in geosynchronous earth orbit for the purpose of transmitting data back to Earth, which is sold to any customer other than the U.S. government. 6. "Government Satellite" means an unmanned machine that is launched from the
Earth's surface for the purpose of transmitting data back to Earth and is designed either
to orbit the Earth or to travel away from the Earth and is sold to the U.S. government. 8. "Respondent" means Boeing. 9. "Hughes" means Hughes Space and Communications Company, Hughes Space and Communications International, Hughes Space and Communications International Service Company, Spectrolab, Inc., Hughes Electron Dynamics, Hughes Telecommunications and Space Company's 2.69% interest in ICO Global Communications Ltd., and Hughes Telecommunications and Space Company's 2% interest in Thuraya Satellite Telecommunications Private Joint Stock Company. II. RESPONDENT 10. Respondent Boeing is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at 7755 E. Marginal Way South, Seattle, Washington 98108. Respondent Boeing is engaged in, among other things, the research, development, manufacture and sale of: Satellites, including Commercial Low Earth Orbit Satellites and Government Satellites, and Launch Vehicles. 11. Respondent 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 affecting commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 44. III. ACQUIRED COMPANY 12. General Motors is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at 100 Renaissance Center, P.O. Box 100, Detroit, Michigan 48265-1000. General Motors, through its subsidiary Hughes, is engaged in, among other things, the research, development, manufacture, and sale of Satellites, including Commercial Geosynchronous Earth Orbit Satellites, Commercial Medium Earth Orbit Satellites, and Government Satellites. 13. General Motors is, and all times 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 affecting commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 44. IV. THE ACQUISITION 14. On January 13, 2000, Boeing and General Motors Corporation subsidiaries, Hughes Electronics Corporation and Hughes Telecommunications and Space Company, entered into a Stock Purchase Agreement under which Boeing is to acquire certain assets of General Motors Corporation, including Hughes, for approximately $3.75 billion ("Acquisition"). V. THE RELEVANT MARKETS 15. For purposes of this Complaint, the relevant lines of commerce in which to analyze the effects of the Acquisition are:
16. For purposes of this Complaint, the United States is the relevant geographic area in which to analyze the effects of the Acquisition on the provision of SETA Services and a certain classified program for which Respondent is providing SETA Services. 17. For purposes of this Complaint, the world is the relevant geographic area in which to analyze the effects of the Acquisition on the research, development, manufacture and sale of Commercial Geosynchronous Earth Orbit Satellites, Commercial Medium Earth Orbit Satellites, and Commercial Low Earth Orbit Satellites. 18. For purposes of this Complaint, the United States is the relevant geographic area in which to analyze the effects of the Acquisition on the research, development, manufacture and sale of Government Satellites. 19. For purposes of this Complaint, the United States or the world is the relevant geographic area in which to analyze the effects of the Acquisition on the research, development, manufacture and sale of Launch Vehicles, depending on the customer.
20. The market for the provision of SETA Services is highly concentrated as measured by the Herfindahl-Hirschman Index ("HHI"). Respondent has been the only provider of SETA Services. 21. Respondent, through the Acquisition, would be engaged in the provision of SETA Services, while at the same time would be a competing bidder, for a certain classified program. 22. The research, development, manufacture and sale of Satellites, including Commercial Geosynchronous Earth Orbit Satellites, Commercial Medium Earth Orbit Satellites, Commercial Low Earth Orbit Satellites, and Government Satellites, are all highly concentrated markets as measured by the HHI. 23. The market for Launch Vehicles is highly concentrated as measured by the HHI. 24. Respondent, through the Acquisition, would be engaged in the research, development, manufacture and sale of Launch Vehicles and a wide range of Satellites, which are launched from the Earth's surface by Launch Vehicles. VII. BARRIERS TO ENTRY 25. Entry into the market for the provision of SETA Services would not occur in a timely manner to deter or counteract the adverse competitive effects described in Paragraph 28 because of, among other things, the time required to develop the experience and expertise necessary to effectively provide these services. 26. Entry into the markets for the research, development, manufacture and sale of Commercial Geosynchronous Earth Orbit Satellites, Commercial Medium Earth Orbit Satellites, Commercial Low Earth Orbit Satellites, and Government Satellites, is difficult, unlikely and would not occur in a timely manner to deter or counteract the adverse competitive effects described in Paragraph 28 because of, among other things, the time and expense required to research and develop a competitive product, acquire the necessary manufacturing equipment and facilities, and establish a reputation for high quality products among customers in these markets. 27. Entry into the market for the research, development, manufacture and sale of Launch Vehicles is difficult, unlikely and would not occur in a timely manner to deter or counteract the adverse competitive effects described in Paragraph 28 because of, among other things, the time and expense required to research and develop a competitive product, acquire the necessary manufacturing equipment and facilities, and establish a reputation for high quality products among customers in these markets. VIII. EFFECTS OF THE ACQUISITION 28. 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:
IX. VIOLATIONS CHARGED 29. The Acquisition agreement described in Paragraph 14 constitutes a violation of Section 5 of the FTC Act, as amended 15 U.S.C. § 45. 30. The Acquisition described in Paragraph 14, 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 twenty-ninth day of December, 2000, issues its Complaint against said Respondent. By the Commission. Donald S. Clark SEAL: |