Contract analysis

I. RESPONSES TO ALLEGATIONS IN THE COMPLAINT A. Response to Introduction and Summary of Action (Complaint ¶¶ 1–8)

1. Paragraph 1. Defendant admits that this action was brought by the State of Oregon, by and through Attorney General Diane Calloway, and that the Complaint purports to challenge the acquisition of Meridian Photonics Inc. by Halcyon Semiconductor Americas Inc. Defendant denies the Complaint's characterization that the transaction at issue is unlawful, anticompetitive, or in violation of Oregon law. To the extent the

2. Paragraph 2. Defendant admits that the Complaint purports to invoke ORS 646.730 and ORS 646.775 as the statutory bases for the State's claims. Defendant denies that the cited statutes provide a basis for any of the relief sought in the Complaint, and denies that the facts alleged in the Complaint satisfy the elements of a claim under either statute. To the extent Paragraph 2 characterizes or paraphrases the substa

3. Paragraph 3. Defendant admits that Halcyon Semiconductor AG ("Halcyon AG"), acting through its wholly owned United States subsidiary Halcyon Semiconductor Americas Inc., acquired one hundred percent (100%) of the outstanding shares of Meridian Photonics Inc. ("Meridian") for a purchase price of Two Billion One Hundred Fifty Million Dollars ($2,150,000,000.00) in an all-cash transaction. Defendant further admits th

4. Paragraph 4. Defendant denies the allegation that the combination of Halcyon and Meridian would substantially lessen competition in the market for "co-packaged optics transceiver modules for data-center applications," or in any other market. Defendant specifically denies that the Attorney General's proposed relevant product market — defined as "co-packaged optics transceiver modules for data-center applications" —

5. Paragraph 5. Defendant admits that Meridian Photonics Inc. is a Delaware corporation with its headquarters located at 1820 NW Everett Street, Suite 400, Portland, Oregon 97209. Defendant further admits that Meridian designs and manufactures silicon photonics transceivers and co-packaged optics ("CPO") modules. Defendant denies the Complaint's characterization that the acquisition eliminates Meridian as an "indepen

6. Paragraph 6. Defendant denies the Attorney General's allegation that, following the acquisition, the combined Halcyon/Meridian entity would hold approximately fifty-eight percent (58%) of United States CPO transceiver sales by revenue, to the extent that such calculation is based on the Attorney General's improperly narrow proposed relevant product market. Defendant states that the relevant market is substantially

7. Paragraph 7. Defendant denies the allegation that Halcyon's vertically integrated position would enable it to degrade interoperability between Meridian CPO modules and competitors' switch application-specific integrated circuits ("ASICs"), or that Halcyon intends to or would engage in any conduct to raise rivals' costs. Defendant states that Halcyon is firmly committed to maintaining interoperability and adherence

8. Paragraph 8. Defendant denies that divestiture, injunctive relief, civil penalties, or any other form of relief sought in the Complaint is warranted, appropriate, or supported by the facts or the law. B. Response to Allegations Regarding the Parties (Complaint ¶¶ 9–18)

9. Paragraph 9. Defendant admits that the Plaintiff is the State of Oregon, acting through Attorney General Diane Calloway and the Antitrust Division of the Oregon Department of Justice, which is led by Senior Assistant Attorney General Marcus Trujillo.

10. Paragraph 10. Defendant admits that Halcyon Semiconductor Americas Inc. is a corporation organized under the laws of the State of Delaware and is a wholly owned subsidiary of Halcyon Semiconductor AG, a German Aktiengesellschaft publicly traded on the Frankfurt Stock Exchange under the ticker symbol FSE: HLC, and headquartered at Ludwigstraße 27, 80539 Munich, Bavaria, Germany.

11. Paragraph 11. Defendant admits that Dr. Tobias Wendt serves as Chief Executive Officer of Halcyon Semiconductor AG and that Katrin Schreiber serves as General Counsel of Halcyon Semiconductor AG. Defendant further admits that Priya Nagarajan serves as U.S. Deputy General Counsel of Halcyon Semiconductor Americas Inc.

12. Paragraph 12. Defendant admits that Halcyon Semiconductor AG reported consolidated annual revenue of approximately Nine Billion Three Hundred Million Euros (€9,300,000,000) for fiscal year 2022 and employs approximately 28,500 people worldwide.

13. Paragraph 13. Defendant admits that Halcyon designs and manufactures analog and mixed-signal semiconductors, power management integrated circuits, and — following the completion of the Meridian acquisition — silicon photonics components for high-speed optical interconnects. To the extent Paragraph 13 contains characterizations beyond the foregoing, Defendant denies such characterizations.

14. Paragraph 14. Defendant admits that Meridian Photonics Inc. is a corporation organized under the laws of the State of Delaware, with its headquarters in Portland, Oregon. Defendant further admits that Meridian was founded by Dr. Samuel Ashford, who served as its Chief Executive Officer, and that Linnea Johansson served as Meridian's Chief Financial Officer.

15. Paragraph 15. Defendant admits that Meridian reported fiscal year 2022 revenue of approximately Three Hundred Eighty-Five Million Dollars ($385,000,000) and employed approximately 1,200 persons at the time of the acquisition's closing.

16. Paragraph 16. Defendant admits that Meridian holds forty-seven (47) United States patents related to co-packaged optics technology.

17. Paragraph 17. Defendant admits that, following completion of the acquisition, Meridian Photonics Inc. operates as a wholly owned subsidiary of Halcyon Semiconductor Americas Inc.

18. Paragraph 18. Defendant lacks sufficient knowledge or information to form a belief as to the truth of the Attorney General's characterization of Cascadia Cloud Services Inc. (with data-center operations in Prineville and The Dalles, Oregon) and Northstar Digital Infrastructure LLC (with data-center operations in Hillsboro, Oregon) as "key Oregon data-center customers," and therefore neither admits nor denies such

19. Paragraph 19. Defendant admits that the Circuit Court of the State of Oregon for the County of Multnomah is a court of general jurisdiction under the Oregon Constitution and Oregon statutes. Defendant reserves all objections regarding subject matter jurisdiction over the specific claims asserted in the Complaint, including without limitation any objections arising from federal preemption.

20. Paragraph 20. Defendant admits that venue is proper in Multnomah County, Oregon, for purposes of this action.

21. Paragraph 21. Defendant admits that the Attorney General purports to bring this action under ORS 646.730 and ORS 646.775. Defendant denies that the Attorney General has stated a cognizable claim under those statutes, or that the facts alleged in the Complaint satisfy the statutory elements necessary to establish liability or entitlement to relief.

22. Paragraph 22. Defendant admits that Halcyon Semiconductor Americas Inc. does business in the State of Oregon through the operations of its subsidiary, Meridian Photonics Inc., which maintains its headquarters and certain of its operations in Portland, Oregon. To the extent Paragraph 22 contains additional allegations or characterizations, Defendant denies such allegations. D. Response to Allegations Regarding the

23. Paragraph 23. Defendant admits that on September 8, 2022, Halcyon Semiconductor AG, acting through Halcyon Semiconductor Americas Inc., entered into an Agreement and Plan of Merger with Meridian Photonics Inc. pursuant to which Halcyon agreed to acquire one hundred percent (100%) of the outstanding shares of Meridian.

24. Paragraph 24. Defendant admits that the aggregate purchase price for the acquisition was Two Billion One Hundred Fifty Million Dollars ($2,150,000,000.00), payable in all cash.

25. Paragraph 25. Defendant admits that the acquisition was funded by a Two Billion Two Hundred Million Dollar ($2,200,000,000.00) senior secured term loan facility, with Vereinigte Kreditbank AG serving as administrative agent, and Nordmark Capital Group and Pacific Rim Commercial Bank participating as syndicate lenders. Defendant further admits that Two Billion One Hundred Fifty Million Dollars ($2,150,000,000.00)

26. Paragraph 26. Defendant admits that Callister Blackwood & Co. served as financial advisor to Halcyon in connection with the acquisition.

27. Paragraph 27. Defendant admits that a pre-merger notification filing was made pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act"), 15 U.S.C. § 18a, on October 3, 2022 (HSR File No. 20221003-1847). Defendant further admits that the Federal Trade Commission and the United States Department of Justice granted early termination of the statutory waiting period on November 14, 2022, without

28. Paragraph 28. Defendant admits that no state-level antitrust pre-notification filing was required by applicable law in connection with the acquisition, and that no such filing was made.

29. Paragraph 29. Defendant admits that the acquisition closed on January 31, 2023.

30. Paragraph 30. Defendant admits that on April 10, 2023, the Oregon Attorney General issued a Civil Investigative Demand ("CID") to Halcyon Semiconductor Americas Inc. Defendant denies that any findings or materials obtained through the CID support the Attorney General's claims or otherwise provide a factual basis for the relief sought in the Complaint. E. Response to Allegations Regarding the Relevant Product Mark

31. Paragraph 31. Defendant denies the allegation that the relevant product market is limited to "co-packaged optics transceiver modules for data-center applications." Defendant states that the proper relevant product market, as defined under applicable antitrust principles including the hypothetical monopolist test set forth in the U.S. Department of Justice and Federal Trade Commission Horizontal Merger Guidelines,

32. Paragraph 32. Defendant denies that co-packaged optics transceiver modules constitute a distinct product market separate from other optical transceiver technologies. Defendant states that significant demand-side substitutability exists because data-center operators routinely evaluate and deploy both CPO modules and pluggable optical transceivers based on price, performance, power consumption, and deployment flexi

33. Paragraph 33. Defendant denies the Attorney General's characterization of competitive dynamics in the alleged market as set forth in this paragraph. To the extent Paragraph 33 contains factual assertions regarding the nature or characteristics of CPO technology, Defendant admits that CPO technology is an important and growing segment of the optical interconnect industry, but denies any characterization that sugge

34. Paragraph 34. Defendant denies the allegations and characterizations set forth in Paragraph 34, including any allegation that competitive dynamics in the alleged CPO market are such that the acquisition would lead to anticompetitive outcomes.

35. Paragraph 35. Defendant admits that the CPO transceiver segment is rapidly growing and that total United States CPO transceiver revenue was approximately Eight Hundred Seventy-Five Million Dollars ($875,000,000) in fiscal year 2022. Defendant states, however, that this segment is part of a broader optical interconnect market that encompasses multiple competing technologies and platforms, and that the rapid growth

36. Paragraph 36. Defendant denies the Attorney General's market-share calculations to the extent they are based on the improperly narrow market definition proposed in the Complaint. To the extent the Attorney General calculates market shares within the narrowly defined CPO transceiver segment, Defendant admits that Meridian's fiscal year 2022 revenue attributable to CPO transceiver products was approximately Three H

37. Paragraph 37. Defendant denies the allegations in Paragraph 37 to the extent they rest upon the Attorney General's narrow market definition. Defendant further denies that raw market-share figures, standing alone, establish anticompetitive effects as a matter of law or economic analysis.

38. Paragraph 38. Defendant denies the allegations in Paragraph 38, including any allegation that a combined market share in the Attorney General's proposed relevant product market creates a presumption of anticompetitive effects that cannot be rebutted.

39. Paragraph 39. Defendant admits that Luminos Systems Corp., headquartered in Austin, Texas, is a competitor in the CPO transceiver segment and holds an estimated twenty-two percent (22%) share of United States CPO transceiver sales as calculated under the Attorney General's proposed market definition. Defendant further admits that Crestwave Optical Technologies Ltd., headquartered in Shenzhen, China, holds approxi

40. Paragraph 40. Defendant denies that the Attorney General's Herfindahl-Hirschman Index ("HHI") analysis is dispositive of any issue in this case. Defendant admits that, using the Attorney General's proposed market definition, the pre-merger HHI was approximately 2,818, the post-merger HHI is approximately 4,050, and the resulting change in HHI (delta) is approximately 1,232. Defendant states, however, that HHI is

41. Paragraph 41. Defendant denies the allegation that the relevant geographic market is limited to the United States, or that a particular focus on Oregon is appropriate for purposes of geographic market definition. Defendant states that the market for co-packaged optics transceiver modules is global in scope. CPO modules are designed, manufactured, and sold on a worldwide basis, and customers — including data-cente

42. Paragraph 42. Defendant denies that the Attorney General's emphasis on Oregon-based customers, including Cascadia Cloud Services Inc. and Northstar Digital Infrastructure LLC, defines or supports a cognizable geographic submarket limited to Oregon or any sub-national region. These customers operate sophisticated, multi-facility data-center networks and procure CPO modules through national and international procur

43. Paragraph 43. Defendant denies the remaining allegations in Paragraph 43 for the same reasons set forth in response to Paragraphs 41 and 42.

44. Paragraph 44. Defendant states that CPO transceiver modules are sold globally, that customers routinely source from international suppliers including Crestwave Optical Technologies Ltd. in Shenzhen, China, and that transportation costs for CPO modules are negligible relative to product value, which further supports the conclusion that the relevant geographic market is global rather than national or sub-national.

45. Paragraph 45. Defendant denies the remaining allegations in Paragraph 45. To the extent Paragraph 45 contains factual assertions not specifically addressed above, Defendant lacks sufficient information to admit or deny such assertions and therefore denies them. G. Response to Allegations Regarding Anticompetitive Effects (Complaint ¶¶ 46–60)

46. Paragraph 46. Defendant denies the allegation that the acquisition substantially lessens competition in any relevant market, whether defined as proposed by the Attorney General or otherwise.

47. Paragraph 47. Defendant denies the allegation that the acquisition eliminates Meridian as an independent, disruptive innovator. Defendant states that Meridian's innovative capabilities — including its portfolio of forty-seven (47) CPO-related patents and its team of experienced engineers and scientists — are enhanced, not diminished, by integration with Halcyon's analog and mixed-signal semiconductor expertise, i

48. Paragraph 48. Defendant denies the Attorney General's vertical foreclosure theory. Defendant denies that it intends to or would degrade interoperability between Meridian CPO modules and third-party switch ASICs manufactured by other semiconductor companies. Halcyon's business interests are best served by ensuring that Meridian's CPO modules are compatible with the widest possible range of switch platforms.

49. Paragraph 49. Defendant denies the allegations in Paragraph 49. Defendant states that it is committed to compliance with OIF 400ZR and OIF 800ZR industry standards, which are the prevailing open standards for coherent optical interconnects in data-center environments. Halcyon has publicly committed to continued participation in the Optical Internetworking Forum and other standards-setting bodies, and to maintaini

50. Paragraph 50. Defendant denies the remaining allegations in Paragraph 50.

51. Paragraph 51. Defendant denies that the acquisition raises rivals' costs or creates barriers to entry in any relevant market. The CPO transceiver segment is characterized by low barriers to entry relative to the scale of the opportunity, and multiple firms possess the technical capabilities and financial resources to enter or expand in this space.

52. Paragraph 52. Defendant denies the allegations in Paragraph 52. Defendant states that multiple competitors, including Luminos Systems Corp. and Crestwave Optical Technologies Ltd., maintain robust research and development programs, are actively expanding their CPO manufacturing capacity, and are well-positioned to compete vigorously for customers in the CPO segment. Luminos, in particular, has announced capital e

53. Paragraph 53. Defendant denies the allegations in Paragraph 53 and incorporates its responses to Paragraphs 51 and 52 by reference.

54. Paragraph 54. Defendant denies the Attorney General's allegations regarding harm to Oregon data-center customers. Defendant states that the acquisition enables Halcyon to deliver lower-cost, higher-performance CPO modules to all customers, including Oregon-based data-center operators such as Cascadia Cloud Services Inc. and Northstar Digital Infrastructure LLC, by combining Meridian's silicon photonics design exp

55. Paragraph 55. Defendant denies the allegations in Paragraph 55 and states that Oregon data-center customers have multiple alternative sources for CPO modules and are not dependent solely upon Meridian for their optical interconnect requirements.

56. Paragraph 56. Defendant denies the allegations in Paragraph 56 and incorporates its responses to Paragraphs 54 and 55 by reference.

57. Paragraph 57. Defendant denies all remaining allegations of anticompetitive effects set forth in Paragraph 57.

58. Paragraph 58. Defendant denies the allegations in Paragraph 58.

59. Paragraph 59. Defendant denies the allegations in Paragraph 59.