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DEPARTMENT OF JUSTICE comments, including the name of the systems for competitors’ engines. UTC submitter, and responses thereto, will be also could exploit confidential Antitrust Division posted on the U.S. Department of information gained through its work on Justice, Antitrust Division’s internet those engine control systems to United States v. United Technologies Web site, filed with the Court and, disadvantage its competitors. The Corporation and Goodrich under certain circumstances, published proposed acquisition therefore is likely Corporation; Proposed Final Judgment in the Federal Register. Comments to reduce competition substantially for and Competitive Impact Statement should be directed to Maribeth Petrizzi, aircraft turbine engines. Notice is hereby given pursuant to the Chief, Litigation II Section, Antitrust 4. UTC and a joint venture in which Antitrust Procedures and Penalties Act, Division, U.S. Department of Justice, Goodrich has a fifty percent share are 15 U.S.C. 16(b)-(h), that a proposed 450 Fifth Street NW., Suite 8700, two of the world’s three leading Final Judgment, Hold Separate Washington, DC 20530 (telephone: (202) producers of engine control systems for Stipulation and Order, and Competitive 307–0924). large aircraft turbine engines. The Impact Statement have been filed with Patricia A. Brink, proposed acquisition likely would reduce competition substantially for the United States District Court for the Director of Civil Enforcement. District of Columbia in United States v. engine control systems for large aircraft United Technologies Corporation and United States District Court for the turbine engines. Goodrich Corporation, Civil Action No. District of Columbia 5. As a result, the proposed 1:12-cv-01230. On July 26, 2012, the United States of America, United States acquisition likely would substantially United States filed a Complaint alleging Department of Justice, Antitrust Division, 450 lessen competition in the worldwide that the proposed acquisition of Fifth Street NW., Suite 8700, Washington, DC markets for the development, Goodrich Corporation (‘‘Goodrich’’) by 20530, Plaintiff, v. United Technologies manufacture, and sale of large main United Technologies Corporation Corporation, United Technologies Building,) engine generators, aircraft turbine (‘‘UTC’’) would violate Section 7 of the Hartford, Connecticut 06101 and Goodrich engines, and engine control systems for Clayton Act, 15 U.S.C. 18. The proposed Corporation, Four Coliseum Centre,) 2730 large aircraft turbine engines, in West Tyvola Road,) Charlotte, North Carolina violation of Section 7 of the Clayton Final Judgment, filed at the same time 28217, Defendants as the Complaint, requires UTC to divest Act, 15 U.S.C. 18. [Civil Action No. 1:12-cv-01230] assets comprising Goodrich’s small II. The Defendants engine control products business, Complaint including Goodrich’s facility in West The United States of America 6. UTC is incorporated in Delaware Hartford, Connecticut and other tangible (‘‘United States’’), acting under the and has its headquarters in Hartford, and intangible assets used in this direction of the Attorney General of the Connecticut. UTC produces a wide business. The proposed Final Judgment United States, brings this civil antitrust range of products for the aerospace also requires UTC to divest Goodrich’s action against Defendants United industry and other industries, electric generation and distribution Technologies Corporation (‘‘UTC’’) and including, among other products, systems business, including Goodrich’s Goodrich Corporation (‘‘Goodrich’’) to aircraft generators, aircraft engine facilities in Pitstone, United Kingdom enjoin UTC’s proposed acquisition of control systems and components, and Twinsburg, Ohio, other tangible and Goodrich. The United States complains aircraft engines, and helicopters. UTC’s intangible assets used in this business, and alleges as follows: main aerospace divisions are Pratt & and Goodrich’s shares in the TRW– Whitney, Hamilton Sundstrand, and Thales Aerolec SAS joint venture. I. Nature of the Action Sikorsky. In 2010, UTC had revenues of Finally, the proposed Final Judgment 1. Pursuant to an asset purchase approximately $54 billion. requires UTC to divest Goodrich’s agreement dated September 21, 2011, 7. Goodrich is incorporated in New shares in the AEC joint venture, as well UTC proposes to acquire all the shares York and has its headquarters in as provide Rolls-Royce plc an additional of Goodrich. The transaction is valued Charlotte, North Carolina. Goodrich time period in which it would be able at approximately $18.4 billion. If manufactures a variety of products for to purchase certain assets relating to the consummated, the acquisition would the aerospace industry, including, aftermarket services utilized by that constitute the largest aerospace among other products, aircraft joint venture. acquisition in history. generators, aircraft engine control Copies of the Complaint, proposed 2. UTC and Goodrich are the only two systems and components, landing gear, Final Judgment, and Competitive Impact significant suppliers in the worldwide and actuation systems. In 2010, Statement are available for inspection at market for large main engine generators. Goodrich had revenues of the Department of Justice, Antitrust The proposed acquisition would approximately $7.2 billion. In 2001, Division, Antitrust Documents Group, eliminate competition between UTC and Goodrich began a joint venture with 450 Fifth Street NW., Suite 1010, Goodrich for large main engine Thales Avionics Electrical Systems SA Washington, DC 20530 (telephone: (202) generators. called TRW-Thales Aerolec SAS 514–2481), on the Department of 3. UTC is one of only a few producers (‘‘Aerolec’’) for the purpose of Justice’s Web site at http:// of aircraft turbine engines in the world. collaborating on the development of www.usdoj.gov/atr, and at the Office of Either on its own or through a variable-frequency main engine the Clerk of the United States District partnership, Goodrich produces and generators for large aircraft. References Court for the District of Columbia. services engine control systems, a to Goodrich throughout the remainder Copies of these materials may be critical component on such engines, for of this Complaint also refer to Aerolec. obtained from the Antitrust Division several of UTC’s leading competitors. III. Jurisdiction and Venue upon request and payment of the Following the acquisition, UTC could copying fee set by Department of Justice disadvantage its engine competitors by 8. The United States brings this action regulations. withholding or delaying delivery, under Section 15 of the Clayton Act, 15 Public comment is invited within 60 increasing prices, or reducing the U.S.C. 4 and 25, as amended, to prevent days of the date of this notice. Such quality of its servicing of engine control and restrain Defendants from violating

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Section 7 of the Clayton Act, 15 U.S.C. primarily aircraft that seat 100 more space, require more connections to 18. passengers or more, such as commercial the electrical distribution system and 9. Defendants develop, manufacture, aircraft like the Airbus A380 and A320 the gearbox, and would be more costly. and sell aircraft systems and or the Boeing 777 and 737. Aircraft that Weight and space, in particular, are components and other products in the do not qualify as large aircraft include important factors in generator selection flow of interstate commerce. regional jets, business jets, and and likely would dissuade a customer Defendants’ activities in the helicopters, which are smaller and have from approving such a design. development, manufacture, and sale of considerably fewer seats than large 21. A generator used in an auxiliary these products substantially affect aircraft. power unit (‘‘APU’’) cannot be used in interstate commerce. This Court has 16. Electrical systems on large aircraft place of a main engine generator. APU subject matter jurisdiction over this are significantly different from those generators are designed to perform a action pursuant to Section 15 of the used on smaller aircraft. Large aircraft function different from main engine Clayton Act, 15 U.S.C. 25, and 28 U.S.C. require more power than smaller generators and, therefore, differ in 1331, 1337(a), and 1345. aircraft. In addition, large aircraft and mechanical design, electrical design, 10. Defendants have consented to smaller aircraft have substantial and cooling technique. differences in terms of power rating, venue and personal jurisdiction in this B. Relevant Markets judicial district. Venue is therefore voltage, speed, and cooling system. proper in this District under Section 12 Further, large aircraft systematically use 1. Product Market of the Clayton Act, 15 U.S.C. 22, and 28 alternating current (‘‘AC’’), but smaller 22. Large main engine generators have U.S.C. 1391(c). aircraft can use either AC or direct specific applications, for which other current (‘‘DC’’). AC generators can IV. Large Main Engine Generators products cannot be employed. An produce variable frequency or constant aircraft needs a main engine generator A. Background frequency electrical power. The and cannot operate without one. In generators that are able to power large addition, main engine generators for use 11. An electrical generator is a device aircraft generally have outputs above that converts mechanical energy into on smaller aircraft, such as regional or approximately 75 thousand volt-amps business jets, cannot be used in large electrical energy. The main engine of an (‘‘Kva’’). Hereinafter, main engine aircraft generates mechanical energy. aircraft because they do not provide generators with outputs of 75Kva or sufficient output to power the aircraft The main engine has a generator, which more will be referred to as ‘‘large main through electromagnetic induction and have other different specifications. engine generators.’’ Further, generators for other parts of an converts the mechanical energy created 17. Designing a large main engine by the engine to electrical energy. aircraft, such as the APU, cannot be generator is generally more difficult used on a main engine for a large 12. The generator is responsible for than designing a main engine generator generating power for all the in-flight aircraft because they do not have the for a smaller aircraft because of the need same performance characteristics as systems that run on electricity, to operate large main engine generators including pumping breathable air into main engine generators. efficiently at high rotation speeds. 23. A small but significant increase in the fuselage, operating the lights, and Design engineering staff must be the price of large main engine generators running the navigation and experienced with the impact of would not cause customers of those communication equipment in the operating at higher speeds, which generators to substitute a smaller cockpit. requires a more complex cooling generator, a generator for an APU, or 13. To operate, the generator depends system, more complex controls, and any other product, or to reduce on the motion of the main engine. As mechanically sizing the generator to fit purchases of large main engine the engine turns, it rotates a shaft the plane. generators, in volumes sufficient to leading to the generator, which 18. The friction created by the heavier make such a price increase unprofitable. generates electric power through rotor operating at faster speeds in a large Accordingly, the development, electromagnetic induction. The outgoing main engine generator also requires a manufacture, and sale of large main electricity flows into the primary more complex cooling system. Main engine generators is a line of commerce electrical distribution system, which engine generators for smaller aircraft, and relevant market within the meaning routes it through the aircraft to the generating 30 to 45Kva or less, are of Section 7 of the Clayton Act. lighting system, environmental control cooled sufficiently by air circulated systems, and other systems requiring within the generator chamber. Large 2. Geographic Market electric power. main engine generators, however, 24. Aircraft manufacturers purchase 14. Aircraft power generation is a require a system of tubing and gears to large main engine generators primarily complicated process because aircraft deliver mists of oil around the rotor to from companies located in the United engines change speed, according to the avoid over-heating. Oil-cooling systems States or Europe. However, suppliers rate of acceleration or deceleration, the are more complex and challenging to typically offer a worldwide organization density of the air through which the design. to support the provision of maintenance aircraft is flying, and the angle of flight. 19. The need for a heavier rotor and and repair services. Customers do not Such variations require the generator to a more complex cooling system also consider transportation costs, a small smooth out the peaks and valleys of makes it difficult to minimize the size proportion of the cost of the finished propulsion to deliver the consistent and weight of a generator. Therefore, aircraft, to be a significant cost driver. power required by the aircraft’s large main engine generators are 25. Accordingly, the world is the electrical systems. designed to more demanding relevant geographic market within the 15. The specifications of the main specifications than main engine meaning of Section 7 of the Clayton Act. engine generator vary based on the size generators for smaller aircraft. of the aircraft on which it is used. That 20. Using two generators designed for C. Anticompetitive Effects of the aircraft size—large or small—determines smaller aircraft in place of one large Proposed Acquisition the amount of power required from the main engine generator with the same 26. UTC’s proposed acquisition of generator. Large aircraft include total output would weigh more, take Goodrich likely would lessen

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competition substantially in the market generators, which are more complicated 36. Developing a large main engine for the development, manufacture, and products. Similarly, companies that generator is technically difficult. sale of large main engine generators. make generators for APUs do not Manufacturers of main engine UTC and Goodrich are the only compete effectively with UTC and generators for smaller aircraft or significant competitors for large main Goodrich for large main engine generators for other parts of the aircraft, engine generators. For the past twelve generators because those companies’ such as APUs, face significant technical years, either UTC or Goodrich has won experiences with APU generators do not hurdles in designing and developing every competition for large main engine provide them the ability to design and large main engine generators. Large generators. Indeed, UTC and Goodrich manufacture large main engine main engine generators present unique were the top two bidders in almost generators, which again are more technical challenges relating to the every one of those competitions. UTC complicated products. preservation of power quality at speeds and Goodrich have been each other’s 32. The proposed acquisition, much higher than those reached in main closest competitor based on technical therefore, likely would substantially engine generators for smaller aircraft and commercial considerations. lessen competition for the development, and generators for APUs. Large main 27. UTC’s and Goodrich’s bidding manufacture, and sale of large main engine generators also generate higher behaviors often have been constrained engine generators. This likely would current levels than other generators, and by the possibility of losing sales of large lead to higher prices, less favorable require an oil cooling system. The main engine generators to the other. contractual terms, and less innovation manufacturer of main engine generators Each firm has often considered the other in violation of Section 7 of the Clayton for smaller aircraft and APU generators company’s offering when planning bids Act. cannot design and produce a large main and research and development engine generator simply by making a activities. D. Difficulty of Entry main engine generator for a smaller 28. Customers have benefited from the 33. Sufficient, timely entry of aircraft or an APU generator competition between UTC and Goodrich additional competitors into the market proportionately larger, but must instead for sales of large main engine generators for large main engine generators is completely redesign the generator. by receiving lower prices, more unlikely. Therefore, entry or the threat favorable contractual terms, more 37. Further, substantial time and of entry into this market would not innovative products, and shorter significant financial investment would prevent the harm to competition caused delivery times. The combination of UTC be required for a company to design and by the elimination of Goodrich as a and Goodrich would eliminate this develop a large main engine generator. supplier of these products. competition and its future benefits to Even companies that already make other customers. Post-acquisition, UTC likely 34. Firms attempting to enter into the types of generators, or that already are would have the incentive and the ability market for the development, attempting to develop a large main profitably to increase prices and reduce manufacture, and sale of large main engine generator, would require up to innovation. engine generators face several barriers to five years or more and an investment of 29. UTC and Goodrich invest entry. Main engine generators perform over $50 million to develop a product significantly to remain the two leading critical functions on the aircraft and that is competitive with those offered by suppliers of large main engine likely will be used throughout the life UTC and Goodrich. generators in the future, and customers of the aircraft program, which may be 38. As a result of these barriers, entry expect them to remain the leading twenty or thirty years. As a result, into the market for large main engine suppliers. Future product development aircraft manufacturers are reluctant to generators would not be timely, likely, for large main engine generators likely purchase a product from a supplier not or sufficient to defeat the substantial would benefit from vigorous innovation already known for its expertise in large lessening of competition that likely competition between UTC and main engine generators. A manufacturer would result from UTC’s acquisition of Goodrich. must be able to demonstrate that its Goodrich. 30. Other companies that have some large main engine generator meets the capability to develop large main engine necessary specifications and need for V. Aircraft Turbine Engines generators are not close competitors to reliability. While some companies may A. Background UTC and Goodrich. For example, no have demonstrated experience in other other company has an installed base of types of generators, such experience is 39. Most modern commercial, large main engine generators. Any other not considered by customers to be as business, and military aircraft are firm would need substantial time and relevant as experience specifically in powered by turbine engines. These expense to achieve UTC’s or Goodrich’s large main generators. engines operate by burning a fuel-and- record of experience, flight time, and 35. UTC and Goodrich emphasize to air mixture in a combustion chamber, reliability. UTC’s and Goodrich’s customers their prior experience in large with the resulting combustion products installed base of large main engine main engine generators to demonstrate turning a propeller blade on a turboprop generators also provides them the ability reliability. Moreover, this experience engine, a rotor shaft on a turboshaft to develop new large main engine allows them to develop a new large engine, or a fan in front of a turbofan generators more efficiently and at a main engine generator at an initial engine. lower cost than other companies. development cost lower than that of 40. Turbofan engines power most 31. Companies that manufacture main companies that do not already have commercial transport aircraft, business engine generators for small aircraft do similar generators in operation. They jets, and many military aircraft. not compete effectively with UTC and also are able to demonstrate the Generally, large commercial aircraft, Goodrich for large main engine technical and financial ability regional jets, and military aircraft use generators because those companies’ successfully to manage production, the most powerful turbofan engines, experiences with main engine aftermarket service, and warranty work while business jets use turbofan engines generators for smaller aircraft do not for large main engine generators, which of lower power. The power delivered by provide them the ability to design and companies trying to enter this market a turbofan engine is measured in terms manufacture large main engine would not be able to do. of pounds of thrust (‘‘pounds thrust’’),

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and such engines are generally software. The operating system is 52. For any given aircraft, a small but categorized by their thrust class. provided by the FADEC supplier. The significant increase in the price of an 41. Turboprop engines primarily are application software contains sensitive aircraft turbine engine of the required used to power smaller aircraft, such as performance data relating to the type and thrust would not cause commuter aircraft. Turboshaft engines particular engine and is usually sufficient purchases of such engines to power helicopters. The power delivered provided by the engine manufacturer. be shifted to engines of a different type by turboprop and turboshaft engines is 48. An ECS, including the FADEC, is or significantly higher or lower thrust so measured in terms of shaft horsepower designed and developed to meet the as to make such a price increase (shp). specific performance requirements for unprofitable. Accordingly, the 42. Due to their complexity and the the particular engine on which it will be development, manufacture, and sale of degree of expertise and skill required for installed. As a result, the ECS supplier the turbine engine required for each their design, development and has insight into the design and cost of type of aircraft is a line of commerce production, few companies produce not only its ECS, but also the customer’s and a relevant product market within aircraft turbine engines. engine. Some ECS suppliers also the meaning of Section 7 of the Clayton 43. Aircraft turbine engines typically provide the application software on the Act. continue in service for decades and FADEC. Such suppliers have access to 53. Although the engine required for require regular maintenance, repair, and competitively sensitive confidential each such aircraft thus may be deemed overhaul. When selecting an engine, business information about the fuel a separate product market, in each such customers take into account the efficiency and performance principles market there are few competitors. difficulty and cost of servicing the around which the customer’s engine is 54. The proposed acquisition of engine. Engines that require more designed. Goodrich by UTC would affect frequent servicing or are otherwise more competition in each large aircraft difficult or costly to own and operate 49. In 2008, Goodrich and Rolls-Royce turbine engine market in the same are less attractive to customers and formed Aero Engine Controls (AEC), a manner. It is therefore appropriate to therefore less competitive. joint venture to produce ECSs. The AEC aggregate large aircraft turbine engine 44. There are only three main joint venture agreement requires Rolls- markets for purposes of analyzing the producers of aircraft turbine engines of Royce to purchase all of its ECSs for effects of the acquisition. greater than 10,000 pounds thrust. engines of over 4000 pounds thrust or 55. The proposed acquisition of (Hereinafter the term ‘‘large aircraft 2000 shp from AEC. Therefore, there are Goodrich by UTC would affect turbine engines’’ will refer to engines of no alternative suppliers of ECSs for competition in each small aircraft this thrust range.) UTC, through its Pratt Rolls-Royce large aircraft turbine turbine engine market in the same & Whitney subsidiary, and Rolls-Royce engines. manner. It is therefore appropriate to Group plc (‘‘Rolls-Royce’’) are two of 50. The AEC joint venture agreement aggregate small aircraft turbine engine these three producers. UTC gives Goodrich the exclusive right to markets for purposes of analyzing the manufactures turbine engines of up to provide replacement parts and effects of the acquisition. 90,000 pounds thrust, while Rolls-Royce undertake maintenance, repair and manufactures turbine engines of up to overhaul of ECSs for Rolls-Royce large b. ECSs for Aircraft Turbine Engines 97,000 pounds thrust. aircraft turbine engines. Because the 56. All aircraft turbine engines require 45. There are only a few producers of volume of commerce for aftermarket an ECS in order to operate properly. No aircraft turbine engines of 10,000 service of any given ECS is quite small, aircraft engine can be sold or operated pounds thrust or less. (Hereinafter the there are no secondary suppliers for ECS without an ECS. There are no other term ‘‘small aircraft turbine engines’’ replacement parts or service. products that perform the functions of will refer to engines of this thrust Aftermarket parts and service for ECSs an ECS in receiving and analyzing data range.) UTC, through its Pratt & Whitney must be provided by the original ECS from sensors and pilot controls, subsidiary, is one of these producers. manufacturer or a reseller designated by calculating the optimal flow rate of fuel 46. It is critical that fuel be fed into that manufacturer. Therefore, it would into the engine combustion chamber, aircraft turbine engines in a precise not be possible for purchasers of these and feeding the proper amount of fuel manner, so that the engine responds to Rolls-Royce engines to obtain parts or into the engine combustion chamber. the pilot’s instructions in the most service for these ECSs from any supplier 57. Each ECS is designed to work on efficient manner possible. The system other than Goodrich. a specific engine, and one ECS cannot that accomplishes this is the engine be substituted for an ECS on another B. Relevant Markets control system, or ECS. The core of the engine. Therefore, a small but ECS is a computer, usually called an 1. Product Markets significant increase in the price of the electronic engine control, or EEC, that a. Aircraft Turbine Engines ECS designed for a particular engine receives information from multiple would not cause enough purchases to be sensors in the engine and from the 51. To a large extent, each aircraft shifted to a different ECS so as to make pilot’s controls, and calculates the platform is limited in the type and size such a price increase unprofitable. amount of fuel to be sent to the engine. of engine with which it may be Accordingly, the development, The ECS also includes the engine’s main powered. The choice of a turbofan, manufacture, sale, and aftermarket fuel pump and a fuel metering unit, or turboprop or turboshaft engine is service of the ECS for each aircraft FMU, which controls the amount of fuel dictated by aircraft type, range and turbine engine is a line of commerce coming into the engine from the main speed, and is specified by the and relevant product market within the fuel pump. manufacturer. The engine must provide meaning of Section 7 of the Clayton Act. 47. In virtually all modern aircraft the amount of power needed for that 58. Although the ECS required for turbine engines, the EEC within the ECS particular aircraft to perform properly each particular engine thus may be is a full-authority digital engine control, and safely, while at the same time being deemed a separate product market, the or FADEC. The FADEC consists of as light as possible. Thus, only a limited AEC joint venture agreement requires hardware and two types of software: the range of engine sizes is considered for Rolls-Royce to purchase all ECSs for operating system and the application any particular aircraft. large aircraft turbine engines from AEC

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and grants exclusive aftermarket rights and services, making Rolls-Royce a less 2. Small Aircraft Turbine Engines to such ECSs to Goodrich. Thus the reliable supplier of large aircraft large proposed acquisition would affect turbine engines. 70. As discussed in paragraph 44 competition in each such market in the 65. Such strategies to raise Rolls- above, UTC, through its Pratt & Whitney same manner. It is therefore appropriate Royce’s costs and reduce its reliability subsidiary, is one of a small number of to aggregate the markets for ECSs for would be profitable to UTC post-merger significant competitors in the markets large aircraft turbine engines for because the sale of large aircraft turbine for the development, manufacture, and purposes of analyzing the effects of the engines provides much more revenue sale of small aircraft turbine engines. acquisition. and profit than the sale of ECSs or the Several of UTC’s competitors purchase 59. The proposed acquisition would aftermarket service of ECSs for those the ECSs for certain of their small have the same effect in each market for engines. Therefore, if UTC were able to aircraft turbine engines from Goodrich. ECSs for small aircraft turbine engines. gain additional engine sales by causing Therefore, if UTC were to purchase It is therefore appropriate to aggregate AEC to withhold or delay delivery of Goodrich, UTC would be both a the markets for ECSs for small aircraft ECSs for Rolls-Royce engines, or by producer of small aircraft turbine turbine engines for purposes of increasing the cost or difficulty of engines and a supplier of ECSs to its analyzing the effects of the acquisition. obtaining aftermarket service on such competitors. ECSs, the additional engine sales would 71. At least three years are required to 2. Geographic Market result in considerably more revenue and design and develop an ECS for a small 60. Aircraft manufacturers purchase profit to UTC than the revenue and aircraft turbine engine. Therefore, if an aircraft turbine engines and the ECSs for profit lost from any decrease in sales of engine manufacturer must replace the those engines primarily from companies or aftermarket service on such ECSs. supplier of the ECS on a specific engine, located in the United States or Europe. 66. These actions by UTC likely at least three years will pass before the However, suppliers typically offer a would harm purchasers of large aircraft engine manufacturer can deliver an worldwide organization to support the turbine engines because UTC and Rolls- engine with a replacement ECS. Aircraft provision of maintenance and repair Royce have been, and likely will manufacturers often demand delivery of services. Customers do not consider continue to be, in some competitions an engine in less than three years. the two best-positioned suppliers of transportation costs, a small proportion 72. If, after the acquisition, UTC were of the cost of the finished aircraft, to be large aircraft turbine engines. By making Rolls-Royce unable to deliver engines or to withhold or delay delivery of a significant cost driver. Goodrich ECSs to companies that 61. Accordingly, the world is the by raising its costs, UTC may substantially affect competition and compete with UTC for the design, relevant geographic market within the development, manufacture, and sale of meaning of Section 7 of the Clayton Act. gain the ability to raise prices or reduce quality. small aircraft turbine engines, those C. Anticompetitive Effects of the 67. In addition, because AEC companies might be unable to deliver Proposed Acquisition produces the ECSs for Rolls-Royce engines on the schedule required by their customers. Such customers likely 1. Large Aircraft Turbine Engines engines, AEC has accurate information concerning the cost of the ECS and each would have to turn to a different engine 62. As discussed in paragraph 43 of the ECS components used on each supplier. above, there are only three primary Rolls-Royce engine covered by the AEC 73. In such circumstances, UTC might competitors in the markets for the agreement. Moreover, because AEC be the best positioned alternative engine development, manufacture, and sale of provides the application software for the supplier. As a result, customers that large aircraft turbine engines. UTC, FADECs for these Rolls-Royce engines, would otherwise choose a competing through its Pratt & Whitney subsidiary, it has access to competitively-sensitive engine could be forced to purchase an and Rolls-Royce are two of those confidential business information engine from UTC. competitors. Goodrich is a partner in concerning the engine itself, including 74. The sale of small aircraft turbine AEC, from which Rolls-Royce must the fuel efficiency and performance engines provides much more revenue obtain its ECSs for most such engines. principles around which each engine is and profit than the sale of ECSs for If UTC were to purchase Goodrich, and designed. thus Goodrich’s share of AEC, UTC 68. Following the acquisition of those engines. Therefore, if UTC were would be both a producer of large Goodrich and its share of AEC, UTC able to gain additional engine sales by aircraft turbine engines and the sole- would have the incentive and ability to withholding or delaying delivery of source supplier of ECSs to one of its use this information to its advantage in ECSs to its engine competitors, the leading engine competitors. bidding on large aircraft turbine additional engine sales would result in 63. After the acquisition UTC, through engines. For example, such information considerably more revenue and profit to its position as a partner in the AEC joint would reveal to UTC when it could offer UTC than the revenue and profit lost venture, would have the incentive and higher pricing or less innovative from any decrease in sales of such ECSs. ability to cause AEC to withhold or solutions without risk of losing a large 75. UTC’s acquisition of Goodrich delay delivery of ECSs to its competitor, aircraft turbine engine sale. therefore would give UTC both the Rolls-Royce, resulting in the inability of 69. Therefore, UTC’s acquisition of ability and the incentive to make its Rolls-Royce to deliver engines on the Goodrich would give UTC both the competitors unable to compete schedule required by customers. ability and the incentive to reduce the effectively to supply small aircraft 64. In addition, after the acquisition competitiveness of Rolls-Royce in the turbine engines. If UTC were to make its UTC, through its position as the supply of large aircraft turbine engines. competitors unable to compete exclusive supplier of aftermarket parts If UTC were to reduce the effectively in the development, and services for ECSs on Rolls-Royce competitiveness of Rolls-Royce in the manufacture, and sale of small aircraft large aircraft turbine engines, would markets for these engines, customers for turbine engines, customers for those have the incentive and ability to raise those engines would have significantly engines would have significantly fewer the costs of such parts and services, or fewer choices, and competition thus choices, and competition would be to lower the availability of such parts would be lessened substantially. lessened substantially.

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D. Difficulty of Entry ECS producer and the engine purchase a replacement ECS from an manufacturer. ECS manufacturer other than its 76. Sufficient, timely entry of 82. In large part because of the highly preferred supplier to upgrade the ECS additional competitors into the markets integrated nature of engines and ECSs, on an engine already in service. This for aircraft turbine engines is unlikely to each of the three major producers of occurs when an existing ECS becomes prevent the harm to competition in the large aircraft turbine engines has a difficult to repair due to parts markets for aircraft turbine engines that preferred supplier for the ECSs used on obsolescence issues. In addition, engine is likely to occur as a result of the its engines. Each engine manufacturer manufacturers occasionally form teams proposed acquisition. purchases the great majority of the ECSs to compete for new large aircraft turbine 77. Entry of any new competitor into used on its engines from its preferred engine projects. In either of these the development, manufacture, and sale supplier. situations, an ECS supplier may be of aircraft turbine engines is unlikely 83. Because of these preferred selected by competition rather than on and cannot happen in a time period that supplier relationships, there are only the basis of an existing preferred would prevent significant competitive three significant suppliers of ECSs for supplier arrangement. After the harm. The primary purchasers of aircraft large aircraft turbine engines, one for acquisition UTC, through its position as turbine engines are aircraft each engine producer. UTC and AEC, a partner in the AEC joint venture, manufacturers, of which there are very the Goodrich-Rolls-Royce joint venture, would have the incentive and ability to few in the world. Aircraft manufacturers are two of the three suppliers. UTC, impede AEC’s pursuit of such projects are extremely hesitant to purchase through its Hamilton Sundstrand in competition with UTC. Competition components from unproven sources, subsidiary, supplies the ECSs used on for ECSs for large aircraft turbine particularly such major components as most of its own engines. AEC supplies engines thus would be lessened engines. A firm seeking to enter this the ECSs used on most Rolls-Royce substantially. business would need many years and an engines. 89. UTC, through its Pratt & Whitney enormous financial investment to subsidiary, and Rolls-Royce are two of design and develop a new aircraft B. Relevant Markets the world’s three primary manufacturers turbine engine. No firm has successfully 1. Product Market of large aircraft turbine engines. The entered this business in decades. companies conduct independent work 78. Such entry is unlikely to occur in 84. As discussed in paragraphs 56 to into the research, development and a timeframe sufficient to prevent 58 above, the development, design of new ECSs for such engines, competitive harm. Engine purchasers manufacture, sale, and aftermarket UTC through its Hamilton Sundstrand typically expect delivery of the first service of the ECS for large aircraft subsidiary and Rolls-Royce through engine for a new aircraft from one to turbine engines is a line of commerce AEC. After UTC acquires Goodrich, UTC five years after contract award. A new and relevant product market within the and Rolls-Royce would share control of entrant into any market for aircraft meaning of Section 7 of the Clayton Act. AEC, and UTC has explored using AEC turbine engines, even a firm already 2. Geographic Market as a vehicle to combine its ECS business manufacturing other aircraft turbine with that of Rolls-Royce, to share engines, would require much more time 85. Aircraft manufacturers purchase intellectual property and research and to develop and market a new engine. ECSs for large aircraft turbine engines development results, and to eliminate 79. As a result of these barriers, entry primarily from companies located in the some product lines, rather than into the markets for aircraft turbine United States or Europe. However, competing with Rolls-Royce to engines would not be timely, likely, or suppliers typically offer a worldwide independently develop innovative and sufficient to defeat the substantial organization to support the provision of cost-effective ECS solutions. lessening of competition that is likely to maintenance and repair services. ECS Competition for ECSs for large aircraft result from UTC’s acquisition of customers do not consider turbine engines thus would be lessened Goodrich. transportation costs, a small proportion substantially, as engine customers of the cost of the finished aircraft, to be would be offered two engines from UTC VI. Engine Control Systems for Large a significant cost driver. and Rolls-Royce, but only a single ECS. Aircraft Turbine Engines 86. Accordingly, the world is the This loss of competition would result in A. Background relevant geographic market within the less innovative and cost-effective ECSs meaning of Section 7 of the Clayton Act. for large aircraft turbine engines. 80. The ECS in a large aircraft turbine engine is a major determinant of key C. Anticompetitive Effects of the D. Difficulty of Entry Proposed Transaction engine performance parameters 90. Sufficient, timely entry of including fuel economy, safe operation, 87. UTC’s proposed acquisition of additional competitors into the market and thrust in different situations. In Goodrich likely would lessen for ECSs for large aircraft turbine order to maximize engine performance, competition substantially in the market engines is unlikely. Therefore, entry or the ECS must be closely integrated with for ECSs for large aircraft turbine the threat of entry into this market the engine during both the design stage engines. UTC and AEC are two of the would not prevent the harm to and the assembly process. Changes in an three producers of such ECSs. If UTC competition caused by UTC’s engine design can necessitate changes in were to purchase Goodrich and thus acquisition of Goodrich and its share of an ECS design, and vice versa. Goodrich’s share of AEC, UTC would AEC. 81. As a result, large aircraft turbine control fifty percent of one of its two 91. A firm seeking to enter this market engines and the ECSs for those engines leading competitors for such ECSs. would need substantial time and a are not sold separately to engine 88. Although an ECS for a large significant financial investment to purchasers. It would not be practical for aircraft turbine engine is generally design and develop a new ECS for a even the most sophisticated engine purchased by an engine builder from its large aircraft turbine engine. Even those purchasers to integrate an ECS and an preferred supplier, independent source firms that produce ECSs for smaller engine. All large aircraft turbine engines selections can and do take place. For engines would need at least five years are sold with an ECS installed by the example, an aircraft manufacturer may and an investment of $50 million or

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more to develop an ECS for a large (b) competition likely would be I. Nature and Purpose of the Proceeding aircraft turbine engine that is substantially lessened; On September 21, 2011, defendants competitive with those produced today (c) prices would likely increase, United Technologies Corporation by UTC and AEC. contractual terms likely would be less (‘‘UTC’’) and Goodrich Corporation 92. A firm attempting to enter this favorable to the customers, and (‘‘Goodrich’’) entered into an agreement market would be unlikely to obtain innovation likely would decrease. whereby UTC proposes to acquire sufficient sales to be economically VIII. Requested Relief Goodrich for approximately $18.4 viable. Because most of these products billion. are purchased by the three primary 98. The United States requests that The United States filed a civil engine manufacturers from their this Court: antitrust Complaint against UTC and existing preferred suppliers, a new (a) Adjudge and decree that UTC’s Goodrich on July 26, 2012, seeking to entrant would have few opportunities to acquisition of Goodrich would be enjoin the proposed acquisition. The recover the considerable investment unlawful and violate Section 7 of the Complaint alleged that the proposed required to develop a new ECS for large Clayton Act, 15 U.S.C. 18; acquisition likely would substantially aircraft turbine engines. Independent (b) preliminarily and permanently lessen competition in violation of competitions are unlikely to occur with enjoin and restrain Defendants and all Section 7 of the Clayton Act, 15 U.S.C. sufficient frequency to permit an entrant persons acting on their behalf from 18, in the worldwide markets for the to recover its costs. consummating the proposed acquisition development, manufacture, and sale of 93. As a result of these barriers, entry of Goodrich by UTC, or from entering large main engine generators, aircraft into the market for ECSs for large into or carrying out any other contract, turbine engines, and engine control aircraft turbine engines would not be agreement, plan, or understanding, the systems for large aircraft turbine timely, likely, or sufficient to defeat the effect of which would be to combine engines. That loss of competition likely substantial lessening of competition that UTC with Goodrich; would result in increased prices, less likely would result from UTC’s (c) award the United States its costs favorable contractual terms, and acquisition of Goodrich. for this action; and decreased innovation in the markets for VII. Violations Alleged (d) award the United States such other these products. and further relief as the Court deems At the same time the Complaint was 94. UTC’s proposed acquisition of just and proper. filed, the United States filed a Hold Goodrich likely would lessen For Plaintiff United States of America: Separate Stipulation and Order (‘‘Hold competition substantially in the Separate’’) and proposed Final Jamillia Ferris development, manufacture, and sale of Judgment, which are designed to large main engine generators, aircraft (D.C. Bar #493479), Acting Assistant Attorney General. eliminate the anticompetitive effects turbine engines, and engine control that would have resulted from UTC’s systems for large aircraft turbine Patricia A. Brink, Director of Civil Enforcement. acquisition of Goodrich. Under the engines, in violation of Section 7 of the proposed Final Judgment, which is Maribeth Petrizzi Clayton Act, 15 U.S.C. 18. explained more fully below, UTC is 95. Unless enjoined, the proposed (D.C. Bar #435204), Chief, Litigation II Section. required to divest assets relating to acquisition likely would have the Goodrich’s main engine generator following anticompetitive effects Dorothy B. Fountain (D.C. Bar #439469), business and Goodrich’s engine controls relating to large main engine generators, Assistant Chief, Litigation II Section. business. UTC is also required to divest among others: Kevin C. Quin Goodrich’s shares in a joint venture (a) Actual and potential competition (D.C. Bar #415268), related to engine controls, and extend between UTC and Goodrich would be Robert W. Wilder, until December 31, 2023 the option of eliminated; Christine A. Hill a third party to purchase a portion of the (b) competition likely would be (D.C. Bar #461048), Goodrich engine controls business substantially lessened; Soyoung Choe, related to that joint venture.1 Each of the (c) prices likely would increase, Attorneys, United States Department of products discussed in the Complaint contractual terms likely would be less Justice, Antitrust Division, 450 Fifth Street and the proposed transaction’s potential favorable to the customers, and NW., Suite 8700, Washington, DC 20530, anticompetitive effects on each relevant innovation likely would decrease. (202) 307–0922. product market are discussed in turn 96. Unless enjoined, the proposed Dated: July 26, 2012. below. acquisition likely would have the The United States and Defendants following anticompetitive effects United States District Court For the District of Columbia have stipulated that the proposed Final relating to aircraft turbine engines, Judgment may be entered after among others: United States Of America Plaintiff, v. compliance with the APPA. Entry of the (a) Competition likely would be United Technologies Corporation and proposed Final Judgment would substantially lessened; Goodrich Corporation, Defendants. terminate this action, except that the (b) prices would likely increase, [Civil Action No. 1:12–cv–01230] Court would retain jurisdiction to contractual terms likely would be less Competitive Impact Statement construe, modify, or enforce the favorable to the customers, and provisions of the Final Judgment and to innovation likely would decrease. Plaintiff United States of America punish violations thereof. 97. Unless enjoined, the proposed (‘‘United States’’), pursuant to Section acquisition likely would have the 2(b) of the Antitrust Procedures and 1 Throughout its investigation of the UTC/ following anticompetitive effects Penalties Act (‘‘APPA’’ or ‘‘Tunney Goodrich acquisition, the United States has worked relating to ECSs for large aircraft turbine Act’’), 15 U.S.C. 16(b)–(h), files this closely with the European Commission and has engines, among others: Competitive Impact Statement relating obtained substantially the same remedies. The United States will continue to cooperate with the (a) Actual and potential competition to the proposed Final Judgment European Commission as appropriate in between UTC and Goodrich would be submitted for entry in this civil antitrust implementing the remedies provided in the eliminated; proceeding. proposed Final Judgment.

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II. Description of the Events Giving Rise amps (‘‘Kva’’).2 Main engine generators products cannot be employed. An to the Alleged Violations for large and small aircraft also have aircraft needs a main engine generator substantial differences in terms of and cannot operate without one. In A. The Defendants rotational speed and cooling system. addition, main engine generators for use UTC is incorporated in Delaware and Moreover, large aircraft almost always on smaller aircraft cannot be used in has its headquarters in Hartford, use alternating current (‘‘AC’’) rather large aircraft because they do not Connecticut. UTC produces a wide than direct current (‘‘DC’’), while provide sufficient output to power the range of products for the aerospace and smaller aircraft use either AC or DC. AC aircraft and have other different specifications. Further, generators for other industries, including, among other generators can produce variable frequency or constant frequency other parts of an aircraft, such as the products, aircraft generators, aircraft electrical power. APU, cannot be used on the main engine control systems and components, Designing a large main engine engine of a large aircraft because they do aircraft engines, and helicopters. UTC’s generator is generally more difficult not have the same performance main aerospace divisions are Pratt & than designing a small main engine characteristics as main engine Whitney, Hamilton Sundstrand, and generator because of the need to operate generators. Sikorsky. In 2010, UTC had revenues of large generators efficiently at high A small but significant increase in the approximately $54 billion. rotational speeds. This requires a more price of large main engine generators Goodrich is incorporated in New York complex cooling system to deal with the would not cause customers of those and has its headquarters in Charlotte, friction created by a heavier rotor generators to substitute a smaller North Carolina. Goodrich manufactures operating at faster speeds. Small generator, a generator for an APU, or a variety of products for the aerospace generators, generating 30 to 45Kva or any other product, or to reduce industry, including, among other less, are cooled sufficiently by air purchases of large main engine products, aircraft generators, aircraft circulated within the generator generators, in volumes sufficient to engine control systems and components, chamber. Large generators, however, make such a price increase unprofitable. landing gear, and actuation systems. In require a system of tubing and gears to Accordingly, the development, 2010, Goodrich had revenues of deliver mists of oil around the rotor to manufacture, and sale of large main approximately $7.2 billion. avoid over-heating. Oil-cooling systems engine generators is a line of commerce are more complex and challenging to and relevant market within the meaning B. The Competitive Effects of the design. of Section 7 of the Clayton Act. Acquisition in the Market for Large The need for a heavier rotor and a Main Engine Generators more complex cooling system also 2. Relevant Geographic Market makes it difficult to minimize the size Aircraft manufacturers purchase large An aircraft electrical generator is a and weight of a large main engine main engine generators primarily from device that converts some of the generator. Therefore, such generators are companies located in the United States mechanical energy created by an aircraft designed to more demanding or Europe. However, suppliers typically engine into electrical power used by specifications than small main engine offer a worldwide organization to communication and navigation generators. Design engineering staffs support the provision of maintenance equipment, environmental control must be familiar with the more and repair services. Customers do not systems, interior and exterior lighting, demanding requirements of large main consider transportation costs, a small and other aircraft systems. As the engine engine generators. proportion of the cost of the finished turns, it rotates a shaft connected to the While multiple smaller generators aircraft, to be a significant cost driver. generator, which by electromagnetic could produce the same total power Accordingly, the world is the relevant induction converts some of the output as a single large main engine geographic market within the meaning mechanical energy into electrical power. generator, multiple generators would of Section 7 of the Clayton Act. Electricity flows into the primary weigh more, consume more space, electrical distribution system, which require more connections to the 3. Anticompetitive Effects routes it through the aircraft to the electrical distribution system and the UTC’s proposed acquisition of lighting bus, environmental control gearbox, and be more costly than a Goodrich likely would lessen systems, and other systems requiring single generator. Weight and space, in competition substantially in the market electric power. particular, are important factors in for the development, manufacture, and generator selection and likely would Aircraft electrical power generation is sale of large main engine generators. dissuade a customer from approving a quite complex. Because aircraft engines UTC and Goodrich are the only multiple-generator design. change speed according to the rate of significant competitors for large main Generators used in auxiliary power engine generators. For the past twelve acceleration or deceleration, air density, units (‘‘APUs’’) cannot be used in place and angle of flight, the shaft connected years, either UTC or Goodrich has won of large main engine generators. APU every competition for large main engine to the generator will rotate at higher or generators are designed to perform a lower rates. This variability must be generators. Indeed, UTC and Goodrich function different from main engine were the top two bidders in almost taken into account by the generator, generators and, therefore, differ in which must deliver a steady level of every one of those competitions. The mechanical design, electrical design, firms have been each other’s closest power to the aircraft systems. and cooling technique. competitors based on technical and Large aircraft (which include 1. Relevant Product Market commercial considerations. commercial aircraft seating 100 or more The bidding behaviors of UTC and Large main engine generators have passengers) generally require much Goodrich often have been constrained specific applications, for which other more electrical power than smaller by the possibility of losing sales of large aircraft. Main engine generators for large 2 main engine generators to the other. aircraft generally have power output Hereinafter, main engine generators with outputs of 75Kva or more will be referred to as Each firm has often considered the other above approximately 75 thousand volt- ‘‘large main engine generators.’’ company’s offering when planning bids

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and research and development 4. Difficulty of Entry making a main engine generator for a activities. Sufficient, timely entry of additional smaller aircraft or an APU generator Customers have benefited from the competitors into the market for large proportionately larger, but must instead competition between UTC and Goodrich main engine generators is unlikely. completely redesign the generator. Further, substantial time and for sales of large main engine generators Therefore, entry or the threat of entry significant financial investment would by receiving lower prices, more into this market would not prevent the be required for a company to design and favorable contractual terms, more harm to competition caused by the develop a large main engine generator. innovative products, and shorter elimination of Goodrich as a supplier of Even companies that already make other delivery times. The combination of UTC these products. types of generators, or that already are and Goodrich would eliminate this Firms attempting to enter into the attempting to develop a large main competition and its future benefits to market for the development, engine generator, would require up to customers. Post-acquisition, UTC likely manufacture, and sale of large main five years or more and an investment of would have the incentive and the ability engine generators face several barriers to over $50 million to develop a product profitably to increase prices and reduce entry. Main engine generators perform that is competitive with those offered by innovation. critical functions on the aircraft and UTC and Goodrich invest UTC and Goodrich. likely will be used throughout the life As a result of these barriers, entry into significantly to remain the two leading of the aircraft program, which may be suppliers of large main engine the market for large main engine twenty or thirty years. As a result, generators would not be timely, likely, generators in the future, and customers aircraft manufacturers are reluctant to expect them to maintain these positions. or sufficient to defeat the substantial purchase a product from a supplier not lessening of competition that likely Future product development for large already known for its expertise in large main engine generators would benefit would result from UTC’s acquisition of main engine generators. A manufacturer Goodrich. from vigorous innovation competition must be able to demonstrate that its between UTC and Goodrich. large main engine generator meets the C. The Competitive Effects of the Other companies that have some necessary specifications and need for Acquisition in the Market for Aircraft capability to develop large main engine reliability. While some companies may Turbine Engines generators are not close competitors to have demonstrated experience in other Most modern commercial, business, UTC and Goodrich. For example, no types of generators, such experience is and military aircraft are powered by other company has an installed base of not considered by customers to be as turbine engines. These engines operate large main engine generators. Any other relevant as experience specifically in by burning a fuel-and-air mixture in a firm would need substantial time and large main generators. combustion chamber, with the resulting expense to achieve UTC’s or Goodrich’s UTC and Goodrich emphasize to combustion products turning a propeller record of experience, flight time, and customers their prior experience in large blade on a turboprop engine, a rotor reliability. UTC’s and Goodrich’s main engine generators to demonstrate shaft on a turboshaft engine, or a fan in installed base of large main engine reliability. Moreover, this experience front of a turbofan engine. Turbofan generators also provides them the ability allows them to develop a new large engines power most commercial to develop new large main engine main engine generator at an initial transport aircraft, business jets, and generators more efficiently and at a development cost lower than that of many military aircraft. Generally, large lower cost than other companies. companies that do not already have commercial aircraft, regional jets, and Companies that manufacture main similar generators in operation. They military aircraft use the most powerful engine generators for small aircraft do also are able to demonstrate the turbofan engines, while business jets not compete effectively with UTC and technical and financial ability use turbofan engines of lower power. Goodrich for large main engine successfully to manage production, The power delivered by a turbofan generators because those companies’ aftermarket service, and warranty work engine is measured in terms of pounds experiences with main engine for large main engine generators, which of thrust (‘‘pounds thrust’’), and such generators for smaller aircraft do not companies trying to enter this market engines are generally categorized by provide them the ability to design and would not be able to do. their thrust class. Turboprop engines manufacture large main engine Developing a large main engine primarily are used to power smaller generators, which are more complicated generator is technically difficult. aircraft, such as commuter aircraft. products. Similarly, companies that Manufacturers of main engine Turboshaft engines power helicopters. make generators for APUs do not generators for smaller aircraft or The power delivered by turboprop and compete effectively with UTC and generators for other parts of the aircraft, turboshaft engines is measured in terms Goodrich for large main engine such as APUs, face significant technical of shaft horsepower (shp). generators because those companies’ hurdles in designing and developing Due to their complexity and the experiences with APU generators do not large main engine generators. Large degree of expertise and skill required for provide them the ability to design and main engine generators present unique their development, and production, few manufacture large main engine technical challenges relating to the companies produce aircraft turbine generators, which again are more preservation of power quality at speeds engines of any kind. Aircraft turbine complicated products. much higher than those reached in main engines typically continue in service for The proposed acquisition, therefore, engine generators for smaller aircraft decades and require regular likely would substantially lessen and generators for APUs. Large main maintenance, repair, and overhaul. competition for the development, engine generators also generate higher When selecting an engine, customers manufacture, and sale of large main current levels than other generators, and take into account the difficulty and cost engine generators. This likely would require an oil cooling system. of servicing the engine, including the lead to higher prices, less favorable Manufacturers of main engine engine control system (‘‘ECS’’) on the contractual terms, and less innovation generators for smaller aircraft and APU engine. Engines that require more in violation of Section 7 of the Clayton generators cannot design and produce a frequent servicing or are otherwise more Act. large main engine generator simply by difficult or costly to own and operate

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are less attractive to customers and joint venture agreement requires Rolls- Similarly, the proposed acquisition of therefore less competitive. There are Royce to purchase all of its ECSs for Goodrich by UTC would affect only three main producers of aircraft engines of over 4000 pounds thrust or competition in each small aircraft turbine engines of greater than 10,000 2000 shp from AEC. Therefore, there are turbine engine market in the same pounds thrust. (Hereinafter the term no alternative suppliers of ECSs for manner. It is therefore also appropriate ‘‘large aircraft turbine engines’’ will Rolls-Royce large aircraft turbine to aggregate small aircraft turbine engine refer to engines of this thrust range.) engines. markets for purposes of analyzing the UTC, through its Pratt & Whitney The AEC joint venture agreement effects of the acquisition. subsidiary, and Rolls-Royce Group plc gives Goodrich the exclusive right to b. ECSs for Aircraft Turbine Engines (‘‘Rolls-Royce’’) are two of these three provide replacement parts and producers. UTC manufactures turbine undertake maintenance, repair, and All aircraft turbine engines require an engines of up to 90,000 pounds thrust, overhaul of ECSs for Rolls-Royce large ECS in order to operate properly. No while Rolls-Royce manufactures turbine aircraft turbine engines. Because the aircraft engine can be sold or operated engines of up to 97,000 pounds thrust. volume of commerce for aftermarket without an ECS. There are no other There are only a few producers of service of any given ECS is quite small, products that perform the functions of aircraft turbine engines of 10,000 there are no secondary suppliers for ECS an ECS in receiving and analyzing data pounds thrust or less. (Hereinafter the replacement parts or service. from sensors and pilot controls, term ‘‘small aircraft turbine engines’’ Aftermarket parts and service for ECSs calculating the optimal flow rate of fuel will refer to engines of this thrust must be provided by the original ECS into the engine combustion chamber, range.) UTC, through its Pratt & Whitney manufacturer or a reseller designated by and feeding the proper amount of fuel subsidiary, is one of these producers. that manufacturer. Therefore, it would into the engine combustion chamber. It is critical that fuel be fed into not be possible for purchasers of these Each ECS is designed to work on a aircraft turbine engines in a precise Rolls-Royce engines to obtain parts or specific engine, and one ECS cannot be manner, so that the engine responds to service for these ECSs from any supplier substituted for an ECS on another the pilot’s instructions in the most other than Goodrich. engine. Therefore, a small but efficient manner possible. The system significant increase in the price of the that accomplishes this is the ECS. The 1. Relevant Product Markets ECS designed for a particular engine core of the ECS is a computer, usually a. Aircraft Turbine Engines would not cause enough purchases to be called an electronic engine control, or shifted to a different ECS so as to make EEC, that receives information from To a large extent, each aircraft such a price increase unprofitable. multiple sensors in the engine and from platform is limited in the type and size Accordingly, the development, the pilot’s controls, and calculates the of engine with which it may be manufacture, sale, and aftermarket amount of fuel to be sent to the engine. powered. The choice of a turbofan, service of the ECS for each aircraft The ECS also includes the engine’s main turboprop, or turboshaft engine is turbine engine is a line of commerce fuel pump and a fuel metering unit, or dictated by aircraft type, range and and relevant product market within the FMU, which controls the amount of fuel speed, and is specified by the meaning of Section 7 of the Clayton Act. coming into the engine from the main manufacturer. The engine must provide Although the ECS required for each fuel pump. the amount of power needed for that particular engine thus may be deemed a In virtually all modern aircraft turbine particular aircraft to perform properly separate product market, the AEC joint engines, the EEC within the ECS is a and safely, while at the same time being venture agreement requires Rolls-Royce full-authority digital engine control, or as light as possible. Thus, only a limited to purchase all ECSs for large aircraft FADEC. The FADEC consists of range of engine sizes is considered for turbine engines from AEC and grants hardware and two types of software: the any particular aircraft. exclusive aftermarket rights to such operating system and the application For any given aircraft, a small but ECSs to Goodrich. Thus the proposed software. The operating system is significant increase in the price of an acquisition would affect competition in provided by the FADEC supplier. The aircraft turbine engine of the required each such market in the same manner. application software contains sensitive type and thrust would not cause It is therefore appropriate to aggregate performance data relating to the sufficient purchases of such engines to the markets for ECSs for large aircraft particular engine and is usually be shifted to engines of a different type turbine engines for purposes of provided by the engine manufacturer, or significantly higher or lower thrust so analyzing the effects of the acquisition. although in some cases the ECS supplier as to make such a price increase The proposed acquisition would have provides this software. unprofitable. Accordingly, the the same effect in each market for ECSs An ECS, including the FADEC, is development, manufacture, and sale of for small aircraft turbine engines. It is designed and developed to meet the the turbine engine required for each therefore appropriate to aggregate the specific performance requirements of type of aircraft is a line of commerce markets for ECSs for small aircraft the particular engine on which it will be and a relevant product market within turbine engines for purposes of installed. As a result, the ECS supplier the meaning of Section 7 of the Clayton analyzing the effects of the acquisition. has insight into the design and cost of Act. not only its ECS, but also the customer’s Although the engine required for each 2. Relevant Geographic Market engine. ECS suppliers that provide the such aircraft thus may be deemed a Aircraft manufacturers purchase application software also have access to separate product market, in each such aircraft turbine engines and the ECSs for competitively sensitive confidential market there are few competitors. The those engines primarily from companies business information about the fuel proposed acquisition of Goodrich by located in the United States or Europe. efficiency and performance principles UTC would affect competition in each However, suppliers typically offer a around which the customer’s engine is large aircraft turbine engine market in worldwide organization to support the designed. the same manner. It is therefore provision of maintenance and repair In 2008, Goodrich and Rolls-Royce appropriate to aggregate large aircraft services. Customers do not consider formed Aero Engine Controls (‘‘AEC’’), a turbine engine markets for purposes of transportation costs, a small proportion joint venture to produce ECSs. The AEC analyzing the effects of the acquisition. of the cost of the finished aircraft, to be

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a significant cost driver. Accordingly, competition and gain the ability to raise schedule required by their customers. the world is the relevant geographic prices or reduce quality. Such customers likely would have to market within the meaning of Section 7 In addition, because AEC produces turn to a different engine supplier. In of the Clayton Act. the ECSs for Rolls-Royce engines, AEC such circumstances, UTC might be the has accurate information concerning the best-positioned alternative engine 3. Anticompetitive Effects cost of the ECS and each of the ECS supplier. As a result, customers that a. Large Aircraft Turbine Engines components used on each Rolls-Royce would otherwise choose a competing engine covered by the AEC agreement. engine could be forced to purchase an As discussed above, there are only Moreover, because AEC provides the engine from UTC. three primary competitors in the application software for the FADECs for The sale of small aircraft turbine markets for the development, these Rolls-Royce engines, it has access engines provides much more revenue manufacture, and sale of large aircraft to competitively-sensitive confidential and profit than the sale of ECSs for turbine engines. UTC, through its Pratt business information concerning the those engines. Therefore, if UTC were & Whitney subsidiary, and Rolls-Royce engine itself, including the fuel able to gain additional engine sales by are two of those competitors. Goodrich efficiency and performance principles withholding or delaying delivery of is a partner in AEC, from which Rolls- around which each engine is designed. ECSs to its engine competitors, the Royce must obtain its ECSs for most Following the acquisition of Goodrich additional engine sales would result in such engines. If UTC were to purchase and its share of AEC, UTC would have considerably more revenue and profit to Goodrich, and thus Goodrich’s share of the incentive and ability to use this UTC than the revenue and profit lost AEC, UTC would be both a producer of information to its advantage in bidding from any decrease in sales of such ECSs. large aircraft turbine engines and the on large aircraft turbine engines. For UTC’s acquisition of Goodrich sole-source supplier of ECSs to one of example, such information would reveal therefore would give UTC both the its leading engine competitors. to UTC when it could offer higher ability and the incentive to make its pricing or less innovative solutions competitors unable to compete After the acquisition UTC, through its without risk of losing a large aircraft effectively to supply small aircraft position as a partner in the AEC joint turbine engine sale. turbine engines. If UTC were to make its venture, would have the incentive and Therefore, UTC’s acquisition of competitors unable to compete ability to cause AEC to withhold or Goodrich would give UTC both the effectively in the development, delay delivery of ECSs to its competitor ability and the incentive to reduce the manufacture, and sale of small aircraft Rolls-Royce, resulting in the inability of competitiveness of Rolls-Royce in the turbine engines, customers for those Rolls-Royce to deliver engines on the supply of large aircraft turbine engines. engines would have significantly fewer schedule required by customers. In If UTC were to reduce the choices, and competition would be addition, after the acquisition UTC, competitiveness of Rolls-Royce in the lessened substantially. through its position as the exclusive markets for these engines, customers for 4. Difficulty of Entry supplier of aftermarket parts and those engines would have significantly services for ECSs on Rolls-Royce large fewer choices, and competition thus Sufficient, timely entry of additional aircraft turbine engines, would have the would be lessened substantially. competitors into the markets for aircraft incentive and ability to raise the costs turbine engines is unlikely to prevent of such parts and services, or to reduce b. Small Aircraft Turbine Engines the harm to competition in the markets the availability of such parts and As discussed above, UTC, through its for aircraft turbine engines that is likely services, making Rolls-Royce a less Pratt & Whitney subsidiary, is one of a to occur as a result of the proposed reliable supplier of large aircraft turbine small number of significant competitors acquisition. Entry of any new engines. Such strategies to raise Rolls- in the markets for the development, competitor into the manufacture and Royce’s costs and reduce its reliability manufacture, and sale of small aircraft sale of aircraft turbine engines is would be profitable to UTC post-merger turbine engines. Several of UTC’s unlikely and cannot happen in a time because the sale of large aircraft turbine competitors purchase the ECSs for period that would prevent significant engines provides much more revenue certain of their small aircraft turbine competitive harm. The primary and profit than the sale of ECSs or the engines from Goodrich. Therefore, if purchasers of aircraft turbine engines aftermarket service of ECSs for those UTC were to purchase Goodrich, UTC are aircraft manufacturers, of which engines. Therefore, if UTC were able to would be both a producer of small there are very few in the world. Aircraft gain additional engine sales by causing aircraft turbine engines and a supplier manufacturers are extremely hesitant to AEC to withhold or delay delivery of of ECSs to its competitors. purchase components from unproven ECSs for Rolls-Royce engines, or by At least three years are required to sources, particularly such major increasing the cost or difficulty of design and develop an ECS for a small components as engines. A firm seeking obtaining aftermarket service on such aircraft turbine engine. Therefore, if an to enter this business would need many ECSs, the additional engine sales would engine manufacturer must replace the years and an enormous financial result in considerably more revenue and supplier of the ECS on a specific engine, investment to design and develop a new profit to UTC than the revenue and at least three years will pass before the aircraft turbine engine. No firm has profit lost from any decrease in sales of engine manufacturer can deliver an successfully entered this business in or aftermarket service on such ECSs. engine with a replacement ECS. Aircraft decades. These actions by UTC likely would manufacturers often demand delivery of Such entry is unlikely to occur in a harm purchasers of large aircraft turbine an engine in less than three years. timeframe sufficient to prevent engines because UTC and Rolls-Royce If, after the acquisition, UTC were to competitive harm. Engine purchasers have been, and likely will continue to withhold or delay delivery of Goodrich typically expect delivery of the first be, in some competitions the two best- ECSs to companies that compete with engine for a new aircraft from one to positioned suppliers of large aircraft UTC for the development, manufacture, five years after contract award. A new turbine engines. By making Rolls-Royce and sale of small aircraft turbine entrant into any market for aircraft unable to deliver engines or by raising engines, those companies might be turbine engines, even a firm already its costs, UTC may substantially affect unable to deliver engines on the manufacturing other aircraft turbine

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engines, would require much more time suppliers typically offer a worldwide competing with Rolls-Royce to to develop and market a new engine. organization to support the provision of independently develop innovative and As a result of these barriers, entry into maintenance and repair services. ECS cost-effective ECS solutions. the markets for aircraft turbine engines customers do not consider Competition for ECSs for large aircraft would not be timely, likely, or sufficient transportation costs, a small proportion turbine engines thus would be lessened to defeat the substantial lessening of of the cost of the finished aircraft, to be substantially, as engine customers competition that is likely to result from a significant cost driver. Accordingly, would be offered two engines from UTC UTC’s acquisition of Goodrich. the world is the relevant geographic and Rolls-Royce, but only a single ECS. market within the meaning of Section 7 D. The Competitive Effects of the This loss of competition would result in of the Clayton Act. Acquisition in the Market for Engine less innovative and cost-effective ECSs Control Systems for Large Aircraft 3. Anticompetitive Effects for large aircraft turbine engines. Turbine Engines UTC’s proposed acquisition of 4. Difficulty of Entry The ECS in a large aircraft turbine Goodrich likely would lessen Sufficient, timely entry of additional engine is a major determinant of key competition substantially in the market competitors into the market for ECSs for engine performance parameters for ECSs for large aircraft turbine large aircraft turbine engines is unlikely. including fuel economy, safe operation, engines. UTC and AEC are two of the Therefore, entry or the threat of entry and thrust in different situations. In three producers of such ECSs. If UTC into this market would not prevent the order to maximize engine performance, were to purchase Goodrich and thus harm to competition caused by UTC’s the ECS must be closely integrated with Goodrich’s share of AEC, UTC would acquisition of Goodrich and its share of the engine during both the design stage control fifty percent of one of its two AEC. and the assembly process. Changes in an leading competitors for such ECSs. A firm seeking to enter this market Although an ECS for a large aircraft engine design can necessitate changes in would need substantial time and a turbine engine is generally purchased by an ECS design, and vice versa. As a significant financial investment to an engine builder from its preferred result, large aircraft turbine engines and design and develop a new ECS for a the ECSs for those engines are not sold supplier, independent source selections can and do take place. For example, an large aircraft turbine engine. Even those separately to engine purchasers. It firms that produce ECSs for smaller would not be practical for even the most aircraft manufacturer may purchase a replacement ECS from an ECS engines would need at least five years sophisticated engine purchasers to and an investment of $50 million or integrate an ECS and an engine. All manufacturer other than its preferred supplier to upgrade the ECS on an more to develop an ECS for a large large aircraft turbine engines are sold aircraft turbine engine that is with an ECS installed by the ECS engine already in service. This occurs when an existing ECS becomes difficult competitive with those produced today producer and the engine manufacturer. by UTC and AEC. In large part because of the highly to repair due to parts obsolescence Moreover, a firm attempting to enter integrated nature of engines and ECSs, issues. In addition, engine this market would be unlikely to obtain each of the three major producers of manufacturers occasionally form teams sufficient sales to be economically large aircraft turbine engines has a to compete for new large aircraft turbine viable. Because most of these products preferred supplier for the ECSs used on engine projects. In either of these are purchased by the three primary its engines. Each engine manufacturer situations, an ECS supplier may be engine manufacturers from their purchases the great majority of the ECSs selected by competition rather than on existing preferred suppliers, a new used on its engines from its preferred the basis of an existing preferred entrant would have few opportunities to supplier. supplier arrangement. After the Because of these preferred supplier acquisition UTC, through its position as recover the considerable investment relationships, there are only three a partner in the AEC joint venture, required to develop a new ECS for large significant suppliers of ECSs for large would have the incentive and ability to aircraft turbine engines. Independent aircraft turbine engines, one for each impede AEC’s pursuit of such projects competitions are unlikely to occur with engine producer. UTC and AEC, the in competition with UTC. Competition sufficient frequency to permit an entrant Goodrich-Rolls-Royce joint venture, are for ECSs for large aircraft turbine to recover its costs. two of the three suppliers. UTC, through engines would thus be lessened As a result of these barriers, entry into its Hamilton Sundstrand subsidiary, substantially. the market for ECSs for large aircraft supplies the ECSs used on most of its Competition also could be turbine engines would not be timely, own engines. AEC supplies the ECSs substantially lessened in other ways. likely, or sufficient to defeat the used on most Rolls-Royce engines. UTC, through its Pratt & Whitney substantial lessening of competition that subsidiary, and Rolls-Royce are two of likely would result from UTC’s 1. Relevant Product Market the world’s three primary manufacturers acquisition of Goodrich. of large aircraft turbine engines. The As discussed in Paragraph II(C)(1)(a) III. Explanation of the Proposed Final companies conduct independent work of this Competitive Impact Statement, Judgment the development, manufacture, sale, and into the research, development and aftermarket service of the ECS for large design of new ECSs for such engines, The divestitures required by the aircraft turbine engines is a line of UTC through its Hamilton Sundstrand proposed Final Judgment will eliminate commerce and relevant product market subsidiary and Rolls-Royce through the anticompetitive effects that likely within the meaning of Section 7 of the AEC. After UTC acquires Goodrich, UTC would result from UTC’s acquisition of Clayton Act. and Rolls-Royce would share control of Goodrich. These divestitures will AEC, and UTC has explored using AEC preserve the current state of competition 2. Relevant Geographic Market as a vehicle to combine its ECS business in the development, manufacture, and Aircraft manufacturers purchase ECSs with that of Rolls-Royce, to share sale of large main engine generators, for large aircraft turbine engines intellectual property and research and aircraft turbine engines, and engine primarily from companies located in the development results, and to eliminate control systems for large aircraft turbine United States or Europe. However, some product lines, rather than engines.

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A. Divestitures property that is used exclusively for electrical distribution systems engine control products and a similar, (hereinafter, the ‘‘Electrical Power 1. Engine Controls but non-exclusive, license for such Divestiture Assets,’’ defined in Section a. Divestiture Assets intellectual property that is used II(Q) of the proposed Final Judgment). The proposed Final Judgment requires primarily, but not exclusively, for The tangible assets to be divested UTC to divest all of the Goodrich assets engine control products. These licenses include Goodrich’s facilities in Pitstone, that are used to design, develop, and will further ensure that the acquirer has Buckinghamshire in the United manufacture engine control products for the assets it needs to be a viable Kingdom 7 and in Twinsburg, Ohio. The small engines, such as electronic engine competitor in the engine controls tangible assets to be divested also controls, fuel metering units, and main systems business. include manufacturing equipment, tooling, fixed assets, personal property, fuel pumps (hereinafter, the ‘‘Engine b. Divestiture Timing Controls Divestiture Assets,’’ defined in inventory, materials, licenses, permits, Section II(M) of the proposed Final In antitrust cases involving mergers in authorizations, agreements, contracts, Judgment).3 The assets to be divested which the United States seeks a customer lists, and repair, performance include Goodrich’s manufacturing divestiture remedy, the United States and other records. The intangible assets facility located in West Hartford, generally requires that divestitures take to be divested include patents, licenses, Connecticut, and all tangible and place within the shortest time period sublicenses, technical information, intangible assets used by or located in reasonable under the circumstances. A intellectual property, know-how, trade that facility. The assets to be divested quick divestiture has the benefits of secrets, designs, design protocols, also include the assets used by or restoring competition lost because of the research data concerning historic and located in Goodrich’s facility in acquisition and reducing the possibility current research and development Montreal, Canada, for engine control of dissipation of the value of the assets. efforts, design tools, and simulation products for small engines.4 The Paragraph IV(A) requires UTC to divest capability.8 This divestiture will divestiture assets include all assets used the Engine Control Divestiture Assets as provide the acquirer with the assets it for maintenance, repair, and overhaul a viable ongoing business within one needs to successfully develop, (‘‘MRO’’) services that are performed at hundred eighty days after the Complaint manufacture, and sell aircraft electrical the West Hartford facility and the assets is filed, or five days after notice of the generation and electrical distribution used for MRO services for small engines entry of the Final Judgment by the systems.9 that are performed at the Goodrich Court. In addition, the proposed Final Montreal facility.5 The divestiture assets This divestiture period is longer than Judgment requires that UTC divest all of exclude assets relating to MRO services those often found in antitrust consent its shares in the Aerolec joint venture, at other Goodrich facilities that are not decrees, but is warranted in this case. as defined in Paragraph II(T). The being divested.6 The divestiture of the The Engine Control Divestiture Assets acquirer of the Aerolec shares and the Engine Controls Divestiture Assets will do not currently comprise a separate, acquirer of the Electrical Power provide the acquirer with all the assets stand-alone business, making their Divestiture Assets must be the same, it needs to successfully develop, separation from the remainder of 7 manufacture, and sell engine control Goodrich more difficult than would The Pitstone facility also houses Goodrich’s otherwise be the case. Also, the Engine motor drives business. The motor drives are products. unrelated to electrical power generation and In addition, to address intellectual Controls Divestiture Assets include distribution and are not complementary products. property that Goodrich is unable to assets that are currently in the process In addition, the inclusion of the motor drives transfer outright, Paragraphs II(M)(5) of being relocated from Goodrich’s business is not necessary to ensure the viability of facility in Montreal to the West Hartford the Pitstone facility and the electrical power and (6) include as a part of the Engine divestiture assets. The physical assets associated Controls Divestiture Assets an facility, which will take a few months with the motor drives business are minimal and exclusive, irrevocable, royalty-free to complete. In addition, in the easily removed from the Pitstone facility. Further, license for Goodrich intellectual particular circumstances of this case any equipment shared by the two businesses will and given the large number of complex remain at the Pitstone facility. Therefore, the motor drives business is not included in the divestiture 3 The divestiture assets also include ancillary and critical products produced by the assets and is required to be removed from the engine control products such as engine actuators divested business, due diligence by the Pitstone facility prior to the divestiture of the and various pumps and valves that are currently acquirer of the divestiture assets is Electrical Power Divestiture Assets. manufactured at the facilities being divested. The likely to be a lengthy process. The 8 The Electrical Power Divestiture Assets also divestiture of these product lines is necessary to include Goodrich’s obligations to provide warranty ensure the continued viability of the West Hartford proposed Final Judgment allows this services to BAE Systems on a torpedo program and facility and the overall viability of the assets. divestiture period to be extended until all assets necessary to fulfill those obligations. This 4 Goodrich is in the process of closing its ten calendar days after the receipt of any program is not related to electrical generation and Montreal facility and transitioning the assets to governmental approvals, including distribution systems. However, this program has various other Goodrich facilities. Goodrich is been manufactured and serviced from the Pitstone transitioning the assets relating to engine control those from authorities outside the facility for several years and it would be disruptive products for small engines to the West Hartford United States, that are required by the to remove the services from the Pitstone facility. facility and those assets are included in the acquirer as a condition of closing. UTC 9 The Electrical Power Divestiture Assets exclude divestiture assets. and Goodrich must use their best efforts Goodrich’s assets in and personnel operating out of 5 The divestiture assets specifically exclude those to seek all necessary approvals as Goodrich’s development center in Bengaluru, India, assets relating to MRO services for several large and Goodrich’s facilities that provide customer engines currently performed at the Montreal facility expeditiously as possible. support for Goodrich’s aircraft electrical generation because those services are not related to the small systems and electrical distribution systems engine control products being divested. 2. Aircraft Electrical Generation products, other than the facilities in Pitstone and 6 The assets relating to MRO services performed a. Divestiture Assets Twinsburg. These facilities provide some services at Goodrich facilities that are not being divested are to the divested business. However, these services excluded because most of the MRO services for The proposed Final Judgment requires are minor and can be replicated by the acquirer of engine control products for small engines are UTC to divest the Goodrich assets used the divested assets. In addition, as discussed more performed at the West Hartford facility. In addition, fully below, a transition services agreement will as discussed more fully below, a transition services to design, develop, manufacture, provide the acquirer any engineering or agreement will provide the acquirer any MRO market, service, distribute, repair and/or maintenance, repair, and overhaul services it needs services it needs for a period of up to two years. sell aircraft electrical generation and for a period of up to two years.

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unless Thales acquires the Aerolec Thales has two options by which it may In the unlikely event that Goodrich’s shares. This provision is necessary to purchase the Aerolec shares—a change shares in AEC are not divested to Rolls- avoid a situation in which the interests of control option, which would allow Royce, Paragraph VI(B) of the proposed of the acquirer of the Aerolec shares Thales to purchase the Aerolec shares Final Judgment requires the divestiture potentially are not aligned with the once the UTC/Goodrich merger is of the shares to another acquirer within interests of the acquirer of the Electrical consummated, and a transfer option, by one hundred eighty days after the date Power Divestiture Assets, especially which Thales has the right to purchase that Rolls-Royce waives its option to because the acquirer of the Electrical the Aerolec shares once Goodrich has acquire the shares or its option expires. Power Divestiture Assets would be selected a potential third-party acquirer While it is unlikely that Rolls-Royce performing the majority of the work and agreed on a price. will not purchase Goodrich’s AEC within the Aerolec joint venture. The timing of the divestiture of the shares,10 this provision ensures that Further, Paragraph II(Q)(5) ensures Aerolec shares will vary depending on Goodrich’s AEC shares will be divested that any rights to intellectual property whether Thales exercises these options. even if the sale to Rolls-Royce does not and know-how that Goodrich has The divestiture periods for the Aerolec go through. The one hundred eighty-day pursuant to a certain agreement with shares, provided in Paragraphs V(C), divestiture period provides sufficient Thales relating to the Aerolec joint (D), and (E), are designed to require the time for operation of the procedures venture will be divested to the acquirer divestiture of the Aerolec shares as soon established by the AEC joint venture of the Engine Control Divestiture Assets as possible while taking into account agreement for the sale of Goodrich’s and will not remain with Goodrich. the contractually permitted time periods shares to a third party. for Thales to exercise its various rights. b. Divestiture Timing When Goodrich is required to select a B. Other Provisions Paragraph V(A) of the proposed Final potential third-party acquirer of the 1. Transition Services Agreements Judgment requires UTC to divest the Aerolec shares prior to Thales Electrical Power Divestiture Assets Because the acquirer will be exercising its rights, the divestiture purchasing equipment and other assets within one hundred eighty days after period includes time for UTC to reach the Complaint is filed, or five days after that must be integrated into its existing a deal with the acquirer of the Electrical operations, it may need the assistance of notice of the entry of the Final Judgment Power Divestiture Assets and have the by the Court. This divestiture period is the former Goodrich employees to acquirer approved by the United States. enable the acquirer to supply the warranted by the specific circumstances Paragraph V(E) addresses the situation related to these assets. The divestiture of divested engine controls systems, where Thales does not exercise any of aircraft electrical generation and the Electrical Power Divestiture Assets its options to purchase the Aerolec is likely to take up to six months electrical distribution systems, and shares. The proposed Final Judgment other products produced with the because Defendants must move the provides time for Defendants to comply motor drives business from the Pitstone divested assets as seamlessly as with additional procedures required by possible. Therefore, Paragraphs IV(H) facility prior to the divestiture. In the Aerolec shareholders agreement addition to the time necessary to locate and V(L) of the proposed Final relating to the sale of the shares to a Judgment require that, at the option of suitable space near the Pitstone facility third party. and to transition the business, it is the acquirer, UTC enter into transition necessary to replace one piece of testing 3. AEC Shares services agreements by which UTC will equipment at the Pitstone facility that Paragraph VI(A) of the proposed Final provide technical and engineering currently is shared between the motor Judgment requires the divestiture to assistance, and maintenance, repair, and drives business and the Electrical Power Rolls-Royce of Goodrich’s shares in the overhaul services to the acquirer for up Divestiture Assets. Although this AEC joint venture, defined in Paragraph to one year, with the possibility of a equipment will remain at the Pitstone II(Y), within one hundred eighty days one-year extension upon approval by facility, the motor drives business will after the filing of the Complaint, or five the United States. These transition services agreements need new equipment once the business days after the notice of entry of the Final do not raise competitive concerns under is removed from the Pitstone facility. Judgment. The divestiture of Goodrich’s The proposed Final Judgment allows the AEC shares will prevent UTC from the circumstances of this particular divestiture period to be extended until jointly developing engine control case. The agreements are limited in ten calendar days after the receipt of any systems with Rolls-Royce through the duration to one year, plus the governmental approvals that are AEC joint venture or from opportunity for a one-year extension. required by the acquirer as a condition disadvantaging Rolls-Royce in future Also, the supply of these services from of closing. UTC and Goodrich must use competitions for large aircraft turbine UTC to the acquirer is unlikely to their best efforts to seek all necessary engines. The one hundred eighty-day provide UTC any competitive insight approvals as expeditiously as possible. divestiture period provides sufficient into the operations of the acquirer, and Pursuant to Paragraph V(S), UTC must time for Rolls-Royce to complete the therefore will not harm competition. divest the Aerolec shares either to the process of acquiring Goodrich’s shares 2. Supply Agreements under the procedures established in the acquirer of the Electrical Power The proposed Final Judgment AEC joint venture agreement, including Divestiture Assets or to Thales, which provides for several supply agreements time to determine the price of the AEC has various rights to purchase the shares between UTC and the acquirers of the shares. The proposed Final Judgment pursuant to the Aerolec shareholders divestiture assets, at the option of the allows the divestiture period to be agreement between Thales and party receiving the supplied product, to extended until ten calendar days after Goodrich. Due to Thales’s rights and the allow the acquirers and UTC to fulfill the receipt of any governmental time periods permitted for Thales to current contractual obligations. These approvals that are required by Rolls- exercise these rights in the Aerolec supply arrangements are necessary shareholders agreement, Defendants Royce as a condition of closing. UTC may be unable to divest the Aerolec and Goodrich must use their best efforts 10 Rolls-Royce has entered into agreements with shares at the same time as the Electrical to seek all necessary approvals as Defendants to exercise its option to purchase the Power Divestiture Assets. In particular, expeditiously as possible. AEC shares.

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because some contractual obligations agreement in Paragraph V(O) will last prior to the divestiture, unless the that will be divested to the acquirer until the underlying contract expires in contracts have been renegotiated in the require the supply of products and December 2013. meantime. Such contracts will be services from parts of Goodrich that are The proposed Final Judgment also extended until thirty days after the not being divested, while other provides for supply agreements, at divestiture of the Engine Control contractual obligations that will not be UTC’s option, whereby the acquirers of Divestiture Assets. This extension will divested require the supply of products the divestiture assets will provide UTC ensure that UTC’s turbine engine and services from the divested with certain parts and/or services for competitors have access to the necessary businesses. specified programs to enable UTC to engine control system components prior Paragraphs IV(I) and V(M) require that fulfill certain Goodrich contractual to the divestiture of the Engine Controls UTC provide each acquirer, at the obligations that will not be divested. Divestiture Assets. option of the acquirer, with any These supply agreements, described in 4. Extension of the AEC Aftermarket components that the acquirer may need Paragraphs IV(L) and V(P), are limited to Option to operate the divested assets for up to specified engines and/or engine control one year, with the possibility of an systems. Like the other supply Paragraph VI(C) of the proposed Final extension of up to one additional year agreements, each agreement is tailored Judgment requires that UTC offer Rolls- upon approval by the United States. to the particular contract that makes it Royce a new option for an additional These general components agreements necessary, and accordingly its length in period of time to purchase assets guarantee the acquirer a source for practice amounts to the life of the relating to the Goodrich aftermarket components that currently are provided program for which the parts and/or business, which services AEC products. from parts of Goodrich that are not services are required. The new option extends until the earlier being divested, and give the acquirer These supply agreements do not raise of: (1) December 31, 2023 (when the time to identify alternative sources of competitive concerns under the exclusivity period of the aftermarket supply or to manufacture the products circumstances of this particular case, as agreement between AEC and Goodrich on its own. the supply agreements are not likely to expires); or (2) the date on which UTC Paragraphs IV(J), IV(K), V(N), and provide UTC or the acquirers with any no longer owns or controls substantially V(O) provide for specific supply competitive insight into the other’s all of the Goodrich aftermarket business. agreements to each acquirer that require business. While some of these supply This provision is necessary to eliminate UTC, at the option of the acquirer, to agreements will be longer than a typical any risk that UTC could disadvantage supply certain parts, engineering supply agreement in the divestiture Rolls-Royce in its sale of engine control expertise, and/or maintenance service context, the contracts for the particular products for large aircraft turbine necessary to allow the acquirer to fulfill products being supplied have already engines by making it difficult for contractual obligations it will acquire been awarded and there is no ability to customers to obtain parts or services for from Goodrich as a part of the affect future competitions based on the those engines. This new period does not divestiture. These supply arrangements supply of components for these affect any prior agreements between and their terms are tailored to the previously awarded contracts. either of the Defendants and Rolls- particular contracts that make them Finally, Paragraphs IV(M) and V(Q) Royce and does not affect UTC’s ability necessary. Accordingly, the lengths of require that, at UTC’s option, the to sell the Goodrich aftermarket the supply agreements in Paragraphs acquirers provide UTC a non-exclusive business to a third party. However, this IV(J) and (K) in practice will amount to license for intellectual property that provision provides a specific procedure the life of the program for which the currently is used both for the products to be followed by UTC relating to its products and services are necessary.11 being divested and for other Goodrich potential sale of the Goodrich The supply agreement in Paragraph products that UTC will retain. Under aftermarket business. This procedure V(N) will last for the life of the program these provisions, UTC may not use these provides Rolls-Royce the ability to for one product and for one year for licenses for engine control products, purchase the aftermarket business, but another product, with the option of a systems, or services or for aircraft provides some limitations to ensure that one-year extension upon approval by electrical generation and electrical UTC effectively retains the ability to sell the United States.12 The supply distribution systems, respectively. UTC the Goodrich aftermarket business to a also would be prohibited from third party. 11 As an alternative to the agreement in Paragraph transferring the license, except as a part 5. Use of Divestiture Trustee IV(K), UTC is required, at the acquirer’s option, to of a sale of the business in which the provide a non-exclusive, irrevocable, royalty-free In the event that Defendants do not license to manufacture the parts necessary for the license is used. These provisions are accomplish the divestitures within the acquirer to fulfill its relevant contractual necessary to ensure that UTC has access period allotted, Section VII of the obligations. This license may be used only to to intellectual property required to run proposed Final Judgment provides that manufacture the parts necessary to fulfill the other portions of Goodrich, but prevents acquirer’s relevant contractual obligations, and the the Court will appoint a trustee selected acquirer is prohibited from transferring this license, UTC from using these licenses to by the United States to effect the except as a part of the sale of the divestiture assets. compete against the acquirers in the divestiture. This requirement to appoint This option allows the acquirer to determine respective divested businesses. whether it is more attractive to manufacture the a divestiture trustee, if necessary, will parts on its own rather than to buy the parts from 3. Contract Extensions encourage quick, effective divestitures UTC. in this matter. If a trustee is appointed, Paragraph IV(N) requires UTC to offer 12 The agreement in Paragraph V(N) is limited to the proposed Final Judgment provides to extend any contracts between the a one-year term with the option of an extension for that UTC will pay all costs and expenses one product (machined housings) because that divested engine controls business and of the trustee. The trustee’s commission product is a simple component that can be made manufacturers of aircraft turbine by the acquirer relatively quickly and easily. will be structured so as to provide an engines that are scheduled to expire Paragraph V(N) also provides an alternative similar incentive for the trustee based on the to that provided in Paragraph IV(K), except that it allows for UTC to provide the acquirer with license, because the products provided for by price and terms obtained and the speed manufacturing know-how sufficient to enable the Paragraph V(N) require only know-how to with which the divestiture is acquirer to manufacture the parts, as opposed to a manufacture. accomplished. After his or her

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appointment becomes effective, the from Goodrich. To oversee UTC’s the APPA, provided that the United trustee will file monthly reports with compliance with its obligations under States has not withdrawn its consent. the Court and the United States setting the Hold Separate, UTC is required to The APPA conditions entry upon the forth his or her efforts to accomplish the appoint, subject to the approval of the Court’s determination that the proposed divestiture. At the end of the six United States, a Hold Separate Manager Final Judgment is in the public interest. months, if the divestiture has not been for the Engine Control Divestiture The APPA provides a period of at accomplished, the trustee and the Assets and a Hold Separate Manager for least sixty days preceding the effective United States will make the Electrical Power Divestiture Assets. date of the proposed Final Judgment recommendations to the Court, which Duties of the latter include, until the within which any person may submit to shall enter such orders as are motor drives business is removed from the United States written comments appropriate to carry out the purpose of the Pitstone facility, ultimate regarding the proposed Final Judgment. the trust, including extending the trust responsibility for resolving conflicting Any person who wishes to comment or the term of the trustee’s appointment. demands for shared resources between should do so within sixty days of the the motor drives business and the date of publication of this Competitive 6. Use of Monitoring Trustee business of the Electrical Power Impact Statement in the Federal Section XI provides that the United Divestiture Assets. This provision will Register, or the last date of publication States may appoint a Monitoring limit UTC’s involvement with the in a newspaper of the summary of this Trustee for the Electrical Power Pitstone facility during the period before Competitive Impact Statement, Divestiture Assets and the Aerolec the motor drives business is removed. whichever is later. All comments shares and/or the AEC shares. The Regarding the Aerolec and AEC received during this period will be Monitoring Trustee would have the shares, the Hold Separate ensures that considered by the United States power and authority to monitor the the Aerolec and AEC joint ventures Department of Justice, which remains parties’ compliance with the terms of remain viable, independent, competitive free to withdraw its consent to the the Final Judgment during the pendency businesses. This includes requiring proposed Final Judgment at any time of the divestiture. The Monitoring Defendants to keep the books, records, prior to the Court’s entry of judgment. Trustee would also exercise control over competitively-sensitive sales, marketing, The comments and the response of the the Aerolec shares and/or the AEC or pricing information, and decision- United States will be filed with the shares under the Hold Separate. The making concerning both Aerolec and Court. In addition, comments will be Monitoring Trustee would not have any AEC separate, distinct, and apart from posted on the U.S. Department of responsibility or obligation for the UTC’s other operations. The Hold Justice, Antitrust Division’s internet operation of the parties’ businesses. The Separate also requires Defendants to Web site, and, under certain proposed Final Judgment provides for a assign control of the Aerolec shares and circumstances, published in the Federal Monitoring Trustee because of the the AEC shares to the Monitoring Register. Written comments should be complexities of the divestiture, Trustee within thirty days of the entry submitted to: Maribeth Petrizzi, Chief, including the need to carve out the of the Hold Separate to ensure that the Litigation II Section, Antitrust Division, motor drives business from the Pitstone shares are held and managed separate United States Department of Justice, 450 facility and the need for an independent and apart from UTC. During the thirty- Fifth Street NW., Suite 8700, individual to exercise control over day period before control is assigned to Washington, DC 20530. Goodrich’s shares in Aerolec and in the Monitoring Trustee, Defendants may The proposed Final Judgment AEC until they are divested. The not exercise any rights or interests provides that the Court retains Monitoring Trustee will serve at the deriving from ownership of the Aerolec jurisdiction over this action and the Defendants’ expense and on such terms shares or AEC shares. parties may apply to the Court for any and conditions as the United States order necessary or appropriate for the approves, and the Defendants must V. Remedies Available to Potential modification, interpretation, or assist the trustee in fulfilling its Private Litigants enforcement of the Final Judgment. obligations. The Monitoring Trustee will Section 4 of the Clayton Act, 15 VII. Alternatives to the Proposed Final file monthly reports and will serve until U.S.C. 15, provides that any person who Judgment the divestitures are complete. has been injured as a result of conduct prohibited by the antitrust laws may The United States considered, as an IV. Hold Separate Stipulation and bring suit in federal court to recover alternative to the proposed Final Order three times the damages the person has Judgment, a full trial on the merits The Hold Separate ensures the suffered, as well as costs and reasonable against Defendants. The United States viability of the assets being divested attorneys’ fees. Entry of the proposed could have continued the litigation and during the divestiture periods. Until the Final Judgment will neither impair nor sought preliminary and permanent divestitures take place, the Hold assist the bringing of any private injunctions preventing UTC’s Separate requires UTC to preserve and antitrust damage action. Under the acquisition of Goodrich. The United continue to operate the Engine Control provisions of Section 5(a) of the Clayton States is satisfied, however, that the Divestiture Assets and the Electrical Act, 15 U.S.C. 16(a), the proposed Final divestiture of the assets described in the Power Divestiture Assets as Judgment has no prima facie effect in proposed Final Judgment will preserve independent, ongoing, and any subsequent private lawsuit that may competition for the development, economically viable businesses that are be brought against Defendants. manufacture, and sale of large main held entirely separate, distinct, and engine generators, aircraft turbine apart from UTC’s assets and the other VI. Procedures Available for engines, and engine control systems for assets UTC acquires from Goodrich. Modification of the Proposed Final large aircraft turbine engines in the During the divestiture period, UTC also Judgment United States. Thus, the proposed Final is prohibited from coordinating the The United States and Defendants Judgment would achieve all or production, marketing, or terms of sale have stipulated that the proposed Final substantially all of the relief the United of the divested assets with any of its Judgment may be entered by the Court States would have obtained through own assets or the other assets it acquires after compliance with the provisions of litigation, but would avoid the time,

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expense, and uncertainty of a full trial As the United States Court of Appeals proposed remedies, its perception of the on the merits of the Complaint. for the District of Columbia Circuit has market structure, and its views of the held, under the APPA a court considers, nature of the case). VIII. Standard of Review Under the among other things, the relationship Courts have greater flexibility in APPA for the Proposed Final Judgment between the remedy secured and the approving proposed consent decrees The Clayton Act, as amended by the specific allegations set forth in the than in crafting their own decrees APPA, requires that proposed consent government’s complaint, whether the following a finding of liability in a judgments in antitrust cases brought by decree is sufficiently clear, whether litigated matter. ‘‘[A] proposed decree the United States be subject to a sixty- enforcement mechanisms are sufficient, must be approved even if it falls short day comment period, after which the and whether the decree may positively of the remedy the court would impose court shall determine whether entry of harm third parties. See Microsoft, 56 on its own, as long as it falls within the the proposed Final Judgment ‘‘is in the F.3d at 1458–62. With respect to the range of acceptability or is ‘within the public interest.’’ 15 U.S.C. 16(e)(1). In adequacy of the relief secured by the reaches of public interest.’ ’’ United making that determination, the court, in decree, a court may not ‘‘engage in an States v. Am. Tel. & Tel. Co., 552 F. accordance with the statute as amended unrestricted evaluation of what relief Supp. 131, 151 (D.D.C. 1982) (citations in 2004, is required to consider: would best serve the public.’’ United omitted) (quoting United States v. Gillette Co., 406 F. Supp. 713, 716 (D. (A) The competitive impact of such States v. BNS, Inc., 858 F.2d 456, 462 judgment, including termination of alleged (9th Cir. 1988) (citing United States v. Mass. 1975)), aff’d sub nom. Maryland violations, provisions for enforcement and Bechtel Corp., 648 F.2d 660, 666 (9th v. United States, 460 U.S. 1001 (1983); modification, duration of relief sought, Cir. 1981)); see also Microsoft, 56 F.3d see also United States v. Alcan anticipated effects of alternative remedies at 1460–62; United States v. Alcoa, Inc., Aluminum Ltd., 605 F. Supp. 619, 622 actually considered, whether its terms are 152 F. Supp. 2d 37, 40 (D.D.C. 2001); (W.D. Ky. 1985) (approving the consent ambiguous, and any other competitive InBev, 2009 U.S. Dist. LEXIS 84787, at decree even though the court would considerations bearing upon the adequacy of *3. Courts have held that: have imposed a greater remedy). To such judgment that the court deems meet this standard, the United States necessary to a determination of whether the [t]he balancing of competing social and political interests affected by a proposed ‘‘need only provide a factual basis for consent judgment is in the public interest; concluding that the settlements are and antitrust consent decree must be left, in the (B) The impact of entry of such judgment first instance, to the discretion of the reasonably adequate remedies for the upon competition in the relevant market or Attorney General. The court’s role in alleged harms.’’ SBC Commc’ns, 489 F. markets, upon the public generally and protecting the public interest is one of Supp. 2d at 17. individuals alleging specific injury from the insuring that the government has not Moreover, the court’s role under the violations set forth in the complaint breached its duty to the public in consenting APPA is limited to reviewing the to the decree. The court is required to including consideration of the public benefit, remedy in relationship to the violations determine not whether a particular decree is if any, to be derived from a determination of the one that will best serve society, but that the United States has alleged in its the issues at trial. whether the settlement is ‘‘within the reaches Complaint, and does not authorize the 15 U.S.C. 16(e)(1)(A) & (B). of the public interest.’’ More elaborate court to ‘‘construct [its] own In considering these statutory factors, requirements might undermine the hypothetical case and then evaluate the the court’s inquiry is necessarily a effectiveness of antitrust enforcement by decree against that case.’’ Microsoft, 56 limited one as the government is consent decree. F.3d at 1459; see also InBev, 2009 U.S. entitled to ‘‘broad discretion to settle Bechtel, 648 F.2d at 666 (emphasis Dist. LEXIS 84787, at *20 (‘‘the ‘public with the defendant within the reaches of added) (citations omitted).14 In interest’ is not to be measured by the public interest.’’ United States v. determining whether a proposed comparing the violations alleged in the Microsoft Corp., 56 F.3d 1448, 1461 settlement is in the public interest, a complaint against those the court (D.C. Cir. 1995); see generally United district court ‘‘must accord deference to believes could have, or even should States v. SBC Commc’ns, Inc., 489 F. the government’s predictions about the have, been alleged’’) (citations omitted). Supp. 2d 1 (D.D.C. 2007) (assessing efficacy of its remedies, and may not Because the ‘‘court’s authority to review public interest standard under the require that the remedies perfectly the decree depends entirely on the Tunney Act); United States v. InBev match the alleged violations.’’ SBC government’s exercising its N.V./S.A., 2009–2 Trade Cas. (CCH) ¶ Commc’ns, 489 F. Supp. 2d at 17; see prosecutorial discretion by bringing a 76,736, 2009 U.S. Dist. LEXIS 84787, also Microsoft, 56 F.3d at 1461 (noting case in the first place,’’ it follows that No. 08–1965 (JR), at *3, (D.D.C. Aug. 11, the need for courts to be ‘‘deferential to ‘‘the court is only authorized to review 2009) (noting that the court’s review of the government’s predictions as to the the decree itself,’’ and not to ‘‘effectively a consent judgment is limited and only effect of the proposed remedies’’); redraft the complaint’’ to inquire into inquires ‘‘into whether the government’s United States v. Archer-Daniels- other matters that the United States did determination that the proposed Midland Co., 272 F. Supp. 2d 1, 6 not pursue. Microsoft, 56 F.3d at 1459– remedies will cure the antitrust (D.D.C. 2003) (noting that the court 60. As this Court recently confirmed in violations alleged in the complaint was should grant due respect to the United SBC Communications, courts ‘‘cannot reasonable, and whether the mechanism States’ prediction as to the effect of look beyond the complaint in making to enforce the final judgment are clear the public interest determination unless and manageable.’’).13 14 Cf. BNS, 858 F.2d at 464 (holding that the the complaint is drafted so narrowly as court’s ‘‘ultimate authority under the [APPA] is to make a mockery of judicial power.’’ limited to approving or disapproving the consent SBC Commc’ns, 489 F. Supp. 2d at 15. 13 The 2004 amendments substituted ‘‘shall’’ for decree’’); United States v. Gillette Co., 406 F. Supp. ‘‘may’’ in directing relevant factors for court to 713, 716 (D. Mass. 1975) (noting that, in this way, In its 2004 amendments, Congress consider and amended the list of factors to focus on the court is constrained to ‘‘look at the overall made clear its intent to preserve the competitive considerations and to address picture not hypercritically, nor with a microscope, practical benefits of utilizing consent potentially ambiguous judgment terms. Compare 15 but with an artist’s reducing glass’’). See generally decrees in antitrust enforcement, adding U.S.C. 16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); Microsoft, 56 F.3d at 1461 (discussing whether ‘‘the see also SBC Commc’ns, 489 F. Supp. 2d at 11 remedies [obtained in the decree are] so the unambiguous instruction that (concluding that the 2004 amendments ‘‘effected inconsonant with the allegations charged as to fall ‘‘[n]othing in this section shall be minimal changes’’ to Tunney Act review). outside of the ‘reaches of the public interest’ ’’). construed to require the court to

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conduct an evidentiary hearing or to Michael H. Byowitz, Esq., Wachtell, Lipton, I. Jurisdiction Rosen & Katz, 51 West 52nd Street, New require the court to permit anyone to This Court has jurisdiction over the intervene.’’ 15 U.S.C. 16(e)(2). The York, NY 10019, [email protected]. Wm. Randolph Smith, Esq., Crowell & subject matter of and each of the parties language wrote into the statute what to this action. The Complaint states a Congress intended when it enacted the Moring LLP, 1001 Pennsylvania Avenue NW., Washington, DC 20004, claim upon which relief may be granted Tunney Act in 1974, as Senator Tunney [email protected]. against Defendants under Section 7 of explained: ‘‘[t]he court is nowhere Counsel for Goodrich Corporation the Clayton Act, as amended (15 U.S.C. compelled to go to trial or to engage in 18). extended proceedings which might have Tom D. Smith, Esq., Jones Day, 51 Louisiana Avenue NW., Washington, DC 20001–2113, II. Definitions the effect of vitiating the benefits of [email protected]. prompt and less costly settlement Kevin C. Quin, United States Department of As used in this Final Judgment: through the consent decree process.’’ Justice, Antitrust Division, Litigation II A. ‘‘Acquirer’’ or ‘‘Acquirers’’ means 119 Cong. Rec. 24,598 (1973) (statement Section, 450 Fifth Street NW., Suite 8700, the entity or entities to which of Senator Tunney). Rather, the Washington, DC 20530, Defendants divest the Divestiture procedure for the public interest [email protected]. Assets. B. ‘‘Acquirer of the Electrical Power determination is left to the discretion of United States District Court for the District the court, with the recognition that the Of Columbia Divestiture Assets’’ means the entity to court’s ‘‘scope of review remains which Defendants divest the Electrical United States of America, Plaintiff v. sharply proscribed by precedent and the Power Divestiture Assets. United Technologies Corporation and C. ‘‘Acquirer of the Engine Control nature of Tunney Act proceedings.’’ Goodrich Corporation, Defendants. SBC Commc’ns, 489 F. Supp. 2d at 11.15 Divestiture Assets’’ means the entity to [Civil Action No. 1:12-cv-01230] which Defendants divest the Engine IX. Determinative Documents Proposed Final Judgment Control Divestiture Assets. D. ‘‘Acquirer of the AEC Shares’’ There are no determinative materials WHEREAS, Plaintiff, United States of means Rolls-Royce or another entity to or documents within the meaning of the America, filed its Complaint on July __, which Defendants divest the AEC APPA that were considered by the 2012, the United States and Defendants Shares. United States in formulating the United Technologies Corporation E. ‘‘Acquirer of the Aerolec Shares’’ proposed Final Judgment. (‘‘UTC’’) and Goodrich Corporation means Thales or another entity to which Dated: July 26, 2012. (‘‘Goodrich’’), by their respective Defendants divest the Aerolec Shares. Respectfully submitted, attorneys, have consented to the entry of F. ‘‘UTC’’ means Defendant United Kevin C. Quin (DC Bar # 415268), this Final Judgment without trial or Technologies Corporation, a Delaware U.S. Department of Justice, Antitrust adjudication of any issue of fact or law, corporation with its headquarters in Division, Litigation II Section, 450 Fifth Street and without this Final Judgment Hartford, Connecticut, its successors, NW., Suite 8700, Washington, DC 20530, constituting any evidence against or assigns, subsidiaries, divisions, groups, (202) 307–0922, [email protected]. admission by any party regarding any affiliates, and partnerships, and their Certificate of Service issue of fact or law; directors, officers, managers, agents, and AND WHEREAS, Defendants agree to employees. I, Kevin C. Quin, hereby certify that be bound by the provisions of this Final G. ‘‘Goodrich’’ means Defendant on July 26, 2012, I caused a copy of the Judgment pending its approval by the Goodrich Corporation, a New York foregoing Competitive Impact Court; corporation with its headquarters in Statement, as well as the Complaint, Charlotte, North Carolina, its successors, Hold Separate Stipulation and Order, AND WHEREAS, the essence of this assigns, subsidiaries, divisions, groups, and Explanation of Consent Decree Final Judgment is the prompt and affiliates, and partnerships, and their Procedures filed in this matter, to be certain divestiture of certain rights and directors, officers, managers, agents, and served upon Defendants United assets by Defendants to assure that employees. Technologies Corporation and Goodrich competition is not substantially H. ‘‘Rolls-Royce’’ means Rolls-Royce Corporation by mailing the documents lessened; Group plc, a company incorporated in electronically to the duly authorized AND WHEREAS, the United States England and Wales with a registered legal representatives of Defendants as requires Defendants to make certain office in London, its successors, assigns, follows: divestitures and make certain subsidiaries, divisions, groups, Counsel for United Technologies Corporation commitments for the purpose of affiliates, and partnerships, and their remedying the loss of competition directors, officers, managers, agents, and 15 See United States v. Enova Corp., 107 F. Supp. alleged in the Complaint; employees. I. ‘‘Thales’’ means Thales Avionics 2d 10, 17 (D.D.C. 2000) (noting that the ‘‘Tunney AND WHEREAS, Defendants have Act expressly allows the court to make its public Electrical Systems SA, a company represented to the United States that the interest determination on the basis of the incorporated in France with a registered divestitures required below can and will competitive impact statement and response to office in Neuilly-Sur-Seine, France, its comments alone’’); United States v. Mid-Am. be made and that Defendants will later successors, assigns, subsidiaries, Dairymen, Inc., 1977–1 Trade Cas. (CCH) ¶ 61,508, raise no claim of hardship or difficulty at 71,980 (W.D. Mo. 1977) (‘‘Absent a showing of divisions, groups, affiliates, and as grounds for asking the Court to corrupt failure of the government to discharge its partnerships, and their directors, modify any of the divestiture provisions duty, the Court, in making its public interest officers, managers, agents, and finding, should * * * carefully consider the contained below; explanations of the government in the competitive employees. impact statement and its responses to comments in NOW THEREFORE, before any J. ‘‘West Hartford Facility’’ means order to determine whether those explanations are testimony is taken, without trial or Goodrich’s facility located at Charter reasonable under the circumstances.’’); S. Rep. No. adjudication of any issue of fact or law, Oak Boulevard, West Hartford, 93–298, 93d Cong., 1st Sess., at 6 (1973) (‘‘Where the public interest can be meaningfully evaluated and upon consent of the parties, it is Connecticut 06133. simply on the basis of briefs and oral arguments, ORDERED, ADJUDGED, AND K. ‘‘Montreal Facility’’ means that is the approach that should be utilized.’’). DECREED: Goodrich’s facility located at 5595

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Royalmount Avenue, Montreal H4P 1J9 property, copyrights, trademarks, trade (3) All tangible assets that are used to QU, Canada, which will be transitioned names, service marks, service names, design, develop, manufacture, market, to the West Hartford Facility. technical information, computer service, distribute, repair, and/or sell L. ‘‘Engine Control Products’’ means software and related documentation, aircraft electrical generation systems all Goodrich products and services that know-how, trade secrets, drawings, and electrical distribution systems that are designed, developed, manufactured, blueprints, designs, design protocols, currently are or have been designed, marketed, serviced, distributed, specifications for materials, developed, manufactured, marketed, repaired, and/or sold out of or using the specifications for parts and devices, serviced, distributed, repaired, and/or assets located in the West Hartford safety procedures, quality assurance and sold by Goodrich Engine Control and Facility and/or the Montreal Facility on control procedures, design tools, Electrical Power Systems, including, but the date the Complaint is filed in this simulation capability, manuals and not limited to, assets relating to research matter, including but not limited to technical information provided to and development activities, electronic engine controls, fuel metering Goodrich employees, customers, manufacturing equipment, tooling, fixed units, main fuel pumps, and ancillary suppliers, agents, or licensees, and assets, personal property, inventory, engine control products (including but research data concerning historic and office furniture, materials, supplies, not limited to, engine actuators, ejector current research and development licenses, permits, authorizations issued pumps and tanks, hot oil valves, shut- efforts, including, but not limited to, by any governmental organization, off valves, flow dividers, start flow designs of experiments and results of contracts, teaming arrangements, control valves, lube pumps, and lube successful and unsuccessful designs and agreements, leases, commitments, and scavenge pumps). Engine Control experiments; certifications, supply agreements, Products exclude maintenance, repair, (5) for intellectual property that is understandings, customer lists, and overhaul services currently used exclusively for Engine Control contracts, accounts, credit records, performed at the Montreal Facility for Products that is owned and/or information technology systems, and the following: (1) Products designed controlled by Goodrich, but for which repair, performance, and other records; specifically to be used on the Rolls- Goodrich’s ownership or control is in (4) All intangible assets that are used Royce Tay and Spey engines; (2) any way encumbered, an exclusive, to design, develop, manufacture, products designed specifically to be irrevocable, royalty-free license for that market, service, distribute, repair and/or used on the General Electric F404 intellectual property; and sell aircraft electrical generation systems engine; (3) products designed (6) for intellectual property that is and electrical distribution systems that specifically to be used on the Pratt & used primarily, but not exclusively, for currently are or have been designed, Whitney PW305 engine; and (4) the Engine Control Products that is owned developed, manufactured, marketed, servo actuator and yaw damper product and/or controlled by Goodrich, but for serviced, distributed, repaired, and/or lines. which Goodrich’s ownership or control sold by Goodrich Engine Control and M. ‘‘Engine Control Divestiture is in any way encumbered, a non- Electrical Power Systems, including, but Assets’’ means: exclusive, irrevocable, royalty-free (1) The West Hartford Facility and all not limited to, contractual rights, license for that intellectual property. patents, licenses, sublicenses, tangible and intangible assets used by or N. ‘‘Qualifying Customer Contracts’’ intellectual property, copyrights, located in the West Hartford Facility; means any contract or agreement: (1) trademarks, trade names, service marks, (2) All tangible and intangible assets Having an initial duration of longer than service names, technical information, used by or located in the Montreal two years; (2) for the supply of any computer software and related Facility that are used to design, develop, Engine Control Products to turbine documentation, know-how, trade manufacture, market, service, distribute, engine manufacturers; (3) to which the secrets, drawings, blueprints, designs, repair, and/or sell Engine Control business comprising the Engine Control design protocols, specifications for Products; Divestiture Assets is a party; (4) that are materials, specifications for parts and (3) All tangible assets, wherever unexpired on the date the Complaint is devices, safety procedures, quality located, that are used to design, filed in this matter; (5) the term of assurance and control procedures, develop, and/or manufacture Engine which will expire prior to the date of design tools, simulation capability, Control Products, including, but not the consummation of the divestiture of manuals and technical information limited to, assets relating to research the Engine Control Divestiture Assets; provided to Goodrich employees, and development activities, and (6) which have not been customers, suppliers, agents, or manufacturing equipment, tooling, fixed renegotiated prior to such licensees, and research data concerning assets, personal property, inventory, consummation. historic and current research and office furniture, materials, supplies, O. ‘‘Twinsburg Facility’’ means development efforts, including, but not licenses, permits, authorizations issued Goodrich’s facility located at 8380 limited to, design of experiments and by any governmental organization, Darrow Road, Twinsburg, Ohio 44087. contracts, teaming arrangements, P. ‘‘Pitstone Facility’’ means results of successful and unsuccessful agreements, leases, commitments, Goodrich’s facility located at Pitstone designs and experiments; certifications, supply agreements, Business Park, Westfield Road, Pitstone, (5) All intellectual property and understandings, customer lists, Buckinghamshire LU7 9GT, United know-how that is owned by Goodrich contracts, accounts, credit records, Kingdom. pursuant to the Intellectual Property information technology systems, and Q. ‘‘Electrical Power Divestiture Agreement between TRW Limited and repair, performance, and other records; Assets’’ means: Thales dated June 27, 2001; and and (1) The Twinsburg Facility; (6) Goodrich’s obligations to BAE (4) All intangible assets, wherever (2) The Pitstone Facility, provided, Systems pursuant to the Norwegian located, that are used to design, however, that the assets used Sting Ray Mod 1 Torpedo System develop, and/or manufacture Engine exclusively for the motor drive business Programme Procurement Specification Control Products, including, but not located at the Pitstone Facility shall not and Sub Contract for the Power Supply limited to, contractual rights, patents, be divested pursuant to this Final (5000) Section and Motor Control (6000) licenses, sublicenses, intellectual Judgment; Section 296401001/01–02 Issue 1, dated

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April 30, 2009 and all assets necessary III. Applicability Divestiture Assets. Defendants shall to fulfill those obligations. A. This Final Judgment applies to inform any person making inquiry The Electrical Power Divestiture UTC and Goodrich, as defined above, regarding a possible purchase of any of Assets exclude assets in or personnel and all other persons in active concert the Engine Control Divestiture Assets operating out of Goodrich’s or participation with any of them who that they are being divested pursuant to development center located in receive actual notice of this Final this Final Judgment and provide that Bengaluru, India and Goodrich’s MRO Judgment by personal service or person with a copy of this Final Campuses. otherwise. Judgment. Defendants shall offer to R. ‘‘Goodrich’s MRO Campuses’’ B. If, prior to complying with Section furnish to all prospective Acquirers, means all Goodrich facilities, except the IV, Section V, and Section VI of this subject to customary confidentiality Twinsburg Facility and the Pitstone Final Judgment, Defendants sell or assurances, all information and Facility, from which customer support otherwise dispose of all or substantially documents relating to the Engine for Goodrich’s aircraft electrical all of their assets or of lesser business Control Divestiture Assets customarily generation systems and electrical units that include the Divestiture provided in a due diligence process distribution systems products is Assets, Defendants shall require the except such information or documents provided. subject to the attorney-client privilege or S. ‘‘Aerolec Shareholders Agreement’’ purchaser(s) to be bound by the provisions of this Final Judgment. work-product doctrine. Defendants shall means the Shareholders’ Agreement make available such information to the dated May 31, 2001, between TRW Defendants need not obtain such an agreement from the Acquirers of the United States at the same time that such France Holding SAS, TRW Limited, and information is made available to any Thales. assets divested pursuant to this Final Judgment. other person. T. ‘‘Aerolec Shares’’ means all shares C. Defendants shall provide the of TRW-Thales Aerolec SAS that are IV. Divestiture of the Engine Control Acquirer of the Engine Control owned and/or controlled by Goodrich, Divestiture Assets Divestiture Assets and the United States TRW France Holding SAS, and/or TRW A. Defendants are ordered and information relating to the personnel Limited that were acquired pursuant to directed, within one hundred and eighty involved in the design, development, the Aerolec Shareholders Agreement. manufacture, marketing, servicing, U. ‘‘Change of Control Option’’ means calendar days after the filing of the Complaint in this matter, or five distribution, repair, and/or sale of Thales’s option to acquire the Aerolec Engine Control Products to enable the Shares pursuant to section 7.2(H) of the calendar days after notice of the entry of this Final Judgment by the Court, Acquirer of the Engine Control Aerolec Shareholders Agreement. Divestiture Assets to make offers of V. ‘‘Transfer Option’’ means Thales’s whichever is later, to divest the Engine employment. Defendants shall not option to acquire the Aerolec Shares Control Divestiture Assets in a manner interfere with any negotiations by the pursuant to section 7.2(E) of the Aerolec consistent with this Final Judgment to Acquirer of the Engine Control Shareholders Agreement. an Acquirer acceptable to the United W. ‘‘AEC Joint Venture Agreement’’ States, in its sole discretion. The United Divestiture Assets to employ any means the Joint Venture Agreement States, in its sole discretion, may agree Goodrich employee who is responsible dated December 31, 2008, between to one or more extensions of this period, for the design, development, Rolls-Royce Engine Controls Holdings not to exceed sixty calendar days in manufacture, marketing, servicing, Limited, Rolls-Royce Group plc, total, and shall notify the Court in such distribution, repair, and/or sale of Goodrich Controls Holding Limited, circumstances. If, however, applications Engine Control Products. Interference Goodrich Actuation Systems Limited, seeking approval to sell the Engine with respect to this paragraph includes, Goodrich Corporation, and Rolls-Royce Control Divestiture Assets have been but is not limited to, enforcement of Goodrich Engine Control Systems filed within the period permitted for the non-compete clauses and offers to Limited. divestiture of the Engine Control increase salary or other benefits apart X. ‘‘AEC’’ means the joint venture Divestiture Assets with authorities from from those offered company-wide. established pursuant to the AEC Joint which approval for the divestiture of the D. Defendants shall permit Venture Agreement. Engine Control Divestiture Assets is prospective Acquirers of the Engine Y. ‘‘AEC Shares’’ means all the shares required by the Acquirer of the Engine Control Divestiture Assets to have in AEC that are owned and/or Control Divestiture Assets as a reasonable access to personnel and to controlled by Goodrich. condition of closing, but orders or other make inspections of the physical Z. ‘‘Goodrich Aftermarket Business’’ dispositive actions by such authorities facilities to be divested; access to any means the worldwide aftermarket on such applications have not been and all environmental, zoning, and business conducted by Goodrich prior issued before the end of the period other permit documents and to the date Goodrich is acquired by UTC permitted for this divestiture, the period information; and access to any and all involving the maintenance, repair, and shall be extended with respect to the financial, operational, or other overhaul of units, equipment, and parts divestiture of the Engine Control documents and information customarily (including hardware and software) that Divestiture Assets until ten calendar provided as part of a due diligence are designed, assembled, manufactured, days after such approvals are received. process. supported, or procured by AEC, the Defendants agree to use their best efforts E. Defendants shall warrant to the provision of training and documentation to accomplish the divestiture of the Acquirer of the Engine Control and support equipment, and the sale Engine Control Divestiture Assets and to Divestiture Assets that each asset and supply of spare parts and initial seek all necessary approvals as included in the Engine Control provisioning for engine control systems expeditiously as possible. Divestiture Assets will be operational on for Rolls-Royce engines. B. In accomplishing the divestitures the date of sale. AA. ‘‘Divestiture Assets’’ means the ordered by this Final Judgment, F. Defendants shall not take any Electrical Power Divestiture Assets, Defendants promptly shall make known, action that will impede in any way the Aerolec Shares, Engine Control by usual and customary means, the permitting, operation, or divestiture of Divestiture Assets, and AEC Shares. availability of the Engine Control the Engine Control Divestiture Assets.

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G. Defendants shall warrant to the the term of this supply agreement for a in this paragraph are in service. In the Acquirer of the Engine Control period of up to one year. If the Acquirer alternative, at the option of the Acquirer Divestiture Assets that there are no of the Engine Control Divestiture Assets of the Engine Control Divestiture Assets, material defects in the environmental, seeks an extension of the term of this UTC shall provide the Acquirer of the zoning, or other permits pertaining to supply agreement, it shall so notify the Engine Control Divestiture Assets a non- the operation of the Engine Control United States in writing at least four exclusive, irrevocable, royalty-free Divestiture Assets, and that following months prior to the date the supply license solely to manufacture the the sale of the Engine Control agreement expires. The United States pressure sensors and transducers Divestiture Assets, Defendants will not shall respond to any such request for necessary to fulfill the contractual undertake, directly or indirectly, any extension in writing at least three obligations of the Acquirer of the Engine challenges to the environmental, zoning, months prior to the date the supply Control Divestiture Assets relating to the or other permits relating to the agreement expires. Goodrich EMC51, EMC60, and EMC101 operation of any of the Engine Control J. At the option of the Acquirer of the electronic engine controls that exist on Divestiture Assets. Engine Control Divestiture Assets, UTC the date the Engine Control Divestiture H. At the option of the Acquirer of the shall enter into a supply agreement to Assets are divested. The Acquirer shall Engine Control Divestiture Assets, UTC supply parts and provide engineering not transfer such license except as part shall enter into a transition services expertise sufficient to meet the needs of a sale of the Engine Control agreement with the Acquirer of the identified by the Acquirer of the Engine Divestiture Assets. Engine Control Divestiture Assets. This Control Divestiture Assets to enable that L. At the option of UTC, the Acquirer agreement shall include technical and Acquirer to provide maintenance, of the Engine Control Divestiture Assets engineering assistance and repair, and overhaul services for the shall enter into a supply agreement for maintenance, repair, and overhaul following products: Engine control unit parts sufficient to meet the needs services relating to Engine Control and fuel pump metering unit for the identified by UTC to enable UTC to Products. The terms and conditions of AE1107 engine; engine control unit and provide maintenance, repair, and any contractual arrangement meant to fuel pump metering unit for the AE3007 overhaul services for the fuel control satisfy this provision must be engine; engine control unit and fuel system for the LF507 engine; the fuel commercially reasonable. The terms and pump for the RB211 engine; engine control system and the power turbine conditions of any such transition control unit for the BR710 engine; governor for the T53 engine; the fuel services agreement shall be subject to engine control unit for the PW305 pump for the LTS101 engine; and the the approval of the United States, in its engine; engine control unit for the Tay fuel pump for the PW100 engine. The sole discretion. The duration of this engine; fuel metering unit for the Trent terms and conditions of any contractual transition services agreement shall not 700 engine; fuel metering unit for the arrangement intended to satisfy this be longer than one year. The United Trent 800 engine; and fuel metering unit provision must be reasonably related to States, in its sole discretion, may and actuator for the V2500 engine. The market conditions for these products. approve an extension of the term of this terms and conditions of any contractual The terms and conditions of any such transition services agreement for a arrangement intended to satisfy this supply agreement shall be subject to the period of up to one year. If the Acquirer provision must be reasonably related to approval of the United States, in its sole of the Engine Control Divestiture Assets market conditions for these products. discretion. At the option of UTC, this seeks an extension of the term of this The terms and conditions of any such agreement may remain in effect so long transition services agreement, it shall so supply agreement shall be subject to the as five or more aircraft equipped with notify the United States in writing at approval of the United States, in its sole an engine listed in this paragraph are in least four months prior to the date the discretion. At the option of the Acquirer service. transition services agreement expires. of the Engine Control Divestiture Assets, M. At the option of UTC, the Acquirer The United States shall respond to any this agreement may remain in effect so of the Engine Control Divestiture Assets such request for extension in writing at long as three or more of any aircraft shall provide UTC with a non-exclusive least three months prior to the date the equipped with an engine listed in this license for intellectual property that is transition services agreement expires. paragraph are in service. included in the Engine Control I. At the option of the Acquirer of the K. At the option of the Acquirer of the Divestiture Assets but used for both Engine Control Divestiture Assets, UTC Engine Control Divestiture Assets, UTC Engine Control Products and other shall enter into a supply agreement to shall enter into a supply agreement to Goodrich products not being divested supply components used in or necessary supply pressure sensors and transducers pursuant to this Final Judgment. UTC for the design, development, for the Goodrich EMC51, EMC60, and shall not transfer the license described manufacture, marketing, servicing, EMC101 electronic engine controls, and in this paragraph except as part of a sale distribution, repair, and/or sale of the any derivatives of those electronic of the business in which the license is Engine Control Products sufficient to engine controls, sufficient to meet the used. UTC shall not use the license meet the needs identified by the needs identified by the Acquirer of the described in this paragraph for engine Acquirer of the Engine Control Engine Control Divestiture Assets. The control products, systems, and services. Divestiture Assets. The terms and terms and conditions of any contractual The terms and conditions of any conditions of any contractual arrangement intended to satisfy this contractual arrangement intended to arrangement intended to satisfy this provision must be reasonably related to satisfy this provision must be provision must be reasonably related to market conditions for these products. reasonably related to market conditions market conditions for these products. The terms and conditions of any such for these products. The terms and The terms and conditions of any such supply agreement shall be subject to the conditions of any such license shall be supply agreement shall be subject to the approval of the United States, in its sole subject to the approval of the United approval of the United States, in its sole discretion. At the option of the Acquirer States, in its sole discretion. discretion. The duration of this supply of the Engine Control Divestiture Assets, N. Defendants shall offer to extend, agreement shall not be longer than one this agreement may remain in effect so with the same pricing and other terms year. The United States, in its sole long as five or more aircraft equipped and conditions, the Qualifying discretion, may approve an extension of with an electronic engine control listed Customer Contracts for a period

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expiring thirty calendar days after the Assets have been filed within the period Electrical Power Divestiture Assets is date of the consummation of the permitted for the divestiture of the consummated. divestiture of the Engine Control Electrical Power Divestiture Assets with E. If Thales does not exercise the Divestiture Assets. authorities from which approval for the Change of Control Option and does not O. Unless the United States otherwise divestiture of the Electrical Power exercise the Transfer Option, consents in writing, the divestiture of Divestiture Assets is required by the Defendants are ordered and directed to the Engine Control Divestiture Assets Acquirer of the Electrical Power divest the Aerolec Shares in a manner pursuant to Section IV or by the Divestiture Assets as a condition of consistent with this Final Judgment to Divestiture Trustee appointed pursuant closing, but orders or other dispositive an Acquirer acceptable to the United to Section VII of this Final Judgment actions by such authorities on such States, in its sole discretion, within one shall be accomplished in such a way as applications have not been issued before hundred fifty calendar days after the to satisfy the United States, in its sole the end of the period permitted for this earlier of: (1) The date Thales notifies discretion, that the Engine Control divestiture, the period shall be extended UTC that it will not exercise the Divestiture Assets can and will be used with respect to the divestiture of the Transfer Option; or (2) the time period by the Acquirer of the Engine Control Electrical Power Divestiture Assets until for Thales to exercise the Transfer Divestiture Assets as part of a viable, ten calendar days after such approvals Option expires. The United States, in its ongoing business that is engaged in the are received. Defendants agree to use sole discretion, may agree to one or design, development, manufacture, their best efforts to accomplish the more extensions of this time period not marketing, servicing, distribution, divestiture of the Electrical Power to exceed sixty calendar days in total, repair, and sale of Engine Control Divestiture Assets and to seek all and shall notify the Court in such Products and that the divestiture of the necessary approvals as expeditiously as circumstances. If, however, applications Engine Control Divestiture Assets will possible. seeking approval to sell the Aerolec remedy the competitive harm alleged in B. Defendants shall remove from the Shares have been filed within the period the Complaint. The divestiture of the Pitstone Facility prior to the permitted for the divestiture of the Engine Control Divestiture Assets, consummation of the divestiture of the Aerolec Shares with authorities from whether pursuant to Section IV or Electrical Power Divestiture Assets all which approval for the divestiture of the Section VII of this Final Judgment, shall assets used exclusively for the motor Aerolec Shares is required by the be made to an Acquirer that, in the drive business. Acquirer of the Aerolec Shares as a United States’s sole judgment, has the C. If Thales exercises the Change of condition of closing, but orders or other intent and capability (including the Control Option, Defendants are ordered dispositive actions by such authorities necessary managerial, operational, and directed, within one hundred eighty on such applications have not been technical and financial capability) of calendar days after the filing of the issued before the end of the period competing effectively in the design, Complaint in this matter, or five permitted for this divestiture, the period development, manufacture, marketing, calendar days after notice of the entry of shall be extended with respect to the servicing, distribution, repair, and sale divestiture of the Aerolec Shares until of Engine Control Products. The this Final Judgment by the Court, ten calendar days after such approvals divestiture of the Engine Control whichever is later, to divest the Aerolec are received. Defendants agree to use Divestiture Assets shall be Shares to Thales in a manner consistent their best efforts to accomplish the accomplished so as to satisfy the United with this Final Judgment. The United divestiture of the Aerolec Shares and to States, in its sole discretion, that none States, in its sole discretion, may agree of the terms of any agreement between to one or more extensions of this time seek all necessary approvals as the Acquirer of the Engine Control period not to exceed sixty calendar days expeditiously as possible. Divestiture Assets and Defendants give in total, and shall notify the Court in F. In accomplishing the divestitures Defendants the ability unreasonably to such circumstances. Defendants agree to ordered by this Final Judgment, raise the Acquirer’s costs, to lower the use their best efforts to divest the Defendants promptly shall make known, Acquirer’s efficiency, or otherwise to Aerolec Shares as expeditiously as by usual and customary means, the interfere in the ability of the Acquirer to possible. availability of the Electrical Power compete effectively. D. If Thales does not exercise the Divestiture Assets. Defendants shall Change of Control Option, but Thales inform any person making inquiry V. Divestiture of the Electrical Power does exercise the Transfer Option, regarding a possible purchase of any of Divestiture Assets and Aerolec Shares Defendants are ordered and directed to the Electrical Power Divestiture Assets A. Defendants are ordered and divest the Aerolec Shares to Thales in that they are being divested pursuant to directed to divest the Electrical Power a manner consistent with this Final this Final Judgment and provide that Divestiture Assets in a manner Judgment within thirty calendar days person with a copy of this Final consistent with this Final Judgment to after the date Thales notifies UTC that Judgment. Defendants shall offer to an Acquirer acceptable to the United it will exercise the Transfer Option. The furnish to all prospective Acquirers, States, in its sole discretion, no later United States, in its sole discretion, may subject to customary confidentiality than one hundred eighty calendar days agree to one or more extensions of this assurances, all information and after the filing of the Complaint in this time period not to exceed sixty calendar documents relating to the Electrical matter, or five calendar days after notice days in total, and shall notify the Court Power Divestiture Assets customarily of the entry of this Final Judgment by in such circumstances. Defendants agree provided in a due diligence process the Court, whichever is later. The to divest the Aerolec Shares as except such information or documents United States, in its sole discretion, may expeditiously as possible. If Thales does subject to the attorney-client privilege or agree to one or more extensions of this not exercise the Change of Control work-product doctrine. Defendants shall time period, not to exceed sixty Option, Defendants further agree to make available such information to the calendar days in total, and shall notify provide notice to Thales pursuant to United States and any Monitoring the Court in such circumstances. If, paragraph 7.2(E) of the Aerolec Trustee at the same time that such however, applications seeking approval Shareholders Agreement no later than information is made available to any to sell the Electrical Power Divestiture two business days after the sale of the other person.

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G. Defendants shall provide the relating to the operation of any of the notify the Acquirer of the Engine Acquirer of the Electrical Power Electrical Power Divestiture Assets. Control Divestiture Assets in writing at Divestiture Assets, the United States, L. At the option of the Acquirer of the least three months prior to the date the and any Monitoring Trustee information Electrical Power Divestiture Assets, supply agreement expires. relating to the Goodrich personnel UTC shall enter into a transition N. At the option of the Acquirer of the involved in the design, development, services agreement with the Acquirer of Electrical Power Divestiture Assets, manufacture, marketing, service, the Electrical Power Divestiture Assets. UTC shall enter into a supply agreement distribution, repair, and/or sale of This agreement shall include technical to supply machined parts, including aircraft electrical generation systems and engineering assistance and machined housings for AC generators and electrical distribution systems to maintenance, repair, and overhaul and accessory gearboxes for the SAAB enable the Acquirer of the Electrical services relating to aircraft electrical Gripen (JAS 39), sufficient to meet the Power Divestiture Assets to make offers generation systems and electrical needs identified by the Acquirer of the of employment. Defendants will not distribution systems. The terms and Electrical Power Divestiture Assets. The interfere with any negotiations by the conditions of any contractual terms and conditions of any contractual Acquirer of the Electrical Power arrangement meant to satisfy this arrangement intended to satisfy this Divestiture Assets to employ any provision must be commercially provision must be reasonably related to Goodrich employee who is responsible reasonable. The terms and conditions of market conditions for these products. for the design, development, any such transitional services agreement The terms and conditions of any such manufacture, marketing, service, shall be subject to the approval of the supply agreement shall be subject to the distribution, repair, and/or sale of United States, in its sole discretion. The approval of the United States, in its sole aircraft electrical generation systems duration of this transition services discretion. At the option of the Acquirer and electrical distribution systems. agreement shall not be longer than one of the Electrical Power Divestiture Interference with respect to this year. The United States, in its sole Assets, the portion of this supply paragraph includes, but is not limited discretion, may approve an extension of agreement relating to the accessory to, enforcement of non-compete clauses the term of this transition services gearboxes may remain in effect so long and offers to increase salary or other agreement for a period of up to one year. as any SAAB Gripen (JAS 39) is in benefits apart from those offered If the Acquirer of the Electrical Power service. The portion of this supply company-wide. However, interference Divestiture Assets seeks an extension of agreement relating to the machined with respect to this paragraph shall not the term of this transition services housings for the AC generators and any include acts by Defendants relating to agreement, it shall so notify the United other products covered shall not be employees of the Pitstone Facility that States in writing at least four months longer than one year. The United States, are necessary to comply with the prior to the date the transition services in its sole discretion, may approve an employment laws of the United agreement expires. The United States extension of the term of the portion of Kingdom. shall respond to any such request for this supply agreement relating the H. Defendants shall permit extension in writing at least three machined housings for the AC prospective Acquirers of the Electrical months prior to the date the transition generators and any other products Power Divestiture Assets to have services agreement expires. covered to for a period of up to one year. reasonable access to personnel and to M. At the option of the Acquirer of If the Acquirer of the Electrical Power make inspections of the physical the Electrical Power Divestiture Assets, Divestiture Assets seeks an extension of facilities to be divested; access to any UTC shall enter into a supply agreement the term of this supply agreement, it and all environmental, zoning, and to supply components used in or shall so notify the United States in other permit documents and necessary for the design, development, writing at least four months prior to the information; and access to any and all manufacture, marketing, servicing, date the supply agreement expires. If the financial, operational, or other distribution, repair, and/or sale of United States approves such an documents and information customarily aircraft electrical generation systems extension, it shall so notify the Acquirer provided as part of a due diligence and electrical distribution systems of the Electrical Power Divestiture process. sufficient to meet the needs identified Assets in writing at least three months I. Defendants shall warrant to the by the Acquirer of the Electrical Power prior to the date the supply agreement Acquirer of the Electrical Power Divestiture Assets. The terms and expires. In the alternative, at the option Divestiture Assets that each asset conditions of any contractual of the Acquirer of the Electrical Power included in the Electrical Power arrangement intended to satisfy this Divestiture Assets, UTC shall provide Divestiture Assets will be operational on provision must be reasonably related to the Acquirer of the Electrical Power the date of sale. market conditions for these products. Divestiture Assets the manufacturing J. Defendants shall not take any action The terms and conditions of any such know-how sufficient to enable the that will impede in any way the supply agreement shall be subject to the Acquirer of the Electrical Power permitting, operation, or divestiture of approval of the United States, in its sole Divestiture Assets to manufacture the the Electrical Power Divestiture Assets. discretion. The duration of this supply machined parts necessary to fulfill the K. Defendants shall warrant to the agreement shall not be longer than one contractual obligations of the Acquirer Acquirer of the Electrical Power year. The United States, in its sole of the Electrical Power Divestiture Divestiture Assets that there are no discretion, may approve an extension of Assets that exist on the date the material defects in the environmental, the term of this supply agreement for a Electrical Power Divestiture Assets are zoning, or other permits pertaining to period of up to one year. If the Acquirer divested. the operation of each asset included in of the Electrical Power Divestiture O. At the option of the Acquirer of the the Electrical Power Divestiture Assets, Assets seeks an extension of the term of Electrical Power Divestiture Assets, and that following the sale of the this supply agreement, it shall so notify UTC shall enter into an agreement to Electrical Power Divestiture Assets, the United States in writing at least four supply maintenance services for the Defendants will not undertake, directly months prior to the date the supply Tornado aircraft secondary power or indirectly, any challenges to the agreement expires. If the United States system equipment sufficient to meet the environmental, zoning, or other permits approves such an extension, it shall so needs identified by the Acquirer of the

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Electrical Power Divestiture Assets. The by the Acquirer of the Electrical Power approvals are received. Defendants terms and conditions of any contractual Divestiture Assets as part of a viable, agree to use their best efforts to arrangement intended to satisfy this ongoing business that is engaged in the accomplish the divestiture of the AEC provision must be reasonably related to design, development, manufacture, Shares to Rolls-Royce and to seek all market conditions for these products. marketing, servicing, distribution, necessary approvals as expeditiously as The terms and conditions of any such repair, and sale of aircraft electrical possible. supply agreement shall be subject to the generation systems and that the B. In the event the AEC Shares are not approval of the United States, in its sole divestiture of the Electrical Power divested to Rolls-Royce pursuant to discretion. At the option of the Acquirer Divestiture Assets will remedy the paragraph VI(A) of this Final Judgment, of the Electrical Power Divestiture competitive harm alleged in the Defendants are ordered and directed, Assets, this supply agreement may Complaint. The divestiture of the within one hundred eighty calendar remain in effect until December 31, Electrical Power Divestiture Assets, days after the date that Rolls-Royce 2013. whether pursuant to Section V or waives its option to acquire the AEC P. At the option of UTC, the Acquirer Section VII of this Final Judgment, shall Shares pursuant to Clause 9 of the AEC of the Electrical Power Divestiture be made to an Acquirer that, in the Joint Venture Agreement, or that option Assets shall enter into an agreement to United States’s sole judgment, has the lapses or expires, to divest the AEC supply maintenance, repair, and intent and capability (including the Shares in a manner consistent with this overhaul services to UTC to enable UTC necessary managerial, operational, Final Judgment to an Acquirer to provide and support the engine technical and financial capability) of acceptable to the United States, in its starter motor on the Rolls-Royce Gnome competing effectively in the design, sole discretion. The United States, in its turboshaft engine. The terms and development, manufacture, marketing, sole discretion, may agree to one or conditions of any contractual servicing, distribution, repair, and sale more extensions of this time period not arrangement intended to satisfy this of aircraft electrical generation systems. to exceed ninety calendar days in total, provision must be reasonably related to The divestiture of the Electrical Power and shall notify the Court in such market conditions for these products. Divestiture Assets shall be circumstances. Defendants agree to use The terms and conditions of any such accomplished so as to satisfy the United their best efforts to divest the AEC supply agreement shall be subject to the States, in its sole discretion, that none Shares as expeditiously as possible. approval of the United States, in its sole of the terms of any agreement between C. Defendants shall offer to Rolls- discretion. At the option of UTC, this the Acquirer of the Electrical Power Royce a new right for a new period in agreement may remain in effect so long Divestiture Assets and Defendants give which Rolls-Royce may purchase or as five or more aircraft equipped with a Defendants the ability unreasonably to acquire the ‘‘AM Package’’ as defined in Rolls-Royce Gnome turboshaft engine raise the Acquirer’s costs, to lower the the ‘‘Put and Call Option Agreement are in service. Acquirer’s efficiency, or otherwise to relating to the Goodrich engine control Q. At the option of UTC, the Acquirer interfere in the ability of the Acquirer to systems aftermarket business’’ dated of the Electrical Power Divestiture compete effectively. December 31, 2008, between Rolls- Assets shall provide UTC with a non- S. Unless Thales acquires the Aerolec Royce and Goodrich (‘‘Put and Call exclusive license for intellectual Shares pursuant to the Aerolec Option Agreement’’) at the price property that is included in the Shareholders Agreement, the Electrical determined using the formula set forth Electrical Power Divestiture Assets but Power Divestiture Assets and the in clause (b) of the definition of the also is used for both aircraft electrical Aerolec Shares must be divested to the ‘‘Call Option Price’’ in the Put and Call generation systems and electrical same Acquirer. Option Agreement, until the earlier of: distribution systems and other Goodrich (1) December 31, 2023; or (2) the date products not being divested pursuant to VI. Divestiture of the AEC Shares and on which UTC no longer owns or this Final Judgment. UTC shall not Obligations Relating to AEC controls substantially all of the transfer the license described in this A. Defendants are ordered and Goodrich Aftermarket Business (‘‘Right paragraph except as part of a sale of the directed, within one hundred eighty to Purchase’’). Nothing in this Final business in which the license is used. calendar days after the filing of the Judgment shall be construed to: (1) UTC shall not use the license described Complaint in this matter, or five Affect any agreements between UTC in this paragraph for aircraft electrical calendar days after notice of the entry of and/or Goodrich, on the one hand, and generation systems and electrical this Final Judgment by the Court, Rolls-Royce, on the other, relating to the distribution systems. The terms and whichever is later, to divest the AEC option to purchase or acquire the conditions of any contractual Shares in a manner consistent with this Goodrich Aftermarket Business; (2) arrangement intended to satisfy this Final Judgment to Rolls-Royce. If, impose any obligation on UTC to provision must be reasonably related to however, applications seeking approval provide Rolls-Royce any extended market conditions for these products. to assign or transfer the AEC Shares to payments terms with respect to the The terms and conditions of any such Rolls-Royce have been filed within the Right to Purchase; or (3) restrict in any license shall be subject to the approval period permitted for the divestiture of way UTC’s ability to sell the Goodrich of the United States, in its sole the AEC Shares to Rolls-Royce with Aftermarket Business (in whole or discretion. authorities from which approval for the significant part) to a party other than R. Unless the United States otherwise divestiture of the AEC Shares is Rolls-Royce. If at any time during which consents in writing, the divestiture of required by Rolls-Royce as a condition Rolls-Royce may exercise its Right to the Electrical Power Divestiture Assets of closing, but orders or other Purchase, UTC determines to commence pursuant to Section V or by the dispositive actions by such authorities a process to sell all or a significant part Divestiture Trustee appointed pursuant on such applications have not been of the Goodrich Aftermarket Business to to Section VII of this Final Judgment issued before the end of the period a party other than Rolls-Royce, UTC shall be accomplished in such a way as permitted for this divestiture, the period shall first notify Rolls-Royce of UTC’s to satisfy the United States, in its sole shall be extended with respect to the determination and provide Rolls-Royce discretion, that the Electrical Power divestiture of the AEC Shares to Rolls- with no less than sixty days to exercise Divestiture Assets can and will be used Royce until ten calendar days after such its Right to Purchase. If Rolls-Royce

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does not exercise its Right to Purchase Assets that have not been sold during in accomplishing any required during such sixty-day period, UTC may the time periods specified in Section divestiture. The Divestiture Trustee and agree to and complete such a sale, and IV(A), V(A), and VI(A). any consultants, accountants, attorneys, the Right to Purchase will be suspended B. After the appointment of a and other persons retained by the for a period of one year from the date Divestiture Trustee becomes effective, Divestiture Trustee shall have full and the sixty-day period expires to allow the only the Divestiture Trustee shall have complete access to the personnel, books, completion of such sale. If UTC ceases the right to sell those Divestiture Assets records, and facilities of the business to its efforts to sell the Goodrich that the Divestiture Trustee has been be divested, and Defendants shall Aftermarket Business at any time during appointed to sell. The Divestiture develop financial and other information the one-year period when the Right to Trustee shall have the power and relevant to such business as the Purchase is suspended, the Right to authority to accomplish the divestiture Divestiture Trustee may reasonably Purchase ceases to be suspended when to an Acquirer or Acquirers acceptable request, subject to reasonable protection UTC ceases its efforts to sell the to the United States at such price and for trade secret or other confidential Goodrich Aftermarket Business. If such on such terms as are then obtainable research, development, or commercial one-year period expires without UTC upon reasonable effort by the information and compliance with all having completed such a sale, then UTC Divestiture Trustee, subject to the export control laws and regulations. may not again attempt to sell the provisions of Section IV, Section V, Defendants shall take no action to Goodrich Aftermarket Business to a Section VI, Section VII, and Section VIII interfere with or to impede the party other than Rolls-Royce without of this Final Judgment, and shall have Divestiture Trustee’s accomplishment of first complying with the procedures set such other powers as this Court deems any required divestiture. forth in this paragraph. appropriate. Subject to Section VII(D) of F. After its appointment, the D. Unless the United States otherwise this Final Judgment, the Divestiture Divestiture Trustee shall file monthly consents in writing, the divestiture of Trustee may hire at the cost and reports with the United States and the the AEC Shares pursuant to Section VI expense of UTC any investment Court setting forth the Divestiture or by the Divestiture Trustee appointed bankers, attorneys, or other agents, who Trustee’s efforts to accomplish any pursuant to Section VII of this Final shall be solely accountable to the divestiture ordered under this Final Judgment shall be accomplished in such Divestiture Trustee, reasonably Judgment. To the extent such reports a way as to satisfy the United States, in necessary in the Divestiture Trustee’s contain information that the Divestiture its sole discretion, that the AEC Shares judgment to assist in any required Trustee deems confidential, such can and will be used by the Acquirer of divestiture. reports shall not be filed in the public the AEC Shares to carry out the purpose C. Defendants shall not object to a sale docket of the Court. Such reports shall of AEC in an ongoing and viable manner by the Divestiture Trustee on any include the name, address, and and the divestiture of the AEC Shares ground other than the Divestiture telephone number of each person who, will remedy the competitive harm Trustee’s malfeasance. Any such during the preceding month, made an alleged in the Complaint. The objections by Defendants must be offer to acquire, expressed an interest in divestiture of the AEC Shares, whether conveyed in writing to the United States acquiring, entered into negotiations to pursuant to Section VI or Section VII of and the Divestiture Trustee within ten acquire, or was contacted or made an this Final Judgment, shall be made to an calendar days after the Divestiture inquiry about acquiring, any interest in Acquirer that, in the United States’s sole Trustee has provided the notice the Divestiture Assets being sold by the judgment, has the intent and capability required under Section VIII. Divestiture Trustee, and shall describe (including the necessary managerial, D. The Divestiture Trustee shall serve in detail each contact with any such operational, technical and financial at the cost and expense of UTC, on such person. The Divestiture Trustee shall capability) of effectively carrying out the terms and conditions as the United maintain full records of all efforts made purpose of AEC. The divestiture of the States approves, and shall account for to divest any of the Divestiture Assets. AEC Shares shall be accomplished so as all monies derived from the sale of any G. If the Divestiture Trustee has not to satisfy the United States, in its sole of the Divestiture Assets sold by the accomplished any divestiture ordered discretion, that none of the terms of any Divestiture Trustee and all costs and under this Final Judgment within six agreement between the Acquirer of the expenses so incurred. After approval by months after its appointment, the AEC Shares and Defendants give the Court of the Divestiture Trustee’s Divestiture Trustee shall promptly file Defendants the ability unreasonably to accounting, including fees for its with the Court a report setting forth: (1) raise the Acquirer’s costs, to lower the services and those of any professionals The Divestiture Trustee’s efforts to Acquirer’s efficiency, or otherwise to and agents retained by the Divestiture accomplish the required divestiture; (2) interfere in the ability of the Acquirer to Trustee, all remaining money shall be the reasons, in the Divestiture Trustee’s compete effectively. paid to defendants and the trust shall judgment, why the required divestiture then be terminated. The compensation has not been accomplished; and (3) the VII. Appointment of Divestiture Trustee of the Divestiture Trustee and any Divestiture Trustee’s recommendations. A. If Defendants have not divested all professionals and agents retained by the To the extent such reports contain of the Divestiture Assets within any of Divestiture Trustee shall be reasonable information that the Divestiture Trustee the respective time periods specified in in light of the value of the Divestiture deems confidential, such reports shall Section IV(A), V(A), and VI(A), they Assets that are being sold by the not be filed in the public docket of the shall notify the United States of that fact Divestiture Trustee and based on a fee Court. The Divestiture Trustee shall at in writing at the time the period for the arrangement providing the Divestiture the same time furnish such report to the relevant divestiture expires and identify Trustee with an incentive based on the United States which shall have the right the assets that have not been divested. price and terms of the divestiture and to make additional recommendations Upon application of the United States, the speed with which it is consistent with the purpose of the trust. the Court shall appoint a Divestiture accomplished, but timeliness is The Court thereafter shall enter such Trustee selected by the United States paramount. orders as it shall deem appropriate to and approved by the Court to effect the E. Defendants shall use their best carry out the purpose of the Final divestiture of any of the Divestiture efforts to assist the Divestiture Trustee Judgment, which may, if necessary,

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include extending the trust and the term consummated unless approved by the the individuals’ experience and of the Divestiture Trustee’s appointment Court. responsibilities. by a period requested by the United E. The Monitoring Trustee shall have IX. Financing States. no responsibility or obligation for the Defendants shall not finance all or operation of Defendants’ businesses. VIII. Notice of Proposed Divestiture any part of any purchase made pursuant F. Defendants shall assist the A. Within two business days to Section IV, Section V, Section VI, or Monitoring Trustee in monitoring following execution of a definitive Section VII of this Final Judgment. Defendants’ compliance with their divestiture agreement, Defendants or the individual obligations under this Final X. Hold Separate Divestiture Trustee, whichever is then Judgment and under the Hold Separate responsible for effecting the divestitures Until the divestitures required by this Stipulation and Order. The Monitoring required herein, shall notify the United Final Judgment have been Trustee and any consultants, States and any Monitoring Trustee of accomplished, Defendants shall take all accountants, attorneys, and other any proposed divestiture required by steps necessary to comply with the Hold persons retained by the Monitoring Section IV, Section V, or Section VI of Separate Stipulation and Order entered Trustee shall have full and complete this Final Judgment. If the Divestiture by this Court. Defendants shall take no access to the personnel, books, records, Trustee is responsible, it shall similarly action that would jeopardize the and facilities relating to the Electrical notify Defendants and the Monitoring divestitures ordered by this Court. Power Divestiture Assets, the Aerolec Trustee. The notice shall set forth the XI. Appointment of Monitoring Trustee Shares, and the AEC Shares, subject to details of the proposed divestiture and reasonable protection for trade secret or list the name, address, and telephone A. Upon the filing of this Final other confidential research, number of each person not previously Judgment, the United States may, in its development, or commercial identified who offered or expressed an sole discretion, appoint a Monitoring information or any applicable interest in or desire to acquire any Trustee for the Electrical Power privileges. Defendants shall take no ownership interest in any of the Divestiture Assets, the Aerolec Shares, action to interfere with or to impede the Divestiture Assets, together with full and/or the AEC Shares, subject to Monitoring Trustee’s accomplishment of details of the same. approval by the Court. its responsibilities. B. Within fifteen calendar days of B. The Monitoring Trustee shall have G. After its appointment, the receipt by the United States of such the power and authority to monitor Monitoring Trustee shall file monthly notice, the United States may request Defendants’ compliance with the terms reports with the United States and the from Defendants, the proposed Acquirer of this Final Judgment and the Hold Court setting forth the Defendants’ or Acquirers, any other third party, or Separate Stipulation and Order entered efforts to comply with their individual the Divestiture Trustee, if applicable, by this Court and shall have such obligations under this Final Judgment additional information concerning the powers as this Court deems appropriate. and under the Hold Separate Stipulation proposed divestiture, the proposed Subject to paragraph XI(D) of this Final and Order. To the extent such reports Acquirer or Acquirers, and any other Judgment, the Monitoring Trustee may contain information that the Monitoring potential Acquirer. Defendants and the hire at the cost and expense of Trustee deems confidential, such Divestiture Trustee shall furnish any Defendants any consultants, reports shall not be filed in the public additional information requested within accountants, attorneys, or other persons docket of the Court. fifteen calendar days of the receipt of reasonably necessary in the Monitoring H. The Monitoring Trustee shall serve the request, unless the parties shall Trustee’s judgment. These individuals until the divestitures pursuant to otherwise agree. shall be solely accountable to the Section V, Section VI, or Section VII of C. Within thirty calendar days after Monitoring Trustee. this Final Judgment are finalized. receipt of the notice, or within twenty C. Defendants shall not object to I. If the United States determines that calendar days after the United States has actions taken by the Monitoring Trustee the Monitoring Trustee has ceased to act been provided the additional in fulfillment of the Monitoring or failed to act diligently, the United information requested from Defendants, Trustee’s responsibilities under any States may appoint a substitute the proposed Acquirer or Acquirers, any Order of this Court on any ground other Monitoring Trustee in the same manner third party, and the Divestiture Trustee, than the Monitoring Trustee’s as provided in this Section. whichever is later, the United States malfeasance. Any such objections by shall provide written notice to Defendants must be conveyed in writing XII. Affidavits Defendants and the Divestiture Trustee, to the United States and the Monitoring A. Within twenty calendar days of the if there is one, stating whether or not it Trustee within ten calendar days after filing of the Complaint in this matter, objects to the proposed divestiture. If the action taken by the Monitoring and every thirty calendar days thereafter the United States provides written Trustee giving rise to the Defendants’ until the divestitures have been notice that it does not object, the objection. completed under Section IV, Section V, divestiture may be consummated, D. The Monitoring Trustee and any and Section VI, or Section VII, subject only to UTC’s limited right to consultants, accountants, attorneys, and Defendants shall deliver to the United object to the sale under Section VII(C) other persons retained by the States and any Monitoring Trustee an of this Final Judgment. Absent written Monitoring Trustee shall serve, without affidavit as to the fact and manner of notice that the United States does not bond or other security, at the cost and their compliance with Section IV, object to the proposed Acquirer or expense of Defendants, on such terms Section V, and Section VI, or Section Acquirers or upon objection by the and conditions as the United States VII, of this Final Judgment. Each such United States, a divestiture proposed approves. The compensation of the affidavit shall include the name, under Section IV, Section V, Section VI, Monitoring Trustee and any consultants, address, and telephone number of each or Section VII shall not be accountants, attorneys, and other person who, during the preceding thirty consummated. Upon objection by UTC persons retained by the Monitoring calendar days, made an offer to acquire, under Section VII(C), a divestiture Trustee shall be on reasonable and expressed an interest in acquiring, proposed under Section VII shall not be customary terms commensurate with entered into negotiations to acquire, or

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was contacted or made an inquiry about Division, and on reasonable notice to in any legal proceeding (other than a acquiring, any interest in any of the Defendants, be permitted: grand jury proceeding). Divestiture Assets, and shall describe in (1) Access during Defendants’ office XIV. No Reacquisition detail each contact with any such hours to inspect and copy, or at the person during that period. Each such option of the United States, to require Defendants may not reacquire any affidavit shall also include a description Defendants to provide hard copy or part of the Divestiture Assets during the of the efforts Defendants have taken to electronic copies of, all books, ledgers, term of this Final Judgment. solicit buyers for the Divestiture Assets, accounts, records, data, and documents and to provide required information to in the possession, custody, or control of XV. Retention of Jurisdiction prospective Acquirers, including the Defendants, relating to any matters This Court retains jurisdiction to limitations, if any, on such information. contained in this Final Judgment; and enable any party to this Final Judgment Assuming the information set forth in (2) To interview, either informally or to apply to this Court at any time for the affidavit is true and complete, any on the record, Defendants’ officers, further orders and directions as may be objection by the United States to employees, or agents, who may have necessary or appropriate to carry out or information provided by Defendants, their individual counsel present, construe this Final Judgment, to modify including limitation on information, regarding such matters. The interviews any of its provisions, to enforce shall be made within fourteen calendar shall be subject to the reasonable compliance, and to punish violations of days of receipt of such affidavit. convenience of the interviewee and its provisions. B. Within twenty calendar days of the without restraint or interference by filing of the Complaint in this matter, Defendants. XVI. Expiration of Final Judgment Defendants shall deliver to the United B. Upon the written request of an Unless this Court grants an extension, States and any Monitoring Trustee an authorized representative of the this Final Judgment shall expire on affidavit that describes in reasonable Assistant Attorney General in charge of December 31, 2023. detail all actions Defendants have taken the Antitrust Division, Defendants shall and all steps Defendants have submit written reports or respond to XVII. Notice to the United States implemented on an ongoing basis to written interrogatories, under oath if All notifications to the United States requested, relating to any of the matters comply with Section X of this Final required pursuant to this Final contained in this Final Judgment as may Judgment. Defendants shall deliver to Judgment shall be made to the United be requested. the United States and any Monitoring States Department of Justice, Antitrust C. No information or documents Trustee an affidavit describing any Division, Litigation II Section. changes to the efforts and actions obtained by the means provided in this outlined in Defendants’ earlier affidavits section shall be divulged by the United XVIII. Public Interest Determination States to any person other than an filed pursuant to this section within Entry of this Final Judgment is in the authorized representative of the fifteen calendar days after the change is public interest. The parties have executive branch of the United States, implemented. complied with the requirements of the except in the course of legal proceedings C. Defendants shall keep all records of Antitrust Procedures and Penalties Act, to which the United States is a party all efforts made to preserve and divest 15 U.S.C. 16, including making copies (including grand jury proceedings), or the Divestiture Assets until one year available to the public of this Final for the purpose of securing compliance after such divestiture has been Judgment, the Competitive Impact with this Final Judgment, or as completed. Statement, and any comments thereon otherwise required by law. XIII. Compliance Inspection D. If at the time information or and the United States’s responses to A. For the purposes of determining or documents are furnished by Defendants comments. Based upon the record securing compliance with this Final to the United States, Defendants before the Court, which includes the Judgment, or of determining whether represent and identify in writing the Competitive Impact Statement and any the Final Judgment should be modified material in any such information or comments and response to comments or vacated, and subject to any legally documents to which a claim of filed with the Court, entry of this Final recognized privilege, from time to time protection may be asserted under Rule Judgment is in the public interest. authorized representatives of the United 26(c)(1)(G) of the Federal Rules of Civil Date: llllllllllllllll States Department of Justice Antitrust Procedure, and Defendants mark each Court approval subject to procedures Division (‘‘Antitrust Division’’), pertinent page of such material ‘‘Subject of Antitrust Procedures and Penalties including consultants and other persons to claim of protection under Rule Act, 15 U.S.C. 16. retained by the United States, shall, 26(c)(1)(G) of the Federal Rules of Civil lllllllllllllllllll upon written request of an authorized Procedure,’’ then the United States shall United States District Judge. representative of the Assistant Attorney give Defendants ten calendar days [FR Doc. 2012–18767 Filed 8–1–12; 8:45 am] General in charge of the Antitrust notice prior to divulging such material BILLING CODE P

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