Under the terms of a proposed consent announced for public comment today by the Federal Trade Commission, Rohm & Haas Company will be required to divest certain assets it would acquire in its purchase of Morton International, Inc. The divestiture would resolve the FTC's competitive concerns that the acquisition of Morton would lessen competition in the North American market for the production and sale of acrylic water-based polymers for use in the formulation of floor care products.
According to the FTC's complaint, water-based floor care polymers impart essential properties, such as hardness, slip resistance and gloss, to floor care products. Major customers of water-based floor care polymers are product formulators, who sell finished floor care products, such as polishes, mainly to industrial and institutional users, including factories, schools and retail stores. The complaint alleges that the water-based floor care polymers market in North America is highly concentrated, with Rohm & Haas and Morton each controlling a significant share of the market. The complaint further alleges that the effect of the acquisition may be to substantially lessen competition and to tend to create a monopoly by, among other things, eliminating direct competition between Rohm & Haas and Morton, increasing the likelihood that purchasers of water-based floor care polymers will be forced to pay higher prices, increasing the likelihood that technical and sales services provided to customers will be reduced, and increasing the likelihood that innovation will be reduced. According to the complaint, entry into the water-based floor care polymers market would not be timely, likely, or sufficient to deter or offset the adverse effects of the acquisition on competition because entry is difficult in this market in view of the length of time it would take and the expense that would be incurred in building appropriate chemical production facilities, acquiring the technical expertise necessary to produce the polymers, and gaining recognition in a marketplace in which customers are reluctant to switch from proven suppliers.
Under the terms of the proposed order, Rohm & Haas would be required to divest, no later than 10 days after the date the Commission accepts the agreement for public comment, Morton's worldwide water-based floor care polymers business to GenCorp, Inc., which currently produces water-based polymers for use in the graphics arts industry, a technology and production area closely related to water-based floor care polymers. The proposed order also would require Rohm & Haas provide a transitional supply of products to GenCorp.
The Commission vote to publish the proposed consent order 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, 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, 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, 600 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. 991 0112)