[Federal Register Volume 61, Number 46 (Thursday, March 7, 1996)]
[Notices]
[Pages 9167-9176]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5224]



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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