001 0040

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

COMMISSIONERS:
Timothy J. Muris, Chairman
Sheila F. Anthony
Mozelle W. Thompson
Orson Swindle
Thomas B. Leary

In the Matter of

AIRGAS, INC., a corporation.

Docket No. C-4029

DECISION AND ORDER

The Federal Trade Commission ("Commission") having initiated an investigation of the acquisition by certain wholly-owned subsidiaries of Respondent Airgas, Inc. of 100 percent of the Puritan Bennett Medical Gas Business from Mallinckrodt, Inc., and Respondent having been furnished thereafter with a copy of a draft of Complaint that the Bureau of Competition proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge Respondent with violations 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

Respondent, its attorneys, and counsel for the Commission having thereafter executed an Agreement Containing Consent Order ("Consent Agreement"), containing an admission by Respondent of all the jurisdictional facts set forth in the aforesaid draft of Complaint, a statement that the signing of said Consent Agreement is for settlement purposes only and does not constitute an admission by Respondent that the law has been violated as alleged in such Complaint, or that the facts as alleged in such Complaint, other than jurisdictional facts, are true, and waivers and other provisions as required by the Commission's Rules; and

The Commission having thereafter considered the matter and having determined that it had reason to believe that Respondent has violated the said Acts, and that a Complaint should issue stating its charges in that respect and having accepted the executed Consent Agreement and placed such Consent Agreement on the public record for a period of thirty (30) days for the receipt and consideration of public comments, now in further conformity with the procedure described in Commission Rule 2.34, 16 C.F.R.  2.34, the Commission hereby issues its complaint, makes the following jurisdictional findings and issues the following Decision and Order ("Order"):

1. Respondent Airgas 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 259 North Radnor-Chester Road, Suite 100, Radnor, Pennsylvania 19087.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of Respondent, and the proceeding is in the public interest.

ORDER

I.

IT IS ORDERED that, as used in this Order, the following definitions shall apply:

A. "Respondent" or "Airgas" means Airgas, Inc., its directors, officers, employees, agents, representatives, successors, and assigns; its joint ventures, subsidiaries, divisions, groups, and affiliates controlled by Airgas, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

B. "Mallinckrodt" means Mallinckrodt, Inc., a corporation that was organized, existing and doing business at the time of the Acquisition under and by virtue of the laws of New York, with its office and principal place of business located at 675 McDonnell Boulevard, P.O. Box 5840, St. Louis, Missouri 63134.
C. "Puritan Bennett Medical Gas Business" means the assets formerly owned by Mallinckrodt, Inc. used to manufacture, sell and distribute gases in the United States and Canada and purchased by Airgas on January 26, 2000.

D. "Air Liquide" means Air Liquide America Corporation, 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 2700 Post Oak Blvd, Houston, Texas 77056. Air Liquide also includes all of the joint ventures, subsidiaries, divisions, groups and affiliates controlled by Air Liquide America Corporation.

E. "Acquirer" means either Air Liquide or the entity approved by the Commission to acquire the Assets To Be Divested pursuant to Paragraph II. or Paragraph III. of this Order, as appropriate.

F. "Acquisition" means the acquisition by Airgas of the Puritan Bennett Medical Gas Business from Mallinckrodt.

G. "Assets To Be Divested" means the Donora Manufacturing Facility and the Richmond Manufacturing Facility.

H. "Commission" means the Federal Trade Commission.

I. "Contract Manufacture Nitrous Oxide" means the annual production of Nitrous Oxide supplied pursuant to the terms of a Divestiture Agreement by Respondent for sale to the Acquirer.

J. "Divestiture Agreement" means all agreements, including any supply agreement, by and between Respondent and the Acquirer and all exhibits and schedules thereof, incorporated by reference into this Order and made a part hereof as a confidential appendix, that have been approved by the Commission.

K. "Donora Manufacturing Facility" means all assets, properties, business and goodwill, tangible and intangible, located in Donora, Pennsylvania as of September 24, 2001 used to produce, sell or distribute Nitrous Oxide, including, but not limited to:
1. all real property interests, including rights, title and interests in and to owned or leased property, together with all buildings, improvements, appurtenances, licenses and permits;

2. all inventory, machinery, fixtures, equipment, vehicles, transportation facilities, furniture, tools and other tangible personal property, including distribution equipment, storage containers, filling equipment and cylinders;
 
3. all vendor lists;
 
4. all sales promotion literature and advertising materials; provided, however, that the Acquirer may not use or distribute any items containing the Respondent's name or logo;
 
5. rights to research materials, inventions, trade secrets, intellectual property, patents, technology, know-how, management information systems, software and software licenses sufficient to operate the Assets To Be Divested;
 
6. all specifications, designs, drawings, processes and quality control data;
 
7. rights to and in all contracts, including, but not limited to, customer, dealer, distributor, supply and utility contracts; provided, however, the Acquirer may negotiate with the Respondent for rights to certain other customers or other contracts, if the Acquirer deems it necessary to be competitive;

8. all assignable regulatory approvals;

9. all rights under warranties and guarantees, express or implied;

10. all books, records and files; and

11. all items of prepaid expense.
L. "Nitrous Oxide" means the chemical compound comprised of two parts nitrogen and one part oxygen ("N2O").
 
M. "Richmond Manufacturing Facility" means all assets, properties, business and goodwill, tangible and intangible, located in Richmond, California as of September 24, 2001 used to produce, sell or distribute Nitrous Oxide, including, but not limited to:

1. all real property interests, including rights, title and interests in and to owned or leased property, together with all buildings, improvements, appurtenances, licenses and permits;

2. all inventory, machinery, fixtures, equipment, vehicles, transportation facilities, furniture, tools and other tangible personal property, including distribution equipment, storage containers, filling equipment and cylinders;
 
3. all vendor lists;
 
4. all sales promotion literature and advertising materials; provided, however, that the Acquirer may not use or distribute any items containing the Respondent's name or logo;
 
5. rights to research materials, inventions, trade secrets, intellectual property, patents, technology, know-how, management information systems, software and software licenses sufficient to operate the Assets To Be Divested;
 
6. all specifications, designs, drawings, processes and quality control data;

7. rights to and in all contracts, including, but not limited to, customer, dealer, distributor, supply and utility contracts; provided, however, the Acquirer may negotiate with the Respondent for rights to certain other customers or other contracts, if the Acquirer deems it necessary to be competitive;

8. all assignable regulatory approvals;

9. all rights under warranties and guarantees, express or implied;

10. all books, records and files; and

11. all items of prepaid expense.

II.

IT IS FURTHER ORDERED that:

A. Respondent shall divest the Assets To Be Divested, absolutely and in good faith, as a competitively viable, on-going business to Air Liquide in accordance with the Divestiture Agreement (which agreement shall not vary from or contradict or be construed to vary from or contradict the terms of this Order). The divestiture shall be made no later than ten (10) days after the date the Order in this matter becomes final. Provided, however, that if Respondent has divested the Assets To Be Divested to Air Liquide prior to the date this Order becomes final, and if, at the time the Commission determines to make this Order final, the Commission notifies Respondent that Air Liquide is not an acceptable purchaser or that the manner of divestiture is not acceptable, then Respondent shall immediately rescind the transaction with Air Liquide and shall divest the Assets To Be Divested, absolutely and in good faith, within six (6) months from the date the Order becomes final. Respondent shall divest the Assets To Be Divested only to an Acquirer that receives the prior approval of the Commission and only in a manner that receives the prior approval of the Commission.

B. The purpose of the divestiture of the Assets To Be Divested and the Divestiture Agreement is to ensure competition in the production, distribution and sale of Nitrous Oxide in the same manner and of the same quality as was produced, distributed and/or sold by Respondent prior to the Acquisition, and to remedy the lessening of competition resulting from the Acquisition as alleged in the Commission's Complaint.

C. Respondent shall not, directly or indirectly, withhold or threaten to withhold Respondent's purchases of oxygen, nitrogen or any other product(s) from any person on the condition that that person also purchase Nitrous Oxide from the Respondent.

D. Respondent shall comply with all of the terms of the Divestiture Agreement approved by the Commission pursuant to which the Assets To Be Divested are divested to the Acquirer (either Air Liquide or any other entity approved by the Commission to acquire the Assets To Be Divested pursuant to this Order). The Divestiture Agreement with the Acquirer shall be deemed incorporated by reference into this Order, and any failure by Respondent to comply with the terms of the Divestiture Agreement shall constitute a failure to comply with this Order.

E. Respondent shall Contract Manufacture Nitrous Oxide and deliver it to the Acquirer in a timely manner and under the terms and conditions of the Divestiture Agreement, for a period not to exceed five (5) years from the date of the divestiture.

F. Pending divestiture of the Assets To Be Divested, Respondent shall take such actions as are necessary to maintain the viability, marketability and competitiveness of the Assets To Be Divested, and to prevent the destruction, removal, wasting, deterioration or impairment of any of the Assets To Be Divested except for ordinary wear and tear.

G. Respondent shall provide the Acquirer with a complete list of all non-clerical, salaried employees at the Assets To Be Divested who have been involved in the production, distribution and/or sale of Nitrous Oxide at any time from January 21, 2000, until the date of the Divestiture Agreement, at the request of the Acquirer any time after the execution of the Divestiture Agreement with the Acquirer. Respondent shall also provide the Acquirer with a complete list of all independent contractors involved in the production, distribution and/or sale of Nitrous Oxide at the Assets To Be Divested at any time from January 21, 2000, until the date of the Divestiture Agreement. The lists shall state each individual's name, position or positions held from January 21, 2000, until the date of the Divestiture Agreement, address, telephone number, and a description of the duties and work performed by the individual in connection with the manufacture, distribution, and/or sale of Nitrous Oxide. Respondent shall provide the Acquirer with the opportunity to enter into employment contracts with such individuals, provided that such contracts are contingent upon the divestiture of the Assets To Be Divested.

H. Respondent shall provide the Acquirer with an opportunity to inspect the personnel files and other documentation relating to individuals identified in Paragraph II.G. of this Order to the extent permissible under applicable laws, at the request of the Acquirer any time after the execution of the Divestiture Agreement with the Acquirer.

I. For a period of one (1) year following the date the divestiture is accomplished, Respondent shall not, directly or indirectly, solicit or otherwise attempt to induce any employees to terminate their employment relationship with the Acquirer; provided, however, it shall not be deemed to be a violation of this provision if: (i) Respondent advertises for employees in newspapers, trade publications or other media not targeted specifically at the employees of the Commission-approved Acquirer, or (ii) Respondent hires employees who apply for employment with Respondent, as long as such employees were not solicited by Respondent in violation of this Paragraph.

J. Respondent shall not enforce any confidentiality or non-compete restrictions relating to the Assets To Be Divested that apply to any employee identified in Paragraph II.G. who accepts employment with the Acquirer, but Respondent may enforce all other rights thereunder relating to any other products or services.

III.

IT IS FURTHER ORDERED that:

A. If Respondent fails to divest, absolutely and in good faith and with the Commission's prior approval, the Assets To Be Divested within the time frame set forth in Paragraph II. of this Order, the Commission may appoint a trustee to divest the Assets To Be Divested and enter into a supply contract for Nitrous Oxide in a manner that satisfies the requirements of Paragraph II. of this Order.

B. In the event that the Commission or the Attorney General brings an action pursuant to Section 5(l) of the Federal Trade Commission Act, 15 U.S.C.  45(l), or any other statute enforced by the Commission, Respondent shall consent to the appointment of a trustee in such action. Neither the appointment of a trustee nor a decision not to appoint a trustee under this Paragraph shall preclude the Commission or the Attorney General from seeking civil penalties or any other relief available to it, including a court-appointed trustee, pursuant to Section 5(l) of the Federal Trade Commission Act or any other statute enforced by the Commission, for any failure by the Respondent to comply with this Order.

C. If a trustee is appointed by the Commission or a court pursuant to Paragraph III.A. of this Order, Respondent shall consent to the following terms and conditions regarding the trustee's powers, duties, authority, and responsibilities:
1. The Commission shall select the trustee, subject to the consent of Respondent, which consent shall not be unreasonably withheld. The trustee shall be a person with experience and expertise in acquisitions and divestitures. If Respondent has not opposed, in writing, including the reasons for opposing, the selection of any proposed trustee within ten (10) days after notice by the staff of the Commission to Respondent of the identity of any proposed trustee, Respondent shall be deemed to have consented to the selection of the proposed trustee.
2. Subject to the prior approval of the Commission, the trustee shall have the exclusive power and authority to divest the Assets To Be Divested.
3. Within ten (10) days after appointment of the trustee, Respondent shall execute a trust agreement that, subject to the prior approval of the Commission and, in the case of a court-appointed trustee, of the court, transfers to the trustee all rights and powers necessary to permit the trustee to effect the divestiture required by this Order.

4. The trustee shall have twelve (12) months from the date the Commission approves the trust agreement described in Paragraph III.C.3. to accomplish the divestiture, which shall be subject to the prior approval of the Commission. If, however, at the end of the twelve-month period, the trustee has submitted a plan of divestiture or believes that divestiture can be achieved within a reasonable time, the divestiture period may be extended by the Commission, or, in the case of a court-appointed trustee, by the court; provided, however, the Commission may extend this period only two (2) times.
5. The trustee shall have full and complete access to the personnel, books, records and facilities related to the Assets To Be Divested or to any other relevant information, as the trustee may request. Respondent shall develop such financial or other information as the trustee may request and shall cooperate with the trustee. Respondent shall take no action to interfere with or impede the trustee's accomplishment of the divestiture. Any delays in divestiture caused by Respondent shall extend the time for divestiture under this Paragraph in an amount equal to the delay, as determined by the Commission or, for a court-appointed trustee, by the court.
6. The trustee shall use his or her best efforts to negotiate the most favorable price and terms available in each contract that is submitted to the Commission, subject to Respondent's absolute and unconditional obligation to divest expeditiously at no minimum price. The divestiture shall be made in the manner and to an acquirer as set out in Paragraph II. of this Order; provided, however, if the trustee receives bona fide offers from more than one acquiring entity, and if the Commission determines to approve more than one such acquiring entity, the trustee shall divest to the acquiring entity selected by Respondent from among those approved by the Commission; provided further, however, that Respondent shall select such entity within five (5) business days of receiving notification of the Commission's approval.

7. The trustee shall serve, without bond or other security, at the cost and expense of Respondent, on such reasonable and customary terms and conditions as the Commission or a court may set. The trustee shall have the authority to employ, at the cost and expense of Respondent, such consultants, accountants, attorneys, investment bankers, business brokers, appraisers, and other representatives and assistants as are necessary to carry out the trustee's duties and responsibilities. The trustee shall account for all monies derived from the divestiture and all expenses incurred. After approval by the Commission and, in the case of a court-appointed trustee, by the court, of the account of the trustee, including fees for his or her services, all remaining monies shall be paid at the direction of the Respondent, and the trustee's power shall be terminated. The trustee's compensation shall be based at least in significant part on a commission arrangement contingent on the trustee's divesting the Assets To Be Divested.

8. Respondent shall indemnify the trustee and hold the trustee harmless against any losses, claims, damages, liabilities, or expenses arising out of, or in connection with, the performance of the trustee's duties, including all reasonable fees of counsel and other expenses incurred in connection with the preparation for or defense of any claim, whether or not resulting in any liability, except to the extent that such losses, claims, damages, liabilities, or expenses result from misfeasance, gross negligence, willful or wanton acts, or bad faith by the trustee.

9. If the trustee ceases to act or fails to act diligently, a substitute trustee shall be appointed in the same manner as provided in Paragraph III.A. of this Order.

10. The Commission or, in the case of a court-appointed trustee, the court, may on its own initiative or at the request of the trustee issue such additional orders or directions as may be necessary or appropriate to accomplish the divestiture required by this Order.

11. In the event that the trustee determines that he or she is unable to divest the Assets To Be Divested in a manner consistent with the Commission's purpose as described in Paragraph II.B. of this Order, the trustee may divest additional ancillary assets of Respondent related to the Assets To Be Divested and effect such arrangements as are necessary to satisfy the requirements of this Order.

12. The trustee shall have no obligation or authority to operate or maintain the Assets To Be Divested.

13. The trustee shall report in writing to Respondent and the Commission every sixty (60) days concerning the trustee's efforts to accomplish the divestiture.

IV.

IT IS FURTHER ORDERED that:

A. Within thirty (30) days after the date this Order becomes final and every sixty (60) days thereafter until Respondent has fully complied with the provisions of Paragraphs II..A, II.F., II.G., II.H. and III. of this Order, Respondent shall submit to the Commission a verified written report setting forth in detail the manner and form in which it intends to comply, is complying, and has complied with Paragraphs II.A, II. F., II.G., II.H. and III. of this Order. Respondent shall include in its compliance reports, among other things that are required from time to time, a full description of the efforts being made to comply with Paragraphs II.A., II.F., II.G., II.H. and III. of the Order, including a description of all substantive contacts or negotiations for the divestiture and the identity of all parties contacted. Respondent shall include in its compliance reports copies of all written communications to and from such parties, all internal memoranda, and all reports and recommendations concerning divestiture. The final compliance report required by this Paragraph IV.A. shall include a statement that the divestiture has been accomplished in the manner approved by the Commission and shall include the date the divestiture was accomplished.

B. One (1) year from the date of divestiture of the Assets To Be Divested and annually thereafter until the Order terminates, Respondent shall file a verified written report to the Commission setting forth in detail the manner in which it has complied and is complying with this Order.

V.

IT IS FURTHER ORDERED that Respondent shall notify the Commission at least thirty (30) days prior to any proposed change in the corporate Respondent such as dissolution, assignment, sale resulting in the emergence of a successor corporation, or the creation or dissolution of subsidiaries or any other change in the corporation that may affect compliance obligations arising out of this Order.

VI.

IT IS FURTHER ORDERED that for the purposes of determining or securing compliance with this Order, and subject to any legally recognized privilege, and upon written request with reasonable notice to Respondent, Respondent shall permit any duly authorized representatives of the Commission:

A. Access, during office hours of Respondent and in the presence of counsel, to all facilities, and access to inspect and copy all books, ledgers, accounts, correspondence, memoranda, and all other records and documents in the possession or under the control of the Respondent relating to compliance with this Order; and

B. Upon five (5) days' notice to Respondent and without restraint or interference from Respondent, to interview officers, directors, or employees of Respondent, who may have counsel present, regarding such matters.

VII.

IT IS FURTHER ORDERED that this Order shall terminate when all of the obligations of the Divestiture Agreement required in Paragraph II. or Paragraph III. of this Order have been accomplished.

By the Commission.

Donald S. Clark
Secretary

SEAL

ISSUED: December 12, 2001

Confidential Appendix
[Redacted From Public Record Version]