[Federal Register Volume 83, Number 119 (Wednesday, June 20, 2018)]
[Notices]
[Pages 28647-28650]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-13190]
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FEDERAL TRADE COMMISSION
[File No. 171 0230]
CRH plc.; 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 methods of competition.
The attached Analysis to Aid Public Comment describes both the
allegations in the complaint and the terms of the consent orders--
embodied in the consent agreement--that would settle these allegations.
DATES: Comments must be received on or before July 16, 2018.
ADDRESSES: Interested parties may file a comment online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write: ``CRH plc; File No.
1710230'' on your comment, and file your comment online at https://ftcpublic.commentworks.com/ftc/crhconsent by following the instructions
on the web-based form. If you prefer to file your comment on paper,
write ``CRH plc; File No. 1710230'' on your comment and on the
envelope, and mail your comment to the following address: Federal Trade
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite
CC-5610 (Annex D), Washington, DC 20580, or deliver your comment to the
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex
D), Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT: Elyssa Wenzel (202-326-2417), Bureau
of Competition, 600 Pennsylvania Avenue NW, Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 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 thirty (30) 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 June 14, 2018), on the World Wide Web, at
https://www.ftc.gov/news-events/commission-actions.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before July 16, 2018.
Write ``CRH plc; File No. 1710230'' on your comment. Your comment--
including your name and your state--will be placed on the public record
of this proceeding, including, to the extent practicable, on the public
Commission website, at https://www.ftc.gov/policy/public-comments.
Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/crhconsent by following the instructions on the web-based form. If
this Notice appears at http://www.regulations.gov/#!home, you also may
file a comment through that website.
If you prefer to file your comment on paper, write ``CRH plc; File
No. 1710230'' on your comment and on the envelope, and mail your
comment to the following address: Federal Trade Commission, Office of
the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D),
Washington, DC 20580, or deliver your comment to the following address:
Federal Trade Commission, Office of the Secretary, Constitution Center,
400 7th Street, SW, 5th Floor, Suite 5610 (Annex D), Washington, DC
20024. If possible, submit your paper comment to the Commission by
courier or overnight service.
Because your comment will be placed on the publicly accessible FTC
website at https://www.ftc.gov, you are solely responsible for making
sure that your comment does not include any sensitive or confidential
information. In particular, your comment should not include any
sensitive personal information, such as your or anyone else's Social
Security number; date of birth; driver's license number or other state
identification number, or foreign
[[Page 28648]]
country equivalent; passport number; financial account number; or
credit or debit card number. You are also solely responsible for making
sure that your comment does not include any sensitive health
information, such as medical records or other individually identifiable
health information. In addition, your comment should not include any
``trade secret or any commercial or financial information which . . .
is privileged or confidential''--as provided by Section 6(f) of the FTC
Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)--
including in particular competitively sensitive information such as
costs, sales statistics, inventories, formulas, patterns, devices,
manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request, and
must identify the specific portions of the comment to be withheld from
the public record. See FTC Rule 4.9(c). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted on the public FTC website--as legally required by FTC Rule
4.9(b)--we cannot redact or remove your comment from the FTC website,
unless you submit a confidentiality request that meets the requirements
for such treatment under FTC Rule 4.9(c), and the General Counsel
grants that request.
Visit the FTC website at http://www.ftc.gov to read this Notice and
the news release describing it. The FTC Act and other laws that the
Commission administers permit the collection of public comments to
consider and use in this proceeding, as appropriate. The Commission
will consider all timely and responsive public comments that it
receives on or before July 16, 2018. For information on the
Commission's privacy policy, including routine uses permitted by the
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.
Analysis of Proposed Consent Orders To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an Agreement Containing Consent Orders (``Consent
Agreement'') designed to remedy the anticompetitive effects resulting
from CRH plc's (``CRH'') proposed acquisition of Ash Grove Cement
Company (``Ash Grove''). Under the terms of the proposed Consent
Agreement, CRH is required to divest the Trident cement plant and
quarry located in Three Forks, Montana to Grupo Cementos de Chihuahua
SAB de CV (``GCC''). The Consent Agreement additionally requires CRH to
divest two sand-and-gravel plants and one sand-and-gravel pit located
in Omaha, Nebraska to Martin Marietta Materials, Inc. (``Martin
Marietta''). Last, the Consent Agreement requires CRH to divest two
limestone quarries and a hot-mix asphalt plant located in Olathe,
Kansas, as well as an additional limestone quarry and hot-mix asphalt
plant located in Louisburg, Kansas, to Summit Materials, Inc.
(``Summit'').
The Consent Agreement has been placed on the public record for
thirty days to solicit comments from interested persons. Comments
received during this period will become part of the public record.
After thirty days, the Commission will again review the Consent
Agreement and the comments received, and decide whether it should
withdraw from the Consent Agreement, modify it, or make final the
Decision and Order (``Order'').
The Transaction
Pursuant to an Agreement and Plan of Merger dated September 20,
2017, CRH proposes to acquire 100 percent of the existing voting
securities of Ash Grove in a transaction valued at $3.5 billion. The
Commission's Complaint alleges that the proposed acquisition, if
consummated, would violate Section 7 of the Clayton Act, as amended, 15
U.S.C. 18, and Section 5 of the Federal Trade Commission Act, as
amended, 15 U.S.C. 45, by substantially lessening competition in
certain regional markets in the United States for the manufacture and
sale of portland cement, sand and gravel, and crushed limestone. The
proposed Consent Agreement will remedy the alleged violations by
preserving the competition that would otherwise be eliminated by the
proposed acquisition.
The Parties
CRH is a multinational corporation headquartered in Dublin, Ireland
that specializes in manufacturing construction products and materials.
In North America, CRH operates under the name CRH Americas, Inc. (``CRH
Americas'') (formerly Oldcastle, Inc.) in forty-four U.S. states and
six Canadian provinces. CRH Americas operates three cement plants, one
inland import terminal, and four inland terminals. In addition, CRH
Americas operates 419 sand-and-gravel sites, 232 quarries, 315 ready-
mix concrete plants, 457 hot-mix asphalt plants, and 26 product
packaging facilities. CRH Americas operates a cement plant in Three
Forks, Montana, sand-and-gravel operations in Omaha, Nebraska under the
subsidiary Mallard Sand & Gravel Co., and a crushed limestone business
in Olathe, Kansas under the subsidiary APAC-Kansas.
Ash Grove is a closely held corporation headquartered in Overland
Park, Kansas, also specializing in the manufacture of construction
products and materials. Ash Grove is the sixth-largest cement
manufacturer in North America and the second-largest manufacturer west
of the Mississippi River. Ash Grove owns eight cement plants, 23 cement
terminals, 10 fly ash terminals, two deep-water import terminals, 52
ready-mix concrete plants, 20 limestone quarries, 25 sand-and-gravel
pits, and nine product packaging facilities. Ash Grove has a cement
plant in Montana City, Montana, a sand-and-gravel business in Omaha,
Nebraska operating under the subsidiary Lyman-Richey Corporation, and a
crushed limestone business in Olathe, Kansas that operates under the
subsidiary Johnson County Aggregates.
The Relevant Products and Structure of the Markets
The transaction raises competition concerns in three relevant
product markets: the manufacture and sale of portland cement, sand and
gravel, and crushed limestone. In the United States, both parties
manufacture and sell portland cement. Users mix portland cement with
water and aggregates (crushed stone, sand, or gravel) to form concrete,
a fundamental building material that is widely used in residential,
commercial, and public infrastructure construction projects. Because
portland cement has no close substitutes and the cost of cement usually
represents a relatively small portion of a project's overall
construction costs, few customers are likely to switch to other
products in response to a small but significant increase in the price
of portland cement.
Both parties also supply construction-grade sand and gravel, which
are alluvial deposits used in concrete, road base, asphalt,
construction fill, and other construction products. Because sand and
gravel have no close substitutes in the Omaha, Nebraska/Council Bluffs,
Iowa market, it is appropriate to treat sand and gravel as a separate
relevant market because Omaha customers are unlikely to switch
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to other products when faced with a small but significant increase in
the price of sand and gravel.
Both parties also produce crushed limestone, which is used as an
input in cement, concrete, asphalt, metal refining, construction base,
and other construction products. Because there are no close substitutes
for crushed limestone in the Johnson County, Kansas City market, it is
appropriate to treat crushed limestone as a separate relevant market
because Johnson County customers are unlikely to switch to other
products in the event of a small but significant increase in the price
of crushed limestone.
The primary purchasers of portland cement are ready-mix concrete
producers. The primary purchasers of sand and gravel and crushed
limestone are producers of ready-mix concrete and hot-mix asphalt.
Because these products are heavy and relatively inexpensive
commodities, the distance over which they can be trucked economically
is limited. As a result, cement and aggregates markets are local or
regional in nature, though their precise scope depends on a number of
factors, including the traffic density of the specific region and local
transportation costs, and available rail lines. For the purposes of
analyzing the effects of the proposed acquisition on the portland
cement market, the relevant geographic market is the state of Montana.
The geographic market in which to analyze the effects of the proposed
transaction on sand and gravel is the Omaha, Nebraska/Council Bluffs,
Iowa region. The geographic market in which to analyze the effects of
the proposed transaction on crushed limestone is the Johnson County,
Kansas region.
These relevant markets are already highly concentrated. In Montana,
the parties are two of only three suppliers of cement. In the Omaha/
Council Bluffs market, the parties are the two leading suppliers of
sand and gravel. In the Johnson County, Kansas, the parties are the two
largest suppliers of crushed limestone and are located across the
street from each other in Olathe, Kansas.
Entry
Entry into the relevant portland cement, sand and gravel, and
crushed limestone markets would not be timely, likely, or sufficient in
magnitude, character, and scope to deter or counteract the
anticompetitive effects of the proposed transaction. Entry into the
cement market is expensive and slow. The cost to construct a new
portland cement plant of sufficient size to be competitive would likely
cost over $500 million and take more than five years. Building a rail
terminal, though less difficult and expensive than building a plant,
can take more than two years and several million dollars, and is only
an option for firms with cement plants in sufficiently close proximity
to supply the terminal economically.
New entry into the sand and gravel markets may take more than two
years to complete. Sand-and-gravel entrants face significant hurdles
because federal and local permits are required before they can commence
operation, and the permitting process can exceed two years.
Opening a new quarry to mine and process crushed limestone in
Kansas City typically costs $3 to 4 million and takes approximately
five years to accomplish. Additionally, Johnson County has not approved
a new quarry site in more than twenty-five years due to municipal
opposition.
Given the difficulties of entry in these three relevant markets,
entry would not be likely, timely, and sufficient to defeat the likely
anticompetitive effects of the proposed transaction in the relevant
markets.
Effects of the Acquisition
Unless remedied, the proposed merger would likely result in
competitive harm in each of the relevant portland cement, sand and
gravel, and crushed limestone markets. The merger would eliminate head-
to-head competition between the parties in each of these markets and
significantly increase market concentration. For many customers in
these markets, the merger would combine their two closest competitors,
leaving the merged entity with the power to increase prices to these
customers unilaterally. The merger would produce a de facto monopoly in
the supply of sand and gravel in Omaha, leave only two suppliers of
cement in Montana, and consolidate the two largest suppliers of crushed
limestone in Johnson County. Further, if consummated without a remedy,
the Acquisition would enhance the possibility of higher prices in the
Montana cement market through collusion or coordinated action between
the remaining two competitors.
The Consent Agreement
The proposed Consent Agreement eliminates the competitive concerns
raised by CRH's proposed acquisition of Ash Grove by requiring the
parties to divest assets in each relevant market. CRH is required to
divest its cement plant in Three Forks, Montana to GCC. GCC is a
Mexican multinational corporation and experienced producer of cement,
aggregates, and downstream construction materials such as concrete. It
owns seven cement plants in the United States, including one in nearby
Rapid City, South Dakota, and 21 cement terminals. Because the CRH
cement plant in Montana currently sells a significant amount of cement
into Canada through two CRH terminals in Alberta, Canada, and GCC does
not have a presence in Canada, GCC will have the option to use a
portion of the throughput of those CRH terminals for a period of three
years. Additionally, CRH has agreed to purchase, at GCC's option,
cement produced at the plant for distribution in Canada for up to three
years. CRH is required to divest two sand-and-gravel operations and one
pit in Omaha, Nebraska to Martin Marietta. CRH is further required to
divest a hot-mix asphalt plant and two limestone quarries in Olathe,
Kansas, as well as another hot-mix asphalt plant and another limestone
quarry in Louisburg, Kansas, to Summit. Each of the identified buyers
possesses the experience and capability to replace one of the merging
parties as a significant competitor in the relevant markets. The
parties must accomplish the divestitures to these buyers within ten
days after the proposed acquisition is accomplished.
The Commission's goal in evaluating possible purchasers of divested
assets is to maintain the competitive environment that existed prior to
the proposed acquisition. If the Commission determines that any of the
identified buyers is not an acceptable acquirer, the proposed Order
requires the parties to divest the assets to a Commission-approved
acquirer within 90 days of the Commission notifying the parties that
the proposed acquirer is not acceptable. If the Commission determines
that the manner in which any divestiture was accomplished is not
acceptable, the Commission may direct the parties, or appoint a
divestiture trustee, to effect such modifications as may be necessary
to satisfy the requirements of the Order.
To ensure compliance with the proposed Order, the Commission has
agreed to appoint a Monitor to ensure that CRH and Ash Grove comply
with all of their obligations pursuant to the Consent Agreement and to
keep the Commission informed about the status of the transfer of the
rights and assets to appropriate purchasers.
The purpose of this analysis is to facilitate public comment on the
Consent Agreement, and it is not intended to constitute an official
interpretation of the proposed Order or to modify its terms in any way.
[[Page 28650]]
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2018-13190 Filed 6-19-18; 8:45 am]
BILLING CODE 6750-01-P