[Federal Register Volume 73, Number 130 (Monday, July 7, 2008)]
[Notices]
[Pages 38453-38455]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-15208]


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FEDERAL TRADE COMMISSION

[File No. 071 0203]


Carlyle Partners IV, L.P.; Analysis of Agreement Containing 
Consent Order 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 and the terms of the consent order -- embodied in the consent 
agreement -- that would settle these allegations.

DATES: Comments must be received on or before July 29, 2008.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Carlyle Partners, File No. 071 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 135-H, 600 Pennsylvania 
Avenue, NW., Washington, DC 20580. Comments containing confidential 
material must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with Commission Rule 4.9(c). 16 CFR 
4.9(c) (2005).\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 that do not 
contain any nonpublic information may instead be filed in electronic 
form by following the instructions on the web-based form at (http://secure.commentworks.com/ftc-CarlylePartners). To ensure that the 
Commission considers an electronic comment, you must file it on that 
web-based form.
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    \1\ 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 website, to the extent 
practicable, at 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 website. 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).

FOR FURTHER INFORMATION CONTACT: Catherine M. Moscatelli, FTC Bureau of 
Competition, 600 Pennsylvania Avenue,

[[Page 38454]]

NW., Washington, DC 20580, (202) 326-2749.

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 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 June 30, 2008), on the World Wide Web, at (http://www.ftc.gov/os/2008/06/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. All comments should be filed as 
prescribed in the ADDRESSES section above, and must be received on or 
before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order to Aid Public Comment

I. Introduction

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Order from Carlyle 
Partners IV, L.P. (``Respondent''). The Consent Agreement is intended 
to resolve anticompetitive effects stemming from Carlyle's proposed 
acquisition of the world-wide sodium silicate and silicas business from 
INEOS Group Limited (``INEOS''). Carlyle participates in the sodium 
silicate market world-wide through PQ Corporation, which it owns. PQ is 
the largest producer of sodium silicate in the United States. The 
Consent Agreement includes a proposed Decision and Order which requires 
Respondent to divest PQ's sodium silicate plant and business located in 
Utica, Illinois. The proposed Decision and Order also requires the 
licensing of all intellectual property related to the production of 
sodium silicate at the Utica plant.
    The Decision and Order calls for divestiture of PQ's Utica, 
Illinois plant to Oak Hill Acquisition Company, LLC (``Oak Hill''), or 
another Commission-approved buyer in the event that Oak Hill is 
determined not to be acceptable. The Consent Agreement, if finally 
accepted by the Commission, would settle charges that the proposed 
acquisition may substantially lessen competition in the market for 
sodium silicate in the Midwest United States. The Commission has reason 
to believe that Respondent's proposed acquisition would violate Section 
7 of the Clayton Act, as amended, 15 U.S.C. Sec.  18, and Section 5 of 
the Federal Trade Commission Act, as amended, 15 U.S.C. Sec.  45.

II. The Proposed Complaint

    According to the Commission's proposed complaint, the relevant 
product market in which to analyze the effects of INEOS' sale of assets 
to Carlyle is the market for the sale and manufacture of sodium 
silicate. Sodium silicate has a variety of direct uses and is also 
consumed in the production of downstream silicate derivatives, also 
referred to as silicas. According to the Commission's complaint, sodium 
silicate does not, in its various end-uses, have close substitutes that 
constrain its pricing. The relevant geographic market is the Midwest 
United States. Sodium silicate, which is generally sold in an aqueous 
solution form that is 65% water, exhibits strong regional markets 
because of high transportation costs relative to the value of the 
product.
    The proposed complaint alleges that the market for sodium silicate 
is highly concentrated and that the acquisition reduces the number of 
competitors in the Midwest United States market from four to three. 
According to the proposed complaint, the acquisition combines PQ, the 
largest competitor, with INEOS, the third largest competitor, which 
hold 50% and 12% market shares as measured by plant capacity, 
respectively. The HHI in this market would increase by 1181, to 4674.
    The proposed complaint alleges that the proposed acquisition would 
reduce competition by eliminating direct competition between these two 
companies. The proposed complaint further states that the market for 
sodium silicate is conducive to coordination due to several structural 
features, including the facts that sodium silicate is a homogenous 
product and pricing information is readily available. Furthermore, 
evidence suggests that competitors behave as if the market were 
essentially a duopoly in which the top two producers, PQ and 
Occidental, operate with a high level of mutual interdependence. Based 
on the level of concentration and the competitive conditions, the 
Commission's complaint alleges that the acquisition would make 
coordinated interaction more likely, leading to higher prices for 
sodium silicate. The proposed complaint further alleges that entry into 
the relevant market would not be timely, likely, or sufficient to deter 
or offset the proposed acquisition's adverse competitive effects.

III. Terms of the Proposed Order

    Under the proposed Decision and Order, Carlyle will divest its 
Utica, Illinois sodium silicate business to Oak Hill within five (5) 
days of the INEOS acquisition. Oak Hill is a new entity that has been 
created for the purpose of acquiring the Utica plant. The principal 
owner of Oak Hill has been involved in entrepreneurial investments in a 
number of industries over the past twenty five years, including in the 
chemicals, software, telecommunications, construction, real estate, and 
energy industries.
    The consent order has several major operative provisions. Section 
II.A. of the Order requires PQ to divest the Utica plant to an up-front 
purchaser, Oak Hill Acquisition Company, LLC, in accordance with the 
provisions of the Asset Purchase Agreement, within five days of 
consummating the acquisition of INEOS. Section II.A. also gives the 
Commission the authority to require PQ to divest the Utica plant to 
another purchaser, should the Commission deem Oak Hill not to be 
acceptable; and to direct PQ to accept any remedial provisions it may 
add to the Order after initial acceptance. Section II.D. requires 
Respondents to make available to Oak Hill or other purchaser, at no 
greater than direct cost, such personnel, assistance and training as is 
necessary to enable the purchaser to operate the Utica plant in 
substantially the same manner as PQ operated plant, for a period of two 
years after divestiture. Section II.E. requires Respondents to enter 
into an employee services agreement covering certain union employees at 
the Utica plant to facilitate their continued employment at that the 
plant under the new ownership. Section III.A. allows the Commission to 
appoint an Interim Monitor to assure that Respondents expeditiously 
comply with all of their obligations and perform all of their 
responsibilities. Section IV.A. allows the Commission to appoint a 
Divestiture Trustee should PQ fail to fully comply with the obligations 
to assign, grant, license, divest, transfer, deliver or otherwise 
convey assets required by the Order. Section V.B. requires Respondents 
to submit to the Commission a verified written report setting forth in 
detail the manner and

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form in which they intend to comply, are complying, and have complied 
with the Order, on a regular basis until Respondents have fully 
achieved the divestiture. Section VII requires Respondents to notify 
the Commission of any change in their corporate structure that may 
affect compliance obligations arising out of the Order. Pursuant to 
Section IX, the Order has a ten year term.

IV. Opportunity for Public Comment

    The proposed Decision and 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.
    The purpose of this analysis is to facilitate public comment on the 
proposed Decision and Order. This analysis is not intended to 
constitute an official interpretation of the Consent Agreement and the 
proposed Decision and Order.
    By direction of the Commission.

Richard C. Donohue,
Acting Secretary.
[FR Doc. E8-15208 Filed 7-3-08: 8:45 am]
BILLING CODE 6750-01-S