[Federal Register Volume 66, Number 181 (Tuesday, September 18, 2001)]
[Notices]
[Pages 48145-48147]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-23234]


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FEDERAL TRADE COMMISSION

[File No. 001 0186]


Metso Oyj, 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 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 October 9, 2001.

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

FOR FURTHER INFORMATION CONTACT: Joseph Simons or Matthew Reilly, FTC/
H-374, 600 Pennsylvania Ave., NW., Washington, DC 20580. (202) 326-3667 
or 326-2350.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 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 by the 
Commission, has been placed on the public record for a period of thirty 
(30) 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 September 7, 2001), on the 
World Wide Web, at ``http://www.ftc.gov/os/2001/09/index.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. Ave., 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 
Sec. 4.9(b)(6)(ii) of the Commission's rules of practice (16 CFR 
4.9(b)(6)(ii)).

Analysis of Agreement Containing Consent Orders To Aid Public 
Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Orders (``Consent 
Agreement'') from Metso Oyj (``Metso'') and Svedala Industri AB 
(``Svedala''), which is designed to remedy the anticompetitive effects 
resulting from Metso's acquisition of Svedala. Under the terms of the 
Consent Agreement, Metso and Svedala will be required to divest Metso's 
global primary gyratory crusher and grinding mills businesses and 
Svedala's global cone crusher and jaw crusher businesses. The three 
crusher businesses will be divested to Sandvik AB (``Sandvik''). The 
grinding mill business will be divested to Outokumpu Oyj 
(``Outokumpu''). Both divestitures will take place no later than twenty 
(20) days from the date Metso consummates its acquisition of Svedala.
    The proposed Consent Agreement has been placed on the public record 
for thirty (30) days for the reception of comments by interested 
persons. Comments received during this period will become part of the 
public record. After thirty (30) days, the Commission will again review 
the proposed Consent Agreement and the comments received, and will 
decide whether it should withdraw from the proposed Consent Agreement 
or make final the Decision and Order.
    Pursuant to a cash tender offer announced on June 21, 2000, Metso 
proposes to acquire all of the issued and outstanding shares and 
convertible debentures of Svedala. The total value of the transaction 
is approximately $1.6 billion. The Commission's complaint alleges that 
the proposed acquisition, if consummated, 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, in the global markets 
for the research, development, manufacture and sale of: (1) Cone 
crushers; (2) jaw crushers; (3) primary gyratory crushers; and (4) 
grinding mills.
    Metso, through its Metso Minerals (formerly known as Nordberg)

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subsidiary, and Svedala, are the two largest suppliers of rock 
processing equipment in the world. Rock processing equipment includes, 
among other products: (1) Cone crushers; (2) jaw crushers; (3) primary 
gyratory crushers; and (4) grinding mills. Rock processing equipment is 
used by both aggregate and mineral producers to crush and pulverize 
large rock formations in order to manufacture aggregates and retrieve 
minerals. Aggregate and mineral producers use a series of different 
types of rock processing equipment in a circuit to crush the rock into 
the desired size, shape and form. Customers of these products state 
that they purchase the type and size of rock processing equipment that 
is optimal for their circuit and, because of the unique performance 
characteristics of each type and size of equipment, there is little 
opportunity to switch to alternative equipment.
    The global markets for cone crushers, jaw crushers, primary 
gyratory crushers and grinding mills are highly concentrated. If the 
proposed acquisition is consummated, Metso's market share would exceed 
50 percent in each of the global markets for: (1) Cone crushers; (2) 
jaw crushers; (3) primary gyratory crushers; and (4) grinding mills. In 
some of these markets, Metso and Svedala are the largest and second 
largest suppliers. If the acquisition is consummated, Metso would have 
a market share many times higher than its next-closest competitor.
    Metso and Svedala regularly bid against each other for rock 
processing equipment. By eliminating competition between these two 
leading suppliers, the proposed acquisition would allow Metso to 
exercise market power unilaterally for certain bids, thereby increasing 
the likelihood that purchasers of cone crushers, jaw crushers, primary 
gyratory crushers and grinding mills would be forced to pay higher 
prices and that innovation in these markets would decrease. Metso's 
proposed acquisition of Svedala would also increase the likelihood that 
the remaining suppliers of cone crushers, jaw crushers, primary 
gyratory crushers and grinding mills could collude to the detriment of 
customers in the relevant markets.
    Significant impediments to new entry exist in each of the global 
markets for cone crushers, jaw crushers, primary gyratory crushers and 
grinding mills. First, a supplier must design and develop a prototype 
of the particular type of rock processing equipment, which requires 
significant amounts of money and time. After a new prototype is 
developed, suppliers devote additional money and time to testing the 
prototype at a customer's mine or quarry. The testing stage often lasts 
as long as two years because many flaws cannot be detected until the 
equipment has been in continuous operation for a significant period of 
time. It is imperative that the rock processing equipment that 
suppliers offer to customers have a track record of reliability and 
high performance because failure of such equipment would substantially 
decrease or halt production at a site, costing the customer thousands 
of dollars an hour in production losses. The steps involved in 
developing a prototype, testing it, and gaining customer acceptance for 
a new piece of equipment are difficult, expensive and time-consuming. 
For these reasons, new entry into the markets for cone crushers, jaw 
crushers, primary gyratory crushers and grinding mills would not be 
accomplished in a timely manner or be likely to occur at all even if 
prices increased substantially after the proposed acquisition.
    The Consent Agreement effectively remedies the acquisition's 
anticompetitive effects in the global markets for cone crushers, jaw 
crushers, primary gyratory crushers and grinding mills by requiring 
Metso to divest its worldwide primary gyratory crusher and grinding 
mill businesses and by requiring Svedala to divest its worldwide cone 
crusher and jaw crusher businesses. Pursuant to the Consent Agreement, 
the three crusher businesses will be divested to Sandvik. The grinding 
mill business will be divested to Outokumpu. Both divestitures will 
take place no later than twenty (20) days from the date Metso 
consummates its acquisition. If the Commission determines that Sandvik 
or Outokumpu is not an acceptable buyer or that the manner of either 
divestiture is not acceptable, Metso and Svedala must unwind the 
sale(s) and divest the crusher businesses or the grinding mill business 
to a Commission-approved buyer. Should they fail to do so, the 
Commission may appoint a trustee to divest the crusher businesses or 
the grinding mill business.
    The Commission's goal in evaluating possible purchasers of divested 
assets is to maintain the competitive environment that existed prior to 
the acquisition. A proposed buyer of divested assets must not itself 
present competitive problems. The Commission is satisfied that both 
Sandvik and Outokumpu are well-qualified acquirers of the divested 
assets. Sandvik is a publicly-traded Swedish corporation and a leading 
global supplier of drilling and excavation machinery, equipment and 
tools for mining and construction industries. Outokumpu is a 
diversified Finnish metals corporation involved primarily in the 
mining, production and fabrication of steel, chromium, zinc, copper and 
nickel. Both Sandvik and Outokumpu have the necessary industry 
expertise to replace the competition that existed prior to the proposed 
acquisition. Furthermore, Sandvik and Outokumpu do not pose separate 
competitive issues as acquirers of the divested assets.
    The Consent Agreement contains several provisions designed to 
ensure that the divestitures of the crusher businesses and the grinding 
mill business are successful. The Consent Agreement requires Metso and 
Svedala to provide incentives to all of the employees that Sandvik and 
Outokumpu want to hire to continue in their positions until the 
divestitures are accomplished. For a period of one (1) year from the 
date the divestitures of the businesses are accomplished, Metso and 
Svedala are prohibited from soliciting or inducing any employees or 
agents of the rock processing equipment businesses involved in the 
divestitures to terminate their employment with Sandvik or Outokumpu. 
Furthermore, in order to enable Sandvik and Outokumpu to develop and 
manufacture rock processing equipment in the same manner and quality 
achieved by Metso and Svedala, the Consent Agreement requires Metso and 
Svedala for a period of one (1) year to provide technical assistance 
and training at cost to Sandvik and Outokumpu.
    Metso and Svedala are also required to provide transitional 
manufacturing services for the production of jaw crushers to enable 
Sandvik to deliver jaw crushers to customers without delay. The 
transitional manufacturing provision only covers the production of jaw 
crushers because Svedala currently manufactures a substantial portion 
of its jaw crushers in its Brazilian facility, which will not be 
divested. Svedala also manufactures some jaw crushers at its Swedish 
facility which will be divested under the proposed Consent Agreement. 
Less than 24 months ago, Svedala manufactured all of its jaw crushers 
in the Swedish facility. Thus, the primary production assets for the 
manufacture of jaw crushers already exist in the Swedish facility. 
Sandvik will also manufacture all of its jaw crushers at the Swedish 
facility. The Commission will appoint an Interim Monitor to oversee the 
transfer of Svedala's jaw crusher assets located in Brazil and to 
insure compliance with the transitional manufacturing agreement. The 
Interim

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Monitor has the requisite capability and applicable business knowledge 
to supervise the proper transfer of divested assets and monitor the 
critical manufacturing and supply activities of Metso and Svedala. 
Thus, the transitional manufacturing agreement, in conjunction with the 
Interim Monitor, provides a guarantee to Sandvik that its production of 
jaw crushers will be seamless and uninterrupted after the divestiture.
    In order to ensure that the Commission remains informed about the 
status of the crushing businesses and the grinding mill business 
pending divestiture, and about the efforts being made to accomplish the 
divestitures, the Consent Agreement requires Metso and Svedala to file 
reports with the Commission within thirty (30) days of the date they 
sign the Consent Agreement, and periodically thereafter, until the 
divestitures are accomplished.
    The purpose of this analysis is to facilitate public comment on the 
Consent Agreement, and it is not intended to constitute an official 
interpretation of the Consent Agreement or to modify in any way its 
terms.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 01-23234 Filed 9-17-01; 8:45 am]
BILLING CODE 6750-01-P