[Federal Register: March 7, 1996 (Volume 61, Number 46)]
[Notices]
[Page 9167-9176]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07mr96-79]
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FEDERAL TRADE COMMISSION
[File No. 951-0096]
Saint-Gobain/Norton Industrial Ceramics Corporation; Consent
Agreement With Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Consent Agreement.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
require the Worcester, Massachusetts-based corporation--a wholly-owned
indirect subsidiary controlled by Compagnie de Saint-Gobain, a French
company--to divest businesses and associated assets in the United
States markets for fused cast refractories, hot surface igniters, and
silicon carbide refractory bricks. The consent agreement settles
allegations that Saint-Gobain's acquisition of The Carborundum Company
from the British Petroleum Company likely would lead to monopolies or
near monopolies in each of these markets, which supply products used in
industrial furnaces and home appliances.
DATES: Comments must be received on or before May 6, 1996.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave. NW., Washington, D.C. 20580.
FOR FURTHER INFORMATION CONTACT: William J. Baer, Federal Trade
Commission, H-374, 6th Street and Pennsylvania Avenue NW, Washington,
DC 20580. (202) 326-2932, or Howard Morse, Federal Trade Commission, S-
3627, 6th Street and Pennsylvania Avenue, NW., Washington, DC 20580.
(202) 326-2949.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby
given that the following consent agreement containing a 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 sixty (60) days. Public comment is invited. Such
comments or views will be considered by the Commission and will be
available for inspection and copying as its principal office in
accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of
Practice (16 CFR 4.9(b)(6)(ii)).
Agreement Containing Consent Order
The Federal Trade Commission (``the Commission''), having initiated
an investigation of the proposed acquisition by Compagnie de Saint-
Gobain, through its wholly-owned subsidiary, Societe Europeenne des
Produits Refractaires, of certain of the subsidiaries of British
Petroleum Company p.l.c. which together comprise The Carborundum
Company (``Carborundum''), in which Saint-Gobain/Norton industrial
Ceramics Corporation will acquire all of the United States assets of
Carborundum, other than assets relating to ceramic fibers, which
acquisition is more fully described at paragraph I.(F) below, and it
now appearing that Saint-Gobain/Norton Industrial Ceramics Corporation
and Compagnie de Saint-Gobain are willing to enter into an agreement
containing an order to divest certain assets and providing for other
relief:
It is hereby agreed by and between Saint-Gobain/Norton Industrial
Ceramics Corporation and Compagnie de Saint-Gobain, by their duly
authorized officers, and their attorneys, and counsel for the
Commission that:
1. Proposed respondent Saint-Gobain/Norton Industrial Ceramics
Corporation is a corporation organized, existing and doing business
under and by virtue of the laws of the state of Delaware, with its
office and principal place of business located at One New Bond Street,
Worcester, Massachusetts 01615-0008.
2. Proposed respondent admits all the jurisdictional facts set
forth in the draft of complaint here attached.
3. Proposed respondent waives:
a. Any further procedural steps;
b. The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
c. All rights to seek judicial review or otherwise to challenge or
contest the validity of the Order entered pursuant to this agreement;
and
d. Any claim under the Equal Access to Justice Act.
4. This agreement shall not become a part of the public record of
the proceeding unless and until it is accepted by the Commission. If
this agreement is accepted by the Commission it, together with the
draft of complaint contemplated thereby, will be placed on the public
record for a period of sixty (60) days and information in respect
thereto publicly released. The Commission thereafter may either
withdraw its acceptance of this agreement and so notify the proposed
respondent, in which event the Commission will take such action as it
[[Page 9168]]
may consider appropriate, or issue and serve its complaint (in such
form as the circumstances may require) and decision, in disposition of
the proceeding.
5. This agreement is for settlement purposes only and does not
constitute an admission by proposed respondent that the law has been
violated as alleged in the draft of complaint here attached, or that
the facts as alleged in the draft complaint, other than jurisdictional
facts, are true.
6. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Section 2.34 of the
Commission's Rules, the Commission may, without further notice to
proposed respondent, (1) issue its complaint corresponding in form and
substance with the draft of complaint attached hereto and its decision
containing the following Order to divest and providing for other relief
in disposition of the proceeding, and (2) make information public with
respect thereto. When so entered, the Order to divest and providing for
other relief shall have the same force and effect and may be altered,
modified, or set aside in the same manner and within the same time
provided by statute for other orders. The Order shall become final upon
service. Delivery by the U.S. Postal Service of the complaint and
decision containing the agreed-to Order to proposed respondent's
address as stated in this agreement shall constitute service. Proposed
respondent waives any right it may have to any other manner of service.
The complaint may be used in construing the terms of the Order, and no
agreement, understanding, representation or interpretation not
contained in the Order or the agreement may be used to vary or
contradict the terms of the Order.
7. Nothing contained in this agreement shall bar the Commission
from seeking judicial relief to enforce the Order, or to enforce the
Agreement to Hold Separate.
8. Proposed respondent has read the proposed complaint and Order
contemplated hereby. Proposed respondent understands that once the
Order has been issued, it will be required to file one or more
compliance reports showing it has fully complied with the Order.
Proposed respondent further understands that it may be liable for civil
penalties in the amount provided by law for each violation of the Order
after it becomes final.
Order
I
As used in this Order, the following definitions shall apply:
A. ``Respondent'' or ``Saint-Gobain'' means Saint-Gobain/Norton
Industrial Ceramics Corporation, its directors, officers, employees,
agents and representatives, its predecessors, successors, and assigns;
subsidiaries, divisions, and groups and affiliates controlled by Saint-
Gobain, and the respective directors, officers, employees, agents,
representatives, successors and assigns of each; its domestic and
foreign parents, including Compagnie de Saint-Gobain, and the
subsidiaries, divisions, and groups and affiliates controlled by
Compagnie de Saint-Gobain or any other domestic or foreign parent, and
the respective directors, officers, employees, agents, representatives,
successors and assigns of each.
B. ``Carborundum'' means the companies and assets comprising The
Carborundum Company that Saint-Gobain proposes to acquire from BP
pursuant to the Acquisition.
C. ``BP'' means The British Petroleum Company p.l.c.
D. ``Toshiba Monofrax'' means the joint venture between Carborundum
and Toshiba Ceramics Company, Limited, pursuant to the Joint Venture
Agreement dated December 20, 1965.
E. ``Commission'' means the Federal Trade Commission.
F. ``Acquisition'' means the acquisition described in the Stock
Purchase Agreement entered into on May 26, 1995 by which Saint-Gobain
has agreed to acquire and BP has agreed to convey certain rights and
interests in, and title to, Carborundum.
G. ``Fused Cast Refractories'' means all grades or types of
refractory products which are produced using a fused cast process,
i.e., melting components in electric furnaces and casting the molten
product into shaped products, including, but not limited to, fused cast
AZS (alumina-zirconia-silica) and fused cast alumina.
H. ``Hot Surface Igniters'' means all silicon carbide hot surface
igniters used in the ignition system of gas appliances.
I. ``Silicon Carbide Performance Refractories'' means all
refractory products composed of bonded silicon carbide grains.
J. ``Silicon Carbide Refractory Bricks'' means all refractory
products composed of bonded silicon carbide grains which are formed by
hydraulic, mechanical or vibratory pressing, and are marketed for use
in the manufacture of primary metals, including aluminum reduction
cells, steel blast furnaces, and copper shaft furnaces.
K. ``Carborundum Silicon Carbide Refractory Brick Technology''
means all patents, trade secrets, technology and know-how of
Carborundum for producing any Silicon Carbide Refractory Brick product
sold by Carborundum on or before the date of the Acquisition, all such
information being sufficiently detailed for the commercial production
and sale of such products, including, but not limited to, all technical
information, data, specifications, drawings, design and equipment
specifications, manuals, engineering reports, manufacturing designs and
reports, operating manuals, and formulations, laboratory research, and
quality control data.
L. ``Assets and Businesses'' means assets, properties, businesses,
and goodwill, tangible and intangible, including, without limitation,
the following:
1. All plant facilities, machinery, fixtures, equipment, vehicles,
transportation and storage facilities, furniture, tools supplies,
stores, spare parts, and other tangible personal property;
2. All customer lists, vendor lists, catalogs, sales promotion
literature, advertising materials, research materials, technical
information, dedicated management information systems, information
contained in management information systems, rights to software,
trademarks, patents and patent rights, inventions, trade secrets,
technology, know-how, ongoing research and development, specifications,
designs, drawings, processes and quality control data;
3. Raw material and finished product inventories and goods in
process;
4. All right, title and interest in and to real property, together
with appurtenances, licenses, and permits;
5. All right, title, and interest in and to the contracts entered
into in the ordinary course of business with customers (together with
associated bids), suppliers, sales representatives, distributors,
agents, personal property lessors, personal property lessees,
licensors, licensees, consignors and consignees;
6. All rights under warranties and guarantees, expressed or
implied;
7. All separately maintained, as well as relevant portions of not
separately maintained books, records and files; and
8. All items of prepaid expense.
M. ``Carborundum Fused Cast Refractories Properties to Be
Divested'' means the Carborundum Monofrax Group, Carborundum's
manufacturing facility in Falconer, New York, and any
[[Page 9169]]
other Carborundum Assets and Businesses utilized in connection with the
research, development, manufacture, distribution or sale of Fused Cast
Refractories (including any assets located at or research or
development work ongoing or completed at the Carborundum Technology
Center); provided, however, that the ``Carborundum Fused Cast
Refractories Properties to Be Divested'' does not include the name
``Carborundum'' nor any interest of Carborundum in, or contractual
relationship with, Toshiba Monofrax.
N. ``Carborundum Igniters Properties to Be Divested'' means
Carborundum's Hot Surface Igniter manufacturing facility in Mayaguez,
Puerto Rico, and any other Carborundum Assets and Businesses utilized
in connection with the research, development, manufacture, distribution
or sale of Hot Surface Igniters (including any assets located or
research and development work done at the Carborundum Technology
Center, and any rights of Carborundum in which any person has agreed
not to compete with Carborundum in the manufacture or marketing of Hot
Surface Igniters); provided, however, that ``Carborundum Igniters
Properties to Be Divested'' does not include the name ``Carborundum.''
O. ``Carborundum Silicon Carbide Properties to Be Divested'' means
Carborundum's Keasbey, New Jersey Silicon Carbide Performance
Refractories manufacturing facility, and any other Carborundum Assets
and Businesses utilized in connection with the research, development,
manufacture, distribution or sale of all products, including Silicon
Carbide Refractory Bricks and products other than Silicon Carbide
Refractory Bricks, manufactured at that plant (including such assets
located, or research and development work done, at the Carborundum
Technology Center); provided, however, that ``Silicon Carbide
Properties to Be Divested'' does not include the name ``Carborundum''
or any Carborundum silicon carbide refractory manufacturing facilities
other than the Keasbey, New Jersey plant, or any trade names used by
Carborundum.
P. ``Carborundum Properties to Be Divested'' means the Carborundum
Fused Cast Refractories Properties to Be Divested, the Carborundum
Igniters Properties to Be Divested, and the Carborundum Silicon Carbide
Properties to Be Divested.
Q. ``Carborundum Technology Center'' means Carborundum's research
and development facility located in Niagara Falls, New York.
R. ``Saint-Gobain Fused Cast Refractories Properties to Be
Divested'' means (i) Saint-Gobain's manufacturing facility in
Louisville, Kentucky, and any other Saint-Gobain Assets and Businesses
located in North America that are utilized in the research,
development, manufacture, sale or distribution of Fused Cast
Refractories and (ii) any product or processing technology utilized in
connection with the research, development, manufacture, distribution or
sale of Fused Cast Refractories (including any ongoing or completed
research or development work within Saint-Gobain that is related to
fused cast AZS refractories, fused cast alumina refractories, or to any
other fused cast products produced or sold by Saint-Gobain in North
America; provided, however, that such research shall not include
research or development work that relates solely to process technology
used by Societe Europeenne des Produits Refractaires in Europe).
S. ``Licensee'' means the person to whom the Carborundum Silicon
Carbide Refractory Brick Technology is licensed pursuant to Paragraph
II of this Order.
T. ``License Date'' means the date on which the Carborundum Silicon
Carbide Refractory Brick Technology is licensed following Commission
approval pursuant to Paragraph II of this Order.
U. ``Remaining Properties to Be Divested'' means the following:
1. The Carborundum Fused Cast Refractories Properties to Be
Divested if the Carborundum Fused Cast Refractories Properties to Be
Divested have not been divested, or divestiture of the Saint-Gobain
Fused Cast Refractories Properties to Be Divested has not been approved
by the Commission and divested, by the time that a trustee is appointed
in accordance with Paragraph III of this Order, and
2. The Carborundum Igniters Properties to Be Divested if the
Carborundum Igniter Properties to Be Divested have not been divested by
the time that a trustee is appointed in accordance with Paragraph III
of this Order, and
3. The Carborundum Silicon Carbide Properties to Be Divested if the
Carborundum Silicon Carbide Properties to Be Divested have not been
divested, or a license to the Carborundum Silicon Carbide Refractory
Brick Technology has not been approved by the Commission and granted,
by the time that a trustee is appointed in accordance with Paragraph
III of this Order.
V. ``Viability and Competitiveness'' of the Properties to Be
Divested means that such respective properties are capable of
functioning independently and competitively in the Fused Cast
Refractories, Hot Surface Igniters, and Silicon Carbide Performance
Refractories Businesses.
II
It is further ordered that:
A. Respondent shall divest, absolutely and in good faith, at no
minimum price, by the earlier of February 28, 1997, or one year from
the date the Acquisition is consummated, the Carborundum Fused Cast
Refractories Properties to Be Divested as an ongoing business, and
shall also divest such additional ancillary Carborundum Assets and
Businesses and effect such arrangements as are necessary to assure the
Viability and Competitiveness of the Carborundum Fused Cast
Refractories Properties to Be Divested.
B. Respondent may propose, and the Commission may in its sole
discretion accept, in lieu of divestiture of the Carborundum Fused Cast
Refractories Properties to Be Divested, divestiture of the Saint-Gobain
Fused Cast Refractories Properties to Be Divested, to a person that
receives the prior approval of the Commission, and in a manner that
receives the prior approval of the Commission. Divestiture of the
Saint-Gobain Fused Cast Refractories Properties to Be Divested shall,
in order to obtain Commission approval, satisfy the purposes of this
Order and remedy the lessening of competition resulting from the
Acquisition as alleged in the Commission's Complaint. Respondent's
request that the Commission approve a divestiture of the Saint-Gobain
Fused Cast Refractories Properties to Be Divested shall not toll the
time in which it is required to divest the Carborundum Fused Cast
Refractories Properties to Be Divested, except that if the Commission
has not approved or disapproved such request within ninety (90) days of
the date on which it was submitted, then, in the event of Commission
disapproval of the request, the period shall be extended by the length
of time in excess of ninety days before Commission disapproval.
Respondent's request that the Commission approve divestiture of the
Saint-Gobain Fused Cast Refractories Properties to Be Divested shall
not eliminate the requirement that it divest the Carborundum Fused Cast
Refractories Properties to Be Divested, unless such substitute
divestiture is approved by the Commission and consummated in a timely
fashion consistent with the requirements of this Order.
C. Respondent shall divest, absolutely and in good faith, at no
minimum price, by the earlier of February 28, 1997, or
[[Page 9170]]
one year from the date the Acquisition is consummated, the Carborundum
Igniters Properties to Be Divested as an ongoing business, and shall
also divest such additional ancillary Carborundum Assets and Businesses
and effect such arrangements as are necessary to assure the Viability
and Competitiveness of the Carborundum Igniters Properties to Be
Divested.
D. Respondent shall divest, absolutely and in good faith, at no
minimum price, by the earlier of February 28, 1997, or one year from
the date the Acquisition is consummated, the Carborundum Silicon
Carbide Properties to Be Divested, and shall also divest such
additional ancillary Carborundum Assets and Businesses and effect such
arrangements as are necessary to assure the Viability and
Competitiveness of the carborundum Silicon Carbide Properties to Be
Divested.
E. Respondent may propose, prior to the earlier of August 30, 1996,
or six months from the date the Acquisition is consummated, and the
Commission may in its sole discretion accept, in lieu of divestiture of
the Carborundum Silicon Carbide Properties to Be Divested, to grant,
with no continuing royalties, a perpetual license to the Carborundum
Silicon Carbide Refractory Brick Technology to a person that obtains
the prior approval of the Commission, in a manner that receives the
prior approval of the Commission. Licensing of the Carborundum Silicon
Carbide Refractory Brick Technology shall, in order to obtain
Commission approval, satisfy the purposes of this Order and remedy the
lessening of competition resulting from the Acquisition as alleged in
the Commission's Complaint. In no event shall any licensing agreement
pursuant to this paragraph contain any limitation on the products the
licensee is permitted to produce, or the geographic area in which the
licensee may produce such products. Respondent's request that the
Commission approve a licensee shall not toll the time in which it is
required to divest the Carborundum Silicon Carbide Properties to Be
Divested, except that if the Commission has not approved or disapproved
such request within ninety (90) days of the date on which it was
submitted, then, in the event of Commission disapproval of the request,
the period shall be extended by the length of time in excess of ninety
days before Commission disapproval. Respondent's request that the
Commission approve a licensee shall not eliminate the requirement that
it divest the Carborundum Silicon Carbide Properties to Be Divested,
unless such licensing is approved by the Commission and consummated in
a timely fashion consistent with the requirements of this Order.
F. If Respondent licenses the Carborundum Silicon Carbide
Refractory Brick Technology pursuant to Paragraph II. E. of this Order,
then for a period of six (6) months after the License Date, upon
reasonable notice and request from the Licensee, Respondent shall
provide to the Licensee information, technical assistance, and advice
sufficient to effect the transfer to the Licensee of the Silicon
Carbide Refractory Brick Technology and to enable the Licensee to
manufacture Silicon Carbide Refractory Bricks. Upon reasonable notice
and request from the Licensee, Respondent shall also provide to the
Licensee consultation and training with knowledgeable employees of
Respondent, including a qualified engineer, at the Licensee's facility
for a period of time, not to exceed three (3) months, sufficient to
satisfy the Licensee's management that its personnel are adequately
trained in the manufacture of Silicon Carbide Refractory Bricks.
Respondent may require reimbursement from the Licensee for all of its
direct out-of-pocket expenses, including a reasonable labor loss fee
for on-site assistance incurred in providing the services required by
this Paragraph II.F. of this Order.
G. If Respondent licenses the Carborundum Silicon Carbide
Refractory Brick Technology pursuant to Paragraph II.E. of this Order,
then Respondent shall provide the Licensee with all promotional,
advertising, and marketing materials regarding Silicon Carbide
Refractory Bricks prepared by Carborundum at any time during the period
commencing twelve (12) months prior to the date this Order becomes
final, a list of all customers of Carborundum's Silicon Carbide
Refractory Bricks during the period commencing twenty four (24) months
prior to the date this Order becomes final, and a list of Carborundum's
suppliers of silicon carbide, other raw materials, and production
components used to produce Carborundum's Silicon Carbide Refractory
Bricks.
H. Respondent shall comply with all terms of the Agreement to Hold
Separate attached to this Order and made a part hereof as Appendix I.
Said Agreement shall continue in effect with respect to the Carborundum
Fused Cast Refractories Properties to Be Divested until such time as
Respondent has divested the Carborundum Fused Cast Refractories
Properties to Be Divested, with respect to the Carborundum Igniters
Properties to Be Divested until such time as Respondent has divested
the Carborundum Igniters Properties to Be Divested, and with respect to
the Carborundum Silicon Carbide Properties to Be Divested until such
time as Respondent has divested the Carborundum Silicon Carbide
Properties to Be Divested, or until such other time as stated in said
Agreement, provided that said Agreement to Hold Separate shall not
continue in effect with respect to the Carborundum Fused Cast
Refractories Properties to Be Divested if Respondent divests, with
Commission approval, the Saint-Gobain Fused Cast Refractories
Properties to Be Divested, and shall not continue in effect with
respect to the Carborundum Silicon Carbide Properties to Be Divested if
Respondent licenses, with Commission approval, the Carborundum Silicon
Carbide Refractory Brick Technology.
I. Respondent shall divest each of the Carborundum Properties to Be
Divested only to an acquirer or acquirers that receive the prior
approval of the Commission and only in a manner that receives the prior
approval of the Commission. The purpose of the divestitures of the
Carborundum Properties to Be Divested is to ensure the continuation of
the Carborundum Properties to Be Divested as ongoing, viable businesses
engaged in the manufacture and sale of Fused Cast Refractories, Hot
Surface Igniters, and Silicon Carbide Performance Refractories,
respectively, and to remedy any lessening of competition resulting from
the Acquisition as alleged in the Commission's Complaint.
III
It is further ordered that:
A. If Respondent has not divested, absolutely and in good faith and
with the Commission's approval, each of the Carborundum Properties to
Be Divested, or, pursuant to Paragraph II.B. of this Order, the Saint-
Gobain Fused Cast Refractories Properties to Be Divested, or has not
licensed, with the Commission's approval, pursuant to Paragraph II.E.
of this Order, the Carborundum Silicon Carbide Refractory Brick
Technology, the Commission may appoint one or more trustees to divest
the Remaining Properties to Be Divested, along with any reasonable
ancillary Carborundum assets and other reasonable arrangements that are
necessary to assure the Viability and Competitiveness of such Remaining
Properties to Be Divested.
B. In the event the Commission or the Attorney General brings an
action
[[Page 9171]]
pursuant to section 5(l) of the Federal Trade Commission Act, 15 U.S.C.
45(l), or any other statute enforced by the Commission, Respondent
shall consent to the appointment of a trustee in such action. Neither
the appointment of a trustee nor a decision not to appoint a trustee
under this Paragraph shall preclude the Commission or the Attorney
General from seeking civil penalties or any other relief available to
it, including a court-appointed trustee, pursuant to section 5(l) of
the Federal Trade Commission Act, or any other statute enforced by the
Commission, for any failure by Respondent to comply with this Order.
C. If a trustee is appointed by the Commission or a court pursuant
to Paragraph III.A. of this Order, Respondent shall consent to the
following terms and conditions regarding the powers, authorities,
duties and responsibilities of the trustee:
1. The Commission shall select the trustee, subject to the consent
of Respondent, which consent shall not be unreasonably withheld. The
trustee shall be a person with experience and expertise in acquisitions
and divestitures. If Respondent has not opposed, in writing, including
the reasons for opposing, the selection of any proposed trustee within
ten (10) days after notice by the staff of the identity of any proposed
trustee, Respondent shall be deemed to have consented to the selection
of the proposed trustee.
2. Subject to the prior approval of the Commission, the trustee
shall have the exclusive power and authority to divest the Remaining
Properties to Be Divested, along with any reasonable ancillary
Carborundum assets and other reasonable arrangements that are necessary
to assure the Viability and Competitiveness of such Remaining
Properties to Be Divested.
3. The trustee shall have twelve (12) months from the date of
appointment to accomplish the divestiture or divestitures. If, however,
at the end of the twelve-month period the trustee has submitted a plan
of divestiture or believes that divestiture can be accomplished within
a reasonable time, the divestiture period may be extended by the
Commission; provided, however, the Commission may only extend the
divestiture period or divestiture periods, as applicable, two (2)
times, but not more than one (1) year in the aggregate for each
divestiture.
4. The trustee shall have full and complete access to the
personnel, books, records and facilities related to the Remaining
Properties to Be Divested, or any other relevant information, as the
trustee may reasonably request. Respondent shall develop such financial
or other information as such trustee may reasonably request and shall
cooperate with any reasonable request of the trustee. Respondent shall
take no action to interfere with or impede any trustee's accomplishment
of the divestiture or divestitures. Any delays in divestiture caused by
Respondent shall extend the time for divestiture under this Paragraph
in an amount equal to the delay, as determined by the Commission or the
court for a court-appointed trustee.
5. Subject to Respondent's absolute and unconditional obligation to
divest at no minimum price, the trustee shall use his or her best
efforts to negotiate the most favorable price and terms available for
the divestiture of the Remaining Properties to Be Divested. If the
trustee receives bona fide offers for the Remaining Properties to Be
Divested from more than one acquiring entity or entities, and if the
Commission determines to approve more than one such acquiring entity,
the trustee shall divest to the acquiring entity or entities selected
by Respondent from among those approved by the Commission.
6. The trustee shall serve, without bond or other security, at the
cost and expense of Respondent, on such reasonable and customary terms
and conditions as the Commission or a court may set. The trustee shall
have authority to employ, at the cost and expense of Respondent, such
consultants, accountants, attorneys, investment bankers, business
brokers, appraisers, and other representatives and assistants as are
reasonably necessary to carry out the trustee's duties and
responsibilities. The trustee shall account for all monies derived from
the sale and all expenses incurred. After approval by the Commission
and, in the case of a court-appointed trustee, by the court, of the
account of the trustee, including fees for his or her services, all
remaining monies shall be paid at the direction of Respondent and the
trustee's power shall be terminated. The trustee's compensation shall
be based at least in significant part on a commission arrangement
contingent on the trustee's divesting the Remaining Properties to be
Divested.
7. Respondent shall indemnify the trustee and hold the trustee
harmless against any losses, claims, damages, or liabilities arising
out of, or in connection with, the performance of the trustee's duties
under this Order, including all reasonable fees of counsel and other
expenses incurred in connection with the preparation for, or defense of
any claim, whether or not resulting in any liability, except to the
extent that such liabilities, losses, damages, claims, or expenses
result from misfeasance, gross negligence, willful or wanton acts, or
bad faith by the trustee.
8. Within ten (10) days after appointment of the trustee, and
subject to the prior approval of the Commission and, in the case of a
court-appointed trustee, of the court, Respondent shall execute a trust
agreement that transfers to the trustee all rights and powers necessary
to permit the trustee to effect the divestitures required by this
order.
9. If a trustee ceases to act or fails to act diligently, a
substitute trustee shall be appointed in the same manner as provided in
Paragraph III.A. of this Order.
10. The Commission or, in the case of a court-appointed trustee,
the court may, on its own initiative or at the request of the
appropriate trustee, issue such additional orders or directions as may
be necessary or appropriate to accomplish the divestiture required by
this Order.
11. The trustee shall have no obligation or authority to operate or
maintain the Remaining Properties to Be Divested.
12. The trustee shall report in writing to Saint-Gobain and to the
Commission every sixty (60) days concerning the trustee's efforts to
accomplish divestiture.
IV
It is further ordered that within thirty (30) days after the date
this order becomes final and every sixty (60) days thereafter until
Respondent has fully complied with Paragraphs II and III of this order,
Respondent shall submit to the Commission a verified written report
setting forth in detail the manner and form in which it intends to
comply, is complying and has complied with those provisions, including
the Agreement to Hold Separate. Respondent shall include in its
compliance reports, among other things that are required from time to
time, a full description of substantive contacts or negotiations for
the divestitures of the Carborundum Fused Cast Refractories Properties
to Be Divested, Carborundum Igniter Properties to Be Divested,
Carborundum Silicon Carbide Properties to Be Divested, and divestiture
of the Saint-Gobain Fused Cast Refractories Properties to Be Divested
or licensing of the Carborundum Silicon Carbide Refractory Brick
Technology, as specified in Paragraph II of this order, including the
identity of all parties contacted. Respondent also shall
[[Page 9172]]
include in compliance reports, among other things, copies of all
written communications to and from such parties, all internal
memoranda, reports and recommendations concerning the divestitures.
V
It is further ordered that for the purposes of determining or
securing compliance with this Order, and subject to any legally
recognized privilege, upon written request and on reasonable notice to
Respondent made to counsel for Respondent, Saint-Gobain shall permit
any duly authorized representatives of the Commission:
A. Access, during office hours and in the presence of counsel, to
inspect and copy all books, ledgers, accounts, correspondence,
memoranda and other records and documents in the possession or under
the control of Respondent, relating to any matters contained in this
order; and
B. Upon ten (10) days' notice to Respondent, and without restraint
or interference from Respondent, to interview officers or employees of
Respondent, who may have counsel present, regarding such matters.
VI
It is further ordered that until the obligations set forth in
Paragraphs II and III of this Order are met, Respondent shall notify
the Commission at least thirty (30) days prior to any proposed change
in the corporation such as dissolution, assignment or sale resulting in
the emergence of a successor corporation, the creation, dissolution or
sale of subsidiaries, or any other change that may affect compliance
obligations arising out of the Order.
Agreement to Hold Separate
This Agreement to Hold Separate (the ``Hold Separate'') is by and
between Saint-Gobain/Norton Industrial Ceramics Corporation (``Saint-
Gobain''), a corporation organized, existing, and doing business under
and by virtue of the laws of Delaware, with its principal office and
place of business at One New Bond Street, Worcester, Massachusetts,
01615-0008, and the Federal Trade Commission (the ``Commission''), an
independent agency of the United States Government, established under
the Federal Trade Commission Act of 1914, 15 U.S.C. Sec. 41, et seq.
(collectively, the ``Parties'').
Premises
Whereas, on May 26, 1995, Compagnie de Saint-Gobain, the parent
company of Saint-Gobain/Norton Industrial Ceramics Corporation, entered
into, through its wholly-owned subsidiary Societe Europeenne Des
Produits Refractaires (``SEPR''), a Stock Purchase Agreement with The
Standard Oil Company, BP International Limited, and BP Exploration
(Alaska), Inc., subsidiaries of British Petroleum Company, p.l.c.
(``BP'') providing for the acquisition (the ``Acquisition'') of the
voting securities of the companies that together comprise The
Carborundum Company (``Carborundum''); and
Whereas, Carborundum, with its principal office and place of
business at 1625 Buffalo Avenue, Niagara Falls, New York, 14303,
manufactures and sells a range of products, including fused cast
refractories, hot surface igniters, and silicon carbide performance
refractories; and
Whereas, the Commission is now investigating the Acquisition to
determine if it would violate any of the statutes enforced by the
Commission; and
Whereas, if the Commission accepts the Agreement Containing Consent
Order (``Consent Order''), the Commission will place it on the public
record for a period of at least sixty (60) days and may subsequently
withdraw such acceptance pursuant to the provisions of Section 2.34 of
the Commission's Rules; and
Whereas, the Commission is concerned that if an understanding is
not reached, preserving the status quo ante of Carborundum, during the
period prior to the final acceptance and issuance of the Consent Order
by the Commission (after the sixty (60)-day public comment period),
divestiture resulting from any proceeding challenging the legality of
the Acquisition might not be possible, or might be less than an
effective remedy; and
Whereas, the Commission is concerned that if the Acquisition is
consummated, it will be necessary to preserve the Commission's ability
to require the divestiture of Carborundum and the Commission's right to
have Carborundum or the Carborundum Properties to Be Divested continue
as viable competitors independent of Saint-Gobain; and
Whereas, even if the Commission determines to finally accept the
Consent Order, it is necessary to hold separate the Carborundum
Properties to Be Divested to protect interim competition pending
divestiture or other relief; and
Whereas, the purpose of this Agreement and the Consent Order is to
(i) Preserve Carborundum as a viable and competitive business,
independent of Saint-Gobain, and engaged in the research and
development, manufacture and sale of Fused Cast Refractories, Hot
Surface Igniters and Silicon Carbide Performance Refractories pending
final acceptance or withdrawal of acceptance of the Consent Order by
the Commission pursuant to the provisions of section 2.34 of the
Commission's Rules;
(ii) Preserve the Carborundum Properties to Be Divested as viable
and competitive businesses, independent of Saint-Gobain, and engaged in
the research and development, manufacture and sale of Fused Cast
Refractories, Hot Surface Igniters and Silicon Carbide Performance
Refractories pending Divestiture or other relief pursuant to Paragraph
II or Paragraph III of the Consent Order;
(iii) Preserve Carborundum as a viable and competitive business,
independent of Saint-Gobain, and engaged in the research and
development, manufacture and sale of Fused Cast Refractories, Hot
Surface Igniters and Silicon Carbide Performance Refractories and
prevent any interim harm to consumers as a result of the Acquisition;
(iv) Remedy the anticompetitive effects of the Acquisition as
alleged in the Commission's Complaint; and
Whereas, entering into this Hold Separate shall in no way be
construed as an admission by Saint-Gobain that the Acquisition is
illegal or would have any anticompetitive effects; and
Whereas, Saint-Gobain understands that no act or transaction
contemplated by this Hold Separate shall be deemed immune or exempt
from the provisions of the antitrust laws or the Federal Trade
Commission Act by reason of anything contained in this Hold Separate.
Now, Therefore, the Parties agree, upon the understanding that the
Commission has not yet determined whether the Acquisition will be
challenged, and in consideration of the Commission's agreement at the
time it accepts the Consent Order for public comment that, unless the
Commission determines to reject the Consent Order, the Commission will
not seek a temporary restraining order, preliminary injunction, or
permanent injunction to prevent consummation of the Acquisition, and
will grant early termination of the Hart-Scott-Rodino waiting period,
as follows:
1. Saint-Gobain agrees to execute and be bound by the attached
Consent Order.
2. The terms ``Fused Cast Refractories,'' ``Hot Surface Igniters,''
``Silicon Carbide Performance Refractories,'' ``Carborundum Fused Cast
Refractories Properties to Be Divested,'' ``Carborundum Igniters
Properties to Be Divested,'' ``Carborundum Silicon Carbide Properties
to Be Divested,''
[[Page 9173]]
``Carborundum Properties to Be Divested,'' and ``Acquisition'' have the
same definitions as in the Consent Order;
3. Saint-Gobain agrees that from the date this Hold Separate is
accepted until the earliest of the dates listed in subparagraphs 3.a.
or 3.b., it will comply with the provisions of paragraph 5 of this Hold
Separate with respect to Carborundum:
a. Five (5) business days after the Commission withdraws its
acceptance of the Consent Order pursuant to the provisions of Section
2.34 of the Commission's Rules;
b. The day after the Commission accepts as final the Consent Order
pursuant to the provisions of Section 2.34 of the Commission's Rules.
Provided, however, that Saint-Gobain is not required to hold separate
pursuant to this Hold Separate any of the following business groups or
businesses of Carborundum: Ceramic Fiber; Microelectronics; Structural
Ceramics; Boron Nitride; Ekonol Polyester Resin; Carborundum Specialty
Products; Irrigation; or Carborundum's silicon carbide refractory
manufacturing plants in Germany, The United Kingdom or Australia.
4. Saint-Gobain agrees that from the date this Hold Separate is
accepted until the earliest of the dates listed in subparagraphs 4.a.,
or 4.b., it will comply with the provisions of paragraph 5 of this Hold
Separate with respect to each of the Carborundum Properties to Be
Divested:
a. Five (5) business days after the Commission withdraws its
acceptance of the Consent Order pursuant to the provisions of Section
2.34 of the Commission's Rules;
b. The day after the respective divestiture required by the Consent
Order is completed, or, as applicable with regard to the Carborundum
Silicon Carbide Properties to Be Divested, an approved license granted.
5. Saint-Gobain shall hold Carborundum or the Carborundum
Properties to Be Divested, as applicable pursuant to Paragraphs 3 and 4
(the ``Held-Separate Businesses''), as they are constituted on the date
the Acquisition is consummated, separate and apart on the following
terms and conditions:
a. The Held-Separate Business shall be held separate and apart and
shall be operated independently of Saint-Gobain (meaning here and
hereafter, Saint-Gobain excluding the Held-Separate Businesses and
excluding all personnel connected with the Held-Separate Businesses as
of the date this Hold Separate is signed) except to the extent that
Saint-Gobain must exercise direction and control over the Held-Gobain
must exercise direction and control over the Held-Separate Businesses
to assure compliance with this Hold Separate or with the Consent Order.
b. Saint-Gobain shall not exercise direction or control over, or
influence directly or indirectly, the Held-Separate Business, the New
Board or Management Committee (as defined in subparagraph 5.d.), or any
of its operations or businesses; provided, however, that Saint-Gobain
may exercise only such direction and control over the Held-Separate
Businesses as is necessary to assure compliance with this Hold Separate
or with the Consent Order.
c. Saint-Gobain shall maintain the marketability, viability and
competitiveness of the Held-Separate Businesses, and shall not take
such action that will cause or permit the destruction, removal,
wasting, deterioration or impairment of the Held-Separate Businesses,
except in the ordinary course of business and except for ordinary wear
and tear, and shall not sell, transfer, encumber (other than in the
normal course of business), or otherwise impair the marketability,
viability or competitiveness of the Held-Separate Businesses.
d. Upon consummation of the Acquisition, Saint-Gobain shall elect a
three-person Board of Directors for the Held-Separate Business (the
``New Board''), or a three-person Management Committee. After the Order
is made final pursuant to Section 2.34 of the Commission's rules,
Saint-Gobain may elect a separate New Board or Management Committee for
each of the Held-Separate Businesses. Each New Board or Management
Committee for each Held-Separate Business shall consist of at least two
Carborundum officers knowledgeable about the Held-Separate Business,
one of whom shall be named Chairman of the New Board or Management
Committee, and who shall remain independent of Saint-Gobain and
competent to assure the continued viability and competitiveness of the
Held-Separate Business, and one New Board or Management Committee
Member who may also be an officer, agent or employee of Saint-Gobain
(the ``Saint-Gobain New Board Management Committee Member''). The
Saint-Gobain New Board or Management Committee Member for each New
Board or Management Committee for each Held-Separate Business shall not
have any direct responsibility relating to any Saint-Gobain business
that manufactures, markets or uses the products, or products that
compete with, products manufactured or marketed by such Held-Separate
Business. Except for the Saint-Gobain New Board or Management Committee
Member, Saint-Gobain shall not permit any director, officer, employee
or agent of Saint-Gobain also to be a director, officer, employee or
agent of Carborundum. Each New Board or Management Committee member
shall enter into a confidentiality agreement agreeing to be bound by
the terms and conditions of this Hold Separate.
e. Except as required by law and except to the extent that
necessary information is exchanged in the course of complying with this
Hold Separate or the Consent Order, or in the course of defending
investigations or litigation or obtaining legal advice, or providing
risk management services, Saint-Gobain shall not receive or have access
to, or the use of, any Material Confidential Information of the Held-
Separate Businesses, not in the public domain, except as such
information would be available to Saint-Gobain in the ordinary course
of business if the Acquisition had not taken place. Saint-Gobain may
receive on a regular basis from the Held-Separate Businesses aggregate
financial information necessary and essential to allow Saint-Gobain to
file financial reports, tax returns and personnel reports, and such
other information, other than information relating specifically to the
Carborundum Properties to Be Divested, necessary in the course of
evaluating and consummating the Acquisition. Any such information that
is obtained pursuant to this subparagraph shall only be used for the
purposes set out in this subparagraph. (``Material Confidential
Information,'' as used in this Hold Separate, means competitively
sensitive or proprietary information not independently known to Saint-
Gobain from sources other than the Held-Separate Businesses or the New
Board or Management Committee, as applicable, and includes but is not
limited to customer lists, customers, price lists, prices, individual
transactions, marketing methods, patents, technologies, processes, or
other trade secrets.) In no event shall Saint-Gobain receive Material
Confidential Information relating to any specific customer of
Carborundum.
f. Saint-Gobain may retain an independent auditor to monitor the
operation of the Held-Separate Businesses. Said auditor may report in
writing to Saint-Gobain on all aspects of the operation of the Held-
Separate Businesses other than information on customer lists,
customers, price lists,
[[Page 9174]]
prices, individual transactions, marketing methods, patents,
technologies, processes, or other trade secrets.
g. Except as permitted by this Hold Separate, the New Board or
Management Committee member appointed by Saint-Gobain who is also an
officer, agent, or employee of Saint-Gobain shall not receive any
Material Confidential Information of the Held-Separate Businesses or
Material Confidential Information of any person other than Saint-Gobain
and shall not disclose any such information obtained through his or her
involvement with the Held-Separate Businesses to Saint-Gobain or use it
to obtain any advantage for Saint-Gobain. The Saint-Gobain New Board or
Management Committee Member shall participate in matters that come
before the New Board or Management Committee only for the limited
purpose of considering any capital investment of over $250,000 for the
Carborundum Fused Cast Refractories Properties to Be Divested, any
capital investment over $150,000 for the Carborundum Igniters
Properties to Be Divested, any capital investment over $150,000 for the
Carborundum Silicon Carbide Properties to Be Divested, approving any
proposed budget and operating plans, authorizing dividends and
repayment of loans consistent with the provisions hereof, reviewing any
material transactions described in paragraph 5.g., and carrying out
Saint-Gobain's responsibilities under the Hold Separate and the Consent
Order. Except as permitted by the Hold Separate, the Saint-Gobain New
Board or Management Committee Member shall not participate in any other
matter.
h. All material transactions, out of the ordinary course of
business and not precluded by paragraph 5 hereof, shall be subject to a
majority vote of the New Board or Management Committee (as defined in
paragraph 5.d. hereof).
i. Saint-Gobain shall not change the composition of the New Board
or Management Committee unless the Chairman of the New Board or
Management Committee consents, or unless it is necessary to do so in
order to assure compliance with this Hold Separate or with the Consent
Order. The Chairman of the New Board or Management Committee shall have
the power to remove members of the New Board or Management Committee
for cause and to require Saint-Gobain to appoint replacement members of
the New Board or Management Committee. Saint-Gobain shall not change
the composition of the management of the Held-Separate Businesses
except that the New Board or Management Committee shall have the power
to remove management employees for any legal reason. If the Chairman
ceases to act of fails to act diligently, a substitute Chairman shall
be appointed in the same manner as provide in paragraph 5.d. Saint-
Gobain shall circulate to the management employees of Carborundum and
appropriately display a notice of the Hold Separate and the Consent
Agreement at a Conspicuous place at all offices and facilities of the
Held-Separate Businesses.
j. All earnings and profits of the Held-Separate Businesses shall
be retained separately by Carborundum or the Carborundum Properties to
Be Divested, as applicable. If necessary, Saint-Gobain shall provided
the Held-Separate Businesses with sufficient working capital to operate
at current rates of operation, upon commercially reasonable terms.
k. Should the Federal Trade Commission seek in any proceeding to
compel Saint-Gobain to divest itself of Carborundum or to compel Saint-
Gobain to divest any assets or businesses of Carborundum that it may
hold, or to seek any other injunctive or equitable relief, Saint-Gobain
shall not raise any objection based upon the expiration of the
applicable Hart-Scott-Rodino Antitrust Improvements Act waiting period
or the fact that the Commission has permitted the Acquisition. Saint-
Gobain also waives all rights to contest the validity of this Hold
Separate.
6. For the purpose of determining or securing compliance with this
Hold Separate, subject to any legally recognized privilege, and upon
written request and ten days' notice to Saint-Gobain, Saint-Gobain
shall permit any duly authorized representative(s) of the Commission:
a. Access during the office hours of Saint-Gobain and in the
presence of counsel to inspect and copy all books, ledgers, accounts,
correspondence, memoranda, and other records and documents in the
possession or under the control of Saint-Gobain or Carborundum relating
to compliance with this Hold Separate;
b. Without restraint or interference from Saint-Gobain, to
interview Saint-Gobain's or Carborundum's officers, directors or
employees, who may have counsel present, regarding any such matters.
Analysis To Aide Public Comment on the Provisionally Accepted Consent
Order
The Federal Trade Commission (``the Commission'') has accepted, for
public comment, from Compagnie de Saint-Gobain and Saint-Gobain/Norton
Industrial Ceramics Corporation, a wholly-owned subsidiary of Compagnie
de Saint-Gobain (collectively ``Saint-Gobain'') an agreement containing
a consent order. This agreement has been placed on the public record
for sixty days for reception of comments from interested persons.
Comments received during this period will become part of the public
record. After sixty days, the Commission will again review the
agreement and the comments received and will decide whether it should
withdraw from the agreement or make final the agreement's order.
The Commission's investigation of this matter concerns the proposed
acquisition by Compagnie de Saint-Gobain, through its wholly-owned
subsidiary, Societe Europeene des Produits Refractaries (``SEPR), of
certain of the subsidiaries of British Petroleum Company p.l.c., which
together comprise The Carborundum Company (``Carborundum''). As part of
this acquisition, Saint-Gobain/Norton Industrial Ceramics Corporation
will acquire United States assets of Carborundum, other than those
relating to ceramic fibers. The Commission's proposed complaint alleges
that Saint-Gobain and Carborundum compete with in each other in three
lines of commerce: fused cast refractories, which glass manufacturers
use to line furnaces; hot surface igniters (``HSIs''), which gas
appliance manufacturers use as ignition sources; and silicon carbide
refractory bricks, which manufacturers of aluminum, steel and other
metals use to line furnaces.
The agreement containing consent order would, if finally accepted
by the Commission, settle charges that the acquisition may
substantially lessen competition in the production and sale of fused
cast refractories, HSIs and silicon carbide refractory bricks in the
United States and lead to a monopoly in those lines of commerce. The
Commission has reason to believe that the acquisition and agreement
violate Section 5 of the FTC Act and the acquisition would have
anticompetitive effects and would violate Section 7 of the Clayton Act
and Section 5 of the Federal Trade Commission Act if consummated,
unless an effective remedy eliminates such anticompetitive effects.
With respect to the market for fused cast refractories, which are
used primarily by glass manufacturers in the furnaces where they melt
raw materials, the Commission's complaint alleges that these
refractories provide unique
[[Page 9175]]
characteristics, and that as a result, the use of these materials would
not be diminished by even a large price increase. Imports of fused cast
refractories, the Complaint further alleges, are small and come
primarily from Saint-Gobain. Saint-Gobain and Carborundum are the only
two producers of fused cast refractories in the United States, and
entry of other producers not only is unlikely, but would be very time-
consuming. The Commission's Complaint alleges that the proposed
acquisition, which would result in a monopoly in the United States,
would lessen competition by eliminating competition between Saint-
Gobain and Carborundum, and would lead to higher prices and less
product innovation.
In the market for HSIs, which are used primarily by gas appliance
manufacturers as an ignition source, the Commission's Complaint alleges
that HSIs, which differ by application in design and price, are the
most reliable and cost-effective ignition sources for most types of gas
appliances, such as ranges, dryers and furnaces. Moreover, customers
would have to redesign appliances to use other products. As a result,
according to the Complaint, the use of HSIs would not be diminished by
even a large price increase. Saint-Gobain and Carborundum account for
nearly all sales of HSIs in the United States, and the only other
producer of HSIs in the United States has only limited sales, nearly
all of which are to the aftermarket. The Commission's Complaint, citing
factors such as the history of failed entry and the time required for
new entry, alleges that entry would not deter or alleviate the
anticompetitive effects of the acquisition. Therefore, according to the
Commission's Complaint, the proposed acquisition, which would result in
a near monopoly in the United States in HSIs and would combine the two
closest substitutes under Saint-Gobain's control even if alternative
ignition sources were included in the market, would lessen competition
by eliminating competition between Saint-Gobain and Carborundum, and
would lead to higher prices and less product innovation.
In the market for silicon carbide refractory bricks, which are used
in such applications as lining aluminum reduction cells, steel blast
furnaces and copper shaft furnaces, the Commission's Complaint alleges
that because of the excellent corrosion resistance provided by silicon
carbide, its use in these applications would not be diminished by a
significant price increase. Imports of silicon carbide refractory
bricks, according to the Commission's Complaint, would not constrain
pricing in the United States. In the market for silicon carbide
refractory bricks, the Complaint alleges, Saint-Gobain and Carborundum
account for virtually all sales, and new entry of a competitive
producer would both be unlikely and take a long time. Therefore, the
Complaint alleges, the proposed acquisition would allow Saint-Gobain to
unilaterally exercise market power, leading to higher prices for
silicon carbide refractory bricks.
The proposed order accepted for public comment contains provisions
that would require Saint-Gobain to divest Carborundum's Monofrax fused
cast refractories business, Carborundum's HSI business, and its United
States silicon carbide refractories manufacturing plant to an acquirer
or acquirers receiving the prior approval of the Commission, by
February 28, 1997. The divestitures include those portions of the
centralized research and development operations at Carborundum that are
related to these businesses. In addition to divesting these businesses,
Saint-Gobain must divest ancillary assets and businesses and make any
arrangements necessary to assure that these Carborundum properties are
capable of being operated independently and competitively by the
acquirer or acquirers of the businesses. Saint-Gobain's divestitures of
the Carborundum businesses, if completed, would satisfy the
requirements of the Order and remedy the lessening of competition
alleged in the Complaint.
The proposed order provides that in lieu of divestiture of the
Carborundum Monofrax fused cast refractories business, Saint-Gobain may
propose divestiture of its own Corhart Refractories fused cast
refractories business, together with results of related research and
development done within Saint-Gobain organization, including research
and development done overseas. Because the Corhart business is operated
as part of the Saint-Gobain fused cast refractory business worldwide,
and relies on the Saint-Gobain organization for certain support
activities, the Commission has retained the discretion to approve or
disapprove this alternative divestiture of the Corhart business,
depending on whether divestiture to a particularly proposed acquirer
fully satisfies the purposes of the proposed order and remedies the
lessening of competition alleged in the Complaint. Among the factors
that may be relevant to this issue include the nature of the business
of the proposed acquirer, as well as the proposed acquirer's
independent research and development capabilities in fused cast
refractories and its product lines and sales and marketing organization
for fused cast refractories, in light of the fact that Corhart would be
divorced from Saint-Gobain's similar capabilities in fused cast
refractories if such divestiture is approved. If Saint-Gobain proposes
divestiture of the Corhart business, and its request is disapproved by
the Commission, Saint-Gobain would continue to have the obligation to
divest the Carborundum fused cast refractory business to a Commission
approved acquirer by February 28, 1997.
The proposed order also provides that in lieu of divestiture of
Carborundum's Keasbey, New Jersey silicon carbide refractories
manufacturing facility in the United States, Saint-Gobain may propose,
by August 30, 1996, to license Carborundum technology for the
manufacture of nitride-bonded, sialon-bonded, and other types of
silicon carbide refractory bricks, which technology the licensee could
use to produce both bricks and other products. The Commission has
retained the discretion to approve or disapprove the technology license
to a particular proposed licensee depending on whether the proposed
license and licensee fully satisfies the purposes of the proposed order
and remedies the lessening of competition alleged in the Complaint.
Among the factors that may be relevant to this issue are the likelihood
that the licensee would enter into production and sale of silicon
carbide refractory bricks, the time required for the licensee to enter
and have a significant market impact in silicon carbide refractory
bricks, the licensee's manufacturing capabilities and costs, and the
types of products that the licensee intends to manufacture and market.
Under the terms of the proposed order, Saint-Gobain must divest
Carborundum's fused cast refractories, HSI, and silicon carbide
refractories businesses by February 28, 1997. If Saint-Gobain fails to
divest either Carborundum's fused cast refractories, HSI, or silicon
carbide performance refractories business by that date, or fails to
accomplish the alternative divestiture or licensing if approved by the
Commission, then the Commission may appoint a trustee to divest any
remaining properties yet to be divested, along with ancillary assets or
other arrangements that may be necessary to assure that any property
yet to be divested is capable of being operated independently and
competitively by its acquirer or acquirers.
A hold separate agreement made a part of the consent agreement
requires
[[Page 9176]]
Saint-Gobain, until the proposed order is made final, to hold separate
Carborundum, but allows Saint-Gobain to integrate certain discrete
assets of Carborundum unrelated to the lines of commerce of competitive
concern. It further requires Saint-Gobain, until it accomplishes the
divestitures of Carborundum's fused cast refractories, HSI or silicon
carbide business required by the order, or the alternative divestiture
or licensing, or until the trustee accomplishes the divestitures
required by the order, to hold separate and preserve all of the assets
and businesses to be divested.
The purpose of this analysis is to invite public comment concerning
the proposed order. This analysis is not intended to constitute an
official interpretation of the agreement and order or to modify their
terms in any way.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 96-5224 Filed 3-6-96; 8:45 am]
BILLING CODE 6750-01-M