[Federal Register Volume 78, Number 68 (Tuesday, April 9, 2013)]
[Notices]
[Pages 21123-21125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-08217]


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FEDERAL TRADE COMMISSION

[File No. 111 0034]


Charlotte Pipe and Foundry; 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 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 May 2, 2013.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/charlottepipeconsent online or on paper, 
by following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Charlotte Pipe, File 
No. 111 0034'' on your comment and file your comment online at https://ftcpublic.commentworks.com/ftc/charlottepipeconsent 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: William L. Lanning (202-326-3361), 
FTC, Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC 
20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 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 April 2, 2013), 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 May 2, 2013. 
Write ``Charlotte Pipe, File No. 111 0034'' 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 privileged or confidential,'' as discussed 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

[[Page 21124]]

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/charlottepipeconsent 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 ``Charlotte Pipe, File No. 
111 0034'' 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 May 2, 2013. 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'' or ``FTC'') has 
accepted, subject to final approval, an Agreement Containing Consent 
Order (``Consent Agreement'') from Charlotte Pipe and Foundry Company 
(hereinafter ``CP&F'') and its wholly-owned subsidiary, Randolph 
Holding Company, L.L.C. (hereinafter ``Randolph'') (hereinafter jointly 
referred to as ``Charlotte Pipe'' or ``Respondents''). The purpose of 
the Consent Agreement is to address the anticompetitive effects 
resulting from Charlotte Pipe's 2010 acquisition (the ``Acquisition'') 
of the cast iron soil pipe (``CISP'') business of Star Pipe Products, 
Ltd. (``Star Pipe''). The parties to that transaction also entered a 
``Confidentiality and Non-Competition Agreement.'' The Acquisition was 
not reportable under the Hart-Scott-Rodino Antitrust Improvement Act of 
1976, 15 U.S.C. 18a (``HSR Act''). The administrative complaint 
(``Complaint'') alleges that the Acquisition violated Section 7 of the 
Clayton Act, 15 U.S.C. 18, and Section 5 of the Federal Trade 
Commission Act, 15 U.S.C. 45.
    Under the terms of the proposed Consent Agreement, Charlotte Pipe 
is: required to provide prior notification to the FTC, for a period of 
ten years, of an acquisition of any entity engaged in the manufacture 
and sale of CISP products in or into the United States; prohibited from 
enforcing the ``Confidentiality and Non-Competition Agreement'' against 
Star Pipe; and required to inform its customers and the public of the 
Acquisition and other transactions involving other CISP competitors.
    The proposed Consent Agreement has been placed on the public record 
for 30 days for receipt of comments from interested members of the 
public. Comments received during this period will become part of the 
public record. After 30 days, the Commission will review the Consent 
Agreement again and the comments received, and will decide whether it 
should withdraw from the Consent Agreement or make final the 
accompanying Decision and Order.
    The purpose of this Analysis to Aid Public Comment is to invite and 
facilitate public comment. It is not intended to constitute an official 
interpretation of the proposed Consent Agreement and the accompanying 
Decision and Order or in any way to modify their terms.
    The Consent Agreement is for settlement purposes only and does not 
constitute an admission by Charlotte Pipe that the law has been 
violated as alleged in the Complaint or that the facts alleged in the 
Complaint, other than jurisdictional facts, are true.

I. The Complaint

    The Complaint makes the following allegations.

A. The Respondents

    CP&F is a privately-held corporation with its principal place of 
business located at 2109 Randolph Road, Charlotte, NC 28207. CP&F is 
one of the largest producers and sellers of CISP products in the United 
States.
    Randolph is a wholly-owned subsidiary of CP&F. Randolph, acting on 
behalf of CP&F, executed both the Acquisition agreement as the 
``Buyer'' of Star Pipe's CISP business and the ``Confidentiality and 
Non-Competition Agreement'' referenced herein.

B. The Product and Structure of the Market

    CISP products are components of pipelines systems used in buildings 
to transport wastewater to the sewer system, to vent the plumbing 
system, and to transport rainwater to storm drains. The end-users of 
CISP products are construction firms, plumbers, or developers.
    The relevant line of commerce within which to analyze the effects 
of the Acquisition is the market for the sale of CISP products for use 
in commercial, industrial, and multi-story residential buildings in the 
United States. Plastic products are not a viable substitute for CISP 
products because state and local building codes in the United States 
generally require the use of CISP products in commercial, industrial, 
and multi-story residential buildings.
    The relevant geographic market within which to analyze the effects 
of the Acquisition is no broader than the United States, and may 
contain smaller geographic markets consisting of states, multi-state 
regions, or metropolitan areas.
    The United States CISP products market is highly concentrated. At 
the time of the Acquisition, two firms, Charlotte Pipe and McWane Inc., 
sold in excess of ninety percent of the CISP products in the United 
States. Companies that sell imported CISP products, including Star 
Pipe, accounted for the remaining sales.

C. Star Pipe and the Acquisition

    In 2007, Star Pipe entered the United States CISP products market. 
Between 2007 and 2010, Star Pipe expanded its sales base throughout the 
United States. In contested markets, Star Pipe acted as a disruptive 
force, competing on price and service to the benefit of consumers.
    In July 2010, Charlotte Pipe executed an Asset Purchase Agreement 
with Star Pipe to acquire the assets of Star Pipe's CISP business for 
approximately $19 million. Pursuant to the agreement, Charlotte Pipe 
purchased, among other things, Star Pipe's inventory, its production 
equipment located in China, and its business records and customer list. 
The parties to the agreement also executed a ``Confidentiality and Non-
Competition Agreement'' that prohibited Star Pipe and certain Star Pipe 
employees from competing with Charlotte Pipe in the United States, 
Mexico, and Canada for a period of six years. In addition, Star Pipe 
agreed to keep the Acquisition confidential and to

[[Page 21125]]

send to its customers a letter indicating that it had decided to the 
exit the CISP business. After the Acquisition, Charlotte Pipe destroyed 
the CISP production equipment that it acquired from Star Pipe.

D. Conditions of Entry

    Entry into the relevant markets would not be timely, likely, or 
sufficient in magnitude, character, and scope to deter or counteract 
the anticompetitive effects of the Acquisition.

E. Effects

    The effects of Charlotte Pipe's acquisition of Star Pipe's CISP 
business have been a substantial lessening of competition in the 
relevant markets. Specifically, the Acquisition has: eliminated actual, 
direct, and substantial competition between Charlotte Pipe and Star 
Pipe in the relevant markets; substantially increased the level of 
concentration in the relevant markets; eliminated a maverick firm; 
increased the ability of Charlotte Pipe unilaterally to exercise market 
power; and prevented Star Pipe and certain Star Pipe employees from re-
entering the CISP products market for a period of six years.

II. The Proposed Order

    Paragraph II of the Proposed Order requires Charlotte Pipe to 
provide prior notification to the Commission of an acquisition of any 
entity engaged in the manufacture and sale of CISP products in or into 
the United States. This paragraph also requires Charlotte Pipe to 
comply with premerger notification procedures and waiting periods 
similar to those found in the HSR Act.
    This provision is necessary because Charlotte Pipe has previously 
acquired several firms in the CISP products market in non-reportable 
transactions. The Proposed Order affords the Commission an appropriate 
mechanism to review all proposed acquisitions by Charlotte Pipe in the 
CISP products market to guard against future anticompetitive 
transactions.
    Paragraph III of Proposed Order prevents Charlotte Pipe from 
enforcing the Confidentiality and Non-Competition Agreement. This frees 
Star Pipe, and its current and former employees, to enter and compete 
against Charlotte Pipe in the United States, Canada, or Mexico.
    Paragraphs IV-VII impose reporting and other compliance 
requirements. In particular, Charlotte Pipe is required to send a 
letter to its customers and to maintain a link on its Web site relating 
to the Acquisition and Charlotte Pipe's other non-reportable 
transactions, including Matco-Norca in 2009, DWV Casting Company 
(``DWV'') in 2004, and Richmond Foundry, Inc. (``Richmond Foundry'') in 
2002. This provision is appropriate because Charlotte Pipe's 
confidential acquisitions are not widely known in the CISP industry and 
have given rise to a perception among distributors and end-users that 
importers of CISP products are transient and unreliable operations. The 
proposed order serves to inform market participants about Charlotte 
Pipe's role in the exit of Star Pipe, Matco-Norca, DWV, and Richmond 
Foundry from the CISP industry.
    The Proposed Order will expire in 10 years.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2013-08217 Filed 4-8-13; 8:45 am]
BILLING CODE 6750-01-P