Rohm and Haas Company et al.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 9910112]

Rohm and Haas Company et al.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged

violations of federal law prohibiting unfair or deceptive acts or

practices or unfair methods of competition. The attached Analysis To

Aid Public Comment describes both the allegations in the draft

complaint that accompanies the consent agreement and the terms of the

consent order--embodied in the consent agreement--that would settle

these allegations.

DATES: Comments must be received on or before July 2, 1999.

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

Room 159, 600 Pennsylvania Avenue, NW, Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Timothy Feighery and Wallace

Easterling, FTC/S-3627, 601 Pennsylvania Avenue, NW, Washington, DC

20580, (202) 326-3520 or (202) 326-2936.

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 above-captioned 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. The following Analysis To Aid Public

Comment describes the terms of the consent agreement, and the

allegations in the complaint. An electronic copy of the full text of

the consent agreement package can be obtained from the FTC Home Page

(for April 22, 1999), on the World Wide Web, at ``http://www.ftc.gov/

os/actions97.htm.'' A paper copy can be obtained from the FTC Public

Reference Room, Room H-130, 600 Pennsylvania Avenue, NW, Washington, DC

20580, either in person or by calling (202) 326-3627

Public comment is invited. Comments should be directed to: FTC/

Office of the Secretary, Room 159, 600 Pennsylvania Avenue, NW,

Washington, DC 20580. Two paper copies of each comment should be filed,

and should be accompanied, if possible, by a 3\1/2\ inch diskette

containing an electronic copy of the comment. Such comments or views

will be considered by the Commission and will be available for

inspection and copying at 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).

Analysis of Proposed Consent Order To Aid Public Comment

The Federal Trade Commission (``Commission'') has accepted, subject

to final approval, an Agreement Containing Consent Order

(``Agreement'') from Rohm and Haas Company (``Rohm & Haas'') and Morton

International, Inc. (``Morton'') to resolve competitive concerns

arising out of Rohm & Haas's proposed acquisition of Morton. Under the

proposed Order, Rohm & Haas and Morton (``respondents'') would divest

the Morton business of producing and selling acrylic water-based

polymers for use in the formulation of floor care products.

The proposed Order has been placed on the public record for sixty

(60) days for reception of comments by interested persons. Comments

received during this period will become part of the public record.

After sixty (60) days, the Commission will review the agreement and

comments received and decide whether to withdraw its acceptance of the

agreement or make final the agreement's proposed Order.

The proposed complaint alleges that the acquisition, if

consummated, would violate section 7 of the Clayton Act, 15 U.S.C. 18,

as amended, and section 5 of the Federal Trade Commission Act (``FTC

Act''), 15 U.S.C. 45, as amended, in the market for the sale of acrylic

water-based polymers for use in formulation of floor care products

(``Water-Based Floor Care Polymers''). According to the proposed

complaint, Water-Based Floor Care Polymers impart essential properties,

such as hardness, slip resistance and gloss, to floor care products.

Major customers of Water-Based Floor Care Polymers are product

formulators, who sell finished floor care products, such as polishes,

mainly to industrial and institutional users, including factories,

schools and retail stores. The proposed complaint alleges that the

Water-Based Floor Care Polymers market in North America is highly

concentrated, with Rohm & Haas and Morton each controlling a

significant share of the market. The proposed complaint further alleges

that the effect of the acquisition may be to substantially lessen

competition and to tend to create a monopoly by, among other things,

eliminating direct competition between Rohm & Haas and Morton,

increasing the likelihood that purchasers of Water-Based Floor Care

Polymers will be forced to pay higher prices, increasing the likelihood

that technical and sales services provided to customers will be

reduced, and increasing the likelihood that innovation will be reduced.

Customers have complained that the effect of the transaction, if

permitted to close, would be increased prices for floor care polymers

and reduced technical service, support, and innovation.

The proposed complaint further alleges that entry into the Water-

Based Floor Care Polymers market would not be timely, likely, or

sufficient to deter or offset the adverse effects of the acquisition on

competition. Entry is difficult in this market because of the length of

time it would take and the expense that would be incurred in building

appropriate chemical production facilities, the difficulty in acquiring

the technical expertise necessary to produce the polymers, and the

difficulty in gaining recognition in a marketplace in which customers

are reluctant to switch from proven suppliers.

The proposed Order is designed to remedy the anticompetitive

effects of the acquisition in the North American market for Water-Based

Floor Care Polymers, as alleged in the complaint, by requiring the

divestiture of Morton's Water-Based Floor Care Polymers business. Under

the terms of the proposed Order, respondents are required to divest, no

later than ten (10) days after the date the Commission accepts the

Agreement for public comment, Morton's worldwide Water-Based Floor Care

Polymers business to GenCorp, Inc. (``GenCorp''). GenCorp currently

produces water-based polymers for use in the graphics industry, a

technology and production area closely related to Water-Based Floor

Care Polymers. Divestiture of the Morton Water-Based Floor Care

Polymers business to GenCorp is

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designed to promote the viability and competitiveness of the divested

business by taking advantage of the synergies that may be afforded

through its combination with GenCorp, including expertise in related

chemistries and economies of scale resulting from shared research and

development, overhead and production.

The proposed Order requires that respondents divest all trade

secrets, know-how, trade marks and trade names, intellectual property,

intangible assets, and business information (including purchasing,

sales, marketing, licensing, and similar information) relating to

Morton's Water-Based Floor Care Polymers business. The proposed Order

also requires that respondents provide incentives to certain employees

identified by the acquirer as important to the continued

competitiveness and viability of the Water-Based Floor Care Polymers

business, to facilitate their transfer and the transfer of know-how, to

the acquirer.

The proposed Order requires that respondents provide a transitional

supply of products to the acquirer. The first supply arrangement

provides that respondents supply to the acquirer, for a period not to

exceed two years, the full line of Morton Water-Based Floor Care

Polymers. The second transitional supply agreement requires that

respondents supply to the acquirer, for a period not to exceed four

years, Conrez resin, a hard resin that enhances the flow

characteristics of water-based polymers. These supply arrangements are

designed to ensure the initial viability and success of the acquirer in

the Water-Based Floor Care Polymers market by providing a seamless and

continuous supply of Morton products to customers. The transitional

supply agreements are intended to be of sufficient duration to give the

acquirer time to assimilate the Morton polymers and perfect the

production processes, in its own plants. This provision also provides

the acquirer the time it needs to work with customers to build

technical relationships and gain approvals for the products it

manufactures in its own facilities, a critical requirement in this

market.

The proposed Order also provides for the appointment of an Interim

Trustee to ensure that respondents expeditiously perform their

responsibilities under the proposed Order. The Interim Trustee will

oversee the divestiture to ensure the adequacy of the transfer, to

ensure that disputes between the parties will be identified and

resolved quickly, clearly, and impartially, and to identify possible

violations of the proposed Order.

If, following receipt and review of public comments regarding the

proposed Order, the Commission determines to disapprove the divestiture

to GenCorp, respondents are required to rescind the transaction with

GenCorp, within five months, and divest Morton's Water-Based Floor Care

Polymers business to an acquirer that receives the prior approval of

the Commission. The proposed Order also provides that if respondents

fail to divest the Morton Water-Based Floor Care Polymers business as

required by the proposed Order, the Commission may appoint a

Divestiture Trustee to divest the business, together with Morton's

Greenville, South Carolina, manufacturing facility. This provision

gives the Trustee the flexibility to divest the business to an entity

not already in the water-based polymers business.

The proposed Order requires respondents to provide the Commission,

within thirty (30) days of the date of Agreement is signed, with an

initial report setting forth in detail the manner in which respondents

will comply with the provisions relating to the divestiture of assets

and the appointment and work of the Interim Trustee. The Order further

requires respondents to provide the Commission with a report of

compliance with the Order within sixty (60) days following the date the

Order becomes final and every ninety (90) days thereafter until they

have complied with the terms of the Order.

The purpose of this analysis is to facilitate public comment on the

proposed Order. This analysis is not intended to constitute an official

interpretation of the Agreement or the proposed Order or in any way to

modify the terms of the Agreement or the proposed Order.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 99-10997 Filed 4-30-99; 8:45 am]

BILLING CODE 6750-01-M