Quexco Incorporated; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 9810327]

Quexco Incorporated; 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 19, 1999.

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

Room 159, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT: Philip Eisenstat, FTC/S-3627, 601

Pennsylvania Avenue, N.W., Washington, D.C. 20580, (202) 326-2769.

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 May 14th, 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, N.W., Washington,

D.C. 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, N.W.,

Washington, D.C. 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 Quexco Incorporated (``Quexco'') relating to a

proposed acquisition by Quexco of Pacific Dunlop GNB Corporation

(``GNB'').

The proposed Consent 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 again review the

Agreement and the comments received and will decide whether it should

withdraw from the Agreement or make final the Agreement's proposed

Order.

Both Quexco, a Delaware corporation, and GNB, also a Delaware

corporation, operate secondary lead smelters. Secondary lead smelters

are facilities that recyle products containing lead, such as old lead-

acid batteries and other lead bearing products, into pure lead or lead

alloys that can be used again by batter manufacturers and other

industries. The output of secondary smelters is called secondary lead.

Primary lead smelters use lead bearing ore to produce pure lead or lead

alloys. The output of primary smelters is called primary lead. For most

uses for lead, either primary or secondary lead can be used.

The Proposed Complaint

The proposed complaint alleges that the relevant geographic market

for evaluating the acquisition's effect in the relevant product markets

is California, and that the proposed acquisition may substantially

lessen competition in the smelting and refining of lead in California

and in providing lead recycling services in California.

The proposed complaint alleges that Quexco and GNB are the only two

operators of lead smelters in California and the only two firms that

perform lead recycling in California. The complaint further alleges

that the proposed transaction would create a monopoly and give Quexco

the ability to unilaterally exercise market power.

The proposed complaint alleges that entry into the alleged markets

would not be timely, likely, or sufficient to deter or offset the

adverse effects of the acquisition on competition in these markets.

Lead is a toxic substance. Construction of a new secondary lead smelter

requires extensive permits before construction on a smelter could

begin. Obtaining permits for a new smelter in California would take

more than two years. Because lead is a toxic substance, community

opposition is likely to any new smelters in California, and such

community opposition may prevent the opening of any new smelters in

California.

The proposed Order would remedy the alleged violation by preserving

the competition that would otherwise be lost as a result of Quexco's

acquisition of GNB. The proposed Order requires Quexco to divest the

GNB secondary smelter in California to Gopher Resources, Inc.

(``Gopher''), under the terms of a contract for the sale of that plant

between Quexco and Gopher. The proposed Order allows Quexco to complete

its acquisition of GNB during the sixty (60) day comment period, but

requires that the GNB California smelter be held separate until the

Order becomes final and then requires the sale of the smelter to Gopher

within 10 days of the Order being made final by the Commission.

The sale of the GNB smelter to Gopher is subject to the approval by

the Commission. If the sale to Gopher is not approved by the

Commission, then Quexco must rescind the transaction with Gopher and

divest the GNB

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smelter, within six (6) months after the date on which the Order

becomes final, to an acquirer and in a manner that receives the prior

approval of the Commission.

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. 99-12661 Filed 5-19-99; 8:45 am]

BILLING CODE 6750-01-M