Saint-Gobain/Norton Industrial Ceramics Corporation; Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 951-0096]

Saint-Gobain/Norton Industrial Ceramics Corporation; Consent

Agreement With Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Consent Agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting

unfair acts and practices and unfair methods of competition, this

consent agreement, accepted subject to final Commission approval, would

require the Worcester, Massachusetts-based corporation--a wholly-owned

indirect subsidiary controlled by Compagnie de Saint-Gobain, a French

company--to divest businesses and associated assets in the United

States markets for fused cast refractories, hot surface igniters, and

silicon carbide refractory bricks. The consent agreement settles

allegations that Saint-Gobain's acquisition of The Carborundum Company

from the British Petroleum Company likely would lead to monopolies or

near monopolies in each of these markets, which supply products used in

industrial furnaces and home appliances.

DATES: Comments must be received on or before May 6, 1996.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave. NW., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT: William J. Baer, Federal Trade

Commission, H-374, 6th Street and Pennsylvania Avenue NW, Washington,

DC 20580. (202) 326-2932, or Howard Morse, Federal Trade Commission, S-

3627, 6th Street and Pennsylvania Avenue, NW., Washington, DC 20580.

(202) 326-2949.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of

the Commission's Rules of Practice (16 CFR 2.34), notice is hereby

given that the following consent agreement containing a consent order

to cease and desist, having been filed with and accepted, subject to

final approval, by the Commission, has been placed on the public record

for a period of sixty (60) days. Public comment is invited. Such

comments or views will be considered by the Commission and will be

available for inspection and copying as its principal office in

accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of

Practice (16 CFR 4.9(b)(6)(ii)).

Agreement Containing Consent Order

The Federal Trade Commission (``the Commission''), having initiated

an investigation of the proposed acquisition by Compagnie de Saint-

Gobain, through its wholly-owned subsidiary, Societe Europeenne des

Produits Refractaires, of certain of the subsidiaries of British

Petroleum Company p.l.c. which together comprise The Carborundum

Company (``Carborundum''), in which Saint-Gobain/Norton industrial

Ceramics Corporation will acquire all of the United States assets of

Carborundum, other than assets relating to ceramic fibers, which

acquisition is more fully described at paragraph I.(F) below, and it

now appearing that Saint-Gobain/Norton Industrial Ceramics Corporation

and Compagnie de Saint-Gobain are willing to enter into an agreement

containing an order to divest certain assets and providing for other

relief:

It is hereby agreed by and between Saint-Gobain/Norton Industrial

Ceramics Corporation and Compagnie de Saint-Gobain, by their duly

authorized officers, and their attorneys, and counsel for the

Commission that:

1. Proposed respondent Saint-Gobain/Norton Industrial Ceramics

Corporation is a corporation organized, existing and doing business

under and by virtue of the laws of the state of Delaware, with its

office and principal place of business located at One New Bond Street,

Worcester, Massachusetts 01615-0008.

2. Proposed respondent admits all the jurisdictional facts set

forth in the draft of complaint here attached.

3. Proposed respondent waives:

a. Any further procedural steps;

b. The requirement that the Commission's decision contain a

statement of findings of fact and conclusions of law;

c. All rights to seek judicial review or otherwise to challenge or

contest the validity of the Order entered pursuant to this agreement;

and

d. Any claim under the Equal Access to Justice Act.

4. This agreement shall not become a part of the public record of

the proceeding unless and until it is accepted by the Commission. If

this agreement is accepted by the Commission it, together with the

draft of complaint contemplated thereby, will be placed on the public

record for a period of sixty (60) days and information in respect

thereto publicly released. The Commission thereafter may either

withdraw its acceptance of this agreement and so notify the proposed

respondent, in which event the Commission will take such action as it

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may consider appropriate, or issue and serve its complaint (in such

form as the circumstances may require) and decision, in disposition of

the proceeding.

5. This agreement is for settlement purposes only and does not

constitute an admission by proposed respondent that the law has been

violated as alleged in the draft of complaint here attached, or that

the facts as alleged in the draft complaint, other than jurisdictional

facts, are true.

6. This agreement contemplates that, if it is accepted by the

Commission, and if such acceptance is not subsequently withdrawn by the

Commission pursuant to the provisions of Section 2.34 of the

Commission's Rules, the Commission may, without further notice to

proposed respondent, (1) issue its complaint corresponding in form and

substance with the draft of complaint attached hereto and its decision

containing the following Order to divest and providing for other relief

in disposition of the proceeding, and (2) make information public with

respect thereto. When so entered, the Order to divest and providing for

other relief shall have the same force and effect and may be altered,

modified, or set aside in the same manner and within the same time

provided by statute for other orders. The Order shall become final upon

service. Delivery by the U.S. Postal Service of the complaint and

decision containing the agreed-to Order to proposed respondent's

address as stated in this agreement shall constitute service. Proposed

respondent waives any right it may have to any other manner of service.

The complaint may be used in construing the terms of the Order, and no

agreement, understanding, representation or interpretation not

contained in the Order or the agreement may be used to vary or

contradict the terms of the Order.

7. Nothing contained in this agreement shall bar the Commission

from seeking judicial relief to enforce the Order, or to enforce the

Agreement to Hold Separate.

8. Proposed respondent has read the proposed complaint and Order

contemplated hereby. Proposed respondent understands that once the

Order has been issued, it will be required to file one or more

compliance reports showing it has fully complied with the Order.

Proposed respondent further understands that it may be liable for civil

penalties in the amount provided by law for each violation of the Order

after it becomes final.

Order

I

As used in this Order, the following definitions shall apply:

A. ``Respondent'' or ``Saint-Gobain'' means Saint-Gobain/Norton

Industrial Ceramics Corporation, its directors, officers, employees,

agents and representatives, its predecessors, successors, and assigns;

subsidiaries, divisions, and groups and affiliates controlled by Saint-

Gobain, and the respective directors, officers, employees, agents,

representatives, successors and assigns of each; its domestic and

foreign parents, including Compagnie de Saint-Gobain, and the

subsidiaries, divisions, and groups and affiliates controlled by

Compagnie de Saint-Gobain or any other domestic or foreign parent, and

the respective directors, officers, employees, agents, representatives,

successors and assigns of each.

B. ``Carborundum'' means the companies and assets comprising The

Carborundum Company that Saint-Gobain proposes to acquire from BP

pursuant to the Acquisition.

C. ``BP'' means The British Petroleum Company p.l.c.

D. ``Toshiba Monofrax'' means the joint venture between Carborundum

and Toshiba Ceramics Company, Limited, pursuant to the Joint Venture

Agreement dated December 20, 1965.

E. ``Commission'' means the Federal Trade Commission.

F. ``Acquisition'' means the acquisition described in the Stock

Purchase Agreement entered into on May 26, 1995 by which Saint-Gobain

has agreed to acquire and BP has agreed to convey certain rights and

interests in, and title to, Carborundum.

G. ``Fused Cast Refractories'' means all grades or types of

refractory products which are produced using a fused cast process,

i.e., melting components in electric furnaces and casting the molten

product into shaped products, including, but not limited to, fused cast

AZS (alumina-zirconia-silica) and fused cast alumina.

H. ``Hot Surface Igniters'' means all silicon carbide hot surface

igniters used in the ignition system of gas appliances.

I. ``Silicon Carbide Performance Refractories'' means all

refractory products composed of bonded silicon carbide grains.

J. ``Silicon Carbide Refractory Bricks'' means all refractory

products composed of bonded silicon carbide grains which are formed by

hydraulic, mechanical or vibratory pressing, and are marketed for use

in the manufacture of primary metals, including aluminum reduction

cells, steel blast furnaces, and copper shaft furnaces.

K. ``Carborundum Silicon Carbide Refractory Brick Technology''

means all patents, trade secrets, technology and know-how of

Carborundum for producing any Silicon Carbide Refractory Brick product

sold by Carborundum on or before the date of the Acquisition, all such

information being sufficiently detailed for the commercial production

and sale of such products, including, but not limited to, all technical

information, data, specifications, drawings, design and equipment

specifications, manuals, engineering reports, manufacturing designs and

reports, operating manuals, and formulations, laboratory research, and

quality control data.

L. ``Assets and Businesses'' means assets, properties, businesses,

and goodwill, tangible and intangible, including, without limitation,

the following:

1. All plant facilities, machinery, fixtures, equipment, vehicles,

transportation and storage facilities, furniture, tools supplies,

stores, spare parts, and other tangible personal property;

2. All customer lists, vendor lists, catalogs, sales promotion

literature, advertising materials, research materials, technical

information, dedicated management information systems, information

contained in management information systems, rights to software,

trademarks, patents and patent rights, inventions, trade secrets,

technology, know-how, ongoing research and development, specifications,

designs, drawings, processes and quality control data;

3. Raw material and finished product inventories and goods in

process;

4. All right, title and interest in and to real property, together

with appurtenances, licenses, and permits;

5. All right, title, and interest in and to the contracts entered

into in the ordinary course of business with customers (together with

associated bids), suppliers, sales representatives, distributors,

agents, personal property lessors, personal property lessees,

licensors, licensees, consignors and consignees;

6. All rights under warranties and guarantees, expressed or

implied;

7. All separately maintained, as well as relevant portions of not

separately maintained books, records and files; and

8. All items of prepaid expense.

M. ``Carborundum Fused Cast Refractories Properties to Be

Divested'' means the Carborundum Monofrax Group, Carborundum's

manufacturing facility in Falconer, New York, and any

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other Carborundum Assets and Businesses utilized in connection with the

research, development, manufacture, distribution or sale of Fused Cast

Refractories (including any assets located at or research or

development work ongoing or completed at the Carborundum Technology

Center); provided, however, that the ``Carborundum Fused Cast

Refractories Properties to Be Divested'' does not include the name

``Carborundum'' nor any interest of Carborundum in, or contractual

relationship with, Toshiba Monofrax.

N. ``Carborundum Igniters Properties to Be Divested'' means

Carborundum's Hot Surface Igniter manufacturing facility in Mayaguez,

Puerto Rico, and any other Carborundum Assets and Businesses utilized

in connection with the research, development, manufacture, distribution

or sale of Hot Surface Igniters (including any assets located or

research and development work done at the Carborundum Technology

Center, and any rights of Carborundum in which any person has agreed

not to compete with Carborundum in the manufacture or marketing of Hot

Surface Igniters); provided, however, that ``Carborundum Igniters

Properties to Be Divested'' does not include the name ``Carborundum.''

O. ``Carborundum Silicon Carbide Properties to Be Divested'' means

Carborundum's Keasbey, New Jersey Silicon Carbide Performance

Refractories manufacturing facility, and any other Carborundum Assets

and Businesses utilized in connection with the research, development,

manufacture, distribution or sale of all products, including Silicon

Carbide Refractory Bricks and products other than Silicon Carbide

Refractory Bricks, manufactured at that plant (including such assets

located, or research and development work done, at the Carborundum

Technology Center); provided, however, that ``Silicon Carbide

Properties to Be Divested'' does not include the name ``Carborundum''

or any Carborundum silicon carbide refractory manufacturing facilities

other than the Keasbey, New Jersey plant, or any trade names used by

Carborundum.

P. ``Carborundum Properties to Be Divested'' means the Carborundum

Fused Cast Refractories Properties to Be Divested, the Carborundum

Igniters Properties to Be Divested, and the Carborundum Silicon Carbide

Properties to Be Divested.

Q. ``Carborundum Technology Center'' means Carborundum's research

and development facility located in Niagara Falls, New York.

R. ``Saint-Gobain Fused Cast Refractories Properties to Be

Divested'' means (i) Saint-Gobain's manufacturing facility in

Louisville, Kentucky, and any other Saint-Gobain Assets and Businesses

located in North America that are utilized in the research,

development, manufacture, sale or distribution of Fused Cast

Refractories and (ii) any product or processing technology utilized in

connection with the research, development, manufacture, distribution or

sale of Fused Cast Refractories (including any ongoing or completed

research or development work within Saint-Gobain that is related to

fused cast AZS refractories, fused cast alumina refractories, or to any

other fused cast products produced or sold by Saint-Gobain in North

America; provided, however, that such research shall not include

research or development work that relates solely to process technology

used by Societe Europeenne des Produits Refractaires in Europe).

S. ``Licensee'' means the person to whom the Carborundum Silicon

Carbide Refractory Brick Technology is licensed pursuant to Paragraph

II of this Order.

T. ``License Date'' means the date on which the Carborundum Silicon

Carbide Refractory Brick Technology is licensed following Commission

approval pursuant to Paragraph II of this Order.

U. ``Remaining Properties to Be Divested'' means the following:

1. The Carborundum Fused Cast Refractories Properties to Be

Divested if the Carborundum Fused Cast Refractories Properties to Be

Divested have not been divested, or divestiture of the Saint-Gobain

Fused Cast Refractories Properties to Be Divested has not been approved

by the Commission and divested, by the time that a trustee is appointed

in accordance with Paragraph III of this Order, and

2. The Carborundum Igniters Properties to Be Divested if the

Carborundum Igniter Properties to Be Divested have not been divested by

the time that a trustee is appointed in accordance with Paragraph III

of this Order, and

3. The Carborundum Silicon Carbide Properties to Be Divested if the

Carborundum Silicon Carbide Properties to Be Divested have not been

divested, or a license to the Carborundum Silicon Carbide Refractory

Brick Technology has not been approved by the Commission and granted,

by the time that a trustee is appointed in accordance with Paragraph

III of this Order.

V. ``Viability and Competitiveness'' of the Properties to Be

Divested means that such respective properties are capable of

functioning independently and competitively in the Fused Cast

Refractories, Hot Surface Igniters, and Silicon Carbide Performance

Refractories Businesses.

II

It is further ordered that:

A. Respondent shall divest, absolutely and in good faith, at no

minimum price, by the earlier of February 28, 1997, or one year from

the date the Acquisition is consummated, the Carborundum Fused Cast

Refractories Properties to Be Divested as an ongoing business, and

shall also divest such additional ancillary Carborundum Assets and

Businesses and effect such arrangements as are necessary to assure the

Viability and Competitiveness of the Carborundum Fused Cast

Refractories Properties to Be Divested.

B. Respondent may propose, and the Commission may in its sole

discretion accept, in lieu of divestiture of the Carborundum Fused Cast

Refractories Properties to Be Divested, divestiture of the Saint-Gobain

Fused Cast Refractories Properties to Be Divested, to a person that

receives the prior approval of the Commission, and in a manner that

receives the prior approval of the Commission. Divestiture of the

Saint-Gobain Fused Cast Refractories Properties to Be Divested shall,

in order to obtain Commission approval, satisfy the purposes of this

Order and remedy the lessening of competition resulting from the

Acquisition as alleged in the Commission's Complaint. Respondent's

request that the Commission approve a divestiture of the Saint-Gobain

Fused Cast Refractories Properties to Be Divested shall not toll the

time in which it is required to divest the Carborundum Fused Cast

Refractories Properties to Be Divested, except that if the Commission

has not approved or disapproved such request within ninety (90) days of

the date on which it was submitted, then, in the event of Commission

disapproval of the request, the period shall be extended by the length

of time in excess of ninety days before Commission disapproval.

Respondent's request that the Commission approve divestiture of the

Saint-Gobain Fused Cast Refractories Properties to Be Divested shall

not eliminate the requirement that it divest the Carborundum Fused Cast

Refractories Properties to Be Divested, unless such substitute

divestiture is approved by the Commission and consummated in a timely

fashion consistent with the requirements of this Order.

C. Respondent shall divest, absolutely and in good faith, at no

minimum price, by the earlier of February 28, 1997, or

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one year from the date the Acquisition is consummated, the Carborundum

Igniters Properties to Be Divested as an ongoing business, and shall

also divest such additional ancillary Carborundum Assets and Businesses

and effect such arrangements as are necessary to assure the Viability

and Competitiveness of the Carborundum Igniters Properties to Be

Divested.

D. Respondent shall divest, absolutely and in good faith, at no

minimum price, by the earlier of February 28, 1997, or one year from

the date the Acquisition is consummated, the Carborundum Silicon

Carbide Properties to Be Divested, and shall also divest such

additional ancillary Carborundum Assets and Businesses and effect such

arrangements as are necessary to assure the Viability and

Competitiveness of the carborundum Silicon Carbide Properties to Be

Divested.

E. Respondent may propose, prior to the earlier of August 30, 1996,

or six months from the date the Acquisition is consummated, and the

Commission may in its sole discretion accept, in lieu of divestiture of

the Carborundum Silicon Carbide Properties to Be Divested, to grant,

with no continuing royalties, a perpetual license to the Carborundum

Silicon Carbide Refractory Brick Technology to a person that obtains

the prior approval of the Commission, in a manner that receives the

prior approval of the Commission. Licensing of the Carborundum Silicon

Carbide Refractory Brick Technology shall, in order to obtain

Commission approval, satisfy the purposes of this Order and remedy the

lessening of competition resulting from the Acquisition as alleged in

the Commission's Complaint. In no event shall any licensing agreement

pursuant to this paragraph contain any limitation on the products the

licensee is permitted to produce, or the geographic area in which the

licensee may produce such products. Respondent's request that the

Commission approve a licensee shall not toll the time in which it is

required to divest the Carborundum Silicon Carbide Properties to Be

Divested, except that if the Commission has not approved or disapproved

such request within ninety (90) days of the date on which it was

submitted, then, in the event of Commission disapproval of the request,

the period shall be extended by the length of time in excess of ninety

days before Commission disapproval. Respondent's request that the

Commission approve a licensee shall not eliminate the requirement that

it divest the Carborundum Silicon Carbide Properties to Be Divested,

unless such licensing is approved by the Commission and consummated in

a timely fashion consistent with the requirements of this Order.

F. If Respondent licenses the Carborundum Silicon Carbide

Refractory Brick Technology pursuant to Paragraph II. E. of this Order,

then for a period of six (6) months after the License Date, upon

reasonable notice and request from the Licensee, Respondent shall

provide to the Licensee information, technical assistance, and advice

sufficient to effect the transfer to the Licensee of the Silicon

Carbide Refractory Brick Technology and to enable the Licensee to

manufacture Silicon Carbide Refractory Bricks. Upon reasonable notice

and request from the Licensee, Respondent shall also provide to the

Licensee consultation and training with knowledgeable employees of

Respondent, including a qualified engineer, at the Licensee's facility

for a period of time, not to exceed three (3) months, sufficient to

satisfy the Licensee's management that its personnel are adequately

trained in the manufacture of Silicon Carbide Refractory Bricks.

Respondent may require reimbursement from the Licensee for all of its

direct out-of-pocket expenses, including a reasonable labor loss fee

for on-site assistance incurred in providing the services required by

this Paragraph II.F. of this Order.

G. If Respondent licenses the Carborundum Silicon Carbide

Refractory Brick Technology pursuant to Paragraph II.E. of this Order,

then Respondent shall provide the Licensee with all promotional,

advertising, and marketing materials regarding Silicon Carbide

Refractory Bricks prepared by Carborundum at any time during the period

commencing twelve (12) months prior to the date this Order becomes

final, a list of all customers of Carborundum's Silicon Carbide

Refractory Bricks during the period commencing twenty four (24) months

prior to the date this Order becomes final, and a list of Carborundum's

suppliers of silicon carbide, other raw materials, and production

components used to produce Carborundum's Silicon Carbide Refractory

Bricks.

H. Respondent shall comply with all terms of the Agreement to Hold

Separate attached to this Order and made a part hereof as Appendix I.

Said Agreement shall continue in effect with respect to the Carborundum

Fused Cast Refractories Properties to Be Divested until such time as

Respondent has divested the Carborundum Fused Cast Refractories

Properties to Be Divested, with respect to the Carborundum Igniters

Properties to Be Divested until such time as Respondent has divested

the Carborundum Igniters Properties to Be Divested, and with respect to

the Carborundum Silicon Carbide Properties to Be Divested until such

time as Respondent has divested the Carborundum Silicon Carbide

Properties to Be Divested, or until such other time as stated in said

Agreement, provided that said Agreement to Hold Separate shall not

continue in effect with respect to the Carborundum Fused Cast

Refractories Properties to Be Divested if Respondent divests, with

Commission approval, the Saint-Gobain Fused Cast Refractories

Properties to Be Divested, and shall not continue in effect with

respect to the Carborundum Silicon Carbide Properties to Be Divested if

Respondent licenses, with Commission approval, the Carborundum Silicon

Carbide Refractory Brick Technology.

I. Respondent shall divest each of the Carborundum Properties to Be

Divested only to an acquirer or acquirers that receive the prior

approval of the Commission and only in a manner that receives the prior

approval of the Commission. The purpose of the divestitures of the

Carborundum Properties to Be Divested is to ensure the continuation of

the Carborundum Properties to Be Divested as ongoing, viable businesses

engaged in the manufacture and sale of Fused Cast Refractories, Hot

Surface Igniters, and Silicon Carbide Performance Refractories,

respectively, and to remedy any lessening of competition resulting from

the Acquisition as alleged in the Commission's Complaint.

III

It is further ordered that:

A. If Respondent has not divested, absolutely and in good faith and

with the Commission's approval, each of the Carborundum Properties to

Be Divested, or, pursuant to Paragraph II.B. of this Order, the Saint-

Gobain Fused Cast Refractories Properties to Be Divested, or has not

licensed, with the Commission's approval, pursuant to Paragraph II.E.

of this Order, the Carborundum Silicon Carbide Refractory Brick

Technology, the Commission may appoint one or more trustees to divest

the Remaining Properties to Be Divested, along with any reasonable

ancillary Carborundum assets and other reasonable arrangements that are

necessary to assure the Viability and Competitiveness of such Remaining

Properties to Be Divested.

B. In the event the Commission or the Attorney General brings an

action

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pursuant to section 5(l) of the Federal Trade Commission Act, 15 U.S.C.

45(l), or any other statute enforced by the Commission, Respondent

shall consent to the appointment of a trustee in such action. Neither

the appointment of a trustee nor a decision not to appoint a trustee

under this Paragraph shall preclude the Commission or the Attorney

General from seeking civil penalties or any other relief available to

it, including a court-appointed trustee, pursuant to section 5(l) of

the Federal Trade Commission Act, or any other statute enforced by the

Commission, for any failure by Respondent to comply with this Order.

C. If a trustee is appointed by the Commission or a court pursuant

to Paragraph III.A. of this Order, Respondent shall consent to the

following terms and conditions regarding the powers, authorities,

duties and responsibilities of the trustee:

1. The Commission shall select the trustee, subject to the consent

of Respondent, which consent shall not be unreasonably withheld. The

trustee shall be a person with experience and expertise in acquisitions

and divestitures. If Respondent has not opposed, in writing, including

the reasons for opposing, the selection of any proposed trustee within

ten (10) days after notice by the staff of the identity of any proposed

trustee, Respondent shall be deemed to have consented to the selection

of the proposed trustee.

2. Subject to the prior approval of the Commission, the trustee

shall have the exclusive power and authority to divest the Remaining

Properties to Be Divested, along with any reasonable ancillary

Carborundum assets and other reasonable arrangements that are necessary

to assure the Viability and Competitiveness of such Remaining

Properties to Be Divested.

3. The trustee shall have twelve (12) months from the date of

appointment to accomplish the divestiture or divestitures. If, however,

at the end of the twelve-month period the trustee has submitted a plan

of divestiture or believes that divestiture can be accomplished within

a reasonable time, the divestiture period may be extended by the

Commission; provided, however, the Commission may only extend the

divestiture period or divestiture periods, as applicable, two (2)

times, but not more than one (1) year in the aggregate for each

divestiture.

4. The trustee shall have full and complete access to the

personnel, books, records and facilities related to the Remaining

Properties to Be Divested, or any other relevant information, as the

trustee may reasonably request. Respondent shall develop such financial

or other information as such trustee may reasonably request and shall

cooperate with any reasonable request of the trustee. Respondent shall

take no action to interfere with or impede any trustee's accomplishment

of the divestiture or divestitures. Any delays in divestiture caused by

Respondent shall extend the time for divestiture under this Paragraph

in an amount equal to the delay, as determined by the Commission or the

court for a court-appointed trustee.

5. Subject to Respondent's absolute and unconditional obligation to

divest at no minimum price, the trustee shall use his or her best

efforts to negotiate the most favorable price and terms available for

the divestiture of the Remaining Properties to Be Divested. If the

trustee receives bona fide offers for the Remaining Properties to Be

Divested from more than one acquiring entity or entities, and if the

Commission determines to approve more than one such acquiring entity,

the trustee shall divest to the acquiring entity or entities selected

by Respondent from among those approved by the Commission.

6. The trustee shall serve, without bond or other security, at the

cost and expense of Respondent, on such reasonable and customary terms

and conditions as the Commission or a court may set. The trustee shall

have authority to employ, at the cost and expense of Respondent, such

consultants, accountants, attorneys, investment bankers, business

brokers, appraisers, and other representatives and assistants as are

reasonably necessary to carry out the trustee's duties and

responsibilities. The trustee shall account for all monies derived from

the sale and all expenses incurred. After approval by the Commission

and, in the case of a court-appointed trustee, by the court, of the

account of the trustee, including fees for his or her services, all

remaining monies shall be paid at the direction of Respondent and the

trustee's power shall be terminated. The trustee's compensation shall

be based at least in significant part on a commission arrangement

contingent on the trustee's divesting the Remaining Properties to be

Divested.

7. Respondent shall indemnify the trustee and hold the trustee

harmless against any losses, claims, damages, or liabilities arising

out of, or in connection with, the performance of the trustee's duties

under this Order, including all reasonable fees of counsel and other

expenses incurred in connection with the preparation for, or defense of

any claim, whether or not resulting in any liability, except to the

extent that such liabilities, losses, damages, claims, or expenses

result from misfeasance, gross negligence, willful or wanton acts, or

bad faith by the trustee.

8. Within ten (10) days after appointment of the trustee, and

subject to the prior approval of the Commission and, in the case of a

court-appointed trustee, of the court, Respondent shall execute a trust

agreement that transfers to the trustee all rights and powers necessary

to permit the trustee to effect the divestitures required by this

order.

9. If a trustee ceases to act or fails to act diligently, a

substitute trustee shall be appointed in the same manner as provided in

Paragraph III.A. of this Order.

10. The Commission or, in the case of a court-appointed trustee,

the court may, on its own initiative or at the request of the

appropriate trustee, issue such additional orders or directions as may

be necessary or appropriate to accomplish the divestiture required by

this Order.

11. The trustee shall have no obligation or authority to operate or

maintain the Remaining Properties to Be Divested.

12. The trustee shall report in writing to Saint-Gobain and to the

Commission every sixty (60) days concerning the trustee's efforts to

accomplish divestiture.

IV

It is further ordered that within thirty (30) days after the date

this order becomes final and every sixty (60) days thereafter until

Respondent has fully complied with Paragraphs II and III of this order,

Respondent shall submit to the Commission a verified written report

setting forth in detail the manner and form in which it intends to

comply, is complying and has complied with those provisions, including

the Agreement to Hold Separate. Respondent shall include in its

compliance reports, among other things that are required from time to

time, a full description of substantive contacts or negotiations for

the divestitures of the Carborundum Fused Cast Refractories Properties

to Be Divested, Carborundum Igniter Properties to Be Divested,

Carborundum Silicon Carbide Properties to Be Divested, and divestiture

of the Saint-Gobain Fused Cast Refractories Properties to Be Divested

or licensing of the Carborundum Silicon Carbide Refractory Brick

Technology, as specified in Paragraph II of this order, including the

identity of all parties contacted. Respondent also shall

[[Page 9172]]

include in compliance reports, among other things, copies of all

written communications to and from such parties, all internal

memoranda, reports and recommendations concerning the divestitures.

V

It is further ordered that for the purposes of determining or

securing compliance with this Order, and subject to any legally

recognized privilege, upon written request and on reasonable notice to

Respondent made to counsel for Respondent, Saint-Gobain shall permit

any duly authorized representatives of the Commission:

A. Access, during office hours and in the presence of counsel, to

inspect and copy all books, ledgers, accounts, correspondence,

memoranda and other records and documents in the possession or under

the control of Respondent, relating to any matters contained in this

order; and

B. Upon ten (10) days' notice to Respondent, and without restraint

or interference from Respondent, to interview officers or employees of

Respondent, who may have counsel present, regarding such matters.

VI

It is further ordered that until the obligations set forth in

Paragraphs II and III of this Order are met, Respondent shall notify

the Commission at least thirty (30) days prior to any proposed change

in the corporation such as dissolution, assignment or sale resulting in

the emergence of a successor corporation, the creation, dissolution or

sale of subsidiaries, or any other change that may affect compliance

obligations arising out of the Order.

Agreement to Hold Separate

This Agreement to Hold Separate (the ``Hold Separate'') is by and

between Saint-Gobain/Norton Industrial Ceramics Corporation (``Saint-

Gobain''), a corporation organized, existing, and doing business under

and by virtue of the laws of Delaware, with its principal office and

place of business at One New Bond Street, Worcester, Massachusetts,

01615-0008, and the Federal Trade Commission (the ``Commission''), an

independent agency of the United States Government, established under

the Federal Trade Commission Act of 1914, 15 U.S.C. Sec. 41, et seq.

(collectively, the ``Parties'').

Premises

Whereas, on May 26, 1995, Compagnie de Saint-Gobain, the parent

company of Saint-Gobain/Norton Industrial Ceramics Corporation, entered

into, through its wholly-owned subsidiary Societe Europeenne Des

Produits Refractaires (``SEPR''), a Stock Purchase Agreement with The

Standard Oil Company, BP International Limited, and BP Exploration

(Alaska), Inc., subsidiaries of British Petroleum Company, p.l.c.

(``BP'') providing for the acquisition (the ``Acquisition'') of the

voting securities of the companies that together comprise The

Carborundum Company (``Carborundum''); and

Whereas, Carborundum, with its principal office and place of

business at 1625 Buffalo Avenue, Niagara Falls, New York, 14303,

manufactures and sells a range of products, including fused cast

refractories, hot surface igniters, and silicon carbide performance

refractories; and

Whereas, the Commission is now investigating the Acquisition to

determine if it would violate any of the statutes enforced by the

Commission; and

Whereas, if the Commission accepts the Agreement Containing Consent

Order (``Consent Order''), the Commission will place it on the public

record for a period of at least sixty (60) days and may subsequently

withdraw such acceptance pursuant to the provisions of Section 2.34 of

the Commission's Rules; and

Whereas, the Commission is concerned that if an understanding is

not reached, preserving the status quo ante of Carborundum, during the

period prior to the final acceptance and issuance of the Consent Order

by the Commission (after the sixty (60)-day public comment period),

divestiture resulting from any proceeding challenging the legality of

the Acquisition might not be possible, or might be less than an

effective remedy; and

Whereas, the Commission is concerned that if the Acquisition is

consummated, it will be necessary to preserve the Commission's ability

to require the divestiture of Carborundum and the Commission's right to

have Carborundum or the Carborundum Properties to Be Divested continue

as viable competitors independent of Saint-Gobain; and

Whereas, even if the Commission determines to finally accept the

Consent Order, it is necessary to hold separate the Carborundum

Properties to Be Divested to protect interim competition pending

divestiture or other relief; and

Whereas, the purpose of this Agreement and the Consent Order is to

(i) Preserve Carborundum as a viable and competitive business,

independent of Saint-Gobain, and engaged in the research and

development, manufacture and sale of Fused Cast Refractories, Hot

Surface Igniters and Silicon Carbide Performance Refractories pending

final acceptance or withdrawal of acceptance of the Consent Order by

the Commission pursuant to the provisions of section 2.34 of the

Commission's Rules;

(ii) Preserve the Carborundum Properties to Be Divested as viable

and competitive businesses, independent of Saint-Gobain, and engaged in

the research and development, manufacture and sale of Fused Cast

Refractories, Hot Surface Igniters and Silicon Carbide Performance

Refractories pending Divestiture or other relief pursuant to Paragraph

II or Paragraph III of the Consent Order;

(iii) Preserve Carborundum as a viable and competitive business,

independent of Saint-Gobain, and engaged in the research and

development, manufacture and sale of Fused Cast Refractories, Hot

Surface Igniters and Silicon Carbide Performance Refractories and

prevent any interim harm to consumers as a result of the Acquisition;

(iv) Remedy the anticompetitive effects of the Acquisition as

alleged in the Commission's Complaint; and

Whereas, entering into this Hold Separate shall in no way be

construed as an admission by Saint-Gobain that the Acquisition is

illegal or would have any anticompetitive effects; and

Whereas, Saint-Gobain understands that no act or transaction

contemplated by this Hold Separate shall be deemed immune or exempt

from the provisions of the antitrust laws or the Federal Trade

Commission Act by reason of anything contained in this Hold Separate.

Now, Therefore, the Parties agree, upon the understanding that the

Commission has not yet determined whether the Acquisition will be

challenged, and in consideration of the Commission's agreement at the

time it accepts the Consent Order for public comment that, unless the

Commission determines to reject the Consent Order, the Commission will

not seek a temporary restraining order, preliminary injunction, or

permanent injunction to prevent consummation of the Acquisition, and

will grant early termination of the Hart-Scott-Rodino waiting period,

as follows:

1. Saint-Gobain agrees to execute and be bound by the attached

Consent Order.

2. The terms ``Fused Cast Refractories,'' ``Hot Surface Igniters,''

``Silicon Carbide Performance Refractories,'' ``Carborundum Fused Cast

Refractories Properties to Be Divested,'' ``Carborundum Igniters

Properties to Be Divested,'' ``Carborundum Silicon Carbide Properties

to Be Divested,''

[[Page 9173]]

``Carborundum Properties to Be Divested,'' and ``Acquisition'' have the

same definitions as in the Consent Order;

3. Saint-Gobain agrees that from the date this Hold Separate is

accepted until the earliest of the dates listed in subparagraphs 3.a.

or 3.b., it will comply with the provisions of paragraph 5 of this Hold

Separate with respect to Carborundum:

a. Five (5) business days after the Commission withdraws its

acceptance of the Consent Order pursuant to the provisions of Section

2.34 of the Commission's Rules;

b. The day after the Commission accepts as final the Consent Order

pursuant to the provisions of Section 2.34 of the Commission's Rules.

Provided, however, that Saint-Gobain is not required to hold separate

pursuant to this Hold Separate any of the following business groups or

businesses of Carborundum: Ceramic Fiber; Microelectronics; Structural

Ceramics; Boron Nitride; Ekonol Polyester Resin; Carborundum Specialty

Products; Irrigation; or Carborundum's silicon carbide refractory

manufacturing plants in Germany, The United Kingdom or Australia.

4. Saint-Gobain agrees that from the date this Hold Separate is

accepted until the earliest of the dates listed in subparagraphs 4.a.,

or 4.b., it will comply with the provisions of paragraph 5 of this Hold

Separate with respect to each of the Carborundum Properties to Be

Divested:

a. Five (5) business days after the Commission withdraws its

acceptance of the Consent Order pursuant to the provisions of Section

2.34 of the Commission's Rules;

b. The day after the respective divestiture required by the Consent

Order is completed, or, as applicable with regard to the Carborundum

Silicon Carbide Properties to Be Divested, an approved license granted.

5. Saint-Gobain shall hold Carborundum or the Carborundum

Properties to Be Divested, as applicable pursuant to Paragraphs 3 and 4

(the ``Held-Separate Businesses''), as they are constituted on the date

the Acquisition is consummated, separate and apart on the following

terms and conditions:

a. The Held-Separate Business shall be held separate and apart and

shall be operated independently of Saint-Gobain (meaning here and

hereafter, Saint-Gobain excluding the Held-Separate Businesses and

excluding all personnel connected with the Held-Separate Businesses as

of the date this Hold Separate is signed) except to the extent that

Saint-Gobain must exercise direction and control over the Held-Gobain

must exercise direction and control over the Held-Separate Businesses

to assure compliance with this Hold Separate or with the Consent Order.

b. Saint-Gobain shall not exercise direction or control over, or

influence directly or indirectly, the Held-Separate Business, the New

Board or Management Committee (as defined in subparagraph 5.d.), or any

of its operations or businesses; provided, however, that Saint-Gobain

may exercise only such direction and control over the Held-Separate

Businesses as is necessary to assure compliance with this Hold Separate

or with the Consent Order.

c. Saint-Gobain shall maintain the marketability, viability and

competitiveness of the Held-Separate Businesses, and shall not take

such action that will cause or permit the destruction, removal,

wasting, deterioration or impairment of the Held-Separate Businesses,

except in the ordinary course of business and except for ordinary wear

and tear, and shall not sell, transfer, encumber (other than in the

normal course of business), or otherwise impair the marketability,

viability or competitiveness of the Held-Separate Businesses.

d. Upon consummation of the Acquisition, Saint-Gobain shall elect a

three-person Board of Directors for the Held-Separate Business (the

``New Board''), or a three-person Management Committee. After the Order

is made final pursuant to Section 2.34 of the Commission's rules,

Saint-Gobain may elect a separate New Board or Management Committee for

each of the Held-Separate Businesses. Each New Board or Management

Committee for each Held-Separate Business shall consist of at least two

Carborundum officers knowledgeable about the Held-Separate Business,

one of whom shall be named Chairman of the New Board or Management

Committee, and who shall remain independent of Saint-Gobain and

competent to assure the continued viability and competitiveness of the

Held-Separate Business, and one New Board or Management Committee

Member who may also be an officer, agent or employee of Saint-Gobain

(the ``Saint-Gobain New Board Management Committee Member''). The

Saint-Gobain New Board or Management Committee Member for each New

Board or Management Committee for each Held-Separate Business shall not

have any direct responsibility relating to any Saint-Gobain business

that manufactures, markets or uses the products, or products that

compete with, products manufactured or marketed by such Held-Separate

Business. Except for the Saint-Gobain New Board or Management Committee

Member, Saint-Gobain shall not permit any director, officer, employee

or agent of Saint-Gobain also to be a director, officer, employee or

agent of Carborundum. Each New Board or Management Committee member

shall enter into a confidentiality agreement agreeing to be bound by

the terms and conditions of this Hold Separate.

e. Except as required by law and except to the extent that

necessary information is exchanged in the course of complying with this

Hold Separate or the Consent Order, or in the course of defending

investigations or litigation or obtaining legal advice, or providing

risk management services, Saint-Gobain shall not receive or have access

to, or the use of, any Material Confidential Information of the Held-

Separate Businesses, not in the public domain, except as such

information would be available to Saint-Gobain in the ordinary course

of business if the Acquisition had not taken place. Saint-Gobain may

receive on a regular basis from the Held-Separate Businesses aggregate

financial information necessary and essential to allow Saint-Gobain to

file financial reports, tax returns and personnel reports, and such

other information, other than information relating specifically to the

Carborundum Properties to Be Divested, necessary in the course of

evaluating and consummating the Acquisition. Any such information that

is obtained pursuant to this subparagraph shall only be used for the

purposes set out in this subparagraph. (``Material Confidential

Information,'' as used in this Hold Separate, means competitively

sensitive or proprietary information not independently known to Saint-

Gobain from sources other than the Held-Separate Businesses or the New

Board or Management Committee, as applicable, and includes but is not

limited to customer lists, customers, price lists, prices, individual

transactions, marketing methods, patents, technologies, processes, or

other trade secrets.) In no event shall Saint-Gobain receive Material

Confidential Information relating to any specific customer of

Carborundum.

f. Saint-Gobain may retain an independent auditor to monitor the

operation of the Held-Separate Businesses. Said auditor may report in

writing to Saint-Gobain on all aspects of the operation of the Held-

Separate Businesses other than information on customer lists,

customers, price lists,

[[Page 9174]]

prices, individual transactions, marketing methods, patents,

technologies, processes, or other trade secrets.

g. Except as permitted by this Hold Separate, the New Board or

Management Committee member appointed by Saint-Gobain who is also an

officer, agent, or employee of Saint-Gobain shall not receive any

Material Confidential Information of the Held-Separate Businesses or

Material Confidential Information of any person other than Saint-Gobain

and shall not disclose any such information obtained through his or her

involvement with the Held-Separate Businesses to Saint-Gobain or use it

to obtain any advantage for Saint-Gobain. The Saint-Gobain New Board or

Management Committee Member shall participate in matters that come

before the New Board or Management Committee only for the limited

purpose of considering any capital investment of over $250,000 for the

Carborundum Fused Cast Refractories Properties to Be Divested, any

capital investment over $150,000 for the Carborundum Igniters

Properties to Be Divested, any capital investment over $150,000 for the

Carborundum Silicon Carbide Properties to Be Divested, approving any

proposed budget and operating plans, authorizing dividends and

repayment of loans consistent with the provisions hereof, reviewing any

material transactions described in paragraph 5.g., and carrying out

Saint-Gobain's responsibilities under the Hold Separate and the Consent

Order. Except as permitted by the Hold Separate, the Saint-Gobain New

Board or Management Committee Member shall not participate in any other

matter.

h. All material transactions, out of the ordinary course of

business and not precluded by paragraph 5 hereof, shall be subject to a

majority vote of the New Board or Management Committee (as defined in

paragraph 5.d. hereof).

i. Saint-Gobain shall not change the composition of the New Board

or Management Committee unless the Chairman of the New Board or

Management Committee consents, or unless it is necessary to do so in

order to assure compliance with this Hold Separate or with the Consent

Order. The Chairman of the New Board or Management Committee shall have

the power to remove members of the New Board or Management Committee

for cause and to require Saint-Gobain to appoint replacement members of

the New Board or Management Committee. Saint-Gobain shall not change

the composition of the management of the Held-Separate Businesses

except that the New Board or Management Committee shall have the power

to remove management employees for any legal reason. If the Chairman

ceases to act of fails to act diligently, a substitute Chairman shall

be appointed in the same manner as provide in paragraph 5.d. Saint-

Gobain shall circulate to the management employees of Carborundum and

appropriately display a notice of the Hold Separate and the Consent

Agreement at a Conspicuous place at all offices and facilities of the

Held-Separate Businesses.

j. All earnings and profits of the Held-Separate Businesses shall

be retained separately by Carborundum or the Carborundum Properties to

Be Divested, as applicable. If necessary, Saint-Gobain shall provided

the Held-Separate Businesses with sufficient working capital to operate

at current rates of operation, upon commercially reasonable terms.

k. Should the Federal Trade Commission seek in any proceeding to

compel Saint-Gobain to divest itself of Carborundum or to compel Saint-

Gobain to divest any assets or businesses of Carborundum that it may

hold, or to seek any other injunctive or equitable relief, Saint-Gobain

shall not raise any objection based upon the expiration of the

applicable Hart-Scott-Rodino Antitrust Improvements Act waiting period

or the fact that the Commission has permitted the Acquisition. Saint-

Gobain also waives all rights to contest the validity of this Hold

Separate.

6. For the purpose of determining or securing compliance with this

Hold Separate, subject to any legally recognized privilege, and upon

written request and ten days' notice to Saint-Gobain, Saint-Gobain

shall permit any duly authorized representative(s) of the Commission:

a. Access during the office hours of Saint-Gobain and in the

presence of counsel to inspect and copy all books, ledgers, accounts,

correspondence, memoranda, and other records and documents in the

possession or under the control of Saint-Gobain or Carborundum relating

to compliance with this Hold Separate;

b. Without restraint or interference from Saint-Gobain, to

interview Saint-Gobain's or Carborundum's officers, directors or

employees, who may have counsel present, regarding any such matters.

Analysis To Aide Public Comment on the Provisionally Accepted Consent

Order

The Federal Trade Commission (``the Commission'') has accepted, for

public comment, from Compagnie de Saint-Gobain and Saint-Gobain/Norton

Industrial Ceramics Corporation, a wholly-owned subsidiary of Compagnie

de Saint-Gobain (collectively ``Saint-Gobain'') an agreement containing

a consent order. This agreement has been placed on the public record

for sixty days for reception of comments from interested persons.

Comments received during this period will become part of the public

record. After sixty days, the Commission will again review the

agreement and the comments received and will decide whether it should

withdraw from the agreement or make final the agreement's order.

The Commission's investigation of this matter concerns the proposed

acquisition by Compagnie de Saint-Gobain, through its wholly-owned

subsidiary, Societe Europeene des Produits Refractaries (``SEPR), of

certain of the subsidiaries of British Petroleum Company p.l.c., which

together comprise The Carborundum Company (``Carborundum''). As part of

this acquisition, Saint-Gobain/Norton Industrial Ceramics Corporation

will acquire United States assets of Carborundum, other than those

relating to ceramic fibers. The Commission's proposed complaint alleges

that Saint-Gobain and Carborundum compete with in each other in three

lines of commerce: fused cast refractories, which glass manufacturers

use to line furnaces; hot surface igniters (``HSIs''), which gas

appliance manufacturers use as ignition sources; and silicon carbide

refractory bricks, which manufacturers of aluminum, steel and other

metals use to line furnaces.

The agreement containing consent order would, if finally accepted

by the Commission, settle charges that the acquisition may

substantially lessen competition in the production and sale of fused

cast refractories, HSIs and silicon carbide refractory bricks in the

United States and lead to a monopoly in those lines of commerce. The

Commission has reason to believe that the acquisition and agreement

violate Section 5 of the FTC Act and the acquisition would have

anticompetitive effects and would violate Section 7 of the Clayton Act

and Section 5 of the Federal Trade Commission Act if consummated,

unless an effective remedy eliminates such anticompetitive effects.

With respect to the market for fused cast refractories, which are

used primarily by glass manufacturers in the furnaces where they melt

raw materials, the Commission's complaint alleges that these

refractories provide unique

[[Page 9175]]

characteristics, and that as a result, the use of these materials would

not be diminished by even a large price increase. Imports of fused cast

refractories, the Complaint further alleges, are small and come

primarily from Saint-Gobain. Saint-Gobain and Carborundum are the only

two producers of fused cast refractories in the United States, and

entry of other producers not only is unlikely, but would be very time-

consuming. The Commission's Complaint alleges that the proposed

acquisition, which would result in a monopoly in the United States,

would lessen competition by eliminating competition between Saint-

Gobain and Carborundum, and would lead to higher prices and less

product innovation.

In the market for HSIs, which are used primarily by gas appliance

manufacturers as an ignition source, the Commission's Complaint alleges

that HSIs, which differ by application in design and price, are the

most reliable and cost-effective ignition sources for most types of gas

appliances, such as ranges, dryers and furnaces. Moreover, customers

would have to redesign appliances to use other products. As a result,

according to the Complaint, the use of HSIs would not be diminished by

even a large price increase. Saint-Gobain and Carborundum account for

nearly all sales of HSIs in the United States, and the only other

producer of HSIs in the United States has only limited sales, nearly

all of which are to the aftermarket. The Commission's Complaint, citing

factors such as the history of failed entry and the time required for

new entry, alleges that entry would not deter or alleviate the

anticompetitive effects of the acquisition. Therefore, according to the

Commission's Complaint, the proposed acquisition, which would result in

a near monopoly in the United States in HSIs and would combine the two

closest substitutes under Saint-Gobain's control even if alternative

ignition sources were included in the market, would lessen competition

by eliminating competition between Saint-Gobain and Carborundum, and

would lead to higher prices and less product innovation.

In the market for silicon carbide refractory bricks, which are used

in such applications as lining aluminum reduction cells, steel blast

furnaces and copper shaft furnaces, the Commission's Complaint alleges

that because of the excellent corrosion resistance provided by silicon

carbide, its use in these applications would not be diminished by a

significant price increase. Imports of silicon carbide refractory

bricks, according to the Commission's Complaint, would not constrain

pricing in the United States. In the market for silicon carbide

refractory bricks, the Complaint alleges, Saint-Gobain and Carborundum

account for virtually all sales, and new entry of a competitive

producer would both be unlikely and take a long time. Therefore, the

Complaint alleges, the proposed acquisition would allow Saint-Gobain to

unilaterally exercise market power, leading to higher prices for

silicon carbide refractory bricks.

The proposed order accepted for public comment contains provisions

that would require Saint-Gobain to divest Carborundum's Monofrax fused

cast refractories business, Carborundum's HSI business, and its United

States silicon carbide refractories manufacturing plant to an acquirer

or acquirers receiving the prior approval of the Commission, by

February 28, 1997. The divestitures include those portions of the

centralized research and development operations at Carborundum that are

related to these businesses. In addition to divesting these businesses,

Saint-Gobain must divest ancillary assets and businesses and make any

arrangements necessary to assure that these Carborundum properties are

capable of being operated independently and competitively by the

acquirer or acquirers of the businesses. Saint-Gobain's divestitures of

the Carborundum businesses, if completed, would satisfy the

requirements of the Order and remedy the lessening of competition

alleged in the Complaint.

The proposed order provides that in lieu of divestiture of the

Carborundum Monofrax fused cast refractories business, Saint-Gobain may

propose divestiture of its own Corhart Refractories fused cast

refractories business, together with results of related research and

development done within Saint-Gobain organization, including research

and development done overseas. Because the Corhart business is operated

as part of the Saint-Gobain fused cast refractory business worldwide,

and relies on the Saint-Gobain organization for certain support

activities, the Commission has retained the discretion to approve or

disapprove this alternative divestiture of the Corhart business,

depending on whether divestiture to a particularly proposed acquirer

fully satisfies the purposes of the proposed order and remedies the

lessening of competition alleged in the Complaint. Among the factors

that may be relevant to this issue include the nature of the business

of the proposed acquirer, as well as the proposed acquirer's

independent research and development capabilities in fused cast

refractories and its product lines and sales and marketing organization

for fused cast refractories, in light of the fact that Corhart would be

divorced from Saint-Gobain's similar capabilities in fused cast

refractories if such divestiture is approved. If Saint-Gobain proposes

divestiture of the Corhart business, and its request is disapproved by

the Commission, Saint-Gobain would continue to have the obligation to

divest the Carborundum fused cast refractory business to a Commission

approved acquirer by February 28, 1997.

The proposed order also provides that in lieu of divestiture of

Carborundum's Keasbey, New Jersey silicon carbide refractories

manufacturing facility in the United States, Saint-Gobain may propose,

by August 30, 1996, to license Carborundum technology for the

manufacture of nitride-bonded, sialon-bonded, and other types of

silicon carbide refractory bricks, which technology the licensee could

use to produce both bricks and other products. The Commission has

retained the discretion to approve or disapprove the technology license

to a particular proposed licensee depending on whether the proposed

license and licensee fully satisfies the purposes of the proposed order

and remedies the lessening of competition alleged in the Complaint.

Among the factors that may be relevant to this issue are the likelihood

that the licensee would enter into production and sale of silicon

carbide refractory bricks, the time required for the licensee to enter

and have a significant market impact in silicon carbide refractory

bricks, the licensee's manufacturing capabilities and costs, and the

types of products that the licensee intends to manufacture and market.

Under the terms of the proposed order, Saint-Gobain must divest

Carborundum's fused cast refractories, HSI, and silicon carbide

refractories businesses by February 28, 1997. If Saint-Gobain fails to

divest either Carborundum's fused cast refractories, HSI, or silicon

carbide performance refractories business by that date, or fails to

accomplish the alternative divestiture or licensing if approved by the

Commission, then the Commission may appoint a trustee to divest any

remaining properties yet to be divested, along with ancillary assets or

other arrangements that may be necessary to assure that any property

yet to be divested is capable of being operated independently and

competitively by its acquirer or acquirers.

A hold separate agreement made a part of the consent agreement

requires

[[Page 9176]]

Saint-Gobain, until the proposed order is made final, to hold separate

Carborundum, but allows Saint-Gobain to integrate certain discrete

assets of Carborundum unrelated to the lines of commerce of competitive

concern. It further requires Saint-Gobain, until it accomplishes the

divestitures of Carborundum's fused cast refractories, HSI or silicon

carbide business required by the order, or the alternative divestiture

or licensing, or until the trustee accomplishes the divestitures

required by the order, to hold separate and preserve all of the assets

and businesses to be divested.

The purpose of this analysis is to invite public comment concerning

the proposed order. This analysis is not intended to constitute an

official interpretation of the agreement and order or to modify their

terms in any way.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 96-5224 Filed 3-6-96; 8:45 am]

BILLING CODE 6750-01-M