UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of
ROHM AND HAAS COMPANY, a corporation, and
MORTON INTERNATIONAL, INCORPORATED, a corporation.

Docket No. C-

COMPLAINT

The Federal Trade Commission ("Commission"), having reason to believe that Rohm and Haas Company has agreed to acquire all of the share capital of Morton International, Incorporated, both corporations subject to the jurisdiction of the Commission, in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C.  18, and Section 5 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C.  45; and it appearing to the Commission that a proceeding in respect thereof would be in the public interest, hereby issues its Complaint, stating its charges as follows:

I. RESPONDENTS

1. Respondent Rohm and Haas Company ("Rohm & Haas") is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at 100 Independence Mall West, Philadelphia, Pennsylvania 19106-2399.

2. Respondent Morton International, Incorporated ("Morton") is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Indiana, with its office and principal place of business located at 100 North Riverside Plaza, Chicago, Illinois 60606-1596.

3. For purposes of this proceeding, Respondents are, and at all times relevant herein have been, engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C.  12, and are corporations whose businesses are in or affecting commerce as "commerce" is defined in Section 4 of the FTC Act, as amended, 15 U.S.C.  44.

II. THE ACQUISITION

4. Pursuant to an Agreement and Plan of Merger dated January 31, 1999, Rohm & Haas will acquire all of the issued share capital of Morton for approximately $4.9 billion ("the Acquisition").

III. THE RELEVANT MARKET

5. For purposes of this Complaint, the relevant line of commerce in which to analyze the effect of the proposed Acquisition is the research, development, manufacture and sale of water-based polymers for use in the formulation of floor care products (hereinafter referred to as "Water-Based Floor Care Polymers"). Water-based polymers are essential components of floor care product formulations, such as floor polishes, in that they impart to the floor care product necessary and desired properties such as hardness, gloss, and slip and scuff resistance. There are no economic substitutes for Water-Based Floor Care Polymers to which customers would switch in response to a small but significant price increase in Water-Based Floor Care Polymers.

6. For purposes of this Complaint, the relevant geographic area in which to analyze the effects of the proposed Acquisition on competition in Water-Based Floor Care Polymers is North America. Water-Based Floor Care Polymers produced outside North America are not economic substitutes because of the high shipping costs associated with a relatively low-value product consisting largely of water, and because of the delays and uncertainties inherent in long-distance shipping.

7. The relevant market set forth in Paragraphs 5 and 6 is highly concentrated, whether measured by the Herfindahl-Hirschman Index ("HHI") or by two-firm and four-firm concentration ratios. Rohm & Haas and Morton are two of the three leading sellers of Water-Based Floor Care Polymers in North America.

8. Entry into the relevant market requires significant sunk costs and would not be timely, likely and sufficient to deter or counteract the adverse competitive effects described in Paragraphs 9 and 10 because of, among other things, the length of time and expense necessary to build appropriate chemical production facilities, the difficulty in acquiring the technical expertise necessary to produce the polymers, and the difficulty in gaining recognition in a marketplace in which customers are reluctant to change from proven suppliers. Thus, it is unlikely that a new entrant not already in the Water-Based Floor Care Polymers business could enter successfully so as to counteract a small but significant price increase.

IV. EFFECTS OF THE ACQUISITION

9. The effect of the Acquisition may be substantially to lessen competition and to tend to create a monopoly in the relevant market in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C.  18, and Section 5 of the FTC Act, 15 U.S.C.  45, in the following ways, among others:

a. by eliminating direct actual competition between Rohm & Haas and Morton;
b. by increasing the likelihood that the firm created by the merger of Rohm & Haas and Morton will unilaterally exercise market power;
c. by increasing the likelihood of coordinated interaction between the remaining competitors in the relevant market;
d. by increasing the likelihood that purchasers of Water-Based Floor Care Polymers in the relevant market will be forced to pay higher prices;
e. by increasing the likelihood that technical and sales services provided to purchasers of Water-Based Floor Care Polymers will be reduced; and
f. by increasing the likelihood that innovation will be reduced.

10. All of the above increase the likelihood that the Acquisition would result in increased prices or reduced services in the near future and in the long term.

V. VIOLATIONS CHARGED

11. The acquisition agreement described in Paragraph 4 constitutes a violation of Section 5 of the FTC Act, as amended, 15 U.S.C.  45.

12. The Acquisition described in Paragraph 4, if consummated, would constitute a violation of Section 7 of the Clayton Act, as amended, 15 U.S.C.  18, and Section 5 of the FTC Act, as amended, 15 U.S.C.  45.

IN WITNESS WHEREOF, the Federal Trade Commission has caused this Complaint to be signed by the Secretary and its official seal to be affixed, at Washington, D.C. this _____ day of _______________ A.D. 199__.

By the Commission.

Donald S. Clark
Secretary
SEAL