In a proposed settlement announced today, Global Industrial Technologies, Inc. has agreed to restructure its proposed acquisition of AP Green Industries, Inc. to resolve Federal Trade Commission allegations that the merger would violate federal antitrust laws by combining the two largest domestic producers of glass-furnace silica refractories. Under the terms of the proposed settlement, Global would divest AP Green’s silica refractories business to a Commission-approved buyer.
According to the FTC, Global and AP Green are the two leading U.S. manufacturers of silica refractories used in glass furnaces. Refractories are heat-resistant materials used to line furnaces in industries that involve heating or containing solids, liquids, or gases at high temperatures. Annual domestic sales of glass-furnace silica refractories total about $4 million. The refractories are used in the glass industry for a variety of purposes, including to build the roofs and other portions of glass-melting furnaces, the agency said. The Commission’s complaint alleges that the merger of the two companies would likely lessen competition by eliminating rivalry between Global and AP Green, and, as a result, would lead to higher prices and less product innovation.
The agency’s complaint also alleges that entry by new competitors into the production of glass-furnace silica refractories is unlikely because of extensive product testing requirements and large sunk capital investment. In addition, the FTC complaint states that even if there were large price increases, buyers of the refractories would be unlikely to substitute other materials or import glass-furnace silica refractories.
The proposed settlement would require Global, which has its principal office in Dallas, Texas, to divest AP Green’s glass-furnace silica refractories business to Robert R. Worthen and Dennis R. Williams (jointly or through a corporation called Utah Refractories Corp.) or to another buyer that receives the prior approval of the Commission. The proposed divestiture would include all of the Missouri-based AP Green’s silica refractories assets, except its manufacturing facility in Sproul, Pennsylvania.
According to the proposed order, if Global does not complete the divestiture within the Commission’s stated timetable, the Commission may appoint a trustee to divest either AP Green’s or Global’s silica refractories business. In addition, the proposed order contains a provision requiring Global to maintain the viability and marketability of the Global and AP Green silica refractories businesses pending the divestiture.
The Commission’s vote to accept the proposed consent order and publish it for public comment was 4-0.
An announcement regarding the proposed consent agreement will be published in the Federal Register shortly. The agreement 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.
Copies of the complaint, the proposed consent order, and an analysis to aid 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, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 202-326-2502. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
Joseph G. Krauss
Bureau of Competition
(FTC File No. 9810173)