TRW Inc

Text (OCR of the scan at left; may contain errors)

IN THE MATTEROF TRW INC.

CONSENT ORDER, ETe., IN REGARD TO ALLEGED VIOLATION OF SEe. 7 OF THE CLAYTON ACT AND SEe. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3790. Complaint, April 1998--Decision, April, 1998 This consent order requires, among other things, the Ohio-based corporation to divest, to an acquirer approved by the Commission and the Dept. of Defense BDM' s SETA service contract with the BMDO and all of BDM' s assets associated with the perfonnance of that contract within 120 days from the date TRW consummates its proposed acquisition ofBDM. The consent order also requires TR W to provide tcclmical assistance to the acquirer for a period of one year.

Appearances For the Commission: Nicholas Koberstein, Yolanda Gruendel Ann Malester and Wiliam Baer. For the respondent: Tom D. Smith, Jones, Day, Reavis Pogue Washington, D.

COMPLAINT The Federal Trade Commission ("Commission ), having reason to believe that respondent, TRW Inc. ("TRW"), a corporation subject to the jurisdiction ofthe Commission, has agreed to acquire all of the voting securities ofBDM International Inc. ("BDM"), a corporation subject to the jurisdiction of the Commission, in violation of Section 5 ofthe Federal Trade Commission Act ("FTC Act"), as amended, 15 c. 45, and that such acquisition, if consummated, would violate Section 7 of the Clayton Act, as amended, 15 U. c. 18, and Section 5 of the FTC Act, as amended, 15 U. 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. RESPONDENT 1. Respondent TR W is a corporation organized and existing under and by virtue of the laws of the State of Ohio, with its principal executive offces located at 1900 Richmond Road, Cleveland, Ohio. TRW INe. 497 496 Complaint II. ACQUIRED COMPANY 2. BDM is a corporation organized and existing under and by virtue of the laws of the State of Delaware, with its principal executive offces located at 1501 BDM Way, McLean, Virginia. JI JUSDICTION 3. TRW and BDM 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 business is in or affects commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 C. 44.

IV. THE ACQUISITON 4. On November 20, 1997, TRW and BDM entered into an Agreement and Plan of Merger whereby TRW will acquire aU of the issued and outstanding common shares ofBDM for approximately $942 million (the "Acquisition V. THE RELEVANT MARKETS 5. The relevant Jines of commerce in which to analyze the effects ofthe acquisition are: (a) the research, development, manufacture and sale of a ballistic missile defense system for the United States Department of Defense ("BMD System ); and (b) the provision of systems engineering and technical assistance services to the United States BaUistic Missile Defense Organization ("SETA Services 6. The United States is the relevant geographic area in which to analyze the effects of the acquisition in both relevant lines of commerce.

VI. STRUCTURE OF THE MARKTS 7. The market for the research, development, manufacture and sale of a BMD System is highly concentrated whether measured by the Herfindahl-Hirschmann Index ("HHI" ) or the two-finn and four-finn concentration ratios ("concentration ratios ). Respondent is a member of one of only two teams competing to supply a BMD System to the United States Department of Defense. 8. The market for SETA Services is highly concentrated whether measurcd by the HHI or by concentration ratios. BDM has been the only provider of SETA Services since 1994. Complaint 125 FTC 9. Respondent, through the Acquisition, would be engaged in both the research, development, manufacture and sale of a BMD System and the provision of SET A Services.

VI!. BARRERS TO ENTRY 10. New entry into the market for the research, development manufacture and sale of a BMD System would be diffcult and unlikely. The time required to develop the necessar expertise to manufacture a BMD System would far exceed two years. The cost to develop the necessary technology to manufacture a BMD System would be prohibitively high.

11. New entry into the market for the provision of SETA Services would be untimely. The Department of Defense intends to award a BMD System procurement contract within the next six months. It would not be possible for a finn to develop the necessar expertise to provide SET A Services in that time.

VII. Effects OF THE ACQUISJTON 12. The effects of the Acquisition, if consummated, may be substantially to lessen competition or to tend to create a monopoly in the market for a BMD System in the United States in violation of Section 7 ofthe Clayton Act, as amended, 15 US. c. 18 , and Section 5 of the Federal Trade Commission Act, as amended, 15 U. c. 45 in the following ways, among others:

a. Respondent may gain access to competitively sensitive non-public infonnation concerning the other BMD System manufacturers, so that actual competition between respondent and the other BMD System manufacturers will be reduced; and b. Respondent may be in a position to disadvantage the other BMD System manufacturers, so that actual competition between respondent and the other BMD System manufacturers will be reduced.

IX. VIOLATIONS CHARGED 13. The Acquisition described in paragraph four, if consummated would constitute a violation of Section 7 of the Clayton Act, as amended, 15 US. C. 18, and Section 5 of the FTC Act, as amended 15 US. c. 45.

TRW INe. 499 496 Dccision and Order 14. The Agreement and Plan of Merger described in paragraph four constitutes a violation of Section 5 of the FTC Act, as amended 15 US. c. 45.

DECISION AND ORDER The Federal Trade Commission having initiated an investigation of the proposed acquisition by respondent of all of the outstanding voting common stock ofBDM International Inc. ("BDM"), and the respondent having been furnshed thereafter with a copy of a draft of complaint that the Bureau of Competition presented to the Commission for its consideration and which, if issued by the Commission, would charge respondent with violations of Section 7 of the Clayton Act, as amended, 15 US. C. 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 US.c. 45; and Respondent, its attorneys, and counsel for the Commission having thereafter executed an Agreement to Hold Separate and an Agreement Containing Consent Order, an admission by respondent of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said Agreements is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, or that the facts as alleged in such complaint, other than jurisdictional facts, are true and waivers and other provisions as required by the Commission s Rules; and The Commission having thereafter considered the matter and having detennined that it had reason to believe that the respondent has violated the said Acts, and that a complaint should issue stating its charges in that respect, and having thereupon accepted the executed Agreement Containing Consent Order and Agreement to Hold Separate and placed such Agreements on the public record for a period of sixty (60) days, and having duly considered the comments filed thereafter by interested persons pursuant to Section 2.34 of its Rules, now in further confonnity with the procedure described in Section 2. 34 of its Rules, the Commission hereby issues its complaint, makes the fo11owingjurisdictional findings and enters the following order:

1. Respondent TRW Inc. ("TRW") is a corporation organized existing and doing business under and by virtue of the laws of the 500 FEDERAL TRDE COMMISSION DECISIONS Decision and Order 125 FT.C. State of Ohio, with its offce and principal place of business located at 1900 Richmond Road, Cleveland, Ohio.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDER It is ordered That, as used in this order, the following definitions shall apply:

A. Respondent or TRW" means TRW Inc. , its directors officers, employees, agents and representatives, predecessors successors, and assigns; its subsidiaries, divisions, groups and affliates controlled by TRW Inc. , and the respective directors offcers, employees, agents, and representatives, successors, and assigns of each.

B. BDM" means BDM International Inc., a Delaware corporation with its principal place of business at 1501 BDM Way, McLean, V A its directors, offcers, employees, agents and representatives predecessors, successors, and assigns; its subsidiaries, divisions groups and affliates controlled by BDM International Inc. , and the respective directors, offcers, employees, agents, and representatives successors, and assigns of each.

C. Commission means the Federal Trade Commission. D. Ballstic Missile Defense Organization means the agency of the Department of Defense that is chartered by the Secretary of Defense under Department of Defense Directive 5134.9 and mandated by Congress to develop ballistic missile defense systems. E. SETA Services Operations means al1 assets, properties business and goodwill, tangible and intangible, held by BDM and used in the provision of SET A Services to thc Ballistic Missile Defense Organization under contract HQ0006-95- 0006, including, without limitation, the following:

1. AI1 rights obligations and interests in contract HQ0006-95- 0006 between the Ballistic Missile Defense Organization and BDM, or any subcontract of a contract between any entity and the Ballistic Missile Defense Organization where such subcontract is between BDM and such entity; TRW INC. 501 496 Decision and Order 2. AU machinery, fixtures, equipment, vehicles, transportation facilities, furniture, tools and other tangible personal property; 3. AU customer lists, vendor lists, catalogs, sales promotion literature, advertising materials, research materials, financial infonnation, technical infonnation, management infonnation and systems, software, softare licenses, inventions, trade secrets intellectual propert, patents, technology, know-how, specifications designs, drawings, processes and quality control data; 4. AU rights, title and interests in and to owned or leased real property, together with appurtenances, licenses and pennits; 5. AU rights, title and interests in and to the contracts entered into in the ordinary course of business with customers (together with associated bid and perfonnance bonds), suppliers sales representatives, distributors, agents, personal property lessors licensees, consignors andpersonal propert lessees, licensors, consignees;

6. A11 rights under waranties and guarantees, express or implied; 7. AU books, records, and files;

8. AU data developed, prepared, received, stored or maintained under contract HQ0006-95- 0006, or any predecessor contract or subcontract to support the operations ofthe Ballistic Missile Defense Organization;

9. AU items of prepaid expense; and 10. A11 employment contracts.

F. SETA Services means systems engineering and technical assistance services provided by BDM to the BaUistic Missile Defense Organization pursuant to HQ0006-95- 0006 or any predecessor contract.

G. Proposed acquisition means TRW' s proposed acquisition of a11 the voting securities ofBDM pursuant to an Agreement and Plan of Merger dated November 20 1997.

H. 'Non-public BMDO information means any infonnation not in the public domain furnished by any company or the BaUistic Missile Defense Organization to BDM in its capacity as provider of SET A Services under contract HQ0006-95- 0006 or any predecessor contract or subcontract.

Decision and Order 125 F.T. II.

It is further ordered That:

A. Respondent shall divest, absolutely and in good faith, within one hundred and twenty (120) days from the date the proposed acquisition is consummated, the SETA Services Operations, and shall also divest such additional ancillary assets as are necessary to assure the continued ability ofthe acquirer to provide SET A Services. B. Respondent shall divest the SETA Services Operations only to an acquirer that receives the prior approval of the Commission and the Department of Defense and only in a manner that receives the prior approval of the Commission. The purpose of the divestiture is to ensure the continued provision of SET A Services in the same manner as provided by BDM at the time of the proposed divestiture at no increased cost to the Ballistic Missile Defense Organization, and to remedy the lessening of competition resulting from the proposed acquisition as alleged in the Commission s complaint. C. Pending divestiture of the SETA Services Operations respondent shall take such actions as are necessary to ensure the continued provision of SET A Services, to maintain the viability and marketability of the assets used to provide SET A Services, and to prevent the destruction, removal, wasting, deterioration, or impainnent of any of the assets used to provide SETA Services except for ordinary wear and tear.

D. Upon reasonable notice from the acquirer or from the Ballistic Missile Defense Organzation to respondent, respondent shall provide such technical assistance to the acquirer as is reasonably necessar enable the acquirer to provide SET A Services in substantially the same manner and quality as provided by BDM prior to divestiture. Such assistance shall include reasonable consultation with knowledgeable employees and training at the acquirer s facility for a period of (ime suffcient to satisfy the acquirer s management that its personnel are appropriately trained in the skills necessary to perfonn the SET A Services. Respondent shall convey all know-how necessary to perfonn SETA Services in substantially the same manner and quality employed or achieved by BDM prior to divestiture. However respondent shall not be required (0 continue providing such assistance for more than one year from the date of the divestiture. Respondent shall charge the acquirer at a rate no more than its own costs for providing such technical assistance.

TRW INC. 503 496 Decision and Order E. At the time of the execution of a purchase agreement between respondent and a proposed acquirer of the SETA Services Operations respondent shan provide the acquirer with a complete list of an current fun-time, non-clerical, salaried employees ofBDM engaged in the provision of SETA Services on the date of the purchase agreement. Such list shan state each such individual' s name, position address, telephone number, and a description of the duties of and work perfonned by the individual in connection with the SET A Services Operations.

F. Respondent shan provide the proposed acquirer with an opportunity to inspect the personnel fies and other documentation relating to the individuals identified in paragraph ILE of this order to the extent pennissible under applicable laws. For a period of six (6) months fonowing the divestiture, respondent shan further provide the acquirer with an opportunity to interview such individuals and negotiate employment contracts with them. G. Respondent shan provide an current employees identified in paragraph ILE of this order with financial incentives to continue in their employment positions pending divestiture ofthe SET A Services Operations, and to accept employment with the acquirer at the time of the divestiture. Such incentives shan include continuation of an employee benefits offered by BDM until the date of the divestiture and vesting of an pension benefits.

I- For a period of two (2) years commencing on the date of the individual' s employment by the acquirer, respondent shan not re-hire any of the individuals identified in paragraph H.E of this order who accept employment with the acquirer.

L Prior to divestiture, respondent shan not transfer any of the individuals identified in paragraph H.E of this order whose employment responsibilities involve access to non-public BMDO infonnation to any other positions.

J. Respondents shan comply with an tenns of the Agreement to Hold Separate, attached to this order and made part hereof as Appendix L It is further ordered That:

A. If respondent has not divested, absolutely and in good faith and with the Commission s prior approval, the SET A Services Operations within one hundred and twenty (120) days ftom the date the proposed Decision and Order 125 FTC. acquisition is consummated, the Commission may appoint a trustee to divest the SETA Services Operations. In the event that the Commission or the Attorney General brings an action pursuant to Section 5(1) of the Federal Trade Commission Act, 15 U. c. 45(1), or any other statute enforced by the Commission, respondent shan consent to the appointment of a trustee in such action. Neither the appointment of a trustee nor a decision not to appoint a trustee under this paragraph shan 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 Section 5(1) of the Federal Trade Commission Act, or any other statute enforced by the Commission, for any failure by the respondent to comply with this order.

B. If a trustee is appointed by the Commission or a court pursuant to paragraph IILA of this order, respondent shan consent to the fonowing tenns and conditions regarding the trustee s powers, duties authority, and responsibilities:

I. The Commission shan select the trustee, subject to the consent of respondent, which consent shan not be unreasonably withheld. The trstee shan be a person with experience and expertise in acquisitions and divestitures. Ifrespondent has 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 respondent of the identity of any proposed trustee, respondent shan be deemed to have consented to the selection of the proposed trustee. 2. Subject to the prior approval of the Commission and the Department of Defense, the trustee shan have the exclusive power and authority to divest the SET A Services Operations. 3. Within ten (10) days after appointment of the trustee respondent shan 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 an rights and powers necessary to pennit the trustee to effect the divestiture required by this order.

4. The trustee shan have nine (9) months from the date the Commission approves the trust agreement described in paragraph IILB.3 to accomplish the divestiture, which shan be subject to the prior approval of the Commission. If, however, at the end of the rune-month period, the trustee has submitted a plan of divestiture or believes that divestiture can be achieved within a reasonable time, the TRW JNe. 505 496 Dccision and Order divestiture period may be extended by the Commission, or, in the case ofa court-appointed trstee, by the cour; provided, however, the Commission may extend this period only two (2) times. 5. The trustee shan have fun and complete access to the personnel, books, records and facilities related to the SETA Services Operations or to any other relevant infonnation, as the trustee may request. Respondent shan develop such financial or other infonnation as such trustee may request and shan cooperate with the trustee. Respondent shan take no action to interfere with or impede the trustee s accomplishment of the divestiture. Any delays in divestiture caused by respondent shan extend the time for divesti ture under this paragraph in an amount equal to the delay, as detennined by the Commission or, for a court -appointed trustee, by the court. 6. The trstee shan use his or her best efforts to negotiate the most favorable price and tenns available in each contract that is submitted to the Commission, subject to respondent' absolute and unconditional obligation to divest expeditiously at no minimum price. The divestitue shan be made in the manner and to the acquirer as set out in paragraph II of this order; provided, however, if the trustee receives bona fide offers fiom more than one acquiring entity, and if the Commission detennines to approve more than one such acquiring entity, the trustee shan divest to the acquiring entity or entities selected by respondent fiom among those approved by the Commission and the Department of Defense. 7. The trustee shan serve, without bond or other security, at the cost and expense of respondent, on such reasonable and customary tenns and conditions as the Commission or a court may set. The trustee shan have the authority to employ, at the cost and expense of respondent, such consultants, accountants, attorneys, investment bankers, business brokers, appraisers, and other representatives and assistants as are necessary to carr out the trustee s duties and responsibilities. The trustee shan account for an monies derived from the divestiture and an 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, an remaining monies shan be paid at the direction of the respondent, and the trustee s power shan be tenninated. The trustee compensation shan be based at least in significant part on a commission arrangement contingent on the trustee s divesting the SETA Services Operations.

Decision and Order 125 FTC. 8. Respondent shan indemnify the trustee and hold the trustee hannless against any losses, claims, damages, liabilities, or expenses arsing out of, or in connection with, the perfonnance of the trustee duties, including an 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, winful or wanton acts, or bad faith by the trustee.

9. If the trustee ceases to act or fails to act diligently, a substitute trustee shan be appointed in the same manner as provided in paragraph IILA of this order.

10. The Commission or, in the case ofa 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 necessar or appropriate to accomplish the divestiture required by this order. 11. The trustee shan have no obligation or authority to operate or maintain the SETA Services Operations.

12. The trustee shan report in writing to respondent and the Commission every thirt (30) days concerning the trustee s efforts to accomplish the divestiture.

IV.

It is further ordered That:

A. Respondent shan not, absent the prior written consent of the proprietor of non-public BMDO infonnation, provide, disclose, or otherwise make available to any entity any non-public BMDO infonnation.

B. Respondent shan use any non-public BMDO information only in its capacity as provider of technical assistance to the acquirer pursuant to paragraph II.D of this order, unless respondent obtains the prior written consent of the proprietor of the non-public BMDO infonnation.

It is further ordered That within thirty (30) days after the date this order becomes final and every thirty (30) days thereafter until respondent has funy complied with the provisions of paragraphs II or II of this order, respondent shan submit to the Commission a verified written report setting forth in detail the manner and fonn in which it TRW INe. 507 496 Decision and Order intends to comply, is complying, and has complied with paragraphs II and II of this order. Respondent shall include in its 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 II of the order, including a description of all substantive contacts or negotiations for the divestiture and the identity of all paries contacted. Respondent shall include in its compliance reports copies of all written communications to and from such parties, all internal memoranda, and all reports and recommendations concerning divestiture.

VI.

It is further ordered That respondent shall notify the Commission at least thirty (30) days prior to any proposed change in the corporate respondent such as dissolution, assignment, a 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. VII.

It is further ordered That, for the purpose of detennining or securing compliance with this order, upon written request, respondent shan pennit any duly authorized representative of the Commission: A. Access, during offce hours and in the presence of counsel, to inspect any facility and to inspect and copy all books, ledgers accounts, correspondence, memoranda and other records and documents in the possession or under the control of respondent relating to any matters contained in this order; and B. Upon five days' notice to respondent and without restraint or interference from it, to interview offcers, directors, or employees of respondent, who may have counsel present, regarding any such matters.

VII It is further ordered That, notwithstanding any other provision of this order, this order shall tenninate on April 6, 2008. Decision and Order 125F. APPENDIX I AGREEMENT TO HOLD SEP ARA TE This Agreement to Hold Separate is by and between TRW Inc. TRW"), a corporation organized and existing under the laws of the State of Ohio, and the Federal Trade Commission (the Commission ), an independent agency of the United States Govemment, established under the Federal Trade Commission Act of 1914 15 US. c. 41 et seq.

PREMISES Whereas TRW has proposed to acquire one hundred percent of the voting securities ofBDM International Inc. ("BDM"); and Whereas the Commission is now investigating the proposed acquisition to detennine if it would violate any of the statutes the Commission enforces; and Whereas TRW has entered into an Agreement Containing Consent Order ("Consent Agreement"), which requires, among other things, TR W to divest the SETA Services Operations, as defined; and Whereas if the Commission accepts the Consent Agreement, the Commission will place it on the public record for a period of at least sixty (60) days and subsequently may either withdraw such acceptance or issue and serve its complaint and decision in disposition of the proceeding pursuant to the provisions of Section 34 of the Commission s Rules; and Whereas the Commission is concerned that if an understanding is not reached, preserving the status ofthe SET A Services Operations durng the period prior to the final issuance of the Consent Agreement by the Commission (after the 60-day public notice period), there may be interim competitive hann and divestiture or other relief resulting ITom a proceeding chanenging the legality ofthe proposed acquisition might not be possible, or might be less than an effective remedy; and Whereas TRW entering into this Agreement to Hold Separate shall in no way be construed as an admission by TRW that the proposed acquisition constitutes a violation of any statute; and Whereas TRW understands that no act or transaction contemplated by this Agreement to Hold Separate shall be deemed immune or excmpt ITom the provisions of the antitrust laws or the Federal Trade Commission Act by reason of anything contained in this Agreement to Hold Separate.

TRW INC. 509 496 Decision and Order Now, therefore upon the understanding that the Commission has not yet detennined whether it will challenge the proposed acquisition and in consideration of the Commission s agreement that, at the time it accepts the Consent Agreement for public comment, it will grant early tennination of the Hart-Scott-Rodino waiting period, TRW agrees as follows:

1. TR W agrees to execute and be bound by the tenns of the order contained in the Consent Agreement, as if it were final, from the date TRW signs the Consent Agreement.

2. TRW agrees that from the date the proposed acquisition is consummated until the earlier of the dates listed in subparagraphs a - 2. , it will comply with the provisions of paragraph 3 of this Agreement to Hold Separate:

a. Three (3) business days after the Commission withdraws its acceptance of the Consent Order pursuant to the provisions of Section 34 of the Commission s rules;

b. The day after the divestiture required by the Consent Order has been completed.

3. To ensure the complete independence and viability of the SETA Services Operations and to assure that no competitive infonnation is exchanged between the SETA Services Operations and TRW, TRW shall hold the SETA Services Operations separate and apart on the following tenns and conditions: a. TRW will appoint, within three (3) days of the date the proposed acquisition is consummated, an individual to manage and maintain the SETA Services Operations who will make no changes to the SETA Services Operations other than changes made in the ordinar course of business. This individual ("the Manager ) shall manage the SETA Services Operations independently of the management of TRW's other businesses. The Manager shall not be involved in any way in the operations or management of any other TRW business.

b. The Manager shall have exclusive control over the SETA Services Operations, with responsibility for the management of the SETA Services Operations and for maintaining the independence of that business.

Decision and Order 125 FTC. c. TRW shall not exercise direction or control over, or influence directly or indirectly the Manager relating to the operation of the SETA Services Operations; provided, however, that TRW may exercise only such direction and control over the Manager and the SETA Services Operations as is necessar to assure compliance with this Agreement to Hold Separate and with all applicable laws. d. TRW shan maintain the marketability, viability, and competitiveness ofthe SETA Services Operations and shall not sen transfer, encumber them (other than in the nonnal course of business or to assure compliance with the Consent Agreement), or otherwise impair their marketability, viability or competitiveness. e. Except for the Manager and support service employees involved in the SET A Services Operations, such as Human Resources, Legal, Tax, Accounting, Insurance, and Internal Audit employees, TR W shall not pennit any other TR W employee, offcer or director to be involved in the management of the SETA Services Operations. Employees ofthe SETA Services Operations shall not be involved in any other TRW business.

f. Except as required by law, and except to the extent that necessary infonnation is exchanged in the course of evaluating the Acquisition, defending investigations or litigation, or negotiating agreements to divest assets, TRW, other than employees involved in the SETA Services Operations, or support service employees involved in the SETA Services Operations, shall not receive or have access to, or the use of, non-public BMDO infonnation, or any material confidential infonnation about the SETA Services Operations or the activities of the Manager or support service employees involved in the SET A Services Operations, not in the public domain.

g. TRW shall circulate to a1l its employees involved with the SET A Services Operations or any Banistic Missile Defense Organization program, and appropriately display, a copy of this Agreement to Hold Separate and the Consent Agreement. h. If the Manager ceases to act or fails to act diligently, a substitute Manager shall be appointed.

i. The Manager shall have access to and be infonned about a1l companies who inquire about, seek or propose to buy the SET A Services Operations. TRW may require the Manager to sign a confidentiality agreement prohibiting the disclosure of any material TRW INC. 511 496 Decision and Order confidential information gained as a result of his or her role as a Manager to anyone other than the Commssion. j. The Manager shall report in writing to the Commssion every thirty (30) days concerning his or her efforts to accomplish the purposes of this Agreement to Hold Separate. 4. TRW shall deliver, within three (3) days of the date the Consent Agreement is accepted for public comment by the Commssion, a copy of the Consent Agreement and a copy of this Agreement to Hold Separate to the Ballistic Missile Defense Organization.

5. TRW waives all rights to contest the validity of this Agreement to Hold Separate.

6. For the purpose of determning or securing compliance with this Agreement to Hold Separate, subject to any legally recognized privilege and applicable United States Government national security requirements, and upon written request, and on reasonable notice, to TRW made to its principal office, TRW shall permit any duly authorized representative or representatives of the Commission: a. Access during the office hours of TRW and in the presence of counsel to inspect any facilities and to inspect and copy all books, ledgers, accounts, correspondence, memoranda, and otherrecords and documents in the possession or under the control ofTRW relating to compliance with this Agreement to Hold Separate; and b. Upon five (5) days ' notice to TRW and without restraint or interference from it, to interview officers, directors, or employees of TRW, who may have counsel present, regarding any such matters. 7. This Agreement to Hold Separate shall not be binding until accepted by the Commssion.

Concurring Statement 125 F.TC. CONCURRING STATEMENT OF COMMISSIONER MARY L. AZCUENAGA I agree with my colleagues that the final decision and order properly addresses the anti competitive implications of the proposed transaction, and I concur in the Commssion s decision except to the extent that the order makes the Department of Defense a participant with the Commssion in giving antitrust approval to any divestiture under the order.

As I said in my concurring statement in Litton Industries Inc.PRC, Docket No. C- 3656 (May 7, 1996), with due deference to the Department of Defense and in full recognition that it has the power to decide the finns with which it wil deal for goods and services vital to the national security, no persuasive argument has been presented to suggest that the Department has or should have a role in deciding the competitive implications of a particular divestiture under Section 7 of the Clayton Act. No showing has been made that this case is unique, that national security issues or concerns Ballistic Missile Defenserelating to the integrity of the Organization s Lead Systems Integrator Program, to the extent they may be affected by this order, could not have been addressed, as they apparently have been in other defense-related transactions,' without inclusion of the Department of Defense as a necessary participant in a decision committed by statute to the Commssion. The need to obtain technical assistance in reviewing commercial transactions in sophisticated markets is not uncommon. The importance of obtaining advice and assistance is especially acute in cases involving issues of national security, a subject that is in the province of the Department of Defense and other security agencies. The Commssion might well find it necessary to consult with the Department of Defense both to assess the viability of a proposed buyer of the BDM assets to be divested and to ensure that a proposed transaction is not inconsistent with national security. I would have preferred, however, to accommodate that need in this case by means other than making the Department of Defense a partner with the Commssion in interpreting and applying a final order of the Commission.

See Lockheed Corporation, C-3576 (May 9, 1995); see alsoARKLA . inc., J 12 FIC 509 (1989). UROLOGICAL STONE SURGEONS, INC. , ET AL. 513 513 Complaint