General Electric Company

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IN THE MATTER OF GENERAL ELECTRIC COMPANY CONSENT ORDER, ETC. IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT AND SECTION 7 OF THE CLAYTON ACT Docket No. C-4411; File No. 131 0069 Complaint, August 27, 2013 – Decision, August 27, 2013 This consent order addresses the acquisition by General Electric Company (“GE”) of the aviation division of Avio S.p.A. (“Avio”) for approximately $4.3 billion. Avio’s aviation divison designs and manufactures modules, component parts and electrical systems for civil and military engines. The complaint alleges that the acquisition raised competitive concerns in the aircraft engine market, as aircraft engines are highly differentiated products. Thus, a hypothetical monopolist for engines designed for a specific type of aircraft could profitably increase prices. Avio has the sole design responsibility for the aircraft gearbox on a forthcoming Pratt & Whitney PW1100F engine, one of two engines available on the Airbus A320neo aircraft. The only other available engine is manufactured by CFM, of which GE owns a 50% interest. Accordingly,the complaint alleges the acquisition would eliminate competition for this engine and would provide GE with the ability and incentive to disrupt the design and certification of the Avio-supplied airline gearbox for the Pratt & Whitney PW1100G engine. The consent order provides a narrowly tailored remedy of the acquisition’s likely anticompetitive effects. The order bars GE from interfering with Avio staffing decisions with respect to the PW1100G project and further requires GE to provide certain transition services, including icenses to essential intellectual property and access to Avio specialized tools, in the event Pratt & Whitney wishes to use an alternative supplier to manufacture the PW1100G. The order further appoints a monitor to oversee GE’s compliance with the terms of the order. Participants For the Commission: Stephen W. Rodger and Mark D. Silvia. For the Respondent: Deborah L. Feinstein, Jonathan I. Gleklen, and Matthew M. Schultz, Arnold & Porter, LLP. COMPLAINT Pursuant to the Clayton Act and the Federal Trade Commission Act (“FTC Act”), and its authority thereunder, the Federal Trade Commission (“Commission”), having reason to VOLUME 156 Complaint believe that Respondent General Electric Company (“GE”), a corporation subject to the jurisdiction of the Commission, has agreed to acquire the aviation business of Avio S.p.A. (“Avio”), a corporation subject to the jurisdiction of the Commission, in violation of Section 5 of the FTC Act, as amended, 15 U.S.C. § 45, and that such acquisition, if consummated, would violate 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, 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 GE is a corporation organized, existing, and doing business under and by virtue of the laws of the State of New York, with its executive office and principal place of business located at 3135 Easton Turnpike, Fairfield, Connecticut 06828. 2. Respondent is engaged in, among other things, the design and manufacture of jet engines and other equipment for commercial and military aircraft. Respondent has a 50% interest in CFM International (“CFM”), which is a joint venture with Snecma S.A. of France.

3. 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 affects commerce, as “commerce” is defined in Section 4 of the FTC Act, as amended, 15 U.S.C. § 44. II. THE ACQUIRED COMPANY 4. Avio is a corporation organized, existing, and doing business under and by virtue of the laws of Italy, with its headquarters at Via I Maggio, 99, 10040, Rivalta Di Torino, Torino, Italy.

5. Avio’s AeroEngine division, among other things, designs and manufactures component parts and electrical systems for civil and military engines.

GENERAL ELECTRIC COMPANY 257 Complaint 6. Avio 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 FTC Act, as amended, 15 U.S.C. § 44. III. THE PROPOSED ACQUISITION 7. Pursuant to an Agreement dated December 21, 2012 (the “Agreement”), GE proposes to acquire Avio’s aviation business for approximately $4.3 billion (the “Acquisition”). IV. RELEVANT MARKET 8. For the purposes of this Complaint, the relevant lines of commerce in which to analyze the effects of the Acquisition are (1) accessory gearboxes (“AGBs”) for Pratt & Whitney’s PW1100G engine that will power the Airbus S.A.S. (“Airbus”) A320neo aircraft, and (2) engines that compete for placement on the A320neo aircraft.

a. AGBs use the mechanical power of the engine shaft to power various accessory systems on the engine and the aircraft, including oil and hydraulic pumps and electrical generators. AGBs are specifically designed for the requirements of individual engine platforms, which vary considerably between different engines and aircraft. Because each AGB for a given engine platform is unique, and cannot be substituted for another AGB from a different engine platform, Pratt & Whitney could not substitute AGBs made for other engines in response to a small but significant and nontransitory increase in price. Thus, the AGB designed for the PW1100G engine constitutes its own relevant product market.

b. Aircraft engines are engineered specifically for the thrust requirements and mission profile of the aircraft on which they are installed. Purchasers of aircraft engines cannot substitute engines which do not meet the specific requirements of the relevant aircraft VOLUME 156 Complaint platform, or which have not been certified by aviation authorities for use on that aircraft. A320neo purchasers could not substitute other engines in the face of a small but significant and non-transitory increase in price for current engines offered to power the A320neo. Thus, the aircraft engines chosen by Airbus for, and certified for use on, the A320neo constitute their own relevant product market. 9. For the purposes of this Complaint, the relevant geographic market in which to analyze the effects of the transaction is the entire world. Engine components such as AGBs are sold to engine manufacturers located across the globe, and those engine manufacturers then sell to aircraft manufacturers that are also located in various parts of the world. Aircraft manufacturers do not significantly alter aircraft features for specific national markets, and aircraft customers are located throughout the world.

V. STRUCTURE OF THE MARKETS 10. Avio currently has sole design responsibility for the AGB on the Pratt & Whitney PW1100G engine, which will be one of two engines available on the A320neo aircraft. Design efforts for the PW1100G AGB have been underway for some time, but further development and testing remains before the engine will be certified by aviation authorities for use on the aircraft. While other component suppliers may be capable of designing AGBs for large commercial aircraft generally, they do not serve as acceptable substitutes for Avio on the PW1100G, because switching component manufacturers at this stage in development would be cost prohibitive. Additionally, the time required for another component supplier to re-design the AGB would require a delay of up to several years in the certification of both the PW1100G engine and the Airbus A320neo aircraft. 11. In the market for engines powering the Airbus A320neo aircraft, only Pratt & Whitney’s PW1100G engine and CFM’s Leap 1-A engine, in which GE has a 50% interest, compete headto-head for sales. Other aircraft engine manufacturers do not currently manufacture engines for the A320neo and could not do so or obtain certification within the timeframe necessary to GENERAL ELECTRIC COMPANY 259 Complaint become a viable substitute for the current engine options on the A320neo platform. The market for engines on the A320neo is highly concentrated, and likely to remain so for the foreseeable future. Pratt & Whitney and CFM each have won roughly half of the A320neo orders placed to date for which the customer has selected an engine.

VI. ENTRY CONDITIONS 12. Sufficient and timely entry into the market for AGBs for the PW1100G on the A320neo aircraft is unlikely to deter or counteract any anticompetitive effects created by the proposed transaction. AGB design and development for large commercial aircraft like the A320neo requires significant experience and resources, and it would take several years for a third-party supplier to develop AGBs for the PW1100G, which would be insufficient to prevent any potential anticompetitive effects of the proposed acquisition. Given the experience and knowledge of the Avio design team and the complexity of transferring the inprogress design work, Pratt & Whitney would unlikely be able to take over the AGB development without incurring significant delays in engine certification and delivery. 13. Sufficient and timely entry into the market for engines powering the A320neo is also unlikely to deter or counter any anticompetitive effects arising from the proposed transaction. The initial design and production of an aircraft engine requires many years and a large financial investment, and must be followed by a long certification process by aviation authorities throughout the world.

VII. EFFECTS OF THE ACQUISITION 14. The effects of the Acquisition, if consummated, may be to substantially lessen competition and tend to create a monopoly in the market for aircraft engines for the Airbus A320neo 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, by providing GE with the ability and incentive to profitably disrupt the design and certification of the AGB for the Pratt & Whitney PW1100G engine, which would provide GE market VOLUME 156 Decision and Order power and the ability and incentive to raise prices, reduce quality, or delay delivery of engines to A320neo customers. VIII. VIOLATIONS CHARGED 15. The Agreement described in Paragraph 7 constitutes a violation of Section 5 of the FTC Act, as amended, 15 U.S.C. § 45.

16. The Acquisition described in Paragraph 7, 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-seventh day of August, 2013, issues its Complaint against said Respondent. By the Commission, Commissioner Wright not participating. DECISION AND ORDER The Federal Trade Commission (“Commission”), having initiated an investigation of the proposed acquisition by the General Electric Company (hereinafter referred to as “GE” or “Respondent”) of the aviation business of Avio S.p.A. (hereinafter referred to as “Avio Newco”), and Respondent having been furnished thereafter with a copy of a draft of Complaint that the Bureau of Competition proposed to present 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 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45; and Respondent, its attorneys, and counsel for the Commission having thereafter executed an Agreement Containing Consent Order (“Consent Agreement”), containing an admission by GENERAL ELECTRIC COMPANY 261 Decision and Order Respondent of all the jurisdictional facts set forth in the aforesaid draft of Complaint, a statement that the signing of said Consent Agreement 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 determined that it had reason to believe that Respondent has violated the said Acts and that a Complaint should issue stating its charges in that respect, and having accepted the executed Consent Agreement and placed such Consent Agreement on the public record for a period of thirty (30) days for the receipt and consideration of public comments, now in further conformity with the procedure described in Commission Rule 2.34, 16 C.F.R. § 2.34, the Commission hereby issues its Complaint, makes the following jurisdictional findings, and issues the following Decision and Order (“Order”):

1. Respondent General Electric Company is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York, with its executive office and principal place of business located at 3135 Easton Turnpike, Fairfield, Connecticut 06828. 2. The Commission has jurisdiction of the subject matter of this proceeding and of Respondent, and the proceeding is in the public interest.

ORDER I.

IT IS ORDERED that, as used in this Order, the following definitions shall apply:

A. “General Electric,” “GE” or “Respondent” means General Electric Company, its directors, officers, employees, agents, representatives, successors, and assigns; and its joint ventures, subsidiaries, divisions, VOLUME 156 Decision and Order groups and affiliates in each case controlled by General Electric Company, and the respective directors, officers, employees, agents, representatives, successors and assigns of each; after the Acquisition, “General Electric,” “GE” or “Respondent” also includes Avio Newco.

B. “GE Aviation” means, for purposes of this Order, GE with the exception of and expressly excluding Avio Newco.

C. “Avio” means Avio S.p.A., a company organized and incorporated under the laws of Italy, whose registered office is at Via I Maggio, 99, 10040, Rivalta Di Torino, Torino, Italy.

D. “Avio Newco” means the Aviation Business acquired by GE pursuant to the Acquisition (regardless of how that acquired business is organized or structured under GE ownership in the future), and includes its employees, agents and representatives, successors and assigns, and any joint ventures, subsidiaries, divisions, groups and affiliates in each case controlled by Avio Newco.

E. “Accessory Gear Box” or “AGB” means the accessory gearbox being developed and produced for the PW1100G series engine pursuant to, and as defined in, the Avio/PW Agreement.

F. “Acquisition” means the acquisition by GE of the Aviation Business of Avio S.p.A. pursuant to the purchase agreement dated December 21, 2012. G. “Agreements” means the Avio/PW Agreement and the CAA, each as defined herein.

H. “Aviation Business” means the aviation business of Avio, as that term is defined in the purchase agreement dated December 21, 2012.

GENERAL ELECTRIC COMPANY 263 Decision and Order I. “Avio/PW Agreement” means the Long Term Agreement between United Technologies Corporation acting through its Pratt & Whitney Division and Avio S.p.A., dated February 1, 2012 (attached as Confidential Exhibit A), to the extent it relates to Development and Production, and as amended by the CAA.

J. “Commercial Assurances Agreement” or “CAA” means the Commercial Assurances Agreement among United Technologies Corporation (acting through its Pratt & Whitney Division), Pratt & Whitney Canada Corp., Pratt & Whitney Aero Engines International Gmbh, Avio S.p.A., GE Avio S.R.L., Nuovo Pignone Holding S.p.A., and General Electric Company (acting through its GE Aviation business unit) dated June 19, 2013 (attached as Confidential Exhibit B) to the extent it relates to Development and Production, including but not limited to Sections 3.02, 8.01 – 8.07, 8.09 – 8.11, and 9.11.

K. “Commission” means the Federal Trade Commission. L. “Core Employees” means the employees, agents or consultants other than Key Employees, comprising the core technical / engineering team responsible for Development and Production, as described in Exhibit 9.11(a) of the CAA.

M. “Customer Representative” means the P&W customer representative as provided for in Section 8.10 of the CAA.

N. “Design and Certification” means product design for the PW1100G sufficient to cause the granting of a certificate of airworthiness by an airworthiness authority, as described more fully in the Agreements. O. “Development and Production” means the research, development, design, certification, engineering, testing, re-design, re-development, production, supply VOLUME 156 Decision and Order and all related work relating to the AGB and Oil Tank for the Pure Power® PW1100G Engine for the A320NEO, as described more fully in the Avio/PW Agreement.

P. “Entry Into Service Date” means the date the first A320NEO aircraft equipped with PW1100G engines is delivered by Airbus S.A.S. to a customer. Q. “Firewall Excluded Information” means any and all information (i) which at the time of disclosure to Respondent is already in the public domain; (ii) which after disclosure is published or otherwise becomes part of the public domain through no act or fault of Respondent; (iii) that is independently developed by Respondent without the use of or access to the information of P&W and without violating any applicable law or this Order; or (iv) which becomes known to Respondent from a third party not in breach of applicable law or a confidentiality obligation with respect to the information; provided, however, that “Firewall Excluded Information” shall not include any “Related Information,” as that term is described in the CAA.

R. “Firewalled Information” means any Proprietary Information of P&W provided pursuant to the Agreements, including but not limited to information contained in any documents, models, business cases, details of fleet incentives, specifications, software, programs, computer disks, visual presentations, photographs, drawings, magnetic or digital form and any other media; provided, however, that “Firewalled Information” shall not include any Firewall Excluded Information.

S. “IPRs” means any and all rights in inventions, patents, utility models, registered design rights, copyrights, moral rights, database rights, trade secrets and other Proprietary Information, and all other intellectual property rights of any kind, any and all categories of intellectual property rights set forth in the Agreements, GENERAL ELECTRIC COMPANY 265 Decision and Order including all registrations of (or other equivalent national rights), applications to register, and the right to apply for registration of any of the foregoing rights, each for their full term (including, without limitation, any extensions or renewals thereof), provided that “IPRs” shall not include trademarks, trade and business names, or any goodwill associated with any trademarks or trade or business names. T. “Key Employees” means the Program Manager, Technical Leader and Systems Leaders, as those employees and positions are described in Exhibit 9.11(a) of the CAA.

U. “Monitor” means the person appointed by the Commission pursuant to Paragraph VI of this Order. V. “New Engine Development Staffing Plan” means the staffing plan described at Section 9.11 of the CAA. W. “Oil Tank” means the oil tank being developed and produced for the PW1100G series engine pursuant to, and as defined in, the Avio/PW Agreement. X. “Pratt & Whitney” or “P&W” means the Pratt & Whitney division of United Technologies Corporation, with its principal place of business at 400 Main Street, East Hartford, Connecticut 06108.

Y. “Proprietary Information” means all confidential and proprietary non-public information, know-how, specifications, drawings, sketches, models, samples, data, test results, computer programs, proprietary processes, documentation and other technical, financial, economic and business information contained, received or transmitted in any form or format (e.g., physically, orally, visually, by document, email, computer disks, magnetic tape, photograph, handwritten notes, drafts, drawings or any other type of media).

VOLUME 156 Decision and Order Z. “PW1100G” means the P&W Pure Power® PW1100G Engine for the A320NEO, as described in the Avio/PW Agreement.

AA. “Technical Representative” means the P&W technical representative as provided for in Section 8.09 of the CAA.

II.

IT IS FURTHER ORDERED that:

A. The Agreements shall be incorporated by reference into this Order and made a part hereof. B. Respondent shall comply with the terms of the Agreements, and any breach by Respondent of any term of the Agreements shall constitute a failure to comply with this Order. If any term of either of the Agreements varies from the terms of this Order (“Order Term”), then to the extent that Respondent cannot fully comply with both terms, the Order Term shall determine the obligations under this Order. C. The Agreements shall not limit or contradict, or be construed to limit or contradict, the terms of this Order, and nothing in this Order shall be construed to reduce any obligations of Respondent under the Agreements.

D. Respondent shall not modify the terms of either of the Agreements without the prior approval of the Commission, except as otherwise provided in Rule 2.41(f)(5) of the Commission’s Rules of Practice and Procedure, 16 C.F.R. § 2.41(f)(5).

III.

IT IS FURTHER ORDERED that:

A. GE Aviation shall:

GENERAL ELECTRIC COMPANY 267 Decision and Order 1. Take all actions necessary to perform its obligations under the CAA and shall perform its obligations under the CAA using a degree of care, professionalism and diligence that is no less than the same degree of care, professionalism and diligence demanded or required by GE Aviation from its commercial suppliers.

2. Take no actions, and shall not direct Avio Newco to take any actions, that are likely to, or that would, limit, impair, hinder, reduce or degrade, directly or indirectly, Avio NewCo’s performance under the Agreements. In furtherance of, and not in limitation to, the foregoing:

a. For a period extending through the second (2nd) anniversary of the Entry Into Service Date, GE Aviation shall not (unless otherwise provided in this Paragraph or the Agreements, or unless undertaken with the prior consent of the Monitor in consultation with Commission staff), participate in, direct, interfere with, or otherwise influence Avio NewCo’s staffing decisions under the Agreements. In furtherance of, and not in limitation to, this sub-paragraph:

(1) GE Aviation shall not transfer or cause to be transferred, directly or indirectly, Key Employees or Core Employees to other GE Aviation or Avio Newco businesses or projects, nor induce or provide incentives for Key Employees or Core Employees to transfer from, or terminate employment with, Avio Newco, where doing so would cause GE to fail to comply with the New Engine Development Staffing Plan;

(2) GE Aviation shall not terminate any Key Employees or Core Employees, except for serious or gross misconduct that would VOLUME 156 Decision and Order warrant dismissal, where doing so would cause GE to fail to comply with the New Engine Development Staffing Plan; in the event of such termination, GE Aviation shall:

(a) Notify the Monitor and P&W prior to such termination, and (b) Not interfere with the prompt replacement of any terminated Key Employee or Core Employee with a qualified employee approved by the Monitor;

(3) GE Aviation shall not take any actions that have, are intended to have, or are reasonably expected to have, an adverse impact on any of the Key Employees or Core Employees, provided, however, that this Paragraph shall not prohibit Respondent from taking actions generally applicable to Avio Newco employees, such as changes to benefits or retirement programs;

(4) GE Aviation may, with the agreement and consent of P&W or with the consent of the Monitor (in consultation with Commission staff), make available staffing and financial resources for Development and Production under the Agreements that are in addition to the staffing and financial resources decided upon by Avio Newco;

b. For a period extending through the fourth (4th) anniversary of the Entry Into Service Date, GE Aviation shall, in consultation with the Monitor, provide sufficient additional financial, technical or engineering resources as may be requested by Avio Newco to address any issues or delays arising with respect to GENERAL ELECTRIC COMPANY 269 Decision and Order Development and Production under the Agreements; and c. GE Aviation shall not interfere, directly or indirectly, with P&W’s ability to have at least one Technical Representative and at least one Customer Representative onsite at Avio NewCo’s facility in Rivalta Di Torino, Italy, as provided for under Sections 8.09 and 8.10 of the CAA.

B. Avio Newco shall:

1. Take all actions necessary to perform, and shall perform, its obligations under the Avio/PW Agreement and the CAA in a manner consistent with the terms of those Agreements and using a degree of care, professionalism, and diligence that is no less than the same degree of care, professionalism, and diligence used by, or expected to be used by, Avio Newco when engaged in similar activities prior to, or but for, the Acquisition.

2. Take all necessary actions to prevent, and shall prevent, any reduction, impairment, or deterioration of its performance, service level, degree of care, or diligence under the Agreements following the Acquisition. In furtherance of, and not in limitation to, the foregoing, Avio Newco shall:

a. Provide sufficient staffing and financial resources to perform its obligations under the Agreements;

b. Continue making staffing decisions relating to its performance under the Avio/PW Agreement independent of GE Aviation, at a level at least consistent with past practice and the New Engine Development Staffing Plan, unless VOLUME 156 Decision and Order otherwise agreed to by P&W after consultation with the Monitor;

c. Not terminate any Key Employees or Core Employees, except for serious or gross misconduct that would warrant dismissal, where doing so would cause GE to fail to comply with the New Engine Development Staffing Plan; in the event of such termination, through the second (2nd) anniversary of the Entry Into Service Date, Avio Newco shall: (1) Notify the Monitor and P&W prior to such termination, and (2) Promptly replace any terminated Key Employee or Core Employee with a qualified employee approved by the Monitor;

d. As provided in the Agreements, provide an incentive bonus program to all Key Employees and Core Employees to remain with Avio Newco and to achieve the timely completion of the AGB and Oil Tank development for Design and Certification under the terms of the Agreements, including a program whereby each such employee shall be eligible to earn a bonus up to the value of the employee’s annual gross salary;

e. Permit P&W to maintain at least one on-site Customer Representative at the site in Rivalta Di Torino, Italy, and permit the P&W Customer Representative(s) reasonable access to facilities where work relating to the Agreements is being performed as provided for under Section 8.10 of the CAA; and f. Permit P&W to have at least one Technical Representative onsite at the site in Rivalta Di Torino, Italy, to monitor the status and progress GENERAL ELECTRIC COMPANY 271 Decision and Order of the PW1100G engine program as provided for under Section 8.09 of the CAA.

C. The purpose of this Paragraph III is to ensure that Avio Newco continues to perform its obligations under the Avio/PW Agreement independent of GE Aviation (unless otherwise provided under the terms of this Order or the Agreements), and to remedy the lessening of competition resulting from the Acquisition as alleged in the Commission’s complaint. IV.

IT IS FURTHER ORDERED that:

A. In the event the Avio/PW Agreement is terminated pursuant to Section 8.04(a) of the CAA, Respondent shall cooperate with P&W in taking any and all actions necessary to assign or transfer the relevant Avio Newco obligations under the Avio/PW Agreement, including but not limited to licensing of any and all necessary IPRs, and shall provide, at P&W’s option, any and all necessary support or transition services, so as to prevent disruption to Development and Production under the Avio/PW Agreement. Such cooperation, support, and transition services shall include, but not be limited to, the following: 1. At P&W’s option, Avio Newco shall continue to perform under the Agreements, on a non-exclusive basis and in a manner consistent with its obligations under the Agreements and this Order, for a period up to thirty (30) months following termination, consistent with the terms of Section 8.04(c) of the CAA;

2. Respondent shall provide to P&W any and all technical support, assistance, materials or knowhow as may be necessary to assign or transfer Avio NewCo’s obligations under the Avio/PW Agreement;

VOLUME 156 Decision and Order 3. P&W shall have the right, without restriction, to procure from third parties the same or similar services provided by Avio Newco under the Avio/PW Agreement;

4. Respondent shall cooperate with P&W in taking any and all actions necessary to assign or transfer the relevant Avio Newco obligations to third parties;

5. P&W shall have the right to acquire from Avio Newco, on reimbursement of reasonable costs and without delay, all documentation, tools, jigs, dies, patterns and other equipment owned or possessed by Avio Newco and used solely to perform its obligations under the Avio/PW Agreement. For any documentation, tools, jigs, dies, patterns and other equipment owned or possessed by Avio Newco that are necessary, but not used solely, to perform obligation under the Avio/PW Agreement, Avio Newco shall permit P&W to make copies or reproductions, and provide all rights to use the same;

6. Respondent shall grant to P&W non-exclusive, royalty-free, fully-paid, worldwide, nonterminable, perpetual, non-sublicensable (except as expressly set forth below) and irrevocable licenses for Avio IPRs so far as are necessary for P&W and/or a subcontractor or agent on behalf of P&W to perform the obligations of Avio Newco under the Avio/PW Agreement, including the right to sub-license third parties to carry out the relevant activities for P&W which were the obligations of Avio Newco under the Avio/PW Agreement. Avio/Newco will allow P&W full, immediate access to, and shall deliver to P&W, copies of all relevant documentation in support of such licenses. For those IPRs which Avio Newco does not have the power to grant licenses, Avio Newco shall identify all IPRs and provide reasonable assistance GENERAL ELECTRIC COMPANY 273 Decision and Order to P&W to acquire rights to such IPRs from their owners; and 7. Respondent shall immediately return, or certify the destruction of, all previously furnished Firewalled Information, Related Information or other P&W Proprietary Information related to the Avio/PW Agreement.

V.

IT IS FURTHER ORDERED that:

A. GE Aviation shall not request, receive, solicit, access, use, disclose, provide, discuss, exchange, circulate or convey, directly or indirectly, any Firewalled Information or Related Information, unless specifically allowed or required to do so under the CAA or as necessary to comply with the terms of this Order. B. Respondent shall prevent access to, and disclosure of, Firewalled Information and Related Information by or to any persons not authorized to access, receive, or use such information pursuant to the Agreements or the terms of this Order.

C. Respondent shall develop and implement procedures with respect to Firewalled Information and Related Information, with the advice and assistance of the Monitor, to comply with the requirements of this Order and the provisions as outlined in Section 8.01 of the CAA.

1. Such procedures shall assure, without limitation, that such information is:

a. Accessible to, and accessed by, only authorized persons or entities pursuant to the terms of the Agreements and this Order;

VOLUME 156 Decision and Order b. Not accessible by, or disclosed to, any persons or entities not authorized to have access to such materials pursuant to the terms of the Agreements and this Order;

c. Used solely for purposes of Development and Production, unless otherwise agreed by P&W, or allowed under the Agreements or this Order; and d. Maintained confidentially and securely; 2. Such procedures shall include, without limitation: a. Monitoring compliance;

b. Requiring and enforcing compliance with appropriate remedial action in the event of noncompliant use or disclosure;

c. Distributing information and providing training regarding the procedures to all relevant GE Aviation and Avio Newco employees, at least annually; and d. Instituting all necessary information technology procedures, authorizations and protocols, and any other controls necessary to comply with this Paragraph.

VI.

IT IS FURTHER ORDERED that:

A. At any time after Respondent signs the Consent Agreement in this matter, the Commission may appoint Thomas Hoehn of CompetitionRx as a monitor (“Monitor”) to assure that Respondent complies with all obligations and performs all responsibilities required by this Order and the Agreements. GENERAL ELECTRIC COMPANY 275 Decision and Order B. The Commission shall select the Monitor, subject to the consent of Respondent, which consent shall not be unreasonably withheld. If Respondent has not opposed, in writing, including the reasons for opposing, the selection of a proposed Monitor within ten (10) days after notice by the staff of the Commission to Respondent of the identity of any proposed Monitor, Respondent shall be deemed to have consented to the selection of the proposed Monitor.

C. Not later than ten (10) days after the appointment of the Monitor, Respondent shall execute an agreement that, subject to the prior approval of the Commission, confers upon the Monitor all the rights and powers necessary to permit the Monitor to monitor Respondent’s compliance with the requirements of this Order and the Agreements.

D. If a Monitor is appointed by the Commission, Respondent shall consent to the following terms and conditions regarding the powers, duties, authorities, and responsibilities of the Monitor:

1. The Monitor shall have the power and authority to monitor Respondent’s compliance with the requirements of this Order, and shall exercise such power and authority and carry out the duties and responsibilities of the Monitor in a manner consistent with the underlying purpose of this Order and in consultation with the Commission or Commission staff.

2. The Monitor shall act in a fiduciary capacity for the benefit of the Commission.

3. The Monitor shall serve until five (5) years after the Entry Into Service Date; provided, however, that the Commission may extend or modify this period as may be necessary or appropriate to accomplish the purpose of this Order.

VOLUME 156 Decision and Order 4. Subject to any demonstrated legally recognized privilege, the Monitor shall have full and complete access to Respondent’s personnel, books, documents, records kept in the ordinary course of business, facilities and technical information, and such other relevant information as the Monitor may reasonably request, related to Respondent’s compliance with its obligations under this Order. Respondent shall cooperate with any reasonable request of the Monitor and shall take no action to interfere with or impede the Monitor's ability to monitor Respondent’s compliance with this Order and the Agreements.

5. The Monitor shall serve, without bond or other security, at the expense of Respondent, on such reasonable and customary terms and conditions as the Commission may set. The Monitor shall have authority to employ, at the expense of Respondent, such consultants, accountants, attorneys and other representatives and assistants as are reasonably necessary to carry out the Monitor’s duties and responsibilities.

6. Respondent shall indemnify the Monitor and hold the Monitor harmless against all losses, claims, damages, liabilities, or expenses arising out of, or in connection with, the performance of the Monitor’s duties, including all reasonable fees of counsel and other reasonable expenses incurred in connection with the preparations for, or defense of, any claim, whether or not resulting in any liability, except to the extent that such losses, claims, damages, liabilities, or expenses result from gross negligence, willful or wanton acts, or bad faith by the Monitor.

7. Respondent may require the Monitor and each of the Monitor’s consultants, accountants, attorneys and other representatives and assistants to sign a customary confidentiality agreement; provided, GENERAL ELECTRIC COMPANY 277 Decision and Order however, that such agreement shall not restrict the Monitor (and its representatives) from providing any information to, or receiving information from, the Commission.

8. The Commission may, among other things, require the Monitor and each of the Monitor’s consultants, accountants, attorneys and other representatives and assistants to sign an appropriate confidentiality agreement related to Commission materials and information received in connection with the performance of the Monitor’s duties.

9. In the event the Commission determines that the Monitor is no longer willing or able to perform his/her duties under this Order, or has ceased to act or failed to act diligently, the Commission may appoint a substitute Monitor in the same manner as provided in this Paragraph.

10. The Commission may on its own initiative, or at the request of the Monitor, issue such additional orders or directions as may be necessary or appropriate to assure compliance with the requirements of this Order.

VII.

IT IS FURTHER ORDERED that Respondent shall file a verified written report with the Commission within thirty (30) days from the date this Order is issued, annually on that date through the fifth (5th) Anniversary of the Entry Into Service Date, and at such other times as the Commission may require, setting forth in detail the manner and form in which it has complied, and is complying, and will comply with this Order. VIII.

IT IS FURTHER ORDERED that Respondent shall notify the Commission at least thirty (30) days prior to: VOLUME 156 Decision and Order A. Any proposed dissolution of Respondent; B. Any proposed sale, acquisition, merger, consolidation or restructuring of Respondent; or C. Any other change in Respondent, including but not limited to, assignment, and the creation or dissolution of subsidiaries, if such change may affect compliance obligations arising out of this Order. IX.

IT IS FURTHER ORDERED that, for purposes of determining or securing compliance with this Order, and subject to any legally recognized privilege, and upon written request and upon five (5) days’ notice to Respondent made to its principal United States offices, registered office of its United States subsidiary, or headquarters address, Respondent shall, without restraint or interference, permit any duly authorized representative of the Commission:

A. Access, during business office hours of Respondent and in the presence of counsel, to all facilities and access to inspect and copy all books, ledgers, accounts, correspondence, memoranda and all other records and documents in the possession or under the control of Respondent related to compliance with this Order, which copying services shall be provided by Respondent at the request of the authorized representative(s) of the Commission and at the expense of Respondent.

B. The opportunity to interview officers, directors, or employees of Respondent, who may have counsel present, related to compliance with this Order. X.

IT IS FURTHER ORDERED that this Order shall terminate on August 27, 2023.

By the Commission, Commissioner Wright not participating. GENERAL ELECTRIC COMPANY 279 Analysis to Aid Public Comment ANALYSIS OF CONSENT ORDER TO AID PUBLIC COMMENT I. Introduction The Federal Trade Commission (“Commission”) has accepted, subject to final approval, an Agreement Containing Consent Order (“Consent Agreement”) with General Electric Company (“GE”), which is designed to remedy the anticompetitive effects of its proposed acquisition of the aviation business of Avio S.p.A. (“Avio”). Under the terms of the proposed Consent Agreement, GE would be required, among other things, to avoid interference with Avio’s design and development work on a critical engine component – the accessory gearbox (“AGB”) – on the Pratt & Whitney PW1100G engine for the Airbus S.A.S. (“Airbus”) A320neo aircraft. GE and Pratt & Whitney are the only manufacturers of engines for the A320neo, and compete head-tohead for sales of engines to purchasers of that aircraft. The proposed Consent Agreement has been placed on the public record for thirty days for receipt of comments by interested persons. Comments received during this period will become part of the public record. After thirty days, the Commission will again review the proposed Consent Agreement and the comments received, and will decide whether it should withdraw from the proposed Consent Agreement, modify it, or make final the accompanying Decision and Order (“Order”). Pursuant to an Agreement dated December 21, 2012, GE proposes to acquire Avio’s aviation business for approximately $4.3 billion. The Commission’s Complaint alleges that the proposed acquisition is in violation of Section 5 of the FTC Act, as amended, 15 U.S.C. § 45, and that the acquisition, if consummated, would violate 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, by lessening the competition in the worldwide market for engine sales on the A320neo aircraft. That is because the acquisition would provide GE with the ability and incentive to disrupt the design and certification of the AGB for the Pratt & Whitney PW1100G engine, which in turn would provide GE with market power in the market for engines for the A320neo VOLUME 156 Analysis to Aid Public Comment aircraft, allowing it to raise prices, reduce quality, or delay delivery of engines to A320neo customers. The proposed Consent Agreement will remedy the alleged violations by eliminating GE’s ability and incentive to engage in such anticompetitive conduct post-merger.

II. The Parties GE, headquartered in Connecticut, is one of the world’s largest companies, with business segments serving a wide variety of industries throughout the globe. GE’s aviation segment, among other things, designs and manufactures jet engines for commercial and military aircraft. GE sells narrow-body commercial aircraft engines through its 50% stake in CFM International (“CFM”), a joint venture with the French engine manufacturer Snecma S.A. Avio is headquartered in Torino, Italy, and is an important designer and manufacturer of component parts for civil and military aircraft engines. Avio provides, among other things, structural parts, gearboxes, and electrical systems for aircraft engines. Avio is currently the sole designer of the AGB on the Pratt & Whitney PW1100G engine.

III. The Products and Structure of the Markets AGBs use the mechanical power of the rotating turbine shaft in a jet engine to power various accessory systems needed by the engine and the aircraft, including oil and hydraulic pumps and electrical systems. Although AGBs on different aircraft engines perform similar functions, AGBs are designed for the specific engine in which it will be used to account for the shape of that engine, the position of the AGB in the engine, and the configuration and specifications of the various accessory systems the gearbox will power. Because AGBs require significant cost and time to develop, and because the aircraft engine – with its AGB – must be tested extensively and certified for flight by aviation authorities before it can be put into service, an engine manufacturer cannot quickly or easily replace an engine’s AGB if it encounters difficulties with its component supplier. Avio has the sole design responsibility for the AGB on the forthcoming Pratt & Whitney PW1100G engine, which will be GENERAL ELECTRIC COMPANY 281 Analysis to Aid Public Comment one of two engines available on the Airbus A320neo aircraft. While Avio is in the advanced stages of designing this AGB, further development and testing must be completed before the AGB and the PW1100G engine will be certified for use by aviation authorities. Beyond that, further design work may be necessary even after the AGB and engine receive certification. Pratt & Whitney has no viable alternative to continuing to work with Avio to develop the AGB for the PW1100G, even after its rival engine manufacturer, GE, acquires Avio. Aircraft engines provide the thrust necessary for flight and must be specifically engineered for the requirements and mission profile of the aircraft on which they are to be installed. When designing a new airplane, an aircraft manufacturer typically approaches engine manufacturers as potential suppliers and selects one or more to provide engines for the aircraft under development. These engines become customers’ only options for that aircraft platform. Airbus chose to work with only Pratt & Whitney and CFM to develop engines for the A320neo platform. Aside from the PW1100G, the only other engine available for the Airbus A320neo is the CFM Leap 1-A engine, in which GE has a 50% interest. These two engines compete for sales on the A320neo aircraft platform, and because other engine manufacturers could not design, or attain certification for, an alternate A320neo engine within several years, purchasers of this aircraft do not have other viable substitutes for these engines. The relevant geographic market in which to analyze the effects of the proposed transaction is the entire world. Engine component developers located around the world supply components to engine manufacturers who are also located worldwide. The aircraft manufacturers themselves are located across the globe, sell to customers worldwide, and do not significantly alter aircraft features for specific national markets. IV. Entry Entry into the relevant markets would not be timely, likely, or sufficient in magnitude to deter or counteract the anticompetitive effects likely to result from the proposed transaction. AGB design for large commercial aircraft like the A320neo requires significant VOLUME 156 Analysis to Aid Public Comment experience and resources, and it would take several years for a third-party provider to complete the development process and begin supplying AGBs for the PW1100G. This delay would make such third-party entry insufficient to prevent any potential anticompetitive effects from the proposed transaction. Similarly, entry into the market for engines powering the A320neo is also unlikely to deter or counter the anticompetitive effects of the proposed transaction. The design and production of an aircraft engine, along with the necessary certification of that engine on the aircraft platform, takes many years and a large financial investment.

V. Effects of the Acquisition The proposed transaction, if consummated, would provide GE with both the ability and the incentive to disrupt the design and certification of the Avio-supplied AGB for the Pratt & Whitney PW1100G engine. A delay in the development of the PW1100G engine would substantially increase GE’s market power for the sale of engines for the A320neo, as it manufactures the only other engine option for that aircraft. In response to such a delay, a significant number of Pratt &Whitney customers would likely switch to the CFM Leap 1-A, and GE would likely use its increased market power to raise price, reduce quality, or delay delivery of engines to customers of the A320neo aircraft. VI. The Consent Agreement The proposed Consent Agreement remedies the acquisition’s likely anticompetitive effects by removing GE’s ability and incentive to disrupt Avio’s AGB work during the design, certification, and initial production ramp-up phase. The proposed Consent Agreement incorporates portions of a recent commercial agreement between GE, Avio, and Pratt & Whitney and Pratt & Whitney’s original contract with Avio that relate to the design and development of the AGB and related parts for the PW1100G. A breach by GE of these aspects of these agreements therefore would constitute a violation of the Consent Agreement. The Consent Agreement further requires GE not to interfere with Avio staffing decisions as they relate to work on the AGB for the PW1100G. It allows Pratt & Whitney to have a technical GENERAL ELECTRIC COMPANY 283 Analysis to Aid Public Comment representative and a customer representative on-site at GE/Avio’s facility to observe work on the PW1100G AGB. In addition, should Pratt & Whitney terminate its agreement with Avio, GE will be required to provide certain transition services, including licenses to intellectual property and access to specialized Avio tools, to help Pratt & Whitney or a third-party supplier produce AGBs and related parts for the PW1100G. The Consent Agreement also contains a firewall provision that limits GE’s access, through Avio, to Pratt & Whitney’s proprietary information relating to the AGB. Finally, the Consent Agreement allows for the appointment of an FTC-approved monitor to oversee GE’s compliance with its obligations under the Consent Agreement.

The purpose of this analysis is to facilitate public comment on the proposed Consent Agreement, and it is not intended to constitute an official interpretation of the proposed Consent Agreement or to modify its terms in any way. VOLUME 156 Complaint