[Federal Register Volume 70, Number 45 (Wednesday, March 9, 2005)]
[Notices]
[Pages 11672-11673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-4592]


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FEDERAL TRADE COMMISSION

[File No. 041 0203]


Cytec Industries 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 draft 
complaint that accompanies the consent agreement and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before March 30, 2005.

ADDRESSES: Comments should refer to ``Cytec Industries Inc., File No. 
041 0203,'' to facilitate the organization of comments. A comment filed 
in paper form should include this reference both in the text and on the 
envelope, and should be mailed or delivered to the following address: 
Federal Trade Commission/Office of the Secretary, Room H-159, 600 
Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing 
confidential material must be filed in paper form, as explained in the 
SUPPLEMENTARY INFORMATION section. The FTC is requesting that any 
comment filed in paper form be sent by courier or overnight service, if 
possible, because U.S. postal mail in the Washington area and at the 
Commission is subject to delay due to heightened security precautions. 
Comments filed in electronic form (except comments containing any 
confidential material) should be sent to the following e-mail box: 
[email protected].

FOR FURTHER INFORMATION CONTACT: Robert Tovsky, FTC, Bureau of 
Competition, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 
326-2634.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), 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, subject to 
final approval, 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 March 1, 2005), on the World Wide Web, at http://www.ftc.gov/os/2005/03/index.htm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. Written comments must be submitted 
on or before March 30, 2005. Comments should refer to ``Cytec 
Industries Inc., File No. 041 0203,'' to facilitate the organization of 
comments. A comment filed in paper form should include this reference 
both in the text and on the envelope, and should be mailed or delivered 
to the following address: Federal Trade Commission/Office of the 
Secretary, Room H-159, 600 Pennsylvania Avenue, NW., Washington, DC 
20580. If the comment contains any material for which confidential 
treatment is requested, it must be filed in paper (rather than 
electronic) form, and the first page of the document must be clearly 
labeled ``Confidential.'' \1\ The FTC is requesting that any comment 
filed in paper form be sent by courier or overnight service, if 
possible, because U.S. postal mail in the Washington area and at the 
Commission is subject to delay due to heightened security precautions. 
Comments filed in electronic form should be sent to the following e-
mail box: [email protected].
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    \1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be 
accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment to be withheld from 
the public record. The request will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments, whether filed 
in paper or electronic form, will be considered by the Commission, and 
will be available to the public on the FTC Web site, to the extent 
practicable, at http://www.ftc.gov. As a matter of discretion, the FTC 
makes every effort to remove home contact information for individuals 
from the public comments it receives before placing those comments on 
the FTC Web site. More information, including routine uses permitted by 
the Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Orders (``Consent 
Agreement'') from Cytec Industries Inc. (``Cytec''). The Consent 
Agreement is intended to resolve anticompetitive effects stemming from 
Cytec's proposed acquisition of the Surface Specialties Business of UCB 
S.A. (``UCB''). The Consent Agreement includes a proposed Decision and 
Order (``Order'') that would require Cytec to divest UCB assets 
relating to the research, development, marketing, sale, and production 
of amino resins (``UCB Amino Resins Business''). The Consent Agreement 
also includes an Order to Hold Separate and Maintain Assets, which 
requires Cytec to preserve the UCB Amino Resins Business as a viable, 
competitive, and ongoing operation until the divestiture is achieved.
    The Consent Agreement, if finally accepted by the Commission, would 
settle charges that Cytec's proposed acquisition of UCB's Surface 
Specialties

[[Page 11673]]

Business may have substantially lessened competition in the markets for 
amino resins for: (1) Industrial liquid coatings; and (2) adhesion 
promotion in rubber. The Commission has reason to believe that Cytec's 
proposed acquisition of UCB's Surface Specialties Business would have 
violated Section 7 of the Clayton Act and Section 5 of the Federal 
Trade Commission Act.
    The proposed Order has been placed on the public record for thirty 
(30) days to receive comments by interested persons. Comments received 
during this period will become part of the public record. After thirty 
(30) days, the Commission will review the Consent Agreement and 
comments received and decide whether to withdraw its agreement or make 
final the Consent Agreement's proposed Order and Order to Hold Separate 
and Maintain Assets.

I. Amino Resins for Industrial Liquid Coatings and Adhesion Promotion 
in Rubber

    According to the Commission's proposed complaint, the relevant 
product markets in which to analyze the effects of Cytec's proposed 
acquisition of UCB's Surface Specialties Business are the manufacture 
and sale of amino resins for: (1) Industrial liquid coatings; and (2) 
adhesion promotion in rubber. The types of amino resins that Cytec and 
UCB manufacture are used as cross-linking agents in thermoset surface 
coatings for a variety of applications, including automotive coatings, 
coil coatings, can coatings, appliance coatings, and general 
maintenance coatings. These types of resins are also used, primarily in 
tires, to promote the adhesion of rubber to materials such as steel or 
fiber. As the proposed complaint describes, there are no effective 
substitutes for amino resins in the applications in which they are 
used. The proposed complaint also alleges that the relevant geographic 
market in which to assess the impact of the proposed acquisition is no 
broader than North America and is potentially limited to the United 
States.
    The proposed complaint alleges that the markets for amino resins 
for industrial liquid coatings and adhesion promotion in rubber are 
highly concentrated, that Cytec and UCB have been for many years the 
two major competitors in these markets, and that these companies 
compete with one another across a wide range of amino resin grades and 
applications in which customers have qualified their resins for use. As 
the proposed complaint describes, customers have relied on the 
competition between these companies to maintain competitive amino resin 
prices. The proposed complaint alleges that the proposed acquisition of 
UCB's Surface Specialties division by Cytec would reduce competition by 
eliminating the direct competition that has existed between these two 
companies. The proposed complaint further alleges that entry into the 
relevant markets would not be timely, likely, or sufficient to deter or 
offset the acquisition's adverse competitive effects. Other firms would 
not in the foreseeable future be able to offer the range of grades that 
Cytec and UCB have developed over the years, nor would they be able to 
meet the requirements necessary to commercially qualify their resins 
for use in demanding customer applications.

II. The Consent Agreement

    The proposed Order requires that Cytec divest the UCB Amino Resins 
Business to an acquirer approved by the Commission within one-hundred 
and eighty (180) days from the date upon which the Commission accepts 
the proposed Order for public comment. The divested business includes 
two manufacturing facilities, in Massachusetts and in Germany, where 
UCB manufactures amino resins, together with UCB's rights to obtain 
amino resins pursuant to a tolling agreement between UCB and Solutia 
Canada, Inc. The divested business also includes certain lines of 
additives that are the only other products that UCB manufactures at the 
plant in Germany. In connection with the divestiture, Cytec is required 
to divest to an acquirer the set of assets that comprise UCB's amino 
resins business. In addition to the manufacturing assets, for example, 
Cytec is required to divest the patents and other intellectual property 
that UCB has relied upon in its amino resins business, the sales and 
marketing materials, including customer information, that UCB has 
relied upon, and the other books and records of the business. Further, 
Cytec is required to assign the different contracts relating to the 
amino resins business, and to secure all consents necessary for the 
divestiture. Cytec is also required, until the divestiture is 
completed, to take the steps necessary to maintain the viability of the 
UCB Amino Resins Business. The acquirer of the divested assets would 
have the opportunity, without interference from Cytec, to interview and 
potentially hire key UCB personnel who have been involved in supporting 
all aspects of the company's amino resins business.
    The proposed Order also provides that if Cytec does not complete 
its divestiture within the specified six-month period, the Commission 
may appoint a Divestiture Trustee to divest the UCB Amino Resins 
Business in a manner acceptable to the Commission. The proposed Order 
also provides for the Commission to appoint a Monitor Trustee to 
oversee Cytec's compliance with the terms of the proposed Order and the 
divestiture agreements that Cytec enters pursuant to the proposed 
Order.
    The proposed Order to Hold Separate and Maintain Assets that is 
also included in the Consent Agreement requires that Cytec hold 
separate and maintain the viability and marketability of UCB's Amino 
Resins Business as a viable and competitive operation until the 
business is transferred to the Commission-approved acquirer. 
Furthermore, it contains measures designed to ensure that no material 
confidential information is exchanged between Cytec and the UCB Amino 
Resins Business (except as otherwise provided in the Order to Hold 
Separate and Maintain Assets) and measures designed to prevent interim 
harm to competition in the relevant markets pending divestiture. The 
Order to Hold Separate and Maintain Assets provides for the Commission 
to appoint a Hold Separate Trustee who is charged with the duty of 
monitoring Cytec's compliance with the Order to Hold Separate and 
Maintain Assets.
    The proposed Order requires Cytec to provide the Commission, within 
thirty (30) days from the date the Order becomes final, a verified 
written report setting forth in detail the manner and form in which 
Cytec intends to comply, is complying, and has complied with the 
provisions relating to the proposed Order and the Order to Hold 
Separate and Maintain Assets. The proposed Order further requires Cytec 
to provide the Commission with a report of compliance with the Order 
every thirty (30) days after the date when the Order becomes final 
until the divestiture has been completed.
    The purpose of this analysis is to facilitate public comment on the 
proposed Order. This analysis is not intended to constitute an official 
interpretation of the Consent Agreement, the proposed Order, or the 
Order to Hold Separate and Maintain Assets, or in any way to modify the 
terms of the Consent Agreement, the proposed Order, or the Order to 
Hold Separate and Maintain Assets.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 05-4592 Filed 3-8-05; 8:45 am]
BILLING CODE 6750-01-P