FTC Requires Honeywell to License Scanner Patents in Intermec Deal

   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 [e-mail]

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