[Federal Register Volume 64, Number 48 (Friday, March 12, 1999)]
[Notices]
[Pages 12339-12340]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6119]
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FEDERAL TRADE COMMISSION
[Dkt. 9290]
Monier Lifetile LLC, 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 administrative
complaint issued in September 1998 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 May 11, 1999.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., NW, Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: William Baer or Nicholas Koberstein,
FTC/H-374, Washington, DC 20580. (202) 326-2932 or 326-2743.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 3.25(f) of
the Commission's Rules of Practice (16 CFR 3.25(f)), 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 March 2, 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, Sixth Street and Pennsylvania Avenue, NW,
Washington, DC 20580, either in person or by calling (202) 326-3627.
Public comment is invited. 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 for
public comment, from Monier Lifetile LLC (``Monier Lifetile''), Boral
Ltd. (``Boral'') and Lafarge S.A. (``Lafarge''), an agreement
containing consent Order (``Agreement'') designed to remedy the
anticompetitive effects resulting from the formation of Monier
Lifetile, a joint venture that combined the United States concrete
roofing tile manufacturing and marketing operations of Boral and
Redland PLC, a wholly-owned subsidiary of Lafarge. Under the terms of
the agreement, Monier Lifetile, Boral and Lafarge (``Respondents'')
will be required to divest certain concrete roofing tile manufacturing
assets to CRH PLC (``CRH''), an Irish corporation that manufactures
materials and products for use in the construction industry. The
Agreement has been placed on the public record for sixty (60) days for
receipt of comments from 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 Order
(``Order'').
The Commission issued an administrative Complaint on September 22,
1998, charging Boral and Lafarge with acquiring shares in and
contributing assets to a joint venture limited liability corporation,
Monier Lifetile, in violation of 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, in the markets for standard-weight
concrete roofing tile in Southern California, Nevada, Arizona and
Southern Florida.
In September of 1997, Boral and Redland PLC combined their United
States concrete roofing tile operations, Boral Lifetile, Inc. and
Monier, Inc., to form Monier Lifetile. Monier Lifetile was formed as a
limited liability company (LLC) under Delaware state law. The
transaction was not reportable under the Hart-Scott-Rodino (HSR) Act
because the joint venture was formed as an LLC. If this transaction had
been consummated after March 1, 1999, it would have been reportable
under Formal Interpretation 15 of the HSR rules. See 64 FR 5808
(February 5, 1999). Under Formal Interpretation 15, the formation of an
LLC will be reportable it two or more pre-existing, separately
controlled businesses will be
[[Page 12340]]
contributed, assuming the HSR size-of-person and size-of-transaction
requirements are met and at least one of the members will control the
LLC (i.e., have an interest entitling it to 50 percent of the profits
of the LLC or 50 percent of the assets of the LLC upon dissolution).
Such formations will be treated as mergers or consolidations under
Sec. 801.2(d) of the HSR rules.
Concrete roofing tile is the predominant material installed on the
roofs of new homes in the Southwest United States and Southern Florida.
Other roofing materials, such as asphalt shingles and clay tiles, are
not considered substitutes for concrete roofing tile by consumers in
these areas due to aesthetic, cost and structural differences. Because
of the preference of homeowners for concrete roofing tile in these
areas, builders and roofing contractors typically will not switch to
other roofing materials.
The areas where concrete roofing tile is the primary material used
in new home construction, Southern California, Nevada, Arizona and
Southern Florida, are each relevant geographic markets. Tile producers
outside these markets cannot compete in these areas because of the
substantial costs associated with transporting the heavy and fragile
tile into these markets.
Prior to the formation of Monier Lifetile, Boral Lifetile and
Monier were the two largest suppliers of concrete roofing tile in the
relevant geographic markets. Each of the relevant geographic markets is
highly concentrated. In Southern California, Nevada and Southern
Florida, there are only two other significant producers of concrete
roofing tile. In Arizona, there is only one other significant producer
of concrete roofing tile. Additionally, prior to the formation of
Monier Lifetile, Boral Lifetile and Monier each controlled significant
excess production capacity in the Southwest United States and Florida.
As a result, Boral Lifetile and Monier were vigorous, head-to-head
competitors in each of the relevant markets.
The formation of Monier Lifetile has combined the two largest
suppliers in the relevant geographic markets and reduced the number of
concrete roofing tile competitors in Southern California, Nevada and
southern Florida from four to three and the number of competitors in
the Arizona market from three to two. Further, as a result of the joint
venture, Monier Lifetile now controls most of the excess production
capacity serving the relevant geographic markets. By reducing the
number of competitors and placing almost all of the excess production
capacity under the control of a single firm, the joint venture has
substantially increased the likelihood of coordinated interaction and
significantly diminished competition in the relevant markets.
Since the formation of the joint venture, Monier Lifetile has
closed plants and reduced the amount of production capacity serving the
relevant geographic markets. Concrete roofing tile customers are now
reporting significant tile shortages in the relevant markets. Monier
Lifetile has also recently announced a five per cent increase in the
price of its concrete roofing tile. Customers have reported that Monier
Lifetile's competitors in the relevant markets have followed Monier
Lifetile's lead and raised their prices. Concrete roofing tile
customers in the relevant geographic markets have also complained that
the joint venture has reduced the number of product lines and colors
available.
New entry has not deterred or counteracted the anticometitive
effects of the formation of Monier Lifetile nor is it expected to do so
in the future. A new entrant into the concrete roofing tile market
would need to undertake the expensive and time-consuming process of
constructing manufacturing facilities, developing a competitive
product, procuring necessary licenses and approvals, and gaining
customer acceptance. Because of the difficulty in accomplishing these
tasks, new entry could not be accomplished in a timely manner.
Moreover, it is unlikely that new entry would occur at all because of
the high costs involved with entering and producing concrete roofing
tile relative to the potential sales revenues available to a new
entrant.
Since September 1998, this matter has been in pretrial discovery
before an administrative law judge, with trial scheduled to begin on
May 17, 1999. This matter was removed from administrative adjudication
on February 19, 1999, on a joint motion by Respondents and Commission
counsel so that the Commission could consider the Agreement. The
Agreement, if finally accepted by the Commission, would settle the
charges alleged in the Complaint.
The proposed Order effectively remedies the joint venture's
anticompetitive effects in the concrete roofing tile market alleged in
the Complaint by requiring Respondents to divest three concrete roofing
tile manufacturing facilities serving the relevant markets. Pursuant to
the Agreement, Respondents are required to divest the following assets,
collectively known as the ``Tile Manufacturing Assets To Be Divested,''
to CRH within five (5) business days of the date the Commission issues
and serves its decision containing the Order:
(1) The Corona tile manufacturing facility, located at 1745 Sampson
Avenue, Corona, California;
(2) The Casa Grande tile manufacturing facility, located at 1742
South Rooftile Road, Casa Grande, Arizona; and
(3) The Ft. Lauderdale tile manufacturing facility, located at 1900
N.W. 21st Avenue, Ft. Lauderdale, Florida.
CRH, headquartered in Dublin, Ireland, is an international producer
and marketer of construction products and building materials with
worldwide sales of approximately $6 billion annually. CRH operates
seven roof tile plants in Europe. CRH manufactures concrete roofing
tile in the United States through its Westile division located in
Littleton, Colorado.
In the event that Respondents fail to divest the Tile Manufacturing
Assets To Be Divested to CRH within five (5) days from the day the
Order becomes final, the Commission may appoint a trustee to divest
these assets.
In order to ensure the viability and competitiveness of the Title
Manufacturing Assets To Be Divested, the Order requires Respondents,
upon reasonable notice and request by CRH, to provide CRH with six (6)
months of assistance, personnel and training as are reasonably
necessary to enable CRH to manufacture concrete roofing tile in
substantially the same manner and quality employed or achieved by
Monier Lifetile, and to enable CRH to obtain necessary government
approval to manufacture concrete roofing tile. The Order also requires
Respondents to provide the Commission a report of compliance with the
divesture provisions of the Order within thirty (30) days after the
date the Order becomes final, and every sixty (60) days thereafter
until Respondents have fully complied with their obligations under the
Order.
The purpose of this analysis is to facilitate public comment on the
proposed Order, and it is not intended to constitute an official
interpretation of the Agreement and Order or to modify in any way their
terms.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 99-6119 Filed 3-11-99; 8:45 am]
BILLING CODE 6750-01-M