FTC Puts Conditions on Carpenter Technology Corporation's Purchase of Rival Manufacturer Latrobe Specialty Metals, Inc.

Proposed Deal Would Allegedly Have Led to Monopoly in the Markets for Certain Aerospace Alloys

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The Federal Trade Commission will require specialty metals manufacturer Carpenter Technology Corporation to sell assets involved in producing two metal alloys used in the aerospace industry, under a proposed settlement resolving charges that Carpenter's proposed $410 million acquisition of Latrobe Specialty Metals, Inc. would harm competition in the U.S. markets for these alloys.

The proposed settlement is part of the FTC's efforts to preserve competition that benefits consumers by keeping prices low and quality and service high. It requires that, in order to complete the deal, Carpenter divest assets necessary for manufacturing the two alloys – MP159 and Aerospace MP35N – to another metals manufacturer, Eramet S.A.

The FTC's complaint alleges that Carpenter and Latrobe are the only companies that make these highly specialized alloys, and that the combination of the two companies would be anticompetitive in the U.S. markets for both alloys. The deal – a merger to monopoly – likely would lead to higher prices for consumers of the two alloys, in violation of the FTC Act and Section 7 of the Clayton Act, according to the complaint.

By requiring the two companies to divest assets to Eramet, the FTC's proposed settlement will preserve competition in the markets for the two alloys, according to the FTC. Eramet is a multi-billion dollar integrated mining and metallurgy company with extensive experience in manufacturing and selling specialty alloys.

To ensure that the divestiture is a success, Carpenter must provide Eramet with the product licenses and manufacturing technology needed to produce the alloys, including technical assistance from current Latrobe employees, as well as certain confidential business information related to manufacturing the alloys. Carpenter is also required to contract-manufacture both alloys for Eramet until the latter is able to produce them on its own. Finally, the FTC has appointed an interim monitor to ensure that the relevant assets are divested successfully, and can appoint a divestiture trustee to complete the sale, if necessary.

The Commission vote approving the complaint and proposed consent order was 4-0. The proposed order with will be published in the Federal Register shortly, and will be subject to public comment for 30 days, until March 29, 2012, after which the Commission will decide whether to make it final.

NOTE: The Commission issues a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of a complaint is not a finding or ruling that the respondent has violated the law. A consent order 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 up to $16,000.

The FTC's Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., Room 7117, Washington, DC 20580. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook and follow us on Twitter.

(FTC File No. 111-0207)
( Carpenter-Latrobe.final)

Contact Information

Mitchell J. Katz
Office of Public Affairs

Scott Reiter
Bureau of Competition