9910288

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of

THE ASSOCIATED OCTEL COMPANY LIMITED, a corporation

Docket No. C-3913

COMPLAINT

The Federal Trade Commission, having reason to believe that Respondent The Associated Octel Company Limited ("Octel"), a corporation subject to the jurisdiction of the Commission, has agreed to acquire all of the voting securities of Oboadler Company Limited, 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, as amended, 15 U.S.C.  45, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its Complaint, stating its charges as follows:

I. RESPONDENT

1. Respondent The Associated Octel Company Limited ("Octel") is a corporation organized, existing and doing business under and by virtue of the laws of the United Kingdom, with its office and principal place of business located at Berkeley Square House, Berkeley Square, London, W1X 6DT, England, United Kingdom.

2. Octel is engaged in, among other things, the manufacture and sale of lead antiknock compounds. Octel is the leading manufacturer of lead antiknocks worldwide, accounting for approximately 80 percent of global production. In the United States, lead antiknock compounds manufactured by Octel are distributed by two firms: Octel America Inc. (a subsidiary of Octel), and Ethyl Corporation.

3. For purposes of this proceeding, Respondent is, and at all times relevant herein has been, engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C.  12, and is a corporation whose business is in or affects commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C.  44.

II. THE ACQUIRED COMPANY

4. Oboadler Company Limited ("Oboadler") is a corporation organized, existing and doing business under and by virtue of the laws of the United Kingdom, with its office and principal place of business located at High Field, Row Dow Lane, Shoreham, Kent, United Kingdom TN15 6XN.

5. Oboadler holds all of the issued share capital of three operating companies: Alcor Chemie AG, Alcor Chemie Vertriebs AG, and Novoktan GmbH. Through its subsidiaries, Oboadler is engaged in, among other things, the manufacture and sale of lead antiknock compounds. In the United States, lead antiknock compounds manufactured by Oboadler are distributed by Allchem Industries, Inc.

6. Oboadler is, and at all times relevant herein has been, engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C.  12, and is a corporation whose business is in or affects commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C.  44.

III. THE ACQUISITION

7. Pursuant to a Share Purchase Agreement dated June 1, 1999, Octel will acquire all of the issued share capital of Oboadler Company Limited for approximately $100 million ("the Acquisition").

IV. THE RELEVANT MARKET

8. For purposes of this Complaint, the relevant line of commerce in which to analyze the effect of the Acquisition is the manufacture and sale of lead antiknock compounds. Lead antiknock compounds are gasoline additives that contain tetraethyl lead. This product is used to increase the octane rating of gasoline, and thereby eliminate engine knock during the combustion cycle and improve fuel efficiency. Currently in the United States, lead antiknock compounds are added to aviation fuel for piston engine aircraft and to certain motor gasoline for racing cars. There are no substitutes for lead antiknock compounds to which customers would switch in response to a small but significant increase in the price of lead antiknock compounds.

9. For purposes of this Complaint, the relevant geographic area in which to analyze the effect of the Acquisition on competition in lead antiknock compounds is the world.

10. The world market for the manufacture and sale of lead antiknock compounds is highly concentrated as measured by the Herfindahl-Hirschman Index. Octel and Oboadler are two of only three firms in the world that manufacture lead antiknock compounds. Further, Octel and Oboadler are the only two manufacturers of lead antiknock compounds whose product is sold in the United States.

11. Entry into the market requires significant sunk costs and would not be timely, likely and sufficient to deter or counteract the adverse competitive effects described in Paragraph 12 because of, among other things, the length of time and expense necessary to construct production facilities, environmental regulations pertaining to manufacturing operations that utilize lead, the ongoing decline in worldwide demand for lead antiknock compounds, and the cost of environmental remediation at the manufacturing site when, due to decline in demand, production is no longer commercially practicable.

V. EFFECTS OF THE ACQUISITION

12. The effect of the Acquisition may be substantially to lessen competition 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 Federal Trade Commission Act, as amended, 15 U.S.C.  45, in the following ways, among others:

(a) by eliminating direct actual competition between Octel and Oboadler in the relevant market;
 
(b) by increasing the likelihood of coordinated interaction between the remaining competitors in the relevant market; and
 
(c) by increasing the likelihood that consumers of lead antiknock compounds will be forced to pay higher prices.

VI. VIOLATIONS CHARGED

13. The Share Purchase Agreement described in Paragraph 7 constitutes a violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C.  45.

14. The Acquisition described in Paragraph 7, 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 Federal Trade Commission Act, as amended, 15 U.S.C.  45.

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on this twenty second day of December, 1999, issues its Complaint against said Respondent.

By the Commission,
Commissioner Leary not participating.

Benjamin I. Berman
Acting Secretary
SEAL

ISSUED: December 22, 1999