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The Federal Trade Commission has accepted a consent order, subject to final Commission approval, that would allow the purchase of Polyfibron Technologies, Inc. by MacDermid, Inc., while resolving the resulting competitive concerns in the markets for the production, distribution and sale of liquid photopolymers and sheet photopolymers that are used to make flexographic printing plates. Under the terms of the agreement, MacDermid and Polyfibron would be required to divest Polyfibron's liquid photopolymer business, would terminate their respective agreements to distribute photopolymers manufactured by other companies, and would agree not to invite or enter into agreements with other photopolymer manufacturers that would result in any allocation, division or illegal restriction of competition. In addition, to preserve Polyfibron's liquid photopolymer assets as a viable, competitive and ongoing business until the divestiture is achieved, the agreement contains an enforceable Order to Maintain Assets.

"While most people may not be familiar with photopolymers, every day they come into contact with the materials they are used to enhance," said Richard Parker, Director of FTC's Bureau of Competition, citing examples such as printed pet food bags, corrugated cardboard containers bearing advertising and company logos, and corrugated display stands used in supermarkets to promote products on sale. "MacDermid and Polyfibron are the two main companies involved in the production and sale of liquid photopolymers, and this agreement ensures that competition in this highly concentrated marketplace will continue undeterred in the future. It will also stimulate competition in the highly concentrated market for solid sheet photopolymers by freeing BASF and Asahi, two major worldwide producers of sheet photopolymers currently tied by exclusive distribution agreements to Polyfibron and MacDermid, to compete in the North American market."

Both MacDermid and Polyfibron are involved in the manufacture, distribution and sale of liquid photopolymers, and either produce and sell -- or have exclusive rights to sell -- sheet photopolymers in North America. Liquid photopolymers are used in making flexographic plates for printing on packaging materials such as corrugated containers and multi-wall bags. Sheet photopolymers are also used to make flexographic plates, but are used for higher resolution printing jobs on packaging materials, including corrugated containers and multi-wall bags, as well as plastic bags and other flexible containers.

The proposed complaint alleges that the liquid photopolymer market in North America is highly concentrated, and that MacDermid's proposed acquisition of Polyfibron would result in a monopoly in that market. Similarly, the complaint alleges that the sheet photopolymer market in North America is also highly concentrated, with the pre-merger market dominated by two firms - E.I. duPont de Nemours & Co., Inc. (duPont) and Polyfibron, which sells its own manufactured sheet photopolymer products and those of BASF under a 1995 distribution agreement.

While MacDermid does not produce sheet photopolymers, in 1998 it entered into an agreement with Asahi Chemical Industry Co., Ltd. (Asahi) that gives it the right to distribute and sell Asahi's sheet photopolymer products in North America. According to the FTC's complaint, the existence of the two distribution agreements means that the current duopoly in the sale of sheet photopolymers in North America would become further entrenched following the acquisition, as the two only likely entrants to the market - BASF and Asahi - are bound by the agreements to sell only through Polyfibron and MacDermid, respectively.

The Commission's complaint alleges that the proposed acquisition would substantially lessen competition and tend to create a monopoly in the photopolymer market by, among other things, eliminating direct competition between MacDermid and Polyfibron in the area of liquid photopolymers, entrenching the existing duopoly in the North American market for sheet photopolymers, increasing the likelihood that the consumers of these products would be forced to pay higher prices, increasing the likelihood that the technical and sales services provided to these customers would be reduced, and increasing the likelihood that innovation in this market would be reduced. Due to cost and other considerations, entry into the photopolymer market by new competitors is unlikely in time to deter or offset the acquisition's adverse effects on competition.

The Commission's complaint also alleges that both Polyfibron and MacDermid have allocated markets for the sale of photopolymers with competitors, or have invited competitors to allocate markets for the sale of these products. Specifically, according to the complaint, when MacDermid first entered the liquid photopolymer market in 1995 through an earlier acquisition, MacDermid and Asahi agreed to allocate markets such that MacDermid would not compete for the sale of liquid photopolymers in Japan and other areas of the world in which Asahi operated, and Asahi would not sell its products in North America. In the case of Polyfibron, the complaint alleges that on several occasions between 1995 and 1998 Polyfibron invited Asahi not to compete in the North American market in return for its pledge not to sell liquid photopolymers in Japan.

To remedy the anticompetitive effects of the proposed acquisition, the order would require the divestiture of Polyfibron's liquid photopolymer business, would require that the companies terminate their respective distribution agreements with Asahi and BASF, and would require that they not enter into or invite any agreements to allocate, divide or illegally restrict competition in the relevant markets.

Under the proposed settlement, Polyfibron's North American liquid photopolymer business would have to be divested to Chemence, Inc. within 20 days of the Commission's finalization of the agreement. Chemence currently produces adhesives, sealants and photopolymers at its facilities in Alpharetta, Georgia, and the United Kingdom, using technology similar to that employed by Polyfibron. Chemence's expertise in related technologies and its experience with liquid photopolymers ensure that it will operate the divested business as a substantial competitive force in the marketplace.

The proposed order would also require that MacDermid and Polyfibron divest all trade secrets, know-how, trademarks and trade names, intellectual property, and other related assets of Polyfibron's liquid photopolymer business, and would require the companies to provide incentives to certain employees identified by Chemence as important to the continued viability of the liquid photopolymer business, to facilitate their transfer to the acquirer.

The proposed agreement contains an Order to Maintain Assets that would require the respondents to preserve Polyfibron's liquid photopolymer business as viable and competitive until it is divested. This includes the obligation to build and maintain a sufficient inventory of product to ensure that there is no shortage of supply during the period that the business is being transferred to the acquirer, and to maintain an adequate workforce during this time.

The respondents would also be prohibited from soliciting Polyfibron's liquid photopolymer customers for up to 90 days after the assets are divested.

If the Commission disallows the transfer of the divested assets to Chemence, the companies would be required to rescind the Chemence transaction and divest Polyfibron's liquid photopolymer business to another Commission-approved acquirer within three months of this decision. Also, if the companies fail to divest the business as required under the order, the Commission would be able to appoint a trustee to divest these assets.

Regarding sheet photopolymers, the respondents would be required to end their agreements with BASF and Asahi. Termination of these agreements would reduce the likelihood of coordinated pricing activities by allowing BASF and Asahi to enter the North American market independently, acting as a considerable competitive counterweight to duPont and MacDermid.

Lastly, the proposed agreement would prohibit MacDermid and Polyfibron from "inviting, creating, maintaining, adhering to, participating in or enforcing" any agreement with any producer of photopolymer products to "allocate, divide or illegally restrict" competition in the relevant markets. This provision would further enhance competition in the North American photopolymer market by ensuring that no potential entrant stays out of the market because of any illegal arrangements with the respondents.

A summary of the consent agreement will be published in the Federal Register shortly. The agreement will be subject to public comment for 30 days, until January 21, 2000, 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.

The Commission vote to accept the proposed consent agreement was 5-0.

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 agreement, and an analysis of the proposed consent order to aid public comment, are available from the FTC's web site at and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

Contact Information

Media Contact:
Mitchell J. Katz,
Office of Public Affairs
Staff Contact:
Morris A. Bloom,
Bureau of Competition

(FTC File No. 991-0167)