LaFarge, Corp. has agreed to restructure its agreement to purchase certain assets of Holnam, Inc., to settle Federal Trade Commission charges that the purchase agreement violated federal antitrust laws and could drive up prices for cement in the Pacific Northwest.
LaFarge Corp. is based in Reston, Virginia. It is one of the largest suppliers of cement for residential, commercial, institutional and public works construction, with 14 plants in the United States and Canada and sales of $1.6 billion in 1996. Holnam, headquartered in Dundee, Michigan, is the number one supplier of cement in the United States. It operates 19 cement plants in North America and had sales of $983 million in 1996.
LaFarge and Holnam are two of five competitors in the portland cement market in the Puget Sound area. In February 1998, LaFarge and Holnam signed a letter of intent detailing an agreement under which LaFarge would buy Holnam's Seattle cement plant, cement distribution terminal in Vancouver, Washington, a rock quarry in Twin Rivers, Washington, and related assets.
The FTC alleged that a provision of the sales agreement between LaFarge and Holnam would have imposed a penalty on LaFarge if it produced quantities of cement in excess of 85 percent of the Holnam plant's capacity. This provision would encourage LaFarge to restrict the output of cement at the Seattle plant to avoid the production penalty and would prevent an increase in supply and a reduction in price for cement in the Puget Sound area.
To restore competition and settle the FTC charges, LaFarge and Holnam have agreed to restructure their arrangement to drop the production penalty clause. In addition, they have agreed not to enter into any agreement relating to the purchase of Holnam's Seattle cement plant and related assets where payment will be affected by, or dependent on, the quantity of cement produced or sold at the Seattle cement plant.
This matter was handled by the FTC's Seattle Regional Office with the assistance and cooperation of Industry Canada's Competition Bureau.
The Commission vote to accept the proposed consent agreement was 4-0.
An announcement regarding the 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.
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 and consent 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 1-866-653-4261. 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.
(FTC File No. 981 0161)