FTC Proposes Compulsory License to Allow Acquisition to Proceed

In the Matter of Flow International Corporation, the U.S. Federal Trade Commission is seeking public comment on the terms of a proposed consent order that would allow Flow International Corporation’s (Flow) proposed $109 million acquisition of rival waterjet manufacturer OMAX Corporation (OMAX) where Flow will be required to grant to any firm a royalty-free license to two OMAX patents relating to the controllers used in waterjet cutting systems.

According to a press release from the FTC, "Since other aspects of Flow and OMAX’s businesses can easily be duplicated by competitors, requiring Flow to grant these licenses will ensure that other firms are able to replace the competition that would otherwise have been eliminated by the proposed acquisition."

The Commission vote to accept the complaint and consent order was 4-0. The complaint, consent order, and an analysis to aid public comment can be found on the Commission’s Web site at http://www.ftc.gov/os/caselist/0810079/index.shtm. The agreement will be subject to public comment for 30 days, beginning today and continuing through August 8, 2008, after which the Commission will decide whether to make it final.