[Federal Register Volume 63, Number 204 (Thursday, October 22, 1998)]
[Notices]
[Pages 56652-56653]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28399]


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FEDERAL TRADE COMMISSION

[File No. 9810161]


Lafarge Corporation; Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint that accompanies the consent agreement and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before December 21, 1998.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 6th St. and Pa. Ave., NW, Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:
Joe Lipinsky or Patricia Hensley, Seattle Regional Office, Federal 
Trade Commission, 915 Second Avenue, Suite 2896, Seattle, WA. 98174, 
(206) 220-6350.

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 above-captioned 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. The following Analysis to Aid 
Public Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for October 16, 1998), on the World Wide Web, at ``http://www.ftc.gov/
os/actions97.htm.'' A paper copy can be obtained from the FTC Public 
Reference Room, Room H-130, Sixth Street and Pennsylvania Avenue, NW, 
Washington, DC 20580, either in person or by calling (202) 326-3627. 
Public comment is invited. Such comments or views will be considered by 
the Commission and will be available for inspection and copying at 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)).

Analysis to Aid Public Comment on the Proposed Consent Order

    The Federal Trade Commission (``Commission'') has accepted for 
public comment an agreement containing a proposed Consent Order from 
Lafarge, S.A., and Lafarge Corporation (collectively ``Lafarge''), 
which is designed to remedy the anticompetitive effects resulting from 
Lafarge's acquisition of Holnam, Inc.'s (``Holnam''), Seattle 
Washington, cement plant and related assets. Under the terms of the 
consent agreement, Lafarge's purchase price for Holnam's assets cannot 
be affected by the quantity of cement produced or sold by Lafarge in 
any market in the states of Washington or Oregon.
    The agreement containing the proposed Consent Order has been placed 
on the public record for 60 days so that the Commission may receive 
comments from interested persons. Comments received during this period 
will become part of the public record. After 60 days, the Commission 
will again review the proposed Consent Order and the comments received, 
and will decide whether it should withdraw from the proposed Consent 
Order or make final the proposed Order.
    On February 4, 1998, Lafarge and Holnam signed a Letter of Intent 
setting out the principal elements of a proposed transaction, whereby 
Lafarge would acquire Holnam's Seattle cement plant and related assets. 
According to the Commission's draft complaint that the Commission 
intends to issue, the acquisition, if consummated, may substantially 
lessen competition in the portland cement market in the Puget Sound 
area of the state of Washington, and would violate Section 7 of the 
Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the Federal 
Trade Commission Act, as amended, 15 U.S.C. 45.
    Lafarge and Holnam, along with Lone Star Northwest, Ash Grove 
Cement Company and CBR Cement Corp., sell portland cement in the Puget 
Sound area. Portland cement, the essential binding ingredient in 
concrete, is a construction raw material that users mix with water and 
aggregates (crushed stone, sand, or gravel) to form concrete. Portland 
cement is a closely controlled chemical combination of calcium 
(normally from limestone), silicon, aluminum, iron and small amounts of 
other ingredients. It is made by quarrying, crushing and grinding the 
raw materials, burning them in huge kilns at extremely high 
temperatures and grinding the resulting marble-size pellets (called 
``clinker'') with gypsum into an extremely fine, usually gray, powder. 
Portland cement produced by one manufacturer is virtually 
indistinguishable from that manufactured by another.
    The Puget Sound area of the state of Washington consists of the 
portion of Washington state south from the Canadian border to the area 
just south of the state capital of Olympia (roughly halfway between 
Seattle and Portland, Oregon) and east from the Pacific Ocean to the 
Cascade mountains, plus two adjacent counties just east of the

[[Page 56653]]

Cascade Mountains. Its commercial center is the city of Seattle. The 
counties in this market west of the Cascades are Clallum, Grays Harbor, 
Island, Jefferson, King, Kitsap, Mason, Pierce, San Juan, Skagit, 
Snohomish, Thurston and Whatcom, and the two counties east of the 
Cascade mountains are Chelan and Kittitas.
    Absent the proposed acquisition, Holnam would likely have increased 
the amount of cement it supplied to the Puget Sound market, which would 
likely have resulted in a decrease in the price of cement. As 
originally structured, the proposed acquisition would likely have 
prevented this increase in supply because it contained a contractual 
provision that imposed a significant cost penalty on Lafarge for 
quantities of cement produced at the Holnam cement plant in excess of 
85% of the plant's capacity. The proposed acquisition thus would have 
given Lafarge the incentive to restrict the output of cement at the 
Holnam plant in order to avoid the additional contractual cost. This 
would have prevented any increase in the supply of cement to the market 
and thus avoided the expected price decrease.
    The proposed Consent Order would eliminate the contractual penalty 
provision. Therefore, Lafarge would no longer have this incentive to 
limit the amount of cement that it supplies to the Puget Sound area 
portland cement market.
    By accepting the proposed Consent Order, the Commission anticipates 
that the competitive problems alleged in the draft complaint will be 
resolved. The purpose of this analysis is to aid public comment on the 
proposed Order. It is not intended to constitute an official 
interpretation of the agreement and proposed Order or to modify in any 
way their terms.

    By direction of the Commission.
Donald Clark,
Secretary.
[FR Doc. 98-28399 Filed 10-21-98; 8:45 am]
BILLING CODE 6750-01-M