EXHIBIT 99.3
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
In the matter of
CADENCE DESIGN SYSTEMS, INC., File No. 971-0033
a corporation.
AGREEMENT CONTAINING CONSENT ORDER
The Federal Trade Commission ("Commission") having initiated an
investigation of the proposed acquisition by Cadence Design Systems, Inc.
("Cadence") of Cooper & Chyan Technology, Inc. ("CCT"), and it now appearing
that Cadence is willing to enter into an Agreement Containing Consent Order
("Agreement") to promote the development of open interfaces and to provide
for other relief,
IT IS HEREBY AGREED by and between Cadence, by its duly authorized
officers and its attorneys, and counsel for the Commission that:
1. Proposed respondent Cadence is a corporation organized, existing,
and doing business under and by virtue of the laws of the State of Delaware,
with its office and principal place of business located at 2655 Seely Road,
San Jose, California 95134.
2. Cadence admits all the jurisdictional facts set forth in the draft
of Complaint here attached.
3. Cadence waives:
(a) any further procedural steps;
(b) the requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
(c) all rights to seek judicial review or otherwise to challenge
or contest the validity of the Order entered pursuant to this Agreement; and
(d) any claim under the Equal Access to Justice Act.
4. This Agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
Agreement is accepted by the Commission, it, together with the draft of
Complaint contemplated thereby, will be placed on the public record for a
period of sixty (60) days and information in respect thereto publicly
released. The Commission thereafter may either withdraw its acceptance of
this Agreement and so notify Cadence, in which event it will take such action
as it may consider appropriate, or issue and serve its Complaint (in such
form as the circumstances may require) and decision, in disposition of the
proceeding.
5. This Agreement is for settlement purposes only and does not
constitute an admission by Cadence that the law has been violated as alleged
in the draft of Complaint here attached, or that the facts as alleged in the
draft Complaint, other than jurisdictional facts, are true.
6. This Agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Section 2.34 of the Commission's
Rules, the Commission may, without further notice to Cadence, (1) issue its
Complaint corresponding in form and substance with the draft of Complaint
here attached and its decision containing the following Order in disposition
of the proceeding and (2) make information public with respect thereto. When
so entered, the Order shall have the same
force and effect and may be altered, modified or set aside in the same manner
and within the same time provided by statute for other orders. The Order
shall become final upon service. Delivery by the U.S. Postal Service of the
Complaint and decision containing the agreed-to Order to Cadence's address as
stated in this Agreement shall constitute service. Cadence waives any right
it may have to any other manner of service. The Complaint may be used in
construing the terms of the Order, and no Agreement, understanding,
representation, or interpretation not contained in the Order or the Agreement
may be used to vary or contradict the terms of the Order.
7. Cadence has read the proposed Complaint and Order contemplated
hereby. Cadence understands that once the Order has been issued, it will be
required to file one or more compliance reports showing that it has fully
complied with the Order. Cadence further understands that it may be liable
for civil penalties in the amount provided by law for each violation of the
Order after it becomes final.
ORDER
I.
IT IS ORDERED that, as used in this Order, the following definitions
shall apply:
A. "Cadence" means Cadence Design Systems, Inc., its directors,
officers, employees, agents and representatives, predecessors, successors,
and assigns; its subsidiaries, divisions, groups and affiliates controlled by
Cadence Design Systems, Inc., and the respective directors, officers,
employees, agents, and representatives, successors, and assigns of each.
B. "CCT" means Cooper & Chyan Technology, Inc., a company organized,
existing, and doing business under and by virtue of the laws of the State of
Delaware, with its office and
principal place of business located at 1601 South De Anza Boulevard,
Cupertino, California 95014.
C. "Respondent" means Cadence.
D. "Commission" means the Federal Trade Commission.
E. "Acquisition" means the acquisition by Cadence of CCT.
F. "Independent Software Interface Programs" means Respondent's
Connections Program-TM-, any successor program thereto, or other licensing
program, promotional program or other arrangement by which Respondent enables
independent software developers to provide interfaces to Respondent's
Integrated Circuit Design Tools (including, e.g., licenses to the SKILL
Programming Language, the SKILL Development Environment, the Virtuoso Layout
Editor, and other intellectual property and documentation made available
through such programs).
G. "Integrated Circuit Design Tool" means electronic design automation
software for integrated circuit design.
H. "Integrated Circuit Routing Tool" means an Integrated Circuit
Design Tool for the automated routing of connections between electronic
components within an integrated circuit.
I. "Commercial Integrated Circuit Routing Tool" means an Integrated
Circuit Routing Tool marketed for sale or intended by the developer for use
other than solely for the developer's internal use.
II.
IT IS FURTHER ORDERED that:
A. Respondent shall permit developers of Commercial Integrated Circuit
Routing Tools to participate in Independent Software Interface Programs. The
terms by which developers
of Commercial Integrated Circuit Routing Tools participate in Respondent's
Independent Software Interface Programs shall be no less favorable than the
terms applicable to any other participants in Respondent's Independent
Software Interface Programs.
B. The purpose of this Paragraph II is to enable independent software
developers to develop and sell Integrated Circuit Routing Tools for use in
conjunction with Respondent's Integrated Circuit Design Tools, in competition
with Integrated Circuit Routing Tools offered by Respondent, and to remedy
the lessening of competition resulting from the proposed Acquisition as
alleged in the Commission's Complaint.
III.
IT IS FURTHER ORDERED that, for a period of ten (10) years from the date
this Order becomes final, Respondent shall not, without prior notification to
the Commission, directly or indirectly:
A. Acquire any stock, share capital, equity, or other interest in any
concern, corporate or non-corporate, engaged in the development or sale of
Integrated Circuit Routing Tools in the United States within the year
preceding such acquisition; provided, however, that an acquisition of such
stock, share capital, equity or other interest will be exempt from the
requirements of this paragraph if it is solely for the purpose of investment
and Respondents will hold no more than ten (10) percent of the shares of any
class of security; or
B. Acquire any assets used or previously used (and still suitable for
use) in the development or sale of Integrated Circuit Routing Tools in the
United States; provided, however, that such an acquisition will be exempt
from the requirements of this paragraph if the purchase price is less than
$5,000,000 (five million dollars).
The prior notifications required by this paragraph shall be given on the
Notification and Report Form set forth in the Appendix to Part 803 of Title
16 of the Code of Federal Regulations as amended (hereinafter referred to as
"the Notification"), and shall be prepared, transmitted and kept confidential
in accordance with the requirements of that part, except that: no filing fee
will be required for any such notification; notification shall be filed with
the Secretary of the Commission and a copy shall be delivered to the Bureau
of Competition; notification need not be made to the United States Department
of Justice; and notification is required only of Respondent and not of any
other party to the transaction. Respondent shall provide the Notification to
the Commission at least thirty (30) days prior to the consummation of any
such transaction (hereinafter referred to as the "initial waiting period").
If, within the initial waiting period, the Commission or its staff makes a
written request for additional information and documentary material,
Respondent shall not consummate the transaction until at least twenty (20)
days after complying with such request for additional information and
documentary material. Early termination of the waiting periods in this
paragraph may, where appropriate, be granted by letter from the Bureau of
Competition. Notwithstanding, prior notification shall not be required by
this paragraph for a transaction for which notification is required to be
made, and has been made, pursuant to Section 7A of the Clayton Act, 15 U.S.C.
Section 18a.
IV.
IT IS FURTHER ORDERED that, within sixty (60) days after the date this
Order becomes final, Respondent shall submit to the Commission a verified
written report setting forth in detail a full description of the manner and
form in which it intends to comply, is complying, and has complied with
Paragraph II of this Order.
V.
IT IS FURTHER ORDERED that, one year from the date this Order becomes
final, annually thereafter for the next nine (9) years, and at other times as
the Commission may require, Respondent shall file with the Commission
verified written reports setting forth in detail the manner and form in which
Respondent has complied and is complying with this Order.
VI.
IT IS FURTHER ORDERED that Respondent shall notify the Commission at
least thirty (30) days prior to any proposed change in the corporate
Respondent such as dissolution, assignment, sale resulting in the emergence
of a successor corporation, or the creation or dissolution of subsidiaries or
any other change in the corporation that may affect compliance obligations
arising out of the Order.
VII.
IT IS FURTHER ORDERED that, for the purpose of determining or securing
compliance with this Order, upon written request, Respondent shall permit any
duly authorized representative of the Commission:
A. Access, during office hours and in the presence of counsel, to
inspect and copy all books, ledgers, accounts, correspondence, memoranda and
other records and documents in the possession or under the control of
Respondent relating to any matters contained in this Order; and
B. Upon five (5) days' notice to Respondent and without restraint or
interference from it, to interview officers, directors, or employees of
Respondent.
VIII.
IT IS FURTHER ORDERED that this Order shall terminate ten (10) years
from the date this Order becomes final.
Signed this ___ day of ____________, 19_____.
FEDERAL TRADE COMMISSION CADENCE DESIGN SYSTEMS, INC.,
A CORPORATION
By:/s/ Robert N. Cook By:/s/ Joseph B. Costello
---------------------------------- -----------------------------------
Robert N. Cook Joseph B. Costello
Attorney Chief Executive Officer
Bureau of Competition
By:/s/ Morris A. Bloom By:/s/ Christopher O.B. Wright
---------------------------------- -----------------------------------
Morris A. Bloom Christopher O.B. Wright
Attorney Counsel for Cadence Design
Bureau of Competition Systems, Inc.
Cooley Godward LLP
Approved: Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306-2155
/s/ M. Howard Morse
- -------------------------------------
M. Howard Morse
Assistant Director
Bureau of Competition
/s/ George S. Cary
- -------------------------------------
George S. Cary
Deputy Director
Bureau of Competition
/s/ William J. Baer
- -------------------------------------
William J. Baer
Director
Bureau of Competition
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
In the Matter of
CADENCE DESIGN SYSTEMS, INC., File No. 971-0033
a corporation.
INTERIM AGREEMENT
This Interim Agreement is by and between Cadence Design Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware
("Cadence"), and the Federal Trade Commission, an independent agency of the
United States Government, established under the Federal Trade Commission Act
of 1914, 15 U.S.C. Section 41, ET SEQ. (the "Commission").
PREMISES
WHEREAS, Cadence has proposed to acquire all of the voting securities of
Cooper & Chyan Technology, Inc. ("CCT") pursuant to the Agreement and Plan of
Merger and Reorganization by and between Cadence and CCT, dated October 28,
1996 ("the proposed Merger");
WHEREAS, the Commission is now investigating the proposed Merger to
determine if it would violate any of the statutes the Commission enforces;
WHEREAS, if the Commission accepts the Agreement Containing Consent
Order ("Consent Agreement") in this matter, the Commission will place it on
the public record for a period of at least sixty (60) days and subsequently
may either withdraw such acceptance or issue
and serve its Complaint and decision in disposition of the proceeding
pursuant to the provisions of Section 2.34 of the Commission's Rules;
WHEREAS, the Commission is concerned that if an understanding is
not reached during the period prior to the final issuance of the
Consent Agreement by the Commission (after the 60-day public notice
period), there may be interim competitive harm;
WHEREAS, the entering into this Interim Agreement by Cadence shall
in no way be construed as an admission by Cadence that the proposed
Merger constitutes a violation of any statute; and
WHEREAS, Cadence understands that no act or transaction
contemplated by this Interim Agreement shall be deemed immune or exempt
from the provisions of the antitrust laws or the Federal Trade
Commission Act by reason of anything contained in this Interim
Agreement.
NOW, THEREFORE, Cadences agrees, upon the understanding that the
Commission has not yet determined whether the proposed Merger will be
challenged, and in consideration of the Commission's agreement that, at
the time it accepts the Consent Agreement for public comment, it will
grant early termination of the Hart-Scott-Rodino waiting period, as
follows:
1. Cadence agrees to execute the Consent Agreement and be bound
by the terms of the Order contained in the Consent Agreement, as if it
were final, from the date Cadence signs the Consent Agreement.
2. Cadence agrees that, from the date Cadence signs the Consent
Agreement until the first of the dates listed in subparagraphs 2.a. and
2.b., it will comply with the provisions of this Interim Agreement:
a. ten (10) business days after the Commission withdraws its
acceptance of the Consent Agreement pursuant to the provisions of Section
2.34 of the Commission's Rules; or
b. the date the Order is final.
3. Cadence waives all rights to contest the validity of this Interim
Agreement.
4. For the purpose of determining or securing compliance with this
Interim Agreement, subject to any legally recognized privilege, and upon
written request, and on reasonable notice, Cadence shall permit any duly
authorized representative or representatives of the Commission:
a. access, during the office hours of Cadence and in the
presence of counsel, to inspect and copy all books, ledgers, accounts,
correspondence, memoranda, and other records and documents in the
possession or under the control of Cadence relating to compliance with
this Interim Agreement; and
b. upon five (5) days' notice to Cadence and without restraint
or interference from them, to interview officers, directors, or
employees of Cadence who may have counsel present, regarding any such
matters.
5. This Interim Agreement shall not be binding until accepted by the
Commission.
Dated: May 6, 1997.
FEDERAL TRADE COMMISSION CADENCE DESIGN SYSTEMS, INC.
By: /s/ Stephen Calkins By: /s/ R.L. Smith McKeithen
-------------------------------- --------------------------------
Stephen Calkins R.L. Smith McKeithen
General Counsel Vice President and
General Counsel
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
In the matter of
CADENCE DESIGN SYSTEMS, INC., Docket No.
a corporation.
COMPLAINT
Pursuant to the provisions of the Federal Trade Commission Act and
the Clayton Act, and by virtue of the authority vested in it by said
Acts, the Federal Trade Commission, having reason to believe that
Cadence Design Systems, Inc. proposes to merge with Cooper & Chyan
Technology, Inc. in violation of Section 5 of the Federal Trade
Commission Act, as amended, 15 U.S.C. Section 45, and in violation of
Section 7 of the Clayton Act, as amended, 15 U.S.C. Section 18, and it
appearing to the Commission that a proceeding in respect thereof would
be in the public interest, hereby issues its complaint stating its
charges as follows:
I. THE RESPONDENT
1. Respondent Cadence Design Systems, Inc. ("Cadence") is a
corporation organized, existing, and doing business under and by virtue
of the laws of the State of Delaware, with its office and principal
place of business located at 2655 Seely Road, San Jose, California
95134. Cadence has annual worldwide sales of approximately $741
million, nearly all of which is attributable to electronic design
automation products and services, and more than $70 million of which is
attributable to sales of integrated circuit layout environments.
2. At all times relevant herein, the respondent has been, and is
now, a corporation as "corporation" is defined in Section 4 of the
Federal Trade Commission Act, 15 U.S.C. Section 44; and at all times
relevant herein, the respondent has been, and is now, engaged in
commerce as "commerce" is defined in Section 4 of the Federal Trade
Commission Act, 15 U.S.C. Section 44, and Section 1 of the Clayton Act,
15 U.S.C. Section 12.
II. THE PROPOSED MERGER
3. Cooper and Chyan Technology, Inc. ("CCT") is a corporation
organized, existing, and doing business under the laws of Delaware.
CCT has annual worldwide sales of approximately $37.6 million, of which
approximately $13 million is attributable to integrated circuit routing
tools and related services, with the balance attributable to printed
circuit board routing tools and related services.
4. Pursuant to an Agreement and Plan of Merger and
Reorganization dated October 28, 1996, Cadence plans to acquire control
of CCT by exchanging Cadence voting securities for the outstanding
voting securities of CCT in a transaction valued at more than $400
million (the "Proposed Merger").
III. THE RELEVANT MARKETS
5. Research, development, and sale of constraint-driven,
shape-based integrated circuit routing tools constitute one relevant
line of commerce within which to analyze the competitive effects of the
Proposed Merger. A constraint-driven, shape-based integrated circuit
routing tool is software used to automate the determination of the
connections between the electronic components within an integrated
circuit. An integrated circuit is a complex electronic
circuit that consists of as many as five million or more miniature
electronic components --such as transistors, resistors, capacitors, and
diodes -- on a piece of semiconductor material smaller than a postage
stamp.
6. There are no acceptable substitutes for constraint-driven,
shape based integrated circuit routing tools. Routing tools based on
other technology cannot accommodate unique problems that arise at deep
submicron scales of integrated circuit design (less than .35 micron).
Furthermore, at deep submicron scales of design, it is not commercially
feasible to route integrated circuit designs without automation. Given
the sheer complexity and density of deep submicron integrated circuit
designs, as well as the intense time-to-market pressures faced by
semiconductor companies in today's fast-paced electronics industry,
hand routing is not an alternative for the timely and accurate design
of integrated circuits.
7. Integrated circuit layout environments also constitute a
relevant line of commerce in which to analyze the competitive effects
of the Proposed Merger. Integrated circuit layout environments are
software infrastructures within which integrated circuit designers
access integrated circuit layout tools, including constraint-driven,
shape-based routing tools. Integrated circuit layout tools and
integrated circuit layout environments are used during the physical
design stage of the integrated circuit design process. The physical
design stage is distinct from, and occurs after, the logical design
stage of the integrated circuit design process.
8. The relevant geographic market within which to analyze the
Proposed Merger is worldwide.
IV. CONCENTRATION
9. CCT is currently the only firm with a commercially viable
constraint-driven, shape-based integrated circuit routing tool. At
least one other firm with constraint-driven, shape-based routing
technology is in the process of developing a constraint-driven,
shape-based integrated circuit routing tool.
10. Cadence is the dominant supplier of integrated circuit layout
environments. Cadence's leading competitor in the supply of integrated
circuit layout environments is the Avant! Corporation. Avant! and
several of its top executives have been charged criminally with
conspiracy and theft of trade secrets from Cadence.
V. ENTRY CONDITIONS
11. There are substantial barriers to entry in the market for
constraint-driven, shape-based integrated circuit routing tools.
Constraint-driven, shape-based integrated circuit routing tools are
technologically complex and difficult to develop. DE NOVO entry takes
approximately two to three and a half years for a company that already
possesses certain underlying core technology that can be used to
develop a constraint-driven, shape-based integrated circuit router
(such as shape-based routing technology for printed circuit boards).
Entry is likely to take even longer for a company that does not possess
such technology.
12. In order to achieve the necessary compatibility between the
integrated circuit layout tools that they use, integrated circuit
designers select integrated circuit layout tools that have interfaces
to a common integrated circuit layout environment.
13. Since Cadence is the dominant supplier of integrated circuit
layout environments, a constraint-driven, shape-based integrated
circuit routing tool that lacks an interface into a
Cadence integrated circuit layout environment is less likely to be
selected by integrated circuit designers than a constraint-driven,
shape-based integrated circuit routing tool that possesses an interface
into a Cadence integrated circuit layout environment.
14. An integrated circuit layout environment is not likely to be
selected by integrated circuit designers unless a full set of
compatible integrated circuit layout tools is available. A full set of
integrated circuit layout tools includes at least placement, routing,
and analysis and verification tools, each of which must be able to
interface into the integrated circuit layout environment that the
integrated circuit designer has selected.
VI. EFFECTS OF THE PROPOSED MERGER ON COMPETITION
15. It is in Cadence's interest to make available to users of a
Cadence integrated circuit layout environment a complete a set of
integrated circuit layout tools, because to do so makes the Cadence
integrated circuit layout environment more valuable to integrated
circuit designers. Cadence historically has provided access to Cadence
integrated circuit layout environments to suppliers of complementary
integrated circuit layout tools chat Cadence does not supply.
16. Cadence does not, however, have incentives to provide access
to a Cadence integrated circuit layout environment to suppliers of
integrated circuit layout tools that compete with Cadence products.
Cadence historically has been reluctant to provide access to Cadence
integrated circuit layout environments to suppliers of integrated
circuit layout tools that compete with Cadence products.
17. Prior to the Proposed Merger, Cadence did not have a
commercially viable constraint-driven, shape-based integrated circuit
routing tool. As a result of the Proposed
Merger, Cadence will own the only currently available commercially
viable constraint-driven, shape-based integrated circuit routing tool.
For this reason, the Proposed Merger will make Cadence less likely to
permit potential suppliers of competing constraint-driven, shape-based
integrated circuit routing tools to obtain access to Cadence
integrated circuit layout environments.
18. Without access to Cadence integrated circuit layout
environments, developers are less likely to gain successful entry into
the market for constraint-driven, shape-based integrated circuit
routing tools.
19. The Proposed Merger will make it more likely that successful
entry into the constraint-driven, shape-based integrated circuit
routing tool market would require simultaneous entry into the market
for integrated circuit layout environments. This need for dual-level
entry will decrease the likelihood of entry into the market for
constraint-driven, shape-based integrated circuit routing tools.
20. The Proposed Merger may substantially lessen competition or
tend to create a monopoly in the market for constraint-driven,
shape-based integrated circuit routing tools. The Proposed Merger may,
among other things, lead to higher prices, reduced service, and less
innovation.
VII. VIOLATIONS CHARGED
21. The Proposed Merger of Cadence Design Systems, Inc. and
Cooper & Chyan Technology, Inc., described in paragraph 4, violates
Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C.
Section 45 and Section 7 of the Clayton Act, as amended, 15 U.S.C.
Section 18.
WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission
on this ________ day of __________ 1997, issues its complaint against
said respondent.
By the Commission.
Seal Donald S. Clark
Secretary
Issued: