Purchase of Helima Created Virtual Monopoly; Pre-Acquisition Information Transfer also Challenged
The Federal Trade Commission has accepted for public comment an agreement with Insilco Corporation settling FTC charges that its acquisition of Helima-Helvetion's aluminum tube manufacturing facilities would create a virtual monopoly or near monopoly in the markets for welded-seam aluminum radiator and charged air cooler (CAC) tubing in North America, in violation of federal antitrust laws. The FTC also charged that the transfer of competitively sensitive information from Helima to Insilco in advance of the purchase was likely to lessen substantially competition in the highly concentrated markets before the acquisition, and also violated federal law. To restore competition and settle the FTC charges, Insilco will be required to divest two of the Helima aluminum tube mills and associated assets to a Commission-approved buyer. If Insilco fails to divest the mills in a timely manner, a "crown jewel" provision in the agreement would authorize the Commission to appoint a trustee to divest all five of the mills located at the former Helima plant in Duncan, South Carolina. Insilco also will also be prohibited from obtaining or providing, without specific safeguards, the type of competitively sensitive, customer-specific price and cost information it obtained from Helima in any future premerger discussions.
In July 1996 Insilco paid approximately $34 million to acquire the automotive aluminum tubing business of the German firm, Helmut Lingemann Gmbh & Co. That purchase included the acquisition of Lingemann's U.S. operation, Helima-Helvetion. Insilco is based in Dublin, Ohio.
According to the complaint detailing the charges, Insilco and Helima were competitors in the market for welded-seam aluminum tubes used in the CAC systems installed on heavy-weight trucks and smaller diameter tubes generally used in vehicle radiators. Markets for both products are highly concentrated, and as a result of the Helima acquisition, Insilco is currently the only supplier of large welded aluminum tubes with 100 percent of the market and one of only two merchant suppliers of small welded aluminum tubes, with a market share over 90 percent. The acquisition threatens to increase prices and reduce service, quality and technological improvements in the products, according to the FTC complaint.
The terms of the order to settle the FTC charges require Insilco to divest to a Commission-approved buyer two of the Helima welded-seam aluminum tube mills within four months of the date on which the proposed order becomes final. One mill must be capable of producing CAC tubes and one must be capable of producing radiator tubes. In addition, Insilco will be required to divest a package of ancillary assets designed to allow the purchaser to become a viable competitor in both lines of business. The assets include tooling, machinery, fixtures, equipment and software used in the maintenance and operation of the assets. Insilco also must provide the buyer access to Insilco employees for training purposes and sell sole-source spare and replacement parts. To assure that the purchaser of the mills has access to customers, the order prohibits Insilco from enforcing any supply contracts entered into after its acquisition of Helima that are operative for more than a year. If Insilco fails to divest the package of assets within four months of the date the order becomes final, the Commission may appoint a trustee to divest all five of the mills located at the former Helima plant.
The proposed order also prohibits Insilco from obtaining or providing the type of sensitive information to others that it obtained before consummating the acquisition of Helima. Such information includes customer-specific price and cost information, current or future pricing plans, or current or future strategies or policies relating to competition. The order does allow the transfer of this type of data when it is aggregated by an independent entity to prevent potential anticompetitive effects.
The Commission vote to accept the agreement for a public comment period was 4-0.
A summary of the proposed consent agreement will be published in the Federal Register shortly and will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.
NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.
Copies of the complaint, proposed consent agreement and an analysis to aid public comment are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov or by calling 202-326-3676. FTC documents also are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No. 961 0106)
Office of Public Affairs
Casey R. Triggs or Nicholas R. Koberstein
Bureau of Competition
202-326-2682 or 202-326-2743