FEDERAL TRADE COMMISSION (1996)

HN}

FEDERAL TRADE COMMISSION

ANNUAL REPORT TO CONGRESS

FOR FISCAL YEAR 1996

PURSUANT TO SECTION 201 OF THE

HART-SCOTT-RODINO ANTITRUST

IMPROVEMENTS ACT OF 1976

(NINETEENTH REPORT)

INTRODUCTION

Fiscal year 1996 marked the 20th anniversary of the

passage of the HSR Act which has become an essential component of

antitrust enforcement.} Prior to its passage, mergers often were

consummated and operations combined before the antitrust agencies

learned of the transactions. It was then difficult, if not

impossible, to "unscramble the eggs" and restore the benefits of

a competitive market. The Act provides the antitrust agencies

with a meaningful Opportunity to conduct an investigation and

take action, if necessary, before the acquisitions take place.?

There has been tremendous growth in merger activity since

enactment of the statute. During fiscal year 1996, the number of

premerger transactions reported increased for the fifth year ina

row and totaled 3,087, marking the first time in the history of

the program that filings exceeded 3,000. This represents a 10-

percent increase over the number reported during fiscal year 1995

and a 102-percent increase over the 1,529 filings recorded in

fiscal year 1991.3 In addition to the Commission and the

Antitrust Division reviewing a record level of filings, the

Commission’s Premerger Notification Office responded to an

estimated 40,000 telephone calls seeking information concerning

reportability of transactions under the HSR Act and the details

involved in completing and filing premerger forms.

The premerger program was instrumental in £acilitating

numerous enforcement actions in fiscal 1996 to protect consumers

and businesses against anticompetitive mergers. The Commission

Challenged or threatened to challenge 27 transactions, leading to

20 consent orders, four abandoned transactions and three

preliminary injunction proceedings authorized.‘ The Antitrust

Division challenged 30 transactions, leading to nine consent

decrees, one transaction that was approved by a regulatory

2 Pub. L. No. 94-435, 90 Stat. 1383 (1976). The

premerger notification provisions are located in § 7A of the

Clayton Act, 15 U.S.C. § 18a.

2 See pp. 34 infra.

2 See Appendix A.

4 See pp. 20-33 infra.

agency, and an additional twenty transactions that were

restructured or abandoned after the Antitrust Division informed

the parties that it intended to sue.5

The Commission and the Antitrust Division also took steps to

eliminate filings and reduce burden for transactions that are

unlikely to have a significant anticompetitive impact. The

agencies adopted five new rules exempting certain types of

transactions from the reporting and waiting period requirements.

The new rules, which reduce the number of reportable transactions

by an estimated 10 percent, generally exempt transfers of goods

or realty in the "ordinary course of business," certain

acquisitions of real property assets such as hotels and shopping

centers, the acquisition of oil and natural gas reserves valued

at $500 million or less, the acquisition of coal reserves valued

at $200 million or less, the acquisition of realty acquired

solely for rental or investment purpose and the acquisition of

securities whose underlying value is represented solely by those

kinds of exempt assets.‘

The HSR Act, together with section 13 (b) of the FTC Act and

section 15 of the Clayton Act, give the Commission and the

Antitrust Division the opportunity to obtain effective

preliminary relief against anticompetitive mergers and to prevent

interim harm to competition and consumers. Swift and efficient

review of proposed mergers is possible only if the parties comply

with the Act’s requirements and provide complete information.

When parties fail to file notification, or file a materially

deficient notification form, the HSR Act provides that the courts

may impose civil penalties. During fiscal year 1996, Commission

investigations resulted in a record $7.65 million in civil

penalties collected pursuant to consent decrees in actions

alleging violations of the HSR Act. These settlements included

-- Sara Lee Corporation, $3.10 million;

-- Automatic Data Processing, Inc., $2.97 million;

-- Foodmaker, Inc.,$1.45 million; and

: See pp. 12-20 infra.

. See pp. 11-12 infra.

-- Titan Wheel International, Inc., $0.13 million.’

BACKGROUND

Section 201 of the Hart-Scott-Rodino Antitrust Improvements

Act of 1976, Pub. L. 94-435, amended the Clayton Act by adding a

new Section 7A, 15 U.S.C. Section 18a ("the Act"). Subsection

(j) of Section 7A provides as follows:

Beginning not later than January 1, 1978,

the Federal Trade Commission, with the

concurrence of the Assistant Attorney

General, shall annually report to the

Congress on the operation of this

section. Such report shall include an

assessment of the effects of this

section, of the effects, purpose, and the

need for any rules promulgated pursuant

thereto, and any recommendations for

revisions of this section.

This is the nineteenth annual report to Congress pursuant to

this provision. It covers October 1995 - September 1996.

In general, the Act requires that certain proposed

acquisitions of stock or assets must be reported to the Federal

Trade Commission and the Antitrust Division of the Department of

Justice prior to consummation. The parties must then wait a

specified period, usually thirty days (fifteen days in the case

of a cash tender offer and ten or fifteen days in the case of a

bankruptcy sale®), before they may complete the transaction.

Whether a particular acquisition is subject to these requirements

7 See pp. 8-11 infra.

: The Bankruptcy Reform Act of 1994 amended § 363 of the

Bankruptcy Code providing in part that the waiting period

required for certain transactions involving an acquired person in

bankruptcy be fifteen days. The provision applies to entities

that filed for bankruptcy on or after October 22, 1994.

Bankruptcy Reform Act, Pub. L. No. 103-394 [H.R. 5116], § 109,

108 Stat. 4106 (1994).

depends upon the value of the acquisition and the size of the

parties, as measured by their sales and assets. Small

acquisitions, acquisitions involving small parties and other

classes of acquisitions that are less likely to raise antitrust

concerns are excluded from the Act's coverage.

The primary purpose of the statutory scheme, as the

legislative history makes clear, is to provide the antitrust

enforcement agencies with the opportunity to review mergers and

acquisitions before they occur. The premerger notification

program, with its filing and waiting period requirements,

Provides the agencies with both the time and the information

necessary to conduct this antitrust review. Much of the

information needed for a preliminary antitrust evaluation is

included in the notification filed with the agencies by the

parties to proposed transactions and thus is immediately

available for review during the waiting period.

If either agency determines during the waiting period that

further inquiry is necessary, it is authorized by Section 7A(e)

of the Act to request additional information or documentary

Materials from either or both of the parties to a reported

transaction (a "second request"). A second request extends the

waiting period for a specified period, usually twenty days (ten

days in the case of a cash tender offer), after the parties have

complied with the request (or in the case of a tender offer,

after the acquiring person complies). This additional time

provides the reviewing agency with the opportunity to analyze the

information and to take appropriate action before the transaction

is consummated. If the reviewing agency believes that a proposed

transaction may violate the antitrust laws, it May seek an

injunction in federal district court to prohibit consummation of

the transaction.

Final rules implementing the premerger notification program

were promulgated by the Commission, with the concurrence of the

Assistant Attorney General, on July 31, 1978.% At that time, a

) 43 Fed. Reg. 33,450 (1978). The rules also appear in

16 C.F.R. Parts 801 through 803. For more information concerning

the development of the rules and operating procedures of the

(continued...)

comprehensive Statement of Basis and Purpose was also published

containing a section-by-section analysis of the rules and an

item-by-item analysis of the Premerger Notification and Report

Form. The program became effective on September 5, 1978. In

1383, the Commission, with the concurrence of the Assistant

Attorney General, made several changes in the premerger

notification rules. Those amendments became effective on

August 29, 1983.*° Additional amendments were published in the

Federal Register on March 6, 1987," and May 29, 1987.?

The appendices to this report provide a statistical summary

of the operation of the premerger notification program. Appendix

A shows, for a ten-year period, the number of transactions

reported,** the number of filings received, the number of merger

investigations in which second requests were issued, and the

number of transactions in which requests for early termination of

(...continued) .

premerger notification program, see the second, third and seventh

annual reports covering the years 1978, 1979 and 1983,

respectively.

= 48 Fed. Reg. 34,427 (1983) (codified at 16 C.F.R. Parts

801 through 803).

a 52 Fed. Reg. 7,066 (1987) (codified at 16 C.F.R. Parts

801 through 803).

a2 52 Fed. Reg. 20,058 (1987) (codified at 16 C.F.R. Parts

801 through 803).

a The term "transactions", as used in Appendices A, B,

and C, and Exhibit A to this report, does not refer to separate

mergers or deals; rather, it refers to types of structures such

as cash tender offers, options to acquire voting securities from

the issuer, options to acquire voting securities from someone

other than the issuer, and multiple acquiring or acquired persons

that necessitate separate HSR identification numbers to track the

filing parties and waiting periods. A particular merger, joint

venture or deal may involve more than one transaction. Indeed,

some have involved as many as four or five transactions.

5

the waiting period were received, granted, and not granted.

Appendix A also shows for fiscal years 1987 through 1996 the

number of transactions in which second requests could have been

issued. (This information appears in Appendix C and is explained

in footnote 1 of that appendix.) Appendix B provides a month-bymonth comparison of the number of transactions reported (Table 1)

and the number of filings received (Table 2) for fiscal years

1987 through 1996. Appendix c shows, for fiscal years 1987

through 1996, the number of transactions in which the agencies

could have issued second requests, the number of merger

investigations in which second requests were issued, and the

percentage of transactions in which second requests were issued.

Appendix C may provide a more meaningful measure of the second

request rate than Appendix A because Appendix C eliminates from

the total number of transactions certain transactions in which

the agencies could not, Or as a practical matter would not, issue

second requests.”

The statistics set out in these appendices show that the

number of transactions reported in 1996 increased approximately

9.6 percent from the number of transactions reported in 1995

(3087 transactions were reported in 1996 while 2,816 were

reported in 1995). The statistics in Appendix A also show that

the number of merger investigations in which second requests were

issued in 1996 decreased approximately 2.0 percent from the

number of merger investigations in which second requests were

issued in 1995 (second requests were issued in 99 merger

investigations in 1996 while second requests were issued in 101

a4 See Appendix C, note 1. As we explained in previous

annual reports, the information regarding second requests in

Appendices A and C differs from that reported in those appendices

in the annual reports for fiscal years 1979-1987. Appendix A and

C in the 1979-1987 reports identified the number of transactions

in which a second request was issued, while Appendices A and C in

the present report show the number of merger investigations in

which second requests were issued. A merger investigation may

include several transactions. We believe that reporting the

number of merger investigations in which second requests were

issued better reflects the agencies' enforcement activities

because it represents the number of mergers or acquisitions that

were investigated to this extent under the Act by the agencies.

6

merger investigations in 1995). These numbers also indicate a

Slight decrease in the number of second requests issued as a

percentage of reported transactions from 1995 to 1996 (from 3.6

percent in 1995 to 3.2 percent in 1996 based on Appendix A, and

from 3.9 percent in 1995 to 3.5 percent in 1996, based on

Appendix C).

The statistics in Appendix A also show that in recent years,

early termination was requested for most transactions. In 1996,

early termination was requested in 92.7 percent (2,861) of the

transactions reported while in 1995 it was requested in 87.7

-percent (2,471) of the transactions reported. The number of

requests granted increased in 1996 compared to 1995 (from 1,869

in 1995 to 2,044 in 1996). The percentage of requests granted

out of the total requested, however, decreased (from 75.6 percent

in 1995 to 71.4 percent in 1996).

We have also included in the report, as Exhibit A,

Statistical tables (Tables I - xz) containing information about

the agencies' enforcement interest in transactions reported in

fiscal year 1996. The tables provide, for various statistical

breakdowns, the number and percentage of transactions in which

clearances to investigate were granted by one antitrust agency to

the other and the number of merger investigations in which second

requests were issued; the number of transactions based on the

dollar value of transactions reported and the reporting threshold

indicated in the notification; the number of transactions based

on the sales or assets of the acquiring person or the sales or

assets of the acquired entity; and the number of transactions

based on the industry group (2-digit SIC code) in which the

acquiring person or the acquired entity derived revenue.

The tables in Exhibit A show that, in 1996, clearance was

granted to one or the other of the agencies for the purpose of

conducting an initial investigation in 17.8 percent of the total

number of transactions in which a second request could have been

issued. In 1995, clearance was granted in 14.5 percent of the

transactions (see Exhibit A to the Eighteenth Annual Report) .

The Commission and the Department of Justice continue to

Monitor compliance with the premerger notification program's

filing requirements and initiated a number of investigations of

compliance in fiscal year 1996. The agencies monitor compliance

through a variety of methods, including the review of newspapers

and industry publications for announcements of transactions that

may not have been reported in accordance with the requirements of

the Act. Industry sources, such as competitors, customers and

suppliers, and interested members of the public often provide the

agencies with information about transactions and possible

violations of the filing requirements.

Under Section 7A(g) (1) of the Act, any person or company

that fails to comply with the Act's notification and waiting

period requirements is liable for a civil penalty of up to

$11,000 for each day the violation continues.?® As a result of

the agencies’ efforts to assure compliance, four cases alleging a

violation of the Act were filed by the Department of Justice at

the Commission’s request in fiscal year 1996.

In United States v. Sara Lee Corp,** the complaint alleged

that Sara Lee violated the Act when it acquired the worldwide

shoe-care business of Reckitt & Colman plc. Prior to the

5 Effective November 20, 1996, dollar amounts specified

in civil monetary penalty provisions within the Commission’s

jurisdiction were adjusted for inflation in accordance with the

Debt Collection Improvement Act of 1996, Pub. L. No. 104-134

(April 26, 1996). The adjustments included, in part, an increase

from $10,000 to $11,000 for each day during which a person is in

violation under Section 7A(g) (1), 15 U.S.C. 18a(g) (1). 61 Fed.

Reg. 54548 (October 21, 1996), corrected at 61 Fed. Reg. 55840

(October 29, 1996).

ue United States v. Sara Lee Corp., Cv. No. 1:96CV00196

(D.D.C. complaint filed February 6, 1996); 1996-1 Trade Cases

q 71,301.

transaction, Sara Lee manufactured "Kiwi," the leading shoe-care

brand in the United States. Reckitt «& Colman manufactured

products under the "Meltonian, " "Griffin," and "Magix" brands.

At the time of the acquisition, Sara Lee had a market share of

approximately 90 percent of shoe polish sold through mass

marketers, and Reckitt and Colman was one of the few remaining

Competitors. According to the complaint, Sara Lee officials

sought to complete the transaction without filing premerger

notification because of their concern that the acquisition of

Reckitt and Colman’s United States assets would be challenged by

one of the antitrust enforcement agencies.!” Sara Lee, despite

valuing the United States assets substantially more than the

foreign assets, split the total $25.8 million purchase price into

two contracts with approximately the same purchase price for each

-~- $13.1 million for the United States assets and $12.7 million

for the foreign assets. The complaint alleged that Sara Lee did

not determine in good faith the fair market value of the United

States assets it purchased, as is required by the rules, and that

the value exceeded $15 million. The complaint also alleged, in

the alternative, that Sara Lee’s allocation of approximately $13

million for the United States assets, together with its failure

to make a good faith determination of the fair market value of

those assets, was a device for avoidance within the meaning of

§ 801.90 of the rules. Under the terms of the final judgment,

Sara Lee agreed to pay a civil penalty of $3.1 million to settle

the charges.

In United States v. Automatic Data Processing, Inc.,?® the

complaint alleged that Automatic Data Processing, Inc. ("ADP"),

violated the Act when it acquired certain assets of AutoiInfo Inc.

Both parties provided computerized transaction processing, data

communication and information services to the automotive salvage

industry. According to the complaint, ADP failed to provide

17 The acquisition itself raised antitrust concerns. The

Commission required Sara Lee to divest in order to restore

competition. Kiwi Brands Inc. and Sara Lee Corporation, Docket

No. C-3523 (issued August 24, 1994); see Seventeenth Annual

Report for Fiscal Year 1994.

a8 United States v. Automatic Data Processing, Inc., Cv.

No. 95-0606 (D.D.C. April 10, 1996); 1996-1 Trade Cas. q 71,361.

9

required documents in response to Item 4(c) of the report form

when it filed notification with the Commission and Antitrust

Division.?® The initial 30-day waiting period expired without

any challenge from the agencies, and the acquisition was

consummated. However, the Commission reopened its investigation

following complaints from automotive salvage yards. In response

to a subpoena, Commission staff discovered documents required by

Item 4(c) that ADP had failed to provide with its filing form.

The complaint alleges that ADP made little effort to locate Item

4(c) documents, that ADP’s failure to submit the required

documents hindered the ability of the antitrust enforcement

agencies to analyze the competitive effects of the acquisition,

and that the antitrust enforcement agencies would likely have

issued a second request had the documents properly been

submitted. ADP agreed to pay a civil penalty of $2.97 million to

settle the charges.

In United States v. Titan Wheel International, Inc.,?° the

complaint alleged that Titan Wheel violated the Act when it took

possession of a Des Moines tire plant of Pirelli Armstrong Tire

Corporation ("Pirelli Armstrong") from Pirelli S.p.A. before

expiration of the statutory waiting period. According to the

complaint, an agreement between the parties, which transferred to

Titan immediate possession and operational control of Pirelli

Armstrong assets, had the effect of transferring beneficial

ownership of those assets to Titan before premerger notification

was given to the enforcement agencies. After inquiry from the

Commission’s Premerger Notification Office, Titan and Pirelli

Armstrong promptly amended their asset purchase agreement to

transfer ownership back to Pirelli Armstrong. Under the terms of

18 Item 4(c) requires parties to submit certain types of

competitive documents, including studies, Surveys, analyses and

reports prepared by or for company officers and directors for the

purpose of evaluating the acquisition with respect to market

shares, competition, competitors, markets, potential for sales

growth or expansion into product or geographic markets.

20 United States v. Titan Wheel International, Inc., cv.

No. 1:96CV01040 (D.D.C. complaint filed May 10, 1996); 1996-1

Trade Cas. § 71,406.

10

the final judgment, Titan agreed to pay a civil penalty of

$130,000 to settle the charges.

In United States v. Foodmaker, Inc.,7* the complaint alleged

that Foodmaker violated the Act when it acquired 100 percent of

the voting securities of Consul Restaurant Corporation

("Consul"), one of its franchisees. According to the complaint,

Foodmaker knew that an HSR filing was required by the Act but

decided to make the acquisition without notifying the enforcement

agencies. Under the terms of the final judgment, Foodmaker

agreed to pay a civil penalty of $1.45 million to settle the

charges.

2. Amendments to the Rules

In fiscal year 1996, the Commission, with the concurrence of

the Assistant Attorney General, adopted five amendments to the

rules that define or create exemptions from the requirements

imposed by the Act.2?? The rules exempt: (1) certain

acquisitions of goods transferred in the ordinary course of

business; (2) certain acquisitions of real property assets such

as hotels and shopping centers; (3) acquisitions of oil and

natural gas reserves valued at $500 million or less, and of coal

reserves valued at $200 million or less; (4) acquisitions of

voting securities of companies that hold assets described in

7A(c) (2) of the Act, real property or carbon-based mineral

reserves the direct acquisition of which would be exempt; and (5)

acquisitions of realty acquired solely for rental or investment

purposes.

The amendments were designed to reduce the compliance burden

on the business community by eliminating the application of the

notification and waiting requirements to a Significant number of

ce United States v. Foodmaker, Inc., Cv. No. 1:96CV01879

(D.D.C. complaint filed August 13, 1996).

22 61 Fed. Reg. 13666 (March 28, 1996). The rules became

effective on April 29, 1996.

il

transactions that are unlikely to violate the antitrust laws .?3

They were also intended to allow the enforcement agencies to

focus their resources more effectively on those transactions that

present the potential for competitive harm.

The amendments adopted in fiscal year 1996 were drafted in

cooperation with the Department of Justice, and reflect extensive

analysis of public comments received on the proposed exemptions

that were published in fiscal year 1995 and described in the

Eighteenth Annual Report. The final amendments contain revisions

to the proposed rules that address certain commenters’ concerns,

and exclude from the reporting requirements additional

transactions that the Commission and the Assistant Attorney

General found were unlikely to violate the antitrust laws.

The Antitrust Division challenged thirty merger transactions

that it concluded could lessen competition if allowed to proceed

as proposed during fiscal year 1996. In nine of these instances,

the Antitrust Division filed a complaint in U.S. District

Court .*° All of these cases have been settled by consent decree.

23 It is estimated that the amendments will reduce the

number of reported transactions by 10 percent.

= The cases in this report were not necessarily

reportable under the premerger notification program. Because of

the Act's provisions regarding the confidentiality of the

information obtained pursuant to this program, it would be

inappropriate to identify which cases were initiated under the

premerger notification program.

28 United States and State of Florida v. Reuter Recycling

of Florida, Inc., and Waste Management Inc. of Florida, Cv. No.

1:95CV01982 (D.D.C. filed October 20, 1995); United States and

State of Texas v. Kimberly-Clark Corporation and Scott Paper

Company, Cv. No. 3:95CV3055-P (N.D. Tex. filed December 12,

1995); United States v. Pacific Scientific Company, Cv. No.

(continued...)

12

In the other twenty-one cases, the Antitrust Division

informed the parties to a proposed transaction that it would file

suit challenging the transaction unless the parties restructured

the proposal to avoid competitive problems or abandoned the

proposal altogether. In sixteen instances, the parties

78(...continued)

1:96CV00165 (D.D.c. filed January 30, 1996); United States v.

Georgia-Pacific Corporation, Cv. No. 96-164 (D. Del. filed March

29, 1996); United States v. American Skiing Company and S-K-I

Limited, Cv. No. 1:96CV01308 (D.D.C. filed June 11, 1996); United

States, State of California, State of Connecticut, State of

Illinois, Commonwealth of Massachusetts, State of New York, State

of Washington and State of Wisconsin v. The Thomson Corporation

and West Publishing Company, Cv. No. 1:96CV01415 (D.D.Cc. filed

June 19, 1996); United States v. Jacor Communications, Inc. and

Citicasters, Inc., Cv. No. C-1-96-757 (S.D. Ohio filed August 5,

1996); United States, State of Texas and Commonwealth of

Pennsylvania v. USA Waste Services, Inc., and Sanifill, Inc., cv.

No. 1:96:CZ02031 (D.D.c. filed August 30, 1996); and United

States and State of Connecticut v. Oldcastle Northeast, Inc., CRH

plc, Tilcon, Inc., and BTR plc, Cv. No. 396-CV-01749 (D. Conn.

filed September 3, 1996).

26 In fifteen instances noted below, the Department of

Justice issued press releases: October 31, 1995 -- acquisition

of Shawmut National Corporation by Fleet Financial Group (banking

service business in New England); December 11, 1995 -- U.S.

Bancorp/West One Bancorp merger (banking service business in the

Pacific Northwest); January 16, 1996 -- purchase of Capital

Cities/ABC Inc. by Walt Disney Company (sale of advertising at

KCAL-TV Los Angeles television station) ; February 28, 1996 --

Wells Fargo/First Interstate Bank merger (61 branches in

California); May 29, 1996 -- acquisition of CFC Aviation Service,

L.P. by UNC Inc. (TFE 731 turbofan engines and jet engine heavy

Maintenance); April 12, 1996 -- merger of Union Pacific

Corporation and Southern Pacific Rail Corporation; June 5, 1996

~- acquisition of Anchor Drilling Fluids of Norway by Smith

International Inc. (drilling fluid business); June 13, 1996 --

acquisition of Ingram Cactus Company by Cooper Cameron

Corporation (geothermal wellheads and valves industry); June 17,

(continued...)

ey

restructured the proposed transactions, and, in four instances,

the parties abandoned the proposed transactions. One transaction

involving the merger of Union Pacific and Southern Pacific Rail

Corporation was litigated before the Surface Transportation

Board, and, on July 3, 1996, the Board approved the $5.4 billion

merger.

In United States and State of Florida v. Reuter Recycling of

Florida, Inc., and Waste Management Inc. of Florida ("WMF"), the

Division challenged the Proposed acquisition of Reuter Recycling

76(... continued)

1956 -- acquisition of Johnstown Corporation by Park Corporation

(steel industry); June 18, 1996 -- Bank of Boston/BayBanks merger

(divestiture of more than 20 branch offices in the Boston,

Massachusetts metropolitan area); July 1, 1996 -- acquisition of

Solvay S.A. by Genecor International Inc. (enzyme business) ;

August 12, 1996 -- acquisition of the Outdoor Division of Gannett

Company by Outdoor Systems Inc. (Denver, Colorado, billboard

business); August 29, 1996 -- acquisition of Zimmerman

international Corporation by Ingersoll Rand Company (air balances

and the elimination of an exclusive licensing agreement); August

30, 1996 -- acquisition of Vapor Corporation's parent Mark IV

Industries by Westinghouse Air Brake Company (rail car door

systems business); September 13, 1996 -- acquisition of Gruma

S.A. de C.V. by Archer-Daniels-Midland Co. (masa flour, the

primary ingredient in tortillas).

In addition to the fifteen instances in which it issued

press releases, the Department, in six instances, informed the

respective parties that their proposed acquisition was likely to

have anticompetitive effects: merger between Monsanto and

Calgene (genetically altered tomatoes, plant oils and cottonseed

and seed); acquisition of Meridian Bancorp by Corestates

Financial (banking service business in Reading and Lebanon,

Pennsylvania); acquisition of Modesto Tallow Company by Darling

International Inc. (tallow/rendering industry); acquisition of

River City Broadcasting L.P. by the Sinclair Broadcasting Group,

Inc. (television stations in Columbus, Ohio); acquisition of Mrs.

Smith’s, Inc. by ConAgra (frozen pie industry); and acquisition

of Pandrol Jackson’s tamper business by Fairmount Tamper (tamper

industry) .

14

of Florida, Inc. . by WMF and alleged that the acquisition

violated Section 7 of the Clayton Act in the waste disposal

industry in Dade and Broward Counties, Florida. aA proposed

consent decree was filed simultaneously settling the suit. The

decree allowed the two companies to merge providing they kept a

waste transfer station that WMF acquired as part of the

transaction open to other waste disposal competitors. The

consent decree was entered on January 22, 1996.

In United States and State of Texas v. Kimberly-Clark

Corporation and Scott Paper Company, the Division challenged the

Proposed acquisition by Kimberly-Clark Corporation of Scott Paper

Company. The acquisition threatened to raise prices and harm

consumers in two markets: facial tissue and baby wipes. aA

combination of Kimberly-Clark and Scott would have controlled

almost 60 percent of the sales of facial tissue and more than 55

percent of sales of baby wipes. A proposed consent decree was

filed simultaneously Settling the suit. Under the decree, the

parties agreed to divest Scott's baby wipes and facial tissue

brands; Scott's Dover, Delaware, Plant used to make Scott baby

wipes and other Products; and a maximum of two of four tissue

mills, i.e., Scott's mills in Marinette, Wisconsin, and Ft.

Edward, New York; and Kimberly-Clark's Lakeview mill and Badger-

Globe mill, both in Neenah, Wisconsin. The consent decree was

entered on April 4, 1996.27

In United States v. Pacific Scientific Company, the Division

Challenged the proposed acquisition by Pacific Scientific of Met

One. Both parties competed head-to-head in the highly

concentrated market for drinking water particle counters, devices

used to protect drinking water against contamination by deadly

micro-organisms. A proposed consent decree was filed

simultaneously settling the suit. Under the decree, Pacific

Scientific of Newport, California, agreed to divest its drinking

water particle counter business as a condition of acquiring Met

One Inc. of Grants Pass, Oregon. The consent decree was entered

on April 18, 1996.

In United States v. Georgia-Pacific Corporation, the

Division challenged the acquisition by Georgia-Pacific

20 All divestitures have occurred.

15

Corporation of the gypsum business of Domtar Inc., a Canadian

corporation, the fourth and third largest producers and sellers

of gypsum products in the northeast region of the United States.

Gypsum board (sometimes called "drywall," "sheetrock" or

"wallboard") is used in the construction and repair of interior

walls and ceilings in residential and commercial buildings in the

United States. In 1995, Georgia-Pacific’s United States gypsum

board sales totaled about $251 million and Domtar’s about $221

Million. The acquisition threatened to raise prices and harm

consumers of gypsum board in Washington, DC, and the states of

Maine, New Hampshire, Vermont, Rhode Island, Connecticut,

Delaware, Massachusetts, New York, New Jersey, Pennsylvania,

Maryland and Virginia in violation of Section 7 of the Clayton

Act. A proposed consent decree was filed simultaneously settling

the suit. The decree required Georgia-Pacific to divest drywall

plants in Wilmington, Delaware, and Buchanan, New York.

Lafarge’s proposal to purchase the two Qypsum plants was approved

and the decree was entered by the court on July 30, 1996.

In United States v. American Skiing Company and S-K-I

Limited, the Division Challenged the $137 million acquisition by

American Skiing Company of S-K-I Limited, and charged that the

acquisition would raise prices and eliminate discounts to Maine

residents for day skiing trips, and for residents of Maine,

eastern Massachusetts, eastern Connecticut and Rhode Island for

week-end ski excursions. American Skiing Company (formerly LBO

Resort Enterprises Corporation), a major owner and operator of

ski resorts in New England, was informed that it could proceed

with the acquisition of S-K-I Ltd. as long as the New Hampshire

ski resorts at Waterville Valley and Mount Cranmore were sold.

Without the divestiture, American Skiing would have controlled

eight of the largest ski resorts serving skiers residing in the

eastern portions of New England. A proposed consent decree was

filed simultaneously settling the suit. S-K-I owned ski resorts

in Killington and Mount Snow/Haystack, Vermont, a majority stake

in Sugarloaf in Maine and Waterville valley in New Hampshire.

All of those resorts were to be sold to American Skiing subject

to its commitment to divest the Waterville Valley and Mount

Cranmore resorts. In 1995, S-K-I’s revenues at these resorts

totaled about $110 million. About $400 million was spent last

year on skiing in New England. The consent decree was entered on

October 31, 1996, and the divestiture closed on November 27,

1996.

16

In United States, State of California, State of Connecticut,

State of Illinois, Commonwealth of Massachusetts, State of New

York, State of Washington and State of Wisconsin v. The Thomson

Corporation and West Publishing Company, the Division challenged

the $3.4 billion merger of two of the nation’s largest legal

publishers, Thomson Corporation, headquartered in Toronto,

Canada, and West Publishing and charged that the acquisition

would lessen competition in nine markets for enhanced primary Law

~- legal publications of statutes or court decisions in which

commentary is offered -- and in more than 50 markets for

secondary law products -- treatises and legal guides -- and in

the online services market. A proposed consent decree was filed

simultaneously settling the suit. The proposed decree would

require the divestiture of more than 50 products by Thomson,

guarantee access to important data bases, require Thomson to

license openly, for a capped fee, to other law publishers the

right to use the pagination of individual pages in West’s

National Reporter System in their products, and give options to

three states to reopen bidding for certain contracts. This was

the seventh and largest joint federal and state antitrust action

filed in the past two years. Modifications were Made to the

consent decree in response to comments and the court’s December

1996 opinion. The consent decree was entered by the court on

March 7, 1997, and the divestitures required by the decree have

occurred.

In United States v. Jacor Communications, Inc. and

Citicasters, Inc., the Division challenged the $770 million

merger between Jacor Communications, Inc. ("Jacor") and

Citicasters, Inc., two of the nation’s largest radio station

owners. The complaint alleged that the combination would control

more than 50 percent of the sales of radio advertising time in

Cincinnati, and could enable the companies to increase prices to

advertisers and substantially reduce competition in the $80

million Cincinnati radio advertising market. A proposed consent

decree was filed simultaneously settling the suit. Jacor and

Citicasters agreed to divest WKRO-FM, a leading Cincinnati

contemporary music station, to an independent buyer. Jacor

Communications and Citicasters are both headquartered in

Cincinnati. Jacor owned 21 radio stations in seven states and

Citicasters owned 19 radio stations in seven states. The

Jacor/Citicasters acquisition was one of the first of Many radio

industry transactions announced following passage of the

17

Telecommunications Reform Act of 1996, which relaxed previous

limits on radio ownership. The consent decree was entered by the

court on December 31, 1996.

In United States, State of Texas and Commonwealth of

Pennsylvania v. USA Waste Services, Inc., and Sanifill, Inc., the

Division challenged the $1.5 billion proposed merger between USA

Waste Services, Inc. ("USA Waste") and Sanifill, Inc. USA Waste

and Sanifill are two of the largest waste hauling and disposal

companies in North America. The deal was permitted to proceed

after the companies agreed to divestitures and other conditions

to eliminate antitrust concerns. Under the restructured deal,

restaurants and stores will continue to have the benefits of

competition for commercial hauling and landfill disposal services

in Houston, Texas, and Johnstown, Pennsylvania. in Houston, the

parties competed in landfill disposal services and are two of

only a few competitive waste haulers. In Johnstown, they

competed in waste hauling. USA Waste is the third largest

hauling and disposal company in North America, with operators in

24 states and sales of $730 million in 1995. Sanifill is among

the top 10 companies in North America and has operations in 23

States, the District of Columbia, Puerto Rico, Mexico and Canada.

In 1995, it had sales of $257 Million. The consent decree was

entered on December 17, 1996.

In United States and State of Connecticut v. Oldcastle

Northeast, Inc., CRH ple, Tilcon, Inc. and BTR pic, the Division

challenged the $270 million deal between two asphalt companies.

The transaction, as originally proposed, would have allowed

Oldcastle Northeast ("Oldcastle") to become the dominant asphalt

concrete company in the greater Hartford area market with the

power to increase prices. Both companies compete in the

production of asphalt concrete, which is also known as blacktop

and is used mainly for constructing or resurfacing roads,

driveways and parking lots. A proposed consent decree was filed

simultaneously settling the suit. The decree required Oldcastle

to divest an East Granby, Connecticut, quarry and two of the

three asphalt plants located at the quarry. Oldcastle, a

subsidiary of CRH ple of the Republic of Ireland, had sales of

about $314 million in 1995. Tilcon, a subsidiary of BTR ple of

the United Kingdom, had sales of about $349 million in 1995. The

consent decree was entered on December 23, 1996.

18

Also, on February 28, 1996, the Division filed a notice of

dismissal in U.S. v. AT&T Corporation and McCaw Cellular

Communications, Inc. (D.D.C. filed July 15, 1994) because before

the judgment was entered, the Telecommunication Act of 1996 was

passed, effectively mooting the decree. ?®

On September 21, 1996, oral arguments were heard in U.S. v.

Engelhard Corporation, et al., (M.D. Ga. filed June 12, 1995).”

On March 10, 1997, the district court entered judgment for

defendants, and the government has appealed.

On October 27, 1995, the district court entered judgment for

the defendants in United States v. Mercy Health Services, et.al.

902 F. Supp. 968 (N.D. Iowa 1995), denying the government’s

requested injunction of the proposed merger of Mercy Health

Center and Finley Hospital.°° The government appealed the

court's geographic market determination, and defendants crossappealed on several issues, including the court’s rejection of

their efficiencies defense. The appeals were argued on October

24, 1996. On January 15, 1997, before the appeals were decided,

Finley Hospital announced that it had abandoned its proposed

merger with Mercy. Based on Finley’s actions, the Eighth Circuit

held the case moot and declined to rule on the merits of the

appeals, vacated the district court’s decision and judgment, and

remanded with instructions to dismiss the case as moot (107 F.3d

632 (8th Cir. 1997)). On May 5, 1997, the district court

dismissed the case.

During fiscal year 1996, the Division investigated eight

bank merger transactions for which divestiture was required prior

to or concurrently with the acquisition. A "not significantly

adverse" letter conditioned on divestiture prior to or

ad See the 1994 Annual Report to Congress for a

description of this case.

ae See the 1995 Annual Report to Congress for a

description of this case.

a See the 1994 Annual Report to Congress for a

description of this case.

19

concurrently with consummation of the transaction was sent to the

appropriate bank regulatory agency in all instances.?}

Ze Federal Trade Commission

The Commission authorized its staff to seek injunctive

relief in three merger cases during fiscal year 1996, two of

22 On October 31, 1995, a "not significantly adverse"

letter was sent to the Board of Governors regarding the

application by Fleet Financial Group, Providence, Rhode Island,

to acquire Shawmut National Corporation, Hartford, Connecticut;

on November 13, 1995, a "not Significantly adverse" letter was

sent to the Board of Governors regarding the application by

Nations Bank Corporation, Charlotte, North Carolina, to acquire

Bank South Corporation, Atlanta, Georgia, and a letter was sent

to the Comptroller of the Currency regarding the application by

Nations Bank of Georgia National Association, Atlanta, Georgia,

to acquire Bank South, Atlanta, Georgia; on December 13, 1995, a

"not significantly adverse" letter was sent to the Board of

Governors regarding the application by Boatmen’s Bancshares, St.

Louis, Missouri, to acquire Fourth Financial Corporation,

Wichita, Kansas; on December 8, 1995, a "not significantly

adverse" letter was sent to the Board of Governors regarding the

application by U.S. Bancorp, Portland, Oregon, to acquire West

One Bancorp, Boise, Idaho; on March 1, 1996, a "not significantly

adverse" letter was sent to the Board of Governors regarding the

application by Wells Fargo & Company, San Francisco, California,

to acquire First Interstate Bancorp of Los Angeles, California;

on March 21, 1996, a "not significantly adverse" letter was sent

to the Board of Governors regarding the application by CoreStates

Financial Corporation, Philadelphia, Pennsylvania, to acquire

Meridian Bancorp, Reading, Pennsylvania; on March 20, 1996, a

"not significantly adverse" letter was sent to the Board of

Governors regarding the application by Norwest Corporation,

Minneapolis, Minnesota, to acquire Victoria Bankshares, Inc.,

Victoria, Texas; and on July 2, 1996, a "not significantly

adverse" letter was sent to the Board of Governors regarding the

application by Bank of Boston Corporation, Boston, Massachusetts,

to acquire BayBanks, Inc., Boston, Massachusetts.

20

which were filed in district court. In two of the three cases,

the parties abandoned the transactions.

In Butterworth Hospital/Blodgett Memorial Medical Center,

the Commission filed for a preliminary injunction in January 1996

alleging that Butterworth’s proposed acquisition of Blodgett

Hospital would lessen competition substantially in the provision

of acute care inpatient hospital services in the Grand Rapids,

Michigan, area. On September 26, 1996, the district court denied

the request for a preliminary injunction finding that, although

the Commission had demonstrated that the merged entity would have

substantial market power and established its prima facie case

that the transaction would violate Section 7 of the Clayton Act,

a2 On December 27, 1995, the Commission filed for a

preliminary injunction alleging that the proposed acquisition by

Questar Corporation of a 50 percent ownership interest in Kern

River Gas Transmission Company from Tenneco, Inc., would lessen

competition substantially for the transmission of natural gas to

industrial customers in the Salt Lake City, Utah, area.

According to the complaint, the parties were the only competitors

in the relevant market. Subsequently, the parties abandoned the

transaction, and the investigation was closed on February 9,

1996. United States vs. Questar Corporation, Civ. No.

2:95CV1127S (D. Utah filed December 27, 1995).

On April 17, 1996, the Commission authorized an action

to enjoin the proposed acquisition by Rite Aid Corporation of

Revco D.S., Inc. The press release issued at the time reported

that the Commission had reason to believe that the transaction

would lessen competition for the retail sale of prescription

drugs in numerous eastern and midwestern metropolitan areas.

According to the press release, the acquisition would have

combined the two largest drug store chains in the United States.

Subsequently, the parties abandoned the transaction, and the

investigation was closed on August 9, 1996.

oS Federal Trade Commission v. Butterworth Health

Corporation, Civ. No. 1:96CV49 (W.D. Mich. filed January 23,

1996); preliminary junction denied September 26, 1996 (1996-2

Trade Cas. §¢ 71,571); FTC Docket No. 9283 complaint issued

November 18, 1996)

21

the parties were unlikely to exercise market power to the

detriment of all consumers. As a condition to the merger, the

court ruled that the hospitals must sign a proposed consent

decree containing certain terms. In November 1996, the

Commission announced that it would appeal the district court

decision and pursue administrative litigation. The 6th Circuit

affirmed the district court on July 8, 1997.

The Commission accepted consent agreements for public

comment in 20 other merger cases in fiscal year 1996. A

complaint and decision and order were issued in 15 of those

matters during the fiscal year, and consent agreements in five of

these cases became final after September 30, 1996.

In Service Corporation International,** the complaint

alleged that the proposed acquisition by Service Corporation

International ("SCI") of Gibraltar Mausoleum Corporation would

lessen competition substantially in the provision of funerals,

perpetual care cemetery services and crematory services in

certain areas of Florida and Texas. According to the complaint,

SCI, the largest owner of funeral homes in North America, and

Gibraltar, one of its primary competitors, both operate funeral

establishments, cemeteries and crematories in Brevard and Lee

Counties, Florida, and in Amarillo, Texas. Under the order, SCI

is required to divest seven properties in the relevant geographic

markets. 35

In The Upjohn Company and Pharmacia Aktiebolag,?* the

complaint alleged that Upjohn’s proposed acquisition of Pharmacia

an Service Corporation International, No. C-3646 (issued

March 21, 1996).

=e In April 1996, the Commission approved the divestiture

to CFS Funeral Services, Inc., of five funeral homes and two

cemetery/crematories, including two funeral homes and one

cemetery in Amarillo; one funeral home and one cemetery in

Titusville, Florida; and one funeral establishment in both Cape

Coral and Ft. Myers, Florida.

36 The Upjohn Company and Pharmacia Aktiebolag, Docket No.

C-3638 (issued February 8, 1996).

22

Aktiebolag ("Pharmacia") would lessen competition substantially

in the research, development, manufacture and sale of

topoisomerase I inhibitors in the United States. According to

the complaint, Upjohn and Pharmacia were two of only a very small

number of companies in the advanced stages of developing the

chemotherapeutic drug which is used for the treatment of

colorectal cancer. The order permitted the transaction, but

required Upjohn to divest Pharmacia’s topoisomerase I inhibitor,

known as "9-Aminocamptothecin," to a Commission-approved buyer .?’

In The Stop & Shop Companies, Inc., and ssc Associates,

L.P.,* the complaint alleged that Stop «& Shop’s proposed

acquisition of Purity Supreme, Inc., would lessen competition

substantially for the retail sale of food and grocery products

sold at supermarkets in five geographic markets of eastern

Massachusetts. According to the complaint, the parties operate

competing supermarkets in the Boston metropolitan area,

Barnstable County (Cape Cod), the South Shore area, Bedford and

Brockton. The order required Stop & Shop to divest a total of 17

supermarkets, including 16 Purity stores and one Stop & Shop

store to a Commission-approved buyer. In addition, the order

required that all seven Cape Cod supermarkets be divested to one

acquirer in order to permit a new entrant to operate at the scale

necessary to support a viable distribution system. 39

In Devro International ple and Devro Inc.,*° the complaint

alleged that Devro’s proposed acquisition of Teepak

International, Inc., would lessen competition substantially in

ait In May 1997, the Commission approved the parties’

application to divest the research and development assets related

to "9-AC" to IDEC Pharmaceuticals Company.

38 The Stop & Shop Companies, Inc., and SSC Associates,

L.P., Docket No. C-3649 (issued April 2, 1996).

= In November 1996, the Commission approved the

application of Stop & Shop to divest its supermarket at 550

Arsenal Street in Watertown, Massachusetts, to J&T Enterprises,

Inc.

= Devro International ple and Devro Inc., No. C-3650

(issued April 3, 1996).

23

the manufacture and sale of collagen Sausage casings in the

United States and the world. Sausage casings are used by sausage

‘makers to form, size and bind ingredients used to manufacture or

process smoked meat or poultry products such as frankfurters,

Sausages, salami and jerky. Collagen sausage casings are

distinguished from other types because they are edible.

According to the complaint, the parties are the nation’s largest

of only four firms worldwide that produce collagen sausage

Casings. The order required Devro to divest its collagen sausage

casings production and distribution Operations in the United

States and Canada to a firm not already engaged in the

business. *

In Johnson & Johnson,“ the complaint alleged that the

proposed acquisition by Johnson & Johnson ("J&J") of Cordis

Corporation would lessen competition substantially in the

manufacture and sale of neurological shunts. Neurological shunts

are medical devices used to treat hydrocephalus, a brain disorder

that primarily afflicts young children. According to the

complaint, the combined company would control over 85 percent of

the market. Under the order, J&J is required to divest Cordis

innovasive Systems, Inc., to a Commission-approved purchaser. *

In Praxair, Inc.,“* the complaint alleged that Praxair’s

proposed acquisition of CBI Industries, Inc. ("CBI"), would

lessen competition substantially in the production of merchant

atmospheric gases, including nitrogen, oxygen and argon, in

liquid or cylinder form. According to the complaint, the

acquisition would reduce competition in the merchant nitrogen and

oxygen markets in both northern and southern California, as well

= In August 1996, the Commission approved the application

of Devro to divest its collagen sausage casings business to Nitta

Gelatin, Inc., of Japan.

a2 Johnson & Johnson, No. C-3645 (issued March 19, 1996).

<= In March 1997, the Commission approved the application

of J&J to divest Cordis’ neuroscience business to Elekta AB, a

Swedish corporation.

a4 Praxair, Inc., Docket No. C-3648 (issued April i,

1996).

24

as eastern Connecticut and western Wisconsin/southeastern

Minnesota; and in the merchant argon market in eastern

Connecticut and western Wisconsin/southeastern Minnesota.

Nitrogen is used to create inert environments in applications

such as heat treating, chemical blanketing and freezing food.

Oxygen is required for combustion and oxidization purposes in

applications such as foundries, steel and glass production, and

also for medical purposes. Argon is employed primarily for

welding purposes. Under the order, Praxair is required to divest

four of CBI’s atmospheric gas production facilities in Vacaville

and Irwindale, California; Bozrah, Connecticut; and Madison,

Wisconsin, to a Commission-approved purchaser. ‘5

In Illinois Tool Works Inc.,** the complaint alleged that

the proposed acquisition by Illinois Tool Works ("ITW") of Hobart

Brothers Company would lessen competition substantially in the

United States market for industrial power sources and industrial

engine drives used to generate power for arc welding systems.

ITW, through Miller Electric Mfg. Co., and Hobart were two of

only three competitors producing these industrial products. The

order required ITW to divest Hobart’s industrial power sources

and industrial engine drives businesses, including an exclusive

five-year license of the Hobart trade name to Prestolite Electric

Incorporated or to another Commission-approved acquirer.

In Hughes Danbury Optical Systems, Inc., Hughes Electronics

Corporation and General Motors Corporation,‘’ the complaint

alleged that the acquisition by Hughes Danbury Optical Systems

("Hughes"), a subsidiary of General Motors, of the Itek Optical

Systems Division ("Itek") of Litton Industries, Inc., would

ag In October 1996, the Commission approved Praxair’s

application to divest four industrial gas producing facilities

located in Bozrah, Connecticut; Madison, Wisconsin; and Irwindale

and Vacaville, California, to AGA Gas, Inc.

<6 Illinois Tool Works, Inc., Docket No. C-3651 (issued

April 23, 1996).

sa Hughes Danbury Optical Systems, Inc., Hughes

Electronics Corporation and General Motors Corporation, Docket

No. C-3652 (issued April 30, 1996).

25

lessen competition substantially for the research, development,

manufacture and sale of an airborne laser system for use in the

United States Air Force's Phillips Laboratory Airborne Laser

("ABL") Program. The ABL program is the premier anti-missile plan

in the Department of Defense’s Theater Missile Defense System.‘

Both Hughes and Itek were involved in the ABL program through

participation on competing teams contracted by the Air Force to

develop the program's demonstrator concept design. The parties

were responsible for supplying an adaptive optics system for

their respective teams, including deformable mirrors which allow

an anti-missile system to correct for distortions in the

atmosphere. Itek and Xinetics, Inc., the only two firms with the

ability to design and fabricate the mirrors, each had an

exclusive agreement with one of the two teams; namely, The Boeing

Company/Lockheed Martin Corporation/Itek ("Boeing team") and

Rockwell International Corporation/Hughes/Xinetics team,

respectively. According to the complaint, Hughes, through the

acquisition, would be engaged in the supply of deformable mirrors

to both teams. Under the order, Hughes is prohibited from

enforcing the exclusivity provision in its contract with Xinetics

to ensure that the Boeing team has a source alternative to

Hughes/Itek for its mirrors. The order also prohibits Hughes

from accessing proprietary information from Itek regarding the

Boeing team’s ABL project.

In Litton Industries, Inc.,*® the complaint alleged that the

proposed acquisition by Litton Industries, Inc., of PRC Inc., a

subsidiary of Black and Decker, would lessen competition

substantially in the United States market for systems engineering

and technical assistance ("SETA") services for the Navy’s Aegis

destroyer program. Litton is one of two defense contractors that

ae As envisioned, the ABL program will utilize a 747

aircraft, equipped with a high energy laser projector, to fly at

high altitudes near the forward edge of a battle area to locate

and destroy incoming short-range missiles. The goal of the

system is to deter the enemy from launching missiles for fear of

contaminating its own territory with nuclear, chemical or

biological warheads.

49 Litton Industries, Inc., Docket No. C-3656 (issued May

7, 1996).

26

manufacture Aegis destroyers for the Navy, and PRC is the sole

systems engineering and technical assistance contractor for the

program. According to the complaint, the acquisition would

afford Litton a competitive advantage by providing it with access

to competitively sensitive, non-public information about the only

other Aegis destroyer producer, General Dynamics. Under the

final order, Litton was required to divest PRC’s Aegis SETA

contract to a purchaser approved by the Commission and the Navy.

In addition, the order requires that PRC provide any technical

assistance necessary to execute the contract for one year. *°

In Saint-Gobain/Norton Industrial Ceramics Corp.,*} the

complaint alleged that the proposed acquisition by Compagnie de

Saint-Gobain of The Carborundum Company from the British

Petroleum Company would lessen competition substantially in the

United States markets for the manufacture of three products used

in industrial furnaces and home appliances: (1) fused cast

refractories used to line glass furnaces for melting raw

materials; (2) hot surface igniters used as ignition sources in

gas appliances; and (3) silicon carbide refractory bricks used in

heat-intensive metal refining applications. According to the

complaint, the parties were the only two competitors or faced

little competition from other firms in each of the relevant

markets. Under the order, Saint-Gobain was required to divest

Carborundum’s Monofrax fused cast refractories business in New

York; hot surface igniter business in Puerto Rico; and silicon

carbide refractories business in New Jersey.** The order also

oe In June 1996, the Commission approved Litton’s

application to divest the systems engineering and technical

assistance contract for the Navy’s Aegis destroyer program to

Vitro Corporation, a subsidiary of Tracor, Inc.

= Saint-Gobain/Norton Industrial Ceramics Corp., Docket

No. C-3673 (issued June 12, 1996).

=2 In December 1996, the Commission approved the

application of Saint-Gobain to grant a perpetual license for

proprietary Carborundum technology used in the production of

Silicon carbide refractory bricks to New Castle Refractories

In March 1997, the Commission approved Saint-Gobain’s

Company.

(continued...)

27

allowed Saint-Gobain to apply for Commission approval to divest

its Corhart business, including the company’s Louisville,

Kentucky, fused cast refractories manufacturing facility as a

substitute for divestiture of the Monofrax assets.

in Lockheed Martin Corporation,®? the complaint alleged that

the proposed acquisition by Lockheed Martin of Loral Corporation

would lessen competition substantially in the United States

markets for the research, development, manufacture and sale of

air traffic control systems; commercial low earth orbit

satellites; commercial geosynchronous earth orbit satellites;

military aircraft; NITE Hawk systems; simulation and training

systems; electronic countermeasures; mission computers; unmanned

aerial vehicles; and integrated communications systems; as well

as the provision of SETA services. Lockheed Martin and Loral

were two of the largest defense and space contractors in the

United States. As part of the transaction, Lockheed Martin

intended to spin-off Loral’s satellite manufacturing assets into

a new entity, Loral Space & Communications Ltd. ("Loral Space").

Under the final order, Lockheed Martin was required to divest its

Federal Aviation Administration ("FAA") SETA services operations,

and was prohibited from disclosing to its air traffic control

systems division any non-public information obtained in its

Capacity as a provider of SETA services to the FAA. The order

also prohibits Lockheed Martin from making available to its

tactical fighter aircraft and unmanned aerial vehicles divisions

any non-public information relating to its competitors’

Operations. Further, the order precludes any person who is

simultaneously a board member or officer of Lockheed Martin and

Loral Space from participating in any matter involving Lockheed

Martin's space business. Finally, the order prohibits Lockheed

Martin’s space division from providing any service or support to

52(...continued)

application to divest the hot surface igniters business of

Carborundum to Graphite Sales, Inc.

= Lockheed Martin Corporation, Docket No. C-3685 (issued

September 19, 1996).

28

Loral Space’s sanellite division, and required Lockheed Martin to

reduce its investment in Loral Space to 20 percent.*

In The Loewen Group, Inc., and Loewen Group International,

inc.,** the complaint alleged that the proposed acquisition by

The Loewen Group ("Loewen") of the Garza Memorial Funeral Home,

Inc., and Thomae-Garza Funeral Directors, Inc., would lessen

competition substantially for the provision of funerals in the

Brownsville and Harlingen/San Benito areas of Cameron County,

Texas, respectively. According to the complaint, the parties are

direct competitors in the relevant markets. Under the order,

Loewen was required to divest one of three funeral homes in

Brownsville, as well as a large funeral home in San Benito or two

smaller funeral homes in Harlingen to a Commission-approved

purchaser. %§

In The Loewen Group, Inc., and Loewen Group International,

inc.,*” the complaint alleged that Loewen’s proposed acquisition

of Heritage Family Funeral Services, Inc. ("Heritage"), would

lessen competition substantially for the provision of funerals in

Castlewood, Virginia. According to the complaint, the

transaction would eliminate competition between the only two

funeral homes operating in the area. Under the order, Loewen was

required to divest Heritage’s Castlewood Funeral Home to a

Commission-approved acquirer.

ae In October 1996, the Commission approved the

application of Lockheed Martin to divest its SETA services

operations to Washington Consulting Group, Inc.

55 The Loewen Group, Inc., and Loewen Group International,

Inc., Docket No. C-3677 (issued July 29, 1996).

ae Specifically, divestiture is required of either Garza

Memorial Funeral Home, Inc., the Darling-Mouser Funeral Home,

Inc., or Paragon Family Services, Inc., in Brownsville; and

either Thomae-Garza Funeral Directors, inc., or both the Pitts,

Kriedler-Ashcraft Funeral Directors, Inc., and Garza-Elizondo

funeral homes in Harlingen.

Bu The Loewen Group, Inc., and Loewen International, Inc.,

Docket No. C-3678 (issued July 29, 1996).

29

[OCR skipped on page(s) 31-65]

[Read from a scan; the first 30 pages.]