[Federal Register Volume 69, Number 31 (Tuesday, February 17, 2004)]
[Notices]
[Pages 7497-7506]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-3384]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. DNH International Sarl, Dyno Nobel, Inc., El 
Paso Corp., and Coastal Chem, Inc.; Competitive Impact Statement, 
Proposed Final Judgment and Complaint

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b) through (h), that a

[[Page 7498]]

Complaint, proposed Final Judgment, Hold Separate Stipulation and 
Order, and Competitive Impact Statement were filed with the United 
States District Court for the District of Columbia in United States of 
America v. DNH International Sarl, Dyno Nobel, Inc., El Paso Corp., and 
Coastal Chem, Inc., Civil Action No. 1:03CV2486. On December 2, 2003, 
the United States filed a Complaint alleging that the proposed 
acquisition by DNH International Sarl subsidiary Dyno Nobel, Inc. 
(``Dyno''), of two industrial grade ammonium nitrate (``IGAN'') 
production plants owned by El Paso Corporation subsidiary Coastal Chem, 
Inc. (``Coastal''), would violate Section 7 of the Clayton Act, 15 
U.S.C. 18. The proposed Final Judgment, filed at the same time as the 
Complaint, requires Dyno to divest its interest in a Vineyard, Utah, 
IGAN production facility, or, in the alternative and at the direction 
of the United States, its Battle Mountain, Nevada, IGAN production 
facility just acquired from Coastal. A Competitive Impact Statement 
filed by the United States describes the Complaint, the proposed Final 
Judgment, and the remedies available to private litigants who may have 
been injured by the alleged violations.
    Copies of the Complaint, proposed Final Judgment and Competitive 
Impact Statement are available for inspection at the Department of 
Justice, Antitrust Division, in Suite 215 North, 325 7th Street, NW., 
Washington, DC 20530 (telephone: 202-514-2481), and at the Office of 
the Clerk of the United States District Court for the District of 
Columbia, 333 Constitution Avenue, NW., Washington, DC 20001. Copies of 
these materials may be obtained upon request and payment of a copying 
fee.
    Public comment is invited within the statutory 60-day comment 
period. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to Maribeth Petrizzi, Chief, Litigation II Section, Suite 3000, 1401 H 
Street, NW., Washington, DC 20530 (telephone: 202-307-0924).

Dorothy B. Fountain,
Deputy Director of Operations, Antitrust Division.

United States District Court for the District of Columbia

    Case No. 1: 03CV02486; JUDGE: Gladys Kessler; DECK TYPE: 
Antitrust; DATE STAMP: January 21, 2004

United States of America, Plaintiff, v. DNH International Sarl, 
Dyno Nobel, Inc., El Paso Corp., and Coastal Chem, Inc., 
Defendants; Competitive Impact Statement

    Plaintiff United States, pursuant to section 2(b) of the 
Antitrust Procedures and Penalties Act (``APPA'' or ``Tunney Act''), 
15 U.S.C. 16(b)-(h), files this Competitive Impact Statement 
relating to the proposed Final Judgment submitted for entry in this 
civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On August 6, 2003, Defendant DNH International Sarl (``DNH''), 
through its wholly owned subsidiary Defendant Dyno Nobel, Inc. 
(``Dyno''), agreed to purchase certain assets of Defendant Coastal 
Chem, Inc. (``Coastal''AAA), a subsidiary of Defendant El Paso 
Corporation (``El Paso''). Theses assets include two industrial 
grade ammonium nitrate (``IGAN'') plants, one located in Cheyenne, 
Wyoming and the other in Battle Mountain, Nevada. Dyno currently 
owns a 50 percent interest in Geneva Nitrogen LLC, which owns an 
IGAN production facility in Vineyard, Utah (the ``Geneva 
facility'').
    On December 2, 2003, the United States filed a civil antitrust 
lawsuit alleging that the proposed acquisition would violate Section 
7 of the Clayton Act, as amended, 15 U.S.C. 18. The Complaint 
alleges that Dyno's acquisition of Coastal's IGAN production 
facilities would substantially lessen competition in the production 
of IGAN for sale in Western North America. Coastal and one other 
firm are the primary suppliers of IGAN consumed in Western North 
America, accounting for over 80 percent of IGAN sales in that 
region, while Dyno's interest in the Geneva facility makes it the 
best located of the three fringe IGAN producers that supply the 
region. The acquisition would combine Coastal's Cheyenne and Battle 
Mountain facilities with Dyno's 50 percent interest in the Geneva 
facility. Such a reduction in competition would result in consumers 
of IGAN in the western United States paying higher prices for IGAN. 
Accordingly, the prayer for relief in the Complaint seeks (1) a 
judgment that the proposed acquisition would violate section 7 of 
the Clayton Act and (2) a permananet injunction that would foreclose 
DNH or any of its subsidiaries from purchasing Coastal's Cheyenne 
and Battle Mountain IGAN production facilities.
    At the same time the Complaint was filed, the United States 
filed a proposed settlement that would permit Dyno to complete its 
acquisition of the two Coastal IGAN production facilities but 
require Dyno to divest its interest in Geneva Nitrogen LLC in such a 
way as to preserve competition in the Western North American IGAN 
market. The settlement consists of a Hold Separate Stipulation and 
Order and a proposed Final Judgment.
    According to the terms of the settlement, Dyno must divest its 
interest in Geneva Nitrogen LLC to a person acceptable to the United 
States, in its sole discretion, within ninety (90) calendar days 
after the filing of the Complaint in this matter, or within five (5) 
days after notice of entry of the Final Judgment, whichever is 
later. The United States, in its sole discretion, may extend the 
time period for divestiture by an additional period of time, not to 
exceed sixty (60) calendar days. If Dyno does not complete the 
divestiture within the prescribed time period, then the United 
States may nominate, and the Court will appoint, a trustee who will 
have sole authority to divest Dyno's interest in Geneva Nitrogen 
LLC. If the trustee is unable to divest Dyno's interest in Geneva 
Nitrogen LLC in a timely manner, it shall, as directed by the United 
States in its sole discretion, divest the Battle Mountain facility 
that Dyno is acquiring from Coastal.
    The parties have stipulated that the proposed Final Judgment may 
be entered by the Court after compliance with the Tunney Act. Entry 
of the proposed Final Judgment would terminate this action, except 
that the Court would retain jurisdiction to construe, modify, or 
enforce the provisions of the Judgment and to punish violations 
thereof.

II. Description of the Events Giving Rise to the Alleged Violations of 
the Antitrust Laws

A. The Defendants and the Proposed Transaction

    DNH, a Luxembourg corporation headquartered in Oslo, Norway, is 
one of the world's largest explosives producers. DNH reported sales 
in 2002 of approximately $630 million. Its Dyno subsidiary is a 
Delaware corporation operating out of Salt Lake City, Utah. Dyno, 
which reported 2002 sales of roughly $336 million, is one of the two 
largest producers of explosives in North America.
    El Paso, a Delaware corporation headquartered in Houston, Texas, 
reported 2002 sales of approximately $12 billion. El Paso is the 
leading provider of natural gas services and the largest pipeline 
company in North America. Its Coastal subsidiary, which also is 
incorporated in Delaware and located in Houston, is one of the two 
largest IGAN producers in Western North America, reporting 2002 
sales of roughly $146 million.
    On August 6, 2003, Dyno agreed to purchase Coastal's IGAN 
production facilities in Battle Mountain, Nevada and Cheyenne, 
Wyoming. The acquisition would combine the two Coastal facilities 
with Dyno's 50 percent interest in the Geneva facility, which is the 
best located of the three fringe IGAN facilities that supply Western 
North America.

B. The Effects of the Transaction on Competition in the IGAN Market

1. The Relevant Market Is the Production of IGAN for Sale in Western 
North America

    The Complaint alleges that the production and sale of IGAN 
constitutes a relevant product market within the meaning of section 
7 of the Clayton Act. IGAN, which is in the form of low-density, 
porous prills (or granules), is an essential ingredient used in the 
production of blasting agents, one of two types of explosives used 
in the mining and construction industries. Blasting agents accounted 
for nearly all of the explosives sold in North America last year. 
They are used principally to mine coal, rock and other nonmetals, 
and metals such as gold and copper. The purchase of blasting agents 
constitutes a relatively small portion of the total costs of the 
mining or other industrial

[[Page 7499]]

operations in which the blasting agents are used.
    The other type of explosive commonly used in the mining and 
construction industries, high explosives, includes products such as 
dynamite. High explosives are much more expensive than blasting 
agents and are far more sensitive to detonation; high explosives can 
be detonated with only a blasting cap, while blasting agents are 
detonated using high explosives.
    Virtually all blasting agents used in North America contain 
ammonium nitrate in the form of IGAN, and essentially all IGAN sold 
in North America is used to make blasting agents. The most widely 
used blasting agent is known as ANFO, which is made by soaking IGAN 
in fuel oil (Ammonium Nitrate plus Fuel Oil). Although ammonium 
nitrate is also available in an agricultural grade, which is in the 
form of high-density prills, only the more porous, lower density 
IGAN prills are used to make ANFO. The greater porosity of the IGAN 
prill allows for significantly better absorption of the fuel oil and 
makes an explosive with a much higher sensitivity to detonation. 
IGAN is also used to make explosive slurries, gels, and emulsions, 
which can be used as blasting agents either alone or in combination 
with ANFO.
    A small but significant increase in the price of IGAN would not 
cause consumers of IGAN to use sufficiently less IGAN so as to make 
such a price increase unprofitable. Accordingly, the production and 
sale of IGAN is a line of commerce and a relevant product market 
within the meaning of section 7 of the Clayton Act.
    The Complaint further alleges that ``Western North America'' 
constitutes a relevant geographic market in which IGAN is sold. The 
Complaint defines Western North America as the eleven contiguous 
western-most states in the United States and the Canadian provinces 
of British Columbia, Alberta, and Saskatchewan.
    IGAN typically is shipped to customers in bulk either by rail or 
by truck. Freight costs are a significant component of the total 
delivered price of IGAN and limit the geographic area that an IGAN 
production facility profitably can serve. The physical 
characteristics of the product impose additional limitations on the 
geographic reach of an IGAN production facility. IGAN degrades over 
time as moisture in the air causes it to ``cake,'' rendering it much 
less economical to use as an ingredient to make blasting agents. 
Also, the more IGAN is handled between production and use, the more 
the IGAN prills break down into unusable fine particles.
    IGAN produced at Coastal's Battle Mountain, Nevada and Cheyenne, 
Wyoming facilities is regularly sold within Western North America. 
IGAN produced at the Geneva facility, in which Dyno has a 50 percent 
interest, is also regularly supplied into Western North America. 
Only three other firms own facilities that regularly produce IGAN 
for sale in Western North Americas. One of those three firms is 
Oricas Limited (``Orica''), which owns the remaining 50 percent 
interest in the Geneva facility and also owns an IGAN facility 
located in Alberta, Canada. The other two facilities are located in 
Benson, Arizona and Manitoba, Canada.
    No other firm owns an IGAN production facility from which it 
supplies IGAN on a regular basis to Western North America. Apart 
from the facilities referenced above, the IGAN facilities closest to 
Western North American customers are located along the Mississippi 
River. The additional transportation costs associated with supplying 
IGAN to Western North America from these facilities, coupled with 
the increased risk of degradation of the IGAN due to prolonged 
shipping and handling of the product, significantly limit the 
ability of these distant facilities to supply Western North America. 
A small but significant increase in the price of IGAN produced for 
sale in Western North America would not cause consumers of IGAN in 
Western North America to purchase sufficient amounts of IGAN 
produced at facilities that do not already regularly supply Western 
North America such that a price increase would be unprofitable. 
Accordingly, western North America is a relevant geographic market, 
within the meaning of section 7 of the Clayton Act, in which to 
assess the competitive effects of the proposed acquisition.

2. The Proposed Acquisition Would Result in Anticompetitive Effects

    The Complaint alleges that Dyno's acquisition of Coastal's 
Battle Mountain and Cheyenne IGAN production facilities likely will 
substantially lessen competition in the production of IGAN for sale 
in Western North America, eliminate actual and potential competition 
between Dyno and Coastal in the production of IGAN for sale in 
Western North America, and increase prices for IGAN produced for 
sale in Western North America.
    Specifically, the Complaint alleges that two firms--Coastal and 
Orica--account for over 80 percent of IGAN sales in Western North 
America, which in 2002 exceeded $150 million, and that Dyno's 
interest in the Geneva facility makes it the best located of the 
three fringe producers that supply the market. After the proposed 
acquisition, the two dominant firms together would control roughly 
90 percent of such sales, with Dyno and Coastal combined having a 
share of approximately 50 percent.
    In Western North America, most IGAN-containing blasting agents 
are consumed in mines located in one of three areas: the Powder 
River Basin in Wyoming (coal mines); Northern Nevada (gold mines); 
and the so-called ``Four-Corners Area'' surrounding the junction of 
Utah, Colorado, New Mexico, and Arizona (coal mines). Coastal and 
Orica have facilities that are well-positioned to supply the Powder 
River Basin and Northern Nevada. The Geneva plant, which has an 
annual capacity of about 100,000 tons and is equally owned by Orica 
and Dyno, is located roughly equidistant from Northern Nevada, the 
Powder River Basin, and the Four-Corners Area and is well-positioned 
to serve all three areas. In contrast, the two other fringe firms 
that produce IGAN for sale in Western North America are located at 
the outer reaches of the relevant geographic market.
    The proposed transaction, which would combine Coastal's Battle 
Mountain and Cheyenne facilities with Dyno's 50 percent interest in 
the Geneva facility, thus would eliminate independent competition 
from the best located of the three fringe IGAN producers that supply 
Western North America.
    Successful entry into the Western North American IGAN market 
would be expensive and time-consuming, and thus would be unlikely to 
constrain an increase in the price of IGAN in Western North America. 
To be successful, a new entrant likely would require an efficient 
IGAN facility that could produce at least one-quarter of total IGAN 
sales in Western North America in order to cover the estimated $70 
million cost of constructing such a facility. An IGAN facility with 
that capacity would take over two years to complete. Considering the 
time and capital expense required to construct such a production 
facility, entry is unlikely to occur in response to a small by 
significant increase in the price of IGAN in Western North America.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment will preserve competition in the 
production of IGAN for sale in Western North America. The Judgment 
requires that within ninety (90) calendar days after the filing of 
the Complaint in this matter, or within five (5) days after notice 
of entry of the Final Judgment, whichever is later, Dyno must sell 
its 50 percent interest in Geneva Nitrogen LLC, the owner of the 
Geneva facility, to an acquirer acceptable to the United States. The 
United States may extend this time period for divestiture for one 
additional period, not to exceed sixty (60) calendar days. Dyno must 
use its best efforts to divest its 50 percent interest in Geneva 
Nitrogen LLC as expeditiously as possible.
    If Dyno does not accomplish the ordered divestiture within the 
prescribed time period, the United States will nominate, and the 
Court will approve and appoint, a trustee to assume sole power and 
authority to complete the divestiture of Dyno's 50 percent interest 
in Geneva Nitrogen LLC. Should the trustee determine that this 
divestiture cannot be accomplished expeditiously, the trustee shall 
notify the United States and the parties and provide the reasons 
supporting its conclusion. Upon receipt of such notice from the 
trustee, the United States, in its sole discretion, shall have the 
right to direct the trustee to sell Coastal's Battle Mountain 
facility instead.
    The United States considers the sale of Dyno's 50 percent 
interest in Geneva Nitrogen LLC to be satisfactory relief. The sale 
of that half-interest to a buyer that does not already produce IGAN 
for sale in Western North America would leave the post-acquisition 
market essentially the same as the pre-acquisition market, with the 
buyer replacing Dyno in the marketplace as the best positioned of 
the three fringe producers of IGAN in the region. The United States 
is optimistic that an acceptable buyer for Dyno's 50 percent 
interest in Geneva Nitrogen LLC can be found in a timely

[[Page 7500]]

manner. If not, the United States is satisfied that the sale of 
Coastal's Battle Mountain facility to a buyer acceptable to the 
United States would be a suitable alternative divestiture. Although 
the Geneva facility is better located than the Battle Mountain plant 
with respect to the majority of IGAN-consuming customers in Western 
North America--those located in the gold mining region of Northern 
Nevada, and in the coal mining industries found in the ``Four 
Corners Area'' and the Powder River Basin--Dyno's share of the 
Geneva facility's output is less than the capacity of the Battle 
Mountain plant. Because of this capacity advantage, the competitive 
significance of an independent Battle Mountain facility should be 
comparable to that of the better-located Geneva facility.
    DNH, Dyno, El Paso, and Coastal must cooperate fully with the 
trustee's efforts to divest either Dyno's 50 percent interest in 
Geneva Nitrogen LLC or, should the United States so direct, 
Coastal's Battle Mountain facility to an acquirer acceptable to the 
United States, and they must report periodically to the United 
States on their divestiture efforts. If the trustee is appointed, 
defendant DNH will pay all costs and expenses of the trustee. The 
trustee's commission will be based in part on the price obtained for 
the divested assets and the speed with which the divestiture is 
completed, thus providing an incentive for the trustee to accomplish 
a speedy divestiture. After its appointment becomes effective, the 
trustee will file monthly reports with the parties and the Court, 
setting forth the trustee's efforts to accomplish the divestiture. 
If the divestiture has not been accomplished within six months of 
the trustee's appointment, the trustee and the parties will make 
recommendations to the Court, which shall enter such orders as may 
be appropriate to carry out the purpose of the Final Judgment, 
including extending the trust and the term of the trustee's 
appointment.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act (15 U.S.C. 15) provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three 
times the damages the person has suffered, as well as costs and 
reasonable attorneys' fees. Entry of the proposed Final Judgment 
will neither impair nor assist the bringing of any private antitrust 
damage action. Under the provisions of Section 5(a) of the Clayton 
Act (15 U.S.C. 16(a)), the proposed Final Judgment has no prima 
facie effect in any subsequent private lawsuit that may be brought 
against the defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The parties have stipulated that the proposed Final Judgment may 
be entered by the Court after compliance with the provisions of the 
APPA, provided that the United States has not withdrawn its consent. 
The APPA conditions entry upon the Court's determination that the 
proposed Final Judgment is in the public interest.
    The Tunney Act provides a period of at least sixty days 
preceding the effective date of the proposed Final Judgment during 
which any person may submit to the United States written comments 
regarding the proposed Final Judgment. Any person who wishes to 
comment should do so within sixty days of the date of publication of 
this Competitive Impact Statement in the Federal Register. The 
United States will evaluate and respond to the comments. All 
comments will be given due consideration by the Department of 
Justice, which remains free to withdraw its consent to the proposed 
Final Judgment at any time prior to entry by the Court. The comments 
and the response of the United States will be filed with the Court 
and published in the Federal Register.
    Written comments should be submitted to:

Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, 
United States Department of Justice, 1401 H Street, NW., Suite 3000, 
Washington, DC 20530.

    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the 
Court for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against defendants DNH, 
Dyno, El Paso, and Coastal. The United States could have continued 
the litigation to seek preliminary and permanent injunctions against 
Dyno's acquisition of Coastal's IGAN production facilities. The 
United States is satisfied, however, that the proposed relief, once 
implemented by the Court, will preserve and ensure competition in 
the relevant market.

VII. Standard of Review Under the APPA for Proposed Final Judgment

    The APPA requires that proposed consent judgments in antitrust 
cases brought by the United States be subject to a sixty-day comment 
period, after which the Court shall determine whether entry of the 
proposed Final Judgment ``is in the public interest.'' In making 
that determination, the Court may consider--

    ``(1) the competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration or relief sought, anticipated effects of 
alternative remedies actually considered, and any other 
considerations bearing upon the adequacy of such judgment;
    (2) the impact of entry of such judgment upon the public 
generally and individuals alleging specific injury from the 
violations set forth in the complaint including consideration of the 
public benefit, if any, to be derived from a determination of the 
issues at trial.''

15 U.S.C. 16(e). As the United States Court of Appeals for the 
District of Columbia Circuit has held, the APPA permits a court to 
consider, among other things, the relationship between the remedy 
secured and the specific allegations set forth in the government's 
complaint, whether the decree is sufficiently clear, whether 
enforcement mechanisms are sufficient, and whether the decree may 
positively harm third parties. United States v. Microsoft Corp., 56 
F.3d 1448, 1458-62 (D.C. Cir. 1995).
    In conducting this inquiry, ``the Court is nowhere compelled to 
go to trial or to engage in extended proceedings which might have 
the effect of vitiating the benefits of prompt and less costly 
settlement through the consent decree process.'' \1\ Rather,
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    \1\ 119 Cong. Rec. 24598 (1973); See also United States v. 
Gillette Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public 
interest'' determination can be made properly on the basis of the 
Competitive Impact Statement and Response to Comments filed by the 
Department of Justice pursuant to the APPA. Although the APPA 
authorizes the use of additional procedures, 15 U.S.C. 16(f), those 
procedures are discretionary. A court need not invoke any of them 
unless it believes that the comments have raised significant issues 
and that further proceedings would aid the court in resolving those 
issues. H.R. 93-1463, 93rd Cong. 2d Sess. 8-9, reprinted in (1974) 
U.S. Code Cong., & Ad. News 6535, 6538.

    ``absent a showing of corrupt failure of the government to 
discharge its duty, the Court, in making its public interest 
finding, should * * * carefully consider the explanations of the 
government in the competitive impact statement and its responses to 
comments in order to determine whether those explanations are 
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reasonable under the circumstances.''

United States v. Mid-America Dairymen, Inc., 1977-1 CCH Trade Cas. ] 
61,508, at 71,980 (W.D. Mo. 1977).
    Accordingly, with respect to the adequacy of the relief secured 
by the decree, a court may not ``engage in an unrestricted 
evaluation of what relief would best serve the public.'' United 
States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (citing 
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); 
see also Microsoft, 56 F.3d at 1460-62. Courts have held that

    ``[t]he balancing of competing social and political interests 
affected by a proposed antitrust consent decree must be left, in the 
first instance, to the discretion of the Attorney General. The 
court's role in protecting the public interest is one of insuring 
that the government has not breached its duty to the public in 
consenting to the decree. The court is required to determine not 
whether a particular decree is the one that will best serve society, 
but whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.''

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\
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    \2\ Cf. BNS, 858 F.2d at 463 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''), Gillette, 406 F. Supp. at 716 
(noting that, in this way, the court is constrained to ``look at the 
overall picture not hypercritically, nor with a microscope, but with 
an artist's reducing glass''). See generally Microsoft, 56 F.3d at 
1461 (discussing whether ``the remedies [obtained in the decree are] 
so inconsonant with the allegations charged as to fall outside of 
the `reaches of the public interest' '').
---------------------------------------------------------------------------

    The proposed Final Judgment, therefore, should not be reviewed 
under a standard of

[[Page 7501]]

whether it is certain to eliminate every anticompetitive effect of a 
particular practice or whether it mandates certainty of free 
competition in the future. Court approval of a final judgment 
requires a standard more flexible and less strict than the standard 
required for a finding of liability. ``[A] proposed decree must be 
approved even if it falls short of the remedy the court would impose 
on its own, as long as it falls within the range of acceptability or 
is `within the reaches of public interest.' '' United States v. 
AT&T, 552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) 
(quoting Gillette, 406 F. Supp. at 716), aff'd sub nom. Maryland v. 
United States, 460 U.S. 1001 (1983); see also United States v. Alcan 
Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving the 
consent decree even though the court would have imposed a greater 
remedy).
    Moreover, the Court's role under the APPA is limited to 
reviewing the remedy in relationship to the violations that the 
United States alleges in its Complaint, and does not authorize the 
Court to ``construct [its] own hypothetical case and then evaluate 
the decree against that case.'' Microsoft, 56 F.3d at 1459. Because 
the ``court's authority to review the decree depends entirely on the 
government's exercising its prosecutorial discretion by bringing a 
case in the first place,'' it follows that ``the court is only 
authorized to review the decree itself,'' and not to ``effectively 
redraft the complaint'' to inquire into other matters that the 
United States did not pursue. Id. at 1459-60.

VIII. Determinative Documents

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

Dated: January 21, 2004.

Respectfully submitted,
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Michael K. Hammaker
D.C. Bar No. 233684
U.S. Department of Justice
Antitrust Division, Litigation II Section
1401 H Street, NW., Suite 3000
Washington, DC 20530

Certificate of Service

    I, Joshua P. Jones, hereby certify that on January 21, 2004, I 
caused copies of the foregoing Competitive Impact Statement to be 
served on Defendants DNH International Sarl, Dyno Nobel, Inc., El 
Paso Corporation, and Coastal Chem, Inc., by facsimile and by 
mailing these documents first-class, postage prepaid, to duly 
authorized legal representatives of those parties, as follows:

Counsel for DNH International Sarl and Dyno Nobel, Inc.
Raymond J. Etcheverry, Esquire
Parsons, Behle & Latimer
201 South Main Street, Suite 1800
Salt Lake City, UT 84111

Counsel for El Paso Corporation and Coastal Chem, Inc.
Eric H. Queen, Esquire
John R. Ingrassia, Esquire
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004

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Joshua P. Jones
GA Bar No. 091645
Antitrust Division
U.S. Department of Justice
1401 H Street, NW., Suite 3000
Washington, DC 20530
(202) 307-1031

United States District Court for the District of Columbia

    Case No. 1:03CV02486; Judge: Gladys Kessler; Deck Type: 
Antitrust; Date Stamp: 12/02/2003

United States of America, Plaintiff, v. DNH International Sarl, 
Dyno Nobel, Inc., El Paso Corporation, and Coastal Chem, Inc., 
Defendants; Final Judgment

    Whereas, plaintiff, United States of America, filed its 
Complaint on December 2, 2003, and plaintiff and defendants, DNH 
International Sarl, Dyno Nobel, Inc., El Paso Corporation and 
Coastal Chem, Inc., by their respective attorneys, have consented to 
the entry of this Final Judgment without trial or adjudication of 
any issue of fact or law, and without this Final Judgment 
constituting any evidence against or admission by any party 
regarding any issue of fact or law;
    And Whereas, defendants agree to be bound by the provisions of 
this Final Judgment pending its approval by the Court;
    And Whereas, the essence of this Final Judgment is the prompt 
and certain divestiture of certain rights or assets by the 
defendants to assure that competition is not substantially lessened;
    And Whereas, plaintiff requires defendants to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    And Whereas, defendants have represented to the United States 
that the divestiture required below can and will be made and that 
defendants will later raise no claim of hardship or difficulty as 
grounds for asking the Court to modify any of the divestiture 
provisions contained below;
    Now Therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ordered, adjudged and decreed:

I. Jurisdiction

    This Court has jurisdiction over the subject matter of and each 
of the parties to this action. The Complaint states a claim upon 
which relief may be granted against defendants under section 7 of 
the Clayton Act, as amended, 15 U.S.C. 18.

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means the entity or entities to whom defendants 
divest the Geneva Production Asset or, alternatively, the Battle 
Mountain Production Asset.
    B. ``DNH'' means defendant DNH International Sarl, a Luxembourg 
corporation with its headquarters in Oslo, Norway, its successors 
and assigns, and its subsidiaries (including defendant Dyno Nobel, 
Inc.), divisions, groups, affiliates, partnerships, and joint 
ventures, and their directors, officers, managers, agents, and 
employees.
    C. ``El Paso'' means El Paso Corporation, a Delaware corporation 
with its headquarters in Houston, Texas, and its successors and 
assigns, its subsidiaries, divisions (including defendant Coastal 
Chem, Inc.), groups, affiliates, partnerships, and joint ventures, 
and their directors, officers, managers, agents, and employees.
    D. ``IGAN'' means low density or industrial grade ammonium 
nitrate which, when mixed with fuel oil, forms an explosive known as 
ANFO.
    E. ``Geneva Production Asset'' means, unless otherwise noted, 
DNH's 50 percent membership interest in Geneva Nitrogen, LLC, a 
Delaware limited liability company which owns an IGAN production 
facility located at 1165 North Geneva Road, Vineyard, Utah 84601, 
including all of DNH's rights, titles, and interests in the 
following:
    1. The tangible assets of the Geneva facility and the real 
property on which the Geneva facility is situated; any facilities 
used for research, development, engineering or other support to the 
Geneva facility, and any real property associated with those 
facilities; manufacturing and sales assets relating to the Geneva 
facility, including capital equipment, vehicles, supplies, personal 
property, inventory, office furniture, fixed assets and fixtures, 
materials, on- or off-site warehouses of storages facilities, and 
other tangible property or improvements; all licenses, permits and 
authorizations issued by any governmental organization relating to 
the Geneva facility; all contracts, agreements, leases, commitments, 
and understandings pertaining to the operations of the Geneva 
facility; supply agreements; all customer lists, accounts, and 
credit records; and other records maintained by DNH in connection 
with the operations of the Geneva facility; and
    2. The intangible assets of the Geneva facility, including all 
patents, licenses and sublicenses, intellectual property, 
trademarks, trade names, service marks, service names, technical 
information, know-how, trade secrets, drawings, blueprints, designs, 
design protocols, specifications for materials, specifications for 
parts and devices, safety procedures for the handling of materials 
and substances, quality assurance and control procedures, design 
tools and simulation capability, and all manuals and technical 
information DNH provides to its employees, customers, suppliers, 
agents or licensees in connection with the operations of the Geneva 
facility.
    F. ``Battle Mountain Production Asset'' means, unless otherwise 
noted, all of El Paso's rights, titles, and interests in the IGAN 
production facility located in Battle Mountain, Nevada, including:
    1. All tangible assets of the Battle Mountain facility and the 
real property on which the Battle Mountain facility is situated; any 
facilities used for research, development, engineering or other 
support to the Battle Mountain facility, and any real property 
associated with those facilities; manufacturing and sales assets 
relating to the Battle Mountain facility, including capital 
equipment, vehicles, supplies, personal property, inventory, office 
furniture, fixed assets and fixtures, materials, on- or off-site 
warehouses or storages facilities, and other tangible property or 
improvements; all

[[Page 7502]]

licenses, permits and authorizations issued by any governmental 
organization relating to the Battle Mountain facility; all 
contracts, agreements, leases, commitments, and understandings 
pertaining to the operations of the Battle Mountain facility; supply 
agreements; all customer lists, accounts, and credit records; and 
other records maintained by El Paso in connection with the 
operations of the Battle Mountain facility; and
    2. All intangible assets of the Battle Mountain facility, 
including all patents, licenses and sublicenses, intellectual 
property, trademarks, trade names, service marks, service names, 
technical information, know-how, trade secrets, drawings, 
blueprints, designs, design protocols, specifications for materials, 
specifications for parts and devices, safety procedures for the 
handling of materials and substances, quality assurance and control 
procedures, design tools and simulation capability, and all manuals 
and technical information El Paso provides to its employees, 
customers, suppliers, agents or licensees in connection with the 
operations of the Battle Mountain facility.

III. Applicability

    A. This Final Judgment applies to DNH and El Paso, as defined 
above, and all other persons in active concert or participation with 
any of them who receive actual notice of this Final Judgment by 
personal service or otherwise.
    B. Defendants shall require, as a condition of the sale or other 
disposition of all or substantially all of their assets or of lesser 
business units that include the Geneva Production Facility or the 
Battle Mountain Production Facility, that the purchaser agrees to be 
bound by the provisions of this Judgment, provided, however, that 
defendants need not obtain such an agreement from the Acquirer.

IV. Divestiture

    A. Defendant DNH is ordered and directed, within ninety (90) 
calendar days after the filing of the Complaint in this matter, or 
five (5) days after notice of the entry of this Final Judgment by 
the Court, whichever is later, to divest the Geneva Production Asset 
in a manner consistent with this Final Judgment to an Acquirer 
acceptable to the United States in its sole discretion. The United 
States, in its sole discretion, may agree to one or more extensions 
of this time period, not to exceed in total sixty (60) calendar 
days, and shall notify the Court in each such circumstance. 
Defendant DNH agrees to use its best efforts to divest the Geneva 
Production Asset as expeditiously as possible.
    B. In accomplishing the divestiture ordered by this Final 
Judgment, defendant DNH promptly shall make known, by usual and 
customary means, the availability of the Geneva Production Asset. 
Defendants shall inform any person making inquiry regarding a 
possible purchase of the Geneva Production Asset that it will be 
divested pursuant to this Final Judgment and provide that person 
with a copy of this Final Judgment. Defendant DNH shall offer to 
furnish to all prospective Acquirers, subject to customary 
confidentially assurances, all information and documents relating to 
the Geneva Production Asset customarily provided in a due diligence 
process except such information or documents subject to the 
attorney-client or work-product privilege. Defendant DNH shall make 
available such information to the United States at the same time 
that such information is made available to any other person.
    C. Defendant DNH shall provide prospective Acquirers of the 
Geneva Production Asset and the United States information relating 
to the personnel involved in the production, operation, development, 
and sale of the Geneva Production Asset to enable the Acquirer to 
make offers of employment. Defendants will not interfere with any 
negotiations by the Acquirer to employ any of defendant DNH's 
employees whose responsibilities include the production, operation, 
development, or sale of the products of the Geneva Production Asset.
    D. Defendant DNH shall permit prospective Acquirers of the 
Geneva Production Asset to have reasonable access to personnel and 
to make inspections of the physical facilities of the Geneva 
Production Asset; access to any and all environmental, zoning, and 
other permit documents and information; and access to any and all 
financial, operational, or other documents and information 
customarily provided as part of a due diligence process.
    E. Defendant DNH shall warrant to the Acquirer of the Geneva 
Production Asset that each asset therein that was operational as of 
the date of filing of the Complaint in this matter will be 
operational on the date of divestiture.
    F. Defendants shall not take any action that will impede in any 
way the permitting, operation, or divestiture of the Geneva 
Production Asset.
    G. Defendant DNH shall warrant to the Acquirer of the Geneva 
Production Asset that there are no material defects in the 
environmental, zoning, or other permits pertaining to the operation 
of the Geneva Production Asset, and following the sale of the Geneva 
Production Asset, defendants shall not undertake, directly or 
indirectly, any challenges to the environmental, zoning, or other 
permits relating to the operation of the Geneva Production Asset.
    H. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section IV, or by trustee appointed pursuant 
to section V, of this Final Judgment, shall include the entire 
Geneva Production Asset or, alternatively, pursuant to section V(B), 
the entire Battle Mountain Production Asset, and shall be 
accomplished in such a way as to satisfy the United States, in its 
sole discretion, that the divested asset can and will be used by the 
Acquirer as part of a viable, ongoing business engaged in the 
manufacture and sale of IGAN. Divestiture of the Geneva Production 
Asset or, alternatively, the Battle Mountain Production Asset may be 
made to an Acquirer, provided that it is demonstrated to the sole 
satisfaction of the United States that the divested asset will 
remain viable and the divestiture of such asset will remedy the 
competitive harm alleged in the Complaint. The divestitures, whether 
pursuant to section IV or section V of this Final Judgment,
    1. Shall be made to an Acquirer that, in the United States's 
sole judgment, has the managerial, operational, and financial 
capability to compete effectively in the manufacture and sale of 
IGAN; and
    2. Shall be accomplished so as to satisfy the United States, in 
its sole discretion, that none of the terms of any agreement between 
an Acquirer and defendants give defendants the ability unreasonably 
to raise the Acquirer's costs, to lower the Acquirer's efficiency, 
or otherwise to interfere in the ability of the Acquirer to compete 
effectively.

V. Appointment of Trustee To Effect Divestiture

    A. If defendant DNH has not divested the Geneva Production Asset 
within the time period specified in Section IV(A), it shall notify 
the United States of that fact in writing. Upon application of the 
United States, the Court shall appoint a trustee selected by the 
United States and approved by the Court to effect the divestiture of 
the Geneva Production Asset.
    B. After the appointment of a trustee becomes effective, only 
the trustee shall have the right to sell the Geneva Production 
Asset. Should the trustee determine that a sale of the Geneva 
Production Asset cannot be expeditiously accomplished, the trustee 
shall notify the United States and the parties of its conclusion and 
the reasons supporting its conclusion. Upon receipt of such notice 
from the trustee, the United States, in its sole discretion, shall 
have the right to direct the trustee to sell the Battle Mountain 
Production Asset as an alternative to the Geneva Production Asset. 
The trustee shall have the power and authority to accomplish the 
divestiture of the Geneva Production Asset or, should the United 
States so direct, the Battle Mountain Production Asset to an 
Acquirer acceptable to the United States at such price and on such 
terms as are then obtainable upon reasonable effort by the trustee, 
subject to the provisions of Sections IV, V, and VI of this Final 
Judgment, and shall have such other powers as this Court deems 
appropriate. Subject to Section V(D) of this Final Judgment, the 
trustee may hire at the cost and expense of defendant DNH any 
investment bankers, attorneys, or other agents, who shall be solely 
accountable to the trustee, reasonably necessary in the trustee's 
judgment to assist in the divestiture.
    C. Defendants shall not object to a sale by the trustee on any 
ground other than the trustee's malfeasance. Any such objections by 
defendants must be conveyed in writing to the United States and the 
trustee within ten (10) calendar days after the trustee has provided 
the notice required under section VI.
    D. The trustee shall serve at the cost and expense of defendant 
DNH, on such terms and conditions as plaintiff approves, and shall 
account for all monies derived from the sale of the Geneva 
Production Asset or, alternatively, the Battle Mountain Production 
Asset, and all costs and expenses so incurred. After approval by the 
Court of the trustee's accounting, including fees for its services 
and

[[Page 7503]]

those of any professionals and agents retained by the trustee, all 
remaining money shall be paid to defendant DNH and the trust shall 
then be terminated. The compensation of the trustee and any 
professionals and agents retained by the trustee shall be reasonable 
in light of the value of the asset to be divested and based on a fee 
arrangement providing the trustee with an incentive based on the 
price and terms of the divestiture and the speed with which it is 
accomplished, but timeliness is paramount.
    E. Defendants shall use their best efforts to assist the trustee 
in accomplishing the required divestiture. The trustee and any 
consultants, accountants, attorneys, and other persons retained by 
the trustee shall have full and complete access to the personnel, 
books, records, and facilities of the business to be divested, and 
defendants shall develop financial and other information relevant to 
such business as the trustee may reasonably request, subject to 
customary confidentiality protection for trade secret or other 
confident research, development, or commercial information. 
Defendants shall take no action to interfere with or to impede the 
trustee's accomplishment of the divestiture.
    F. After its appointment, the trustee shall file monthly reports 
with the United States and the Court setting forth the trustee's 
efforts to accomplish the divestiture ordered under this Final 
Judgment. To the extent such reports contain information that the 
trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. Such reports shall include the name, 
address, and telephone number of each person who, during he 
preceding month, made an offer to acquire, expressed an interest in 
acquiring, entered into negotiations to acquire, or was contacted or 
made an inquiry about acquiring, any interest in the Geneva 
Production Asset or, alternatively, the Battle Mountain Production 
Asset, and shall describe in detail each contact with any such 
person. The trustee shall maintain full records of all efforts made 
to divest either asset.
    G. If the trustee has not accomplished such divestiture within 
six months after its appointment, the trustee shall promptly file 
with the Court a report setting forth (1) the trustee's efforts to 
accomplish the required divestiture; (2) the reasons, in the 
trustee's judgment, why the required divestiture has not been 
accomplished; and (3) the trustee deems confidential, such reports 
shall not be filed in the public docket of the Court. The trustee 
shall at the same time furnish such report to the plaintiff who 
shall have the right to make additional recommendations consistent 
with the purpose of the trust The Court thereafter shall enter such 
orders as it shall deem appropriate to carry lout the purpose of the 
Final Judgment, which may, if necessary, include extending the trust 
and the term of the trustee's appointment by a period requested by 
the United States.

VI. Notice of Proposed Divestiture

    A. Within two (2) business days following execution of a 
definitive divestiture agreement, defendant DNH or the trustee, 
whichever is then responsible for effecting the divestiture required 
herein, shall notify the United States of any proposed divestiture 
required by Section IV or V of this Final Judgment. If the trustee 
is responsible, it shall similarly notify defendants. The notice 
shall set forth the details of the proposed divestiture and list the 
name, address, and telephone number of each person and not 
previously identified who offered or expressed an interest in or 
desire to acquire any ownership interest in the Geneva Production 
Asset or, alternatively, the Battle Mountain Production Asset, 
together with full details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States of such notice, the United States may request from 
defendants, the proposed Acquirer, any other third party, or the 
trustee if applicable additional information concerning the proposed 
divestiture, the proposed Acquirer, and any other potential 
Acquirer. Defendants and the trustee shall furnish any additional 
information requested within fifteen (15) calendar days of the 
receipt of the request, unless the parties shall otherwise agree.
    C. Within thirty (30) calendar days after receipt of the notice 
or within twenty (20) calendar days after the United States has been 
provided the additional information requested from defendants, the 
proposed Acquirer, any third party, and the trustee, whichever is 
later, the United States shall provide written notice to defendants 
and the trustee, if there is one, stating whether or not it objects 
to the proposed divestiture. If the United States provides written 
notice that it does not object, the divestiture may be consummated, 
subject only to defendants' limited right to object to the sale 
under section V(C) of this Final Judgment. Absent written notice 
that the United Sates does not object to the proposed Acquirer or 
upon objection by the United States, a divestiture proposed under 
Section IV or Section V shall not be consummated. Upon objection by 
defendants under section V(C), a divestiture proposed under section 
V shall not be consummated unless approved by the Court.

VII. Financing

    Defendants shall not finance all or any part of any purchase 
made pursuant to section IV or V of this Final Judgment.

VIII. Hold Separate

    Until the divestiture required by this Final Judgment has been 
accomplished, defendants shall take all steps necessary to comply 
with the Hold Separate Stipulation and Order entered by this Court. 
Defendants shall take no action that would jeopardize the 
divestiture ordered by this Court.

IX. Affidavits

    A. Within twenty (20) calendar days of the filing of the 
Complaint in this matter, and every thirty (30) calendar days 
thereafter until the divestiture has been completed under Section IV 
or V, defendants shall deliver to the United States an affidavit as 
to the fact and manner of its compliance with Section IV or V of 
this Final Judgment. Each such affidavit shall include the name, 
address, and telephone number of each person who, during the 
preceding thirty days, made an offer to acquire, expressed an 
interest in acquiring, entered into negotiations to acquire, or was 
contacted or made an inquiry about acquiring, any interest in the 
Geneva Production Asset or, alternatively, the Battle Mountain 
Production Asset, and shall describe in detail each contact with any 
such person during that period. Each such affidavit shall also 
include a description of the efforts defendants have taken to 
solicit buyers for the asset to be divested, and to provide required 
information to any prospective Acquirer, including the limitations, 
if any, on such information. Assuming the information set forth in 
the affidavit is true and complete, any objection by the United 
States to information provided by defendants, including limitations 
on the information, shall be made within fourteen (14) days of 
receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the 
Complaint in this matter, defendants shall deliver to the United 
States an affidavit that describes in reasonable detail all actions 
defendants have taken and all steps defendants have implemented on 
an ongoing basis to comply with Section VIII of this Final Judgment. 
Defendants shall deliver to the United States an affidavit 
describing any changes to the efforts and actions outlined in 
defendants' earlier affidavits filed pursuant to this section within 
fifteen (15) calendar days after the change is implemented.
    C. Defendants shall keep all records of all efforts made to 
preserve the Geneva Production Asset and the Battle Mountain 
Production Asset and to divest either asset until one year after 
such divestiture has been completed.

X. Compliance Inspection

    A. For purposes of determining or securing compliance with this 
Final Judgment, or of determining whether the Final Judgment should 
be modified or vacated, and subject to any legally recognized 
privilege, from time to time duly authorized representatives of the 
United States Department of Justice, including consultants and other 
persons retained by the United States, shall, upon written request 
of a duly authorized representative of the Assistant Attorney 
General in charge of the Antitrust Division, an don reasonable 
notice to defendants, be permitted:
    1. Access during defendants' office hours to inspect and copy, 
or at plaintiff's option, to require defendants to provide copies 
of, all books, ledgers, accounts, records and documents in the 
possession, custody, or control of defendants, relating to any 
matters contained in this Final Judgment; and
    2. To interview, either informally or on the record, defendants' 
officers, employees, or agents, who may have their individual 
counsel present, regarding such matters. The interviews shall be 
subject to the reasonable convenience of the interviewee and without 
restraint or interference by defendants.
    B. Upon the written request of a duly authorized representative 
of the Assistant Attorney General in charge of the Antitrust 
Division, defendants shall submit written reports, under oath if 
requested, relating to any of the matters contained in this Final 
Judgment as may be requested.

[[Page 7504]]

    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person 
other than an authorized representative of the executive branch of 
the United States, except in the course of legal proceedings to 
which the United States is a party (including grand jury 
proceedings), or for the purpose of securing compliance with this 
Final Judgment, or as otherwise required by law.
    D. If at the time information or documents are furnished by 
defendants to the United States, defendants represent and identify 
in writing the material in any such information or documents to 
which a claim of protection may be asserted under Rule 26(c)(7) of 
the Federal Rules of Civil Procedure, and defendants mark each 
pertinent page of such material, ``Subject to claim of protection 
under Rule 26(c)(7) of the Federal Rules of Civil Procedure,'' then 
the United States shall give defendants ten (10) calendar days 
notice prior to divulging such material in any legal proceeding 
(other than a grand jury proceeding).

XI. No Reacquisition

    Defendants may not reacquire any part of the asset divested 
under this Final Judgment during the term of this Final Judgment.

XII. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this 
Final Judgment to apply to this Court at any time for further orders 
and directions as may be necessary or appropriate to carry out or 
construe this Final Judgment, to modify any of its provisions, to 
enforce compliance, and to punish violations of its provisions.

XIII. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire ten years from the date of its entry.

XIV. Public Interest Determination

    Entry of this Final Judgment is in the public interest.

Date:------------------------------------------------------------------

Court approval subject to procedures of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16.

-----------------------------------------------------------------------
United States District Judge

United States District Court for the District of Columbia

    CASE NUMBER 1: 03CV02486; JUDGE: Gladys Kessler; DECK TYPE: 
Antitrust; DATE STAMP: 12/02/2003

United States of America, U.S. Department of Justice Antitrust 
Division 1401 H Street, NW Suite 3000 Washington, DC 20530, 
Plaintiff, v. DNH International Sarl, 23 Avenue Monterey L-2086 
Luxemburg, Dyno Nobel, Inc., 50 S. Main Street Salt Lake City, UT 
84144; El Paso Corporation, 1001 Louisiana Street Houston, TX 
77002; and Coastal Chem, Inc., 1001 Louisiana Street Houston, TX 
77002, Defendants; Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil antitrust 
action to obtain injunctive relief against defendants, and alleges 
as follows:
    1. DNH International Sarl (``DNH'') intends to acquire, through 
its wholly-owned subsidiary Dyno Nobel, Inc. (``Dyno''), certain 
assets associated with the nitrogen products businesses of El Paso 
Corporation (``El Paso''). The assets to be acquired include two 
industrial grade ammonium nitrate (``IGAN'') manufacturing 
facilities owned by Coastal Chem, Inc. (``Coastal''), a wholly-owned 
subsidiary of El Paso. One of these facilities is located in Battle 
Mountain, Nevada, and the other is in Cheyenne, Wyoming.
    2. Dyno and Coastal sell IGAN in the United States. IGAN is an 
essential ingredient in nearly all blasting agents. Coastal and one 
other firm are the primary suppliers of IGAN consumed in the western 
United States and western Canada (``Western North America''), 
accounting for over 75 percent of all plant capacity regularly used 
to make IGAN for sale in that region. Dyno, which owns a 50 percent 
interest in an IGAN production facility near Salt Lake City, Utah, 
is the best located of a few fringe IGAN suppliers in Western North 
America.
    3. Unless the proposed acquisition is enjoined, Dyno's 
acquisition of Coastal's Battle Mountain and Cheyenne IGAN 
production facilities will substantially lessen competition in the 
production of IGAN for sale in Western North America, and consumers 
of IGAN in that region likely will pay higher process as a result of 
the reduced competition.

Jurisdiction and Venue

    4. This Complaint is filed by the United States under section 15 
of the Clayton Act, as amended, 15 U.S.C. 25, to prevent and 
restrain defendants from violating section 7 of the Clayton Act, 15 
U.S.C. 18.
    5. DNH, through Dyno, and El Paso, through Coastal, produce and 
sell IGAN in the flow of interstate commerce. DNH's and El Paso's 
activities in producing and selling IGAN substantially affect 
interstate commerce. This Court has jurisdiction over the subject 
matter of this action pursuant to section 12 of the Clayton Act, 15 
U.S.C. 22, and 28 U.S.C. 1331, 1337(a), and 1345.
    6. DNH, Dyno, El Paso, and Coastal have consented to personal 
jurisdiction and venue in this judicial district.

II. Defendants

    7. DNH is a Luxembourg corporation with its headquarters in 
Oslo, Norway. DNH is one of the world's largest producers of 
explosives. In 2002, DNH reported total sales of approximately $630 
million. Dyno, a subsidiary of DNH, is a Delaware corporation with 
its principal place of business in Salt Lake City, Utah. Dyno, one 
of the two largest producers of IGAN in North America, reported 2002 
sales of about $316 million.
    8. El Paso is a Delaware corporation with its headquarters in 
Houston, Texas. El Paso is the leading provider of natural gas 
services and the largest pipeline company in North America. In 2002, 
El Paso reported sales of roughly $12 billion. Coastal, a subsidiary 
of El Paso, is a Delaware corporation with its principal place of 
business in Houston, Texas. Coastal, one of the two largest 
producers of IGAN in Western North America, reported 2002 sales of 
approximately $146 million.

III. The Proposed Transaction

    9. Pursuant to an Asset Purchase Agreement dated August 6, 2003, 
Dyno, a wholly-owned subsidiary of DNH, intends to acquire certain 
assets of the nitrogen products businesses owned by El Paso's 
subsidiaries. The assets to be acquired include Coastal's IGAN 
manufacturing facilities in Battle Mountain, Nevada and Cheyenne, 
Wyoming.

IV. Trade and Commerce

A. The Relevant Product Market

    10. IGAN, which is in the form of low-density, porous prills (or 
granules), is used to make blasting agents, one of two types of 
explosives for industrial uses like mining and construction. The 
other type is high explosives like dynamite, which are much more 
expensive than blasting agents. The principal physical difference 
between high explosives and blasting agents is in their sensitivity 
to detonation; a high explosive can be detonated with only a 
blasting cap, while blasting agents are detonated using high 
explosives. Blasting agents, which accounted for nearly all of the 
explosives sold in North America last year, are used principally to 
mine coal, rock and other nonmetals, and metals such as gold and 
copper. Blasting agents constitute a relatively small portion of the 
costs of mining and the other industrial uses to which they are put.
    11. Virtually all blasting agents used in North America contain 
ammonium nitrate in the form of IGAN, and essentially all IGAN sold 
in North America is used to make blasting agents. The most widely 
used blasting agent is known as ANFO, which is made by soaking IGAN 
in fuel oil (Ammonium Nitrate plus Fuel Oil). Although ammonium 
nitrate is also available in an agricultural grade, which is in the 
form of high-density prills, the more porous IGAN prills are used to 
make ANFO. The greater porosity of the IGAN prill allows for 
significantly better absorption of the fuel oil and makes an 
explosive with a much higher sensitivity to detonation. IGAN is also 
used to make explosive slurries, gels, and emulsions, which can be 
used as blasting agents either alone or in combination with ANFO.
    12. A small but significant increase in the price of IGAN would 
not cause consumers of IGAN to use sufficiently less IGAN so as to 
make such a price increase unprofitable. Accordingly, the production 
and sale of IGAN is a line of commerce and a relevant product market 
within the meaning of section 7 of the Clayton Act.

B. The Relevant Geographic Market

    13. IGAN typically is shipped to customers in bulk either by 
rail or by truck. Freight costs are a significant component of the 
total delivered price of IGAN and limit the geographic area that an 
IGAN production facility profitably can serve. In addition, IGAN 
degrades over time as moisture in the air causes it to ``cake,'' 
rendering it much less economical to use as an ingredient to make

[[Page 7505]]

blasting agents. Also, the more IGAN is handled between production 
and use, the more the IGAN prills break down into unusuable fine 
particles.
    14. El Paso, through Coastal, produces IGAN at two facilities, 
one located in Battle Mountain, Nevada and the other in Cheyenne, 
Wyoming. IGAN produced at these facilities is sold within Western 
North America. DNH, through Dyno, owns a 50 percent interest in an 
IGAN plant near Salt Lake City, Utah (known as the ``Geneva plant'') 
from which it supplies IGAN into Western North America. Only three 
other firms own facilities that regularly produce IGAN for sale in 
the eleven contiguous western-most states in the United States and 
the Canadian provinces of British Columbia, Alberta, and 
Saskatchewan (``Western North America''). One of those three firms 
is Orica Limited (``Orica''), which owns the remining 50 percent 
interest in the Geneva plant and also owns an IGAN facility located 
in Alberta, Canada. The other two facilities are located in Benson, 
Arizona and Manitoba, Canada.
    15. No other firm owns an IGAN production facility from which it 
supplies IGAN on a regular basis to Western North America. Apart 
from the facilities referenced in paragraph 14 above, the IGAN 
facilities closest to Western North American customers are located 
along the Mississippi River. The additional transportation costs 
needed to supply Western North America from these facilities, 
coupled with the increased risk of degradation of the IGAN due to 
prolonged shipping and handling, significantly limit the ability of 
these distant facilities to supply IGAN to Western North America.
    16. A small but significant increase in the price of IGAN 
produced for sale in Western North America would not cause consumers 
of IGAN in Western North America to purchase sufficient amounts of 
IGAN produced at facilities not already regularly supplying IGAN to 
Western North America that such a price increase would be 
unprofitable. Accordingly, Western North America is a relevant 
geographic market within the meaning of Section 7 of the Clayton 
Act.

C. Anticompetitive Effects

    17. Two firms account for over 80 percent of IGAN sales in 
Western North America. After the proposed acquisition, the two 
dominant firms together would control about 90 percent of sales, 
with Dyno and Coastal combined having a share of about 50 percent. 
Total sales of IGAN in Western North America exceed 750,000 tons 
annually, or over $150 million a year.
    18. Concentration in the Western North American IGAN market 
would increase significantly if DNH, through Dyno, acquired 
Coastal's IGAN production facilities in Battle Mountain and 
Cheyenne. The proposed acquisition would increase the Herfindahl-
Hirschman Index (``HHI''), a measure of market concentration defined 
and explained in Appendix A, by approximately 220 points, based on 
plant capacity, resulting in a post-merger HHI of roughly 3400, well 
in excess of levels that ordinarily would raise significant 
antitrust concerns.
    19. IGAN-containing blasting agents are used primarily in four 
industries in North America: Coal mining, which accounted for about 
70 percent of total consumption in the United States in 2002; 
quarrying and nonmetal mining (13 percent); metal mining (8 
percent); and construction (8 percent). In Western North America, 
most IGAN-containing blasting agents are consumed in mines located 
in one of three areas: The Powder River Basin in Wyoming (coal 
mines); North Nevada (gold mines); and the so-called ``Four-Corners 
Area'' surrounding the junction of Utah, Colorado, New Mexico, and 
Arizona (coal mines).
    20. The two leading producers of IGAN sold in Western North 
America, Coastal and Orica, have facilities that are well-positioned 
to supply the Powder River Basin and Northern Nevada. The Geneva 
plant, which has a capacity of about 100,000 tons/year and is 
equally owned by Orica and Dyno, is located roughly equidistant from 
Northern Nevada, the Powder River Basin, and the Four-Corners Area 
and is well-positioned to serve all three areas.
    21. The proposed transaction would combine Coastal's Battle 
Mountain and Cheyenne facilities with Dyno's 50 percent interest in 
the Geneva plant, thus eliminating independent competition from 
Dyno, the best located of three fringe IGAN producers that supply 
Western North America. Unlike the Geneva plant, which is centrally 
located to all three primary IGAN-containing blasting agent-
consuming areas in Western North America, the two remaining fringe 
firms are located at the outer reaches of the relevant geographic 
market.
    22. Purchasers of IGAN in Western North America have benefitted 
from competition between Dyno and Coastal through lower prices for 
IGAN. By acquiring Coastal's Battle Mountain and Cheyenne IGAN 
production facilities, DNH would eliminate that competition.

D. Entry Unlikely To Deter a Post-Acquisition Exercise of Market 
Power

    23. Successful entry into the IGAN market in Western North 
America would not be timely, likely, or sufficient to deter any 
coordinated exercise of market power as a result of the transaction.
    24. Significant barriers prevent de novo entry into the 
production of IGAN for sale in Western North America. De novo entry 
would be a lengthy process. The two most time-consuming steps--
construction of the IGAN plant itself and the obtaining of permits 
needed to construct the plant--would take over two years. Also, 
economies of scale in plant capacity are significant. To be 
successful, a new entrant likely would require a facility that could 
produce at least one-quarter of total IGAN sales in Western North 
America. An IGAN facility with that capacity would cost over $70 
million. All of these factors make entry unlikely in response to a 
small but significant increase in IGAN prices.

V. Violations Alleged

    25. DNH's proposed acquisition from El Paso of Coastal's IGAN 
production facilities in Battle Mountain, Nevada and Cheyenne, 
Wyoming, likely will lessen competition substantially and tend to 
create a monopoly in interstate trade and commerce in violation of 
Section 7 of the Clayton Act.
    26. The transaction likely will have the following 
anticompetitive effects, among others:
    a. Competition generally in the production of IGAN for sale in 
Western North America will be substantially lessened;
    b. Actual and potential competition between Dyno and Coastal in 
the production of IGAN for sale in Western North America will be 
eliminated; and
    c. Prices for IGAN produced for sale in Western North America 
likely will increase.
    27. Unless prevented, the acquisition by DNH of Coastal's Battle 
Mountain and Cheyenne IGAN production facilities would violate 
Section 7 of the Clayton Act, as amended, 15 U.S.C. 18.

VI. Requested Relief

    28. Plaintiff requests:
    a. That DNH's proposed acquisition from El Paso of Coastal's 
IGAN production facilities in Battle Mountain, Nevada and Cheyenne, 
Wyoming, be adjudged and decreed to be unlawful and in violation of 
section 7 of the Clayton Act, as amended, 15 U.S.C. 18;
    b. That defendants and all persons acting on their behalf be 
permanently enjoined and restrained from carrying out any contract, 
agreement, understanding, or plan, the effect of which would be to 
combine DNH and Coastal's Battle Mountain and Cheyenne IGAN 
production facilities;
    c. That plaintiff recover the costs of this action; and
    d. That plaintiff receive such other and further relief as the 
case requires and this Court may deem proper.

Dated: December 2, 2003.

Respectfully submitted,

    For Plaintiff United States of America:

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R. Hewitt Pate
Assistant Attorney General
DC Bar 473598

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Deborah P. Majoras
Deputy Assistant Attorney General
DC Bar 474239

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Dorothy Fountain
Deputy Director of Operations
DC Bar 439469

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Maribeth Petrizzi
Chief, Litigation II Section
DC Bar 435204

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Michael K. Hammaker
DC Bar 233684

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P. Terry Lubeck
CA Bar 46372

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Joshua P. Jones
GA Bar 91645

Trial Attorneys
U.S. Department of Justice,
Antitrust Division

[[Page 7506]]

Litigation II Section
1401 H Street, NW., Suite 3000
Washington, DC 20530
Telephone: (202) 307-0924

Appendix A--Herfindahl-Hirschman Index Calculations

    ``HHI'' means the Herfindahl-Hirschman Index, a commonly 
accepted measure of market concentration. It is calculated by 
squaring the market share of each firm competing in the market and 
then summing the resulting numbers. For example, for a market 
consisting of four firms with shares of thirty, thirty, twenty, and 
twenty percent, the HHI is 2600 (30 \2\ + 30 \2\ + 20 \2\ + 20 \2\ = 
2600). The HHI takes into account the relative size and distribution 
of the firms in a market and approaches zero when a market consists 
of a large number of firms of relatively equal size. The HHI 
increases both as the number of firms in the market decreases and as 
the disparity in size between those firms increases.
    Markets in which the HHI is between 1000 and 1800 points are 
considered to be moderately concentrated, and those in which the HHI 
is in excess of 1800 points are considered to be highly 
concentrated. Transactions that increase the HHI by more than 100 
points in highly concentrated markets presumptively raise antitrust 
concerns under the Horizontal Merger Guidelines issued by the U.S. 
Department of Justice and the Federal Trade Commission. See Merger 
Guidelines Sec. 1.51.

[FR Doc. 04-3384 Filed 2-13-04; 8:45 am]
BILLING CODE 4410-11-M