The Federal Trade Commission has negotiated a consent agreement with Solvay S.A. to resolve competitive concerns stemming from Solvay's proposed $1.3 billion acquisition of Ausimont S.p.A. from Italenergia S.p.A. (Italenergia). The settlement would require Solvay to divest its U.S. polyvinylidene fluoride (PVDF) operations, including its Decatur, Alabama, PVDF plant and its interest in the Alventia LLC (Alventia) joint venture, which manufactures the main raw material for PVDF. Without the divestiture, Solvay's proposed acquisition of Ausimont would lessen competition in two markets: PVDF and melt-processible PVDF. The proposed settlement also includes an Order to Hold Separate and Maintain Assets (Hold Separate Order), which would require Solvay to preserve its Fluoropolymers Business as a viable, competitive, and ongoing operation until the divestiture is achieved.
"The combination of Solvay and Ausimont would combine firms that were becoming increasingly significant competitors to each other," said Joseph Simons, Director of the FTC's Bureau of Competition. "The divestiture required by the consent agreement would maintain three strong competitors in the market for PVDF."
Solvay, based in Belgium, is a global manufacturer of pharmaceuticals, chemicals, and processed finished products (such as molded plastics and plastic film and sheet). Ausimont, based in Italy, is a majority-owned subsidiary of Italenergia, S.p.A., and is operated as part of the Montedison Group. Ausimont's two business areas are fluorinated materials and peroxides. Solvay and Ausimont are two of only three producers of PVDF in the United States and are two of the three major PVDF producers in the world. PVDF is a fluoropolymer used in a wide variety of applications, including highly durable architectural coatings, wire and cable jacketing, fiber optic raceways, chemical processing equipment, semiconductor manufacturing equipment, and other miscellaneous applications.
According to the FTC, there are two relevant lines of commerce in which to analyze the alleged competitive effects of Solvay's proposed acquisition of Ausimont: the production and sale of all grades of PVDF; and the production and sale of melt-processible grades of PVDF. The melt-processible grades include all PVDF grades except those used in coatings.
The FTC's complaint alleges that the markets for PVDF and melt-processible PVDF are highly concentrated, and that the proposed acquisition of Ausimont by Solvay would increase concentration in those markets. The complaint also alleges that entry into those markets would not be timely, likely, or sufficient to deter or offset the acquisition's adverse competitive effects, because producers employ proprietary technology to manufacture PVDF. In addition, new entry also likely would require entry into the production of VF2, which is a necessary raw material to produce PVDF. Entry into the production of PVDF likely would take as long as three years, according to the FTC.
The complaint also alleges that Solvay's acquisition of Ausimont would lessen competition by making coordinated interaction among the remaining producers of PVDF more likely. The complaint alleges that the acquisition would leave only two significant PVDF producers, that reliable pricing information is available from customers, and that the large number of customers in the industry would make cheating on any coordination easy to detect. The complaint further alleges that because Ausimont has been expanding its sales of melt-processible PVDF, the acquisition would limit the growing competition between Solvay and Ausimont in the relevant market for melt-processible PVDF.
The proposed Order, designed to remedy the alleged anticompetitive effects of the acquisition in the markets for PVDF and melt-processible PVDF, would require the divestiture of Solvay's Fluoropolymers Business in the U.S. to an acquirer approved by the Commission within 180 days from the date upon which Solvay consummates its acquisition of Ausimont. That business includes Solvay's PVDF manufacturing plant in Decatur, Alabama, and its interest in Alventia, a VF2 manufacturing joint venture. As part of the divestiture, the proposed Order also would require Solvay to provide to the acquirer of the Solvay PVDF business a royalty-free license to Solvay's intellectual property, including detailed information about Solvay's production of PVDF at both of Solvay's two plants, in Alabama and France. The scope of the license would allow the acquirer to manufacture or sell PVDF anywhere in the world. The proposed Order would further require Solvay to divest other assets related to its PVDF business, including real property, customer lists, contracts, patents, inventories, and other intangible assets and goodwill used to operate the business.
The proposed Order also provides that if Solvay does not complete its divestiture within that 180-day period, the Commission may appoint a Divestiture Trustee to divest the Solvay Fluoropolymers Business in a manner acceptable to the Commission, or may require divestiture of Ausimont's PVDF business, including its VF2 and PVDF manufacturing operations in Thorofare, New Jersey. The proposed Order also provides for the Commission to appoint a Monitor Trustee to oversee Solvay's compliance with the terms of the proposed Order and the divestiture agreements that Solvay enters into pursuant to the proposed Order.
The Hold Separate Order included in the proposed consent agreement would require that Solvay hold separate and maintain the viability of its PVDF business as a viable and competitive operation, and maintain the viability of Ausimont's PVDF business, until either business is transferred to the Commission-approved acquirer. The Hold Separate Order provides for the Commission to appoint a Hold Separate Trustee who would be charged with the duty of monitoring Solvay's compliance with the Hold Separate Order.
Finally, the proposed consent agreement contains a number of record-keeping and reporting requirements to allow the Commission to monitor compliance with its terms.
On the basis of the bilateral agreement on antitrust cooperation between the United States and the European Commission, the FTC and the European Commission have co-operated in their analysis of Solvay's acquisition of Ausimont. The European Commission recently concluded its investigation.
The Commission vote to accept the proposed consent agreement was 5-0. A summary of the proposed consent agreement will be published in the Federal Register shortly and will be subject to public comment for 30 days, until June 3, 2002, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 600 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, the proposed consent agreement and an analysis of the agreement to aid in public comment are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC's Bureau of Competition seeks to prevent business practices that restrain competition. The Bureau carries out its mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. To notify the Bureau concerning particular business practices, call or write the Office of Policy and Evaluation, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, D.C. 20580, Electronic Mail: firstname.lastname@example.org; Telephone (202) 326-3300. For more information on the laws that the Bureau enforces, the Commission has published "Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws," which can be accessed at http://www.ftc.gov/bc/compguide/index.htm.
(FTC File No.: 021 0067)
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