By Nathalie Tadena
The Federal Trade Commission has placed conditions on Honeywell
International Inc.'s (HON) $600 million acquisition of scan engine
manufacturer Intermec Inc. (IN), requiring the diversified
industrial company to license key two-dimensional bar code scanner
patents.
The settlement, which requires Honeywell to license its and
Intermec's patents for 2D scan engines to Datalogic IP Tech SRL for
the next 12 years, resolves FTC charges that Honeywell's planned
Intermec acquisition would be anticompetitive. Scan engines are
used in products such as retail store scanners to translate an
image, often a UPC barcode, into a digital format, that can be
interpreted and analyzed by a computer.
According to the FTC's complaint, Honeywell, Intermec and a
third competitor, Motorola, are the only 2D scan engine makers in
the U.S. that have broad enough intellectual property portfolios to
insulate them from potential patent-infringement lawsuits.
Honeywell's acquisition of Intermec would leave only Honeywell and
Motorola with control of more than 80% of the already highly
concentrated U.S. market for 2D scan engines, the FTC said.
The agency noted the most significant barrier to entry into the
U.S. market from 2D scan engine manufacturers outside the U.S. is a
lack of access to the relevant U.S. intellectual property.
Datalogic markets 2D scan engines similar to those made by
Honeywell and Intermec outside of the U.S. but currently lacks the
necessary patent rights to compete in the U.S.
Honeywell in December unveiled plans to acquire Intermec, as it
aims to further its scale in rugged mobile computing devices. The
company has said the deal will strengthen Honeywell's core scanning
and mobile computing business and open new opportunities in areas
such as voice solutions and barcode and receipt printing. Honeywell
develops 2D scan engines and related devices through it
subsidiaries Hand Held Products Inc. and Metrologic Instruments
Inc.
The FTC consent agreement will be subject to public comment for
30 days, beginning Friday and continuing through Oct. 15, after
which the commission will decide whether to make the proposed
consent order final.
Honeywell shares were up by 20 cents to $83.98 in recent
trading, while Intermec's shares were up 1.3% to $10.01.
Write to Nathalie Tadena at nathalie.tadena@wsj.com
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