[Federal Register Volume 66, Number 216 (Wednesday, November 7, 2001)]
[Notices]
[Pages 56329-56330]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-27960]


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FEDERAL TRADE COMMISSION

[File No. 001 0040]


Airgas, Inc.; 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 November 26, 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: Christina Perez, FTC/S-2308, 600 
Pennsylvania Ave., NW., Washington, DC (202) 326-2682.

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 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 October 26, 2001), on the 
World Wide Web, at ``http://www.ftc.gov/os/2001/10/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 
section 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR 
4.9(b)(6)(ii)).

Analysis of Agreement Containing Consent Order To Aid Public 
Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Order (``Consent 
Agreement'') from Airgas, Inc. (``Airgas''), which is designed to 
remedy the anticompetitive effects resulting from an acquisition by 
certain wholly-owned subsidiaries of Airgas of the Puritan Bennett 
Medical Gas Business (``Puritan Bennett''). Under the terms of the 
Consent Agreement, Airgas will be required to divest a nitrous oxide 
business to Air Liquide America Corporation (``Air Liquide'') within 
ten days of the date the Commission issues the Decision and Order in 
this matter.
    The Consent Agreement has been placed on the public record for 
thirty (30) days for 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 
Consent Agreement and the comments received, and will decide whether it 
should withdraw from the Consent Agreement or make final the Decision 
and Order.
    On January 21, 2000, Airgas acquired Puritan Bennett from 
Mallinckrodt, Inc., for approximately $90 million. The

[[Page 56330]]

Commission's Complaint alleges that the acquisition violated 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 market 
for the production and sale of nitrous oxide in the United States and 
Canada (``North America'').
    Nitrous oxide is a clear, odorless gas that is mainly used in 
dental and surgical procedures as an analgesic or a weak anesthetic. 
Because nitrous oxide elevates the patient's pain threshold and 
relieves patient anxiety, it is predominantly used by dentists when a 
patient is undergoing extensive dental work or by anesthesiologists 
during many surgical procedures as a supplement to other anesthetics. 
According to customers of nitrous oxide, other anesthetics and 
analgesics are far more expensive or have other detriments when 
compared to nitrous oxide, and thus are not viable substitutes for 
nitrous oxide.
    Currently, Airgas is the only producer of nitrous oxide in North 
America. However, prior to its purchase by Airgas, Puritan Bennett was 
also a producer and seller of nitrous oxide in North America. As a 
result, before the acquisition, Puritan Bennett and Airgas competed 
against each other for a wide variety of nitrous oxide customers across 
the country. Therefore, Airgas's acquisition of Puritan Bennett 
effectively elimated any competition in the North American market for 
the production and sale of nitrous oxide.
    There are substantial barriers to new entry into the nitrous oxide 
market. Effective new entry would require a company to build multiple 
production facilities, which would take well in excess of two years. In 
addition, a new entrant would have to incur substantial investments, 
including the acquisition of a source of red material and the 
development of an appropriate infrastructure to deliver bulk nitrous 
oxide to end-users and to distributors for resale. In light of the fact 
that the nitrous oxide market is relatively small compared to the costs 
that a new entrant would have to incur, new entry is not likely to 
occur. Because of the cost and difficulty of accomplishing these tasks, 
no new entry into the nitrous oxide market is likely to occur within 
the next two years to deter or counteract the anticompetive effects 
resulting from the transaction.
    The proposed order effectively remedies the acquisition's 
anticompetitive effects in the North American nitrous oxide market by 
requiring Airgas to divest a nitrous oxide business, which consists of 
two nitrous oxide production plants, customers contracts, and all 
related assets necessary for distribution and storage to Air Liquide. 
The order also requires Airgas to supply Air Liquide with a specified 
amount of bulk liquid nitrous oxide from its Florida nitrous oxide 
production plant in order to ensure that Air Liquide has the same 
volume of nitrous oxide as Airgas did before its acquisition of Puritan 
Bennett.
    Air Liquide has all of the necessary attributes to restore 
competition to the relevant market. Not only does it produce other 
medical gases, such as medical grade oxygen and nitrogen, but it also 
already has extensive contracts with gas distributors, which are the 
major customers of nitrous oxide. Indeed, many distributors already buy 
a wide variety of other gases from Air Liquide. Furthermore, Air 
Liquide has the financial resources to purchase the assets and operate 
the business in a competitive manner.
    Pursuant to the proposed order, Airgas is required to divest these 
assets to Air Liquide within ten days of the date the Commission issues 
the Decision and Order in this matter. If the divestiture to Air 
Liquide is not accomplished by then, Airgas must divest these nitrous 
oxide assets to a Commission-approved acquirer within six months. 
Should Airgas fail to do so, the Commission may appoint a trustee to 
divest the business.
    In order to ensure that the Commission remains informed about the 
status of the Airgas nitrous oxide business pending divestiture, and 
about efforts being made to accomplish the divestiture, the Consent 
Agreement requires Airgas to report to the Commission within 30 days, 
and every 60 days thereafter until the divestiture is accomplished. In 
addition, Airgas is required to report to the Commission every 60 days 
regarding its obligations to provide transitional services and 
facilities management.
    The purpose of this analysis is to facilitate public comment on the 
Consent Agreement, and it is not intended to constitute on 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. 01-27960 Filed 11-6-01; 8:45 am]
BILLING CODE 6750-1-M