[Federal Register Volume 64, Number 84 (Monday, May 3, 1999)]
[Notices]
[Pages 23649-23650]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10997]


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FEDERAL TRADE COMMISSION

[File No. 9910112]


Rohm and Haas Company et al.; 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 July 2, 1999.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 600 Pennsylvania Avenue, NW, Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Timothy Feighery and Wallace 
Easterling, FTC/S-3627, 601 Pennsylvania Avenue, NW, Washington, DC 
20580, (202) 326-3520 or (202) 326-2936.

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 April 22, 1999), 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, 600 Pennsylvania Avenue, NW, Washington, DC 
20580, either in person or by calling (202) 326-3627
    Public comment is invited. Comments should be directed to: FTC/
Office of the Secretary, Room 159, 600 Pennsylvania Avenue, NW, 
Washington, DC 20580. Two paper copies of each comment should be filed, 
and should be accompanied, if possible, by a 3\1/2\ inch diskette 
containing an electronic copy of the comment. 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 of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Order 
(``Agreement'') from Rohm and Haas Company (``Rohm & Haas'') and Morton 
International, Inc. (``Morton'') to resolve competitive concerns 
arising out of Rohm & Haas's proposed acquisition of Morton. Under the 
proposed Order, Rohm & Haas and Morton (``respondents'') would divest 
the Morton business of producing and selling acrylic water-based 
polymers for use in the formulation of floor care products.
    The proposed Order has been placed on the public record for sixty 
(60) days for reception of comments by interested persons. Comments 
received during this period will become part of the public record. 
After sixty (60) days, the Commission will review the agreement and 
comments received and decide whether to withdraw its acceptance of the 
agreement or make final the agreement's proposed Order.
    The proposed complaint alleges that the acquisition, if 
consummated, would violate section 7 of the Clayton Act, 15 U.S.C. 18, 
as amended, and section 5 of the Federal Trade Commission Act (``FTC 
Act''), 15 U.S.C. 45, as amended, in the market for the sale of acrylic 
water-based polymers for use in formulation of floor care products 
(``Water-Based Floor Care Polymers''). According to the proposed 
complaint, Water-Based Floor Care Polymers impart essential properties, 
such as hardness, slip resistance and gloss, to floor care products. 
Major customers of Water-Based Floor Care Polymers are product 
formulators, who sell finished floor care products, such as polishes, 
mainly to industrial and institutional users, including factories, 
schools and retail stores. The proposed complaint alleges that the 
Water-Based Floor Care Polymers market in North America is highly 
concentrated, with Rohm & Haas and Morton each controlling a 
significant share of the market. The proposed complaint further alleges 
that the effect of the acquisition may be to substantially lessen 
competition and to tend to create a monopoly by, among other things, 
eliminating direct competition between Rohm & Haas and Morton, 
increasing the likelihood that purchasers of Water-Based Floor Care 
Polymers will be forced to pay higher prices, increasing the likelihood 
that technical and sales services provided to customers will be 
reduced, and increasing the likelihood that innovation will be reduced. 
Customers have complained that the effect of the transaction, if 
permitted to close, would be increased prices for floor care polymers 
and reduced technical service, support, and innovation.
    The proposed complaint further alleges that entry into the Water-
Based Floor Care Polymers market would not be timely, likely, or 
sufficient to deter or offset the adverse effects of the acquisition on 
competition. Entry is difficult in this market because of the length of 
time it would take and the expense that would be incurred in building 
appropriate chemical production facilities, the difficulty in acquiring 
the technical expertise necessary to produce the polymers, and the 
difficulty in gaining recognition in a marketplace in which customers 
are reluctant to switch from proven suppliers.
    The proposed Order is designed to remedy the anticompetitive 
effects of the acquisition in the North American market for Water-Based 
Floor Care Polymers, as alleged in the complaint, by requiring the 
divestiture of Morton's Water-Based Floor Care Polymers business. Under 
the terms of the proposed Order, respondents are required to divest, no 
later than ten (10) days after the date the Commission accepts the 
Agreement for public comment, Morton's worldwide Water-Based Floor Care 
Polymers business to GenCorp, Inc. (``GenCorp''). GenCorp currently 
produces water-based polymers for use in the graphics industry, a 
technology and production area closely related to Water-Based Floor 
Care Polymers. Divestiture of the Morton Water-Based Floor Care 
Polymers business to GenCorp is

[[Page 23650]]

designed to promote the viability and competitiveness of the divested 
business by taking advantage of the synergies that may be afforded 
through its combination with GenCorp, including expertise in related 
chemistries and economies of scale resulting from shared research and 
development, overhead and production.
    The proposed Order requires that respondents divest all trade 
secrets, know-how, trade marks and trade names, intellectual property, 
intangible assets, and business information (including purchasing, 
sales, marketing, licensing, and similar information) relating to 
Morton's Water-Based Floor Care Polymers business. The proposed Order 
also requires that respondents provide incentives to certain employees 
identified by the acquirer as important to the continued 
competitiveness and viability of the Water-Based Floor Care Polymers 
business, to facilitate their transfer and the transfer of know-how, to 
the acquirer.
    The proposed Order requires that respondents provide a transitional 
supply of products to the acquirer. The first supply arrangement 
provides that respondents supply to the acquirer, for a period not to 
exceed two years, the full line of Morton Water-Based Floor Care 
Polymers. The second transitional supply agreement requires that 
respondents supply to the acquirer, for a period not to exceed four 
years, Conrez resin, a hard resin that enhances the flow 
characteristics of water-based polymers. These supply arrangements are 
designed to ensure the initial viability and success of the acquirer in 
the Water-Based Floor Care Polymers market by providing a seamless and 
continuous supply of Morton products to customers. The transitional 
supply agreements are intended to be of sufficient duration to give the 
acquirer time to assimilate the Morton polymers and perfect the 
production processes, in its own plants. This provision also provides 
the acquirer the time it needs to work with customers to build 
technical relationships and gain approvals for the products it 
manufactures in its own facilities, a critical requirement in this 
market.
    The proposed Order also provides for the appointment of an Interim 
Trustee to ensure that respondents expeditiously perform their 
responsibilities under the proposed Order. The Interim Trustee will 
oversee the divestiture to ensure the adequacy of the transfer, to 
ensure that disputes between the parties will be identified and 
resolved quickly, clearly, and impartially, and to identify possible 
violations of the proposed Order.
    If, following receipt and review of public comments regarding the 
proposed Order, the Commission determines to disapprove the divestiture 
to GenCorp, respondents are required to rescind the transaction with 
GenCorp, within five months, and divest Morton's Water-Based Floor Care 
Polymers business to an acquirer that receives the prior approval of 
the Commission. The proposed Order also provides that if respondents 
fail to divest the Morton Water-Based Floor Care Polymers business as 
required by the proposed Order, the Commission may appoint a 
Divestiture Trustee to divest the business, together with Morton's 
Greenville, South Carolina, manufacturing facility. This provision 
gives the Trustee the flexibility to divest the business to an entity 
not already in the water-based polymers business.
    The proposed Order requires respondents to provide the Commission, 
within thirty (30) days of the date of Agreement is signed, with an 
initial report setting forth in detail the manner in which respondents 
will comply with the provisions relating to the divestiture of assets 
and the appointment and work of the Interim Trustee. The Order further 
requires respondents to provide the Commission with a report of 
compliance with the Order within sixty (60) days following the date the 
Order becomes final and every ninety (90) days thereafter until they 
have complied with the terms of the Order.
    The purpose of this analysis is to facilitate public comment on the 
proposed Order. This analysis is not intended to constitute an official 
interpretation of the Agreement or the proposed Order or in any way to 
modify the terms of the Agreement or the proposed Order.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 99-10997 Filed 4-30-99; 8:45 am]
BILLING CODE 6750-01-M