The Federal Trade Commission has given final approval to a consent agreement with the Mustad International Group NV of Bulle, Switzerland, and its subsidiary, Mustad Connecticut, of Bloomfield, Connecticut, settling charges that through a series of acquisitions, the companies have illegally monopolized the manufacture and sale of rolled horseshoe nails in the United States, allowing Mustad to raise prices as much as 50 to 75 percent. The Commissionþs action makes the consent order provisions binding on the respondents.
Under the final order, Mustad is required either to divest all its Connecticut horseshoe nail manufacturing assets, or to divest four, fully-functioning nail machines and to license technology and know-how to operate them, to a Commission-approved acquirer by May 15, 1996, in order to re-establish a viable competitor.
Rolled horseshoe nails -- used by U.S. farriers to shoe horses -- require a relatively complex manufacturing process because the nail must bend outward as it is being driven into a horse's hoof, so as not to cause injury. Rolled horseshoe nails are not considered interchangeable with forged nails, which are used primarily outside the United States. Entry into the production and sale of rolled horseshoe nails would take in excess of two years and is unlikely, according to the FTC.
According to the FTC complaint detailing the allegations, Mustad has acquired several current and potential competitors to maintain market power. These acquisitions resulted in Mustad controlling more than 90 percent of the rolled horseshoe nails sold in the United States. Moreover, the FTC charged, Mustad has destroyed some of the horseshoe nail machinery that it acquired in order to prevent potential competitors from producing rolled horseshoe nails.
The consent agreement to settle these charges requires Mustad, among other things, either to divest, by May 15, 1996, specified manufacturing assets as an ongoing business to an FTC-approved acquirer; or to divest four, fully- functional nail machines, one machine for spare parts and tooling, and to grant a perpetual non-exclusive license to the technology to an FTC-approved acquirer. If the divestiture is not completed by that date, the Commission may appoint a trustee to accomplish the divestiture.
The settlement also requires Mustad to provide training regarding the use, set-up and maintenance to the purchaser of the divested machinery.
In addition, the settlement prohibits Mustad, for a 10-year period, from acquiring any stock, or assets of any other rolled horseshoe nail manufacturer in the United States, without prior notice to the FTC.
The consent agreement was announced for a public-comment period on Aug. 3. The Commission vote to issue it in final form occurred on Oct. 30 and was 5-0.
NOTE: A consent agreement is for settlement purposes only and does not constitute 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 up to $10,000.
A news release summarizing the complaint and consent agreement was issued at the time the Commission accepted the consent agreement for public comment. Copies of that release and of the complaint and final order are available from the FTCþs 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 is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTCþs World Wide Web Site at: http://www.ftc.gov.
(FTC File No. 931 0121)
(Docket No. C-3624)