Order Protects Competition in Market for Alumina Wear Tile Used to Line Industrial Equipment
The Federal Trade Commission moved to preserve competition in the North American market for alumina wear tile by imposing conditions on Keystone Holdings, LLC and Compagnie de Saint-Gobain in a settlement involving Keystone’s planned acquisition of Saint-Gobain’s Advanced Ceramics Business.
Alumina wear tile protects industrial equipment from abrasive wear. Equipment protected by the tiles includes chutes, hoppers, and pipes used to carry coal and ash in coal-fired power plants; silos and equipment used in the cement and asphalt industry; and mineral processing equipment. There are two types of alumina wear tile: standard and pre-engineered. Standard alumina wear tile comes in a variety of predetermined sizes and shapes, while pre-engineered tile is made-to-order to fit complex shapes that standard tile cannot fit.
According to the FTC’s complaint, the deal as originally structured would reduce competition in the North American markets for both types of alumina wear tile, as well as the overall market for alumina wear tile. Keystone and Saint-Gobain are two of only three significant suppliers in North America for pre-engineered alumina wear tile, and two of only four suppliers in North America for standard alumina wear tile. Keystone’s acquisition of Saint-Gobain’s North American alumina wear tile assets would eliminate direct competition between CoorsTek – the Keystone subsidiary that manufactures its tiles – and Saint-Gobain. In addition, the deal would increase CoorsTek’s market share substantially, eliminate CoorsTek’s most significant alumina wear tile competitor in North America, allow the combined company to raise prices for alumina wear tile, and increase the likelihood that the remaining firms could act together to raise consumer prices for alumina wear tile.
The proposed settlement is designed to ensure that Saint-Gobain’s North American alumina tile business will remain in place and continue to compete in the market. Keystone and Saint-Gobain modified their transaction to allow Saint-Gobain to retain its Latrobe, Pennsylvania facility, which manufactures most of the alumina wear tile sold by Saint-Gobain in the United States. The FTC order requires Keystone, for a period of 10 years, to obtain prior approval from the Commission before acquiring any of Saint-Gobain’s North American alumina wear tile assets, including its Latrobe manufacturing facility. Also, under the proposed order, for a period of five years Saint-Gobain must provide the FTC with advance written notice before selling all or substantially all of its North American alumina wear tile assets. Saint-Gobain also must notify the FTC before permanently closing or halting operations at the Labrobe facility, with certain exceptions, such as for maintenance closures.
Finally, to ensure the continued viability of Saint-Gobain’s North American alumina wear tile business, Keystone must comply with all terms of alumina wear tile business agreements between the two firms, including a supply agreement for certain types of tile made at a Saint-Gobain facility in Vinhedo, Brazil, which Keystone will acquire through this transaction.
The Commission vote approving the proposed order was 5-0. It will be subject to public comment for 30 days, until February 1, 2011, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580. Electronic comments may be submitted at https://ftcpublic.commentworks.com/ftc/keystone.
NOTE: The Commission issues a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of a complaint is not a finding or ruling that the defendants have violated the law. A consent order is for settlement purposes only and does not constitute an admission of a violation of the law. When the Commission issues an 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 up to $16,000.
Copies of the complaint, consent order, and an analysis to aid in public comment can be found on 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 works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to email@example.com, or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.
(FTC File No. 101-0175)
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