[Federal Register Volume 77, Number 44 (Tuesday, March 6, 2012)]
[Notices]
[Pages 13326-13328]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-5333]


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FEDERAL TRADE COMMISSION

[File No. 111 0207]


Carpenter Technology Corporation and Latrobe Specialty Metals, 
Inc.; Analysis of Proposed Agreement Containing Consent Orders 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 March 29, 2012.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Carpenter Latrobe, 
File No. 111 0207'' on your comment, and file your comment online at 
https://ftcpublic.commentworks.com/ftc/carpenterlatrobeconsent, by 
following the instructions on the web-based form. If you prefer to file 
your comment on paper, mail or deliver your comment to the following 
address: Federal Trade Commission, Office of the Secretary, Room H-113 
(Annex D), 600 Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Scott Reiter (202-326-2886), FTC, 
Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC 
20580.

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 February 29, 2012), 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, DC 
20580, either in person or by calling (202) 326-2222.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before March 29, 2012. 
Write ``Carpenter Latrobe, File No. 111 0207'' on your comment. Your 
comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the public Commission

[[Page 13327]]

Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of 
discretion, the Commission tries to remove individuals' home contact 
information from comments before placing them on the Commission Web 
site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone'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 credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do 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 FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do 
not include competitively sensitive information such as costs, sales 
statistics, inventories, formulas, patterns, devices, manufacturing 
processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/carpenterlatrobeconsent by following the instructions on the web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
    If you file your comment on paper, write ``Carpenter Latrobe, File 
No. 111 0207'' on your comment and on the envelope, and mail or deliver 
it to the following address: Federal Trade Commission, Office of the 
Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue NW., 
Washington, DC 20580. If possible, submit your paper comment to the 
Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that 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 on or before March 29, 2012. You can find more information, 
including routine uses permitted by the Privacy Act, in the 
Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

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 Orders (``Consent 
Agreement'') with Carpenter Technology Corporation (``Carpenter''), 
Latrobe Specialty Metals, Inc. (``Latrobe''), and HHEP-Latrobe, L.P., 
which is designed to remedy the anticompetitive effects of Carpenter's 
proposed acquisition of Latrobe.
    Pursuant to an Agreement and Plan of Merger dated June 20, 2011, 
Carpenter intends to acquire all of Latrobe's voting securities for 
approximately $410 million. Carpenter and Latrobe compete in the sale 
of specialty alloys used in the aerospace, energy, and other 
industries. The proposed acquisition would result in a merger to 
monopoly in the market for two of these specialty alloys: (1) MP159 and 
(2) MP35N used in aerospace applications (``Aerospace MP35N,'' and 
collectively, the ``MP Alloys''). 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. 18, and Section 5 of the 
Federal Trade Commission Act, as amended, 15 U.S.C. 45, in the markets 
for each of the MP Alloys.
    The proposed Consent Agreement remedies the alleged violations by 
replacing the lost competition in the relevant markets that would 
result from the acquisition. Under the terms of the Consent Agreement, 
Carpenter is required to divest assets related to the manufacture and 
sale of the MP Alloys to Eramet S.A. (``Eramet''). The Consent 
Agreement requires Carpenter to provide Eramet with all of the relevant 
equipment, licenses, and technical information necessary for Eramet to 
replace Latrobe as a competitor in the markets for the MP alloys. In 
addition, the Consent Agreement requires Carpenter to contract 
manufacture the MP Alloys for Eramet at cost until Eramet is able to 
produce and commercially sell these products on its own.
    The proposed Consent Agreement has been placed on the public record 
for thirty days, and comments from interested persons have been 
requested. Comments received during this period will become part of the 
public record. After thirty days, the Commission will again review the 
proposed Consent Agreement and the comments received, and will decide 
whether it should withdraw from the proposed Consent Agreement, modify 
it, or make final the accompanying Decision and Order.

II. The Products and Structure of the Markets

    The MP Alloys have unique physical characteristics that make them 
well suited for use in aerospace applications, and especially in 
aerospace engine fasteners. Purchasers of the MP Alloys are generally 
willing to consider overseas suppliers, although to avoid the cost of 
dual inventories for commercial and military customers, they typically 
require that suppliers be located in countries approved by Congress to 
supply materials for military purposes. For these reasons, the relevant 
markets in which to analyze the competitive effects of the proposed 
acquisition are the markets for MP159 and Aerospace MP35N manufactured 
in the United States and in foreign countries approved to supply 
materials for military purposes under the Defense Federal Acquisition 
Regulation System (``DFARS''). In these markets, Carpenter and Latrobe 
are the only options for U.S. consumers, and the proposed transaction 
would create a monopoly in both relevant markets.

III. Entry

    Entry or expansion by other specialty alloy manufacturers is not 
likely to avert the anticompetitive impact of Carpenter's acquisition 
of Latrobe. The time and cost required to obtain the physical assets, 
expertise, and qualifications necessary to produce the MP Alloys are 
substantial, and far outweigh the potential profits from entry into 
these small markets.

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IV. Effects of the Acquisition

    The proposed acquisition likely would result in significant 
anticompetitive harm in the highly-concentrated relevant markets for 
each of the MP Alloys. Carpenter and Latrobe are the only competitors 
in these highly-concentrated markets. The acquisition will eliminate 
actual, direct, and substantial competition between Carpenter and 
Latrobe, and likely result in higher prices for both of the MP Alloys.

V. The Consent Agreement

    The proposed Consent Agreement remedies the competitive concerns 
raised by the transaction by requiring the parties to divest assets 
related to the manufacture of the MP Alloys to Eramet. The terms 
required by the Consent Agreement will enable Eramet to effectively 
replace the competition in the MP Alloys markets lost as a result of 
the proposed acquisition.
    Eramet is a global supplier of specialty alloys with an established 
sales and marketing network in the United States that will allow it to 
be immediately competitive in the relevant MP Alloys markets. Eramet is 
based in France, which is an approved foreign source country for U.S. 
military operations under DFARS. The proposed Consent Agreement 
requires Carpenter to provide Eramet with product licenses and the 
manufacturing technology necessary to manufacture the MP Alloys. This 
includes technical assistance from current Latrobe company designees, 
and confidential business information directly related to the 
manufacture of the MP Alloys. In addition, the Consent Agreement 
requires Carpenter to contract manufacture the MP Alloys for Eramet at 
cost until Eramet is able to produce and commercially sell these 
products on its own. The Commission has appointed James R. Bucci, who 
has over 35 years of experience in the specialty alloy industry, as the 
interim monitor to oversee the divestiture.
    If after the public comment period the Commission determines that 
Eramet is not an acceptable acquirer of the assets to be divested, or 
that the manner of the divestitures is not acceptable, Carpenter must 
unwind the divestiture and divest the assets within 180 days of the 
date the Order becomes final to another Commission-approved acquirer. 
If Carpenter fails to divest the assets within the 180 days, the 
Commission may appoint a trustee to divest the relevant assets.
    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. 2012-5333 Filed 3-5-12; 8:45 am]
BILLING CODE 6750-01-P