[Federal Register Volume 74, Number 191 (Monday, October 5, 2009)]
[Notices]
[Pages 51151-51153]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-23826]
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FEDERAL TRADE COMMISSION
[File No. 901 0086]
K+S Aktiengesellschaft; 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 October 26, 2009.
ADDRESSES: Interested parties are invited to submit written comments
electronically or in paper form. Comments should refer to``K+S
International Salt, File No. 901 0086'' to facilitate the organization
of comments. Please note that your comment -- including your name and
your state -- will be placed on the public record of this proceeding,
including on the publicly accessible FTC website, at (http://www.ftc.gov/os/publiccomments.shtm).
Because comments will be made public, they should not include any
sensitive personal information, such as an individual's Social Security
Number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or
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credit or debit card number. Comments also should not include any
sensitive health information, such as medical records or other
individually identifiable health information. In addition, comments
should not include any ``[t]rade secret or any commercial or financial
information which is obtained from any person and which is privileged
or confidential. . . .,'' as provided in Section 6(f) of the FTC Act,
15 U.S.C. 46(f), and Commission Rule 4.10(a)(2), 16 CFR 4.10(a)(2).
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c), 16 CFR
4.9(c).\1\
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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 FTC Rule 4.9(c), 16 CFR
4.9(c).
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Because paper mail addressed to the FTC is subject to delay due to
heightened security screening, please consider submitting your comments
in electronic form. Comments filed in electronic form should be
submitted by using the following weblink: (https://public.commentworks.com/ftc/mortonsalt) and following the instructions
on the web-based form. To ensure that the Commission considers an
electronic comment, you must file it on the web-based form at the
weblink: (https://public.commentworks.com/ftc/mortonsalt). If this
Notice appears at (http://www.regulations.gov/search/index.jsp), you
may also file an electronic comment through that website. The
Commission will consider all comments that regulations.gov forwards to
it. You may also visit the FTC website at (http://www.ftc.gov/) to read
the Notice and the news release describing it.
A comment filed in paper form should include the ``K+S
International Salt, File No. 901 0086'' 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-135
(Annex D), 600 Pennsylvania Avenue, NW, Washington, DC 20580. 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.
The Federal Trade Commission Act (``FTC Act'') and other laws the
Commission administers permit the collection of public comments to
consider and use in this proceeding as appropriate. The Commission will
consider all timely and responsive public comments that it receives,
whether filed in paper or electronic form. Comments received will be
available to the public on the FTC website, to the extent practicable,
at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of
discretion, the Commission 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.shtm).
FOR FURTHER INFORMATION CONTACT: Jill Frumin, Bureau of Competition,
600 Pennsylvania Avenue, NW, Washington, D.C. 20580, (202) 326-2458.
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 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 September 25, 2009), on the World Wide Web, at (http://www.ftc.gov/os/actions.shtm). A paper copy can be obtained from the FTC
Public Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW,
Washington, D.C. 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 (``Consent
Agreement'') from K+S Aktiengesellschaft (``K+S''), and its subsidiary,
International Salt Company LLC (``ISCO''), that is designed to remedy
the anticompetitive effects that would otherwise result from K+S's
proposed acquisition of Morton International, Inc. (``Morton''), from
The Dow Chemical Company (``Dow''). Under the terms of the proposed
Consent Agreement, K+S is required to divest assets related to its bulk
de-icing salt business in Maine to an up-front buyer, Eastern Salt
Company, Inc. (``Eastern Salt'' or ``Maine Purchaser''), and to divest
assets related to its bulk de-icing salt business in Connecticut to an
up-front buyer, Granite State Minerals, Inc. (``Granite State'' or
``Connecticut Purchaser'').
The proposed Consent Agreement has been placed on the public record
for thirty (30) days to solicit comments from interested persons.
Comments received during this period will become part of the public
record. After thirty (30) days, the Commission will again review the
proposed Consent Agreement and will decide whether it should withdraw
from the proposed Consent Agreement, modify it, or make final the
Decision and Order (``Order'').
Pursuant to a Stock Purchase Agreement dated April 1, 2009 (the
``Agreement''), K+S proposes to acquire Morton from Dow for
approximately $1.675 billion (the ``Acquisition''). The Commission's
complaint alleges that the proposed Acquisition, if consummated, would
violate Section 7 of the Clayton Act, as amended, 15 U.S.C. Sec. 18,
and Section 5 of the Federal Trade Commission Act, as amended, 15
U.S.C. Sec. 45, by lessening competition in Maine and Connecticut for
the sale and delivery of bulk de-icing road salt.
II. The Parties
K+S is currently one of the world's leading suppliers of salt
products. K+S sells salt into the United States through its U.S.
subsidiary, ISCO. Morton, headquartered in Chicago, Illinois, and a
wholly-owned subsidiary of Dow, is a leading salt vendor in North
America. Morton produces consumer salt, industrial salt, and de-icing
salt. The acquisition of Morton will make K+S the largest producer and
distributor of de-icing road salt for customers in Maine and
Connecticut.
III. The Proposed Complaint
According to the Commission's proposed Complaint, the relevant
product market in which to assess the competitive effects of the
proposed Acquisition is the sale and delivery of bulk de-icing salt.
The evidence indicates that there are no practical
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substitutes for bulk de-icing salt to melt snow and ice. The relevant
geographic markets in which to assess the impact of the proposed
Acquisition are the states of Maine and Connecticut.
The relevant markets are highly concentrated. ISCO and Morton are
the two principal bidders in the states of Maine and Connecticut for
the sale and delivery of bulk de-icing salt. Post acquisition, the
combined entity will have a market share exceeding 70 percent in both
Maine and Connecticut. Post-merger HHIs for Maine and Connecticut are
5,142 and 5,834, and the acquisition will increase HHI levels by 1,914
and 2,642, respectively. These market concentration levels far exceed
the thresholds set forth in the Horizontal Merger Guidelines and thus
create a presumption that the proposed merger will create or enhance
market power.
Entry into the relevant markets is difficult because, among other
things, there is a lack of acceptable stockpile space along the coasts
of Maine and Connecticut. As a result, new entry sufficient to achieve
a significant market impact within two years is unlikely.
Finally, the Complaint alleges that the proposed Acquisition will
reduce competition in the relevant markets by eliminating direct and
substantial competition between ISCO and Morton, and by increasing the
likelihood that ISCO would increase prices either unilaterally or
through coordinated interaction with the few remaining firms in the
relevant markets.
IV. The Consent Agreement
To preserve the competition that otherwise would be eliminated by
the Acquisition, the proposed Consent Agreement requires ISCO to divest
to Commission-approved buyers, Eastern Salt and Granite State, assets
sufficient to enable these buyers to become viable competitors for the
de-icing salt business in the relevant markets beginning with the 2010-
2011 bidding cycle. ISCO will divest to Eastern Salt the Maine
Divestiture Assets, including: 1) stockpile space in the state, 2) all
associated handling and trucking contracts, and 3) a book of de-icing
salt business for the 2009-2010 winter season. ISCO will divest to
Granite State the Connecticut Divestiture Assets, including: 1)
stockpile space in the state, 2) all associated handling and trucking
contracts, 3) a book of de-icing salt business for the 2009-2010 winter
season, and 4) a three-year supply of de-icing salt at a price that is
no more than ISCO's costs.
The Commission has preliminarily determined that Eastern Salt is a
well-qualified buyer of the Maine Divestiture Assets and is well
situated to replace the competition Morton provided in the state.
Eastern Salt is a family-owned company that has been a de-icing salt
supplier in other geographic markets along the East Coast for roughly
60 years. Eastern Salt is a vertically-integrated supplier with a
dependable, high-quality supply of de-icing salt. With the divested
assets, Eastern Salt will be well positioned to compete for future
business in Maine and to deliver salt to customers in a timely manner.
The Commission has preliminarily determined that Granite State is a
well-qualified buyer of the Connecticut Divestiture Assets and is well
situated to replace the competition Morton provided in the state.
Granite State has experience supplying de-icing salt to customers in a
number of states along the East Coast. The Consent Agreement requires
ISCO to provide Granite State with a three-year supply of bulk de-icing
salt at no more than ISCO's costs. The supply requirement will ensure
that Granite State has a supply of salt in Connecticut during the 2010-
2011 and 2011-2012 bid cycles while Granite State develops the
necessary supply arrangements to serve Connecticut customers in
subsequent years. With the divested assets, Granite State will be well
positioned to compete for future business in Connecticut and to deliver
salt to customers in a timely manner.
The proposed Consent Agreement requires that the divestitures occur
no later than twenty (20) days after the Acquisition is consummated.
However, if ISCO divests the assets to Eastern Salt or Granite State
during the public comment period, and if, at the time the Commission
decides to make the Order final, the Commission notifies K+S or ISCO
that either purchaser is not an acceptable acquirer or that the asset
purchase agreement with the Maine Purchaser or Connecticut Purchaser is
not an acceptable manner of divestiture, then ISCO must immediately
rescind the transaction in question and divest those assets to another
buyer within six (6) months of the date the Order becomes final. At
that time, Respondents must divest those assets only to an acquirer and
in a manner that receives the prior approval of the Commission. The
proposed Consent Agreement also enables the Commission to appoint a
trustee to divest any assets identified in the Order that K+S or ISCO
has not divested to satisfy the requirements of the Order.
The proposed Consent Agreement further requires K+S and ISCO to
maintain the viability and marketability of the Maine Divestiture
Assets and the Connecticut Divestiture Assets and to prevent the
destruction, removal, wasting, deterioration, or impairment of those
assets prior to divestiture.
In order to ensure that the Commission remains informed about the
status of the divestitures, the proposed Consent Agreement requires K+S
and ISCO to file reports with the Commission periodically until the
divestitures are completed. Written reports describing how K+S and ISCO
are complying with the Order must be filed one year after the Order
becomes final and annually for the next three (3) years.
The purpose of this analysis is to facilitate public comment on the
proposed Consent Agreement, and it is not intended to constitute an
official interpretation of the proposed Consent Agreement or to modify
its terms in any way.
By direction of the Commission.
Donald S. Clark
Secretary.
[FR Doc. E9-23826 Filed 10-2-09: 6:40 am]
BILLING CODE: 6750-01-S