The Federal Trade Commission today said it would seek a federal district court order temporarily blocking Ferro Corporation from acquiring Chi-Vit Corporation on grounds that the acquisition would violate the antitrust laws by raising prices for a specialty glass called ?frit.? Frit is used to make porcelain enameled steel used in home appliances (including oven interiors), barbecue grills and hot water heaters, among other applications. The FTC will allege that the acquisition would combine two of the three leading producers of frit in the United States, giving the combined firm control over more than 60 percent of the more than $80 million U.S. market.
Ferro, a major international producer of chemicals, plastics and coatings, is based in Cleveland, Ohio. Chi-Vit is based in Urbana, Ohio.
The FTC will allege that there is no substitute for frit in the production of porcelain enameled steel and that porcelain enameled steel is unmatched in durability and resistance to heat, chemicals and abrasion. Customers that currently use porcelain enameled steel have substantial investments in frit application facilities and it would take them a long time to redesign their products to use alternative materials or coatings, the FTC staff said. Thus, these customers would have no alternative to frit if the remaining firms were to raise frit prices. The FTC also will argue that entry by new competitors is unlikely to occur in time to defeat anticompetitive price increases.
The FTC will argue not only that the proposed acquisition likely will lead to higher prices, but also that it may result in reduced product innovation and reduced customer service. FTC staff noted that the investigation into this matter has produced substantial evidence, including documents and testimony from the merging firms as well as testimony from customers, giving the Commission reason to believe that the proposed transaction may substantially lessen competition
If the federal district court grants the FTC?s request for a temporary restraining order and preliminary injunction blocking the merger pending the outcome of an administrative trial, the FTC will have 20 days in which to issue an administrative complaint detailing the alleged antitrust law violations associated with this merger. It is that complaint that would begin the administrative trial process.
The Commission vote to seek the court order was 4-0, with FTC Chairman Robert Pitofsky recused. The motion for an injunction will be filed in an appropriate federal district court shortly.
Copies of the motion for preliminary injunction will be available shortly from the FTC?s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580: 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it happens, call the FTC?s NewsPhone at 202-326-2710. FTC news releases and other documents also are available on the Internet at the FTC's World Wide Web Site at http://www.ftc.gov
(FTC File No. 951 0032)