[Federal Register Volume 77, Number 108 (Tuesday, June 5, 2012)]
[Notices]
[Pages 33218-33220]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-13625]


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FEDERAL TRADE COMMISSION

[Docket No. 9350]


Graco, 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 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 2, 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 ``Graco, Dkt. No. 9350'' 
on your comment, and file your comment online at https://ftcpublic.commentworks.com/ftc/gracoitwconsent, 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: Peter Richman (202-326-2563), 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.  3.25(f) 
the Commission Rules of Practice, 16 CFR 3.25(f), 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 May 31, 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 July 2, 2012. 
Write ``Graco, Dkt. No. 9350'' 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 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/gracoitwconsent 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 ``Graco, Dkt. No. 9350'' 
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,

[[Page 33219]]

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 July 2, 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

    The Federal Trade Commission (``Commission''), subject to its final 
approval, has accepted for public comment an Agreement Containing 
Consent Orders, containing both a Proposed Decision and Order 
(``Proposed Order'') and an Order To Hold Separate and Maintain Assets, 
with Graco, Inc. (``Graco''), Illinois Tool Works Inc., and ITW 
Finishing LLC (``ITW''), collectively referred to as the Respondents, 
to resolve an Administrative Complaint issued by the Commission on 
December 15, 2011. The Complaint alleged that Graco's proposed 
acquisition of ITW would substantially reduce competition in various 
markets for industrial liquid finishing equipment in North America. The 
proposed acquisition would harm industrial liquid finishing equipment 
customers by resulting in higher prices and less choice in the relevant 
markets. The Proposed Order requires Graco to divest all overlapping 
ITW businesses and to hold those assets separate pending that 
divestiture. The Proposed Order is for settlement purposes only and 
tailored to remedy the effects of Graco's proposed acquisition of ITW.
    The Commission has placed the Proposed Order on the public record 
for thirty (30) days for receipt of comments by interested persons. 
Comments received during the comment period will become part of the 
public record. After thirty days, the Commission will review the 
Proposed Order and comments received and will decide whether it should 
withdraw from the Agreement or make final the Proposed Order.

I. The Commission's Complaint

    The Federal Trade Commission voted 4-0 to issue an Administrative 
Complaint against Respondents on December 15, 2011.\2\ Graco is a 
Minnesota corporation with its principal place of business in 
Minneapolis, Minnesota. Illinois Tool Works Inc. is a Delaware 
corporation with its principal place of business in Glenview, Illinois. 
Illinois Tool Works Inc., at the time of the Commission's Complaint, 
wholly owned ITW, a Delaware limited liability company with its 
principal place of business in Glenview, Illinois.\3\ Graco and ITW 
manufacture and sell industrial liquid finishing equipment throughout 
North America and the world. Industrial manufacturers use industrial 
liquid finishing equipment to apply paint and other coatings to all 
kinds of finished goods, including automobiles, office furniture, and 
home appliances.
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    \2\ http://ftc.gov/os/adjpro/d9350/111215gracoadmincmpt.pdf.
    \3\ On March 13, 2012, the Secretary withdrew the Commission's 
administrative challenge to Graco's acquisition of ITW in order to 
consider Graco's proposed settlement. Graco agreed to an Agreement 
Containing Consent Orders requiring it to hold separate all of the 
ITW liquid finishing businesses and to divest up to all of the hold-
separate assets to a Commission-approved acquirer. On March 27, the 
Commission issued an Order to Hold Separate and Maintain Assets 
(``Hold Separate'') covering the ITW liquid finishing equipment 
businesses worldwide, allowing Graco to close on the Acquisition but 
to retain and integrate only the ITW powder finishing assets. The 
Commission deferred voting to accept the Consent Agreement to allow 
staff an opportunity to investigate whether a narrower divestiture 
package would fully remedy the competitive harm alleged in the 
Complaint. http://ftc.gov/opa/2012/03/graco.shtm.
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    The Complaint alleged that Graco's proposed acquisition of ITW 
would harm competition in five specific product markets: The 
manufacture and sale of (1) liquid finishing pumps for industrial uses; 
(2) liquid finishing spray guns, which apply paint and other liquid 
coatings to surfaces in industrial uses; (3) proportioners, which mix 
and blend paint with catalysts and other liquids before applying the 
coating in industrial uses; (4) circulation pumps for paint systems in 
automotive assembly plants; and (5) industrial liquid finishing 
equipment for resale.
    The Complaint charged that if the proposed acquisition were 
completed, the combined firm would control a dominant share of all 
North American sales of industrial liquid finishing equipment and 
create a monopoly for circulation pumps used in paint systems in the 
automobile industry.
    The Complaint also alleged that the proposed transaction would end 
the close competition between Graco and ITW, its largest competitor, 
reduce or eliminate the substantial one-time price breaks or other 
discounts both firms offer to distributors, and lessen Graco's 
incentives to develop new products after the merger. The competition 
lost by the acquisition could not be easily replaced, as Exel North 
America, the firm in the market with a distant third place in sales, as 
well as other fringe firms, lack the brand acceptance and distribution 
to challenge a combined Graco/ITW. Significant hurdles and barriers 
would also deter new competitors from entering the markets.

II. The Agreement Containing Consent Orders

    The purpose of the Proposed Order is to ensure the continuation of 
ITW's liquid finishing business assets as an ongoing, viable business 
operating in the same relevant markets in which they were competing at 
the time Graco announced the proposed acquisition, and to remedy the 
lessening of competition resulting from the proposed acquisition as 
alleged in the Commission's Complaint. In order to do that, the 
Proposed Order requires Graco to divest ITW's liquid finishing business 
assets, including the Binks, DeVilbiss, Ransburg, and BGK brands, no 
later than 180 days after the date the Proposed Order becomes final, to 
a Commission-approved Acquirer. If Graco has not divested ITW's liquid 
finishing business assets within 180 days, the Commission may appoint a 
trustee to divest ITW's liquid finishing business assets in a manner 
that satisfies the requirements of the Proposed Order.
    The divestiture maintains that status quo ante in the markets 
alleged in the Commission's Complaint. The Proposed Order permits Graco 
to complete its acquisition of ITW, but requires it to hold the 
businesses containing ITW's industrial liquid finishing equipment 
assets separate and to maintain them while it looks for a buyer for the 
assets to be divested. The Order to Hold Separate and Maintain Assets 
will protect the competitive status quo during this process.
    The Proposed Order requires Graco, or the divestiture trustee, if 
appointed, to file periodic reports detailing efforts to divest the 
assets and the status of that undertaking. Commission representatives 
may have reasonable access to Graco's business records related to 
compliance with the Proposed Order.

III. Opportunity for Public Comment

    By accepting the Proposed Order subject to final approval, the 
Commission anticipates that the competitive problems alleged in the 
Complaint will be resolved. The purpose of this analysis is to invite 
and facilitate public comment concerning the Proposed Order to aid the

[[Page 33220]]

Commission in its determination of whether it should make final the 
Proposed Order contained in the Agreement. This analysis is not 
intended to constitute an official interpretation of the Proposed 
Order, nor is it intended to modify the terms of the Proposed Order in 
any way.

    By direction of the Commission, Commisioner Ohlhausen not 
participating.
Donald S. Clark,
Secretary.
[FR Doc. 2012-13625 Filed 6-4-12; 8:45 am]
BILLING CODE 6750-01-P