82_FR_32318 82 FR 32186 - Broadcom Limited and Brocade Communications Systems, Inc.; Analysis To Aid Public Comment

82 FR 32186 - Broadcom Limited and Brocade Communications Systems, Inc.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

Federal Register Volume 82, Issue 132 (July 12, 2017)

Page Range32186-32188
FR Document2017-14536

The consent agreement in this matter settles alleged violations of federal law prohibiting unfair methods of competition. The attached Analysis to Aid Public Comment describes both the allegations in the complaint and the terms of the consent order-- embodied in the consent agreement--that would settle these allegations.

Federal Register, Volume 82 Issue 132 (Wednesday, July 12, 2017)
[Federal Register Volume 82, Number 132 (Wednesday, July 12, 2017)]
[Notices]
[Pages 32186-32188]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-14536]


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FEDERAL TRADE COMMISSION

[File No. 171 0027]


Broadcom Limited and Brocade Communications Systems, Inc.; 
Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

-----------------------------------------------------------------------

SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair methods of competition. 
The attached Analysis to Aid Public Comment describes both the 
allegations in the complaint and the terms of the consent order--
embodied in the consent agreement--that would settle these allegations.

DATES: Comments must be received on or before August 2, 2017.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/broadcombrocadeconsent/ online or on 
paper, by following the instructions in the Request for Comment part of 
the SUPPLEMENTARY INFORMATION section below. Write ``In the Matter of 
Broadcom Limited and Brocade Communications Systems, Inc., File No. 171 
0027'' on your comment and file your comment online at https://ftcpublic.commentworks.com/ftc/broadcombrocadeconsent/ by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, write ``In the Matter of Broadcom Limited and Brocade 
Communications Systems, Inc., File No. 171 0027'' on your comment and 
on the envelope, and mail your comment to the following address: 
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania 
Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, or deliver 
your comment to the following address: Federal Trade Commission, Office 
of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, 
Suite 5610 (Annex D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Stephen Antonio (202-326-2536), Bureau 
of Competition, Mergers II Division, 600 Pennsylvania Avenue NW., 
Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing consent order to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of thirty (30) days. The 
following Analysis to Aid Public Comment describes the terms of the 
consent agreement, and the allegations in the complaint. An electronic 
copy of the full text of the consent agreement package can be obtained 
from the FTC Home Page (for July 3, 2017), on the World Wide Web, at 
http://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before August 2, 2017. 
Write ``In the Matter of Broadcom Limited and Brocade Communications 
Systems, Inc., File No. 171 0027'' on your comment. Your comment--
including your name and your state--will be placed on the public record 
of this proceeding, including, to the extent practicable, on the public 
Commission Web site, at https://www.ftc.gov/policy/public-comments.
    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/broadcombrocadeconsent/ by following the instructions on the web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
    If you prefer to file your comment on paper, write ``In the Matter 
of Broadcom Limited and Brocade Communications Systems, Inc., File No. 
171 0027'' on your comment and on the envelope, and mail it to the 
following address: Federal Trade Commission, Office of the Secretary, 
600 Pennsylvania Avenue NW., Suite CC-5610 (Annex D), Washington, DC 
20580, or deliver your comment to the following address: Federal Trade 
Commission, Office of the Secretary, Constitution Center, 400 7th 
Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC. If 
possible, submit your paper comment to the Commission by courier or 
overnight service.
    Because your comment will be placed on the publicly accessible FTC 
Web site at www.ftc.gov, you are solely responsible for making sure 
that your comment does not include any sensitive or confidential 
information In particular, your comment should not include any 
sensitive personal information, such as your or anyone else's Social 
Security number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. You are also 
solely responsible for making sure that your comment does not include 
any sensitive health information, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and

[[Page 32187]]

FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)--including in particular 
competitively sensitive information such as costs, sales statistics, 
inventories, formulas, patterns, devices, manufacturing processes, or 
customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular, 
the written request for confidential treatment that accompanies the 
comment must include the factual and legal basis for the request, and 
must identify the specific portions of the comment to be withheld from 
the public record. See FTC Rule 4.9(c). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted on the public FTC Web site--as legally required by FTC Rule 
4.9(b)--we cannot redact or remove your comment from the FTC Web site, 
unless you submit a confidentiality request that meets the requirements 
for such treatment under FTC Rule 4.9(c), and the General Counsel 
grants that request.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before August 2, 2017. You can find more information, 
including routine uses permitted by the Privacy Act, in the 
Commission's privacy policy, at https://www.ftc.gov/site-information/privacy-policy.

Analysis of Agreement Containing Consent Order To Aid Public Comment

Introduction

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Order (``Consent 
Agreement'') from Broadcom Limited (``Broadcom'') and Brocade 
Communications Systems, Inc. (``Brocade''), designed to remedy the 
anticompetitive effects resulting from Broadcom's proposed acquisition 
of Brocade.
    Pursuant to an Agreement and Plan of Merger dated November 1, 2016, 
the parties agreed that Broadcom would acquire Brocade for $5.9 
billion, including assuming $400 million in debt (``the Acquisition''). 
The Commission's Complaint alleges that the proposed Acquisition, if 
consummated, would violate Section 7 of the Clayton Act, as amended, 15 
U.S.C. 18, and Section 5 of the FTC Act, as amended, 15 U.S.C. 45, by 
substantially lessening competition in the worldwide market for fibre 
channel switches. The Complaint alleges that Broadcom's access to 
Cisco's competitively sensitive confidential information, provided in 
furtherance of its ongoing supply relationship for application specific 
integrated circuits (``ASICs'') with Broadcom, may substantially lessen 
competition by increasing the likelihood that Broadcom may unilaterally 
exercise market power or by increasing the likelihood of coordinated 
interaction between the two competitors in the fibre channel switch 
market.
    Under the terms of the proposed Decision and Order (``Order'') 
contained in the Consent Agreement, Broadcom is required to implement 
firewalls preventing the flow of Cisco's confidential business 
information outside of an identified group of relevant Broadcom 
employees, and requires a monitor to oversee compliance with the 
firewall provisions. The proposed remedy effectively addresses the 
potential for competitive harm resulting from Broadcom misusing Cisco's 
competitively sensitive confidential information.
    The Consent Agreement has been placed on the public record for 30 
days to solicit comments from interested persons. Comments received 
during this period will become part of the public record. After 30 
days, the Commission will again review the Consent Agreement and the 
comments received, and decide whether it should withdraw from the 
Consent Agreement, modify it, or make it final.

The Parties

    Headquartered in both Singapore and San Jose, California, Broadcom 
is a publically traded global developer and supplier of semiconductor 
products. Broadcom's enterprise storage group specializes in designing, 
producing, and selling a broad array of integrated circuits used in 
fibre channel and Ethernet network environments, including ASICs for 
fibre channel switches.
    Headquartered in San Jose, California, Brocade is a data storage 
and networking company. Brocade is the leading manufacturer of fibre 
channel switches, and also sells wireless networking equipment, 
Ethernet switches, and software solutions for networks.

The Relevant Market and Market Structure

    The relevant line of commerce in which to analyze the effects of 
the Acquisition is fibre channel switches. The fibre channel switch is 
part of a fibre channel storage area network, which employs the fibre 
channel interconnect protocol to enable stable, high-throughput data 
transfers between servers and storage arrays in data centers. Fibre 
channel switches provide quick and secure access to large amounts of 
data and are often used for mission-critical applications.
    Fibre channel switch customers would not turn to alternative 
switching technologies in response to a small but significant price 
increase because doing so would involve significant business risk and 
expense.
    Each fibre channel switch contains an ASIC, which is an integrated 
circuit that is custom-tailored to carry out the functions of the fibre 
channel switch. It is the most costly and technically complex component 
of the switch. The ASIC is designed through a collaboration between the 
switch manufacturer and an ASIC provider. Switch manufacturers 
typically develop proprietary intellectual property, and ASIC 
providers, add intellectual property libraries, design oversight 
capabilities, and oversee the production of the ASICs at a third-party 
foundry in order to create a commercial ASIC for a switch manufacturer.
    The relevant geographic market in which to analyze the effects of 
the Acquisition on the fibre channel switch market is worldwide. Fibre 
channel switches are produced in facilities worldwide. The size and 
weight of fibre channel switches generally allow for economical 
shipping to downstream customers located throughout the world.
    The worldwide market for fibre channel switches is highly 
concentrated, consisting of a duopoly between Brocade and Cisco. The 
fibre channel market has been flat to slowly declining over the past 
several years.

Effects of the Acquisition

    The Complaint alleges that as a result of its ongoing ASIC supply 
relationship with Cisco, Broadcom will continue to have extensive 
access to Cisco's competitively sensitive confidential information. 
Without proper safeguards, Broadcom could misuse that information, 
leading to anticompetitive conduct that could make Cisco a less 
effective competitor, or increase the likelihood of coordinated 
interaction between the two remaining fibre channel switch competitors, 
in turn

[[Page 32188]]

increasing the probability that customers would pay higher prices for 
fibre channel switches and that innovation would be lessened.

Entry

    Entry into the worldwide fibre channel switch market is not likely 
to occur in a timely, likely, or sufficient magnitude, character and 
scope to deter or counteract any anticompetitive effects created by the 
proposed Acquisition. Entry is unlikely in light of slowly declining 
demand for fibre channel switches in a mature market, customers that 
tend to stay with one fibre channel switch manufacturer for extended 
periods of time, and the significant capital costs required for entry.

The Consent Agreement

    To remedy the alleged competitive concern stemming from Broadcom's 
access to Cisco's competitively sensitive confidential information, the 
consent decree prevents the Cisco information from being shared among 
Broadcom employees who could use such information to raise prices or 
lessen innovation.
    Pursuant to the proposed Order, only authorized individuals will 
have access to Cisco's competitively sensitive confidential information 
that is given to the firewalled entity, which is defined as Broadcom's 
business group responsible for the development, production, sale, and 
marketing of fibre channel ASICs for Cisco. The firewalled entity will 
have separate facilities and a separate information technology system 
with security protocols assuring access only to the authorized 
individuals. Furthermore, Broadcom shall require all authorized 
individuals to sign a non-disclosure agreement, requiring compliance 
with the terms of the proposed Order. Additionally, the proposed Order 
provides for a cooling off period whereby any authorized individual who 
leaves his or her position at the firewalled entity will not work in 
the development, production, sale, or marketing of fibre channel ASICs 
for Brocade's business unit or in the development, production, sales, 
and marketing of fibre channel switches for twelve months.
    The proposed Order also requires Broadcom to use Cisco's 
competitively sensitive confidential information only in furtherance of 
the design, manufacturing, and sale of fibre channel ASICs for Cisco. 
Moreover, Broadcom will be required to take all actions necessary to 
prevent access to, or the disclosure or use of Cisco's competitively 
sensitive confidential information by or to anyone who is not an 
authorized individual. The proposed Order also incorporates by 
reference non-disclosure provisions contained in four prior private 
Confidentiality Agreements that Broadcom, or its predecessor, signed 
with Cisco.
    To ensure compliance with the proposed Order, the Commission will 
appoint a Monitor to oversee Broadcom's and Brocade's performance of 
their obligations pursuant to the Consent Agreement. The Monitor will 
be appointed to a five-year term, but the Commission may extend or 
modify the term as appropriate up to a ten-year period. Further, the 
Consent Agreement contains appropriate reporting requirements.

Opportunity for Public Comment

    The purpose of this analysis is to facilitate public comment on the 
proposed Consent Agreement to aid the Commission in determining whether 
it should make the proposed Consent Agreement final. This analysis is 
not an official interpretation of the proposed Consent Agreement and 
does not modify its terms in any way.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2017-14536 Filed 7-11-17; 8:45 am]
BILLING CODE 6750-01-P



                                                    32186                        Federal Register / Vol. 82, No. 132 / Wednesday, July 12, 2017 / Notices

                                                    banks and nonbanking companies                           federal law prohibiting unfair methods                before August 2, 2017. Write ‘‘In the
                                                    owned by the bank holding company,                       of competition. The attached Analysis to              Matter of Broadcom Limited and
                                                    including the companies listed below.                    Aid Public Comment describes both the                 Brocade Communications Systems, Inc.,
                                                      The applications listed below, as well                 allegations in the complaint and the                  File No. 171 0027’’ on your comment.
                                                    as other related filings required by the                 terms of the consent order—embodied                   Your comment—including your name
                                                    Board, are available for immediate                       in the consent agreement—that would                   and your state—will be placed on the
                                                    inspection at the Federal Reserve Bank                   settle these allegations.                             public record of this proceeding,
                                                    indicated. The applications will also be                 DATES: Comments must be received on                   including, to the extent practicable, on
                                                    available for inspection at the offices of               or before August 2, 2017.                             the public Commission Web site, at
                                                    the Board of Governors. Interested                       ADDRESSES: Interested parties may file a              https://www.ftc.gov/policy/public-
                                                    persons may express their views in                       comment at https://                                   comments.
                                                    writing on the standards enumerated in                   ftcpublic.commentworks.com/ftc/                          Postal mail addressed to the
                                                    the BHC Act (12 U.S.C. 1842(c)). If the                  broadcombrocadeconsent/ online or on                  Commission is subject to delay due to
                                                    proposal also involves the acquisition of                paper, by following the instructions in               heightened security screening. As a
                                                    a nonbanking company, the review also                    the Request for Comment part of the                   result, we encourage you to submit your
                                                    includes whether the acquisition of the                  SUPPLEMENTARY INFORMATION section                     comments online. To make sure that the
                                                    nonbanking company complies with the                     below. Write ‘‘In the Matter of                       Commission considers your online
                                                    standards in section 4 of the BHC Act                    Broadcom Limited and Brocade                          comment, you must file it at https://
                                                    (12 U.S.C. 1843). Unless otherwise                       Communications Systems, Inc., File No.                ftcpublic.commentworks.com/ftc/
                                                    noted, nonbanking activities will be                     171 0027’’ on your comment and file                   broadcombrocadeconsent/ by following
                                                    conducted throughout the United States.                  your comment online at https://                       the instructions on the web-based form.
                                                      Unless otherwise noted, comments                       ftcpublic.commentworks.com/ftc/                       If this Notice appears at http://
                                                    regarding each of these applications                     broadcombrocadeconsent/ by following                  www.regulations.gov/#!home, you also
                                                    must be received at the Reserve Bank                     the instructions on the web-based form.               may file a comment through that Web
                                                    indicated or the offices of the Board of                 If you prefer to file your comment on                 site.
                                                    Governors not later than August 7, 2017.                 paper, write ‘‘In the Matter of Broadcom                 If you prefer to file your comment on
                                                      A. Federal Reserve Bank of Boston                                                                            paper, write ‘‘In the Matter of Broadcom
                                                                                                             Limited and Brocade Communications
                                                    (Prabal Chakrabarti, Senior Vice                                                                               Limited and Brocade Communications
                                                                                                             Systems, Inc., File No. 171 0027’’ on
                                                    President) 600 Atlantic Avenue, Boston,                                                                        Systems, Inc., File No. 171 0027’’ on
                                                                                                             your comment and on the envelope, and
                                                    Massachusetts 02210–2204. Comments                                                                             your comment and on the envelope, and
                                                                                                             mail your comment to the following
                                                    can also be sent electronically to                                                                             mail it to the following address: Federal
                                                    BOS.SRC.Applications.Comments@                           address: Federal Trade Commission,
                                                                                                                                                                   Trade Commission, Office of the
                                                    bos.frb.org:                                             Office of the Secretary, 600
                                                                                                                                                                   Secretary, 600 Pennsylvania Avenue
                                                      1. Berkshire Hills Bancorp, Inc.,                      Pennsylvania Avenue NW., Suite CC–
                                                                                                                                                                   NW., Suite CC–5610 (Annex D),
                                                    Pittsfield, Massachusetts; to acquire 100                5610 (Annex D), Washington, DC 20580,
                                                                                                                                                                   Washington, DC 20580, or deliver your
                                                    percent of the shares of Commerce                        or deliver your comment to the
                                                                                                                                                                   comment to the following address:
                                                    Bancshares Corporation and thereby                       following address: Federal Trade
                                                                                                                                                                   Federal Trade Commission, Office of the
                                                    acquire, Commerce Bank and Trust                         Commission, Office of the Secretary,                  Secretary, Constitution Center, 400 7th
                                                    Company, both of Worcester,                              Constitution Center, 400 7th Street SW.,              Street SW., 5th Floor, Suite 5610
                                                    Massachusetts.                                           5th Floor, Suite 5610 (Annex D),                      (Annex D), Washington, DC. If possible,
                                                      B. Federal Reserve Bank of Dallas                      Washington, DC 20024.                                 submit your paper comment to the
                                                    (Robert L. Triplett III, Senior Vice                     FOR FURTHER INFORMATION CONTACT:                      Commission by courier or overnight
                                                    President) 2200 North Pearl Street,                      Stephen Antonio (202–326–2536),                       service.
                                                    Dallas, Texas 75201–2272:                                Bureau of Competition, Mergers II                        Because your comment will be placed
                                                      1. Maple Financial Holdings, Inc.,                     Division, 600 Pennsylvania Avenue                     on the publicly accessible FTC Web site
                                                    Dallas, Texas; to become a bank holding                  NW., Washington, DC 20580.                            at www.ftc.gov, you are solely
                                                    company by acquiring The First                           SUPPLEMENTARY INFORMATION: Pursuant                   responsible for making sure that your
                                                    National Bank of Edgewood, Edgewood,                     to Section 6(f) of the Federal Trade                  comment does not include any sensitive
                                                    Texas.                                                   Commission Act, 15 U.S.C. 46(f), and                  or confidential information In
                                                      Board of Governors of the Federal Reserve              FTC Rule 2.34, 16 CFR 2.34, notice is                 particular, your comment should not
                                                    System, July 7, 2017.                                    hereby given that the above-captioned                 include any sensitive personal
                                                    Michele T. Fennell,                                      consent agreement containing consent                  information, such as your or anyone
                                                    Assistant Secretary of the Board.                        order to cease and desist, having been                else’s Social Security number; date of
                                                    [FR Doc. 2017–14587 Filed 7–11–17; 8:45 am]              filed with and accepted, subject to final             birth; driver’s license number or other
                                                    BILLING CODE 6210–01–P
                                                                                                             approval, by the Commission, has been                 state identification number, or foreign
                                                                                                             placed on the public record for a period              country equivalent; passport number;
                                                                                                             of thirty (30) days. The following                    financial account number; or credit or
                                                                                                             Analysis to Aid Public Comment                        debit card number. You are also solely
                                                    FEDERAL TRADE COMMISSION
                                                                                                             describes the terms of the consent                    responsible for making sure that your
                                                    [File No. 171 0027]                                      agreement, and the allegations in the                 comment does not include any sensitive
asabaliauskas on DSKBBXCHB2PROD with NOTICES




                                                                                                             complaint. An electronic copy of the                  health information, such as medical
                                                    Broadcom Limited and Brocade                             full text of the consent agreement                    records or other individually
                                                    Communications Systems, Inc.;                            package can be obtained from the FTC                  identifiable health information. In
                                                    Analysis To Aid Public Comment                           Home Page (for July 3, 2017), on the                  addition, your comment should not
                                                    AGENCY:    Federal Trade Commission.                     World Wide Web, at http://www.ftc.gov/                include any ‘‘trade secret or any
                                                    ACTION:   Proposed consent agreement.                    news-events/commission-actions.                       commercial or financial information
                                                                                                                You can file a comment online or on                which . . . is privileged or
                                                    SUMMARY:   The consent agreement in this                 paper. For the Commission to consider                 confidential’’—as provided by Section
                                                    matter settles alleged violations of                     your comment, we must receive it on or                6(f) of the FTC Act, 15 U.S.C. 46(f), and


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                                                                                 Federal Register / Vol. 82, No. 132 / Wednesday, July 12, 2017 / Notices                                           32187

                                                    FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)—                  Commission’s Complaint alleges that                   The Relevant Market and Market
                                                    including in particular competitively                    the proposed Acquisition, if                          Structure
                                                    sensitive information such as costs,                     consummated, would violate Section 7                     The relevant line of commerce in
                                                    sales statistics, inventories, formulas,                 of the Clayton Act, as amended, 15                    which to analyze the effects of the
                                                    patterns, devices, manufacturing                         U.S.C. 18, and Section 5 of the FTC Act,              Acquisition is fibre channel switches.
                                                    processes, or customer names.                            as amended, 15 U.S.C. 45, by                          The fibre channel switch is part of a
                                                       Comments containing material for                      substantially lessening competition in                fibre channel storage area network,
                                                    which confidential treatment is                          the worldwide market for fibre channel                which employs the fibre channel
                                                    requested must be filed in paper form,                   switches. The Complaint alleges that
                                                                                                                                                                   interconnect protocol to enable stable,
                                                    must be clearly labeled ‘‘Confidential,’’                Broadcom’s access to Cisco’s
                                                                                                                                                                   high-throughput data transfers between
                                                    and must comply with FTC Rule 4.9(c).                    competitively sensitive confidential
                                                                                                                                                                   servers and storage arrays in data
                                                    In particular, the written request for                   information, provided in furtherance of
                                                                                                                                                                   centers. Fibre channel switches provide
                                                    confidential treatment that accompanies                  its ongoing supply relationship for
                                                                                                                                                                   quick and secure access to large
                                                    the comment must include the factual                     application specific integrated circuits
                                                                                                                                                                   amounts of data and are often used for
                                                    and legal basis for the request, and must                (‘‘ASICs’’) with Broadcom, may
                                                                                                                                                                   mission-critical applications.
                                                    identify the specific portions of the                    substantially lessen competition by
                                                                                                                                                                      Fibre channel switch customers
                                                    comment to be withheld from the public                   increasing the likelihood that Broadcom
                                                                                                                                                                   would not turn to alternative switching
                                                    record. See FTC Rule 4.9(c). Your                        may unilaterally exercise market power
                                                                                                                                                                   technologies in response to a small but
                                                    comment will be kept confidential only                   or by increasing the likelihood of
                                                                                                                                                                   significant price increase because doing
                                                    if the General Counsel grants your                       coordinated interaction between the two
                                                                                                             competitors in the fibre channel switch               so would involve significant business
                                                    request in accordance with the law and                                                                         risk and expense.
                                                    the public interest. Once your comment                   market.
                                                                                                                Under the terms of the proposed                       Each fibre channel switch contains an
                                                    has been posted on the public FTC Web                                                                          ASIC, which is an integrated circuit that
                                                    site—as legally required by FTC Rule                     Decision and Order (‘‘Order’’) contained
                                                                                                             in the Consent Agreement, Broadcom is                 is custom-tailored to carry out the
                                                    4.9(b)—we cannot redact or remove                                                                              functions of the fibre channel switch. It
                                                    your comment from the FTC Web site,                      required to implement firewalls
                                                                                                             preventing the flow of Cisco’s                        is the most costly and technically
                                                    unless you submit a confidentiality                                                                            complex component of the switch. The
                                                    request that meets the requirements for                  confidential business information
                                                                                                             outside of an identified group of                     ASIC is designed through a
                                                    such treatment under FTC Rule 4.9(c),                                                                          collaboration between the switch
                                                    and the General Counsel grants that                      relevant Broadcom employees, and
                                                                                                             requires a monitor to oversee                         manufacturer and an ASIC provider.
                                                    request.                                                                                                       Switch manufacturers typically develop
                                                       Visit the Commission Web site at                      compliance with the firewall provisions.
                                                                                                             The proposed remedy effectively                       proprietary intellectual property, and
                                                    http://www.ftc.gov to read this Notice                                                                         ASIC providers, add intellectual
                                                    and the news release describing it. The                  addresses the potential for competitive
                                                                                                             harm resulting from Broadcom misusing                 property libraries, design oversight
                                                    FTC Act and other laws that the                                                                                capabilities, and oversee the production
                                                    Commission administers permit the                        Cisco’s competitively sensitive
                                                                                                             confidential information.                             of the ASICs at a third-party foundry in
                                                    collection of public comments to                                                                               order to create a commercial ASIC for a
                                                                                                                The Consent Agreement has been
                                                    consider and use in this proceeding as                                                                         switch manufacturer.
                                                                                                             placed on the public record for 30 days
                                                    appropriate. The Commission will                                                                                  The relevant geographic market in
                                                                                                             to solicit comments from interested
                                                    consider all timely and responsive                                                                             which to analyze the effects of the
                                                                                                             persons. Comments received during this
                                                    public comments that it receives on or                                                                         Acquisition on the fibre channel switch
                                                                                                             period will become part of the public
                                                    before August 2, 2017. You can find                                                                            market is worldwide. Fibre channel
                                                                                                             record. After 30 days, the Commission
                                                    more information, including routine                                                                            switches are produced in facilities
                                                                                                             will again review the Consent
                                                    uses permitted by the Privacy Act, in                                                                          worldwide. The size and weight of fibre
                                                                                                             Agreement and the comments received,
                                                    the Commission’s privacy policy, at                                                                            channel switches generally allow for
                                                                                                             and decide whether it should withdraw
                                                    https://www.ftc.gov/site-information/                                                                          economical shipping to downstream
                                                                                                             from the Consent Agreement, modify it,
                                                    privacy-policy.                                                                                                customers located throughout the world.
                                                                                                             or make it final.
                                                    Analysis of Agreement Containing                                                                                  The worldwide market for fibre
                                                                                                             The Parties                                           channel switches is highly
                                                    Consent Order To Aid Public Comment
                                                                                                               Headquartered in both Singapore and                 concentrated, consisting of a duopoly
                                                    Introduction                                             San Jose, California, Broadcom is a                   between Brocade and Cisco. The fibre
                                                       The Federal Trade Commission                          publically traded global developer and                channel market has been flat to slowly
                                                    (‘‘Commission’’) has accepted, subject to                supplier of semiconductor products.                   declining over the past several years.
                                                    final approval, an Agreement                             Broadcom’s enterprise storage group
                                                    Containing Consent Order (‘‘Consent                                                                            Effects of the Acquisition
                                                                                                             specializes in designing, producing, and
                                                    Agreement’’) from Broadcom Limited                       selling a broad array of integrated                      The Complaint alleges that as a result
                                                    (‘‘Broadcom’’) and Brocade                               circuits used in fibre channel and                    of its ongoing ASIC supply relationship
                                                    Communications Systems, Inc.                             Ethernet network environments,                        with Cisco, Broadcom will continue to
                                                    (‘‘Brocade’’), designed to remedy the                    including ASICs for fibre channel                     have extensive access to Cisco’s
asabaliauskas on DSKBBXCHB2PROD with NOTICES




                                                    anticompetitive effects resulting from                   switches.                                             competitively sensitive confidential
                                                    Broadcom’s proposed acquisition of                         Headquartered in San Jose, California,              information. Without proper safeguards,
                                                    Brocade.                                                 Brocade is a data storage and                         Broadcom could misuse that
                                                       Pursuant to an Agreement and Plan of                  networking company. Brocade is the                    information, leading to anticompetitive
                                                    Merger dated November 1, 2016, the                       leading manufacturer of fibre channel                 conduct that could make Cisco a less
                                                    parties agreed that Broadcom would                       switches, and also sells wireless                     effective competitor, or increase the
                                                    acquire Brocade for $5.9 billion,                        networking equipment, Ethernet                        likelihood of coordinated interaction
                                                    including assuming $400 million in                       switches, and software solutions for                  between the two remaining fibre
                                                    debt (‘‘the Acquisition’’). The                          networks.                                             channel switch competitors, in turn


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                                                    32188                        Federal Register / Vol. 82, No. 132 / Wednesday, July 12, 2017 / Notices

                                                    increasing the probability that                          information by or to anyone who is not                management activities, for both the
                                                    customers would pay higher prices for                    an authorized individual. The proposed                Centers for Disease Control and
                                                    fibre channel switches and that                          Order also incorporates by reference                  Prevention and the Agency for Toxic
                                                    innovation would be lessened.                            non-disclosure provisions contained in                Substances and Disease Registry.
                                                                                                             four prior private Confidentiality
                                                    Entry                                                                                                          Claudette Grant,
                                                                                                             Agreements that Broadcom, or its
                                                       Entry into the worldwide fibre                        predecessor, signed with Cisco.                       Acting Director, Management Analysis and
                                                    channel switch market is not likely to                     To ensure compliance with the                       Services Office, Centers for Disease Control
                                                    occur in a timely, likely, or sufficient                 proposed Order, the Commission will                   and Prevention.
                                                    magnitude, character and scope to deter                  appoint a Monitor to oversee                          [FR Doc. 2017–14745 Filed 7–10–17; 4:15 pm]
                                                    or counteract any anticompetitive                        Broadcom’s and Brocade’s performance                  BILLING CODE 4163–18–P
                                                    effects created by the proposed                          of their obligations pursuant to the
                                                    Acquisition. Entry is unlikely in light of               Consent Agreement. The Monitor will
                                                    slowly declining demand for fibre                        be appointed to a five-year term, but the             DEPARTMENT OF HEALTH AND
                                                    channel switches in a mature market,                     Commission may extend or modify the                   HUMAN SERVICES
                                                    customers that tend to stay with one                     term as appropriate up to a ten-year
                                                    fibre channel switch manufacturer for                    period. Further, the Consent Agreement                Food and Drug Administration
                                                    extended periods of time, and the                        contains appropriate reporting
                                                    significant capital costs required for                   requirements.                                         [Docket No. FDA–2017–N–0002]
                                                    entry.
                                                                                                             Opportunity for Public Comment                        New Animal Drugs; Withdrawal of
                                                    The Consent Agreement
                                                                                                               The purpose of this analysis is to                  Approval of a New Animal Drug
                                                       To remedy the alleged competitive                     facilitate public comment on the                      Application
                                                    concern stemming from Broadcom’s                         proposed Consent Agreement to aid the
                                                    access to Cisco’s competitively sensitive                Commission in determining whether it                  AGENCY:    Food and Drug Administration,
                                                    confidential information, the consent                    should make the proposed Consent                      HHS.
                                                    decree prevents the Cisco information                    Agreement final. This analysis is not an
                                                    from being shared among Broadcom                         official interpretation of the proposed               ACTION:   Notice of withdrawal.
                                                    employees who could use such                             Consent Agreement and does not
                                                    information to raise prices or lessen                    modify its terms in any way.                          SUMMARY:  The Food and Drug
                                                    innovation.                                                                                                    Administration (FDA) is withdrawing
                                                       Pursuant to the proposed Order, only                    By direction of the Commission.
                                                                                                                                                                   approval of two new animal drug
                                                    authorized individuals will have access                  Donald S. Clark,                                      applications (NADAs). This action is
                                                    to Cisco’s competitively sensitive                       Secretary.                                            being taken at the sponsor’s request
                                                    confidential information that is given to                [FR Doc. 2017–14536 Filed 7–11–17; 8:45 am]           because these products are no longer
                                                    the firewalled entity, which is defined                  BILLING CODE 6750–01–P                                manufactured or marketed.
                                                    as Broadcom’s business group
                                                    responsible for the development,                                                                               DATES:  Withdrawal of approval is
                                                    production, sale, and marketing of fibre                 DEPARTMENT OF HEALTH AND                              effective July 24, 2017.
                                                    channel ASICs for Cisco. The firewalled                  HUMAN SERVICES                                        FOR FURTHER INFORMATION CONTACT:
                                                    entity will have separate facilities and a                                                                     Sujaya Dessai, Center for Veterinary
                                                    separate information technology system                   Centers for Disease Control and                       Medicine (HFV–212), Food and Drug
                                                    with security protocols assuring access                  Prevention                                            Administration, 7519 Standish Pl.,
                                                    only to the authorized individuals.
                                                                                                             Sunshine Act Meeting: Board of                        Rockville, MD 20855, 240–402–5761,
                                                    Furthermore, Broadcom shall require all
                                                                                                             Scientific Counselors NCEH/ATSDR;                     sujaya.dessai@fda.hhs.gov.
                                                    authorized individuals to sign a non-
                                                    disclosure agreement, requiring                          Cancelation                                           SUPPLEMENTARY INFORMATION:    Zoetis,
                                                    compliance with the terms of the                                                                               Inc., 333 Portage St., Kalamazoo, MI
                                                                                                             FEDERAL REGISTER CITATION OF PREVIOUS
                                                    proposed Order. Additionally, the                                                                              49007 has requested that FDA withdraw
                                                                                                             ANNOUNCEMENT: The original Federal
                                                    proposed Order provides for a cooling                                                                          approval of NADA 065–291 for bulk
                                                    off period whereby any authorized                        Register Notice for this meeting was
                                                                                                                                                                   dihydrostreptomycin sulfate and NADA
                                                    individual who leaves his or her                         published in the Federal Register on
                                                                                                                                                                   065–324 for bulk streptomycin sulfate
                                                    position at the firewalled entity will not               May 22, 2017, Volume 82, Number
                                                                                                                                                                   because the products are no longer
                                                    work in the development, production,                     2017–10333, page/s/23250–23251.
                                                                                                                                                                   manufactured or marketed.
                                                    sale, or marketing of fibre channel                      PREVIOUSLY ANNOUNCED TIME AND DATE OF
                                                                                                             THE MEETING: 9:00 a.m.–noon, EDT, June                  Therefore, under authority delegated
                                                    ASICs for Brocade’s business unit or in
                                                                                                             23, 2017.                                             to the Commissioner of Food and Drugs,
                                                    the development, production, sales, and
                                                                                                             CHANGES IN THE MEETING:   This meeting is             and in accordance with § 514.116 Notice
                                                    marketing of fibre channel switches for
                                                                                                             being canceled in its entirety.                       of withdrawal of approval of application
                                                    twelve months.
                                                       The proposed Order also requires                                                                            (21 CFR 514.116), notice is given that
                                                                                                             CONTACT PERSON FOR MORE INFORMATION:
                                                                                                                                                                   approval of NADA 065–291 and NADA
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                                                    Broadcom to use Cisco’s competitively                    Amanda Malasky, BS, ORISE Fellow,
                                                    sensitive confidential information only                                                                        065–324, and all supplements and
                                                                                                             CDC, 4770 Buford Hwy., Atlanta, GA
                                                    in furtherance of the design,                            30344, telephone 770–488–7699; yoo0@                  amendments thereto, is hereby
                                                    manufacturing, and sale of fibre channel                 cdc.gov.                                              withdrawn, effective July 24, 2017.
                                                    ASICs for Cisco. Moreover, Broadcom                        The Director, Management Analysis                     As neither of these NADAs was
                                                    will be required to take all actions                     and Services Office, has been delegated               codified, the animal drug regulations do
                                                    necessary to prevent access to, or the                   the authority to sign Federal Register                not require amendment to reflect the
                                                    disclosure or use of Cisco’s                             notices pertaining to announcements of                voluntary withdrawal of approval of
                                                    competitively sensitive confidential                     meetings and other committee                          these applications.


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Document Created: 2017-07-12 03:00:19
Document Modified: 2017-07-12 03:00:19
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionProposed consent agreement.
DatesComments must be received on or before August 2, 2017.
ContactStephen Antonio (202-326-2536), Bureau of Competition, Mergers II Division, 600 Pennsylvania Avenue NW., Washington, DC 20580.
FR Citation82 FR 32186 

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