CHI:1176893.3

PUBLIC VERSION

UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

__________________________________________

)

In the Matter of )

)

CHICAGO BRIDGE & IRON COMPANY N.V., )

)

a foreign corporation, )

)

CHICAGO BRIDGE & IRON COMPANY, )

)

a corporation, ) Docket No. 9300

)

and )

)

PITT-DES-MOINES, INC., )

)

a corporation. )

__________________________________________)

RESPONDENTS' REPLY FINDINGS OF FACT 

& CONCLUSIONS OF LAW

VOLUME I
CHI:1176893.3

PUBLIC VERSION

UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

__________________________________________

)

In the Matter of )

)

CHICAGO BRIDGE & IRON COMPANY N.V., )

)

a foreign corporation, )

)

CHICAGO BRIDGE & IRON COMPANY, )

)

a corporation, ) Docket No. 9300

)

and )

)

PITT-DES-MOINES, INC., )

)

a corporation. )

__________________________________________)

RESPONDENTS' REPLY FINDINGS OF FACT 

& CONCLUSIONS OF LAW

VOLUME II
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CHI:1176893.3

TABLE OF CONTENTS

Page

I. WHY THIS MERGER MAY LESSEN COMPETITION .......................................................1

II. THE RESPONDENTS AND THE MERGER .....................................................................20

A. The Respondents................................................................................................20

1. CB&I .....................................................................................................21

2. PDM ......................................................................................................21

B. The Merger........................................................................................................22

III. THE SIX RELEVANT PRODUCT MARKETS ARE LARGE, FIELD-ERECTED LNG, 

LIN/LOX AND LPG STORAGE TANKS AND TVC ..................................................25

A. LNG Tanks Are a Relevant Product Market.......................................................26

B. LIN/LOX Tanks Are a Relevant Project Market ................................................31

C. LPG Tanks Are a Relevant Project Market.........................................................34

D. TVCs Are a Relevant Product Market................................................................37

IV. THE RELEVANT GEOGRAPHIC MARKET IS THE UNITED STATES .......................41

V. THE MERGER WILL LIKELY LESSEN COMPETITION BECAUSE IT CREATES A 

DOMINANT FIRM IN HIGHLY CONCENTRATED MARKETS ..............................42

A. Market Shares Should Be Measured Based on Historical Sales..........................47

B. Market Shares and Concentration in the LNG Market........................................55

C. Market Shares and Concentration in the LIN/LOX Market.................................66

D. Market Shares and Concentration in the LPG Market.........................................79

E. Market Shares and Concentration in the TVC Market ........................................91

VI. THE MERGER WILL LIKELY LESSEN COMPETITION BECAUSE IT ELIMINATES 

PDM AS CB&I'S CLOSEST COMPETITOR AND OTHER FIRMS CANNOT 

EFFECTIVELY REPLACE PDM.................................................................................95

A. Respondents Viewed Each Other as Their Closest Competitor.........................100
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1. Respondents Were the Closest Competitors in the LNG Market ............102

2. Respondents Were the Closest Competitors in the LPG Market ............104

3. Respondents Were the Closest Competitors in the TVC Market ............104

4. Respondents Were Major Competitors in the LIN/LOX Market.............106

B. Industry Members View Respondents as the Closest Competitors....................108

1. LNG Industry Members........................................................................108

2. LPG Industry Members ........................................................................110

3. LIN/LOX Industry Members .................................................................111

4. TVC Industry Members.........................................................................114

C. Competition from PDM Caused CB&I to Lower Prices and Margins...............118

D. Competition from CB&I Caused PDM to Lower Prices and Margins...............121

E. Competition Between Respondents Resulted in Lower Prices for LNG Customers

........................................................................................................................123

F. Competition Between Respondents Resulted in Lower Prices for LPG Customers

........................................................................................................................125

G. Competition Between Respondents Resulted in Lower Prices for LIN/LOX 

Customers........................................................................................................127

H. Competition Between Respondents Resulted in Lower Prices for TVC Customers

........................................................................................................................133

I. Other Firms Cannot Replace PDM Because Entry into the Relevant Markets Is 

Not Easy..........................................................................................................135

1. The Lack of a Fabrication Facility in the United States Impedes Entry.143

2. Revenue Base and Scale Sufficient to Compete for Large Projects Impede 

Entry ....................................................................................................145

3. Lack of Know-How Relating to the Relevant Products Impedes Entry...149

4. Lack of Prior Experience Building Relevant Products Impedes Entry...154

5. Inability to Complete Projects on Schedule Impedes Entry ...................167
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6. Lack of Knowledge about Tank Construction Business Conditions in the 

United States Impedes Entry.................................................................169

7. Entrants Face Higher Sunk Costs Because They Must Buy their Way into 

the Markets ..........................................................................................177

J. Other Firms Cannot Replace PDM Because of Respondents' Competitive 

Advantages......................................................................................................179

1. Respondents Have Unequaled Competitive Advantages in the LNG Market

.............................................................................................................182

2. Respondents Have Unequaled Competitive Advantages in the LPG Market

.............................................................................................................185

3. Respondents Have Unequaled Competitive Advantages in the LIN/LOX 

Market..................................................................................................189

4. Respondents Have Unequaled Competitive Advantages in the TVC Market

.............................................................................................................191

K. Foreign and Domestic Firms Cannot Replace PDM .........................................193

1. CB&I Does Not Foresee Other Firms Restraining Its Market Power....193

2. The Firms Cited by Respondents as Entrants Cannot Replace PDM.....200

3. AT&V Cannot Replace PDM................................................................207

4. BSL Cannot Replace PDM ...................................................................223

5. Chart Industries Cannot Replace PDM ................................................224

6. Chattanooga Boiler & Tank Cannot Replace PDM ..............................226

7. Howard Fabrication Cannot Replace PDM..........................................229

8. Matrix Cannot Replace PDM ...............................................................231

9. Morse Constructors Can Not Replace PDM .........................................237

10. Skanska/Whessoe Cannot Replace PDM...............................................238

11. [xxxxxxxxxxxxxxxxx] Cannot Replace PDM..........................................246

12. TKK Cannot Replace PDM ..................................................................253

13. XL Technologies Cannot Replace PDM................................................256
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L. CB&I's Market Power Extends to All Types of LNG Tanks.............................257

M. CB&I's Post-Merger LNG Project Wins Show that Other Firms Cannot Replace 

PDM................................................................................................................262

N. Respondents' Critical Loss Analysis Is Flawed and Underestimates the 

Profitability to CB&I of a Price Increase in the Relevant Markets....................267

O. Dr. Simpson Established that the Merger Will Likely Lessen Competition.......292

P. Dr. Harris Overlooked Critical Evidence Inconsistent with His Conclusions....300

Q. Industry Members Are Concerned that the Merger Will Likely Lead to Higher 

Prices and Poorer Quality.................................................................................317

R. CB&I and PDM Recognized that the Merger Would Reduce Competition and 

Lead to Higher Margins and Prices ..................................................................326

VII. THE MERGER HAS HAD ACTUAL ANTICOMPETITIVE EFFECTS .......................333

A. The Merger Has Resulted in Higher Prices and Margins in All Markets...........333

1. CB&I Publicly Acknowledges that Competition Has Been Substantially 

Lessened...............................................................................................335

B. The Merger Has Had Actual Anticompetitive Effects in the LNG Market........343

1. The Cove Point, Maryland Project .......................................................343

2. Cove Point Phase 1 – CB&I - PDM Competition Brings Prices Down .344

3. Cove Point Phase 2 – The First Price Increase.....................................348

4. Cove Point Phase 2 – The Second & Third Price Increases..................350

5. Cove Point Phase 3 – The Fourth Price Increases................................357

6. Cove Point – What Could Have Been Absent the Merger......................360

7. The [xx] Projects..................................................................................365

8. A Sole-Source/Turnkey Contract Leads to Higher Prices for Customers

.............................................................................................................366

9. The Absence of Effective Competition Leaves [xxx] with No Choice but to 

Enter Into Sole-Source, Turnkey Negotiations with CB&I ....................374

10. Respondents' Pricing Pattern for Cove Point Compared to [xxx] Pricing 

Analysis Illustrates Why CB&I Can Exercise Market Power ................387
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11. Phase I: PDM Restrained CB&I's Pre-merger Prices...........................389

12. Phase II: Post-merger, CB&I Has Increased Prices.............................396

13. The [xx]/Cove Point Comparison Shows that Foreign Firms Cannot 

Restrain CB&I as Effectively as PDM ..................................................404

14. The Memphis, Tennessee Project: Pre-merger Price Competition Between 

Respondents.........................................................................................410

15. The Memphis, Tennessee Project: Post-Merger Price Increase by CB&I

.............................................................................................................416

16. The Fairbanks, Alaska Project: Post-Merger Price Increase by CB&I .421

17. Comparing Fairbanks' Post-Merger Price with British Columbia Gas' 

Pre-Merger Price.................................................................................428

18. The Dynegy Project: CB&I Attempts to Exercise Market Power...........432

19. The Yankee Gas Project: CB&I Attempts to Exercise Market Power....446

20. Post-Merger LNG Margins Are Substantially Higher than Pre-Merger 

Margins................................................................................................454

C. The Merger Has Had Actual Anticompetitive Effects in the LIN/LOX Market.466

1. The Linde-New Mexico Project: CB&I Raises Prices by 8.7%..............472

2. The Praxair-New Mexico Project 1: CB&I Raises Prices by 8.7%........481

3. The Praxair-New Mexico Project 2: CB&I Raises Prices by 8.7%........483

4. MG Industries: Without PDM, Customers Lose the Benefit of Competitive 

Bidding ................................................................................................490

D. The Merger Has Had Actual Anticompetitive Effects in the TVC Market ........498

1. Spectrum Astro: Pre-Merger, Respondents Compete Vigorously Against 

Each Other...........................................................................................498

2. Spectrum Astro: Respondents Collude to Raise Prices..........................500

3. TRW: Post-Merger Coordination by CB&I Foreshadows Anticompetitive 

Effects..................................................................................................515

4. [xxxxxx]: Pre-Merger Competition Between Respondents Lowers Prices

.............................................................................................................522
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5. Following the Acquisition, CB&I Increased the Price for [xxxxxx]'s 

[xxxxxxxxxx] TVC Project by [xx]%.....................................................528

VIII. CB&I'S "EXITING ASSETS" DEFENSE IS MERITLESS...........................................533

A. Overview.........................................................................................................533

B. PDM Would Have Been Able to Meet its Financial Obligations ......................535

C. Respondents Have Not Shown that PDM Would Not Be Able to Reorganize 

Successfully Under Chapter 11 ........................................................................541

D. PDM Did Not Make Good-Faith Efforts to Elicit Reasonable Alternative Offers

........................................................................................................................541

E. Absent the Acquisition, PDM EC's Assets Would Not Have Exited .................550

IX. DIVESTITURE IS THE PROPER REMEDY FOR THIS ILLEGAL MERGER..............559

A. CB&I Must Be Ordered to Divest and Restore PDM........................................559

B. Divestiture Must Be Complete and Must Include Full Restoration of Both the 

PDM EC and Water Divisions .........................................................................564

C. In Order to Create a Viable, Effective Competitor, the Tribunal Must Provide the 

Divested Entity ("New PDM") with Certain Tangible and Intangible Assets....567

1. A Revenue Base Comparable to PDM's and CB&I's Pre-Acquisition....567

2. Assets and Equipment Used to Manufacture the Relevant Products......575

3. Assets, Equipment And Operational Resources Used to Manufacture More 

Than the Relevant Products..................................................................583

4. A Track Record of Building Tanks Successfully in the United States.....587

5. Customer Approval to Transfer Projects to the Divested Company.......591

6. Key Personnel ......................................................................................593

7. Intellectual Property, Including PDM's Name ......................................597

8. Training and Technical Assistance .......................................................601

9. Additional Safeguards to Ensure that it is Enforced..............................603
CHI:1176893.3

COMPLAINT COUNSEL'S PROPOSED FINDINGS OF FACT

I.

WHY THIS MERGER MAY LESSEN COMPETITION

1. "Mergers are motivated by the prospect of financial gains." Merger Guidelines

§ 0.1.1 The Merger Guidelines "focus on the one potential source of gain that is of concern

under the antitrust laws: market power." (Id.) "Market power to a seller is the ability profitably 

to maintain prices above competitive levels for a significant period of time." (Id.) "The unifying 

theme of the [Merger Guidelines] is that mergers should not be permitted to create or enhance 

market power or to facilitate its exercise." (Id.; Simpson, Tr. 2985).

Response to Finding No. 1:

Complaint Counsel’s finding number 1 is an incomplete recitation of the Merger 

Guidelines and the principles embodied in the Guidelines. The Merger Guidelines note that

“[t]he possible sources of the financial gains from mergers are many, and the Guidelines do not 

attempt to identify all possible sources of gain in every merger.” Further, the Guidelines note

that “[b]ecause the specific standards set forth in the Guidelines must be applied to a broad range 

of possible factual circumstances, mechanical application of those standards may provide

misleading answers to the economic questions raised under the antitrust laws. Moreover,

information is often incomplete and the picture of competitive conditions that develops from

historical evidence may provide an incomplete answer to the forward-looking inquiry of the

Guidelines.” Introduction, Merger Guidelines. Section 0.1 sets forth the full purpose and

underlying policy assumptions of the Guidelines. Merger Guidelines § 0.1.

2. By acquiring Pitt-Des Moines, Inc.'s Water and EC Divisions ("PDM"), Chicago 

Bridge & Iron Company ("CB&I") has eliminated an important restraint on its ability to raise

prices and margins. Other firms cannot replace the competitive void left by PDM's demise.

CB&I's dominant position in highly concentrated markets increases the likelihood that CB&I has 

achieved, and will be able to exercise, market power, either in coordination with other firms or 

 

1

 U.S. Dept. of Justice & Federal Trade Commission, Horizontal Merger Guidelines (1992 rev'd 1997).
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CHI:1176893.3

unilaterally. Indeed, there is evidence that without PDM to discipline it, CB&I has in fact raised 

prices and margins in the relevant markets. CCFF 750-1221.2

Response to Finding No. 2:

Complaint Counsel’s finding number 2 is entirely false, unsupported by evidence, 

and contrary to the weight of record evidence. First and foremost, the evidence is overwhelming 

that there has been both actual entry and that there is potential entry constraining CB&I’s prices. 

(See Harris, Tr. 7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-7.101, 7.118,

7.113) (See FOF 3.68-3.227 (actual entry has occurred in the LNG market); FOF 4.16-4.54 

(actual entry in the LPG market); FOF 5.22-5.71 (new competitors have entered the LIN/LOX 

market); 5.79-5.184 (LIN/LOX customers are satisfied with prices received and available

competitive options)). Second, there is no evidence that CB&I has in fact raised its prices and 

margins; Complaint Counsel’s purported examples of price increases are based on inappropriate 

comparisons, conjecture, and fabrication. (See FOF 7.1-7.41, 3.597-3.641, 5.182-5.211, 7.164 ). 

Complaint Counsel has not and cannot provide a single instance where CB&I has raised prices 

on a firm fixed bid or where a customer has paid a higher price for a product than prior to the

Acquisition.

3. It is undisputed that the relevant product markets in which to analyze the merger 

are large, field-erected: (1) liquefied natural gas storage tanks ("LNG"); (2) LNG import

terminals; (3) LNG peak shaving plants; (4) liquid nitrogen, oxygen and argon storage tanks

("LIN/LOX"); (5) refrigerated liquid petroleum gas storage tanks ("LPG"); and (6) large (over 20 

feet in diameter) thermal vacuum chambers ("TVC"). CCFF 50-94.

Response to Finding No. 3:

Complaint Counsel’s finding number 3 is incorrect because Respondents have

clearly disputed the LIN/LOX market as defined by Complaint Counsel: the liquid nitrogen,

oxygen and argon storage tanks (“LIN/LOX”) market should not include spheres, which are an 

 

2

 "CCFF" refers to Complaint Counsel's Proposed Findings of Fact.
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CHI:1176893.3

entirely different technology and are not a substitute for LIN/LOX tanks. (Harris, Tr. 7301-02). 

There is no basis for including spheres in the LIN/LOX market. (Harris, Tr. 7301-02)

4. It is undisputed that the relevant geographic market in which to analyze the

CB&I-PDM merger is the United States. CCFF 95-98.

Response to Finding No. 4:

Complaint Counsel’s finding number 4 is misleading because while Respondents 

do not dispute that the antitrust market in this proceeding should be the United States, evidence 

relating to competition in the Western Hemisphere and elsewhere in the world is useful for the

purposes of analyzing the CB&I-PDM Acquisition because CB&I’s domestic competitors are

also worldwide competitors offering identical products and services in nearby countries under

similar competitive conditions, and could do so in the United States. (E.g. Harris, Tr. 7214-20).

5. In the LNG and TVC markets, the merged entity's market share is 100%. In the 

LIN/LOX and LPG markets, the merged entity's market share exceeds 70%. CCFF 148-193.

Response to Finding No. 5:

Complaint Counsel’s finding number 5 is false. For example, in the LNG market, 

CB&I lost the Dynegy LNG project; thus CB&I does not have anything approaching a 100%

market share in the LNG market. (Puckett, Tr. 4547; [XXXXXXXXXXX]) (FOF 3.68). AT&V 

presently dominates the LIN/LOX market. (Harris, Tr. 7308). Since the Acquisition, CB&I has 

won only about 18% of the dollars available in the relevant product markets. (Harris, Tr. 7223). 

Further, this proposed finding is irrelevant because the market shares, as calculated by Complaint 

Counsel, are not predictive of future competition; Complaint Counsel calculates market shares

over a span of 13 years, using the same time period across all four markets regardless of admitted 

changes in those markets. Importantly, Complaint Counsel completely ignores entry, which

negates the significance of these market shares, had they been appropriately calculated. (See 

Harris, Tr. 7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-7.101, 7.118, 7.113)
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(See FOF 3.68-3.227 (actual entry has occurred in the LNG market); FOF 4.16-4.54 (actual entry 

in the LPG market); FOF 5.22-5.71 (new competitors have entered the LIN/LOX market); 5.79-

5.184 (LIN/LOX customers are satisfied with prices received and available competitive

options)).

6. CB&I's acquisition of PDM creates a dominant firm in highly concentrated 

markets. In the LNG market, the merger increases the HHI by at least [xx] to [xx]; in the

LIN/LOX market, the merger increases the HHI by at least [xx] to [xx]; in the LPG market, the 

merger increases the HHI by [xx] to [xx]; and in the TVC market, the merger increases the HHI 

by [xx] to 10000. CCFF 146, 160, 180, 193.

Response to Finding No. 6:

Complaint Counsel’s finding number 6 is misleading and/or inaccurate. First, the 

assertion that “CB&I’s acquisition of PDM creates a dominant firm in highly concentrated

markets” is contrary to the weight of the evidence that entry prevents any “dominance” by

CB&I. (See Harris, Tr. 7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-7.101, 

7.118, 7.113). Second, CB&I has won less than 20% of the available dollars in the relevant 

markets since the date of the Acquisition; clearly CB&I is not a “dominant firm.” (Harris, Tr.

7223). Third, the HHIs as calculated by Complaint Counsel are misleading and are not “the best 

indicator of firms’ future competitive significance” as required by section 1.41 of the Merger

Guidelines. (Merger Guidelines § 1.41; Harris, Tr. 7221-29, 7286-87, 7311-13; see United 

States v. Baker Hughes, 908 F.2d 981, 984 (D.C. Cir. 1990); United States v. General Dynamics 

Corp., 415 U.S. 486, 498 (1974)).

7. The Merger Guidelines provide that where "the post-merger HHI exceeds 1800, it 

will be presumed that mergers producing an increase in the HHI of more than 100 points are

likely to create or enhance market power or facilitate its exercise." Merger Guidelines § 1.51(c) 

(emphasis supplied). In all of the relevant markets, CB&I's acquisition of PDM increases the

HHI by a minimum of 3200 and, by a wide margin, above the 1800 threshold necessary to

trigger the presumption of illegality.
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Response to Finding No. 7:

Complaint Counsel’s finding number 7 is misleading because the HHIs as

calculated by Complaint Counsel are not predictive of future competition and therefore do not

trigger the presumption of illegality. (Harris, Tr. 7227; Merger Guidelines § 1.41) (FOF 7.116). 

First, new competitors have entered the U.S. market since the Acquisition. (See Harris, Tr.

7219-21, 7307-08, 7311-12). (FOF 7.108, 7.127, 7.130). 

Second, since the Acquisition, LNG demand in the U.S. has generally shifted

from single-containment to double- and full-containment tanks. (Harris, Tr. 7219-21). (FOF

7.108). This shift has changed the competitive abilities of CB&I relative to new entrants. 

Because foreign companies are more experienced in building full and double-containment tanks, 

they can be expected to have advantages relative to CB&I which Complaint Counsel's historical 

market concentration statistics do not measure. (See Harris, Tr. 7227) (FOF 7.115). Complaint 

Counsel's economist, Dr. Simpson, did not account for these changes in his market share 

analysis, which is significant because it affects Dr. Simpson's HHI analysis. (Harris, Tr. 7221-

22) (FOF 7.114). Further, Dr. Harris noted that, since the Acquisition, CB&I has won only 17-

18 percent of the dollar amounts awarded in the four markets combined. (Harris, Tr. 7223). 

(FOF 7.78). For these reasons, Complaint Counsel's structural analysis is not useful. (Harris, Tr. 

7227-29) (FOF 7.115).

Third, in some cases, the market concentration statistics and other economic

evidence presented by Complaint Counsel were misleading because they contained products

different than the relevant products. For example, the LIN/LOX market included certain spheres. 

Because spheres serve different functions, and are constructed in a different manner, it is

inappropriate to include spheres in this market. (See Harris, Tr. 7301-02) (FOF 7.123).
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Fourth, Complaint Counsel chose to calculate statistics in all four markets using 

data from the same starting point -- 1990 to the date of the Acquisition. Complaint Counsel's 

expert witness, Dr. John Simpson, acknowledged on cross-examination that he had no principled 

basis for choosing this date, other than the fact that 1990 was the earliest data he had available. 

(Simpson, Tr. 3704-05). There is no principled basis for selecting twelve years of data for

purposes of concentration statistics as compared to fifteen or five. Sales in these markets are

sporadic, and a single sale can represent a large percent of market share in any given year. Thus, 

as the Merger Guidelines note, "[t]ypically, annual data are used, but where individual sales are 

large and infrequent so that annual data may be unrepresentative, the Agency may measure

market shares over a longer period of time." (Merger Guidelines, § 1.41). 

The arbitrary nature of the HHIs is underscored by the fact that choosing a

different date achieves a completely different result; picking a different starting point of 1995 or 

1996, vastly different concentration statistics emerge. CB&I did not build an LNG or LPG tank 

in the United States between 1995 and the date of the Acquisition, resulting in a change of zero 

in the HHIs in those markets, and the HHI in the LIN/LOX market is lowered. (See, e.g., 

Simpson, Tr. 3744) (FOF 7.236). In the thermal vacuum chamber market, CB&I has not built a 

thermal vacuum chamber since 1984. (Scorsone, Tr. 5055) (FOF 7.235). Thus, choosing to

calculate HHIs beginning in 1996 results in an HHI change of zero in three of the four markets. 

Under Baker Hughes and Section 1.5 of the Merger Guidelines, an acquisition resulting in zero 

change in the HHI fails to establish a prima facie case. In the LIN/LOX market, even Dr.

Simpson admitted that CB&I's sale by Praxair in 1997 was a significant competitive change, a

fact which would justify beginning the HHI calculation in 1997 after the date of the sale. (See

Simpson, Tr. 3753) (FOF 7.236).
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Finally, while the Merger Guidelines use HHIs as an evaluative tool for mergers, 

the Merger Guidelines are not law and the courts have expressed a high degree of skepticism

regarding this use of HHIs. See Respondents’ Conclusions of Law 7-22; Merger Guidelines §§ 

1.52, 1.521 (noting that market shares are only a starting point).

8. CB&I and PDM were each other's closest competitors. Respondents' ordinary 

course of business records repeatedly and consistently identify each other, to the exclusion of all 

other firms (foreign and domestic), as each other's main competitive threat. CCFF 204-231. The 

testimony of industry participants confirms this intense rivalry. CCFF 232-251.

Response to Finding No. 8:

Complaint Counsel’s proposed finding number 8 is irrelevant. The documents

referred to by Complaint Counsel predate the actual entry and announcements of planned entry

made by competitors indicating planned entry in the relevant markets. (See FOF 3.56). 

9. The record of projects won in the United States by CB&I and PDM reflect their 

positions as the leading firms and closest competitors. Since 1990, CB&I or PDM was the firm 

chosen by nearly every United States customer to build the relevant products. CCFF 146, 151, 

172, 192.

Response to Finding No. 9:

Complaint Counsel’s finding number 9 is inaccurate because since the

Acquisition CB&I has won less than 20% of the dollars available in the alleged product markets. 

(See Harris, Tr. 7342-43). Even prior to the Acquisition, this statement would be false. For

example, in the LIN/LOX market Graver tank had the second highest market share. (Harris, Tr. 

7312). In the thermal vacuum chamber (“TVC”) market, there has been virtually no demand

whatsoever since 1990; thus this finding is irrelevant with respect to the TVC market.

10. Since 1990, no foreign firm has beaten CB&I or PDM in head-to-head 

competition for a project in the United States. CCFF 146, 151, 172, 192. Since 1990, domestic 

firms have beaten CB&I or PDM in head-to-head competition in only a small handful of projects 

in the United States. CCFF 146, 151, 172, 192.
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Response to Finding No. 10:

Complaint Counsel’s finding number 10 is false. First, it is inaccurate to

characterize CB&I’s defeats by domestic firms as a “handful” of projects. In the LIN/LOX

market, for example, AT&V has won three of the five post-Acquisition LIN/LOX projects and 

all three of the LIN/LOX projects on which it bid. (Harris, Tr. 7308). Further, CB&I lost the

Dynegy project on both the EPC and tank portions of the project to foreign competition. (See 

Harris, Tr. 7209-13, 7239-47; Puckett, Tr. 4547) (FOF 3.68). Additionally, Graver tank had the 

second greatest market share in the LIN/LOX market through the 1990s. (Harris, Tr. 7312). 

Clearly, CB&I has been beaten by a foreign firm in head-to-head competition in the United

States and has lost more than a handful of projects to domestic firms.

11. The competition between CB&I and PDM benefitted customers in the form of,

inter alia, lower prices. In order to beat the other, CB&I and PDM strived to lower costs, reduce 

prices aggressively and accept lower margins. CCFF 252-291. This vigorous competition

caused CB&I and PDM to quote prices to customers at comparatively low margins, including at 

times negative margins. CCFF 252-291.

Response to Finding No. 11:

Complaint Counsel’s finding number 11 is irrelevant since there has been entry or 

will be entry sufficient to maintain competition in the alleged product markets. (See Harris, Tr. 

7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-7.101, 7.118, 7.113) (See FOF

3.68-3.227 (actual entry has occurred in the LNG market); FOF 4.16-4.54 (actual entry in the

LPG market); FOF 5.22-5.71 (new competitors have entered the LIN/LOX market); 5.79-5.184 

(LIN/LOX customers are satisfied with prices received and available competitive options)). 

Complaint Counsel has presented no valid evidence indicating that CB&I has in fact raised

prices. (FOF 3.597-3.641, 5.182-5.211, 7.164).

12. In markets where firms submit bids to customers, the price to the customer is

"determined by the cost of the second lowest-cost seller" – historically either CB&I or PDM. 
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Merger Guidelines § 2.21, n. 21. Thus, a merger between close competitors like CB&I and

PDM "could cause prices to rise to the constraining level of the next lowest-cost seller." (Id.)

Response to Finding No. 12:

Complaint Counsel’s finding number 12 is inaccurate for two reasons. First,

Complaint Counsel has offered no evidence supporting its assumptions that CB&I and PDM

were the two lowest cost competitors before the acquisition. The weight of the evidence

suggests that CB&I does not have cost advantages over entrants. (Harris, Tr. 7264, 7273, 7358-

59). Second, in order for this statement to be true, CB&I must have good information regarding 

its competitors’ costs; unless CB&I actually knows its competitors costs, it is unable to raise

prices just below the “next lowest-cost seller.” (Harris, Tr. 7264, 7273, 7358-59). Record

evidence indicates that CB&I does not have good information about its competitors costs;

therefore Complaint Counsel’s finding No. 11 is inaccurate. (See Simpson, Tr. 3073, 3771,

3844-47; Harris, Tr. 7264, 7273, 7358-59; Jolly, Tr. 4761-62; Patterson, Tr. 350-60; Scorsone

Tr. 5010).

13. Respondents' principal defense is that new entry or expansion by existing firms

will replace PDM and deter or counteract any anticompetitive conduct by CB&I. The Merger 

Guidelines require that entry must be timely, likely and sufficient. Merger Guidelines § 3.0. In 

other words, the foreign or domestic entrant must be able to "cause prices to fall to their

premerger levels or lower." (Id.)

Response to Finding No. 13:

Complaint Counsel’s finding number 13 is misleading. First, entry is not a

defense; it is evidence that rebuts Complaint Counsel’s prima facie case, should the court decide 

Complaint Counsel established a prima facie case. Second, the entry proven by Respondents

meets the requirements of the Merger Guidelines. Third, the Merger Guidelines do not have the 

force of law, and are instead intended to guide the Commission in analyzing mergers; therefore it 

is misleading to suggest that the Merger Guidelines “require” anything of Respondents. (E.g., 
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New York v. Kraft Gen. Foods, Inc., 926 F. Supp. 321, 359 n.9 (S.D.N.Y. 1995) (internal

citations omitted). See also, e.g., FTC v. PPG Indus., Inc., 798 F.2d 1500, 1503 n.4 (D.C. Cir. 

1986); Fruehauf Corp. v. FTC, 603 F.2d 345, 353-54 (2d Cir. 1979); Olin Corp. v. F.T.C., 986 

F.2d 1295, 1300 (9th Cir. 1993)).

14. Entry into the relevant markets is not easy. There are numerous and significant 

barriers to entry. CCFF 292-392.

Response to Finding No. 14:

Complaint Counsel’s finding number 14 is patently false and is contrary to the

weight of record evidence indicating that entry is in fact easy. For example, in the LPG market, 

Morse tank was able to succeed in a “hit and run entry” whereby Morse profitably built an LPG 

tank without having ever bid on an LPG tank or bidding on another LPG tank. (Harris, Tr. 7296-

97). In the LNG market, the same barriers to entry identified by Dr. Simpson existed in Trinidad 

where CB&I lost to TKK/AT&V. (Harris, Tr. 7247-55). There is ample actual and potential

entry, which proves ease of entry. (See FOF 3.68-3.227 (actual entry has occurred in the LNG 

market); FOF 4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new competitors have 

entered the LIN/LOX market); 5.79-5.184 (LIN/LOX customers are satisfied with prices

received and available competitive options)). See also RFOF 750-1221. Complaint Counsel’s 

own expert admits that there has been actual entry, which undermines Complaint Counsel’s

assertions that entry is difficult. (Simpson, Tr. 3952-53, 5605, 3913-19) (FOF 7.227, 7.251,

7.252). Contrary to Complaint Counsel’s baseless assertions about barriers to entry, the

evidence overwhelmingly indicates that entry is easy.

15. Respondents' business records and the testimony presented in this case confirm

that CB&I and PDM won the vast majority of projects in the United States because entry barriers 

placed other firms (foreign and domestic) at a competitive disadvantage. CCFF 393-420. CB&I 

acknowledges that this competitive disadvantage persists today, which explains why no firm has 

eroded CB&I's dominant market position or restrained CB&I's market power since the merger. 

CCFF 399 and 400-402.
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Response to Finding No. 15:

Complaint Counsel’s finding number 15 is entirely false. First, since the

Acquisition, CB&I has only won less than 20% of the dollars available in the relevant markets. 

Further, competition has restrained CB&I’s pricing through both actual and potential entry. For 

example, in the LIN//LOX market, AT&V has won the majority of projects. Internal CB&I

emails do indicate that CB&I’s prices have been constrained. (RX 208, RX 627). There is

evidence that CB&I was forced to lower its prices in response to competition. (FOF 4.67-4.70). 

It is absolutely untrue that CB&I has market power and that its prices have not been constrained.

16. Respondents did not present any evidence of a post-merger competitive situation 

where another firm (foreign or domestic) constrained CB&I/PDM's pricing strategy. To the

contrary, the numerous examples of post-merger price and margin increases by Respondents

indicate that other firms, domestic and foreign, have neither deterred nor counteracted

Respondents' exercise of market power. CCFF 750-1221.

Response to Finding No. 16:

Complaint Counsel’s finding number 16 is entirely false. There is evidence that 

CB&I has lowered prices in response to competition and that it has had to keep on its toes in

response to competition. Internal CB&I documents do indicate that CB&I’s prices have been 

constrained. (RX 208, RX 627). There is evidence that CB&I has had to lower its prices in

response to competition. Specific examples where CB&I’s pricing was constrained include a

projects for MG Industries, (FOF 5.151-5.158), Air Liquide, (FOF 5.123-5.125), CMS and

Southern LNG (FOF 3.470-3.480, 3.485-3.486), ABB/Lummus (4.66-4.70) and in Trinidad

(FOF 3.140, 3.327-3.331). It is absolutely untrue that CB&I has market power and that its prices 

have not been constrained.

17. Industry members with first-hand knowledge about the vigorous head-to-head 

competition between Respondents are concerned that this merger will result in higher prices. 

CCFF 711-729. None of Respondents' customer witnesses had the requisite first-hand 

experience with pre-merger competition between CB&I and PDM in the United States to attest to 

the likely competitive effects of the merger.
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Response to Finding No. 17:

Complaint Counsel’s finding number 17 is false and directly contrary to the

record evidence. It is Complaint Counsel’s customer witnesses who had no foundation to testify 

regarding the likely competitive effects of the merger. Complaint Counsel relies on the

testimony of “customer” witnesses who, in some cases, are actually competitors, and who in

some cases are retired, have not purchased the relevant products in a decade, and/or admittedly 

know nothing about present competitive conditions. (See FOF 3.642-3.696, 4.144-4.158, 5.144, 

5.180, 5.181, 5.192, 5.193). Respondents presented the testimony of witnesses who have the

requisite first hand knowledge and experience necessary to testify regarding competition and

prices. (FOF 3.571-3.596, 4.159, 4.160, 5.79-5.86).

18. Respondents' merger planning documents and the testimony in this case

demonstrate that the rationale for the merger was to create a dominant firm with the power to 

raise prices and margins. CCFF 730-749.

Response to Finding No. 18:

Complaint Counsel’s proposed finding number 18 is false; the uncontroverted

record evidence is that the rationale for the Acquisition was to expand CB&I’s resources

generally and to expand its global LNG presence. (Glenn, Tr. 4080-81).

19. Consistent with its dominant market position, and as predicted by industry

participants and Respondents' merger planning documents, CB&I/PDM has in fact raised prices 

and its margins since the merger. CCFF 750-1221.

Response to Finding No. 19:

Complaint Counsel’s finding number 19 is entirely false; there is no evidence that 

CB&I has raised prices since the merger. Complaint Counsel relies on examples of purported

price increases that are either based on inappropriate comparisons of budget estimates,

inappropriate comparisons of different types of projects, or an analysis Complaint Counsel’s own 

expert cannot vouch for. (FOF 3.597-3.641, 5.182-5.211, 7.164). Further, there has been entry 
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or will be entry sufficient to maintain competition in the alleged product markets. (See Harris, 

Tr. 7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-7.101, 7.118, 7.113) (See FOF 

3.68-3.227 (actual entry has occurred in the LNG market); FOF 4.16-4.54 (actual entry in the

LPG market); FOF 5.22-5.71 (new competitors have entered the LIN/LOX market); 5.79-5.184 

(LIN/LOX customers are satisfied with prices received and available competitive options)). (See 

also RFOF 750-1221.)

20. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. CCFF 778-

831.

Response to Finding No. 20:

This finding is inaccurate, misleading, and unsupported by record evidence. 

(RFOF 778-831). As an initial matter, there is no evidence that "competition between CB&I and 

PDM caused" any changes in price on the Cove Point project. Further, this finding relies on

comparisons between budget pricing and firm, fixed prices bids. As Respondents have already

established, such a comparison is highly inappropriate. (See FOF 7.1-7.38). In addition, this

finding is misleading to the extent it implied that any increase in CB&I's actual margin on this

project is related to the Acquisition; such an implication is inappropriate and unsupported by the 

evidence. (See Reply Brief at Part III.)

21. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxx]. CCFF 930-978, 1008-1027.

Response to Finding No. 21:

This finding is inaccurate, mislead, and unsupported by record evidence. (RFOF 

930-978, 1998-1027). In particular, this finding is misleading to the extent it relies on budget
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pricing as evidence of anticompetitive effect. Respondents have already established that budget 

pricing is often rough and inaccurate, and that use of such data for the purpose advanced by

Complaint Counsel is patently improper. (See FOF 7.1-7.38). Comparison of budget pricing to 

fixed, firm priced bids, which Complaint Counsel has attempted to do in this case, only

magnifies the error. (See FOF 7.1-7.38).

22. On three LNG projects for [xxxxxxxxxxxxxxxxxxx], CB&I pressured [xxxx] to 

enter into negotiations for a sole-source arrangement in which [xxxx] may incur higher costs and 

CB&I is likely to earn a higher margin. [xxxx] rationale for doing so included an analysis that 

showed that CB&I's foreign competitor's prices for single-containment LNG tanks were at least 

[xxxxx] higher than CB&I's prices. That same analysis shows PDM as the closest price

constraint on CB&I. CCFF 832-929.

Response to Finding No. 22:

This finding is inaccurate, misleading, and unsupported by credible evidence. In 

fact, the evidence from [xx] is to the contrary. As discussed more extensively in RFOF 832-929, 

this proposed finding is based on a document completely devoid of contextual testimony, which 

was available to Complaint Counsel. None of the conclusions advanced by Complaint Counsel 

in this finding were testified to by [xxx] corporate representative -- [xxxxxxxxxxxxxxxx]. (See

RFOF 832-929).

23. In both the Dynegy and Yankee Gas projects, CB&I attempted to leverage its

competitive advantages compared to other LNG tank suppliers to convince the customers to

accept CB&I as the tank constructor and supplier on terms favorable to CB&I. CCFF 979-1007 

(Dynegy); CCFF 1008-1027 (Yankee Gas).

Response to Finding No. 23:

This finding is inaccurate, misleading, and unsupported by credible evidence. In 

particular, there is no evidence that CB&I has any "competitive advantages compared to other

LNG tank suppliers" that would prevent them from competing on an equal footing with CB&I. 

No significant entry barriers prevent these foreign competitors from entering the market; in fact, 

they have already done so. (See generally Opening Br. at 46-61). Further, this finding is
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misleading to the extent it implies that CB&I has any ability to exercise market power over LNG 

owners. In fact, Dynegy rejected CB&I's suggested turnkey approach to LNG import terminal

development, and selected Skanska/Whessoe as its EPC contractor. Similarly, Yankee Gas is

currently in the process of developing a bid specification for its peakshaving facility; it is

currently considering pre-qualifying foreign competitors such as Skanska/Whessoe and

Technigaz. (See RFOF 979-1007; RFOF 1008-1027).

24. On LIN/LOX projects in New Mexico, Respondents have quoted prices, with

positive margins, that are 8.7% higher than prices for comparable projects awarded to CB&I and 

PDM immediately before the merger. When Respondents competitively bid against each other 

before the merger, their aggressive price reductions often resulted in negative margins on

LIN/LOX projects. CCFF 277-278.

Response to Finding No. 24:

On LIN/LOX projects in New Mexico, Respondents have quoted prices, with

positive margins, that are 8.7% higher than prices for comparable projects awarded to CB&I and 

PDM immediately before the merger. When Respondents competitively bid against each other

before the merger, their aggressive price reductions often resulted in negative margins on

LIN/LOX projects. CCFF 277-278.

Complaint Counsel's finding is false, misleading and fails to rely on any record

evidence. Respondents have also demonstrated that prices have not increased. (See RFOF 1053; 

see also FOF 5.79-5.211). Additionally, LIN/LOX customers have testified that they are

satisfied with the post-Acquisition prices and believe they are in line with pre-Acquisition prices. 

(FOF 5.96, 5.125, 5.182).

25. On a TVC project for Spectrum Astro, immediately after the merger, Respondents 

implemented a price increase that anticipates a 50% increase in margins, from [xx] to [xx]. 

CCFF 1109-1165.
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Response to Finding No. 25:

Complaint Counsel’s finding number 25 is misleading because CB&I re-pricing 

was not a result of the Acquisition. Rather, the original firm fixed price expired after 90 days in 

February, 2001. In November 2001, nearly one year after the original price was submitted to

Spectrum Astro, CB&I provided a new price which included an increase in margin in order to

account for an increase in the risk, increased labor and materials costs, changes in the scope of 

the project, and an attempt to recover some of the un-reimbursed pre-contract costs. Spectrum

Astro admits that this increase was the result of a negotiation, and constituted a common

business dispute. The Acquisition had no impact on the Spectrum Astro re-pricing. (FOF 6.169-

6.202; see also RFOF 1109-1165.) Moreover, the Spectrum Astro project ultimately was

cancelled. Thus, Spectrum Astro never paid any price to CB&I.

26. On a TVC project for [xxxxx], immediately after the merger, Respondents 

implemented a 35% increase from the price quoted by PDM before the merger, from [xx] million 

to [xx] million. CCFF 1208-1221.

Response to Finding No. 26:

Complaint Counsel’s finding number 26 is misleading because it compares a firm 

fixed price provided by PDM in 1999 of $16 million with a rough order of magnitude (rougher 

than budget estimate) price provided by CB&I of $21.6 million in 2002. (FOF 6.154-6.168). 

Budget prices are different from firm fixed prices. Budget prices do not constitute a selling

price. Budget prices are merely provided by suppliers for planning purposes. (FOF 7.1-7.38). 

In the instance of the [xxxxx] 2002 ROM price, the budgetary number of [xxxxxxxxxx] was only 

accurate to a degree of plus or minus 30%. (FOF 6.161; see also RFOF 1208-1221.)

27. Respondents did not present any evidence challenging the accuracy of these price 

and margin increases since the merger.
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Response to Finding No. 27:

Complaint Counsel’s finding number 27 is false. Complaint Counsel neglects to 

acknowledge the undisputed testimony that the [xxxxx] 2002 ROM price was only accurate to a 

degree of plus or minus 30%. (FOF 6.161). Budget prices and firm fixed prices are completely 

different and cannot be compared. (FOF 7.1-7.38).

28. Respondents have also engaged in conduct suggestive of collusion. Before the

companies finalized the merger (and while the FTC was still investigating the merger), on the

TVC project for Spectrum Astro there were impermissible inter-company activities. CCFF

1120-1125. There is also evidence of impermissible communications between Respondents and 

a competing supplier regarding bidding on a TVC project for TRW. CCFF 1174-1178.

Response to Finding No. 28:

Complaint Counsel's finding number 28 is false. Respondents' conduct has not

suggested collusion. The evidence shows that PDM and CB&I both bid the Spectrum Astro job 

competitively and did not communicate in any way prior to the Acquisition with regard to

bidding or pricing on that project. (FOF 6.138-6.153). Furthermore, the evidence shows that 

Respondents did not impermissibly communicate with regard to the TRW budget pricing. In that 

situation, a lower level employee sought to inquire about the use of Howard Fabrication as a

subcontractor on the proposed project, without the knowledge or consent of CB&I's

management. (FOF 6.131; see also RFOF 1120-25, 1174-78.)

29. By proposing a TVC remedy to the Tribunal during the trial, Respondents have

conceded that this merger will likely have anticompetitive effects in the TVC market.

Response to Finding No. 29:

Complaint Counsel’s finding number 29 is false and contrary to well-settled 

principals of law. It is fundamental that an offer of settlement is not an admission of liability. 

Fed. R. Evid. 408. Further, Respondents state that CB&I is a fringe firm in the TVC market and 

the remedy offer proposed by Mr. Glenn is a good faith effort to maintain low pricing and
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competition in a market that has historically only supported the existence of one supplier, i.e.

PDM was the only supplier from 1984 until 1997. (FOF 6.40). Respondents' proposed remedy 

is not a concession of any kind.

30. Respondents have abandoned any claim that the merger will generate significant 

cognizable efficiencies or that any such efficiencies "likely would be sufficient to reverse the

merger's potential to harm consumers in the relevant market." Merger Guidelines § 4.

Response to Finding No. 30:

Complaint Counsel’s finding number 30 ignores evidence from CB&I’s CEO,

Gerald Glenn, that the Acquisition was intended, in part, to achieve efficiencies. (Glenn, Tr.

4080-81).

31. Given that Respondents have not presented an efficiencies defense that the merger 

reduced costs, these post-merger higher profit margins show that prices have increased after the 

acquisition. Post-merger increases in profit margins and prices constitute evidence that a merger 

created market power.

Response to Finding No. 31:

Complaint Counsel’s finding number 31 is false - Complaint Counsel has not

shown a single instance where CB&I has raised price on a firm fixed bid, or a single instance

where a customer paid a higher price. Complaint Counsel’s purported examples of price

increases depend on wholly inappropriate comparisons of actual prices and budget estimates and 

conjecture. (FOF 3.597-3.641, 5.182-5.211, 7.164).

32. Respondents assert an "exiting assets" defense that has never been recognized by 

the Merger Guidelines or any court. In any event, the evidence flatly contradicts Respondents' 

claim. Absent the merger, PDM would have continued as a viable and vigorous competitor

against CB&I. Respondents failed to prove that PDM conducted an exhaustive search for

alternative buyers; and it could not have exited the market in any event, since PDM planned to 

sell the assets, including on-going contracts, to other companies. CCFF 1227-1239.

Response to Finding No. 32:

Complaint Counsel’s finding number 32 is false. First, the court in Olin

recognized the exiting assets defense, but found that the Respondent did not meet the criteria in 
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that case. Olin Corp. v. Federal Trade Commission, 986 F.2d 1295, 1306-7 (9th Cir. 1993). 

Further, the evidence is clear and uncontroverted that PDM would have liquidated its EC

division had it not been acquired by CB&I. (FOF 8.115-8.126; see also RFOF 1227-1239.)

33. Complaint Counsel has demonstrated sufficiently high market shares and

increases in market concentration to trigger the presumption that the CB&I/PDM merger will

likely have anticompetitive effects. Complaint Counsel has also shown that the elimination of

CB&I's closest competitor will likely lessen competition. Respondents have not rebutted this

presumption with proof of ease of entry, cognizable efficiencies or an "exiting assets" defense. 

Although not required to do so, Complaint Counsel has also shown instances of actual

anticompetitive effects. In other words, the evidence establishes that this merger violates Section 

7 of the Clayton Act and Section 5 of the FTC Act.

Response to Finding No. 33:

Complaint Counsel’s finding number 33, which contains no citation and is pure

argument, is patently false. The evidence fails to establish any violation of Section 7 of the

Clayton Act, and instead weighs against a finding of a Clayton Act violation. First, Complaint 

Counsel’s prima facie case depends wholly on market share statistics, which are not predictive of 

future competition. Further, Complaint Counsel persistently ignores the reality that there is both 

actual and potential entry. (See Harris, Tr. 7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF

7.58, 7.92-7.101, 7.118, 7.113) (See FOF 3.68-3.227 (actual entry has occurred in the LNG

market); FOF 4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new competitors have 

entered the LIN/LOX market); 5.79-5.184 (LIN/LOX customers are satisfied with prices

received and available competitive options)). This entry rebuts Complaint Counsel’s prima facie 

case, as does the sophistication of customers in the alleged product markets and the unreliability 

of the market share statistics heavily relied on by Complaint Counsel as well as the bulk of other 

evidence presented at the two month long trial.

34. The explicit terms of the Clayton Act and Supreme Court and FTC precedents

unequivocally require an order of divestiture in this case. Respondents must be ordered to

recreate PDM as a viable competitor. There is substantial evidence on how the divestiture must 

be implemented. CCFF 1283-1375.
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Response to Finding No. 34:

Complaint Counsel’s finding number 34 is unquestionably false. First, there has 

been no Clayton Act violation, thus it is wholly inappropriate to order divestiture in this case. 

Complaint Counsel asks the court to blindly order divestiture despite its failure to present a shred 

of evidence indicating that divestiture would not lessen competition in the relevant markets. 

Complaint Counsel’s own expert admitted that he had not fully considered whether full

divestiture is advisable if there is not a violation in every market. (Simpson, Tr. 5586) (FOF

9.32). Instead, Respondents have presented evidence that a full divestiture would harm

customers and would be inadvisable. (FOF 9.11-9.31). Further, even if there were a Clayton

Act violation, the law is clear that divestiture is not a required remedy; the United States

Supreme Court has made this clear. United States v. E.I. DuPont de Nemours, 353 U.S. 586,

607-08 (1961). The Federal Trade Commission has also recognized this fact. See also In the

Matter of Retail Credit Company, 92 F.T.C. 258-59 (1978); In the Matter of Ekco Prods. Co., 65 

F.T.C. 1163, 126 (1964); In the Matter of The Grand Union Company, 102 F.T.C. 812, 503

(1983).

II.

THE RESPONDENTS AND THE MERGER

A. The Respondents

35. Since 1990, CB&I and PDM have won virtually all of the field-erected LNG,

LIN/LOX, LPG and TVC projects awarded in the United States. CCFF 135, 151, 172, 192.

Response to Finding No. 35:

This finding is misleading and inaccurate as set forth in RFOF 135, 151, 172, and 

192. For example, Graver Tank won a significant number of LIN/LOX projects. (Patterson, Tr. 

478-79) (FOF 5.146). This finding is also irrelevant, as it ignores the fact that AT&V has won 
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three out of four competitively bid LIN/LOX projects since the Acquisition. (Scorsone, Tr.

5018) (FOF 5.78). Finally, CB&I has not won a TVC project since 1984. (Scorsone, Tr. 5055-

56; Glenn, Tr. 4089, 4160; Scully, Tr. 1187-89, 1193; Higgins, Tr. 1276-77) (FOF 6.26).

1. CB&I

36. Among other products and services, CB&I is engaged in the business of

designing, engineering, manufacturing and constructing field-erected LNG, LIN/LOX and LPG 

storage tanks and TVCs in the United States and abroad. (CX 1033 at 6; CX 212 at CB&I-PL 

031711).

Response to Finding No. 36:

This finding is misleading and inaccurate because CB&I has not built or

constructed a TVC project since 1984. (Scorsone, Tr. 5055-56; Glenn, Tr. 4089, 4160; Scully, 

Tr. 1187-89, 1193; Higgins, Tr. 1276-77) (FOF 6.26). As to the rest of CCFF 36, Respondents 

do not dispute the truth of this finding. (FOF 8.2).

37. In 1999, prior to the merger, CB&I had revenues of $674 million; in 2000,

revenues were $612 million; in 2001, after the merger with PDM, revenues were approximately 

$1.081 billion. (CX 1033 at 22). In 1999, CB&I had adjusted earnings before interest, taxes, 

depreciation, and amortization (EBITDA) of $49 million; in 2000, earnings were $46 million; in 

2001, after the merger with PDM, earnings were approximately $89 million. (CX 1033 at 28).

Response to Finding No. 37:

This finding is misleading and inaccurate. For example, CX 1033 at 22 does not 

contain relevant information regarding CB&I's revenues in 1999-2001 or relate to the

proposition asserted. In addition, this finding fails to recognize the impact of CB&I's acquisition 

of Howe Baker, Inc. in December 2000, which accounted for a "tremendous" increase in CB&I 

revenues. (Glenn, Tr. 4403-05) (FOF 8.107).

2. PDM

38. Prior to being acquired by CB&I, Pitt Des-Moines, Inc. ("Pitt Des-Moines") was a 

diversified company with several divisions, two of which were PDM Engineered Construction

(PDM EC) and PDM Water. Both divisions were acquired by CB&I. (CX 328 at CB&I 001253-

CHI).
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Response to Finding No. 38:

This finding is misleading and inaccurate to the extent that Pitt Des-Moines was 

acquired by CB&I. In fact, CB&I acquired only the PDM EC and PDM Water Divisions. (CX 

328 at 001253-CHI) (FOF 8.105). Otherwise, Respondents do not dispute the truth of this

finding.

39. Pitt Des-Moines was a corporation organized and existing under the laws of the

Commonwealth of Pennsylvania, publicly traded on the American Stock Exchange, with its

principal place of business at 1450 Lake Robbins Drive, Suite 400, the Woodlands, Texas, 

77380. (CX 328 at CB&I 001253-CHI; CX 21 at PDM-C 1000003; Byers, Tr. 6732). PDM's 

headquarters were located at 10200 Grogan's Mill Road, Suite 300, the Woodlands, Texas,

77380. (CX 661 at PDM-HOU017554).

Response to Finding No. 39:

Respondents have no specific response.

40. In 1999, Pitt-Des Moines had a total revenue of $629 million and EBIT of $41

million. (CX 520 at TAN 1003289; Scheman, Tr. 2915-2916). In 2000, Pitt-Des Moines had a 

total revenue of $659 million and EBIT of $76 million. (CX 520 at TAN 1003289; Scheman, Tr. 

2915-2916). In 1999, PDM had a total revenue of $281 million and EBIT of $16.1 million. 

(CX 525 at TAN 1000385). In 2000, PDM had a total revenue of $268 million and EBIT of

$0.7 million. (CX 525 at TAN 1000385).

Response to Finding No. 40:

Respondents have no specific response.

41. Among other products and services, PDM was engaged in the business of

designing, engineering, manufacturing and constructing field-erected LNG, LIN/LOX and LPG 

storage tanks and TVCs in the United States and abroad. (CX 522 at TAN 1003371; CX 850 at 

PDM-HOU 0129192-0129195, 0129199; CX 911 at CB&I 028717-HOU -CB&I 028726-HOU).

Response to Finding No. 41:

Respondents have no specific response. (FOF 8.1-8.3)

B. The Merger

42. In August of 2000, CB&I offered $93.5 million for PDM. (CX 521 at TAN

1000328).
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Response to Finding No. 42:

To the extent this finding refers to CB&I's initial offer to purchase PDM,

Respondents have no specific response. This finding is misleading to the extent it refers to

something other than CB&I's initial offer because multiple downward concessions were made by 

PDM given PDM EC's substantial losses in fiscal year 2000. (Byers, Tr. 6789-91, 6793-94; 

Glenn, Tr. 4255-56) (FOF 8.110, 8.112).

43. In late May of 2000, Goldman Sachs, the investment banking firm, valued PDM 

at $68.6 million. (Byers, Tr. 6745-46). Goldman Sachs also believed that a "[r]equest for a

preemptive bid may elicit a full price from a strategic buyer," and listed dozens of potential

buyers who were never called. (CX 520 at TAN 1003292; Scheman Tr. 2915-16). CB&I was a 

preemptive buyer of PDM, and thus, no other prospective buyers were solicited. (Scheman, Tr. 

2938-39).

Response to Finding No. 43:

This finding is misleading and inaccurate. For example, Mr. Byers testified that 

Goldman Sachs placed a "book value" on PDM EC and PDM Water of $68.6 million, but that

book values are not an accurate indicator of PDM's value because book value is a historical

calculation not used for valuation purposes. (Byers, Tr. 6746; RX 23) (FOF 8.28). Further, this 

finding is inaccurate because Goldman Sachs never believed that a "[r]equest for a preemptive

bid may elicit a full price from a strategic buyer" -- neither CX 520 nor Mr. Scheman refer to a 

Goldman Sachs document or Complaint Counsel's asserted proposition. CX 520 is a Tanner & 

Co. document. In addition, Goldman Sachs was never selected as investment banker for PDM. 

(Scheman, Tr. 2914-15, 7911-12, 6907-08; RX 25 at 2) (FOF 8.30). Finally, simply because

CB&I was considered a preemptive buyer does not mean that Tanner continued to evaluate

potential viable purchasers and field inquiries from interested parties. (Scheman, Tr. 6911) (FOF 

8.53). In fact, PDM management began looking at alternatives on how to sell PDM EC and

Water with Tanner's assistance in December 2000. (Byers, 6768-70) (FOF 8.118).
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44. Tanner believed, "rational buyers who were the only people who would make

sense would be unlikely to put up a premium price in light of the fact that they had tough

competition from CB&I." (Scheman, Tr. 2967).

Response to Finding No. 44:

This finding is misleading and irrelevant to the extent that Mr. Scheman's

testimony is taken out of context and is incomplete. Mr. Scheman's complete statement is that 

any potential purchasers would not have paid an irrational price for PDM given the substantial

losses incurred by PDM EC as well as the competitive industry landscape from "CB&I and

others." (Scheman, Tr. 2966-68).

45. On August 29, 2000, CB&I and PDM entered into a letter of intent for CB&I to 

acquire PDM. (CX 21 at PDM-C 1000003).

Response to Finding No. 45:

Respondents do not dispute the truth of this finding. (FOF 8.105).

46. CB&I's earlier offer of $93.5 million for PDM was negotiated downward to $84

million in December of 2000 because of financial losses suffered by PDM EC in 2000. (Byers, 

Tr. 6789-6790). CB&I's purchase price of $84 million was eventually lowered to approximately 

$76 to $77 million because of losses in PDM's foreign subsidiary, PDM Venezuela, that did not 

become apparent until after the transaction was consummated. (Byers, Tr. 6793-6794).

Response to Finding No. 46:

Respondents do not dispute the truth of this finding. (FOF 8.110, 8.112-14).

47. Respondents made their filings under the Hart-Scott-Rodino Act ("HSR") on

September 12, 2000. (CX 56 at PDM-HOU 002331). The initial waiting period under HSR

expired on October 12, 2000. (CX 56 at PDM-HOU 002331).

Response to Finding No. 47:

Respondents have no specific response.

48. On November 12, 2002, this administrative hearing began before the Honorable

D. Michael Chappell, Administrative Law Judge. (Tr. 4). The hearing ended on January 16,

2003. (Tr. 8364).
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Response to Finding No. 48:

Respondents have no specific response.

49. On January 16, 2003, the record in this matter was closed. (Tr. 8364).

Response to Finding No. 49:

Respondents have no specific response.

III.

THE SIX RELEVANT PRODUCT MARKETS ARE LARGE, 

FIELD-ERECTED LNG, LIN/LOX AND LPG STORAGE TANKS AND TVC

50. The relevant product markets in which to analyze the acquisition are field-erected 

LNG storage tanks (individually, or as a component of an LNG import terminal or a LNG peak 

shaving plant), LIN/LOX storage tanks, LPG storage tanks and TVCs.

Response to Finding No. 50:

Complaint Counsel’s finding number 50 is false to the extent that it includes

spheres in the LIN/LOX storage tank market in its complaint.

51. Respondents agree that the relevant product markets are field-erected LNG

storage tanks, LIN/LOX storage tanks, LPG storage tanks and TVCs. Drs. Simpson and Harris 

agree on the relevant product markets. (Simpson, Tr. 2989 (LNG); Harris, Tr. 7192 (LNG); 

Simpson, Tr. 3356-57 (LPG); Harris, Tr. 7280 (LPG); Simpson, Tr. 3416-17 (LIN/LOX); Harris, 

Tr. 7300 (LIN/LOX); Simpson, Tr. 3483 (TVC); Harris, Tr. 7324 (TVC)).

Response to Finding No. 51:

Complaint Counsel's finding number 51 is false to the extent that Dr. Harris was 

explicit in his testimony that he accepted the product markets only for the purposes of his

analysis and that spheres should not be included in the LIN/LOX market. (Harris, Tr. 7301-02, 

7192-95, 7280, 7324).

52. The first step in analyzing mergers and acquisitions is to distinguish between

close and distant substitutes. (Simpson, Tr. 2986). "[T]he definition of the product market seeks 

to distinguish between producers of close substitutes whose actions would have a large effect on

the marketplace and producers of distant substitutes whose actions would have little, if any,

effect on the marketplace" (Simpson, Tr. 2992).
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Response to Finding No. 52:

Respondents have no specific response.

53. The Merger Guidelines define a product market by asking whether a hypothetical 

monopolist of some set of products could profitably increase price by a small but significant

amount, such as 5%. (Simpson, Tr. 2992). Field-erected LNG, LIN/LOX and LPG tanks and 

TVCs comprise relevant product markets if a "small but significant and nontransitory" increase 

in the price of these products does not induce so much substitution to other storage alternatives 

that the price increase would be unprofitable. (Merger Guidelines § 1.11). For each of these

products, there are no economic substitutes to which customers will turn in the face of a "small

but significant and nontransitory" price increase.

Response to Finding No. 53:

Complaint Counsel has not shown that there are no substitutes for the products at 

issue. In fact, there is record evidence that there are substitutes in some markets. For example, 

Mr. Kamrath testified that shop-built LIN/LOX tanks can serve as a substitute for field-erected 

LIN/LOX tanks. (Kamrath, Tr. 1984). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Proulx, Tr. 1928, 1942-43). 

Mr. Scorsone testified that customers have substituted pressure spheres for LPG tanks. 

(Scorsone, Tr. 5170). The underlying assumption made by Complaint Counsel that there are no 

substitutes for the relevant products is contradicted by record evidence.

A. LNG Tanks Are a Relevant Product Market

54. LNG storage tanks are a type of cryogenic tank that stores natural gas or methane 

at a temperature of -260° F. (Kistenmacher, Tr. 879; CX 1074 at CB&I-001243-PLA). Due to 

these very cold temperatures, LNG storage tanks are made of special materials, such as 9%

nickel alloy steel, and are specially designed so that they do not crack. (Kistenmacher, Tr. 881-

82; CX 1074 at CB&I-001245-PLA). LNG tanks are double-walled, with special perlite

insulation between the two shells, and may have some form of concrete containment for safety

reasons. (Kistenmacher, Tr. 881-82; CX 1074 at CB&I-001243-PLA). The outer walls of single 

containment tanks are carbon steel and the inner walls are nine percent nickel steel. (CX 1074 at 

CB&I-001243-PLA).
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Response to Finding No. 54:

The proposed finding is misleading and mischaracterizes the evidence to the

extent that it suggests LNG storage tanks store methane in addition to liquefied natural gas. 

Complaint Counsel cites to Mr. Kistenmacher, who did not testify that LNG tanks store methane 

as an alternative to natural gas. To the contrary, while natural gas contains methane and other

types of gas, the terms "methane" and "LNG" are not used interchangeably. (Kistenmacher, Tr. 

889) (FOF 3.2). In fact, pure methane derived from certain petroleum products "is not natural

gas." (Blaumueller, Tr. 282). Further, Complaint Counsel's citations do not support the

assertions that LNG tanks are "specially designed." In fact, CB&I uses the same construction

steps when it builds LNG tanks as it does when it builds any ambient-temperature flat-bottom 

tank. (Scorsone, Tr. 4885) (FOF 3.26). Similarly, the engineering of an LNG tank does not

differ from the engineering of any cylindrical flat-bottomed tank, as the same processes are used. 

(Rano, Tr. 5894) (FOF 3.28). None of the citations Complaint Counsel provides support the

assertion that the steel and perlite used for LNG tanks are "special." LNG storage tanks are

made of 9 percent nickel which has certain crack arresting properties when containing LNG at 

low temperatures, and is less brittle than carbon steel. (CX 1074 at CB&I-001245-PLA; Glenn, 

Tr. 4109-10) (FOF 3.4). While perlite is often used as insulation for the construction of LNG 

tanks, there are a number of other systems that could be used in place of perlite. (Glenn, Tr.

4110) (FOF 3.4).

55. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxx]. (Price, Tr. 524-525; Kistenmacher, Tr. 879; CX 176 at CB&IPL010926, in camera; CX 162 at CB&I-PL006153; Puckett, Tr. 4566; J. Kelly, Tr. 6260).

Response to Finding No. 55:

Respondents have no specific response.
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56. There are three basic types of LNG tanks: (1) single containment; (2) double

containment; and (3) full containment. (Puckett, Tr. 4541; Bryngelson, Tr. 6170-71). The type 

of LNG tank that is traditionally built in the United States is a single containment tank. (Glenn, 

Tr. 4110-4111). Single containment LNG tanks store LNG in a nine percent nickel steel inner 

tank that is surrounded by a low earthen dike which would contain LNG in case of a leak.

(Puckett, Tr. 4541; Bryngelson, Tr. 6173; CX 1074 at CB&I 001243-PLA). Double containment 

tanks have the same nine percent nickel steel inner tank as a single containment tank, but offer a 

concrete outer tank to contain spillage from the inner tank. (Price, Tr. 530-32; CX 1074 at CB&I 

001243-PLA). Full containment tanks consist of a self-supporting inner tank and the outer tank 

used in a double-containment tank, but also include a concrete roof, so that the inner tank is

completely encapsulated in a concrete shell. (CX 1074 at CB&I 001243-PLA). Full

containment tanks are designed to contain both the spillage of refrigerated liquid and the vapor 

resulting from leakage. (CX 1074 at CB&I 001243-PLA).

Response to Finding No. 56:

While there are three basic types of LNG tanks, there is a trend in the United

States toward the use of double and full-containment LNG tanks for projects currently under

development. (Glenn, Tr. 4112-13; Scorsone, Tr. 4921-22; Izzo, Tr. 6491-92) (FOF 3.11-3.13) 

(see also FOF 3.5-3.7).

57. LNG import terminals are "facilities to receive an LNG tanker, offload LNG into 

LNG storage tanks, take the LNG from those storage tanks over time, vaporize it, pressurize the 

gas, and send it out into a pipeline." (Bryngelson, Tr. 6170). The terminals include storage

tanks, ship loading/unloading facilities, send-out facilities and vapor handling systems. (CX 650 

at CB&I/PDM-H4019758). LNG is stored in the tanks, pumped out, vaporized and injected into 

pipelines for transmission to end users. (CX 853 at PDM-HOU011487).

Response to Finding No. 57:

Respondents have no specific response.

58. LNG peak shaving plants store LNG to provide an emergency reserve of LNG in 

the event that gas customers experience a severe shortage of natural gas. (CX 650 at

CB&I/PDM-H4019758). LNG peak shaving plants consist of a liquefaction unit, where the gas 

is turned into liquid, and LNG storage tanks. (Kistenmacher, Tr. 884-85). In LNG peak shaving 

facilities, natural gas from a pipeline is refrigerated in the liquefaction unit and stored in liquid 

form in an LNG tank during the warmer months when demand and prices are low. (CX 142 at 

CB&I 000241-HOU). As gas demand increases in colder months, the stored LNG is heated,

vaporized and put back into the supply stream to meet heating demand peaks, when prices are

high. (CX 142 at CB&I 000241-HOU; Hall, Tr. 1775-1776).
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CHI:1176893.3

Response to Finding No. 58:

Respondents have no specific response.

59. The evidence demonstrates that a small but significant, nontransitory increase in

the price of a field-erected LNG tank would not prompt customers to switch to alternative

products. (see Price, Tr. 450; Bryngelson, Tr. 6217-6218; Davis, Tr. 1781).

Response to Finding No. 59:

The proposed finding is erroneously cited. Neither Mr. Price, nor any other

witness, ever testified at page 450 regarding the proposed finding. Further, neither Mr. Davis, 

nor any other witness, ever testified at page 1781 regarding the proposed finding. Respondents 

have no further specific response.

60. There are no economical alternatives to using field-erected LNG tanks for storing 

LNG. (CX 1074 at CB&I001243-PLA; see also Price, Tr. 540; Bryngelson, Tr. 6217; Davis Tr. 

3186; Hall, Tr. 1781, 1786; JX 21 at 47-48 (Andrukiewicz, Dep.)).

Response to Finding No. 60:

The proposed finding does not contain accurate citations, and is thus, not

supported by the record evidence. First, JX 21 was never admitted into evidence. Second, the 

citations to Mr. Bryngelson's testimony and Mr. Davis' testimony do not support the proposed

finding. (Bryngelson, Tr. 6217; Davis, Tr. 3186). Mr. Hall's testimony also does not support the 

proposed finding, as he testified about various economic alternatives to building a peakshaving 

facility, not an LNG tank. (Hall, Tr. 1781).

61. A 5-10% price increase "translates into maybe a 4 or 5 increase – percent increase 

in overall cost, which would translate into a couple of pennies per mm Btu that we would have to 

charge the customer, and that's something that can probably be absorbed by the customer and by 

our profit margin." (Bryngelson, Tr. 6217-18).

Response to Finding No. 61:

Respondents have no specific response.

62. LNG tanks comprise about half of the cost of a peak shaving plant and about onequarter to one-half of the cost of an import terminal. (Bryngelson, Tr. 6215-16; CX 1185 at
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CB&I-PL045968). Thus, a 10% increase in the price of an LNG tank would result in no more 

than a 5% increase in the price of a peak-shaving plant or an import terminal. (Bryngelson, Tr. 

6217-18). A price increase of this size is unlikely to make or break a project. (Id.)

Response to Finding No. 62:

The proposed finding is misleading and is not supported by the citations. While 

Mr. Bryngelson testifies about import terminals, he never testified about the cost of a peak

shaving facility. (Bryngelson, Tr. 6215-18). CX 1185 likewise does not discuss the cost of peak 

shaving facilities. Further, at least one customer would have reconsidered its decision to build an 

LNG peakshaving facility in 1994 if the bid prices increased. (Hall, Tr. 1785).

63. Luke Scorsone, President of CB&I Industrial and former President of PDM-EC, 

could not cite a single instance in which a potential customer of an LNG tank tried to get a lower 

price by threatening to switch to an alternative to an LNG tank. (Scorsone, Tr. 2845).

Response to Finding No. 63:

Respondents have no specific response.

64. Respondents' documents focus exclusively on competition with other fielderected LNG tank builders rather than on competition from suppliers of alternative products. 

(See, e.g., CX 1185 at CB&I-PL045968; CX 227 at CB&I-PL045127-5133; CX 184 at CB&IPL012440-2441; CX 259 at CB&I-H003002; CX 94 at PDM-HOU017580; CX 107 at PDMHOU005016).

Response to Finding No. 64:

Respondents have no specific response.

65. The large tanks required for LNG storage are much too large practically to shopfabricate and ship to the site. (Andrukiewicz, Tr. 6697-98). Shop-fabricated tanks cannot

provide the storage levels required for LNG facilities. A shop-fabricated tank provides less than 

1% of the storage that a field-erected LNG tank provides. (RX 6 at CB&I-PL 031593). Shopbuilt tanks have size limitations and are "not a direct substitute for larger quantities of LNG." 

(Davis, Tr. 3184). LNG tanks designed to hold above a certain volume of LNG must be fielderected. (Blaumueller, Tr. 287). The largest shop-built tanks "would pale in comparison to field 

tanks." (Davis Tr. 3184-85). For example, 420 shop erected tanks would be required to replace 

one large LNG tank. (Price, Tr. 536-37).

Response to Finding No. 65:

Respondents have no specific response.
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CHI:1176893.3

66. It is not economic to use multiple shop-built LNG tanks as a substitute for one

field-erected LNG tank. (Kistenmacher, Tr. 880). El Paso has not considered shop-built LNG 

tanks for the LNG imports terminals it is planning because the storage volumes are too large.

(Bryngelson, Tr. 6220).

Response to Finding No. 66:

Respondents have no specific response.

B. LIN/LOX Tanks Are a Relevant Project Market

67. LIN/LOX/LAR tanks are field-erected cryogenic tanks that store various liquid

gas products including hydrogen, oxygen, nitrogen, argon and helium at cryogenic temperatures, 

typically at -300°F or lower. (CX 650 at CB&I/PDM-H4019758).

Response to Finding No. 67:

Respondents do not dispute the truth of the proposed finding. (FOF 5.1-5.2).

68. LIN/LOX tanks typically hold 400,000 to 1,000,000 gallons and cost $500,000 to 

$1 million each. (CX 170 at CB&I-PL009650).

Response to Finding No. 68:

Respondents do not dispute the truth of the proposed finding.

69. The tanks typically include an inner and outer shell of steel material. (JX 37 at 13 

Newmeister, Dep.)). The inner tank is made of stainless steel to withstand cryogenic

temperatures without becoming brittle and cracking. (Kistenmacher, Tr. 835). Between the two 

shells is perlite insulation. (Kistenmacher Tr. 833-834). LIN/LOX tanks have dome roofs,

safety relief valves and nozzles that connect to piping and other equipment. They are built to

withstand wind and seismic conditions. (Kistenmacher, Tr. 864).

Response to Finding No. 69:

Respondents do not dispute the truth of the proposed finding. (FOF 5.2-5.5).

70. LIN/LOX tanks are an essential part of integrated air separation facilities. Air

separation plants take ambient temperature air and cool it down to a temperature around -300°F, 

and through a distillation process separate air into its liquefied elements: nitrogen, oxygen, and 

argon. (Kistenmacher, Tr. 825-26; Patterson, Tr. 338).

Response to Finding No. 70:

Respondents do not dispute the truth of the proposed finding. (FOF 5.6-5.9).
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CHI:1176893.3

71. The evidence demonstrates that a small but significant nontransitory increase in

the price of a field-erected LIN/LOX tank would not prompt customers to switch to alternative 

products. (Kistenmacher, Tr. 839-940; see also Hilgar, Tr. 1385 (unaware of any substitutes to a 

field-erected LIN/LOX tank)).

Response to Finding No. 71:

Complaint Counsel's proposed finding of fact is vague, inaccurate, and

misleading. First, Dr. Kistenmacher's testimony does not support Complaint Counsel's proposed 

finding. Dr. Kistenmacher actually testified, over pages 839-840, that (1) shop fabricated tanks 

may at times be utilized in lieu of field erected tanks, and (2) the decision to utilize a particular 

shop fabricated or a field erected tank turns on the volume of storage needed for the facility and 

not an increase or decrease in the going rate for field erected LIN/LOX tanks. (Kistenmacher, 

Tr. 839-840).

Complaint Counsel's citation of Mr. Hilgar's testimony on this point only bolsters 

Dr. Kistenmacher and other LIN/LOX tank customer's testimony regarding when it is practical to 

use shop built tanks over field erected tanks. Mr. Hilgar testified that for some tanks a shop built 

tank may be appropriate and that the reason that larger tanks are field-erected stems from the

feasibility of transporting such a large object. (Hilgar, Tr. 1385).

Moreover, additional LIN/LOX customers, not cited by Complaint Counsel for

this finding, name shop fabricated tanks as "substitutes" for field-erected LIN/LOX tanks. 

(Kamrath, Tr. 1984). David Kamrath testified that shop fabricated tanks are typically used as

substitutes for field erected tanks in smaller capacities. Mr. Kamrath testified that any limit on 

the ability to substitute shop fabricated tanks for field erected tanks was due to shipping concerns 

generated from shipping excessively large tanks. This concern was echoed by other customers in 

the market. (Patterson, Tr. 343-343; Hilgar, Tr. 1385).
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72. Field-erected tanks are used in industrial applications that require large amounts

of storage capacity. In these applications, it is not economic to use shop-built LIN/LOX tanks. 

(JX 37 at 33 (Newmeister, Dep.)).

Response to Finding No. 72:

Complaint Counsel's proposed finding is inaccurate and overbroad. While it is

not disputed that field erected tanks are used in "industrial applications that require large

amounts of storage capacity," it is inaccurate and overbroad to conclude that it is not "economic" 

[sic] to use shop built LIN/LOX tanks in all industrial applications. In fact, it may be

economical to use shop built tanks in depending on the total storage volume needed for a

particular facility. (Kamrath, Tr. 1984; Hilgar, Tr. 1385; Kistenmacher, Tr. 838-839).

73. Shop-fabricated LIN/LOX tanks can store up to 80,000 gallons of liquid. (Hilgar, 

Tr. 1385). If a company tried to use shop-erected tanks for applications that require large

amounts of storage, it would need to use many smaller tanks, instead of one large, field-erected 

LIN/LOX tank. (Kistenmacher, Tr. 838; JX 37 at 33 (Newmeister, Dep.)). The cost of multiple 

shop-built tanks would be higher than the cost of one field-erected tank that could store the same 

amount of product. Including the cost of attaching all of the piping for connecting multiple

shop-built tanks, the increased cost would be "astronomical." (Kistenmacher, Tr. 838-39).

Response to Finding No. 73:

Complaint Counsel's proposed finding is inaccurate and overly broad. The

proposed finding is overbroad because in some cases (depending upon the volume of storage

needed) shop built tanks can be used as a substitute to field erected tanks in order to store

LIN/LOX/LAR for industrial applications. This fact is supported by at least three different

customers' testimony. (Kamrath, Tr. 1984; Hilgar, Tr. 1385; Kistenmacher, Tr. 838-839) (RFOF 

71).

74. Air Products buys only field-erected LIN/LOX tanks for projects requiring

storage of large volumes of liquid. (Hilgar, Tr. 1385). Air Products is not aware of any

substitute for LIN/LOX tanks. (Hilgar, Tr. 1385-86).
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Response to Finding No. 74:

The proposed finding is vague, ambiguous, and misleading. Air Products'

representative, Joseph Hilgar, specifically testified that Air Products would purchase shop built 

LIN/LOX tanks for projects for storage of liquid gas below 80,000 to 100,000 gallons in volume. 

(Hilgar, Tr. 1385). To the extent that Complaint Counsel asserts that shop built LIN/LOX tanks 

are never viable substitutes for field erected LIN/LOX tanks the testimony of Hilgar is not

helpful. Hilgar's testimony is more general than that. Hilgar states that there is no substitute for 

LIN/LOX tanks that he is aware of, not that shop built tanks are never substitutes for field-erected 

tanks. (Hilgar, Tr. 1385) (emphasis added).

75. A small but significant, nontransitory increase in the price of field-erected 

LIN/LOX tanks would have no impact on demand for field-erected LIN/LOX tanks because of

the large cost differential with shop-built LIN/LOX tanks. (Kistenmacher, Tr. 839; Hilgar, Tr.

1385).

Response to Finding No. 75:

The proposed finding is overbroad and misleading because it states that changes 

in the price of field erected LIN/LOX tanks would never effect the demand of field-erected 

LIN/LOX tanks because they are always far more expensive than shop built tanks. This

statement is overbroad. In fact, the testimony of Complaint Counsel witnesses Mr. Hilgar, Mr. 

Kamrath, and Dr. Kistenmacher all support the fact that at certain volume levels shop built tanks 

are viable substitutes for field-erected tanks. (Kamrath, Tr. 1984; Hilgar, Tr. 1385;

Kistenmacher, Tr. 838-839) (See also RFOF 71-74).

C. LPG Tanks Are a Relevant Project Market

76. LPG tanks field-erected, refrigerated tanks that store liquefied gases such as

propane, butane, propylene and butadiene at refrigerated temperatures of around -50° F. 

(Warren, Tr. 2275, 2306; CX 258 at CB&I-H001793; CX 650 at CB&I/PDM-H 4019758; CX

993 at PDM-HOU021479).
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Response to Finding No. 76:

Respondents do not dispute the truth of this finding. (FOF 4.1).

77. LPG customers are oil and petrochemical companies, such as Marathon and

Enron; owners of LPG terminals, such as Sea-3 and CMS Energy, that import/export LPG and 

transfer the LPG between ships and storage tanks via pipelines; and EPC contractors, such as

Fluor, who subcontract tank suppliers to build LPG tanks for larger facilities. (CX 993 at PDMHOU-021484).

Response to Finding No. 77:

Respondents have no specific response to the extent this finding also includes

additional companies such as Intercontinental Terminals Co. and Texaco. (See, e.g., FOF 4.2-

4.6).

78. The evidence demonstrates that a small but significant, nontransitory increase in

the price of a field-erected LPG tank would not prompt customers to switch to alternative

products.

Response to Finding No. 78:

This finding is wholly unsupported by any record evidence, misleading and

irrelevant as stated. Complaint Counsel fails to cite any record evidence for this conclusion. To 

the extent that any record evidence does exist, this finding lacks foundation, reliability, is

conclusory in nature and represents improper argument.

79. Field-erected LPG tanks can hold substantially larger volumes of LPG than shopbuilt tanks. (RX 778 at 46-47 (Crider, Dep.)).

Response to Finding No. 79:

This finding is misleading because Mr. Crider simply testified that shopconstructed tanks are smaller in volume, and were not used on the Ferndale LPG project. 

(Crider, Tr. 6719-20). Further, not all field-erected tanks hold "substantially larger volumes" of 

product than shop-built tanks. (See generally N. Kelley, Tr. 7093-94).

80. Because field-erected tanks can hold a larger volume of LPG, it allows LPG

customers to import and export LPG at a faster rate, and minimizes the amount of money
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customers spend to hold a ship while the LPG is being transferred. (RX 778 at 26-27 (Crider, 

Dep.)).

Response to Finding No. 80:

This finding is misleading to the extent that Mr. Crider's testimony relates solely

to Texaco's purpose in pursing the Ferndale LPG expansion project. (Crider, Tr. 6708-10). 

Moreover, this finding is misleading because not all field-erected tanks hold a large volume of

LPG product. (See RFOF 79).

81. Shop-built pressurized tanks (also known as bullets) and field-erected pressure

spheres are not economic substitutes for an LPG tank when storing large volumes. (Scorsone, 

Tr. 5170-71; Crider, Tr. 6719-20-1; JX 27 at 32 (N. Kelley, Dep.)). For some chemicals such as 

butadeine, storage tanks must be refrigerated to keep the chemical from polymerizing. (JX 27 at 

38-39 (N. Kelley Dep.). For such chemicals an unrefrigerated pressure sphere (or bullet) is not a 

substitute for an LPG tank.

Response to Finding No. 81:

This finding is misleading and inaccurate for a variety of reasons. Specifically,

Mr. Scorsone testified that for "LPG, from time to time customers will evaluate whether

refrigerated storage, a relevant product in this case, or pressure storage could be an alternative." 

(Scorsone, Tr. 5170-71). Mr. Scorsone further testified that sometimes, shop-erected tanks are 

less expensive to the customer given the circumstances of the project. (Scorsone, Tr. 5171). 

Moreover, Complaint Counsel's assertion that for certain chemicals, unrefrigerated pressure

storage is not a substitute for an LPG tank is unsupported by any record evidence. In fact, ITC

stores butadiene in a semi-refrigerated sphere pressure vessel. (N. Kelley, Tr. 7097-98). The

refrigeration of butadiene at certain temperatures, namely minus 20 degrees, would be too cold 

and create a vacuum. (N. Kelley, Tr. 7098).

82. To adopt a storage solution for 400,000 barrels of LPG based on multiple shopbuilt LPG pressure spheres would cost approximately three times the amount of a storage

solution based on a field-erected LPG tank. (RX 778 at 46-47 (Crider, Dep.)).
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Response to Finding No. 82:

This finding is misleading because it is based on one LPG project in 1994 under a 

specific set of circumstances. Moreover, this finding is irrelevant to today's market and

circumstances in the industry. In fact, under certain circumstances, a shop-built LPG pressure

sphere would cost less than a field-erected LPG tank. (Scorsone, Tr. 5171).

83. PDM EC's former president, Mr. Scorsone, who has worked in the tank industry

for many years, has never seen a customer switch from field erected LPG tanks to shop-built 

pressurized tanks to obtain a lower price. (Scorsone, Tr. 5170-71).

Response to Finding No. 83:

This finding is inaccurate and misstates Mr. Scorsone's testimony. Mr. Scorsone 

stated that "LPG, from time to time customers will evaluate whether refrigerated storage, a

relevant product in this case, or pressure storage could be an alternative, so I know throughout 

my career I've had discussions of that, but I can't recall specifically with whom, but that is a

trade-off which is commonly done." (Scorsone, Tr. 5170). Mr. Scorsone further testified that 

"often customers have needs that are on the cusps of field-erected versus shop-built and

sometimes shop-built may be less expensive to that customer given the circumstances of the

project." (Scorsone, Tr. 5171).

D. TVCs Are a Relevant Product Market

84. A TVC is a large metal enclosure used to simulate the vacuum of space for the

purpose of testing satellites. During a test, air is pumped out of the enclosure and, within the

enclosure, liquid or gaseous nitrogen circulates through pipes to heat or cool the interior

environment. Controls allow users to adjust the temperature and vacuum conditions inside the

enclosure so that satellites can be tested in a space-like environment. (Thompson, Tr. 2039-40). 

Temperatures simulated within the chamber can range "from minus 180 degrees C to plus 150 

degrees C" and the vacuum can range from 1 x 10-6 torr to 1x10-8 torr. (Higgins, Tr. 1262;

Scully, Tr. 1143). TVCs range in size from 20 feet in diameter to 45 feet in diameter. (Higgins, 

Tr. 1264).
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Response to Finding No. 84:

Complaint Counsel misquotes the testimony of Higgins. (See Higgins, Tr. 1264). 

The range in size of field-erected TVC's is not limited to 20 feet to 45 feet in diameter, nor does 

Higgins testify that such a range exists. (See Higgins, Tr. 1264). With the exception of the last 

statement above, Respondents do not dispute the facts contained in this statement. (See RFOF 

6.1-6.10).

85. The customers of TVCs are satellite manufacturers and government agencies,

such as NASA. TVCs are used to test satellites purchased by the Department of Defense, NASA 

and commercial buyers. (Neary, Tr. 1420; Glenn, Tr. 4074-75; see also CX 1196 at PDMHOU011524-1525 (list of PDM customers)).

Response to Finding No. 85:

Respondents do not dispute the facts contained in this statement, except to note

that field-erected TVC customers such as Boeing, Raytheon, Spectrum Astro and TRW are

sophisticated aerospace companies. (See RFOF 6.68-6.90).

86. "Customers are typically testing satellites costing $50MM to $200MM in thermal 

vacuum chambers costing $5MM - $20MM." (CX 212 at CB&I-PL031718). The satellites sold 

by TRW range in value from $750 million to $1.5 billion, while those sold by Spectrum Astro, a 

smaller satellite manufacturer, range in value from $10 million to $55 million. (Neary, Tr. 1420-

21; Thompson, Tr. 2038).

Response to Finding No. 86:

Respondents do not dispute the facts contained in this statement.

87. The evidence demonstrates that a small but significant nontransitory increase in

the price of a TVC would not prompt customers to switch to alternative products. CCFF 88.

Response to Finding No. 87:

This finding is inaccurate, because alternatives to field-erected TVCs do exist,

and customers have used them. (See RFOF 6.65-6.67). For example, [xxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxx]
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88. TVCs are the only satellite testing equipment capable of simulating the vacuum

and thermal conditions of outer space. (Higgins, Tr. 1262-63). Other testing chambers are not 

substitutes for TVCs because they only simulate other conditions. (Scully, Tr. 1139; Proulx, Tr. 

1729). Satellite customers require that manufacturers test their satellites in TVCs. (Neary, Tr. 

1424).

Response to Finding No. 88:

This finding is misleading to the extent that it suggests shop-erected TVCs are not 

substitutes for field-erected TVCs. Satellite sizes are shrinking, rendering the large, field-erected 

TVCs obsolete, because smaller satellites can be tested in smaller shop-erected chambers. (See

RX 204 (state of mind)). The predominant number of satellites built in the future will be small 

enough to be tested in existing shop- and field-erected TVCs. (Scully, Tr. 1203-04). Existing 

large, field-erected TVCs and smaller shop-erected TVCs should be adequate to test these

satellites in the future. (See Scully, Tr. 1203-04) (FOF 6.22-6.25).

89. Luke Scorsone, President of CB&I Industrial and former President of PDM EC, 

could not recall an instance in which a potential customer of a TVC tried to get a lower price by 

threatening to switch to an alternative. (CX 646 at 76-77 (Scorsone, IHT)).

Response to Finding No. 89:

Respondents have no specific response.

90. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 265 at CB&IH007057; see CX 1202 at PDM-HOU1005348, in camera; CX 212 at CB&I-PL031709-1724; 

CX 1196 at PDM-HOU011519-1532).

Response to Finding No. 90:

These documents state that thermal vacuum chambers are a product, however,

references in business documents do not account for the legal requirements in defining an

antitrust relevant market.

91. Shop-built TVCs are not economic substitutes for field-erected TVCs. Thermal

vacuum chambers that are too large to transport from a fabrication shop to the customer's site

must be field-erected. (Neary, Tr. 1421-22; Gill, Tr. 186-87; Glenn, Tr. 4064; JX 37 at 88

(Newmeister, Dep.)). At [xxxxxx], "90 percent of the time, most assembled satellites do require 
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testing in field fabricated rather than [shop-fabricated thermal vacuum chambers]." (Proulx, Tr. 

1727).

Response to Finding No. 91:

This may have been true in the past. However, this is not true today because of

the miniaturization of satellites. (See FOF 6.22-6.25).

92. The construction of a shop-fabricated thermal vacuum chamber is "markedly

different" from the construction of a field-erected thermal vacuum chamber. (Scully, Tr. 1101-

02; Gill, Tr. 235). "In shop-built chambers, all of the equipment and capability, personnel

capability, lies within the confines of the shop." (Scully, Tr. 1103). In contrast, field-erected 

chambers require a crew that "virtually lives in the field for elongated periods of time.... It's a

vastly different technology than what a shop-built chamber requires." (Scully, Tr. 1103).

Response to Finding No. 92:

Some shop-built TVCs still require field-erection, including for example, the

small field-erected chambers being built by XL/Votaw for Raytheon. (Hart, Tr. 406-07; See

RFOF 6.10).

93. Satellites above a certain size cannot be tested in shop-fabricated thermal vacuum 

chambers. (Scully, Tr. 1139; Neary, Tr. 1425). Consequently, shop-fabricated thermal vacuum 

chambers are not an alternative to large, field-erected thermal vacuum chambers for testing large 

satellites. (Scully, Tr. 1140).

Response to Finding No. 93:

Respondents do not dispute this finding except to note that large satellites are

being phased out because of miniaturization. (FOF 6.11-6.16, 6.22-6.25). Complaint Counsel

ignores the evidence of miniaturization within the satellite industry, which is driving the size of 

satellites down and allowing smaller, shop-erected TVC's to serve as substitutes for larger, fielderected TVCs. (See RFOF 6.22-6.25, 6.65-6.67).

94. Other products, such as "thermal cycling chambers" and "altitude chambers" are 

not functional equivalents because they cannot mimic the conditions a satellite will face in space. 

(Neary, Tr. 1463-1464; see Scully, Tr. 1135-1139).
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Response to Finding No. 94:

Respondents do not dispute the that "thermal cycling chambers" and "altitude

chambers" are not functional substitutes.

IV.

THE RELEVANT GEOGRAPHIC MARKET IS THE UNITED STATES

95. The parties agree that the relevant geographic market in which to analyze the

merger is the United States. Drs. Simpson and Harris agree that the relevant geographic market 

in which to assess the impact of the acquisition is the United States. (Simpson, Tr. 3035 (LNG); 

Harris, Tr. 7192 (LNG); Simpson, Tr. 3361-3362 (LPG) (citing CX 116); Harris, Tr. 7280

(LPG); Simpson, Tr. 3421 (LIN/LOX); Harris, Tr. 7300-7301 (LIN/LOX); Simpson, Tr. 3488

(TVC); Harris, Tr. 7324 (TVC)).

Response to Finding No. 95:

Complaint Counsel's finding number 95 is incomplete because it fails to include

Dr. Harris' qualification that technically, under the guidelines, every single project is a separate

antitrust market. (Harris, Tr. 7192, 7301-02, 7280, 7324).

96. By definition, field-erected LNG, LIN/LOX and LPG storage tanks and TVCs

must be built at customers' sites in the United States. "LNG tanks are purchased as part of a

larger facility that is designed to supply natural gas to gas users in a particular area. As a

consequence, the LNG tanks have to be located in a particular locality." (Simpson, Tr. 3034). 

"The competitive situation is basically the same across the localities in the U.S., so defining the 

geographic market as the U.S...make[s] the analysis much more tractable without harming the

analysis at all." (Simpson, Tr. 3035). Dr. Simpson testified: "LIN/LOX/LAR tanks are

purchased as part of a facility that makes liquefied gas, and those facilities are built close to a

customer." (Simpson, Tr. 3420). Dr. Simpson then noted: "[A]s with the other structures, the

identity of the market participants is basically the same across the U.S. So to make the analysis 

more tractable, it makes sense to define the geographic market as the United States." (Simpson, 

Tr. 3421).

Response to Finding No. 96:

Respondents have no specific response.

97. Respondents' business documents analyze competition separately in the United

States compared to other areas of the world. Respondents' business documents identify the

United States as a "marketplace in which they will institute a particular policy." (Simpson, Tr. 

3035, citing CX 185). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxx]. (Simpson, Tr. 3036, citing CX 364, in camera). PDM strategic documents differentiate 
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between the domestic and international LNG markets and identify a separate cast of competitors 

for each market. (CX 99 at PDM HOU 000259; CX 646 at 282 (Scorsone, IHT)). [xxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] 

(CX 94 at PDM-HOU017580; see also CX 217 at CB&I-PL034441 in camera).

Response to Finding No. 97:

Complaint Counsel's finding number 97 is irrelevant; whether CB&I's documents 

differentiate markets is not the issue in this case. Further, because competition has changed in

the alleged product markets and increasingly CB&I's worldwide competitors are its domestic

competitors. (See Harris, Tr. 7123, 7287-94) (FOF 7.93, 7.118).

98. It is economically infeasible to import a field-erected storage tank from anywhere 

outside the United States. (Kistenmacher, Tr. 840, 881).

Response to Finding No. 98:

Complaint Counsel's proposed finding number 98 is inaccurate; it depends on

where the tank is being imported from. Further, this assertion is overbroad; what type of storage 

tank is Complaint Counsel talking about? LNG? Water? However, there is ample evidence that 

nine percent nickel steel for LNG tanks are imported in pre-fabricated pieces on a regular basis. 

(FOF 3.560-3.564).

V.

THE MERGER WILL LIKELY LESSEN COMPETITION BECAUSE

IT CREATES A DOMINANT FIRM IN HIGHLY CONCENTRATED MARKETS

99. Prior to the merger, CB&I and PDM each had market shares ranging from [xx] to 

[xx] in each relevant market. CCFF 146, 154. After the merger, the combined market share in 

the relevant markets ranges from 70% to 100%. CCFF 138, 151, 180, 191.

Response to Finding No. 99:

Complaint Counsel's finding number 99 is incorrect. AT&V's post acquisition

LIN/LOX market share is 60%; CB&I's market share in LIN/LOX cannot therefore be 70% to

100%. Further, CB&I will not win the Dynegy project, thus CB&I's post-Acquisition share
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CHI:1176893.3

cannot be 100%. In addition, CB&I has not built a thermal vacuum chamber since 1984 -- how 

could CB&I's market share be 70%-100% since the merger? In addition, Complaint Counsel's 

reliance on shares is inappropriate because it fails to reflect competition going forward; the

appropriate method of calculating market shares would be a 1/N or bidding model. (Harris, Tr.

7340-41).

100. A 1998 presentation to the PDM Board reported market shares for PDM and

CB&I as [xx] and [xx], respectively, for a combined share of [xxx]. Morse was listed as having 

a [xx] share; since Morse is now owned by CB&I, the combined market share of all three firms 

is [xx]. (CX 648 at PDM-HOU000249).

Response to Finding No. 100:

Complaint Counsel's finding number 100 is absurdly irrelevant because the

document cited by Complaint Counsel is clearly indicating market share across all products

excluding LNG, which includes all of the non-relevant products made by CB&I and PDM. (CX 

648 at PDM-HOU000249). Even without this enormous oversight by Complaint Counsel, as the 

finding itself notes, the referenced document dates from 1998. Complaint Counsel is attempting 

to calculate shares based on a five year old document that was not prepared using "market share" 

in the antitrust context.

101. These market share figures provide several important insights. First,

Respondents' high pre-merger market shares reflect the vigorous direct competition that existed 

between them before the merger. "The market concentration measures provide a measure of this 

[unilateral anticompetitive price increase] if each product's market share is reflective of not only 

its relative appeal as a first choice to consumers of the merging firms' products but also its

relative appeal as a second choice, and hence as a competitive constraint to the first choice." 

Merger Guidelines § 2.211.

Response to Finding No. 101:

Complaint Counsel's finding number 101 is incorrect. The market share figures

referenced by Complaint Counsel are those contained in CX 648, which as noted above, purports 

to calculate market share across all markets (including water, flat bottom tanks, etc.) excluding
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LNG. (CX 648 at PDM-HOU000249). There are no important insights provided by this

document, other than that Complaint Counsel's case is based on utter distortions of documents

taken out of context. Further, this finding entirely ignores the fact that there has been entry and 

that further entry is imminent. Firms have recently entered or have made plans to enter the

alleged product markets. (See Harris, Tr. 7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF

7.58, 7.92-7.101, 7.118, 7.113) (See FOF 3.68-3.227 (actual entry has occurred in the LNG

market); FOF 4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new competitors have 

entered the LIN/LOX market); 5.79-5.184 (LIN/LOX customers are satisfied with prices

received and available competitive options)).

102. Second, the greater the level of direct competition before the merger, as reflected 

in Respondents' high individual market shares, the greater the likely anticompetitive harm after 

the merger. Merger Guidelines § 2.21 ("The price rise will be greater the closer substitutes are

the products of the merging firms, i.e. the more the buyers of one product consider the other

product to be their next choice.").

Response to Finding No. 102:

Complaint Counsel's finding number 102 is unsupported by evidence and is

irrelevant because it fails to account for post-acquisition evidence indicating that the Acquisition 

of PDM by CB&I has not lessened competition in the alleged product markets. (Harris, Tr.

7184-89) (FOF 7.56, 7.57) (See FOF 3.68-3.227 (actual entry has occurred in the LNG market); 

FOF 4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new competitors have entered 

the LIN/LOX market); 5.79-5.184 (LIN/LOX customers are satisfied with prices received and

available competitive options)).

103. Third, Respondents' [xx] plus combined market shares exceed the 35% level at

which the Merger Guidelines "presume that a significant share of sales in the market are

accounted for by consumers who regard the products of the merging firms as their first and

second choices." Merger Guidelines § 2.211.
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Response to Finding No. 103:

Complaint Counsel's proposed finding 103 is irrelevant and does not support the

view that CB&I and PDM were customers' first choices. Further, it ignores entirely the issue of 

entry.

104. CB&I's and PDM's market shares, and those of other competitors in the relevant 

markets, are also used to compute the level of concentration in a particular market and the

increase in concentration caused by the merger. "Market concentration is a useful indicator of

the likely potential competitive effect of a merger." Merger Guidelines § 1.51.

Response to Finding No. 104:

Complaint Counsel’s finding number 104 is incomplete because it fails to note

that under section 1.41 of the Merger Guidelines it is necessary that market shares be “the best 

indicator of firms’ future competitive significance.” (Merger Guidelines § 1.41; see also id. § 

1.32; Harris, Tr. 7221-29, 7286-87, 7311-13; see United States v. Baker Hughes, 908 F.2d 981, 

984 (D.C. Cir. 1990); United States v. General Dynamics Corp., 415 U.S. 486, 498 (1974)). 

Further, this proposed finding entirely ignores entry.

105. The antitrust agencies use the Herfindahl-Hirschman Index ("HHI") of market

concentration. Merger Guidelines § 1.5. The HHI is calculated by summing the squares of the 

individual market shares of all participants. (Id.) The increase in concentration caused by the

merger is calculated by doubling the product of the market shares of the merging firms. (Id. 

§ 1.51, n.18).

Response to Finding No. 105:

Respondents have no specific response.

106. In the LNG market, the merger increases the HHI by [xxxx] to [xxxx]; in the

LIN/LOX market, the merger increases the HHI by [xx] to [xx]; in the LPG market, the merger 

increases the HHI by [xxxx] to [xxxx]; and in the TVC market, the merger increases the HHI by 

[xxxx] to 10000. CCFF 146, 151, 180, 198.

Response to Finding No. 106:

Complaint Counsel’s finding number 106 is misleading and irrelevant because, as 

indicated previously, the HHIs are not an accurate reflection of present and future competition in 
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these markets and do not satisfy the requirements of section 1.41 of the Merger Guidelines. 

(RFOF 7). As stated supra RFOF 7, the starting date of 1990 in Complaint Counsel’s HHI

calculations is arbitrary and manipulates the HHI numbers when the HHIs show a change of zero 

in three of the markets if one starts calculating in 1995 or 1996 or any time after.

107. The Merger Guidelines provide that where "the post-merger HHI exceeds 1800, it 

will be presumed that mergers producing an increase in the HHI of more than 100 points are

likely to create or enhance market power or facilitate its exercise." Merger Guidelines § 1.51(c) 

(emphasis supplied).

Response to Finding No. 107:

Complaint Counsel’s finding number 107 is misleading and irrelevant because, as 

indicated previously, the HHIs are not an accurate reflection of present and future competition in 

these markets and do not satisfy the requirements of section 1.41 of the Merger Guidelines. 

Further, the Merger Guidelines are not binding on the courts. (See also RFOF 7.)

108. In this case, the increase in concentration in each of the relevant markets is, at a 

minimum, more than 25 times as great as the threshold that the Merger Guidelines identify as the 

level of increase that is likely to create market power.

Response to Finding No. 108:

Complaint Counsel’s finding number 108 is misleading and irrelevant because, as 

indicated previously, the HHIs are not an accurate reflection of present and future competition in 

these markets and do not satisfy the requirements of section 1.41 of the Merger Guidelines. 

RFOF 7. As stated supra RFOF 7, the starting date of 1990 in Complaint Counsel’s HHI

calculations is arbitrary and manipulates the HHI numbers when the HHIs show a change of zero 

in three of the markets if one starts calculating in 1995 or 1996.

109. The HHI levels in this case well exceed the postmerger market concentration

levels of recent FTC actions in which the FTC successfully enjoined mergers. FTC v. Libbey, 

211 F. Supp. 2d 34 (D.D.C. 2002) (HHI of 5251); FTC v. Heinz, 116 F. Supp. 2d 190, 195

(D.D.C. 2000) (HHI of 5285); FTC v. Swedish Match, 131 F. Supp. 2d 151, 167 (D.D.C. 2000) 

(HHI of 4733); FTC v. Cardinal Health, 12 F. Supp. 2d 34, 53 (D.D.C. 1998) (HHI of 2224).
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CHI:1176893.3

Response to Finding No. 109:

Complaint Counsel’s finding number 109 is misleading and irrelevant because, as 

indicated previously, the HHIs are not an accurate reflection of present and future competition in 

these markets and do not satisfy the requirements of section 1.41 of the Merger Guidelines. 

RFOF 7. Further, in none of these cases did the court find for the Plaintiff based on HHIs alone. 

As stated supra RFOF 7, the starting date of 1990 in Complaint Counsel’s HHI calculations is

arbitrary and manipulates the HHI numbers when the HHIs show a change of zero in three of the 

markets if one starts calculating in 1995 or 1996.

A. Market Shares Should Be Measured Based on Historical Sales

110. The appropriate measure of market shares is each firm's sales, as opposed to each 

firm's production capacity. In markets where the products are supplied on a differentiated basis, 

and in which firms have different capabilities to supply customers, it is appropriate to determine 

market shares by each firm's success in securing sales. Merger Guidelines § 1.41 ("Dollar sales 

or shipments generally will be used if firms are distinguished primarily by differentiation of their 

products. Unit sales generally will be used if firms are distinguished primarily on the basis of

their relative advantages in serving different buyers or groups of buyers.").

Response to Finding No. 110:

Complaint Counsel’s proposed finding is false; the Merger Guidelines state that

the appropriate measure of market shares is whatever is predictive of future competitiveness. 

Merger Guidelines § 1.41. Further, neither dollar sales nor unit sales nor production capacity are 

appropriate measures of market share in this case because none of these gives the best indication 

of firm’s ability to compete in the future. The appropriate method of calculating market shares

would be a 1/N or bidding model. (Harris, Tr. 7340-41).

111. Each of the relevant markets is comprised of highly differentiated products. 

Field-erected LNG, LIN/LOX and LPG tanks and TVCs vary by size, by specific application, by 

installation parameters, by site characteristics, and by specific design. Factors that differentiate 

LNG tanks include the location, the nature of the site, the size of the tank, and the tank's design. 

(CX 573 at CB&I-PL031580 (describing CB&I LNG tank "design considerations," including

factors such as codes and regulations, materials, site conditions, wind loads, seismic events, 
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CHI:1176893.3

secondary containment and internal pressure); see also CX 85 (LIN/LOX tanks); CX 1048 (LPG 

tanks and TVCs)).

Response to Finding No. 111:

Respondents have no specific response.

112. Suppliers set prices by individual project, depending on the nature of the project 

and on the level of competition among the suppliers. (Gill, Tr. 209-210; Price, Tr. 556). The 

design of the LNG tank is heavily dependent on an analysis of risk factors. (CX 573 at CB&IPL031585). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (See, 

e.g., CX 827 (PDM pricing); CX 1321, in camera (CB&I pricing)).

Response to Finding No. 112:

Respondents have no specific response.

113. In this case, the firms that compete for new projects are distinguished by several

factors that are relevant to their ability to secure contracts. These include firms' actual

experience, their reputation for providing quality products on a timely basis, their engineering

and fabrication resources, and their cost structure. (Simpson, Tr. 3037).

Response to Finding No. 113:

Respondents have no specific response.

114. In the past decade, Respondents have won virtually every contract in the relevant 

markets. CCFF 136, 151, 172, 192. Domestic firms have won only a handful of contracts and 

foreign firms have not won any contracts in head-to-head competition with Respondents. CCFF 

136, 151, 172, 192. The reason Respondents' competitors have not won more contracts is

because of the competitive advantage enjoyed by Respondents, including lower cost structures. 

CCFF 393-420.

Response to Finding No. 114:

Complaint Counsel’s finding number 114 is misleading and/or inaccurate. First, 

it is inaccurate to characterize CB&I’s defeats by domestic firms as a “handful” of projects. In

the LIN/LOX market, for example, AT&V has won three of the last five projects available. 

(Harris, Tr. 7308). Foreign firms have only recently entered or have made plans to enter the

alleged product markets; thus the failure of foreign firms to beat CB&I or PDM in “head-tohead” competition for a project prior to their entry in the United States is misleading. (See 
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Harris, Tr. 7209-13, 7239-47). Further, Complaint Counsel has done no analysis whatsoever of 

CB&I’s cost structure, PDM’s cost structure, or foreign or domestic competitors’ cost structures; 

thus it is an inappropriate assumption that Respondents have a lower cost structure. Dr. Simpson 

believes that the costs of foreign LNG competitors put them at a competitive disadvantage,

however Dr. Simpson has never seen the costs of the foreign competitors. (Simpson, Tr. 3919-

22). Dr. Simpson has not seen evidence permitting him to quantify differences between CB&I

and foreign firms in terms of field erection costs, labor costs, acquisition, project management

personnel rates, engineering personnel rates, fabrication costs, administrative overhead, or costs

relating to owning versus renting equipment. (Simpson, Tr. 3921-37) (FOF 7.150).

115. Dr. Simpson provided a probability analysis for LNG tanks, which compared the 

actual results of bids with the likely results if other firms had been equally situated with CB&I 

and PDM. Based on his assessment, the probability is extremely low that CB&I and PDM would 

have prevailed as often as they did if other firms were equally capable of competing with CB&I 

and PDM. CCFF 141.

Response to Finding No. 115:

Complaint Counsel’s finding number 115 is misleading and irrelevant because Dr. 

Simpson’s probability analysis was so fundamentally flawed both logically and economically

that it had no value whatsoever. Dr. Simpson used probability theory to predict that firms who 

were not competing had no probability of winning jobs. (Simpson, Tr. 3393-94, 3400, 3663-65, 

5753, CX-1645) (FOF 7.213). This is conceptually flawed because, obviously, firms that were

not competing and not bidding on projects had no chance of winning projects. It is illogical to 

suggest that this means firms that bid now have no chance of winning projects based on the fact 

that they did not win jobs when they did not bid. (See Harris, Tr. 7339).

116. Actual sales data since 1990 provides the best data to measure market shares and 

concentration levels. "Market concentration and market share data of necessity are based on

historical evidence." Merger Guidelines, § 1.521.
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Response to Finding No. 116:

Complaint Counsel’s finding number 116 is inaccurate; 1990 was chosen

arbitrarily by Complaint Counsel. First, it is difficult to imagine that 1990 is the best starting 

date in all four markets. Second, the arbitrary nature of the HHIs is underscored by the fact that 

choosing a different date achieves a completely different result; picking a different starting point 

of 1995 or 1996, vastly different concentration statistics emerge. CB&I did not build an LNG or 

LPG tank between 1995 and the date of the Acquisition, resulting in a change of zero in the

HHIs in those markets, and the HHI in the LIN/LOX market is lowered. (See, e.g., Simpson, 

Tr. 3744) (FOF 7.236). In the thermal vacuum chamber market, CB&I has not built a thermal

vacuum chamber since 1984. (Scorsone, Tr. 5055) (FOF 7.235). Thus, choosing to calculate

HHIs beginning in 1996 results in an HHI change of zero in three of the four markets. Under 

Baker Hughes and Section 1.5 of the Merger Guidelines, an Acquisition resulting in zero change 

in the HHI fails to establish a prima facie case. In the LIN/LOX market, even Dr. Simpson

admitted that CB&I's sale by Praxair in 1997 was a significant competitive change, a fact which 

would justify beginning the HHI calculation in 1997 after the date of the sale. (See Simpson, Tr. 

3753) (FOF 7.236) (RFOF 10).

117. Because the products in all of the relevant markets are sold on an infrequent basis, 

sales data from any particular year may be unrepresentative of the competitive significance of

any particular firm. Sales of LNG tanks are made infrequently. [xxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 1210, in camera; CX 

1212, in camera). That is fewer than one tank per year.

Response to Finding No. 117:

Respondents have no specific response.

118. It is appropriate in this case to measure market shares by examining sales data

over an extended period of time. Merger Guidelines § 1.41 ("where individual sales are large

and infrequent so that annual data may be unrepresentative, the Agency may measure market

shares over a longer period of time.").
- 51 -

CHI:1176893.3

Response to Finding No. 118:

Complaint Counsel’s finding number 118 is misleading because while under the

Guidelines it may appropriate to measure over a “longer” period of time, there is no support

whatsoever for using market shares spanning 13 years. Further, the proposed finding is

incomplete because it fails to note the requirement under the Merger Guidelines that market

shares be measured using “the best indicator of firms’ future competitive significance.” Merger 

Guidelines § 1.41. The changes in the alleged product markets militate against a different date, 

depending on the particular circumstances of each market, which have been highlighted supra 

RFOF 7.

119. In order to evaluate how CB&I's acquisition of PDM affected competition for

LNG tanks, it is appropriate to examine sales from 1990 to the time of the acquisition (Simpson, 

Tr. 3037-38, 3043-46). Economists examine multi-year periods when analyzing competition

(Simpson, Tr. 3044). The respondents use sales data going back eleven years or more to make

inferences about the competitive strength of companies. (CX 160; CX 169 at CB&I-PL 007573; 

CX 173 at CB&I-PL010403; CX 205; CX 207 at CB&I-PL 031456-57; CX 244). There is no 

evidence that market conditions changed significantly during this period. (Simpson, Tr. 3046).

Response to Finding No. 119:

Complaint Counsel’s finding number 119 is incorrect and directly contradicts

admissions made by Dr. Simpson himself. First, there is economic testimony indicating that the 

LNG market has been historically depressed, but is seeing a significant rise in demand. (Harris, 

Tr. 7195-96). Further, Dr. Simpson acknowledged that LNG tanks are increasingly double or

full containment rather than single containment. (Simpson, Tr. 3854, 3993, 3729-30, 3732,

3736) (FOF 7.220-7.226). This is supported by other economic testimony. (Harris, Tr. 7220). 

Dr. Simpson admitted that whether LNG tanks will be double or full containment rather than

single containment should be considered in a market share analysis. (Simpson, Tr. 3743) (FOF 

7.226). Additionally, there has been a change in competitors. (Harris, Tr. 7220-21). Dr.

Simpson agreed that for LNG if you calculated HHIs from 1996 to 2001, the change would be 
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CHI:1176893.3

zero. (Simpson, Tr. 3744) (FOF 7.236). In addition, Dr. Simpson admitted that the spin-off of 

CB&I by Praxair was an important change. (Simpson, Tr. 3753) (FOF 7.235). There have

clearly changes in market conditions. Complaint Counsel has used an inappropriate date to

measure market shares, and its use of such old and outdated data contradicts the Merger

Guidelines’ requirement that market shares be predictive of future competition. There is no

authority for the period of time used by Complaint Counsel to measure market share. Certainly 

Respondents’ sales data does not support Complaint Counsel’s use of 1990 for a starting date for 

HHIs -- not a single document cited by Complaint Counsel supports Complaint Counsel’s

finding. (CX 160, CX 169, CX 173, CX 205, CX 207, CX 244). While economists may use

historical evidence, there is no support for going 13 years back.

120. Dr. Harris acknowledged that 1995 or 1996 would be an arbitrary starting date to 

examine market sales and that it would be wrong to conclude that the merger does not hurt

competition simply because over some period of years CB&I or PDM accounted for all of the

sales in the market and the other firm accounted for none. (Harris, Tr. 7228).

Response to Finding No. 120:

Complaint Counsel’s finding number 120 is incomplete because it fails to note

that Dr. Harris thought that the choice of 1990 was arbitrary, and his use of the years 1995 or

1996 were intended to underscore the uselessness of Complaint Counsel’s HHI calculation and 

the arbitrary nature of the selection of 1990. (Harris, Tr. 7227-28, 7364).

121. Respondents' witness, Nigel Carling of Enron testified that, in assessing suppliers, 

"You're really looking at expertise over the last ten years." (Carling, Tr. 4512).

Response to Finding No. 121:

Complaint Counsel’s finding number 121 is irrelevant because if “expertise over 

the last ten years” were the proper gauge for measuring market share, it would be necessary to 

include all worldwide projects. Nigel Carling stated that one looks at expertise worldwide. 

(Carling, Tr. 4552). Further, the statement made by Nigel Carling was clearly not an economic 
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CHI:1176893.3

analysis and was clearly not meant to suggest that market shares in antitrust cases should be

calculated one way or another.

122. In their own documents and in presentations to customers, Respondents draw

upon their historical sales achievements to make new sales. In a bid proposal to Louisville Gas 

& Electric, CB&I touted that it has been "integrally involved with LNG peak shaving facilities

since the 1960's. The enclosed installation list summarizes the 43 LNG peak shaving facilities 

and 90 individual LNG tanks designed and constructed by CB&I [on] a lump sum basis." (CX 

173 at CB&I-PL010403 (emphasis supplied); see also CX 207 at CB&I-PL 013456-457; CX 150 

at CB&I-PL 002655, 002661; CX 142 at CB&I-00212-HOU). With respect to LIN/LOX tanks, 

CB&I and PDM tout their experiences in constructing tanks from as far back as 1957. (See CX 

160 ("CB&I has built the majority of LIN/LOX/LAR tanks in the world, and in total we have

designed and erected over 600 cryogenic tanks throughout the world."); see also CX 85; CX 145 

at PDM-S-001409; CX 154 at CB&I-PL002939-70; CX 443; CX 914; CX 1048; CX 1201).

Response to Finding No. 122:

Complaint Counsel’s finding number 122 is irrelevant because CB&I sales

documents are just that: sales documents. As such they do not indicate that market shares

measured from 1990 are an indicator of future competition. They do, however, indicate that

CB&I competes in the U.S. LNG market, as do the sales documents of the various entrants. 

One can point to historical events for one purpose without having to do so for all purposes. 

Complaint Counsel’s argument is extremely specious.

123. In a May 2001 LNG tank sales presentation to Yankee Gas (CX 417 at CB&I

026845-HOU), CB&I detailed its relevant LNG tank experience, including the 2000 ENRON,

Puerto Rico LNG import terminal (id. at CB&I 026848-HOU - 849-HOU), the 1999 Pine

Needle, North Carolina, peakshaving facility (id. at CB&I 026850-HOU), the 1997 Memphis

Light, Gas and Water LNG peakshaving facility and the 1993 Salley, South Carolina, LNG

satellite storage facility (id. at CB&I 026849-HOU), and other LNG import terminal and

peakshaving projects extending from 1969 through 2002. (Id. at CB&I 026851-HOU - 852-

HOU; CX 417 at CB&I 026845-026852).

Response to Finding No. 123:

Complaint Counsel’s finding number 123 is irrelevant because CB&I sales

documents are just that: sales documents. As such they do not indicate that market shares

measured from 1990 are an indicator of future competition. Sales documents only indicate that 
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CHI:1176893.3

CB&I is competing in the market, as do the sales documents of CB&I’s competitors. One can

point to historical events for one purpose without having to do so for all purposes. Complaint 

Counsel’s argument is extremely specious.

124. Steven Knott, CB&I's vice-president of sales for North American, declared under 

penalty of perjury, "[I]nformation regarding LNG tank and TVC prices – which are far less

common – is far more valuable, because the number of completed jobs is far fewer. Because

fewer solid data points exist, the remaining data points become even more valuable, even ones

from the mid-1990s. Further, the greater value of LNG and TVC projects increases the value of 

pricing information for these projects to CB&I." (CX 393 at 6).

Response to Finding No. 124:

Complaint Counsel’s finding number 124 contradicts Complaint Counsel’s

suggestion that 1990 is an appropriate date from which to measure market share; Mr. Knott uses 

the words “even ones from the mid-1990s” which suggests that the mid 1990s are a more

appropriate starting point for measuring market share. Further, Mr. Knott is talking about the

value of knowing a competitor’s price when bidding on future projects, which is much different 

than suggesting that information regarding who won a project is important in predicting who will 

win a project ten years later.

125. Respondents assert that the historical market shares are not relevant to the

competitive analysis in this case. Giving no weight to historical sales results, Dr. Harris

suggested that each firm could be allocated an identical market share. This assumes that, in spite 

of the historical bidding patterns, each firm Respondents have identified as a potential bidder in 

each relevant market is equally qualified to secure a contract. (Harris, Tr. 7177-78; see Merger 

Guidelines § 1.41, n.15 ("Where all firms have, on a forward-looking basis, an equal likelihood 

of securing sales, the [Commission] will assign firms equal shares.")). Dr. Harris concludes

from this methodology that the acquisition has resulted in only minor increases in concentration. 

(Harris, Tr. 7195, 7300, 7302, 7326).

Response to Finding No. 125:

Respondents have no specific response.

126. There is no evidence to conclude that all of the companies who may bid in the

future have an equal likelihood of winning in head-to-head competition with Respondents. To

the contrary, there is evidence that firms who bid in the past and may bid in the future are not

equally qualified. Several of the firms identified by Dr. Harris are the same firms that before the 
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CHI:1176893.3

merger lost to Respondents because of their competitive disadvantage vis-a-vis Respondents in

the United States. (Harris, Tr. 7211). CCFF 393-571.

Response to Finding No. 126:

Complaint Counsel’s finding number 126 is wrong and unsupported. Further,

Respondents have never suggested that companies who may bid in the future have an equal

likelihood of winning in head-to-head competition with Respondents. There is evidence that

foreign competitors with concrete technology are more likely to win LNG projects than CB&I in 

the future. (Jolly, Tr. 4439-40; RFOF 119). Further, since the Acquisition, AT&V has won

more than half of all LIN/LOX tank projects. (Harris, Tr. 7308) (See also FOF 3.493-3.508).

127. By failing to consider actual historical sales, Dr. Harris' analysis fails to take into 

account the substantial direct competition between CB&I and PDM that was eliminated by the

merger. (Harris, Tr. 7185-86, 7223, 7233).

Response to Finding No. 127:

Complaint Counsel’s finding number 127 is purely argumentative. Further,

Complaint Counsel’s finding number 127 mischaracterizes Dr. Harris’ approach; indeed Dr.

Harris examined the totality of the evidence to analyze the future competitive impact of the

Acquisition of PDM’s EC division by CB&I. (Harris, Tr. 7181, 7183-84, 7222).

128. For all these reasons, the historical sale data provided by Complaint Counsel is

the most appropriate method for measuring market shares and market concentration.

Response to Finding No. 128:

For all the above stated reasons, the historical sale data provided by Complaint

Counsel is an inappropriate method for measuring market shares and market concentration. 

RFOF.

B. Market Shares and Concentration in the LNG Market

129. Four LNG import terminals were constructed in the United States since the 1970s, 

during the energy crisis when gas prices were high and gas supplies questionable. (CX 853 at 

PDM-HOU011488). PDM constructed two (Lake Charles, Louisiana and Cove Point, Maryland) 
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CHI:1176893.3

and CB&I constructed two (Boston, Massachusetts and Savannah, Georgia). (CX 853 at PDMHOU011488; CX 154 at CB&I-PL002958, 002961).

Response to Finding No. 129:

The proposed finding is misleading and mischaracterizes the evidence. For

example, CX 853 states that PDM constructed the storage tanks for the Cove Point, Maryland 

and Lake Charles, Louisiana terminals. (CX 853 at PDM-HOU011488). CX 853 does not state 

that PDM constructed the entire terminals as the proposed finding suggests. Additionally, CX

154 states that CB&I constructed an LNG tank in Everett, Massachusetts not an entire import

terminal in Boston, Massachusetts as the proposed findings avers. (CX 154 at CB&IPL002958). Likewise, CX 154 states that CB&I built three LNG tanks in Savanna, Georgia not 

the entire import terminal. (CX 154 at CB&I-PL002961).

130. There are about 90 LNG peak shaving plants in the United States. (CX 228 at 

CB&I-PL046034). CB&I and PDM have constructed every LNG tank built in the United States 

since 1975. (CX 125 at PDM-HOU 2017162-7169).

Response to Finding No. 130:

The proposed finding is misleading and mischaracterizes the evidence. First, CX

228 states that 90 LNG peak shaving facilities have been built in "North America." (CX 228 at 

CB&I-PL046034). The proposed finding erroneously substitutes the geographic location of the 

United States for North America. Second, CX 125 does not support the proposition that "CB&I 

and PDM have constructed every LNG tank built in the United States since 1975." No

testimony, during trial, was presented regarding CX 125. Thus, it is unclear whether this

document exhaustively lists all LNG tanks constructed in the United States since 1975. Further, 

CX 125 clearly states that it only applies to LNG peak shaving facilities built in the United States 

or Canada. (CX 125 PDM-HOU 2017162-7169).

131. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (Kistenmacher, Tr. 891;
- 57 -

CHI:1176893.3

[xxxx], Tr. 714-15, in camera (["[F]rom 1965 through '97 or so, the only two companies pretty 

much across the board that built LNG plants in the United States were PDM and CB&I"]); Cutts, 

Tr. 2390 (CB&I and PDM "dominated the marketplace significantly and the interpretation by

most people would have been that any large cryogenic projects in the United States would have 

been built by CB&I or PDM.")).

Response to Finding No. 131:

Testimony elicited during trial and Complaint Counsel's own documents

demonstrate the falsity of the proposed finding. CB&I and PDM were not the only firms to build 

field-erected LNG tanks prior to the merger. Dr. Kistenmacher, a witness who is only

"somewhat" familiar with LNG tanks and who has been involved with "very, very few LNG

tanks", testified that he could only recall CB&I and PDM having built LNG tanks prior to the

merger. (Kistenmacher, Tr. 879, 888, 891; see also FOF 3.669-670). In fact, Ms. Outtrim

testified that [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxx] (Outtrim, Tr. 715) (in camera). Mr. Cutts also recognized that he

possessed limited knowledge regarding which companies had previously built LNG tanks in the 

United States. (Cutts, Tr. 2390). Mr. Cutts admitted that he was not in a position "to speak for 

all the customers." (Cutts, Tr. 2390). Further, a document cited by Complaint Counsel in the

previous proposed finding, CX 125, clearly demonstrates that Graver and Preload have

constructed LNG tanks in the United States. (CX 125 at PDM-HOU 2017162-7167). This

proposed finding is contradicted by proposed finding number 132.

132. 1975 was the last time a firm other than CB&I or PDM built an LNG tank in the 

United States. (CX 125). Graver, which is now out of business, built the tank in 1975. (CX 125 

at PDM-HOU2017165; CX 1546 (ITEQ, Graver's successor, ceased operations in March 2001)).

Response to Finding No. 132:

Respondents have no specific response.

133. Preload built an LNG tank in the United States in 1971. (CX 125 at PDMHOU2017164). Preload possesses a "completely concrete" technology that "would be a very

costly design and not be a competitive design to the tanks that the other people could build." 
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CHI:1176893.3

(Price, Tr. 550; Hall, Tr. 1817). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxxx], Tr. 689-691, 693, 724, in camera).

Response to Finding No. 133:

The proposed finding is misleading because United States' owners may choose to 

utilize an all-concrete LNG tank design (Andrukiewicz, Tr. 6464-65; [xxxxxxxxxxxxxxxxx]; 

see also FOF 3.344, 3.420). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxx] (Sawchuck, Tr. 6088; see also FOF 3.420). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Sawchuck, Tr. 6087; see also FOF 3.420). The

proposed finding is further misleading because Skanska/Whessoe submitted preliminary 

engineering designs to CHI, for the Yankee Gas peak shaving facility, for an exclusively

concrete tank utilizing inner and outer walls of concrete. (Andrukiewicz, Tr. 6447; see also FOF 

3.344). In fact, CHI engineering specifically cited Skanska/Whessoe's concrete design to

Yankee Gas in its preliminary engineering report. (Andrukiewicz, Tr. 6447; see also FOF

3.344).

134. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxxx], Tr.

4683, in camera; CX 125; CX 853 at PDM-HOU011458).

Response to Finding No. 134:

The proposed finding is irrelevant given the fact that [xxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

(Jolly, Tr. 4683; see also FOF 3.162). Since the Acquisition, foreign companies have entered the 

United States market and competed for American LNG projects. (See generally FOF 3.68-73, 

3.109-22, 3.173-78, 3.200-03, 3.212-27). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 4760; see also FOF 3.307). When completed, the Hackberry 
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CHI:1176893.3

facility will be the largest LNG regasification facility in the United States. (Puckett, Tr. 4540;

see also FOF 3.259).

135. Other companies attempted to compete during this period but failed to beat CB&I 

and PDM. TKK and Whessoe both submitted proposals for the Memphis project in 1995 but

were substantially higher-priced than CB&I and PDM. CCFF ___. [xxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (RX 

157 at [xxx] 02 004, in camera). No other firm has won a U.S. LNG project in head-to-head 

competition against CB&I or PDM.

Response to Finding No. 135:

The first two sentences and the last sentence of the proposed finding lack factual 

support in the record as Complaint Counsel failed to cite any evidence supporting its assertions. 

In fact, the record contradicts Complaint Counsel's proposed finding. [xxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxx] (Jolly, Tr. 4683, 4729; see also FOF 3.162). The proposed finding is also 

misleading in that it suggests that Whessoe's portion of the Memphis bid was significant. This is 

clearly untrue given that Whessoe's engineering package accounted for only $1 million of

Lotepro's $40 million total bid. (Kistenmacher, Tr. 900, 938-939; see also FOF 3.498). Titan

Constructor's LNG tank construction/erection costs, conversely, accounted for $14 million of

Lotepro's total bid. (Kistenmacher, Tr. 900, 938; see also FOF 3.498). Similarly, TKK's portion 

of the Memphis bid accounted for less than $3 million of the total Black & Veatch bid. (RX 888; 

see also FOF 3.502). Characterizing Whessoe's and TKK's "bids" as substantially higher priced 

than CB&I's or PDM's bids is also misleading given the discrepancies in the record regarding

CB&I's LNG tank price and the fact that PDM's bid was disqualified for failing to meet the

owner's specifications. (Hall, Tr. 1823-24; Davis, Tr. 3196; RX 888, RX 1571; see also FOF

3.505, 3.506). Finally, the Memphis 1995 bidding is irrelevant to assessing competition today

for the reasons set forth in FOF 3.493-3.508.
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The proposed finding that Whessoe's price to [xx] was not competitive is

misleading and irrelevant. First, the document relied upon is from 1998, well before the

Acquisition. Additionally, the document was created before Skanska acquired Whessoe in 2000. 

(RX 770 at 33/49; see also FOF 3.57). Further, testimony at trial contradicts the proposed

finding. British Petroleum testified that it would include Whessoe on a potential bidder list for 

LNG projects in the United States. (Sawchuck, Tr. 6062; see also FOF 3.78).

136. As shown in the following table, nine LNG tank projects were awarded in the

United States from 1990 through the time of the acquisition in early 2001.

[xxxxxxxxxxxxxxx]

[xxxxxxxxx] [xxxxxxxxxxx] [xxxxxx]

[xxxx]

[xxxxxx] [xxxxxxxx] [xxxxxxxx]

[xxxxxxxxxx] [xxxxxxxxx] [xxx] [xxxxx] [xxxxxx] [xxxxxxxx]

[xxxxxxxxxx] [xxxxxxxxx] [xxx] [xxxxx] [xxxxxx] [xxxxxxxx]

[xxxxxxxxxx] [xxxxxxxxx] [xxx] [xxxxx] [xxxxxx] [xxxxxxxx]

[xxxxxxxxxx] [xxxxxxxxx] [xxx] [xxxxx] [xxxxxx] [xxxxxxxx]

[xxxxxxxxxx] [xxxxxxxxx] [xxx] [xxxxx] [xxxxxx] [xxxxxxxx]

[xxxxxxxxxx] [xxxxxxxxx] [xxx] [xxxxx] [xxxxxx] [xxxxxxxx]

[xxxxxxxxxx] [xxxxxxxxx] [xxx] [xxxxx] [xxxxxx] [xxxxxxxx]

[xxxxxxxxxx] [xxxxxxxxx] [xxx] [xxxxx] [xxxxxx] [xxxxxxxx]

[xxxxxxxxxx] [xxxxxxxxx] [xxx] [xxxxx] [xxxxxx] [xxxxxxxx]

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

[As some of the projects are in camera, a table in its entirety should be treated in camera]

(CX 1210, in camera; CX 824; CX 1212, in camera; CX 1645 at 2 (demonstrative); CX 26 at 

CB&I-PL069530, in camera; RX 757; Simpson, Tr. 3046, 3052-3055).

Response to Finding No. 136:

Complaint Counsel’s proposed finding is irrelevant since projects awarded from

1990 through 2001 do not provide useful information about future competition and do not reflect 

post-Acquisition entry.

137. Dr. Harris acknowledges that prior to the merger, United States LNG tanks were 

built entirely by CB&I and PDM. (Harris Tr. 7196, 7521-22). According to Dr. Harris, "until 
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roughly 2001 I guess, the competitors in the market, were almost entirely limited to CB&I and 

PDM." (Harris, Tr. 7220). Based on information at the time of the acquisition CB&I had

roughly one chance in two of winning an LNG tank award. (Harris, Tr. 7877).

Response to Finding No. 137:

Complaint Counsel’s proposed finding is irrelevant since projects awarded from

1990 through 2001 do not provide useful information about future competition and do not reflect 

post-Acquisition entry.

138. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. 

(CX 1210, in camera; CX 1645 at 2, (demonstrative); Simpson, Tr. 3046, 3052-3054). CB&I

won five of these projects and PDM won four. (Simpson, Tr. 3046, 3052-3054).

Response to Finding No. 138:

Complaint Counsel’s proposed finding is irrelevant since projects awarded from

1990 through 2001 do not provide useful information about future competition and do not reflect 

post-Acquisition entry.

139. Dr. Simpson testified that the fact that a company does not bid for a project is

informative. (Simpson, Tr. 5757). Dr. Simpson testified that he concluded that the reason

foreign firms were not bidding for LNG projects prior to CB&I's acquisition of PDM is that the 

foreign firms believed that they were not competitive with PDM and CB&I. (Simpson, Tr.

5757).

Response to Finding No. 139:

Complaint Counsel’s proposed finding is irrelevant because Dr. Simpson’s

analysis is illogical. First, the joint ventures entering the LNG market were not yet formed in the 

1990s. Dr. Simpson’s belief that prior to the acquisition foreign firms were not competitive is

irrelevant to whether they are in the future. That a company does not bid for a project is not

informative if that company does not compete in that market. It is only informative if they are in 

the market.

140. Dr. Simpson also testified that the fact that foreign firms did not participate in

sole-source negotiations for U.S. LNG tank projects prior to CB&I's acquisition of PDM is also 

informative. (Simpson, Tr. 5757). Dr. Simpson testified that buyers who sought to buy LNG
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CHI:1176893.3

tanks through sole-source contracts would have approached the foreign firms if they thought that 

these foreign firms were competitive with CB&I or PDM. (Simpson, Tr. 5757-5758).

Response to Finding No. 140:

Complaint Counsel’s proposed finding is irrelevant since “these foreign firms”

were not competing in the U.S. markets in the relevant product markets during the 1990s -- there 

would be no reason to approach firms who are not competing or soliciting business. That would 

make no sense.

141. An analysis of U.S. LNG tank projects awarded between 1990 and the time of the 

acquisition indicates that CB&I and PDM were the two strongest competitors. (Simpson, Tr.

3050). Dr. Simpson testified that respondents had claimed that seven other companies competed 

with CB&I and PDM to supply LNG tanks in the U.S. (Simpson, Tr. 3047, 5753). If seven

companies competed on an equal footing with CB&I and PDM, then the probability that CB&I 

and PDM would have won all nine of the U.S. LNG projects awarded between 1990 and the time 

of the acquisition is 0.0000013 (2/9 X 2/9 X 2/9 X 2/9 X 2/9 X 2/9 X 2/9 X 2/9 X 2/9). 

(Simpson, Tr. 3047-3048 (referencing CX 1645 at 3, (demonstrative)). If one other firm

competed on an equal footing with CB&I and PDM, the probability that CB&I and PDM would

have won all nine of the U.S. LNG tank projects awarded between 1990 and the time of the

acquisition is 2.6 percent (2/3 X 2/3 X 2/3 X 2/3 X 2/3 X 2/3 X 2/3 X 2/3 X 2/3). (Simpson, Tr. 

3048 (referencing CX 1645 at 3, (demonstrative)). Given these results, an environment in which 

other firms competed on an equal footing with CB&I and PDM is extremely unlikely to produce 

the observation that CB&I and PDM won all nine awards. (Simpson, Tr. 3048). Thus, the

history of LNG tank awards in the United States reflects the fact that CB&I and PDM were each 

other's strongest competitors and that foreign companies did not compete on an equal footing

with CB&I and PDM. (Simpson, Tr. 3050).

Response to Finding No. 141:

Complaint Counsel’s proposed finding 141 is so completely devoid of logic that it 

is irrelevant. Obviously, if current competitors were not competing between 1990 and the time 

of the Acquisition, they had a zero percent chance of winning projects they did not bid on. This, 

however, says nothing about whether a competitor has a chance of winning a job it does bid on 

once it competes in the market. For example, company A may enter the widget market in 2000 

and become the most successful widget maker in the widget market. That company A never bid 
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CHI:1176893.3

on or won a widget contract before 2000 does not predict that company A cannot win widget

contracts after 2000. Complaint Counsel’s rationale leads to absurd results.

142. Dr. Simpson noted that the Merger Guidelines indicate that a firm's market share 

should reflect that firm's future competitive significance. (Simpson, Tr. 3050). Dr. Harris

acknowledged that the strength of competitors going forward should be considered in examining 

the acquisition. (Harris, Tr. 7229). Dr. Simpson concluded that CB&I and PDM were far and 

away the two strongest competitors in the market for LNG tanks in the U.S. (Simpson, Tr.

3050). Dr. Simpson testified that Whessoe, Technigaz, and TKK were not a competitive factor 

in the U.S. market for LNG tanks at the time of the acquisition. (Simpson, Tr. 3051). Dr. 

Simpson further testified that Whessoe, Technigaz, and TKK would need to make a significant 

investment for more than a year in order to acquire the tangible and intangible assets necessary to 

become competitive with CB&I and PDM. (Simpson, Tr. 3051-3052).

Response to Finding No. 142:

Complaint Counsel’s proposed finding 142 is misleading as stated because what 

the Merger Guidelines state is that market share is only relevant if it is predictive of future

competition; not that market shares are necessarily predictive of future competition. Merger 

Guidelines § 1.41.

143. Dr. Simpson testified that one did not need detailed cost information to determine 

whether foreign firms would have higher costs than CB&I in building LNG tanks in the U.S. 

(Simpson, Tr. 5765). Dr. Simpson noted that one could use other sources of information, such as 

company documents, statements to investors, and a history of past awards, to determine whether 

foreign firms had higher costs than CB&I in building LNG tanks in the U.S. (Simpson, Tr.

5765).

Response to Finding No. 143:

Complaint Counsel’s proposed finding is irrelevant because he did not examine

company documents of any foreign competitors. Dr. Simpson could not know foreign firms'

costs from CB&I documents, since CB&I does not know foreign firms’ costs. In any case, Dr. 

Simpson admitted on cross-examination that he had done no analysis of competitors’ costs, so 

whether he could have is irrelevant. (FOF 7.150-7.156).

144. Dr. Simpson then testified that CB&I and PDM would each have a 50-percent 

market share if they were treated as equally strong competitors. (Simpson, Tr. 3050). Dr.

Simpson testified that CB&I and PDM would have similar market shares if they were assigned 
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CHI:1176893.3

market shares based on the value of their actual sales of LNG projects between 1990 and the

time of the acquisition. (Simpson, Tr. 3050-51).

Response to Finding No. 144:

Complaint Counsel’s proposed finding 144 is irrelevant because entry and

changes in market conditions render such an observation wholly irrelevant.

145. If CB&I and PDM are each assigned a 50-percent market share, then CB&I's

acquisition of PDM increased the HHI by 5000 from a pre-merger HHI of 5000 to a post-merger 

HHI of 10000. (Simpson, Tr. 3055 (referencing CX 1646)).

Response to Finding No. 145:

Complaint Counsel’s proposed finding 144 is irrelevant because entry and

changes in market conditions render such an observation wholly irrelevant.

146. As shown in the table below, if CB&I and PDM are assigned market shares based 

on the LNG tank awards between 1990 and the time of the acquisition, the effect of the

acquisition on market concentration is similar irrespective of whether concentration is measured 

based on the number of awards or the dollar value of the awards and irrespective whether

cancelled projects are included in or excluded from the calculation. (See Simpson, Tr. 3055-

3058 (referencing CX 1645, (demonstrative)).

[xxxxxxxxxxx]

[xxxxxx]

[xxxxxx]

[xxxxxx]

[xxxxxx]

[xxxxxx]

[xxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxx]

[xxxxxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]

[xxxxxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]

[xxxxxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]

[xxxxxxxx]

[xxxxxxxx] 

[xxxxxxxx]

[xxx] [xxxxx] [xxxxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]

[xxxxxxxx]

[xxxxxxxx]

[xxxxxxxx]

[xxx] [xxxxx] [xxxxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]

[xxxxxxxx]

[xxxxxxxx]

[xxx] [xxxxx] [xxxxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]
- 65 -

CHI:1176893.3

[xxxxxxxxx]

[xxxxxxxxx]

[xxxxxxxxx]

[xxxxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx]

[As some of the projects are in camera, above table in its entirety should be treated in camera]

Response to Finding No. 146:

Complaint Counsel’s proposed finding 144 is irrelevant because entry and

changes in market conditions render such an observation wholly irrelevant.

147. Of the LNG tank projects awarded before the acquisition, CB&I accounted for

[xxx] of LNG tank projects awarded, and [xxx] of projects excluding projects cancelled

following award. PDM accounted for [xxxx] of LNG tank projects awarded, and [xxxx]

excluding cancelled projects. Based on dollar value of projects, CB&I accounted for [xxx] of

project awards and [xxxx] excluding cancelled projects, and PDM accounted for [xxxx] of

awards and [xxxx] excluding cancelled projects.

Response to Finding No. 147:

Complaint Counsel’s proposed finding 147 is irrelevant because entry and

changes in market conditions, such as the shift from single to full and double-containment tanks, 

render such an observation wholly irrelevant. (Harris, Tr. 7227-28).

148. By any measure, the combined share of the two companies is 100 percent and the 

post acquisition HHI is 10000. (Simpson, Tr. 3055 (referencing CX 1646)).

Response to Finding No. 148:

Complaint Counsel’s proposed finding 148 is false. If HHIs are measured from

1996 to the Acquisition the change in HHIs would be zero. (Harris, Tr. 7228). Clearly, the

HHIs in this case depend on the “measure” used.

149. Dr. Harris erroneously argues that market shares should be measured based on the 

post-acquisition period. In using the HHI to predict the effects of the acquisition it is appropriate 

to assign CB&I and PDM shares based on their future competitiveness. When CB&I and PDM 

merged their combined share was 100 percent. (Simpson, Tr. 3711). Exercise of market power 

by the merged firm, following the acquisition, will lead to an erosion of market share. Dr. Harris 

confuses this effect with analysis of market concentration. Dr. Simpson explains that "if you

have a monopolist and they have market power, they will increase price. When they increase

price, other firms that previously were not able to make sales begin to make sales. So if you

were to look after the acquisition and if the monopolist has increased price and has lost sales to 
- 66 -

CHI:1176893.3

other customers as a result of that price increase, you would see that the HHI would fall from the 

10,000 level that we computed before the acquisition to some level under 10,000." (Simpson, 

Tr. 3711).

Response to Finding No. 149:

This proposed finding is unsupported by the evidence Dr. Harris, as evidenced by 

the lack of citation to testimony, did not argue that market shares should be calculated after the

date of the Acquisition. Dr. Harris argued that Complaint Counsel’s reliance on market shares

generally was inappropriate since a reliance on shares failed to account for both actual and

potential entry and changes in the market. (Harris, Tr. 7227). Further, Dr. Harris believes that 

Complaint Counsel’s selection of 1990 as the starting date was arbitrary. (Harris, Tr. 7227).

150. Under the Merger Guidelines, the CB&I/PDM merger has resulted in a substantial 

increase in concentration in an already highly concentrated LNG market. The HHI level raises 

the presumption that the merger will likely create or enhance market power or facilitate its

exercise by CB&I. (Merger Guidelines § 1.51(c)).

Response to Finding No. 150:

Complaint Counsel’s proposed finding 150 is false; the Acquisition has not

created a presumption that the merger will likely create or enhance market power because

Complaint Counsel has improperly calculated the HHIs. The HHIs, as calculated by Complaint 

Counsel, are not predictive of future competition and therefore do not trigger the presumption of 

illegality. (Harris, Tr. 7227; Merger Guidelines § 1.41) (FOF 7.116). New competitors have

entered the U.S. market since the Acquisition. (See Harris, Tr. 7219-21, 7307-08, 7311-12). 

(FOF 7.108, 7.127, 7.130). Supra, RFOF 7 (detailing why HHIs are not predictive of future

competition in this case).

C. Market Shares and Concentration in the LIN/LOX Market

151. The table below shows LIN/LOX tank awards in the United States during the

period 1990 to the time of the acquisition:

[xxxxxxxxxxxxxx]
- 67 -

CHI:1176893.3

[xxxxxx] 

[xxxxxx]

[xxxxxxx] 

[xxxxxxx] 

[xxxxxxx] 

[xxxxxxx]

[xxxxxx] 

[xxxxxx]

[xxxxxxx] 

[xxxxxxx] 

[xxxxxxx] 

[xxxxxxx]

[xxxxxxxx] 

[xxxxxxxx] 

[xxxxxxxx]

[xxxxxxxx] 

[xxxxxxxx] 

[xxxxxxxx]

[xxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]

[xxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]

[xxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]

[xxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]

[xxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]

[xxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]

[xxxxxxxx] 

[xxxxxxxx]

[xxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]

[xxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]

[xxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]

[xxxxxxxx]

[xxxxxxxx]

[xxx] [xxxxx] [xxx] [xxxxx] [xxxxx] [xxxxx]

[As some of the projects are in camera, above table in its entirety should be treated in camera]

(CX 26; CX 85; CX 155; CX 183; CX 260; CX 282; CX 397, in camera; CX 755; CX 1025; CX 

1170; CX 1210 at 5-6, in camera; CX 1212 at 6, in camera; CX 1321, in camera; CX 1458; CX 

1663 (demonstrative); CX 1664 (demonstrative); CX 1665 (demonstrative) in camera; Simpson, 

Tr. 3422, 3429, 3430; Cutts, Tr. 2451 (AT&V built two tanks for BOC); Newmeister, Tr. 1587 

(Matrix has won [xxx] LIN/LOX projects); JX 37 at Exh. 3 (Newmeister, Dep.)).

Response to Finding No. 151:

The proposed finding is irrelevant because the market statistics cited by

Complaint Counsel do not accurately reflect the state of competition in today's LIN/LOX market. 

(FOF 5.22-5.78) (showing that three competitors have successfully entered the LIN/LOX market 

in recent years). Specifically, the chart created by Complaint Counsel simply ignores postAcquisition evidence regarding the success of AT&V. In fact, AT&V has a 60 percent market 

share after the Acquisition and has never lost a LIN/LOX bid to CB&I. (FOF 5.76-5.78). 

Moreover, Complaint Counsel fails to account for CB&T in its market share analysis. CB&T 
- 68 -

CHI:1176893.3

has been pre-qualified to bid on LIN/LOX projects and has entered the LIN/LOX market. (FOF 

5.56-5.71). Finally, the record evidence shows that Matrix is currently competing for LIN/LOX 

jobs and intends to be a "competitive force" in this market. [xxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

152. As shown in the above table, during the period from 1990 to the time of the

acquisition, 83 LIN/LOX projects were awarded comprising 109 tanks with a total value of

[xxxx] million.

Response to Finding No. 152:

The proposed finding is irrelevant and inaccurate for several reasons. First, 

Complaint Counsel's LIN/LOX market statistics are irrelevant. Complaint Counsel's statistics

are irrelevant because they do not accurately reflect the current state of competition in the

LIN/LOX market. First, there is substantial empirical evidence regarding the post-Acquisition 

competitive strength of AT&V. The statistics relied on by Complaint Counsel are preAcquisition only, despite the fact that AT&V did not fully enter the LIN/LOX market until 2000. 

(See FOF 5.26-5.30). After the Acquisition, CB&I has not fared well when in direct competition 

with AT&V for LIN/LOX tank awards. CB&I has never won a LIN/LOX project when AT&V 

was a competitor bidding on the project. (Scorsone, Tr. 5018) (See also FOF 5.26-5.42; 7.127). 

AT&V has captured a majority of the post-Acquisition LIN/LOX market in the U.S., and has

done so at prices lower than PDM's pre-Acquisition prices. (Scorsone, Tr. 5017-5018; RX 208). 

Complaint Counsel's chart ignores this evidence and represents that AT&V has less than a 2

percent market share.

Further, Complaint Counsel also fails to account for new entry from firms such as 

CB&T and Matrix who have both been pre-qualified by LIN/LOX customers and permitted to 

bid on recent LIN/LOX projects. CB&T has entered the LIN/LOX market. CB&T has

submitted pricing on jobs for BOC and MG Industries. Further, Martix has entered the market 
- 69 -

CHI:1176893.3

and has bid on work for Air Liquide, Linde, Praxair, and Air Products. (FOF 5.56-5.71, 5.43-

5.55). Finally, Complaint Counsel's analysis also fails to account for Praxair's spinoff of CB&I 

in the mid-1990s and the exit of Graver from that market in 1999. (See Harris, Tr. 7307-08, 

7311-12) (FOF 7.127, 7.130). In the LIN/LOX market, Dr. Simpson admitted that CB&I's sale 

by Praxair in 1997 was a significant competitive change, a fact which would justify beginning 

the calculations in 1997, after the date of the sale. (See Simpson, Tr. 3753) (FOF 7.236).

153. As further shown in the above table, PDM won [xxx] projects ([xxxx] of the

total), including [xxx] tanks ([xxxx] of the total) with total revenues of $41.8 million ([xxxx] of 

the total).

Response to Finding No. 153:

The proposed finding is misleading for reasons cited above in Respondent's

Response to Finding No. 152. (RFOF 152).

154. CB&I won [xxx] projects ([xxxx] of the total) encompassing [xxx] tanks ([xxxxx] 

of the total) with a total value of $36.3 million ([xxxxxx] of the total).

Response to Finding No. 154:

The proposed finding is irrelevant. First, Complaint Counsel's analysis is an

inaccurate measurement of the current state of competition in the U.S. LIN/LOX market. 

Complaint Counsel's statistics do not take into account the fact that AT&V has won all three of 

the jobs it has competed on against CB&I and reduce the market share AT&V rightfully

possesses. Moreover, Complaint Counsel fails to account for new entry by Matrix and CB&T. 

(RFOF 152). In this way Complaint Counsel overstates CB&I's LIN/LOX market share. In fact, 

Dr. Harris testified that, since the Acquisition, CB&I has won only 17-18 percent of the dollar 

amounts awarded in the four markets combined. (Harris, Tr. 7223) (FOF 7.78).

155. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 155; CX 183; CX

282; CX 755; CX 1321, in camera). Graver went out of business, in 2001, and is no longer a
- 70 -

CHI:1176893.3

competitor in the LIN/LOX market. (CX 1546; Hilgar, Tr. 1543). Graver's assets were sold at 

auction. (Harris, Tr. 7312, 7313).

Response to Finding No. 155:

The proposed finding is irrelevant in that key portions of Graver's assets were

purchased by current day LIN/LOX market entrants. In fact, these assets have allowed potential 

new entrants to bid on LIN/LOX tank contracts after the Acquisition. Specifically, CB&T

purchased "quite a bit of equipment" from ITEQ/Graver when it went out of business in 1999. 

(Stetzler, Tr. 6317-18). CB&T has also hired two former Graver employees and opened an

office in Houston, in order to expand into the oil market as well as the LIN/LOX market. The 

office is also positioned to promote CB&T in the Houston area. (Stetzler, Tr. 6318-19; RX 273). 

CB&T has used and plans to utilize these assets to compete for LIN/LOX jobs in the future. 

(Stetzler, Tr. 6347, 6350-51, 6368) (FOF 3.59-3.65).

156. Matrix won four projects ([xxx] of the total) including four tanks ([xxx] of the

total) with a total value of [xxx] million ([xxx] of the total). (RX 290 at CB&I-046596-NEW; 

Newmeister, Tr. 1587; JX 37 at Exh. 3 (Newmeister, Dep.)). In August 2000, Matrix sold

Brown Steel and its fabrication facility. (Newmeister, Tr. 1589-90). Matrix's sale of Brown Steel 

competitively disadvantages Matrix in the LIN/LOX tank market. (Newmeister, Tr. 1590-91). 

Matrix has not won a LIN/LOX award since it sold Brown Steel.

Response to Finding No. 156:

The proposed finding is irrelevant and understates Matrix's abilities to compete in 

today's LIN/LOX market. The record evidence has shown that Matrix is a viable competitor in 

the LIN/LOX market that has successfully completed four LIN/LOX projects, received

recommendations from LIN/LOX customers, and continues to offer competitive pricing. (See

FOF 5.43-5.55). Matrix has successfully constructed four LIN/LOX tanks in the U.S. for Praxair 

and Air Products, and won those jobs when PDM was still in the market. (Newmeister, Tr. 2213-

14, 2173-74; FOF 5.47-5.50). Both Praxair and Air Products were satisfied with Matrix's

performance. (Newmeister, Tr. 2173-74, 2176-77; FOF 4.48-4.50). Air Products has informed 
- 71 -

CHI:1176893.3

CB&I that they consider Matrix to be "a player in the [LIN/LOX] market" and certainly consider 

them to be a "viable competitor." (RX 273; FOF 5.54). Air Liquide also believes that Matrix is 

a viable LIN/LOX supplier and has solicited bids from Matrix on at least two projects, Freeport 

and Longview, Texas. (Kamrath, Tr. 2005-06; FOF 5.53). [xxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

The proposed finding is also inaccurate to the extent it implies that Matrix does 

not have the ability to fabricate LIN/LOX tanks in-house. In fact, Mr. Newmeister testified that 

Matrix currently has the required fabrication capabilities in-house in Matrix's existing fabrication 

facility. (See Newmeister, Tr. 2197). As a result, the sale of Brown Steel will have very little 

effect on Matrix. (Harris, Tr. 7309; see also FOF 5.12, 5.17).

The fact that Matrix has not won a LIN/LOX award since it sold Brown Steel is 

not indicative of its ability to win awards. First, Matrix's bid on Air Liquide's Freeport, Texas

LIN/LOX tank was competitive. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxx] Further, since 2000 the LIN/LOX market has been in a state of decline 

and is currently described as having "overcapacity" and demand is not high. (Hilgar, Tr. 1541-

43; Stetzler, Tr. 6382-83) (See also FOF 7.128) (Harris economic analysis of Matrix and its sale 

of Brown Steel).

157. AT&V won one project ([xxx] of the total) consisting of [xxx] tanks ([xxx] of the 

total) with a value of [xxx] million ([xxx] of the total). (Cutts, Tr. 2451; RX 290 at CB&I046596-NEW).

Response to Finding No. 157:

The proposed finding is misleading because empirical evidence shows the postAcquisition competitive strength of AT&V. After the Acquisition, CB&I has not fared well

when in direct competition with AT&V for LIN/LOX tank awards. CB&I has never won a
- 72 -

CHI:1176893.3

LIN/LOX project when AT&V was a competitor bidding on the project. (Scorsone, Tr. 5018)

(See also FOF 5.26-5.42; 7.127). In the end, AT&V has captured a majority of the postAcquisition LIN/LOX market in the U.S., and has done so at prices lower than PDM's preAcquisition prices. (Scorsone, Tr. 5017-5018; RX 208) (RFOF 152).

158. After attempting without success to compete for a LIN/LOX project, BSL has

exited the U.S. LIN/LOX market. (Hilgar, Tr. 1378-1380). No foreign company has ever built a 

LIN/LOX tank in the United States. (Hilgar, Tr. 1385).

Response to Finding No. 158:

Respondents do not dispute the truth of the proposed finding.

159. As further shown in the above table, CB&I and PDM have a combined share of

[xxxxx] of the value of LIN/LOX awards, since 1990, a combined share of [xxxx] of the number 

of projects awarded and [xxx] of the number of LIN/LOX tanks. Graver has a [xxx] market

share, Matrix has a [xx] market share, and AT&V has a [xxx] market share (Simpson, Tr. 3430).

Response to Finding No. 159:

The proposed finding is irrelevant because the market statistics cited by

Complaint Counsel do not accurately reflect the state of competition in today's LIN/LOX market. 

(FOF 5.22-5.78) (showing that three competitors have successfully entered the LIN/LOX market 

in recent years). Specifically, the chart created by Complaint Counsel simply ignores postAcquisition evidence regarding the success of AT&V. In fact, AT&V has a 60 percent market 

share after the Acquisition and has never lost a LIN/LOX bid to CB&I. (FOF 5.76-5.78). 

Moreover, Complaint Counsel fails to account for CB&T in its market share analysis. CB&T 

has been pre-qualified to bid on LIN/LOX projects and has entered the LIN/LOX market. (FOF 

5.56-5.71). Finally, the record evidence shows that Matrix is currently competing for LIN/LOX 

jobs and intends to be a "competitive force" in this market. [xxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

160. As further shown in the above table, CB&I's acquisition of PDM increased

concentration substantially in the LIN/LOX market. The acquisition increased the HHI by 2635 
- 73 -

CHI:1176893.3

points to a level of 5845 based on the value of projects awarded, and increased the HHI by 2264 

to a level of 5602 based on the number of projects awarded. (Simpson, Tr. 3443, 3343-3344 

(referencing CX 1665 (demonstrative)).

Response to Finding No. 160:

For the same reasons as above, the proposed finding is irrelevant because the

market statistics cited by Complaint Counsel do not accurately reflect the state of competition in 

today's LIN/LOX market. (FOF 5.22-5.78) (showing that three competitors have successfully

entered the LIN/LOX market in recent years) (RFOF 159). Specifically, the chart created by

Complaint Counsel simply ignores post-Acquisition evidence regarding the success of AT&V. 

In fact, AT&V has a 60 percent market share after the Acquisition and has never lost a LIN/LOX 

bid to CB&I. (FOF 5.76-5.78). Moreover, Complaint Counsel fails to account for CB&T in its 

market share analysis. CB&T has been pre-qualified to bid on LIN/LOX projects and has

entered the LIN/LOX market. (FOF 5.56-5.71). Finally, the record evidence shows that Matrix 

is currently competing for LIN/LOX jobs and intends to be a "competitive force" in this market. 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxx]

161. Under the Merger Guidelines, the CB&I/PDM merger has resulted in a substantial 

increase in concentration in an already highly concentrated LIN/LOX market. The HHI level

raises the presumption that the merger will likely create or enhance market power or facilitate its 

exercise by CB&I. Merger Guidelines § 1.51(c).

Response to Finding No. 161:

Complaint Counsel's proposed finding is argumentative, conclusory, and not

supported by citation or record evidence. First, the Merger Guidelines never comment

particularly on the "CB&I/PDM merger" and citation to those guidelines as support for the broad 

assertion that the Acquisition has resulted in increased concentration, which will likely create or 

enhance CB&I's market power, is misplaced. Second, Complaint Counsel's proposed market
- 74 -

CHI:1176893.3

concentration statistics are both misleading, inaccurate, and irrelevant in light of record evidence 

detailing present competition and strong indications of potential future LIN/LOX suppliers. 

(FOF 7.235-7.237) (RFOF 160). Therefore, the proposed finding of fact should not be endorsed 

by this court.

162. Dr. Simpson testified: [T]he acquisition combined the two strongest builders of

LIN/LOX/LAR tanks in the U.S., and I think it enables them to increase price." (Simpson, Tr. 

3444; see Simpson, Tr. 3450 (Dr. Simpson established that "CB&I and PDM EC were the

strongest competitors in this marketplace prior to the acquisition)). Dr. Simpson noted that a

merger of the two strongest suppliers would enable the merged firm to increase price up until the 

point where other less-strong suppliers begin to constrain it. (Simpson, Tr. 3451). Dr. Simpson 

also testified that a merger that reduces the number of sellers of LIN/LOX tanks from four to

three or from three to two would be likely to result in an increase in price. (Simpson, Tr. 3451). 

Dr. Simpson further testified that CB&I's acquisition of PDM will enable CB&I to increase price 

by 5 percent in the market for LIN/LOX tanks over the next five years. (Simpson, Tr. 3828,

3869).

Response to Finding No. 162:

The proposed finding is inaccurate and unsupported by empirical evidence. As an 

initial matter, Dr. Simpson admitted on cross-examination that he may have underestimated the

post-Acquisition competitive strength of certain LIN/LOX competitors. (Simpson, Tr. 3703-

3707). Simpson also admitted that the knowledge that AT&V beat CB&I twice would have an 

effect on CB&I's pricing in the LIN/LOX market. (FOF 7.229; Simpson, Tr. 3829).

Evidence shows that CB&I has not been able to increase its prices on LIN/LOX 

tanks after the Acquisition. (Harris, Tr. 7315-7317) (FOF 7.133; 7.135; 5.72-5.78; see also FOF 

5.87-5.121 (finding BOC has used AT&V for several LIN/LOX projects and has been pleased

with AT&V's performance and price. BOC plans to use AT&V in the future); 5.122-5.130 

(establishing that Air Liquide awarded AT&V a LIN/LOX tank at Freeport, Texas because

AT&V was the low bidder and despite the fact CB&I lowered its price to a zero percent

margin)). CB&I has in fact lost several LIN/LOX tank jobs to other, lower cost providers. (FOF 

5.31-5.34). Finally, the record shows that LIN/LOX customers actively involved in the market 
- 75 -

CHI:1176893.3

today are satisfied with the prices they have received and their available competitive options. 

(FOF 5.79-5.184).

163. Because Graver has exited the market, the market shares understate the

competitive effects of the acquisition. Merger Guidelines § 1.52.

Response to Finding No. 163:

The proposed finding is inaccurate and misleading because, as an initial matter,

there is no citation to record evidence. The Merger Guidelines state nothing specifically about 

Graver Tank's exit from the LIN/LOX market. Second, whether Graver is included or not in

market share analysis or market concentration statistics is irrelevant because Complaint

Counsel's efforts to calculate market share in the LIN/LOX market is inaccurate. (FOF 7.235-

7.237) (RFOF 152, 160).

164. The following table shows market shares and market concentration excluding

sales by Graver:

[xxxxxxxxxxxxx]

[xxxxxxxxxxxxx]

[xxxxxx] 

[xxxxxx]

[xxxxxx] 

[xxxxxx] 

[xxxxxx] 

[xxxxxx]

[xxxxxx] 

[xxxxxx]

[xxxxxx] 

[xxxxxx] 

[xxxxxx] 

[xxxxxx]

[xxxxxxx] 

[xxxxxxx] 

[xxxxxxx]

[xxxxxx] 

[xxxxxx] 

[xxxxxx] 

[xxxxxx]

[xxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxx] [xxxxx] [xxxxx]

[xxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxx] [xxxxx] [xxxxx]

[xxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxx] [xxxxx] [xxxxx]

[xxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxx] [xxxxx] [xxxxx]

[xxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxx] [xxxxx] [xxxxx]

[xxxxxxxxxx] 

[xxxxxxxxxx]

[xxx] [xxxxx] [xxx] [xxx] [xxxxx] [xxxxx]

[xxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxx] [xxxxx] [xxxxx]

[xxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxx] [xxxxx] [xxxxx]

[xxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxx] [xxxxx] [xxxxx]

[As some of the projects are in camera, above table in its entirety should be treated in camera]
- 76 -

CHI:1176893.3

Response to Finding No. 164:

The proposed finding is misleading and inaccurate because Complaint Counsel's

chart simply assigns the market share previously owned by Graver to CB&I and PDM without 

accounting for present day competitors in the LIN/LOX market. Present day competition is

strong and there is no evidence indicating that CB&I would simply absorb Graver's outstanding 

market share. First, the record evidence has demonstrated that AT&V can compete as effectively 

as PDM or CB&I did in the LIN/LOX market, as it beat CB&I three times in a row in postAcquisition bidding and has done so at prices lower than PDM's pre-Acquisition prices. 

(Scorsone, Tr. 5017-5018; RX 208) (FOF 5.76-5.78). Second, the market concentrations

calculated by Complaint Counsel above also fail to account for the entry of CB&T or Matrix --

entry which is supported by record evidence. (FOF 5.43-5.71).

165. As shown in the above table, excluding Graver, PDM won [xxxx] of the number 

of project awards, [xxx] of the tanks, and [xxx] of the value of LIN/LOX projects awarded,

CB&I won [xxxxx] of the number of project awards, [xxxxx] of the tanks, and [xxxxx] of the

value of LIN/LOX projects awarded.

Response to Finding No. 165:

The proposed finding is irrelevant because the market statistics cited by

Complaint Counsel do not accurately reflect the state of competition in today's LIN/LOX market. 

(FOF 5.22-5.78) (showing that three competitors have successfully entered the LIN/LOX market 

in recent years) (RFOF 159). Specifically, the chart created by Complaint Counsel simply

ignores post-Acquisition evidence regarding the success of AT&V. In fact, AT&V has a 60

percent market share after the Acquisition and has never lost a LIN/LOX bid to CB&I. (FOF 

5.76-5.78). Moreover, Complaint Counsel fails to account for CB&T in its market share

analysis. CB&T has been pre-qualified to bid on LIN/LOX projects and has entered the

LIN/LOX market. (FOF 5.56-5.71). Finally, the record evidence shows that Matrix is currently 
- 77 -

CHI:1176893.3

competing for LIN/LOX jobs and intends to be a "competitive force" in this market. [xxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

166. As further shown in the above table, excluding Graver, CB&I and PDM have a

combined share of [xxx] of the value of LIN/LOX awards, [xxx] of the number of projects

awarded and [xxx] of the number of LIN/LOX tanks.

Response to Finding No. 166:

The proposed finding is misleading because combined, CB&I and PDM have not 

fared as successfully as Complaint Counsel avers in awards for LIN/LOX tanks when faced with 

current day competition. (See RFOF 152, 154, 157, 159, 164, 165).

167. When Graver's exit from the market is taken into account, CB&I's acquisition of

PDM increased the HHI by [xxx] points to a level of [xxx] based on the value of projects

awarded, increased the HHI by [xx] to a level of [xxx] based on the number of projects awarded, 

and increased the HHI by [xxx] to a level of [xxx] based on the number of tanks.

Response to Finding No. 167:

The proposed finding is misleading and inaccurate because it does not take into

account current market conditions and the strength of present day competition for LIN/LOX

tanks awards. (FOF 7.132; 7.133) (See RFOF 152; 154; 157; 159; 160). Further, based on

empirical evidence of entry and competition in the LIN/LOX market it is illogical to simply

assume that CB&I would acquire all of Graver's market share. In fact, CB&I has lost a majority 

of LIN/LOX projects to AT&V and therefore there is at least as much of a rationale to assume 

that AT&V would take-up Graver's market share. (FOF 5.76-5.78) (RFOF 164).

168. The LIN/LOX market has remained highly concentrated following the

acquisition, with CB&I and AT&V accounting for all five LIN/LOX tank awards during this

period. (CX 1758 (demonstrative); Harris, Tr. 7306-7308). Dr. Harris's compilation of the

dollar value of LIN/LOX tank awards, during the period 2001 through 2002, shows that

concentration as measured by the HHI is [xxx]. (CX 1758 (demonstrative); Harris, Tr. 7825-

7826).
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Response to Finding No. 168:

The proposed finding is inaccurate and misstates testimony given by Dr. Harris. 

As an initial matter, Complaint Counsel cites the HHIs from exhibit CX 1758, which is a

demonstrative and was never admitted into evidence for the truth of its contents. Further, Dr.

Harris never agreed that the HHIs for LIN/LOX for this time period were 5372. In fact, Dr.

Harris stated narrowly that the arithmetic used by Complaint Counsel to mechanically reach the 

number 5372 was correct. Specifically, Harris stated with regard to the number 5372: "I don't 

think it means anything, but as a mechanical matter, I believe that you have done the arithmetic 

correctly." (Harris, Tr. 7825-7826).

169. Dr. Harris acknowledged that if PDM had not been acquired by CB&I it might 

have won some of these LIN/LOX tank awards. (Harris, Tr. 7826). Dr. Harris acknowledged 

that one reason Air Liquide and BOC turned to AT&V was because they thought they needed 

some alternative to CB&I. (Harris, Tr. 7827-28). Dr. Harris credited to AT&V the award of Air 

Liquide's Freeport, Texas, LIN/LOX project, even though after the award, Air Liquide requested 

CB&I to replace AT&V on the project. (Harris, Tr. 7830; Scorsone, Tr. 5036).

Response to Finding No. 169:

The proposed finding mischaracterizes Dr. Harris' testimony to the extent it

implies Dr. Harris concluded that the Acquisition has harmed competition in the LIN/LOX

market. In fact, Dr. Harris has concluded the opposite, that an economic analysis of market

behavior in the LIN/LOX market indicates that competition has not been harmed by the

Acquisition. (Harris, Tr. 7302, 7314-15) (FOF 7.124, 7.131).

Further, Dr. Harris has credited AT&V the award of the Freeport project for good 

reason -- because AT&V was awarded the job and is currently performing the work. (FOF

5.122, 5.141). Moreover, the dispute between Air Liquide and AT&V is a business dispute and 

not a dispute regarding AT&V's technical capabilities. (FOF 5.131-5.139). Finally, Dr. Harris 

noted that AT&V is a strong entrant in the LIN/LOX market and has won three of the five post-
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Acquisition LIN/LOX projects. AT&V's success rate supports the view that competition has not 

been harmed in the LIN/LOX market. (Harris, Tr. 7308-10) (FOF 7.127).

170. AT&V has not replaced the competition that existed between CB&I and PDM. 

(Simpson, Tr. 3452).

Response to Finding No. 170:

The proposed finding is inaccurate and unsupported by empirical evidence found 

in the record. As an initial matter, Dr. Simpson admitted on cross-examination that he may have 

underestimated the post-Acquisition competitive strength of AT&V because it was awarded

LIN/LOX contracts of which he was unaware. (Simpson, Tr. 3703-3707). Dr. Simpson also 

admitted that the knowledge that AT&V beat CB&I twice would have an effect on CB&I's

pricing in the LIN/LOX market. (FOF 7.229; Simpson, Tr. 3829).

Empirical evidence shows CB&I has lost every LIN/LOX tank job it has bid

against AT&V. (Scorsone, Tr. 5018) (FOF 5.31-5.34). As a result of post-Acquisition 

competition CB&I has not been able to increase its prices on LIN/LOX tanks. (Harris, Tr. 7315-

7317) (FOF 7.133; 7.135; 5.72-5.78; see also FOF 5.87-5.121 (finding BOC has used AT&V for 

several LIN/LOX projects and has been pleased with AT&V's performance and price. BOC

plans to use AT&V in the future); FOF 5.122-5.130 (establishing that Air Liquide awarded

AT&V a LIN/LOX tank at Freeport, Texas because AT&V was the low bidder and despite the 

fact CB&I lowered it's price to a zero percent margin)). Finally, the record shows that LIN/LOX 

customers actively involved in the market today are satisfied with the prices they have received 

and their available competitive options. (FOF 5.79-5.184).

D. Market Shares and Concentration in the LPG Market

171. Analysis of LPG tanks sold between 1990 and early 2001 indicates that CB&I and 

PDM were the two strongest suppliers of LPG tanks in the United States. (Simpson, Tr. 3363, 

3400, 3402-3).
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Response to Finding No. 171:

This finding is misleading in that it ignores the current state of competition in the 

LPG market, and therefore is irrelevant in determining the competitive effects of the Acquisition 

on the LPG market. For example, such historical information fails to account for AT&V's

success in the LPG market from 2000 to the present as well as viable competitors such as Matrix 

and Chattanooga Boiler & Tank. (N. Kelley, Tr. 7088-89, 7085, 7090; Cutts, Tr. 2334; Stetzler, 

Tr. 6355, 6365; CX 396, CX 397) (FOF 4.17-4.19, 4.43-4.46, 4.47-4.49). Further, such

historical data does not account for the lack of demand and virtually non-existent market for

LPG tanks. (Harris, Tr. 7281-82) (FOF 4.10-4.15). Therefore, analyzing the LPG market based 

on a ten-year time frame is arbitrary and not reflective of the current competitive conditions in 

the LPG market. (Harris, Tr. 7364-65).

172. CB&I and PDM have built the great majority of LPG tanks constructed in the

United States. As shown in the table below, of the fourteen LPG tanks built in the United States 

between 1990 and 2001, CB&I built [xxx] and PDM built [xxx]:

[xxxxxxxxxxxxxxx]

[xxxxxxxxxxx] [xxxxxxxxx] [xxxxxxx] 

[xxxxxxx]

[xxxxxx] [xxxxxxx] [xxxxxxx]

[xxxxxxxxxxxxxx] [xxxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxxxxxx]

[xxxxxxxxxxxxxx] [xxxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxxxxxx]

[xxxxxxxxxxxxxx] [xxxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxxxxxx]

[xxxxxxxxxxxxxx] [xxxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxxxxxx]

[xxxxxxxxxxxxxx] [xxxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxxxxxx]

[xxxxxxxxxxxxxx] [xxxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxxxxxx]

[xxxxxxxxxxxxxx] [xxxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxxxxxx]

[xxxxxxxxxxxxxx] [xxxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxxxxxx]

[xxxxxxxxxxxxxx] [xxxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxxxxxx]

[xxxxxxxxxxxxxx] [xxxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxxxxxx]

[xxxxxxxxxxxxxx] [xxxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxxxxxx]

[xxxxxxxxxxxxxx] [xxxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxxxxxx]

[xxxxxxxxxxxxxx] [xxxxxxxxxxx] [xxx] [xxxxx] [xxx] [xxxxxxxxx]

[As some of the projects are in camera, above table in its entirety should be treated in camera]
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(CX 486; CX 824; CX 1210, in camera; CX 1212 at 7, in camera ; CX 397, in camera; CX 1657 

(demonstrative), in camera; RX 757; Simpson, Tr. 3368, 3372-3375).

Response to Finding No. 172:

This finding is misleading and irrelevant for a number of reasons. First, this

finding is not indicative of the current competitive conditions in the LPG market as set forth in 

RFOF 171. Second, this finding is misleading because from 1993 to the date of the Acquisition, 

CB&I did not build a single LPG tank. (Harris, Tr. 7286) (FOF 4.12). From 1994 to 2001, there 

were only 4 LPG projects and PDM won 3 while AT&V won 1. (Harris, Tr. 7285) (FOF 4.13). 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 396 at 2) (FOF 4.18).

173. As shown in the above table, twelve field-erected LPG projects were awarded 

between 1990 and early 2001 in the United States. (Simpson, Tr. 3399 (referencing CX 1661,

demonstrative)). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxx]. (CX 1660 (demonstrative); CX 486; RX 678; CX 397 at 1, in 

camera). No foreign firms built an LPG tank in the United States during this period.

Response to Finding No. 173:

This finding is misleading, incomplete, and irrelevant for the reasons set forth in 

RFOF 171-172. Further, this finding's reference to foreign firms is misleading because foreign 

tank manufacturers are currently soliciting LPG business in the United States. (N. Kelley, Tr.

7126) (FOF 4.52-4.54). Moreover, this finding is unreliable as Complaint Counsel now states

that twelve field-erected LPG projects were awarded between 1990 and early 2001, while in

CCFF 172 the number it asserted was fourteen.

174. Dr. Harris acknowledged that CB&I and its two acquisitions, PDM and Morse,

account for all but one of the sales of LPG tanks in the United States from 1990 to the time of the 

acquisition. (Harris, Tr. 7522).
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Response to Finding No. 174:

This finding is misleading to the extent that Dr. Harris qualified his answer to

include that CB&I's acquisition of Morse did not impact competition for LPG tanks in any way. 

(Harris, Tr. 7522-23). Moreover, from 1993 to the Acquisition, CB&I did not build a single

LPG tank. (Harris, Tr. 7286) (FOF 4.12). Further, this finding's reliance on the 1990 to 2001 

time frame is misleading, incomplete, and irrelevant as set forth in RFOF 171-173.

175. Dr. Simpson calculated that the probability of observing CB&I and PDM win [xx] 

of twelve projects if some other firm competed on an equal footing with CB&I and PDM is 18 

percent. (Simpson, Tr. 3399 (referencing CX 1661, demonstrative)).

Response to Finding No. 175:

This finding is misleading, incomplete, irrelevant, and unreliable for a number of 

reasons. First, the figures underlying Dr. Simpson's calculations are flawed, misleading, and

incomplete as set forth in RFOF 171-174. As a result, this finding is unreliable and improper. 

Moreover, this calculated probability is irrelevant for the same reasons as set forth in RFOF 171-

174. (See, e.g., Harris, Tr. 7339).

176. The value of the LPG tank sold by [xxx] was a small fraction of the value of the 

other LPG tanks sold during this period. (Simpson, Tr. 3395 (referencing CX 1658,

demonstrative)). Dr. Simpson testified that if this project is dropped from the sample, then

CB&I won [xxx] LPG projects, PDM won [xxx] LPG projects, and Morse Tank won [xxx] LPG 

project. (Simpson, Tr. 3399). Dr. Simpson testified that the probability of observing CB&I and 

PDM win [xxx] of eleven projects, if some other firm competed on an equal footing with CB&I 

and PDM, is 7.5 percent. (Simpson, Tr. 3400).

Response to Finding No. 176:

This finding is misleading, incomplete, irrelevant, and unreliable for a number of 

reasons. First, this finding is misleading because the value of the LPG tank sold by AT&V is

irrelevant to AT&V's ability to successfully complete and compete in the LPG market. (See N. 

Kelley, Tr. 7085-86, 7107-08) (FOF 4.36). On the ITC project, AT&V constructed a fielderected LPG tank, a project that was completed on time, without any defects, to the satisfaction 
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CHI:1176893.3

of the customer, at a fair price, and through a competitive bidding process that did not include

PDM. (N. Kelley, Tr. 7088-89, 7130-31; Cutts, Tr. 2455-56, 2495) (FOF 4.16-4.42). Second, 

this finding is unreliable and improper to the extent that it asserts Dr. Simpson's probability

analysis in the LPG market as expressed in RFOF 175. Moreover, this finding is misleading,

incomplete, and irrelevant as set forth in RFOF 171-175.

177. Dr. Simpson testified that an analysis of LPG tanks and ammonia tanks sold

between 1990 and early 2001 provides further evidence that CB&I and PDM were the two

strongest suppliers of LPG tanks in the United States. (Simpson, Tr. 3400). Dr. Simpson

testified that the skill set required to build field-erected ammonia tanks is very similar to the skill 

set required to build field-erected LPG tanks (Simpson, Tr. 3398 (citing CX 1615 and interviews 

with industry participants)). Nineteen projects for field-erected LPG tanks and field-erected 

ammonia tanks were awarded between 1990 and early 2001 in the United States. (Simpson, Tr. 

3400 (referencing CX 1660 (demonstrative))). CB&I won [xxx] of these projects, PDM won

[xxx] of these projects, Morse won [xx] of these projects, and AT&V won [xx] of these projects. 

(Simpson, Tr. 3400 (referencing CX 1661 (demonstrative))). Dr. Simpson testified that the

probability of observing CB&I and PDM win [xxx] of nineteen projects if some other firm

competed on an equal footing with CB&I and PDM is only 2.4 percent. (Simpson, Tr. 3400

(referencing CX 1661, demonstrative)).

Response to Finding No. 177:

This finding is misleading, irrelevant, incomplete, unreliable, and is wholly

unsupported by any record evidence. First, this finding is irrelevant because ammonia tanks are 

not a relevant product market at issue. Second, this finding is wholly unsupported by any record 

evidence. Nowhere in this record is any cite regarding the skill set required to build an ammonia 

tank. However, Complaint Counsel attempts to assert, as a finding of fact, the testimony of Dr. 

Simpson as to such facts. Moreover, "interviews with industry participants" is not a part of the 

record evidence in this case and citing to them is wholly improper. Third, this finding is

misleading, incomplete, irrelevant, and unreliable as set forth in RFOF 171-176.

178. Dr. Simpson concluded, based on documents, opinions of customers, and on his

probability analysis, that CB&I and PDM were the two strongest competitors in the U.S. market 

for LPG tanks. (Simpson, Tr. 3402-3).
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Response to Finding No. 178:

This finding relies on materials wholly unsupported by any record evidence. It

attempts to assert as a finding of fact statements and opinions that are not a part of the record

evidence. In addition, this finding is misleading, incomplete, irrelevant, and unreliable for the

reasons set forth in RFOF 171-177. In particular, this finding ignores AT&V's success in the

LPG market as well as viable competitors such as Matrix and Chattanooga Boiler & Tank. (N. 

Kelley, Tr. 7088-89, 7085, 7090; Cutts, Tr. 2334; Stetzler, Tr. 6355, 6365; CX 396, CX 397)

(FOF 4.17-4.19, 4.43-4.46, 4.47-4.49).

179. Dr. Simpson testified that Morse Tank had a large advantage in competing for a

project to build an LPG tank for Texaco in Ferndale, Washington in 1994. Dr. Simpson noted

that this LPG tank project was very close to Morse Tank's headquarters and fabrication plant and 

very far from CB&I 's headquarters and fabrication plant. (Simpson, Tr. 3386-8 (citing CX 1482 

and referring to CX 1195 for proposition that location provides a competitive advantage)). Dr.

Simpson noted that a later PDM document describing competitors in the U.S. LPG tank market 

did not list Morse as a competitor. (Simpson, Tr. 3389 (citing CX 94)).

Response to Finding No. 179:

This finding is misleading, incomplete, and irrelevant for a variety of reasons. 

First, Ray Maw testified that Morse actually had a competitive cost disadvantage on the Ferndale 

LPG project in 1994 because of its obligations under a union collective bargaining agreement. 

(Maw, Tr. 6563-64, 6566, 6680) (FOF 4.99). These union obligations resulted in a higher wage 

payment, greater benefits, and subsistence cost obligations incurred by Morse that a nonunion

employer, such as CB&I or PDM, would not be required to pay. (Maw, Tr. 6553-56) (FOF 4.99-

4.109). In fact, Dr. Simpson even admitted that he did not know Morse was a union employer, 

that Morse in fact paid subsistence costs on the Ferndale project, and that the Ferndale project 

was a nonunion project. (Simpson, Tr. 5554-57). He explicitly stated that Morse would have

been "at a disadvantage on a merit [nonunion] job." (Simpson, Tr. 5555). This disadvantage 

was estimated by Mr. Maw to be $180,000, more than outweighing any locational advantage
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CHI:1176893.3

Morse may have had. (Maw, Tr. 6565-66) (FOF 4.108-4.111). Even Dr. Simpson noted that he 

did not know if Morse's disadvantage outweighed any locational cost advantage. (Simpson, Tr. 

5557). Second, in his analysis, Dr. Simpson failed to account for CB&I's fabrication facility

located in Fontana, California in 1994, or the alternative of transporting by railroad to the

railspur at the Ferndale site. (Maw, Tr. 6606, 6682, 6685) (FOF 4.110-4.119). Third, CX 1482 

is irrelevant; it is a marketing and sales tool that naturally does not express cost disadvantages

that Morse would realize on the project. (Maw, Tr. 6680-81) (Respondents also note that CX

1195 is irrelevant as it is a PDM memorandum discussing Graver Tank). Finally, any assertion 

relating to Morse as a competitor in the LPG market is irrelevant because from the first day in

this case, Respondents have asserted that "The Morse Tank Story" demonstrates the ease of entry 

and lack of entry barriers in the relevant product markets, not that Morse is a current competitor 

to CB&I. (See Opening Br. at 90-93) (FOF 4.90-4.98).

180. As shown in the following table, in the U.S. market for LPG tanks, between 1990 

and early 2001, PDM had sales of [xxxxxxxxx], CB&I had sales of [xxxxxxxxx], Morse Tank 

had sales of [xxxxxx], and AT&V had sales of [xxxxxx]. (Simpson, Tr. 3403-04 (referencing 

CX 1662, demonstrative)). Based on these sales, PDM had a [xxx] percent market share, CB&I 

had a [xx] percent market share, Morse Tank had an [xx] percent market share, and AT&V had a 

[xxx] percent market share. (Simpson, Tr. 3404).
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CHI:1176893.3

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

[xxx] [xxx] [xxx] [xxx]

[xxxxxxxxxxxxxxxxxxxxxxxxxx] [xxx] [xxx] [xxx] [xxx]

[xxxxxxxxxxxxxxxxxxxxxxxxxx] [xxx] [xxx] [xxx] [xxx]

[xxxxxxxxxxxxxxxxxxxxxxxxxx] [xxx] [xxx] [xxx] [xxx]

[xxxxxxxxxxxxxxxxxxxxxxxxxx] [xxx] [xxx] [xxx] [xxx]

[xxxxxxxxxxxxxxxxxxxxxxxxxx] [xxx] [xxx] [xxx] [xxx]

[xxxxxxxxxxxxxxxxxxxxxxxxxx] [xxx]

[xxxxxxxxxxxxxxxxxxxxxxxxxx] [xxx]

[xxxxxxxxxxxxxxxxxxxxxxxxxx]

[xxx]

[xxxxxxxxxxxxxxxxxxxxxxxxxx] [xxx]

[xxxxxxxxxxxxxxxxxxxxxxxxxx] [xxx]

[xxxxxxxxxxxxxxxxxxxxxxxxxx] [xxx]

[xxxxxxxxxxxxxxxxxxxxxxxxxx] [xxx]

[As some of the projects are in camera, above table in its entirety should be treated in camera]

Response to Finding No. 180:

This finding is misleading, incomplete, irrelevant, and unreliable for a number of 

reasons. The figures underlying Dr. Simpson's calculations are flawed, misleading, and

incomplete as set forth in RFOF 171-178. This finding does not accurately reflect the current 

competitive conditions in the LPG market. (RFOF 171). New competitors are currently active 

in pursuing LPG projects, such as AT&V, Matrix and CB&T. (FOF 4.46-4.54). Further,

Complaint Counsel's time period dating back to 1990 is arbitrary. (Simpson, Tr. 3704-05) (See

Opening Br. at 16-19). In fact, from 1993 to the Acquisition, CB&I did not built a single LPG 

tank, corresponding to a zero change in HHI for the LPG market. (Simpson, Tr. 3744; Harris, 

Tr. 7286) (FOF 4.12, 7.236).
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CHI:1176893.3

181. CB&I's acquisition of PDM increased LPG market concentration, as measured by 

the HHI, by [xxx] points to a level of [xxx]. The combined market share of the merged company 

is [xxx] percent. (Simpson, Tr. 3404-3405).

Response to Finding No. 181:

This finding is misleading and unreliable because HHI calculations are not

accurate in determining the concentration in the LPG market due to the extraordinarily thin and 

almost nonexistent demand, and because of recent entry into the market by Matrix and AT&V. 

(Cutts, Tr. 2495; N. Kelley, Tr. 7088-90, 7130-31; Harris, Tr. 7281-82) (FOF 4.10, 4.17-4.22, 

4.42, 4.43-4.46). Further, CB&I did not built an LPG tank from 1993 to the date of the

Acquisition, corresponding to a zero change in HHI for the LPG market. (Simpson, Tr. 3744;

Harris, Tr. 7286) (FOF 4.12, 7.236) (See also Opening Br. at 16-19).

182. Under the Merger Guidelines, the CB&I/PDM merger has resulted in a substantial 

increase in an already highly concentrated LPG market. The HHI level raises the presumption 

that the merger will likely create or enhance market power or facilitate its exercise by CB&I. 

Merger Guidelines § 1.51(c).

Response to Finding No. 182:

This finding is misleading because HHI calculations are not accurate in

determining the concentration in the LPG market due to the extraordinarily thin and almost

nonexistent demand. (Harris, Tr. 7281-82) (FOF 4.10). Moreover, this finding is further

misleading and unreliable because any presumption is directly contradicted by actual events in

the LPG market. For instance, CB&I did not built an LPG tank from 1993 to the date of the

Acquisition, corresponding to a zero change in HHI for the LPG market. (Simpson, Tr. 3744;

Harris, Tr. 7286) (FOF 4.12, 7.236). (See also Opening Br. at 16-19). According to Baker 

Hughes, an HHI change of zero combined with two entrants, AT&V and Matrix, recently

competing in the LPG market, with low demand, low barriers to entry, and customer perceptions 
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of competitive pricing on LPG projects is sufficient to rebut any alleged presumption. (Opening 

Br. at 88-97) (FOF 4.1-6.160).

183. Shortly after the complaint issued in this matter, CB&I acquired Morse,

eliminating the firm that had accounted for the next most substantial share of LPG sales prior to 

the acquisition. (Maw, Tr. 6545). Because CB&I has acquired Morse Tank, the market shares 

understate the competitive effects of the acquisition. Merger Guidelines § 1.52.

Response to Finding No. 183:

This finding is misleading and incomplete because when Morse was acquired on 

November 30, 2001 by CB&I, AT&V had already successfully completed LPG tanks. (Maw,

Tr. 6545; N. Kelley, Tr. 7088-89, 7130-31; CX 396, CX 397) (FOF 4.16-4.42, 4.75). In

addition, Morse has not built or bid on an LPG tank project since 1994. (Maw, Tr. 6546-48) 

(FOF 4.73). Consistent with Respondents' position in this case, Morse is not a current LPG

competitor. (See Opening Br. at 90-93). The impact of CB&I's acquisition of Morse has no

impact in anyway on the competitive effects of Acquisition. (Harris, Tr. 7522-23).

184. The Morse acquisition further increased CB&I's share of LPG sales to [xxx], 

leaving AT&V as the only competition to CB&I in the market. CB&I's acquisition of Morse

further increased concentration in LPG, as measured by the HHI, by an additional [xxx] points to 

a level of [xxx]. (Simpson, Tr. 3404).

Response to Finding No. 184:

This finding is misleading and irrelevant for the reasons set forth in RFOF 180-

183. (See also Opening Br. at 16-19). In particular, this finding does not account for the lack of 

demand and virtually "non-existent" market for LPG tanks. (Harris, Tr. 7281-82) (FOF 4.10-

4.15). Further, CB&I, combined with Morse, did not built an LPG tank from 1994 to the date of 

the Acquisition, corresponding to a zero change in HHI for the LPG market. (Simpson, Tr.

3744) (FOF 7.236). More importantly, this finding is incomplete when it states that AT&V is

the only competitor left in the LPG market. Direct record evidence exists to the contrary. 

Matrix has also bid on current LPG projects. (N. Kelley, Tr. 7088-89, 7085, 7090; Cutts, Tr.
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CHI:1176893.3

2334; CX 396, CX 397) (FOF 4.17-4.19, 4.47-4.49). In fact, LPG customers have testified that 

Matrix is "a large contractor, and quite capable" of building an LPG tank. (N. Kelley, Tr. 7085, 

7090) (FOF 4.43-4.46). Matrix has bid on LPG projects and intends to pursue them in the future. 

(N. Kelley, Tr. 7083-84; Newmeister, Tr. 2180-82) (FOF 4.34, 4.43).

185. Calculations by Respondents' expert show a similar result. Dr. Harris presented a 

demonstrative exhibit depicting LPG sales in the United States from 1992 through 2002. (Harris, 

Tr. 7282-7284 (referencing RX 947)). Dr. Harris acknowledged that his demonstrative exhibit 

regarding sales in the LPG market is essentially the same exhibit used by Dr. Simpson (Harris, 

Tr. 7284-7285).

Response to Finding No. 185:

This finding is misleading and unsupported by the record evidence. While Dr.

Harris presented a chart similar to Dr. Simpson's demonstrative, Dr. Harris successfully attacked 

Dr. Simpson's conclusions and expressly disagreed with Complaint Counsel's findings. 

Complaint Counsel's assertion that Dr. Harris reached a similar result is unsupported by the

evidence. For example, Dr. Harris expressly stated that Dr. Simpson's structural analysis does

not accurately reflect the current level of competition in the LPG market. (Harris, Tr. 7286-87). 

Further, Dr. Simpson fails to recognize that CB&I did not win an LPG project from 1993 to the 

Acquisition and fails to consider entry in the LPG market. (Harris, Tr. 7287). (See also RFOF 

171-184).

186. The figures presented by Dr. Harris confirm that the United States LPG tank

market is highly concentrated and that the acquisition of PDM substantially increased market

concentration. Of the eight LPG jobs during this period, [xxx] were performed by CB&I, [xxx]

by PDM, [xx] by Morse, and [xx] by AT&V. (Harris, Tr. 7285). The one LPG tank constructed 

by AT&V was only [xxx], much smaller than historical LPG tanks constructed in the United

States. (Harris, Tr. 7281).

Response to Finding No. 186:

This finding is misleading, incomplete, irrelevant, and unreliable for a number of 

reasons. First, Complaint Counsel miscites the record evidence. For example, Dr. Harris
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testified that historical LPG tank prices are much smaller than LNG tanks, not as Complaint

Counsel asserts in CCFF 186 that AT&V's 2000 LPG tank was much smaller than historical LPG 

tanks. (Harris, Tr. 7281). Second, this finding is irrelevant because Dr. Harris testified that the 

Acquisition has not harmed or reduced competition in the LPG market. (Harris, Tr. 7280-81). 

Third, this finding is misleading because the value of the LPG tank sold by AT&V is irrelevant 

to AT&V's ability to successfully compete in the LPG market. (See generally N. Kelley, Tr.

7085-86, 7107-08) (FOF 4.36). On the ITC project, AT&V constructed a field-erected LPG

tank, a project that was completed on time, without any defects, to the satisfaction of the

customer, at a fair price, and through a competitive bidding process that did not include PDM. 

(N. Kelley, Tr. 7088-89, 7130-31; Cutts, Tr. 2455-56, 2495) (FOF 4.16-4.42).

187. Using his figures for the dollar value of LPG projects sold in the United States

from 1992 through 2002, Dr. Harris determined that CB&I accounted for [xxxx], PDM

accounted for [xxx], Morse accounted for [xxx], and AT&V accounted for [xxx]. (CX 1757

(demonstrative); Harris, Tr. 7732-7734). According to Dr. Harris's figures, CB&I and PDM

together account for 88.3%, and together with Morse account for roughly [xxx] of the dollar

value of LPG tank projects sold in the United States during the period 1992 through 2002. (CX 

1757 (demonstrative); Harris, Tr. 7732-7734, 7773-7774; see Harris, Tr. 7770 ("looking at LPG 

projects sold in the United States 1992 through 2002, I think PDM plus CB&I plus Morse

accounted for roughly 99 percent of the dollar value during that period.")).

Response to Finding No. 187:

This finding is another example of Complaint Counsel's attempt to mislead and

distort the record evidence. Dr. Harris specifically testified that he did not calculate percentages 

of the LPG market based on dollar values -- Complaint Counsel calculated these statistics on its 

own and made its own determinations. (Harris, Tr. 7732-74). Dr. Harris only confirmed that the 

mechanical process of adding numbers together was as Complaint Counsel said it was

performed. In fact, Dr. Harris stated on the record that he was not comfortable with Complaint 

Counsel's attempt to alter RX 947 in the form of CX 1757. (Harris, Tr. 7754). Moreover, Dr.

Harris' direct quote set forth by Complaint Counsel is taken entirely out of context and is
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misleading. (See Harris, Tr. 7770). Dr. Harris did not state that his own belief was that CB&I 

accounted for 99 percent of the LPG dollar value. Rather, Dr. Harris agreed with Complaint

Counsel that the sum of all Complaint Counsel's percentages added together was 99 percent. 

(Harris, Tr. 7767-70). Finally, any attempt to use dollar figures from 1992 as compared to dollar 

figures of projects in 2001 to determine market share is misleading and fails to reflect the current 

competitive conditions in the LPG market. (Harris, Tr. 7753-54).

188. Using Dr. Harris's dollar sales figures, CB&I's acquisition of PDM increased the 

HHI by [xxx] points to a level of [xxx]. (CX 1757 (demonstrative); Harris Tr. 7775-7776, 7759-

7762, 7765). CB&I's subsequent acquisition of Morse further increased the HHI by [xxx] points 

to a level of [xxx]. (CX 1757 (demonstrative); see Harris, Tr. 7772-7773).

Response to Finding No. 188:

This finding is misleading, attempts to distort Dr. Harris' testimony, and is wholly 

unsupported by the record evidence. Dr. Harris did not perform these HHI calculations. In fact, 

he testified against them. (Harris, Tr. 7753-54, 7767-68). Instead, Complaint Counsel is

asserting as a finding its own calculation of HHIs. Dr. Harris specifically testified that HHIs are 

not accurate indicators in this case. (Harris, Tr. 7221, 7227-29) (FOF 7.114, 7.115-7.116) (See

Opening Br. at 16-19).

E. Market Shares and Concentration in the TVC Market

189. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (Simpson, Tr. 3489 (citing CX 272; 

CX 857, in camera; CX 264; CX 1040 at PDM-HOU 010889; CX 94 at PDM-HOU 017583)). 

Since 1960, the only companies that have built TVCs are PDM and CB&I. (Scully, Tr. 1110, 

1115 (referencing RX 178); Higgins, Tr. 1267; Newmeister, Tr. 1564). PDM and CB&I are the 

only TVC suppliers known to customers. (Scully, Tr. 1110; Neary, Tr. 1430 (referencing RX

178); Higgins, Tr. 1267 (referencing RX 178); Gill, Tr. 204-205).

Response to Finding No. 189:

Respondents do not dispute the truth of this statement, except to note that CB&I 

was a fringe competitor in the field-erected TVC market prior to the Acquisition because of its 
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lack of experience and lack of commitment to the market. (FOF 6.26-6.64; Opening Br. 121-

122). Indeed, CB&I has not built a field-erected TVC since 1984. (Scorsone, Tr. 5055-56; 

Glenn, Tr. 4089, 4160; Scully, Tr. 1187-89, 1193; Higgins, Tr. 1276-77) (FOF 6.26). CB&I has 

never built a mailbox-shaped field-erected TVC. (Scully, Tr. 1193; Neary, Tr. 1467; Scorsone, 

Tr. 5056; FOF 6.27). Furthermore, CB&I had already exited the field-erected TVC market in the 

late 1980's, which left PDM as the only competitor for field-erected TVCs in the U.S. until 1997. 

(Scully, Tr. 1188; [xxxxxxxxxxxxxxxxxxxxxx] (FOF 6.40).

190. Since 1990, PDM built five TVCs, several of which were awarded prior to 1990, 

and CB&I has been awarded [xxx]. (CX 849 at 117-118 (Steimer, IHT) (referencing CX 861 at 

PDM-HOU00036163); CX 827 at 5; Thompson, Tr. 2061-2062; Scully, Tr. 1169; CX 926 at

CB&I 007212-HOU).

Response to Finding No. 190:

This finding is misleading and inaccurate. Specifically, even Complaint

Counsel's own expert witness disputes the number of field-erected TVCs built since 1990. 

(CCFF 192). In fact, PDM has built only one field-erected TVC since 1990, and CB&I, though 

it has been awarded a field-erected TVC that was ultimately canceled, has not built one since

1984. (CX-1048 at 14; Scorsone, Tr. 5055-56; Glenn, Tr. 4089, 4160; Scully, Tr. 1187-89, 

1193; Higgins, Tr. 1276-77) (FOF 6.26, 6.199).

191. By any measure the TVC market is highly concentrated and the acquisition

greatly increased the level of market concentration. Dr. Simpson testified that he would assign a 

50-percent market share to CB&I and a 50-percent market share to PDM based on the opinions 

of market participants, documents, and the history of awarded projects. (Simpson, Tr. 3492-3, 

3495-6). Based on these market shares, the acquisition increased market concentration, as

measured by the HHI, by 5000 points to a level of 10,000. (Simpson, Tr. 3494).

Response to Finding No. 191:

This finding is inaccurate. CB&I has not built a field-erected TVC since 1984. 

(Scorsone, Tr. 5055-56; Glenn, Tr. 4089, 4160; Scully, Tr. 1187-89, 1193; Higgins, Tr. 1276-77) 

(FOF 6.26). Furthermore, CB&I had already exited from the field-erected TVC market in the 
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late 1980's, which left PDM as the only competitor for field-erected TVCs in the U.S. until 1997. 

(Scully, Tr. 1189; [xxxxxxxxxxxxxxxxxxxxxx] (FOF 6.40).

192. As shown in the following table, if CB&I and PDM are assigned market shares

based on the dollar value of awarded sales since 1990, CB&I has a [xxx] percent market share, 

and PDM has a [xxx] percent market share. (Simpson, Tr. 3493-4).

[xxxxxxxxxxxxxxx]

[xxxxxx] [xxxxxx] [xxxxxx] [xxxxxx] [xxxxxx] [xxxxxx]

[xxxxxx] [xxxxxx] [xxxxxx] [xxxxxx] [xxxxxx] [xxxxxx]

[xxxxxx] [xxxxxx] [xxxxxx] [xxxxxx] [xxxxxx] [xxxxxx]

[xxxxxx] [xxxxxx] [xxxxxx] [xxxxxx] [xxxxxx] [xxxxxx]

[xxxxxx] [xxxxxx]

[xxxxxx] [xxxxxx]

[xxxxxx] [xxxxxx]

[xxxxxx] [xxxxxx]

(CX 1210 at 7, in camera; CX 567 at CB&I 007139-HOU)

Response to Finding No. 192:

This finding is misleading and inaccurate for four reasons. First, the market

concentration statistics are virtually meaningless, as they were generated using a total of two data 

points over an eleven-year period. (Opening Br. 119). Second, CB&I was a fringe competitor in 

the field-erected TVC market prior to the Acquisition because of its lack of experience and lack 

of commitment to the market. (FOF 6.26-6.64; Opening Br. 121-122). Indeed, CB&I has not 

built a field-erected TVC since 1984. (Scorsone, Tr. 5055-56; Glenn, Tr. 4089, 4160; Scully, Tr. 

1187-89, 1193; Higgins, Tr. 1276-77) (FOF 6.26). Third, CB&I had already exited from the

field-erected TVC market in the late 1980's, which left PDM as the only competitor for fielderected TVCs in the U.S. until 1997. (Scully, Tr. 1189; [xxxxxxxxxxxxxxxxxx] (FOF 6.40). 

Fourth, while CB&I was awarded a bid in 2000, a contract was never signed and the project is 
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canceled. (FOF 6.169-6.201). Without the proposed Spectrum Astro project included (and it

cannot be since the product was never sold), PDM would have an HHI of 10,000 since 1984. 

(See Reply Br. Part I.A.).

193. As shown in the above table, based on the dollar value of TVC awards since

1990, CB&I and PDM have a combined share of 100%, and the acquisition increases market

concentration, as measured by the HHI, by [xxx] points to a level of 10,000. (Simpson, Tr.

3494).

Response to Finding No. 193:

Respondents dispute this finding for the reasons set forth in RFOF 192.

194. Under the Merger Guidelines, the CB&I/PDM merger has resulted in a substantial 

increase in concentration in an already highly concentrated TVC market. The HHI level raises 

the presumption that the merger will likely create or enhance market power or facilitate its

exercise by CB&I. Merger Guidelines § 1.51(c).

Response to Finding No. 194:

The Merger Guidelines are not controlling. The Merger Guidelines do not

establish a criteria for evaluating entry that is binding on this Court; instead the Merger

Guidelines, if anything, are binding on Complaint Counsel and it is Complaint Counsel’s burden 

to show that it brought this proceeding in accordance with its own Guidelines. The proper legal 

analysis under which entry should be analyzed is set forth in United States v. Baker Hughes, 908 

F.2d 981, 987-88 (D.C. Cir. 1990). (See Opening Br. Part I.D.) Moreover, non-existent demand 

explains the high concentration in the field-erected TVC market. (See RFOF 6.11-6.16). The

market for field-erected TVC's is not large enough to support the existence of two suppliers in 

the U.S. (Scully, Tr. 1226-27; RFOF 6.97). A breakup would result in two smaller companies 

that would each be substantially weaker than the current CB&I-PDM. (Scully, Tr. 1239-40; 

RFOF 6.96).

195. Based on the experiences of TVC customers, Dr. Simpson concluded that CB&I's 

acquisition of PDM would lead to higher prices in the market for TVCs. (Simpson, Tr. 3501).
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Response to Finding No. 195:

This finding is misleading and inaccurate, because CB&I was a fringe player and 

because CB&I has offered a remedy package to this Court that field-erected TVC customers

agree would benefit competition and maintain favorable prices for field-erected TVC customers 

in the future. (FOF 6.99-6.121). Complaint Counsel relies on its expert to prematurely and

inaccurately conclude that prices will increase and can cite no evidence of a field-erected TVC

price increase in the record.

VI.

THE MERGER WILL LIKELY LESSEN COMPETITION

BECAUSE IT ELIMINATES PDM AS CB&I'S CLOSEST COMPETITOR

AND OTHER FIRMS CANNOT EFFECTIVELY REPLACE PDM

196. Respondents' high market shares in each of the relevant markets demonstrates that 

the two firms were the first and second best competitive choices for customers.

Response to Finding No. 196:

Complaint Counsel’s finding number 196 is misleading because, as has been

stated repeatedly, market shares as calculated by Complaint Counsel are not predictive of future 

competition in the alleged product markets. (See supra RFOF 7.) Furthermore, it entirely

ignores the issue of entry.

197. In addition to market share evidence, the record contains business documents,

testimony and actual competitive bidding situations in which CB&I and PDM were the closest 

competitors, CCFF 204-251, and this vigorous head-to-head competition resulted in lower prices 

and margins CCFF 249-291.

Response to Finding No. 197:

Complaint Counsel’s finding number 197 is irrelevant since entry indicates that

competition will remain vigorous. (See Harris, Tr. 7209-13, 7239-47, 7286-87, 7308, 7315-17) 

(FOF 7.58, 7.92-7.101, 7.118, 7.113) (See FOF 3.68-3.227 (actual entry has occurred in the LNG 

market); FOF 4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new competitors have 
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entered the LIN/LOX market); 5.79-5.184 (LIN/LOX customers are satisfied with prices

received and available competitive options)); RFOF 204-291).

198. Sellers of LNG, LPG and LIN/LOX tanks and TVCs compete on price, quality, 

reputation, safety record and timeliness of completion. (CX 1033 at 7; Simpson, Tr. 3037). 

Prior to the merger, Respondents were far and away the two strongest competitors in terms of

offering buyers the best combination of price, quality, reputation, safety record and timeliness of 

completion. (Simpson, Tr. 3050, 3094).

Response to Finding No. 198:

Complaint Counsel’s finding number 198 is misleading and irrelevant since prior 

to the Acquisition, new entrants were not seriously pursuing projects in the United States. 

(Harris, Tr. 7209-13, 7239-47). Additionally, since CB&I has not built a TVC since 1984, this 

statement by Complaint Counsel is flatly false with respect to TVCs. Further, in the LIN/LOX 

market Graver had the second-highest market share. (Harris, Tr. 7312). Finally, this finding

ignores entry.

199. CB&I's acquisition of PDM reduced competition by eliminating the competition

between these firms and making it more likely that CB&I could exercise market power. Since

PDM was CB&I's closest competitor, it was also the firm to which CB&I would most likely lose 

sales to when it raised price. Thus, by eliminating competition between CB&I and PDM in the 

relevant markets, the merger makes it less likely that CB&I would lose sales after increasing

prices. Merger Guidelines § 2.21 ("The price rise will be greater the closer substitutes are the

products of the merging firms, i.e., the more the buyers of one product consider the other product 

to be their next choice"); id. § 2.21, n.21 ("A merger involving the first and second lowest-cost 

sellers could cause prices to rise to the constraining level of the next lowest-cost seller").

Response to Finding No. 199:

Complaint Counsel’s finding number 199 is pure argument and unsupported by

citation to evidence. Contrary to the assertion made in finding number 199, the Acquisition has 

not reduced competition in the alleged product markets. (Harris, Tr. 7192). This finding entirely 

ignores entry.

200. Entry by new firms into the relevant markets or expansion by existing firms may 

deter or counteract the likely anticompetitive effects of a merger if such entry or expansion will 

be timely (i.e., within two years of the merger), likely and sufficient. Merger Guidelines § 3.0. 
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This entry or expansion must duplicate the pre-merger competition provided by PDM against

CB&I.

Response to Finding No. 200:

Complaint Counsel’s finding number 200 is misleading. First, Complaint

Counsel is unable to even cite to its own Merger Guidelines for its bold, unsupported assertion 

that “this entry or expansion must duplicate the pre-merger competition provided by PDM

against CB&I.” Logic dictates that multiple firms, for example, could prevent a substantial

lessening of competition without duplicating PDM. Second, while the Merger Guidelines may

provide guidance, they are not law and are not binding on the Commission itself or on the courts. 

New York v. Kraft Gen. Foods, Inc., 926 F. Supp. 321, 359 n.9 (S.D.N.Y. 1995); FTC v. PPG 

Indus., Inc., 798 F.2d 1500, 1503 n.4 (D.C. Cir. 1986); Fruehauf Corp. v. FTC, 603 F.2d 345, 

353-54 (2d Cir. 1979); Olin Corp. v. F.T.C., 986 F.2d 1295, 1300 (9th Cir. 1993). Third, under 

the law, entry rebuts Complaint Counsel’s prima facie case where there is evidence regarding

actual or potential entry or the existence of low entry barriers rebuts a prima facie case. Baker 

Hughes, 908 F.2d at 988. A showing of actual entry is not even necessary. Even the mere threat 

of entry can rebut a prima facie case. Id. The "mere threat" of entry could rebut a prima facie 

case if "these firms would exert pressure on the United States . . . market even if they never

actually entered the market." Id. Evidence of the absence of entry barriers to the relevant

markets rebuts a prima facie case. Id. at 989.

201. In the two years since the merger, no firm has replaced PDM as an effective price 

restraint on CB&I. CCFF 292-571. To the contrary, CB&I has used its competitive advantages, 

particularly the significant price gap between CB&I and its competitors, to continue building its 

market leadership. CCFF 568-592.

Response to Finding No. 201:

Complaint Counsel’s finding number 201 is riddled with falsehoods. First, there

is evidence indicating that CB&I has been constrained; the evidence is overwhelming that there 
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has been both actual entry and that there is potential entry constraining CB&I’s prices. (See

Harris, Tr. 7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-7.101, 7.118, 7.113)

(See FOF 3.68-3.227 (actual entry has occurred in the LNG market); FOF 4.16-4.54 (actual entry 

in the LPG market); FOF 5.22-5.71 (new competitors have entered the LIN/LOX market); 5.79-

5.184 (LIN/LOX customers are satisfied with prices received and available competitive

options)). Internal CB&I documents indicate that CB&I’s prices have been constrained. (RX

208, RX 627). There is additional evidence that CB&I has had to lower its prices in response to 

competition. (FOF 4.67-4.70). Additionally, there is no evidence that CB&I has in fact raised 

its prices and margins; Complaint Counsel’s purported examples of price increases are based on 

inappropriate comparisons, conjecture, and fabrication. (See FOF 7.1-7.41, 3.597-3.641, 5.182-

5.211, 7.164).

202. Respondents cite numerous domestic and foreign firms that they claim will

replace PDM as a price restraint on CB&I. These are not "new" entrants, but rather the same

firms that historically attempted to compete against Respondents in the relevant markets and

failed. CCFF 437-571. Moreover, Respondents' ordinary course of business documents,

including those prepared after the merger, fail to identify any other firm as a competitive threat 

to the same extent, consistency and frequency as CB&I and PDM.

Response to Finding No. 202:

Complaint Counsel’s finding number 202 is irrelevant and flatly false. First,

whether an entrant is “new” is irrelevant; expansion by existing firms is a form of entry sufficient 

to rebut Complaint Counsel’s prima facie case. In re Grand Union Co., 102 F.T.C. 812, No.

9121, 1983 FTC LEXIS 61, *529 (1983) ("Evidence of low entry barriers includes recent entry

into the target market, or recent capacity expansion by existing competitors in the market.”) 

(emphasis added). International Distrib. Ctrs., Inc. v. Walsh Trucking Co., Inc., 812 F.2d 786, 

792-93 (2d Cir. 1987) (“Although the issue of barriers to entry is disputed, there was undisputed 

evidence that a new carrier had in fact entered the market during 1983 and that several existing 
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carriers had expanded their operations into the market during 1983 and 1984. . . . [W]hen

existing carriers expand into a new market, they have lower entry costs than new carriers

‘primarily due to their expertise in the trucking business, their ability to shift some existing assets 

to new locations at minimal cost, and their ability to use existing terminals or break-bulk stations 

as the core of an expanded service territory.’”).

This proposed finding is also false because internal CB&I documents indicate that 

CB&I’s prices have been constrained. (RX 208, RX 627). Further, there are specific instances 

where CB&I has lowered prices in response to competition; for example the ABB Lummus and 

MG New Johnsonville projects. (FOF 4.66, 4.674.67-4.70, 5.151, 5.153). In addition, CB&I

witnesses have testified that the loss of the Dynegy and Trinidad projects has impacted its view 

that it cannot raise prices. (FOF 3.451-3.459).

Further, the entrants are new: S&B/Daewoo, Technigaz/Zachry,

Skanska/Whessoe, and TKK/AT&V are all completely new competitors in their current

configuration. Even those who bid on Memphis in 1994 did not exist in their present

manifestation.

203. These "new" entrants were, and remain, distant competitors, unable to close the

competitive gap between them and CB&I. There are numerous marketplace conditions that

explain why foreign and domestic firms cannot replace PDM. CCFF 292-420. Respondents and 

industry participants know this, (CCFF 393-592), which is why Respondents' merger planning

documents (CCFF 730-749) and the testimony of industry participants (CCFF 711-727) 

consistently predict that the merger will likely lead to higher prices.

Response to Finding No. 203:

Complaint Counsel’s finding number 203 is false. First, the statement that

entrants are distant competitors is false; Respondents have won less than 20% of the available

dollars in the relevant product markets. (Harris, Tr. 7223). In LIN/LOX, CB&I has been beaten 

by AT&V on every project where AT&V was a bidder. (FOF 5.76-5.78). Further, as discussed 
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below, there are no barriers to entry. Further, as has been addressed, the industry participants

who have foundation believe that the Acquisition has not and will not lead to higher prices. See 

supra RFOF 17. Finally, this proposed finding is vague since Complaint Counsel does not

specify product market. RFOF 393-592, 730-749, 711-727.

A. Respondents Viewed Each Other as Their Closest Competitor

204. PDM was CB&I's "main competitor" in the relevant product markets, and

CB&I's ordinary course of business documents reflect this fact. (CX 163 at CB&I-PL006679;

see also, e.g., CX 186 at CB&I-PL012446 ("two horse race" between CB&I and PDM/Air

Products); CX 227 at CB&I-PL045102 ("Principal US Competitor"); Glenn, Tr. 4332 ("principal 

U.S. competitor for services")).

Response to Finding No. 204:

Complaint Counsel’s finding number 204 is irrelevant since the relevant question 

is competition going forward. (Harris, Tr. 7196). Old documents reflecting an “old” state of

competition do not indicate the state of competition years later.

205. Other descriptions of PDM include the "biggest competitor" (CX 627 at CB&IH006780), and a "formidable competitor" (CX 216 at CB&I-PL033886; see also Glenn, Tr.

4263).

Response to Finding No. 205:

Complaint Counsel’s finding number 205 is irrelevant since the relevant question 

is competition going forward. (Harris, Tr. 7196). Old documents reflecting an “old” state of

competition do not indicate the state of competition years later.

206. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 76 at PDM-C 1006121; see also

CX 660 at PDM-HOU005014 (since 1996, CB&I is PDM's "most aggressive competitor in

increasing market share; Scorsone, Tr. 5174; CX 857 at PDM-HOU019513 ([xxxxxx 

xxxxxxxx]); see CX 218 at CB&I PL034531 (PDM is "CB&I's largest and most mentioned tank 

competitor")).
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Response to Finding No. 206:

Complaint Counsel’s finding number 206 is irrelevant since the relevant question 

is competition going forward. (Harris, Tr. 7196). Old documents reflecting an “old” state of

competition do not indicate the state of competition years later.

207. At other times, CB&I was described as PDM's "only competitor" in the relevant 

markets. (CX 660 at PDM-HOU005016; see also Scorsone. Tr. 5156-57, 5177, 5183; CX 94 at 

PDM-HOU017580, 017582, 017583)

Response to Finding No. 207:

Complaint Counsel’s finding number 207 is irrelevant since the relevant question 

is competition going forward. (Harris, Tr. 7196). Old documents reflecting an “old” state of

competition do not indicate the state of competition years later.

208. In September 1998, a PDM EC "President's report" to the Board of Directors

portrayed CB&I as "PDM EC's major competitor in almost all of the significant markets PDM

EC serves... CB&I and PDM EC are often the only competitors for [] cryogenic storage

contracts." (CX 68 at PDM-C 1002632; see also Scorsone, Tr. 5153-4).

Response to Finding No. 208:

Complaint Counsel’s finding number 208 is irrelevant since the relevant question 

is competition going forward. (Harris, Tr. 7196). Old documents reflecting an “old” state of

competition do not indicate the state of competition years later.

209. A later "President's report" to PDM's Board in November 1998 states that "CB&I 

remains the major competitor to PDM EC." (CX 67 at PDM-C 1002625; see also CX 106 at 

PDM-HOU004990; CX 116 at PDM-HOU019181 ("CB&I is PDM's major competitor for both

[LNG] storage tanks and turnkey facilities in the US"); CX 116 at PDM-HOU019176 ("CB&I is 

PDM's competition for LNG tanks alone. Others have bid tanks in recent years, such as Preload 

and Graver, but are not now competitive."); CX 119 at PDM-HOU019508).

Response to Finding No. 209:

Complaint Counsel’s finding number 209 is irrelevant since the relevant question 

is competition going forward. (Harris, Tr. 7196). Old documents reflecting an “old” state of

competition do not indicate the state of competition years later.
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210. In 1999, PDM's Board was advised that CB&I is PDM EC's "[w]orldwide

competitor on all projects," and that PDM EC's objective is to "Be the largest and most profitable 

storage tank and related systems contractor in the U.S. and Latin America - beat CB&I!" (CX 74 

at PDM-C 1005928, PDM-C 1005940). PDM EC's president, Mr. Scorsone used the idea of

"beating CB&I" as a "rallying" cry for PDM to "focus on." (Scorsone, Tr. 5166, 5167-68). The 

same document attributes CB&I with the highest and PDM with the second highest market

shares for the markets PDM served. (CX 74 at PDM-C 1005933).

Response to Finding No. 210:

Complaint Counsel’s finding number 210 is irrelevant since the relevant question 

is competition going forward. (Harris, Tr. 7196). Old documents reflecting an “old” state of

competition do not indicate the state of competition years later.

211. Tanner & Company, who was retained to locate buyers for PDM in 2000,

described CB&I and PDM as the "two main players" in the relevant markets, who "bid against 

each other a lot." (CX 75 at PDM-C 1006089; see RX 26 at PDM-C 1004310 (August 2000 

Tanner & Company sales presentation characterizing competition between CB&I and PDM as

"stiff")).

Response to Finding No. 211:

Complaint Counsel’s finding number 211 is irrelevant since the relevant question 

is competition going forward. (Harris, Tr. 7196). Old documents reflecting an “old” state of

competition do not indicate the state of competition years later.

1. Respondents Were the Closest Competitors in the LNG Market

212. In July 1998, PDM's Carroll Davis wrote to his colleague, Steve Crain, and others 

that, for the Atlanta Gas Light/Southern Natural Gas LNG project in Etowah, GA, "the real

competition [was] between CB&I and PDM." (CX 161 at CB&I-PL006113).

Response to Finding No. 212:

Respondents have no specific response.

213. An LNG/Aerospace marketing presentation, dated November 2000, states that

CB&I was "PDM's competition for LNG tanks alone." (CX 116 at PDM-HOU019176).
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Response to Finding No. 213:

The proposed finding is factually incorrect. There is no evidence suggesting that 

CX 116 was dated November, 2000. In fact, the document suggests that it was prepared prior to 

2000: "A firm price inquiry is expected sometime during the first half of 2000." (CX 116 at

PDM-HOU019176).

214. PDM's 2000 Business Plan states that "CB&I is PDM EC's domestic competition 

for LNG tanks." (CX 94 at PDM-HOU017580).

Response to Finding No. 214:

Respondents have no specific response.

215. PDM characterized CB&I as "PDM EC's only competitor on domestic cryogenic, 

LNG, LPG, Ammonia and thermal vacuum projects." (CX 107 at PDM-HOU005016).

Response to Finding No. 215:

Respondents have no specific response.

216. In a 1997 PDM Customer Briefing, PDM determined that with "only two capable 

LNG tank builders in the U.S. (PDM and CB&I) our teaming with Air Products has essentially 

put Lotepro and other liquefaction design companies out of the LNG business in the domestic

U.S." (CX 113 at PDM-HOU014838 (emphasis added)).

Response to Finding No. 216:

Respondents have no specific response.

217. Mr. Scorsone confirmed that PDM and CB&I competed fiercely against one

another for LNG tanks. (Scorsone, Tr. 5173).

Response to Finding No. 217:

This finding is misleading and irrelevant as it related to PDM's view as to

competition in November, 2000. (Scorsone, Tr. 5173, citing CX 857). This finding is not

relevant to the current state of competition in the LNG market because of the emergence of new 

entrants and foreign tank suppliers. (See generally, FOF 3.451-3.459). Moreover, Complaint 

Counsel's cite makes no reference to the "fierce" state of competition at that time. Instead, Mr. 
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CHI:1176893.3

Scorsone read from an exhibit as follows: "CB&I is PDM's competition for LNG tanks alone." 

(Scorsone, Tr. 5173).

2. Respondents Were the Closest Competitors in the LPG Market

218. Respondents' business documents refer to each other as a "formidable" competitor 

(CX 216 at CB&I-PL-033886) or "major" competitor in the LPG market (CX 116 at PDMHOU019181).

Response to Finding No. 218:

This finding is irrelevant to the current state of competition in the LPG market,

especially in light of recent entry by AT&V and Matrix. (N. Kelley, Tr. 7088-89, 7130-31, 

7085, 7090) (FOF 4.16-4.46).

219. PDM believed CB&I was its "only competition on tanks over 100,000 bbl

[barrel]." (CX 303 at CB&I/PDM-H 4001285).

Response to Finding No. 219:

This finding is irrelevant as it fails to reflect the current state of competition in the 

LPG market, especially in light of recent entry by Matrix and AT&V. (See RFOF 218). In

addition, this finding is misleading given that AT&V has successfully completed LPG projects. 

(N. Kelley, Tr. 7088-89, 7130-31) (FOF 4.16-4.42).

220. Mr. Scorsone testified that CB&I was "PDM EC's major competitor" for LPG

tanks. (Scorsone, Tr. 5157, 5174; CX 94 at PDM-HOU017580).

Response to Finding No. 220:

This finding is irrelevant to the current state of competition in the LPG market as 

set forth in RFOF 217-219.

3. Respondents Were the Closest Competitors in the TVC Market

221. CB&I's business and strategic documents refer to PDM as CB&I's "only

competitor" for TVC projects in the United States. (CX 212 at CB&I-PL031721; see also CX 

264 at CB&I-H006780 ("only real competitor"); CX 265 at CB&I-H007057 ("single USA

competitor").
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CHI:1176893.3

Response to Finding No. 221:

Respondents have no specific response.

222. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 

216 at CB&I-PL033886, in camera; see also CX 212 at CB&I-PL031721 (PDM's strategic

alliance was "the only competition for the thermal vacuum systems market")), [xxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 1040 at PDM-HOU 010889).

Response to Finding No. 222:

Respondents have no specific response.

223. A 1998 CB&I e-mail discussing a TVC project for Orbital Sciences discussed a 

bidding strategy that focused upon beating PDM, and no one else. (CX 272 at CB&I-H010889-

90).

Response to Finding No. 223:

This finding is misleading and irrelevant. First, the email refers to a project to

modify an existing 12' thermal vacuum chamber. (CX 272 at CB&I-H010889-90). Repair jobs 

are not relevant to this litigation, and are outside of the product market definitions. (See RFOF 

6.1-6.10). Furthermore, this existing chamber is a shop-built TVC, and not a relevant product,

by Complaint Counsel's definition, thus exposing a direct contradiction in its findings. (See

CCFF 84, 223).

224. A 1997 memo to a senior CB&I executive notes reaching the objective of

maneuvering CB&I "into a position which could provide CB&I significant advantages over Pitt 

Des Moines." (CX 261 at CB&I-H004029).

Response to Finding No. 224:

Respondents have no specific response, except to note that this document shows 

Respondents' interest in entering the field-erected TVC market in 1997. (FOF 6.40).

225. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 242 at CB&I-PL 4003341, 

in camera).
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CHI:1176893.3

Response to Finding No. 225:

Complaint Counsel's arguments rely heavily on Mr. Lacey, even though he was

an entry-level marketing person at CB&I who worked primarily in the aerospace business during 

the time that XL was owned by CB&I. (Scully, Tr. 1125; Scorsone, Tr. 5045). Mr. Lacey was 

indeed CB&I's contact person with Spectrum Astro. (Thompson, Tr. 2043). However, Mr.

Lacey generated a large volume of ideas for management to consider with regard to the fielderected TVC business. (Scully, Tr. 1218; CX-242). Mr. Lacey's ideas were ignored. (Scorsone, 

Tr. 5045-46; Scully, Tr. 1221). (FOF 6.150-6.153).

226. In its 2000 Business Plan, PDM stated that "The [EC] Division's competition is

CB&I." (CX 94 at PDM-HOU 017583; see also CX 859 at PDM-HOU017583; CX 857 at

PDM-HOU019511).

Response to Finding No. 226:

Complaint Counsel ignores record substantial record evidence that CB&I was a

fringe competitor compared to PDM because of CB&I's lack of recent experience and its lack of 

commitment to the field-erected TVC market. (FOF 6.26-6.64; Opening Br. 121-122). Indeed, 

CB&I has not built a field-erected TVC since 1984. (Scorsone, Tr. 5055-56; Glenn, Tr. 4089, 

4160; Scully, Tr. 1187-89, 1193; Higgins, Tr. 1276-77) (FOF 6.26). Furthermore, CB&I had

already exited from the field-erected TVC market in the late 1980's, which left PDM as the only 

competitor for field-erected TVCs in the U.S. until 1997. (Scully, Tr. 1189; [xxxxxxxxxxxxxxx 

xxxxxx] (FOF 6.40).

4. Respondents Were Major Competitors in the LIN/LOX Market

227. PDM and CB&I were major competitors in the LIN/LOX market. (CX 183 at

CB&I-PL012437; see CX 660 at PDM-HOU 005016; CX 658 at PDM-HOU 1002551).
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CHI:1176893.3

Response to Finding No. 227:

The proposed finding is made irrelevant by the fact that new entry has created

competition in the LIN/LOX market. (FOF 5.22-5.78) (RFOF 152).

228. In a March 1996 memo to Mr. Scorsone, PDM staff anticipated that CB&I, by

separating from its former parent, Praxair, would "become a major competitor in [the LIN/LOX] 

market." (CX 1040 at PDM-HOU010888). Between 1990 and 1997, PDM identified at least

four tanks that were lost due to competition from CB&I. (CX 1049 at PDM-HOU11767-70).

Response to Finding No. 228:

The proposed finding is made irrelevant by the fact that new entry has created

competition in the LIN/LOX market. (FOF 5.22-5.78) (RFOF 152). Therefore, any implication 

that absent PDM CB&I would be the only major competitor left is inaccurate.

229. In a July 1997 competitor report to Luke Scorsone, PDM's Bill Weber noted that 

"[s]ince last fall, CB&I has been the most aggressive competitor in increasing market share." 

(CX 108 at PDM-HOU005018).

Response to Finding No. 229:

The proposed finding is irrelevant. First, the fact that PDM felt CB&I was the

most aggressive competitor in the LIN/LOX market in 1997 has no bearing on present day

competition. In reality, since the Acquisition CB&I has lost the majority of LIN/LOX project

awards, each time because the competition bid a lower price. (Scorsone, Tr. 5017-18) (FOF

5.76-5.78).

230. PDM was the lower price alternative to CB&I in the LIN/LOX market. 

According to an October 2000 e-mail from Bob Lewis, then CB&I's Vice President of Corporate 

Business Development, PDM had "[a] tendency to bid much lower than the market leaving a lot 

of money on the table." (CX 632 at CB&I-PL 4000160). In April 1997, Rich Kooy compared 

CB&I and PDM's LIN/LOX prices and recognized that "[i]n North America we [CB&I] could 

still be very handily undercut (by as much as 10%) by PDM if they wanted to work at a lower 

price level." (CX 178 at CB&I-PL011835).
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CHI:1176893.3

Response to Finding No. 230:

The proposed finding is irrelevant and because it does not reflect today's

LIN/LOX market. Today, the other firms have been able to compete with CB&I on price. (FOF 

5.76-5.78, 5.87, 5.96, 5.124, 5.128, 5.151-5.158). As a result of this competition, CB&I believes 

that this market is competitive and plans to act accordingly. In fact, over the past two years,

CB&I has been forced to cut its price to LIN/LOX customers in order to win work from other

competitors. (FOF 5.151-5.156, 5.128-5.130). In fact, AT&V's prices have been so low that

recent CB&I documents reflect pessimism as to CB&I's ability to even compete in this market. 

(RX 208).

Further, the proposed finding is inaccurate because not all LIN/LOX customers

believed PDM was the low-cost provider prior to the Acquisition. [xxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

B. Industry Members View Respondents as the Closest Competitors

1. LNG Industry Members

231. Eckhard Blaumueller, former Director of Pipelines and Peaking Services for

People's Energy, testified that "there were only two [suppliers] who had U.S. experience, and

those were the parties that we were talking to, Chicago Bridge & Iron and PDM." (Blaumueller, 

Tr. 302; see also Tr. 307-09).

Response to Finding No. 231:

The proposed finding is irrelevant, misleading and incomplete. Mr. Blaumueller 

was personally involved with the construction of only one LNG facility, which was built in 1973. 

(Blaumueller, Tr. 325) (FOF 3.642). The testimony Complaint Counsel cites refers to Mr.

Blaumueller's role in a proposed methane storage facility, not an LNG storage facility. 

(Blaumueller, Tr. 282, 327). Since his retirement in 2001, Mr. Blaumueller had not done any
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CHI:1176893.3

research regarding the LNG tank market in the United States (Blaumueller, Tr. 329), and has no 

knowledge of foreign LNG tank suppliers. (Blaumueller, Tr. 309, 315, 321, 330) (FOF 3.643-

3.644).

232. Robert Davis, Director of HYCO Services for Air Products, testified that

"virtually all, with just few exceptions, of the LNG tanks in this country had been built by CB&I 

and PDM." (Davis, Tr. 3192-3).

Response to Finding No. 232:

Respondents have no specific response.

233. James Clay Hall, Chief LNG Project Engineer for Memphis Light, Gas & Water, 

viewed CB&I as the "industry leader" and PDM was "certainly a close second." (Hall, Tr.

1801). Together, CB&I and PDM provided "very competitive" supply options. (Hall, Tr. 1804).

Response to Finding No. 233:

The proposed finding is irrelevant, misleading, and incomplete. Although Mr.

Hall testified as set forth above, he is not a current participant in the market for field-erected 

LNG tanks. (Hall, Tr. 1832-33) (FOF 3.650). Since 1994, Mr. Hall has not conducted any

searches for builders of field-erected LNG tanks or facilities. (Hall, Tr. 1843-45) (FOF 3.653). 

Mr. Hall does not monitor the LNG markets, and is not familiar with the current state of

competition in these markets today. (Hall, Tr. 1857) (FOF 3.653).

234. John Newmeister, Vice President of Marketing and Business Development at

Matrix Services, Inc., explained that historically the suppliers of LNG tanks in the U.S. were

"CB&I, PDM and possibly Graver," but with Graver's exit and CB&I's acquisition of PDM, "the 

list of qualified tank suppliers decreased to one." (Newmeister, Tr. 2166).

Response to Finding No. 234:

Respondents have no specific response.

235. Brian Price, Vice President of LNG Technology for Black & Veatch, who

competed against CB&I and PDM for the Memphis LNG project, saw first-hand that "the two

competitors with the lowest prices were CB&I and PDM." (Price, Tr. 558).
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CHI:1176893.3

Response to Finding No. 235:

The proposed finding is misleading because it attempts to refer to eight year-old 

events as current. The bidding process for the Memphis LNG project occurred in 1994, almost 

nine years ago, when foreign companies such as Noell Whessoe were reluctant to enter the U.S. 

LNG market. (Hall, Tr. 1771, 1778-80; Scorsone, Tr. 5014; Kistenmacher, Tr. 895, 939-40) 

(FOF 3.493-3.508).

2. LPG Industry Members

236. Mr. Newmeister of Matrix had no knowledge of any firm competing for an LPG 

project in the United States other than CB&I and PDM. (Newmeister, Tr. 1614, 2166).

Response to Finding No. 236:

This finding is misleading and irrelevant as AT&V has successfully entered the

LPG market and completed such projects. (N. Kelley, Tr. 7088-89, 7130-31) (FOF 4.16-4.42). 

This finding lacks foundation, particularly in light of the fact that Matrix, a competitor of CB&I 

in the LPG market, competed for the ITC LPG project in 2000, despite losing to AT&V. (N.

Kelley, Tr. 7083-84) (FOF 4.34).

237. Amy Warren, Contracts Administrator for Fluor, Inc., testified that for Fluor's 

2000 LPG project (Sea-3), the only competitors available were PDM and CB&I. (Warren, Tr.

2307-8).

Response to Finding No. 237:

This finding is misleading, irrelevant, and lacks foundation. First, Ms. Warren's

testimony lacks foundation because she was last involved in the procurement of an LPG tank in 

1998. (Warren, Tr. 2284, 2318) (FOF 4.148). Contrary to Complaint Counsel's assertion,

Fluor's last LPG project was completed in 2000 but was actually procured in 1998. (Warren, Tr. 

2318) (FOF 4.148). Therefore, Ms. Warren admits that her knowledge regarding LPG

competitors is based on pre-1998 LPG competition. (Warren, Tr. 2318) (FOF 4.148). 
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CHI:1176893.3

Accordingly, this finding is irrelevant to the current state of competition in the LPG market,

especially given that AT&V has successfully completed LPG projects. (N. Kelley, Tr. 7088-89, 

7130-31) (FOF 4.16-4.42). In fact, Ms. Warren testified that she did not even know which

companies are currently qualified by Fluor to build field-erected LPG tanks, or which companies 

currently have the ability to construct LPG tanks. (Warren, Tr. 2318) (FOF 4.156-4.157).

3. LIN/LOX Industry Members

238. William Cutts, president of American Tank & Vessel ("AT&V") agreed that,

prior to the merger of CB&I and PDM, customers preferred PDM or CB&I for their LIN/LOX 

tank projects, "almost exclusively [desiring] one or the other or pit[ting] the two against the

other." (Cutts, Tr. 2390).

Response to Finding No. 238:

The following finding is irrelevant and misleading because it is not representative 

of current LIN/LOX market conditions. Cutts' own company, AT&V, is currently a strong

competitor often preferred by present day LIN/LOX customers. (FOF 5.26-5.42). Aside from

CB&I, several LIN/LOX market entrants are utilized by current customers. (FOF 5.22-5.78). 

Customers have awarded AT&V three out of the five post-Acquisition LIN/LOX tanks awarded 

(Scorsone, Tr. 5018) (FOF 5.76-5.78) and AT&V currently has six different bids outstanding for 

budget pricing on LIN/LOX tanks. (Cutts, Tr. 2452-2453). Each time since the Acquisition

Cutts' own company, AT&V, has bid against CB&I they have been awarded the LIN/LOX

project. (Scorsone, Tr. 5018) (FOF 5.31-5.34). Finally, Cutts testified that as a result of the

Acquisition of PDM, customers have looked at AT&V and awarded them several LIN/LOX tank

projects. (Cutts, Tr. 2572).

239. Chung Fan, Proposal Manager for Linde BOC Process Plants, testified that before 

the merger, Linde typically purchased LIN/LOX tanks from PDM, but today CB&I is "the only 

game in town." (Fan, Tr. 1023, 1026-1027).
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Response to Finding No. 239:

The proposed finding is inaccurate for several reasons. As an initial matter,

Chung Fan is not involved in the procurement of LIN/LOX tanks and, therefore, has no basis for 

asserting CB&I is the "only game in town." (Fan, Tr. 951; Cutts, Tr. 2420). Further, empirical 

evidence establishes CB&I is not the only game in town. Specifically, post-Acquisition CB&I 

has lost a majority of LIN/LOX tanks awarded. (Scorsone, Tr. 5018) (FOF 5.76-5.78) (RFOF 

238).

240. Cleve Fontenot, former Vice President of Procurement for Air Liquide Process

and Construction, testified that CB&I and PDM were the two most qualified LIN/LOX/LAR

tank suppliers. Air Liquide's bid slate included, "CB&I, PDM and a little bit lower would be

Matrix." (Fontenot, Tr. 2021-2). However, Air Liquide "didn't feel as comfortable" with Matrix 

because the "number of references they had weren't nearly what the other two suppliers [CB&I 

and PDM] had." (Fontenot, Tr. 2022).

Response to Finding No. 240:

The proposed finding is irrelevant because Cleve Fontenot has no current

experience nor basis for his assertions. Fontenot admitted at trial that he left Air Liquide in July 

2001 and has not kept up to date with current or potential suppliers for LIN/LOX tanks in the

United States. (Fontenot, Tr. 2032) (FOF 5.144). Fontenot further admitted he is unaware of

current market conditions and has no knowledge of which companies Air Liquide has currently

pre-qualified or permits to bid for the supply of field-erected LIN/LOX tanks. (Fontenot, Tr.

2033). In fact, Air Liquide has awarded AT&V, a supplier not referenced by Fontenot, a

contract for the field erection of a LIN/LOX tank in Freeport, Texas. (FOF 5.122-5.130).

241. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxxx], Tr. 1988, in camera; CX 136 at CB&I 014195-

HOU; CX 289 at CB&I/PDM-H4000815).
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CHI:1176893.3

Response to Finding No. 241:

The proposed finding is contradicted by empirical evidence in the record. Air

Liquide has awarded AT&V, a supplier not referenced by Kamrath, a contract for the field

erection of a LIN/LOX tank in Freeport, Texas. (FOF 5.122-5.130). [xxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

242. Dr. Hans Kistenmacher, Vice President of Marketing and Sales for Linde BOC

Process Plants, LLC, testified that the merger has "reduced the number of vendors, experienced 

vendors from prior to Graver going out of business, we had three experienced, with PDM we had 

two, and now we have one." (Kistenmacher, Tr. 876).

Response to Finding No. 242:

The proposed finding lacks foundation and is inaccurate. The proposed finding

lacks foundation because at trial it was demonstrated that Dr. Kistenmacher does not even know 

of the current LIN/LOX suppliers for his own company, Linde BOC. As an initial matter, Linde 

has not actually purchased a LIN/LOX tank for several years. In fact, the last LIN/LOX tank

purchased by Linde, prior to its acquisition of BOC, was in 1999. (Kistenmacher, Tr. 868-869). 

Moreover, Kistenmacher is unaware that BOC awarded AT&V two LIN/LOX tanks after the

Acquisiton. (Kistemacher, Tr. 922). Therefore, the fact that Kistenmacher testified that "we

now have one" experienced LIN/LOX vendor is of little weight.

Further, record evidence establishes that Matrix and AT&V both have experience 

field erecting LIN/LOX tanks. (FOF 5.26-5.34, 5.47-5.55). Thus, Dr. Kistenmacher's claim that 
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CHI:1176893.3

only one experienced vendor exists in the United States is inaccurate and contradicted by record 

evidence.

4. TVC Industry Members

243. John Gill, owner of Howard Fabrication, testified that prior to the acquisition,

"before Pitt-Des Moines was taken off the street as a competitor [for TVCs]," "PDM was either 

number one or number two," and CB&I was, "either number one or number two." (Gill, Tr. 204-

205).

Response to Finding No. 243:

This finding is inaccurate and misleading for two reasons. First, Complaint

Counsel flagrantly misappropriates the first quotation as testimony from Mr. Gill. In fact, Mr.

Robertson stated "before Pitt-Des Moines was taken off the street as a competitor ..." as part of 

his predicate to a question stricken from the record by a sustained objection. (Gill, Tr. 204-205). 

Second, Respondents reiterate that CB&I is a fringe competitor in the field-erected TVC market, 

even if it was "number two." (See RFOF 6.26-6.64).

244. Kent Higgins, President of Process Systems International, testified that "PDM and 

CB&I" were the only firms that had the capability to construct TVCs. (Higgins, Tr. 1267).

Response to Finding No. 244:

Complaint Counsel ignores substantial record evidence that CB&I was a fringe

competitor compared to PDM because of CB&I's lack of recent experience and its lack of

commitment to the field-erected TVC market. (FOF 6.26-6.64; Opening Br. 121-122). Indeed, 

CB&I has not built a field-erected TVC since 1984. (Scorsone, Tr. 5055-56; Glenn, Tr. 4089, 

4160; Scully, Tr. 1187-89, 1193; Higgins, Tr. 1276-77) (FOF 6.26). Furthermore, CB&I had 

already exited from the field-erected TVC market in the late 1980's, which left PDM as the only 

competitor for field-erected TVCs in the U.S. until 1997. (Scully, Tr. 1189; [xxxxxxxxxxxxxxx 

xxxxxx] (FOF 6.40).
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245. Patrick Neary, Manger of the Environmental Test Organization, testified that

Respondents were "the two large field-erected manufacturers" of TVCs. (Neary, Tr. 1430).

Response to Finding No. 245:

Complaint Counsel ignores substantial record evidence that CB&I was a fringe

competitor compared to PDM because of CB&I's lack of recent experience and its lack of

commitment to the field-erected TVC market. (FOF 6.26-6.64; Opening Br. 121-122). Indeed, 

CB&I has not built a field-erected TVC since 1984. (Scorsone, Tr. 5055-56; Glenn, Tr. 4089, 

4160; Scully, Tr. 1187-89, 1193; Higgins, Tr. 1276-77) (FOF 6.26). Furthermore, CB&I had 

already exited from the field-erected TVC market in the late 1980's, which left PDM as the only 

competitor for field-erected TVCs in the U.S. until 1997. (Scully, Tr. 1189; [xxxxxxxxxxxxxxxx 

xxxxxx] (FOF 6.40).

246. Mr. Newmeister of Matrix testified that Respondents were the only two firms who 

have competed in the TVC market. (Newmeister, Tr. 1564).

Response to Finding No. 246:

Complaint Counsel ignores substantial record evidence that CB&I was a fringe

competitor compared to PDM because of CB&I's lack of recent experience and its lack of

commitment to the field-erected TVC market. (FOF 6.26-6.64; Opening Br. 121-122). Indeed, 

CB&I has not built a field-erected TVC since 1984. (Scorsone, Tr. 5055-56; Glenn, Tr. 4089, 

4160; Scully, Tr. 1187-89, 1193; Higgins, Tr. 1276-77) (FOF 6.26). Furthermore, CB&I had 

already exited from the field-erected TVC market in the late 1980's, which left PDM as the only 

competitor for field-erected TVCs in the U.S. until 1997. (Scully, Tr. 1189; [xxxxxxxxxxxxxxxx 

xxxxxx] (FOF 6.40).

247. [xxxxxxxxx], Product Manufacturing Factory Planning Manager for

[xxxxxxxxxxxxx], testified that Respondents were "the lowest risk and best candidates for

success." ([xxxxxx], Tr. 1899, 1900). Other firms lack the expertise to be as cost-effective and 

of equal quality as Respondents. ([xxxxxx], Tr. 1900-01, in camera).
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Response to Finding No. 247:

Complaint Counsel ignores substantial record evidence that CB&I was a fringe

competitor compared to PDM because of CB&I's lack of recent experience and its lack of

commitment to the field-erected TVC market. (FOF 6.26-6.64; Opening Br. 121-122). Indeed, 

CB&I has not built a field-erected TVC since 1984. (Scorsone, Tr. 5055-56; Glenn, Tr. 4089, 

4160; Scully, Tr. 1187-89, 1193; Higgins, Tr. 1276-77) (FOF 6.26). Furthermore, CB&I had 

already exited from the field-erected TVC market in the late 1980's, which left PDM as the only 

competitor for field-erected TVCs in the U.S. until 1997. (Scully, Tr. 1189; [xxxxxxxxxxxxxxxx 

xxxxxx] (FOF 6.40).

248. Ronald Scully, President of XL Systems, testified that turnkey suppliers for TVCs 

were limited to Respondents. (Scully, Tr. 1115, 1237).

Response to Finding No. 248:

Complaint Counsel ignores substantial record evidence that CB&I was a fringe

competitor compared to PDM because of CB&I's lack of recent experience and its lack of

commitment to the field-erected TVC market. (FOF 6.26-6.64; Opening Br. 121-122). Indeed, 

CB&I has not built a field-erected TVC since 1984. (Scorsone, Tr. 5055-56; Glenn, Tr. 4089, 

4160; Scully, Tr. 1187-89, 1193; Higgins, Tr. 1276-77) (FOF 6.26). Furthermore, CB&I had 

already exited from the field-erected TVC market in the late 1980's, which left PDM as the only 

competitor for field-erected TVCs in the U.S. until 1997. (Scully, Tr. 1189; [xxxxxxxxxxxxxxxx 

xxxxxx] (FOF 6.40).

249. David Thompson, CEO of Spectrum Astro, who has "seen most of the thermal

vacuum chambers in the industrial base in the [United States]," testified that Spectrum Astro

"tried to do a survey of everybody in the country that we thought would be a qualified bidder, 

and the two bidders that we found at the time were Chicago Bridge and Iron and PDM." 

(Thompson, Tr. 2039-41).
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CHI:1176893.3

Response to Finding No. 249:

Complaint Counsel ignores substantial record evidence that CB&I was a fringe

competitor compared to PDM because of CB&I's lack of recent experience and its lack of

commitment to the field-erected TVC market. (FOF 6.26-6.64; Opening Br. 121-122). Indeed, 

CB&I has not built a field-erected TVC since 1984. (Scorsone, Tr. 5055-56; Glenn, Tr. 4089, 

4160; Scully, Tr. 1187-89, 1193; Higgins, Tr. 1276-77) (FOF 6.26). Furthermore, CB&I had 

already exited from the field-erected TVC market in the late 1980's, which left PDM as the only 

competitor for field-erected TVCs in the U.S. until 1997. (Scully, Tr. 1189; [xxxxxxxxxxxxxxxx 

xxxxxx] (FOF 6.40).

250. Based on "[c]ompany documents and the opinions of market participants and the 

results of previous projects that had been awarded," Dr. Simpson concluded that Respondents are 

"the only competitors for large field-erected thermal vacuum chambers." (Simpson, Tr. at 3489, 

3492). CCFF 189.

Response to Finding No. 250:

Complaint Counsel ignores substantial record evidence that CB&I was a fringe

competitor compared to PDM because of CB&I's lack of recent experience and its lack of

commitment to the field-erected TVC market. (FOF 6.26-6.64; Opening Br. 121-122). Indeed, 

CB&I has not built a field-erected TVC since 1984. (Scorsone, Tr. 5055-56; Glenn, Tr. 4089, 

4160; Scully, Tr. 1187-89, 1193; Higgins, Tr. 1276-77) (FOF 6.26). Furthermore, CB&I had 

already exited from the field-erected TVC market in the late 1980's, which left PDM as the only 

competitor for field-erected TVCs in the U.S. until 1997. (Scully, Tr. 1189; [xxxxxxxxxxxxxxxx 

xxxxxx] (FOF 6.40). Finally, Dr. Simpson relies on market concentration statistics that are

virtually meaningless, as they were generated using a total of two data points over an eleven-year 

period. (Opening Br. 119).
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C. Competition from PDM Caused CB&I to Lower Prices and Margins

251. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. 

(CX 260 at CB&I-H003010-22; CX 227 at CB&I-PL045101; CX 282; CX 183; CX 1321 at

CB&I-PL069518-29, in camera).

Response to Finding No. 251:

This finding is vague, as it does not identify a specific product market. It is also 

misleading to the extent it implies that customers do not benefit today from the aggressive

pricing strategy of current competitors in the relevant markets. As discussed in Respondents'

Opening Brief and Findings of Fact, customers in the relevant products continue to receive

competitive prices from suppliers. (See, e.g., FOF 3.256-3.459; FOF 4.55-4.70; FOF 5.79-

5.185).

252. PDM was the "single largest" reason CB&I lost business in the United States;

competition from PDM accounted for 33% of CB&I's lost business. (Glenn, Tr. 4331; CX 227 at 

CB&I-PL045101; see also CX 23 at PDM-C1002566 (PDM has made "significant market share 

increases against CB&I in both domestic and international markets")). In March 2000, CB&I

reported that "in the last three months our business lost report is showing PDM taking some 13 

jobs from [CB&I] at a value of $25 million." (CX 243 at CB&I-PL 4004707; see CX 660 at 

PDM-HOU005014 ("Since the fall of 1996, CB&I has been the most aggressive competitor in

increasing market share")).

Response to Finding No. 252:

This finding is vague, as it does not identify a specific product market. It is also 

misleading to the extent it implies that CB&I does not lose business today in the relevant

products. In fact, CB&I faces stiff competition in the relevant products. It has lost the only

competitively-bid LNG job to be awarded since the Acquisition, three of last four competitively 

bid LIN/LOX jobs, and half of the last LPG jobs in the last four years. (See generally FOF

3.256-3.459; FOF 4.55-4.70; FOF 5.79-5.185).

253. In March 2000, Steve Knott, CB&I's sales manager for the United States, emailed CB&I's sales team to lament that PDM is "'eating our lunch' and we know much of it is 

because of a CB&I cost problem." (CX 243 at CB&I-PL 4004707).
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Response to Finding No. 253:

This finding is vague, as it does not discuss a specific product market. It is also 

irrelevant, because there is no evidence in the record that Mr. Knott's concern was valid, or

whether CB&I has any such "cost problem" today. Further, there is no evidence to suggest that 

there are not other low-cost providers of the relevant products in the relevant markets today that 

act as a check on CB&I's pricing. For example, AT&V has recently established itself as a lowcost provider in the LIN/LOX and LPG market; it is able to "beat the socks off of CB&I." (E.g., 

FOF 4.55-4.70; FOF 5.79-5.185).

254. Mr. Knott asked, "What is PDM doing that gives them the ability to be this low, 

this often? I am not 'coming down' on our group for losing to PDM. We all recognize that we 

can only sell to the market what the market will pay. Given our current system, we are bumping 

against pricing levels that are dangerously close to our direct cost." (CX 243 at CB&I-PL 

4004707).

Response to Finding No. 254:

This finding is vague and irrelevant for the reasons set forth in response to

Finding No. 252 and Finding No. 253.

255. Mr. Knott concluded that "We need to come up with a strategy to combat the

effort PDM is making to erode our market share." (CX 243 at CB&I-PL 4004707).

Response to Finding No. 255:

This finding is vague and irrelevant for the reasons set forth in response to

Finding No. 252 and Finding No. 253.

256. In late 2000, CB&I's Bob Lewis wrote to Steve Crain, President of CB&I's

Western Hemisphere Operations that PDM was bidding "much lower than the market, leaving a 

lot of money on the table." (CX 278 at CB&I-H 4004204).

Response to Finding No. 256:

This finding is irrelevant. There is no evidence regarding which product market 

Mr. Lewis was referring to, who Mr. Lewis is, or whether Mr. Lewis was correct in his
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assessment. Further, the record evidence contradicts the assertion that PDM bid "much lower

than the market." For example, in the LIN/LOX market, Graver was known as the low-cost 

provider of LIN/LOX tanks, beating out CB&I and PDM in many instances. (E.g., FOF 5.146).

257. Mr. Glenn testified that the competition between CB&I and PDM caused

substantial downward pressure on pricing and operating margins. (Glenn, Tr. 4335-6).

Response to Finding No. 257:

This finding is misleading to the extent it implies that Mr. Glenn's statement

referred to competition after 1997. Mr. Glenn explicitly limited his testimony on this point to

1997. (Glenn, Tr. 4335-36). Further, it is misleading to the extent it suggests that "substantial

downward pressure on pricing and operating margin" does not exist in the relevant markets

today. As Respondents have set forth in great detail, such pressure does exist. (See generally

Opening Br. at 19-118).

258. In April 1997, CB&I stated that, in North America, CB&I could be "very handily 

undercut (by as much as 10%) by PDM if they wanted to work at a lower price level; the

implication being that MG has seen lower LIN/LOX tank pricing from PDM." (CX 178 at

CB&I-PL011835).

Response to Finding No. 258:

This finding is irrelevant and misleading. It is misleading because it cites a

document and attributes it to "CB&I." This document does not state any corporate positions on 

behalf of CB&I. It is a document authored by Rich Kooy, a person that Complaint Counsel did 

not call as a witness. There is no evidence providing insight regarding the meaning of this

phrase or why Mr. Kooy wrote this document. Further, this e-mail does not even relate to a U.S. 

project; it relates to a project in Malaysia. In short, this document is not probative of any

relevant issue in this case.

259. In competing for LIN/LOX jobs, CB&I and PDM would in some instances, set

prices that would generate "negative margins." (CX 183). In fact, CB&I lost some projects to 

PDM because of PDM's "very low" pricing levels. (Crain, Tr. 2592; CX 624).
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Response to Finding No. 259:

This finding is misleading to the extent it suggests that PDM was the sole driving 

factor for bidding at negative margins. As discussed above, Graver provided heavy competition 

in the LIN/LOX market, for example. Graver's influence affected how PDM and CB&I set their 

prices. (See RFOF 256).

260. No firm exerted a greater consistent competitive threat than PDM across the

relevant markets.

Response to Finding No. 260:

This finding is vague because it does not set forth a specific time frame or in a

specific product market. It is also irrelevant because it says nothing about current competitive

conditions in the relevant markets. As discussed in Respondents' Opening Brief, customers in

the relevant product markets have competitive threats available to them to keep prices in check. 

(See Opening Br. at 19-118).

D. Competition from CB&I Caused PDM to Lower Prices and Margins

261. In the late 1990s, PDM began increasing its market share against CB&I. A PDM 

Board presentation states: "CB&I is currently a weakened and vulnerable organization and PDM 

EC is in an excellent position to exploit this weakness and build profitable market share in

domestic and select international markets." (CX 68 at PDM-C 1002634).

Response to Finding No. 261:

This finding is irrelevant, as it merely sets forth the view of PDM regarding

CB&I. There is no evidence that the assessment identified in Finding No. 261 was accurate.

262. Recognizing CB&I's weakness, PDM began pricing more aggressively to gain

business. Handwritten notes from the files of PDM's President reviews the evolution of PDM: 

(1) 1996-1997 "focused on more profitable assignments;" (2) 1997-1998 accept "lower gross

profit in pursuit of higher revenues;" and (3) 1998-1999 PDM "forced to bid at lower

margins" due to "competition w/CB&I" and "seeking more revenues." (CX 76 at PDMC1006141-3 (emphasis supplied); see also CX 390 at PDM-C 1006145 ("97-98 -> aggressive

growth market share - sacrifice margins")).
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Response to Finding No. 262:

This finding is vague, as it does not reference a specific product market. Further, 

it is misleading to the extent it implies that competition in the relevant product markets is

anything less than strong. As explained in Respondents' Opening Brief and Findings of Fact,

CB&I faces an array of competition from recent entrants in the relevant markets. (See generally 

Opening Br. at 19-118).

263. In May 2000, PDM warned its Board of Directors that "CB&I has been extremely 

aggressive on pricing work in North and South America. They have taken certain projects at

levels which would be slightly over PDM EC's flat cost." (CX 64 at PDM-C 1002562).

Response to Finding No. 263:

This finding is vague, as it does not reference a specific product market. Further, 

it is misleading to the extent it implies that competition in the relevant product markets is

anything less than strong. As explained in Respondents' Opening Brief and Findings of Fact,

CB&I faces an array of competition from recent entrants in the relevant markets. (See generally 

Opening Br. at 19-118).

264. Mr. Scorsone confirmed that he told Tanner & Company about the competition

between PDM and CB&I and how the companies were "forced to bid at lower margins" because 

of this competition. (Scorsone, Tr. 5152).

Response to Finding No. 264:

This finding is vague as to time frame and as to which products it refers to. It is 

also misleading to the extent it implies that CB&I does not currently face competition in the

relevant markets. As explained in Respondents' Opening Brief and Findings of Fact, CB&I faces 

an array of competition from recent entrants in the relevant markets. (See generally Opening Br. 

at 19-118).

265. There are no PDM documents that discuss any firm as a greater competitive threat 

than CB&I in the relevant markets.
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Response to Finding No. 265:

This finding is vague as to time frame. It is also misleading to the extent it

implies that CB&I does not currently face competition in the relevant market. As explained in 

Respondents' Opening Brief and Findings of Fact, CB&I faces an array of competition from

recent entrants in the relevant markets. (See generally Opening Br. at 19-118).

E. Competition Between Respondents

Resulted in Lower Prices for LNG Customers

266. In 1998, [xxxxxxxxxxxxxxxxxxxxxxxxxx] sent requests for bids to CB&I,

PDM/Air Products, and a third competitor, Marlborough Enterprises, for a proposed LNG peak 

shaving facility. According to CB&I, "[xxxxx] considered the Marlborough bid more of a

courtesy proposal with the real competition between CB&I and PDM/AP." (CX 161 at CB&IPL006113). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 161 at CB&I-PL006114; 

CX 1321 at CB&I-PL 069518).

Response to Finding No. 266:

The proposed finding is irrelevant because: (i) the Atlanta Gas project was never 

built; (ii) the cited documents do not support that competition between CB&I and PDM led to

lower prices; and (iii) it ignores the fact that many new competitors have entered the United

States LNG market since the Acquisition. (See generally FOF 3.68-73, 3.109-22, 3.173-87, 

3.200-03, 3.212-27).

267. In 1998, Peoples Gas of Illinois ("Peoples") sought an LNG tank supplier. 

(Blaumueller, Tr. 306). Peoples received budget pricing from CB&I and PDM, the only two

"real" competitors on the project. (CX 237 at CB&I-PL067744; see also Blaumueller, Tr. 289, 

296; CX 601 at CB&I-PL067744 (CB&I's assessment of "competition" – only PDM)).

Response to Finding No. 267:

The proposed finding is factually incorrect and misleading. First, People's Gas'

never sought an LNG supplier, it sought a supplier of methane tanks, for its proposed methane 

facility, in Joliet, Illinois. (See FOF 3.646, 3.647). In fact, the testimony cited in the proposed 

finding itself confirms that the Joliet facility would not have been the same as an LNG facility. 
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(See Blaumueller, Tr. 306). Second, it has been well established that budget pricing does not

have any bearing on the ultimate competitiveness of firm fixed bids. (See FOF 7.1-7.38). 

Lastly, the proposed finding is irrelevant because People's Gas considered the methane project in 

1998 well before the Acquisition and emergence of new LNG competitors.

268. Peoples originally solicited budget pricing from CB&I only, who wanted to "keep 

the inquiry 'off the street,'" but PDM found out and asked to be considered for the project. (CX 

259 at CB&I-H003002; Blaumueller, Tr. 296).

Response to Finding No. 268:

The proposed finding is misleading, irrelevant and factually incorrect for the

reasons articulated in CB&I's Response to Finding No. 269. (See FOF 3.646, 3.647).

269. PDM saw an opportunity to win because CB&I's "price is probably substantially 

high due to their perceived sole source situation." (CX 112 at PDM-HOU 011513-4). PDM

planned to undercut CB&I by submitting a "very competitive budget price." (Id.)

Response to Finding No. 269:

The proposed finding is irrelevant and misleading for the reasons articulated in

CB&I's Response to Finding Nos. 267 and 268. (See FOF 3.646, 3.647). The proposed finding 

is also factually incorrect because the PDM document cited in the proposed finding does not

state that PDM "planned to undercut CB&I." (CX 112 at PDM-HOU 011513-14). The

document merely states that PDM planned to submit a competitive budget price. (CX 112 at

PDM-HOU 011513-14).

270. CB&I feared that if PDM bid, the process would become "a classic head-to-head 

price war." (CX 602 at CB&I-H003002-03). In order to combat PDM's aggressiveness, CB&I 

forced PDM to "play in our 'sandbox'" by persuading Peoples to require that the project would 

require union labor. CB&I believed that the union labor requirement would prevent PDM from 

submitting a competitive price because PDM relied primarily on non-union labor. (CX 602 at 

CB&I-H003002-3).
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Response to Finding No. 270:

The proposed finding is irrelevant and misleading for the reasons articulated in

CB&I's Response to Finding Nos. 267 and 268. (See FOF 3.646, 3.647).

271. Due to extraneous business decisions, Peoples did not complete the project. 

(Blaumueller, Tr. 296).

Response to Finding No. 271:

The proposed finding is irrelevant and misleading for the reasons articulated in

CB&I's Response to Finding Nos. 267 and 268. (See FOF 3.646, 3.647).

272. Another example of head-to-head competition between Respondents that resulted 

in approximately [xxxxx] lower prices is the Cove Point project. CCFF 785.

Response to Finding No. 272:

For the reasons set forth in RFOF 786 and RFOF 787, the proposed finding is

factually incorrect, speculative, and mischaracterizes the evidence.

F. Competition Between Respondents

Resulted in Lower Prices for LPG Customers

273. In 1998, Sea-3 requested Fluor to secure bids for LPG tanks to be constructed in 

Tampa, Florida. (Warren, Tr. 2275, 2303). Fluor obtained bids only from CB&I and PDM. (Id. 

at 2281, 2303). Fluor told CB&I and PDM that they were the only two bidders. (Id. at 2304-05). 

By leveraging Respondents against each other, Fluor obtained a lower LPG tank price. (Id. at 

2303-04; see also Price, Tr. 556).

Response to Finding No. 273:

This finding is misleading and inaccurate. Contrary to Complaint Counsel's

assertion, Ms. Warren actually testified that she did not know whether Fluor obtained a lower

LPG tank price as a result of the competitive bidding process because she was not directly

involved in the preparation of bid pricing. (Warren, Tr. 2303-04, 2307) (FOF 4.158). Further, 

this finding's reliance on the testimony of Mr. Price is irrelevant as he was not involved in the

Sea-3 project, does not work for Fluor or Sea-3, and has had no involvement in the LPG market.
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274. Dr. Simpson testified that CB&I's acquisition of PDM combines the two strongest 

sellers of LPG tanks in the United States. (Simpson, Tr. 3406). According to Dr. Simpson: 

"Prior to the acquisition ... CB&I's pricing was constrained principally by the presence of PDM 

EC. When CB&I acquired PDM EC, then CB&I's pricing would be constrained by much weaker 

competitors and constrained at a higher price." (Simpson, Tr. 3406). Dr. Simpson testified that 

he believed that CB&I's acquisition of PDM would lead to higher prices for LPG tanks. 

(Simpson, Tr. 3406).

Response to Finding No. 274:

This finding is misleading, irrelevant and contradicted by the actual record

evidence of LPG customers in the market. First, testimony regarding the LPG market prior to

the Acquisition is irrelevant to current competition in the market. Second, LPG customers have 

directly refuted Dr. Simpson, stating satisfaction with current price and competition levels and in 

the LPG market and not believing that the prices for LPG tanks will increase as a result of the 

Acquisition. (N. Kelley, Tr. 7090-92, 7135, 7137) (FOF 4.55, 4.58, 4.59). Finally, the most

recent LPG project, ABB Lummus in 2001, demonstrates the inaccuracy of Dr. Simpson's

testimony. (Scorsone, Tr. 5039-43). On that project, competition with AT&V and Wyatt forced 

CB&I to lower its margin from four percent to 2.5 percent. (Scorsone, Tr. 5041-42). Without 

meaningful competition, CB&I would never had lowered its price. Consequently, CB&I was

also forced to create a new design innovation in an effort to reduce the total cost of the tank. 

(Scorsone, Tr. 5040-41). Based on this recent evidence, CB&I cannot impose a price increase in 

the future on LPG projects without losing projects to competitors. (Scorsone, Tr. 5043) (FOF

4.66-4.70).

275. Dr. Harris testified that prior to the acquisition, neither CB&I nor PDM could

increase prices of LPG tanks in the United States without risking that each would lose sales to

the other. (Harris, Tr. 7539-40, 7543-44).
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Response to Finding No. 275:

Respondents do not dispute the truth of this finding. In addition, this finding

holds true for post-Acquisition price increases as well, as evidenced by the ABB Lummus

project in 2001. (See RFOF 274)

G. Competition Between Respondents

Resulted in Lower Prices for LIN/LOX Customers

276. In order to compete against PDM, CB&I has set prices so low that if CB&I won 

the business, the project would generate "negative margins." (Crain, Tr. 2594).

Response to Finding No. 276:

The proposed finding is irrelevant because record evidence shows that current

competition in the LIN/LOX market has driven CB&I prices to extremely low levels. CB&I has 

only won two of five post-Acquisition LIN/LOX projects and on those projects tight competition 

has forced CB&I to use razor thin margins. For example, despite the fact that the low cost

supplier in today's market, AT&V, was absent from the bidding, CB&I was forced to cut its

margin from four percent to less than one percent on MG's New Johnsonville project to beat the 

competition. (Scorsone, Tr. 5023-24) (FOF 5.151, 5.152). Further, when CB&I trimmed its

margin zero on Air Liquide's Freeport project to remain competitive, it still lost to AT&V by

$200,000. (Scorsone, Tr. 5023-5024; RX 627 at 2).

277. A CB&I document states that "PDM is the driver on negative margins on these

LIN/LOX tanks. We understand that PDM can readily price the LIN/LOX work at -6% margin 

in the Gulf Coast and Southeast ... Unless there is a reason why PDM would be less aggressive 

or economical in NV, then I agree with Ron that -2% or -3% should get us on the high side of the 

target range." (CX 193 at CB&I-PL020339).

Response to Finding No. 277:

The proposed finding is irrelevant and misleading because current LIN/LOX

competitors' low pricing and aggressive margins have kept CB&I from increasing prices, despite 

the exit of PDM from the LIN/LOX market. (RFOF 276).
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278. CB&I responded to PDM's offensive by reducing prices to maintain business. In 

February 2000, in his quarterly report to PDM's Board of Directors, Mr. Scorsone wrote:

"PDM EC has made significant market share increases against CB&I in both

domestic and international markets. Disruptions are occurring at CB&I as a result 

of disconnects between their new senior management and long term CB&I

personnel. PDM EC will take advantage of this by providing a more nimble and 

focused response to customer needs and market opportunities. ... As was done

from time to time in 1999 PDM EC will force CB&I to take contracts at

unattractive prices by exploiting this behavior."

(CX 23 at PDM-C 1002566).

Response to Finding No. 278:

The proposed finding is irrelevant and does not account for new entry in the

LIN/LOX market. (RFOF 152). Further, the finding is misleading because CB&I has been

constrained by market conditions and in fact lowered its prices and cut its margins due to fierce 

competition in today's LIN/LOX market. (RFOF 276). Whether or not CB&I responded to

PDM's pricing strategies or not prior to the Acquisition have nothing to do with the current state 

of LIN/LOX competition.

279. LIN/LOX customers used the competition between CB&I and PDM to obtain

lower prices. (Hilgar, Tr. 1357 (PDM met all Air Products' procurement criteria and generally

offered a lower price than competing tank suppliers); CCFF 1087-1108 (MG Industries)).

Response to Finding No. 279:

The proposed finding is irrelevant because LIN/LOX customers have been able to 

use competition between current LIN/LOX suppliers CB&I, Matrix, AT&V, and CB&T to

obtain prices which are very low. (FOF 5.79-5.185). For example, BOC awarded the Midland 

project to AT&V because of low cost and was satisfied with the price AT&V gave because the 

price was below BOC's budget for the project. (FOF 5.96).

Also, Air Liquide told CB&I it was in a competitive situation on the Freeport

project and in response to that competitive situation CB&I lowered its margin from 2 percent to 
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zero percent. (FOF 5.128-5.130). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

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280. Linde used PDM's prices as its "benchmark" to compare other firms' prices. (Fan, 

Tr. 967). Linde was able to leverage PDM's lower prices to negotiate pricing and other

concessions from other vendors. (Kistenmacher, Tr. 867-8; see Patterson, Tr. 356-9, 362-4 (uses 

PDM's low price to reduce tank prices even further)).

Response to Finding No. 280:

The proposed finding is misleading because it implies that, without PDM,

LIN/LOX buyers are unable to leverage present competitive situations to negotiate low prices. 

However, the record is rife with empirical evidence establishing that current LIN/LOX buyers 

are receiving low prices and are pleased with the prices they have gotten post-Acquisition. (FOF 

5.79-5.185) (RFOF 279).

281. Linde told CB&I that its "budget prices are always higher than PDM's, and that 

PDM always beats their budget price." (CX 182 at CB&I-PL012354; see also CX 222 at CB&IPL037594 (PDM beat CB&I for a LIN/LOX tank for Linde in Louisiana by reducing the price in 

the last round of bidding)).

Response to Finding No. 281:

Respondents do not dispute the truth of the proposed finding.
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282. In 1998, CB&I competed against PDM, BSL and Graver for a construction

project in Baytown, Texas for Air Products. CB&I projected Graver's and PDM's prices to be at 

$1,650,000, and BSL's price at over $2,000,000. CB&I's price was $1,793,000. CB&I believed 

it would be difficult to make up the difference on price without adding additional products to the 

customer. (CX 198 at CB&I-PL023631; see also CX 197 at CB&I-PL023628 (customer 

confirmed BSL bid was $2,700,000)).

Response to Finding No. 282:

The proposed finding is irrelevant because pricing for a LIN/LOX project bid on 

in 1998 has nothing to do with the current state of competition in 2003. Initially, the document 

cited by Complaint Counsel may be unreliable. There is no testimony in the record regarding the 

information in Exhibit CX 198 or CX 197. Both exhibits are emails of meeting notes from Rich 

Kooy, a CB&I employee, and the prices cited in the emails may or may not be correct or

accurate. At the end of the day, Complaint Counsel could have called any number of witnesses 

with knowledge of this email to testify about its contents, however Complaint Counsel chose not 

to do so and now wants to use the emails as evidence of pricing in 1998.

Further, the proposed finding is irrelevant because it has no bearing on the current 

state of competition in the LIN/LOX market. After the Acquisition, CB&I is still having

difficulty competing with respect to price. In fact, CB&I has lost a majority of the LIN/LOX

projects awarded post-Acquisition. (FOF 5.76-5.78).

283. A memo written to Mr. Scorsone in 1996, around the time that CB&I was spun

off from Praxair, anticipates that CB&I will become "more active participant in the market, [and] 

this may push margins downward." (CX 1040 at PDM-HOU010888-89).

Response to Finding No. 283:

The proposed finding is irrelevant because Mr. Scorsone's predictions regarding 

the effect of CB&I's participation in the 1996 market for LIN/LOX tanks has nothing to do with 

the state of competition in 2003. In fact, current competition has forced CB&I to reduce its

margins on several recent bids for LIN/LOX tanks. For example, Air Liquide communicated to 
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CB&I that it was in a competitive situation for the Freeport LIN/LOX project and in response to 

that competitive situation CB&I lowered its margin from 2 percent to 0 percent. (FOF 5.128-

5.130). Moreover, in response to MG's comments made during negotiations, CB&I cut its

margin from four percent to less than one percent on the New Johnsonville project. [xxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

284. In 1997, a customer in Georgia obtained an additional 4% price reduction because 

of PDM's aggressive price cutting against CB&I in the final round of bids. (CX 166 at CB&IPL006870).

Response to Finding No. 284:

The proposed finding is irrelevant because the fact that a customer in Georgia

obtained a four percent price reduction has no bearing on the market conditions which exist in

the LIN/LOX market in 2003. First, there is no testimony regarding the contents of the email

exhibit numbered CX 166. There is no way for the information in this email to be verified and if 

Complaint Counsel had wished to call its author, Rich Kooy, it could have. Not only did

Complaint Counsel fail to question the author regarding the email, they also failed to call any of 

the recipients of the email message. Thus, nothing is known about the context or accuracy of the 

information being cited by Complaint Counsel for its proposed finding.

Moreover, the finding is irrelevant because empirical evidence produced at trial

establishes that CB&I in fact still lowers its margins and reduces its prices in response to

competition. Competition to which it has lost a majority of LIN/LOX jobs, post-Acquisition. 

(RFOF 279, 282, 283).

285. In May 2000, Luke Scorsone warned the Board of Pitt-Des Moines that "CB&I 

has been extremely aggressive on pricing work in North and South America. They have taken

certain projects at levels which would be slightly over PDM EC's flat cost." (CX 64 at PDM-C 

1002562).
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Response to Finding No. 285:

The proposed finding is irrelevant because LIN/LOX customers have been able to 

use competition between current LIN/LOX suppliers CB&I, Matrix, AT&V, and CB&T to

obtain prices which are very low. (FOF 5.79-5.185). Complaint counsel implies that in the

absence of competition between CB&I and PDM customers cannot receive prices which are

similar to pre-Acquisition levels, however empirical evidence admitted at trial proves otherwise. 

For example, BOC awarded the Midland project to AT&V because of low cost and was satisfied 

with the price because it was below BOC's budget for the project. (FOF 5.96). [xxxxxxxxx 

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286. Other documents of Respondents reflect the competitive pressure that PDM

regularly placed on CB&I. (See CX 614 at CB&I-PL039367 (for LOX tank project for Air

Products in Eureka, Nevada, PDM's quoted price was "$100,000 lower than CB&I's and Matrix's 

price, and almost $200,000 lower than Graver's price"); CX 222 at CB&I-PL037594 (PDM won 

a bid from CB&I for a pair of LIN/LOX tanks by dropping their bid on their best and final offer 
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by $40,000); CX 191 at CB&I-PL018948 (Air Products had awarded a LOX tank to PDM,

which "was the very low bidder and met all of the technical requirements.")).

Response to Finding No. 286:

The proposed finding is irrelevant because current LIN/LOX suppliers place

competitive pressures on CB&I -- pressures which have constrained prices for field erected

LIN/LOX tanks in the United States. (FOF 5.79-5.184). Post-Acquisition, CB&I has competed 

directly with AT&V on three competitively bid projects and lost to AT&V on the basis of low

price each time. (FOF 5.76-5.78). Even absent AT&V, empirical evidence shows that

competitive pressures are such that pricing in kept at pre-Acquisition levels for LIN/LOX tanks. 

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H. Competition Between Respondents

Resulted in Lower Prices for TVC Customers

287. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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242 at CB&I-PL 4003340, in camera). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxx]. (Id.; see also Gill, Tr. 212, 213 (CB&I and PDM competition 

lowered prices to customers).
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Response to Finding No. 287:

Complaint Counsel relies heavily on an internal CB&I memorandum from an low 

level line salesman (Dave Lacey) to support their argument (CC Br. at 31; citing CX 242). Mr. 

Lacy is not part of CB&I management, and in fact, he is a fairly lower-level marketing and

salesperson at CB&I. (Scully, Tr. 1217; FOF 6.148). Mr. Lacey typically presented both the

extreme case as well as the moderate case in his proposals, and his extreme suggestions were

ignored by his superiors. (Scully, Tr. 1219-21; FOF 6.152). Mr. Lacey's ideas were ignored. 

(Scorsone, Tr. 5045-46; Scully, Tr. 1221; FOF 6.153).

288. XL Technologies viewed the competition between Respondents as "always

relatively intense." (Scully, Tr. 1175). CB&I's desire to win TVC projects caused the "pricing 

[of TVCs] to go down." (Id., Tr. 1175-6). The competition was so "intense" that XL

Technologies and its partner CB&I worried that the prices to customers would not return a profit: 

"the costs incurred to get" a project were so high that "if the price of the system isn't high

enough, you've lost your profit before you ever begin the job." (Id. at 1179-81).

Response to Finding No. 288:

Respondents have no specific response, except to note that Scully refers to the

intensity of the competition only in the context of CB&I's attempt to enter the field-erected TVC 

market in 1998. (Scully, Tr. 1175).

289. Spectrum Astro saw CB&I and PDM "fighting against each other pretty hard to

get []our business." (Thompson, Tr. 2115). After receiving CB&I's initial bid, Spectrum Astro 

was pleased to find that CB&I "had probably low-ended the profit to get the job." (Id. at Tr.

2074-75).

Response to Finding No. 289:

Respondents do not dispute the truth of this statement, and note that CB&I and 

PDM competed vigorously for the Spectrum Astro job. (FOF 6.142-6.146). Additionally, the

substance of this finding runs counter to the arguments posed by Complaint Counsel elsewhere 

in its filing. (See, e.g. CCFF 1119-1164).
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290. In August 1998, Orbital Sciences Corp. ("Orbital Sciences") requested bids for a 

TVC to be built in Virginia. PDM and CB&I were the only suppliers that bid. (Scully, Tr. 1175;

see also CX 112 at PDM-HOU011527; CX 235 at CB&I-PL060195; CX 1196 at PDMHOU011527). After CB&I learned there was a "significant difference" between its initial bid of 

$10.2 million and PDM's bid, CB&I further lowered its price by 15% to $8.6 million. (CX 235 

at CB&I-PL060197; see also CX 272 at CB&I-H010889).

Response to Finding No. 290:

This finding is misleading and irrelevant. First, the email refers to a project to

modify an existing 12' thermal vacuum chamber. (CX 272 at CB&I-H010889-90). Repair jobs 

are not relevant to this litigation, and are outside of the product market definitions. (See RFOF 

6.1-6.10). Furthermore, this existing chamber is a shop-built TVC and not a relevant product, by 

Complaint Counsel's definition, thus exposing a direct contradiction in its findings. (See CCFF 

84, 223).

I. Other Firms Cannot Replace PDM

Because Entry into the Relevant Markets Is Not Easy

291. Respondents contend that the merger is not likely to substantially lessen

competition because entry by foreign and domestic firms into the relevant markets will deter or 

counteract the anticompetitive effects of concern.

Response to Finding No. 291:

Respondents have no specific response to this finding, except to note that it is

Respondents' position that entry has already had the aforementioned effects.

292. A merger is not likely to create or enhance market power or to facilitate its

exercise, if entry into the market is "so easy" that market participants, after the merger, "could 

not profitably maintain a price increase above premerger levels." Merger Guidelines § 3.0.

Response to Finding No. 292:

Complaint Counsel's proposed finding 292 is misleading because the Merger 

Guidelines are not binding on this Court. New York v. Kraft Gen. Foods, Inc., 926 F. Supp. 321, 

359 n.9 (S.D.N.Y. 1995); FTC v. PPG Indus., Inc., 798 F.2d 1500, 1503 n.4 (D.C. Cir. 1986); 

Fruehauf Corp. v. FTC, 603 F.2d 345, 353-54 (2d Cir. 1979); Olin Corp. v. F.T.C., 986 F.2d 
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1295, 1300 (9th Cir. 1993). The approprite legal standards for evaluating entry are set forth in

United States v. Baker Hughes and its progeny. 908 F.2d 981 (D.C. Cir. 1990).

293. "Entry is that easy if entry would be timely, likely, and sufficient in its magnitude, 

character and scope to deter or counteract the competitive effects of concern." Merger 

Guidelines § 3.0.

Response to Finding No. 293:

Respondents have no specific response to this finding, except to note that it is

Respondents' position that entry has already had the aforementioned effects.

294. It is not enough for Respondents merely to point to some firm that might win one 

contract in the relevant markets. Entry that will deter or counteract the likely anticompetitive

effects of this merger cannot be a "hit and run" exercise. Entry is sufficient only if the entrant 

restrains CB&I at the same pre-merger price levels and as consistently as PDM did. "Entry that 

is sufficient to counteract the competitive effects of concern will cause prices to fall to their

premerger levels or lower. Thus, the profitability of such committed entry must be determined 

on the basis of premerger market prices over the long-term." Merger Guidelines § 3.0.

Response to Finding No. 294:

This finding of fact is incorrect, because it assumes that Respondents have

"merely point[ed] to some firm that might win one contract in the relevant markets." To the

contrary, Respondents have pointed to a variety of large multinational conglomerates and

domestic tank makers that have already entered the relevant markets in the past two years. (See

FOF 3.68-3.227 (actual entry has occurred in the LNG market); FOF 4.16-4.54 (actual entry in 

the LPG market); FOF 5.22-5.71 (new competitors have entered the LIN/LOX market); 5.79-

5.184 (LIN/LOX customers are satisfied with prices received and available competitive

options)). Further, Respondents have presented evidence that this new entry has restrained

CB&I's prices over the past two years, and that it is likely to restrain CB&I's prices in the future. 

Complaint Counsel is incorrect in its assertion regarding hit and run entry, because if entry

barriers are low, hit and run entry can be recurrent and form a price disciplining influence. See

United States v. Baker Hughes, 908 F.2d 981 (D.C. Cir. 1990). Respondents have shown such 
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low entry barriers. Further, this so-called finding of fact is not based on record evidence in this 

case, nor is it based on a legal conclusion reached by any court. It is based on the Merger

Guidelines, which were created by the government itself and are not binding on this Court.

295. Both economic experts agree that entry by new firms would not restore the

competition lost through an anticompetitive merger if this entry is at a price above the premerger price. (Simpson, Tr. 3151-2; Harris, Tr. 7438).

Response to Finding No. 295:

Respondents have no specific response to this finding.

296. Dr. Simpson testified: "If you have an anticompetitive merger where you have the 

two strongest competitors in a market merge, then that merged firm could increase price until

firms that previously had been fringe competitors begin to serve as a constraint. When it

increases price, some of these fringe competitors begin to make sales, but ... the fact that the

fringe competitors make sales at the higher price is not sufficient to restore the premerger

competitive environment." (Simpson, Tr. 3151-2).

Response to Finding No. 296:

This finding is irrelevant, as Dr. Simpson's testimony assumes that new entry will 

not occur in the relevant markets, or that already-existing market players will not increase their 

efforts to win work in the relevant markets in the absence of a market participant. These

assumptions are not borne out by the record evidence. As Respondents have proven, new entry 

has occurred in the relevant markets. Many of these new entrants have been successful in

winning work in the relevant products, and have constrained CB&I's pricing in these markets. 

For example, the recent entry of AT&V, Matrix, and CB&T has created a competitive situation 

in which LIN/LOX tank customers have received good prices from competitors, including prices 

from CB&I that are equal to or lower than prices it has provided in the past. (See FOF 5.22-5.71 

(new competitors have entered the LIN/LOX market); 5.79-5.184 (LIN/LOX customers are

satisfied with prices received and available competitive options)). Further, the necessary

implication of Dr. Simpson's theory is that a merger will always have an anticompetitive result.
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297. Dr. Harris testified that entry will not keep prices from rising above the

preacquisition level if entry is only profitable at higher prices. (Harris, Tr. 7451). The mere fact 

that entry has occurred following an acquisition does not mean that the entry is sufficient to

restore the premerger competitive environment. (Harris, Tr. 7436). Entry by firms who can only 

profitably enter at prices above the competitive level would not restore competition. (Harris, Tr. 

7438).

Response to Finding No. 297:

This finding is irrelevant, as it assumes that the new entry discussed by

Respondents is not profitable at pre-merger prices. In fact, Respondents have presented evidence 

that new entrants can win jobs in the relevant markets at pre-merger prices. For example,

Skanska/Whessoe provided Dynegy with a price so low that it refused to allow CB&I to bid on 

this project. (FOF 3.68, 3.75, 3.270, 3.297-3.306). Similarly, AT&V has provided prices to

LIN/LOX customers on a variety of projects that easily beat CB&I's prices, suggesting that it can 

compete profitably at pre-merger levels. (FOF 5.76-5.78). Futher, Complaint Counsel ignores

that this is a sealed bid industry with imperfect information. (Simpson, Tr. 3073, 3771; FOF

7.83). In this sealed bid environment, CB&I's state of mind regarding this entry is more

important than actual pricing by the entrants. (FOF 7.82-7.88, 7.241). CB&I's state of mind is 

relevant (FOF 7.82-7.88, 7.241), and is one impact on the strength of post-Acquisition 

competition.

298. Both Dr. Simpson and Dr. Harris testified that the observation that buyers are

willing to consider buying from new firms does not always imply that entry is sufficient. 

(Simpson, Tr. 3281-2; Harris, Tr. 7791). Both Dr. Simpson and Dr. Harris also testified that the 

observation that buyers sometimes buy from new firms does not, by itself, imply that entry is

sufficient. (Simpson, Tr. 3280-1; Harris, Tr. 7792).

Response to Finding No. 298:

This finding mischaracterizes Dr. Harris' testimony regarding observations that

buyers are willing to consider buying from new firms. In fact, Dr. Harris testified that such
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evidence constitutes "important analysis" in determining the sufficiency of entry. (Harris, Tr.

7991).

299. Both Dr. Simpson and Dr. Harris also testified that the observation that new firms 

submit bids in a market does not always imply that entry is sufficient. (Simpson, Tr. 3282-4; 

Harris Tr. 7790). Both Dr. Simpson and Dr. Harris testified that the observation that new firms 

make some investments to sell into a market does not always imply that entry is sufficient. 

(Simpson, Tr. 3284-8 (citing RX 738); Harris, Tr. 7791).

Response to Finding No. 299:

Respondents have no specific response to this finding.

300. The economic literature recognizes that entry does not always quickly restore

competition, e.g., F.M. Scherer and David Ross, Industrial Market Structure and Economic

Performance, 366-67 (3rd ed. 1990)).

Response to Finding No. 300:

Respondents have no specific response to this finding, except to note this

literature is not in evidence.

301. Dr. Simpson testified: "[T]he competition between CB&I and PDM EC that

existed prior to the acquisition led to lower prices for buyers than whatever competition exists

after the acquisition among CB&I and the foreign firms such as Skanska/Whessoe, TKK/ATV

and Technigaz/Zachry." (Simpson, Tr. 3347).

Response to Finding No. 301:

The finding is inaccurate and misleading, as it is does not identify a specific

product market and is based solely on the testimony of Dr. Simpson, which was completely

devoid of support to the record. In fact, the evidence shows that competition in the relevant

markets post-Acquisition has led to prices equal to or lower than those received prior to the

Acquisition. (E.g., Patterson, Tr. 488; Kamrath, Tr. 2260-61) (FOF 5.158, 5.184). In fact,

customers have observed that competition in some of the relevant markets has actually increased 

as a result of the Acquisition. (E.g., Carling, Tr. 4494) (FOF 3.253). There is an extensive

record of vibrant post-Acquisition competition in each market. (See FOF 3.68-3.227 (actual entry 
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has occurred in the LNG market); FOF 4.16-4.54 (actual entry in the LPG market); FOF 5.22-

5.71 (new competitors have entered the LIN/LOX market); 5.79-5.184 (LIN/LOX customers are 

satisfied with prices received and available competitive options)).

302. There are significant barriers in the relevant markets that make entry by new firms 

or expansion by existing firms not easy. CCFF 307-391.

Response to Finding No. 302:

This finding is patently false and lacks any credible evidentiary support. The

evidence demonstrates that there are no significant barriers to entry in the relevant markets. 

(FOF 3.509-3.570). In fact, Complaint Counsel's proposed finding has been rejected by

empirical evidence, as a wide variety of firms have actually entered the relevant markets since

the Acquisition. (See FOF 3.68-3.227 (actual entry has occurred in the LNG market); FOF 4.16-

4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new competitors have entered the

LIN/LOX market); 5.79-5.184 (LIN/LOX customers are satisfied with prices received and

available competitive options)). Further, the evidence is clear that entry barriers are low in each 

market. (See Opening Br. at. 46-61 (LNG), 90-94 (LPG), 107-09 (LIN/LOX); FOF 3.509-3.570 

(LNG), 4.71-4.143 (LPG), 5.219-5.223 (LIN/LOX)).

303. Dr. Simpson testified that a new entrant would have to possess the same tangible 

and intangible assets that made CB&I and PDM such strong competitors in order to restore

competition in the relevant markets to the level that existed prior to CB&I 's acquisition of PDM. 

(Simpson, Tr. 3278, 3155). Dr. Simpson identified these tangible assets as a large engineering 

staff, field erection crews in the U.S., and fabrication facilities in the U.S. (Simpson, Tr. 3155-

56). Dr. Simpson identified these intangible assets as reputation, building experience, and

bidding experience. (Simpson, Tr. 3214).

Response to Finding No. 303:

This finding is inaccurate and misleading, as it is based solely on the unsupported 

testimony of Dr. Simpson and does not identify a specific product market to which it refers. As 

Respondents discussed in their Opening Brief and Findings of Fact, the analysis of entry barriers 
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differs by product market. (See Opening Br. at. 46-61 (LNG), 90-94 (LPG), 107-09 (LIN/LOX); 

FOF 3.509-3.570 (LNG), 4.71-4.143 (LPG), 5.219-5.223 (LIN/LOX); See Harris, Tr. 7209-13, 

7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-7.101, 7.118, 7.113). In addition, this 

finding is improperly based on the flawed premise that PDM must be replaced by a single firm, 

and excludes the possibility of several firms providing the competition that PDM did in the past. 

Further, the evidence shows that Dr. Simpson's claims are incorrect. For example, it is not

necessary to have a large engineering staff or bidding experience to build an LPG tank. (See, 

e.g., Maw, Tr. 6547-48, 6551-52, 6557-60; see also FOF 4.72, 4.73, 4.93). Dr. Simpson also 

ignores the fact that the new entrants identified by Respondents have access to the assets he

identifies as so-called entry barriers. (Opening Br. at 20-46; FOF 3.56-3.227). For example,

Technigaz/Zachry and TKK/AT&V have the necessary engineering staffs, experience, and

reputation to build LNG tanks in the U.S. (Opening Br. at. 28-41; FOF 3.99-3.108, 3.141-

3.172).

304. A new entrant would have to possess the same tangible and intangible assets that 

made CB&I and PDM such strong competitors in order to restore competition in the relevant

markets to the level that existed prior to CB&I 's acquisition of PDM. (Simpson, Tr. 3278). Dr. 

Simpson testified: [F]or an entrant to acquire these tangible and intangible assets, the entrant

would need to spend a lot of money and a lot of time." (Simpson, Tr. 3278). If the new entrant 

had to abandon the entry, certain types of investments, such as rented office space, might be

recoverable. Other types of expenditures, such as the cost of buying projects, would not be

recoverable. (Simpson, Tr. 3279). According to Dr. Simpson, the portion of the expenditure that 

would not be recoverable would make up a "significant portion" of the original investment. 

(Simpson, Tr. 3278).

Response to Finding No. 304:

This finding is inaccurate, misleading, and vague. It fails to analyze the issue of 

alleged entry barriers on a product by product basis. Further, it is based entirely on Dr.

Simpson's testimony, and is unsupported by any credible record evidence. There is no evidence 

in the record that competitors must possess the same tangible and intangible assets that CB&I
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and PDM possessed prior to the Acquisition. Indeed, CB&I and PDM possessed different assets 

prior to the Acquisition, yet were able to compete with each other in all but one of the product 

markets at issue. In addition, this finding is improperly based on the flawed premise that PDM

must be replaced by a single firm, and excludes the possibility of several firms providing the

competition that PDM did in the past. This finding also ignores the empirical evidence showing 

that the so-called "entry barriers" identified by Dr. Simpson. As discussed extensively in

Respondents' Opening Brief and findings of fact, a variety of large, multinational conglomerates 

and domestic tank makers have entered the markets for the relevant products in the past two

years. The fact that they have successfully entered these markets conclusively demonstrates that 

Dr. Simpson's alleged entry barriers simply do not exist. (Opening Br. at 64-79, 89-94, 98-107; 

See FOF 3.68-3.227 (actual entry has occurred in the LNG market); FOF 4.16-4.54 (actual entry 

in the LPG market); FOF 5.22-5.71 (new competitors have entered the LIN/LOX market); 5.79-

5.184 (LIN/LOX customers are satisfied with prices received and available competitive

options)).

305. Dr. Simpson testified that, to compete as effectively as CB&I and PDM had prior 

to the acquisition, an entrant would need tangible and intangible assets comparable to those

possessed by CB&I and PDM. (Simpson, Tr. 3407, 3451). Dr. Simpson identified the tangible 

assets as fabrication facilities, an engineering staff, and field erection crews. (Simpson, Tr. 3407, 

3451). Dr. Simpson identified the intangible assets as reputation, building experience, and

bidding experience. (Simpson Tr. 3407, 3451). Dr. Harris agreed that an entrant would need to 

possess these intangible assets. (Harris, Tr. 7314 (testifies that it is "fair to say" that "it 's

important to have a good reputation"; "that you have to be able to bid properly"; and that "there 

is learning by doing.")).

Response to Finding No. 305:

This finding is inaccurate, misleading, and vague. It fails to analyze the issue of

alleged entry barriers on a product by product basis. Further, it is based entirely on Dr.

Simpson's testimony, and is unsupported by any credible record evidence. There is no evidence 

in the record that competitors must possess the same tangible and intangible assets that CB&I
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and PDM possessed prior to the Acquisition. Indeed, CB&I and PDM possessed different assets 

prior to the Acquisition, yet were able to compete with each other in all but one of the product 

markets at issue. In addition, this finding is improperly based on the flawed premise that PDM

must be replaced by a single firm, and excludes the possibility of several firms providing the

competition that PDM did in the past. This finding also ignores the empirical evidence showing 

that the so-called "entry barriers" identified by Dr. Simpson. As discussed extensively in

Respondents' Opening Brief and findings of fact, a variety of large, multinational conglomerates 

and domestic tank makers have entered the markets for the relevant products in the past two

years. The fact that they have successfully entered these markets conclusively demonstrates that 

they have these "certain tangible and intangible assets" and that Dr. Simpson's alleged entry

barriers simply do not exist. (Opening Br. at 64-79, 89-94, 98-107; See FOF 3.68-3.227 (actual 

entry has occurred in the LNG market); FOF 4.16-4.54 (actual entry in the LPG market); FOF

5.22-5.71 (new competitors have entered the LIN/LOX market); 5.79-5.184 (LIN/LOX

customers are satisfied with prices received and available competitive options)).

306. In selecting a supplier, customers weigh multiple criteria, including price,

delivery schedule, quality, safety record and innovative engineering and design. (Gill, Tr. 206-

07; Glenn, Tr. 4335; CX 1569 at 3). An entrant must possess all of these tangible and intangible 

assets to be able to replace PDM in the relevant markets.

Response to Finding No. 306:

This finding is inaccurate and misleading, as it is based on the flawed premise that 

PDM must be replaced by a single firm, and excludes the possibility of several firms providing 

the competition that PDM did in the past.

1. The Lack of a Fabrication Facility in the United States Impedes Entry

307. Foreign builders of LNG tanks do not have fabrication facilities in the United

States. (Simpson, Tr. 3166). Having a fabrication facility in the United States gave CB&I and 

PDM a competitive advantage in bidding for LNG tanks in the U.S. (JX 37 (Newmeister, Dep., 
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IHT.); RX 738 at 2). Building a fabrication plant would cost about $9 million and take about 9 

months. (CX-922).

Response to Finding No. 307:

This finding is inaccurate because it incorrectly asserts that foreign builders of

LNG tanks do not have fabrication facilities in the U.S. Consortia involving foreign entities,

such as TKK/AT&V, have access to U.S.-based fabrication facilities. (E.g., Cutts, Tr. 2457;

FOF 3.103-3.108). Further, access to fabrication facilities is not an entry barrier to the LNG

markets. Fabrication for LNG tanks takes place overseas, rendering a U.S. fabrication facility

useless. (FOF 3.562). Even if U.S. fabrication facilities did provide any competitive advantage, 

that advantage would be minor. (FOF 3.564). Further, this finding is based on the testimony of 

John Newmeister of Matrix, a company that has never even participated in the LNG market and 

that competes against CB&I in other relevant markets. (See Opening Br. at 89, 103-05; FOF

4.63, 5.43-5.55; Newmeister IH, Tr. 1596-97 (JX 37)).

308. The fact that CB&I and PDM both possessed fabrication plants in the United

States gave them a competitive advantage in bidding for the relevant products (Simpson, Tr.

3159, 3163, 3166). For example, when Matrix Services Company sold Brown Steel Company, a 

division of Matrix that possessed a fabrication facility, it lost some of its competitive strength as 

a tank builder. (Simpson, Tr. 3160-61 (citing JX 37 (Newmeister, IHT) (loss of Brown Steel's

fab facility means more subcontracting), RX 738 (Technigaz is less competitive because it

doesn't have a fabrication facility); CX 922 (it costs $9M to build a fab facility in U.S. and takes 

9 months)).

Response to Finding No. 308:

This finding is inaccurate. First, there is no credible evidence in the record that

having a fabrication facility in the U.S. gives any competitor an advantage in bidding for the

LNG tanks. For example, Jean Pierre Jolly of Technigaz explained that a U.S. based fabrication 

facility did not provide any significant competitive benefit because steel fabrication for LNG

tanks takes places overseas. Accordingly, any advantage with having such a facility in the U.S. 

is insignificant or minor. (See Opening Br. at 52-53; FOF 3.560-3.564). Further, Complaint 
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Counsel's finding is based on the flawed premise that CB&I's competitors in the relevant market 

do not have access to fabrication facilities. The evidence shows that AT&V, CB&T, and Matrix 

all have fabrication facilities necessary to build relevant products. (See Opening Br. at 98-107; 

FOF 3.103-3.108, 5.29, 5.45-5.46, 5.59, 5.63.) The finding is also flawed to the extent is implies 

that Matrix cannot compete with CB&I effectively. The evidence shows just the opposite;

Matrix matched CB&I's price on a recent LIN/LOX project for Air Liquide in Freeport, Texas. 

(See FOF 5.124).

2. Revenue Base and Scale Sufficient

to Compete for Large Projects Impede Entry

309. For a new entrant, having an adequate revenue base is critical. (Izzo, Tr. 6511-

12). Substantial revenues are necessary to cover the sunk costs associated with preparing bids

CCFF 310-312, and to meet customer demands for performance bonds and ability to pay any

liquidated damages CCFF 313-317.

Response to Finding No. 309:

This finding is inaccurate to the extent it implies that having a large revenue base 

and bonding capacity is necessary to bid on and build smaller relevant products, such as

LIN/LOX tanks and LPG tanks. In many cases, preparing a bid for these smaller products costs 

far less than preparing a bid for a large LNG facility. (See, e.g., Maw, Tr. 6556-57; FOF 4.92).

310. A firm needs to expend significant resources in developing proposals and price

quotations for the relevant products. For example, a CB&I document reports that CB&I

expended $300,000 in design resources and $190,000 in other resources to prepare its TVC

proposal for Orbital Sciences' planned chamber. (CX 235 at CB&I-PL060198).

Response to Finding No. 310:

This finding is inaccurate as it applies to smaller relevant products, such as

LIN/LOX tanks and LPG tanks. In many cases, preparing a bid for these smaller products costs 

far less than preparing a bid for a large LNG facility. (See, e.g., Maw, Tr. 6556-57; FOF 4.92).

311. Large amounts are required to conduct physical tests of materials and tank

prototypes or components. For example, Matrix spent $200,000 - $300,000 testing cellular glass 
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and rigid insulation systems that form the ground insulation between the inner and outer tanks

for a LIN/LOX tank. (Newmeister, Tr. 1584-5; Cutts, Tr. 2235-6 (AT&V's first project realized 

a net loss of about $100,000, resulting from the research and development costs AT&V incurred 

to enter the LIN/LOX market)).

Response to Finding No. 311:

This finding is irrelevant, because the alleged entry barrier identified by

Complaint Counsel can be overcome, as empirical evidence shows. As the finding itself

implicitly acknowledges, Matrix and AT&V have already spent money to conduct physical tests 

of materials and tank prototypes in the process of entering the LIN/LOX market.

312. If a new entrant is not successful in winning projects, the costs of preparing

proposals and prototypes become sunk, non-recoverable costs. (CX 235 at CB&I-PL060198). A 

new entrant would need to be able to absorb those losses as a cost of entry in order to continue 

competing.

Response to Finding No. 312:

Respondents have no specific response to this finding.

313. An entrant must have a sufficiently large revenue base to secure bonds required 

by customers. Customers require the tank supplier "to provide a bond to the contractor ... that 

guarantees the project will get finished." (Stetzler, Tr. 6385). An entrant's ability to bond a

project, or bonding capacity, "has to do with your financial strength, and also the size of your

company, which how big of a contract are you used to handling." (Stetzler, Tr. 6385).

Response to Finding No. 313:

This finding is irrelevant, as the evidence has shown that new entrants have the

bonding capacity to enter the relevant market they have entered. For example, Mr. Stetzler of

CB&T -- cited by Complaint Counsel in this finding -- testified that CB&T has far more bonding 

capacity than is required to build a LIN/LOX tank. (Stetzler, Tr. 6385-87, 6391; see also FOF 

5.64). Each of the new LNG entrants has adequate bonding capacity. (See generally FOF 3.56-

3.227).

314. The amount of financial guarantee that is required varies with the risk profile of

the tank supplier. (Izzo, Tr. 6485-86). Mr. Gill testified that, as a general rule, the cost for the 

bond is "a percentage rate based on your experience in the industry." (Gill, Tr. 198).
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Response to Finding No. 314:

This finding is irrelevant, as the evidence has shown that new entrants have the

bonding capacity to enter the relevant markets. For example, new entrants in the LNG markets

have sufficient bonding capacity to compete. (See Opening Br. at 57; FOF [3.142], 3.371). 

Further, Mr. Gill's testimony is limited to his experience in the TVC market and has no

application to the experience of the foreign LNG entrants.

315. LNG facility contracts often impose large liquidated damage provisions on the

constructor if the project is completed late. (CX 891 at 46-47 (Glenn, Dep.); Izzo, Tr. 6485-86; 

Bryngelson, Tr. 6154-55).

Response to Finding No. 315:

Respondents have no specific response to this finding.

316. A large revenue base enhances the tank supplier's ability to offer the financial

guarantees necessary to win contracts. (CX 891 at 43, 47 (Glenn, Dep.); Izzo, Tr. 6511-12). 

Customers want suppliers with a large asset base, because there is a larger target to go after if the 

contractor is late in completing the project and the customer sues for liquidated damages. 

(Bryngelson, Tr. 6154-55; Warren, Tr. 2297-98; JX 27 at 69 (N. Kelley, Dep.); Izzo, Tr. 6485-

86; CX 1121 at CB&I-HWH 053087).

Response to Finding No. 316:

Respondents have no specific response to this finding as it relates to large

projects. The evidence regarding bonding is different in each market, a fact Complaint Counsel 

obfuscates by melding all the markets into one.

317. Mr. Gill testified that his company, Howard Fabrication, with $2.5 million in

annual revenues, could not effectively compete in the market for TVCs because it was not large 

enough to purchase the bonds for TVC projects. (Gill, Tr. 200-01, 234).

Response to Finding No. 317:

Respondents have no specific response to this finding.

318. An entrant would need a large engineering staff to design LNG tanks. (Simpson, 

Tr. 3156 (citing CX 258 at 1794; CX 1591 at 15262). Dr. Harris agreed that an entrant must

have engineering capability. (Harris, Tr. 7249).
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Response to Finding No. 318:

This finding is vague and irrelevant. The term "large" is not defined. Further, the 

finding is irrelevant, because it is undisputed in this case that all of the new entrants in the LNG 

market have the necessary engineering capability to compete effectively in the U.S. market. 

(FOF 3.28-3.29, 3.56-3.227). Additionally, Complaint Counsel flouts the rules set forth in this 

Court's Order by citing to a document which is not in evidence, i.e. "CX 1591."

319. LPG customers will not purchase LPG tanks from a supplier until they are assured 

that the supplier has sufficient personnel to design, engineer and construct an LPG tank. (RX 

682 at MCG 000059 ("Texaco will verify that bidder is not overcommitted to perform that

work."); Warren, Tr. 2295 (Before allowing a company to bid, Fluor reviews a potential LPG

tank supplier's volume to ensure the supplier is capable of managing multiple projects

simultaneously, and to ensure there is not too much backlog to prevent Fluor from accessing the 

supplier's resources promptly as needed); see CX 415 at 2).

Response to Finding No. 319:

This finding is irrelevant, as the evidence has demonstrated that current and

potential entrants in the LPG market have the necessary personnel to design, engineer, and

construct an LPG tank including Morse, a company that had never before built an LPG tank and 

to which RX 682 refers. (E.g., N. Kelley, Tr. 7090, 7109, 7127-30) (FOF 4.40, 4.45-4.46, 4.61). 

This finding is also misleading to the extent that it implies such requirements constitute barriers 

to entry in the LPG market. (See, e.g., FOF 4.90-4.128). For example, Morse had only 18

employees (two of which were engineers) and no salaried field crews when it built the Texaco 

Ferndale LPG facility. (Maw, Tr. 6551-52) (FOF 4.72).

320. LPG tank suppliers need sufficient personnel to handle adjustments to possible

schedule changes. (Warren, Tr. 2296 (In order to bid on an LPG project, an LPG tank supplier 

needs enough staff to handle an adjustment if it becomes necessary to shorten the schedule or

recover from delays); see CX 415 at 2).
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Response to Finding No. 320:

This finding is irrelevant, as the evidence has demonstrated that current and

potential entrants in the LPG market have the necessary personnel to construct an LPG tanks. 

(E.g., N. Kelley, Tr. 7090, 7109, 7127-30) (FOF 4.40, 4.45-4.46, 4.61). This finding is

misleading to the extent it implies that sufficient personnel includes experience or that it

constitutes a barrier to entry. For example, Morse employed only two engineers without any

LPG tank experience and had few other employees. (Maw, Tr. 6551-52; N. Kelley, Tr. 7120)

(FOF 4.72, 4.128). There is no evidence in the record to suggest that any current or potential

player in this market lacks this capability.

3. Lack of Know-How Relating to the Relevant Products Impedes Entry

321. A new entrant would also have to surmount the challenge of developing a

sufficient knowledge base to compete in the relevant markets.

Response to Finding No. 321:

This finding is vague and irrelevant. It does not refer to a specific product

market. Further, to the extent the finding implies that it is difficult to develop a sufficient

knowledge base in the relevant markets, such a conclusion should be rejected. New entrants in 

the LNG, LPG, and LIN/LOX markets have already surmounted this challenge, as they have

successfully won projects in these markets. (See FOF 3.68-3.227 (actual entry has occurred in

the LNG market); FOF 4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new

competitors have entered the LIN/LOX market); 5.79-5.184 (LIN/LOX customers are satisfied 

with prices received and available competitive options)).

322. A new entrant will need to establish the capability to perform specialized metal

fabrication. (Hilgar, Tr. 1343-44 (fabrication of the pieces for a LIN/LOX tank is complex due 

to "the tolerances and the manufacturing processes.... [if the] pieces get to the field and don't fit, 

you have a major problem"); Kamrath, Tr. 1995 (customer "would be very concerned about how 

he manages that, the supervision he provides, the standards and guidance he provides. It's not

something that eliminates a supplier, but certainly it raises a concern.")).
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Response to Finding No. 322:

This finding is vague and irrelevant. It does not refer to a specific product

market. Further, to the extent the finding implies that it is difficult to develop a capability to

perform specialized metal fabrication, such a conclusion should be rejected. New entrants in the 

LNG, LPG, and LIN/LOX markets have already met this challenge, as they have successfully

won and constructed projects in the relevant markets. (See FOF 3.68-3.227 (actual entry has

occurred in the LNG market); FOF 4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 

(new competitors have entered the LIN/LOX market); 5.79-5.184 (LIN/LOX customers are

satisfied with prices received and available competitive options)).

323. A new entrant would need to develop the specialized construction capabilities

necessary to successfully erect a tank. "The construction of field-erected storage tanks requires 

experienced engineers and construction workers with specialized know-how in welding

techniques, metallurgy and design." (see also Hilgar, Tr. 1375).

Response to Finding No. 323:

This finding is vague and irrelevant. It does not refer to a specific product

market. Further, to the extent the finding implies that it is difficult to develop these capabilities, 

such a conclusion should be rejected. New entrants in the LNG, LPG, and LIN/LOX markets

have already met this challenge, as they have successfully won and constructed projects in the

relevant markets. (See FOF 3.68-3.227 (actual entry has occurred in the LNG market); FOF

4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new competitors have entered the

LIN/LOX market); FOF 5.79-5.184 (LIN/LOX customers are satisfied with prices received and 

available competitive options)).

324. Because of the specialized nature of tank construction, customers look to deal

with established, reliable suppliers. Air Liquide wants "to make sure the know-how that is

involved is known by the people doing the work so that tank is safe and operable." (Kamrath, 

Tr. 1994, 1995; see also Hilgar, Tr. 1356-1357, 1377-1378 (very important that these tanks are 

meticulously designed and constructed)).
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Response to Finding No. 324:

This finding is inaccurate to the extent it implies that being an established, reliable 

supplier is the most important consideration in selecting a tank supplier. For example, Michael 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] Further, AT&V built a 

LIN/LOX tank for BOC, even though it had never built one before. (FOF 5.31-5.34).

325. The technology needed to supply TVCs is not readily available, and experience

with the technology must be obtained while working for a company that supplies these products. 

(Scully, Tr. 1097-98). Additionally, new entrants would need to obtain "the ability to fabricate 

in the field a stainless steel vessel" and satisfy "the quality requirements of leak testing and

cleanliness" for a TVC. (Higgins, Tr. 1272-3).

Response to Finding No. 325:

This finding is inaccurate. The first statement refers specifically to thermal

vacuum systems, the portion of a field-erected TVC that CB&I does not build. (Scully, Tr.

1097-98; FOF 6.54-6.56). Secondly, CB&I has offered a remedy package which includes

providing its technical knowledge relating to building field-erected TVC's to new entrants along 

with mentoring. (FOF 6.91-6.121). Thus, these alleged barriers to entry can be overcome via

CB&I's remedy proposal.

326. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (Cutts, Tr.

2379-80; Kistenmacher, Tr. 881-82; Fahel, Tr. 1628-29, in camera).

Response to Finding No. 326:

This finding is inaccurate on several fronts. First, the evidence shows that it is not 

necessary to hire "specially-trained construction workers" with "experience welding nine percent 

nickel steel." Peter Rano of CB&I explained that CB&I itself generally hires local labor to build 

LNG tanks, without regard as to whether that labor has prior experience in working on LNG
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tanks. (FOF 3.533-3.540). Further, there is no credible evidence showing that it is necessary to 

use welders with prior experience with 9 percent nickel welding. For a variety of reasons, it is 

more effective to train welders on this type of metal than to actively seek them out. (FOF 3.528-

3.540). Finally, to the extent this finding implies that CB&I's competitors in the LNG markets

lack the necessary experience to build an LNG tank, it should be rejected. These competitors are 

large, sophisticated companies with deep experience in LNG and have these capabilities. (FOF 

3.56-3.227).

327. Mr. Cutts testified that LNG tanks are "built out of fairly sophisticated materials. 

You don't just weld them up any old way....The equipment is quite expensive to develop. You 

can go buy it, but the stuff you buy has to be modified and tailored, and then you have to build 

procedures around it. So it's not like you can go buy an automobile. It's unique equipment...." 

(Cutts, Tr. 2379).

Response to Finding No. 327:

This finding is inaccurate. First, the processes and equipment used to weld an

LNG tank is not materially different that those used on other types of tanks. (FOF 3.532). 

Second, to the extent this finding implies that CB&I's competitors in the LNG market lack the

necessary equipment and procedures to build LNG tanks, it should be rejected. These

competitors are large, sophisticated companies with deep experience in LNG and have these

capabilities. (FOF 3.56-3.227).

328. [xxxxxxx] of [xxxxxxx] testified the lack of knowledge of the industry and the

lack of a fabrication plant currently obstruct the [xxxxxxxxxxxxxxx] partnership's penetration of 

the LNG market. ([xxxxx], Tr. 1635-34, 1654, in camera)).

Response to Finding No. 328:

This finding is inaccurate to the extent it implies that lack of knowledge of the

industry and the lack of a fabrication plant prevent [xxxxxxxxxxxxxxxx] from entering the U.S. 

market for LNG facilities. While [xxxxxxxxx] identified these items as areas of concern, he did 

not indicate that they posed an insurmountable burden to being an effective competitor in the
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LNG market. Further, [xxxxxxxxxxxxxxxxxxxxxx] contradicted [xxxxxxxxx]. He testified that 

[xxxxxxxxx] did have deep knowledge of the LNG industry, and that the lack of a fabrication

facility in the U.S. was not a major impediment to [xxxxxxxxxxxxxxxxxx] entry into the U.S.

market. (See FOF 3.141-3.154).

329. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. 

(JX 30 at 180-81 ([xxxxx]), in camera).

Response to Finding No. 329:

This finding is misleading and inaccurate. The welding of nine percent nickel

steel is not particularly difficult or special. It involves the exact same processes and techniques 

used to weld carbon steel, and is much easier to weld than stainless steel or aluminum. (Rano, 

Tr. 5872-73, 5947; see also Hall, Tr. 1792) (FOF 3.532). The testimony of Peter Rano on this 

point is particularly instructive, as he is the only trained welder to have testified in this case. 

(See Rano, Tr. 5872). Further, this finding is misleading to the extent it implies that CB&I's

competitors in the LNG industry lack access to the techniques necessary to weld LNG tanks. 

The evidence on this point is squarely to the contrary. (FOF 3.528-3.540).

330. Other witnesses testified to the specialized expertise, including that relating to the 

welding of 9% nickel plate, required for the design and construction of LNG tanks. (Hall, Tr. 

1792; JX 32 at 37-38 (Rapp Dep.)).

Response to Finding No. 330:

This finding is misleading and inaccurate for the reasons set forth in CB&I's

Response to Finding 329. Further, Complaint Counsel's own citations contradict its argument. 

Mr. Hall agreed that the term "special" did not properly characterize the welding expertise

necessary to build an LNG tank. (See Hall, Tr. 1792).

331. Peter Rano, a CB&I Vice President, concedes that CB&I considers its welding

procedures for LNG projects to be proprietary work product which it does not want to fall into 

the hands of its competitors. (Rano, Tr. 6028-29).
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Response to Finding No. 331:

This finding is misleading to the extent it implies that CB&I's competitors do not 

themselves have access to welding procedure for LNG projects. The evidence shows that they

do, in fact, have such procedures available to them as they all have built LNG tanks successfully 

overseas using these methods. (See FOF 3.528-3.540).

332. PDM and CB&I have developed specialized welding procedures, equipment and 

techniques for welding nine percent nickel steel. For example, in 1999, PDM developed and

implemented twin wire (two electrodes/one control) submerged arc for welding of horizontal

seams of 9% nickel in cryogenic applications. (CX 109 at PDM-HOU006700).

Response to Finding No. 332:

The response to this finding is identical to RFOF 331 above.

333. PDM has also developed weld procedures and specific equipment for automatic

stud welding of stainless steel studs to 9% nickel for use in concrete wall embedments for double 

and full containment LNG storage tanks. (See CX 109 at PDM-HOU006701; Knight, Tr. 2614-

15).

Response to Finding No. 333:

The response to this finding is identical to RFOF 331 above.

334. A new entrant would need to hire engineers with previous experience in designing 

TVCs, which are "truly one-of-a-kind designs for very specific applications on very technical

products." (JX 37 at 127 (Newmeister, IH.); see also Higgins, Tr. 1272-3).

Response to Finding No. 334:

Respondents have no specific response, except to note that such engineers have

left CB&I since the Acquisition and are available. Further, CB&I will license all its TVC

engineering and technology, making this finding irrelevant.

4. Lack of Prior Experience Building Relevant Products Impedes Entry

335. Both economic experts agree that the economic literature recognizes reputation as 

a barrier to entry. (Simpson, Tr. 3229-30; Harris, Tr. 7445-8). Carlton & Perloff explain:

"Product differentiation (firms produce similar but not identical products) can create a long-run 

barrier to entry. For example, consumer goodwill toward established brand names may make it 

more difficult for a new brand to enter... For example, because the product of the first firm in the 
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market is familiar to customers, they may be reluctant to switch to a new brand." D. Carlton & J. 

Perloff, Modern Industrial Organization, at 80 (3d ed. 2000) (hereinafter "Carlton & Perloff"). 

Dr. Harris agrees. (Harris, Tr. 7445-6; see Harris, Tr. 7448 ("reputation matters").

Response to Finding No. 335:

This finding is irrelevant, because the new entrants identified by Respondents

have already surmounted this alleged "entry barrier." Each new entrant has the necessary

reputation to compete in the relevant markets, as evidenced by their recent success in penetrating 

these markets. (Opening Br. 20-45; See FOF 3.68-3.227 (actual entry has occurred in the LNG 

market); FOF 4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new competitors have 

entered the LIN/LOX market); 5.79-5.184 (LIN/LOX customers are satisfied with prices

received and available competitive options); See Harris, Tr. 7209-13, 7239-47, 7286-87, 7308,

7315-17) (FOF 7.58, 7.92-7.101, 7.118, 7.113).

336. There are "tremendous safety considerations" regarding LNG tanks. (Price, Tr.

564-5). If LNG should leak from a tank, the vaporized LNG could lead to fires and death, and 

liability for losses. (Bryngelson, Tr. 6234-35; see also Blaumueller, Tr. 293-4).

Response to Finding No. 336:

Respondents have no specific response to this finding.

337. The same safety and liability considerations drive customers in the other relevant 

markets to look for tank builders with experience. (Newmeister, Tr. 1609-10; Glenn, Tr. 4073; 

CX 258 at CB&I-H001794; JX 27 at 69-70 (N. Kelley, Dep.); Warren, Tr. 2293-94; see CX 415 

at 2).

Response to Finding No. 337:

This finding is irrelevant, because the new entrants identified by Respondents

have already surmounted this alleged "entry barrier." Each new entrant has the necessary

experience to compete in the relevant markets, as evidenced by their recent success in

penetrating these markets. (FOF 3.56-3.227).

338. Leaks in a TVC can prevent the user from meeting the vacuum specifications

required for satellite testing. (Proulx, Tr. 1904-05). In addition, defects in the welding of the
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chamber can lead to the leakage of contaminants into the chamber, which can interfere with the 

accuracy of the test results. (Scully, Tr. 1143-44). If a TVC fails during a satellite test, the

satellite within the chamber can be damaged. (Neary, Tr. 1454; (Scully, Tr. 1144). Operational 

problems with a TVC can have a "bad effect" on the satellite's program schedule, because the

test may have to be restarted from the beginning after the problem is resolved. (Scully, Tr. 1145-

46).

Response to Finding No. 338:

Respondents have no specific response, except to note that CB&I has an uneven 

track record in its field-erected TVC work. It's second-to-last field-erected TVC, the East

Windsor, Long Island TVC built in 1981, was defective and never went into operation. 

(Thompson, Tr. 2113; Scully, Tr. 1188) (FOF 6.45).

339. To avoid these catastrophes, customers seek experienced tank suppliers. Mr. Hall 

of Memphis Light Gas & Water put it succinctly: "If you're going to be handling something like 

liquefied natural gas [LNG], you don't want some amateur putting it together. The results can be 

catastrophic." (Hall, Tr. 1789).

Response to Finding No. 339:

This finding is vague and misleading. It is vague because it does not refer to a

specific product market. It is misleading the extent it implies that new entrants lack the necessary 

experience to be accepted by customers as a tank suppliers. For example, in the LNG market,

the new entrants identified by Respondents are recognized by current customers as capable,

experienced suppliers. (FOF 3.56-3.227). Further, Complaint Counsel's finding of fact lacks

solid evidentiary support, as it is based entirely on the testimony of a former LNG customer who 

has not purchased an LNG tank since 1995.

340. Dr. Kistenmacher, a vice president at Linde BOC Process Plants, testified that

risks associated with leakage cause Lotepro to subcontract the design and construction of LNG 

tanks to companies that have a long track record of experience in constructing these facilities. 

(Kistenmacher, Tr. 904-05).
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Response to Finding No. 340:

This finding is irrelevant, as all of the new entrants identified by Respondents

have a "long track record" of experience in constructing LNG facilities. (FOF 3.56-3.227).

341. Mr. Kelley of ITC testified that he will not purchase an LPG tank from a company 

with no prior experience because "I don't want to be a guinea pig." (N. Kelley, Tr. 7104-05; see 

also Warren, Tr. 2290-91; CX 415 at 2).

Response to Finding No. 341:

This finding is misleading and inaccurate in that it misstates the record evidence. 

Mr. Kelley testified that a tank supplier would be considered for an LPG project if it had built an 

API 620 tank, not necessarily an LPG tank. (N. Kelley, Tr. 7117-18) (FOF 4.121). In addition, 

Mr. Kelley further testified that such cryogenic tank experience was not required. (N. Kelley, Tr. 

7117-18) (FOF 4.121). If a contractor had never built a cryogenic tank before, but had

experienced personnel who had, then that contractor would get a chance to prove it could build 

the tank for ITC. (N. Kelley, Tr. 7131-32) (FOF 4.121). Even more, Mr. Kelley stated that he 

did not know if AT&V had previously built an LPG tank before the 2000 ITC project, as long as 

he had confidence in the contractor's ability to build the tank. (N. Kelley, Tr. 7104-05) (FOF 

4.123). (See also Maw, Tr. 6550-51 (FOF 4.90) (Morse had never constructed an LPG tank

before and specifically told Texaco it had no LPG experience. Nonetheless, Texaco requested 

Morse submit a bid on the Ferndale project)).

342. LPG customers want a tank supplier with a long track record building several

LPG tanks. (Carling, Tr. 4512 (the last ten years would be the most relevant experience); JX 27 

at 72 (N. Kelley, Dep.) (would "definitely want [an LPG tank supplier] to have had prior

experience building an LPG tank before I would hire them to build an LPG tank for me.")).

Response to Finding No. 342:

This finding is misleading because while LPG customers would prefer a tank

supplier with a long track record building several LPG tanks, the record evidence indicates that 
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such experience is not required. Mr. Kelley of ITC testified that such experience is not

necessary. (N. Kelley, Tr. 7117-18, 7131-32) (FOF 4.121). In fact, he selected a contractor for 

the ITC LPG project without any knowledge as to AT&V's LPG track record, but had confidence 

in them from other API tank projects. (N. Kelley, Tr. 7104-05) (FOF 4.123). Further, Morse

was selected for the Ferndale LPG project by Texaco with full disclosure regarding Morse's lack 

of any prior LPG experience. (Maw, Tr. 6550-51) (FOF 4.90). Complaint Counsel relies on the 

testimony of Mr. Carling in this finding; however, Mr. Carling's testimony related to the LNG

market, not the LPG product market. (See Carling, Tr. 4512).

343. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. 

([xxxxxx], Tr. 1995-96, [2236-7], in camera; see also Knight, Tr. 2628 ("[E]xperience building 

LIN/LOX tanks provides customers with confidence that the product will be designed and built 

the way it was requested"); JX 25 at 83-4 (Hilgar, Dep.) (describing safety hazards associated

with LIN/LOX tanks).

Response to Finding No. 343:

Respondents have no specific response to this finding.

344. Mr. Scully, President of XL Technology Systems, testified that TVC customers

want experienced suppliers with "knowledge as to how to deal with the architects and the

construction people ... and ability to manage a project." (Scully, Tr. 1147; see also Higgins, Tr. 

1272; Proulx, Tr. 1756; Neary, Tr. 1455).

Response to Finding No. 344:

Respondents have no specific response, except to note that Respondents have

offered a remedy package that would provide inexperienced suppliers with the appropriate

mentoring to be able to satisfy customers in this regard. (FOF 6.99-6.105).

345. Companies, such as Black & Veatch and Air Products, that provide the

liquefaction systems and other components but not the LNG tanks, are unwilling to partner with 

an inexperienced LNG tank supplier. (CX 157 at CB&I-PL003348 (Black & Veatch "are

looking to partner on a project with a firm which has better experience"); Davis, Tr. 3190-1 (Air 

Products chose to partner with PDM "because we needed to have somebody who would be

competent to work with and capable of project execution, and they had demonstrated those

capabilities")).
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Response to Finding No. 345:

This finding is irrelevant and misleading, as it implies that new entrants identified 

by Respondents in the LNG market do not have the necessary experience to be able to compete 

in the U.S. LNG market. In fact, new entrants do have this experience. (FOF 3.56-3.227). U.S. 

process firms, including Black & Veatch, have found these new entrants to be acceptable

partners. In fact, Black & Veatch has partnered with Skanska/Whessoe on the Dynegy project. 

(Puckett, Tr. 4579). Further, Black & Veatch has touted this alliance to other U.S. LNG

customers, such as Freeport LNG, as a selling point. (See RX 935).

346. Customers will pay a premium for the lower risk from dealing with the more

experienced supplier. (Fan, Tr. at 960-1, 1017-8 (did not purchase from AT&V even though

AT&V's price was $200,000 lower than CB&I's)).

Response to Finding No. 346:

This finding is inaccurate and misleading. No customer has testified that they will 

pay a premium to deal with a more experienced supplier. In fact, the evidence shows [xxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxx]. (See Patterson, Tr. 480; FOF 5.145). Further, Complaint Counsel's finding is

wholly unsupported by the evidence. Contrary to Complaint Counsel's implication, Mr. Fan of

Linde has never rejected AT&V as a supplier of LIN/LOX tanks. (Fan, Tr. 1018). In fact, the

evidence demonstrates that Linde has never received a fixed, firm price bid from AT&V, or that 

Linde has ever analyzed AT&V's abilities in the LIN/LOX market. (Fan, Tr. 1018). The

$200,000 figure to which Complaint Counsel refers was a preliminary budget price, not a firm

bid. (Fan, Tr. 960-63). Mr. Fan didn't disregard AT&V's price because he wanted CB&I's

experience; he just didn't trust the accuracy of AT&V's price and didn't want to use it in the

budget for the air separation facility Linde was bidding on. (Fan, Tr. 963).
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347. A CB&I customer survey notes that "the main weakness noted about other

competitors is that they are generally less experienced and reliable than CB&I. Their expertise is 

generally narrow and limited compared to CB&I. Lacking the discipline and financial strength 

of a CB&I makes using smaller suppliers a more risky proposition. ... CB&I should be able to 

succeed by presenting itself as the low-risk, best value supplier who has the broadest and deepest 

capabilities." (CX 218 at CB&I-PL034532, CB&I-PL034537; see also Scully, Tr. 1146-47).

Response to Finding No. 347:

This finding ignores the fact that CB&I has an uneven track record in its TVC

work. It's second-to-last field-erected TVC, the East Windsor, Long Island TVC built in 1981, 

was defective and never went into operation. (Thompson, Tr. 2113; Scully, Tr. 1188) (FOF

6.45). Further, this survey document is dated well before the Acquisition and does not reflect the 

current customer views expressed in sworn testimony before this Court. (FOF 3.565-3.567; 

4.71-4.124; 5.22-5.78).

348. It would take an inexperienced supplier in the relevant markets several years to

build a track record. (CX 167 at CB&I-PL007052). Developing a reputation similar to CB&I's 

for supplying cryogenic tanks can take as much as ten years. (Cutts, Tr. 2372, 2385).

Response to Finding No. 348:

This finding is vague, misleading, and inaccurate. It is vague because it does not 

identify which product market it refers to. It is misleading and inaccurate because it assumes

that it is necessary to have a reputation similar to CB&I's in order to compete in the cryogenic

tank market. This was neither true pre-Acquisition nor was it true post-Acquisition. Graver

Tank was able to compete effectively both CB&I and PDM in the LIN/LOX market in the 1990s, 

despite the fact that its reputation was not as good as CB&I's or PDM's. Customers continued to 

purchase from Graver based on low price. (See, e.g., [xxxxxxxxxxxxxxxxxxxxx]; FOF 5.146). 

Post-Acquisition, AT&V has successfully gained a majority share of the LIN/LOX market,

despite the fact that it has not built as many LIN/LOX as CB&I. (See, e.g., Scorsone, Tr. 5015-

18; FOF 5.76-5.78).
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349. Experienced suppliers minimize defects by learning through trial and error. Mr.

Scully of XL Technologies has personally learned from engineering errors and construction

errors experienced on TVC projects. Additionally, when working with CB&I, he observed that 

their employees learned from past mistakes made in the process of supplying TVCs. (Scully, Tr. 

1140-41).

Response to Finding No. 349:

Respondents have no specific response, except to note that CB&I has not built a 

field-erected TVC since 1984, thus this alleged accumulated knowledge at CB&I is dated. CB&I 

has not built a TVC since 1984. (FOF 6.26; Scorsone, Tr. 5055-56; Glenn, Tr. 4089, 4160;

Scully, Tr. 1187-89, 1193; Higgins, Tr. 1276-77).

350. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxxx], Tr.] 1637-38, in camera).

Response to Finding No. 350:

This finding is misleading because it implies that CB&I's competitors in the LNG 

market would be building an LNG tank for the first time. In fact, CB&I's competitors in this

market have deep experience in this area. In fact, in light of the recent upturn in demand for

concrete LNG tanks, CB&I actually faces a disadvantage in that it has completed fewer such

tanks than its competition. (FOF 3.43, 3.45, 3.152, 3.546).

351. CB&I has worked many "years" to "streamline its processes" and lower its costs. 

(CX 392 at 3).

Response to Finding No. 351:

Respondents have no specific response to this finding, except to note that its

international LNG competitors and other competitors have also worked hard to streamline their 

processes.

352. The construction of an LNG import terminal, from the initial ground breaking to 

completion, takes four to five years. (Outtrim, Tr. 700; see also CX 162 at CB&I-PL006153; 

CX 214 at CB&I-PL033809).
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Response to Finding No. 352:

Respondents have no specific response to this finding.

353. If FERC approval is required, the total time to complete the LNG peakshaving

project would increase by an additional year, thereby delaying entry by another year. (CX 168 at 

CB&I-PL007235).

Response to Finding No. 353:

This finding is vague, as the meaning of "delaying entry by another year" is

unclear. While the FERC process can delay the timetable of an LNG project, it does not

necessarily do so. To the extent this finding implies that the FERC filing process will delay

entry of new competitors in the market, this finding is inaccurate. The evidence shows that

Skanska/Whessoe has already entered the market, winning an LNG EPC project despite the fact 

that a FERC application needed to be filed by Dynegy. (Puckett, Tr. 4548-49; see also FOF

3.244, 3.312).

354. Mr. Scully testified that a TVC with a 30-foot diameter can take about two years 

to design and construct. (Scully, Tr. 1108).

Response to Finding No. 354:

Respondents have no specific response to this finding.

355. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxx]. (CX 629 at CB&I-PL033069, in camera).

Response to Finding No. 355:

Respondents have no specific response to this finding.

356. Learning by doing represents a barrier to entry in each of the markets. (Simpson, 

Tr. 3237). Dr. Simpson testified that economic studies have found that producers in a number of 

industries (e.g., air frame production, chemical processes, construction of nuclear power plants) 

become more efficient as their cumulative output increases. (Simpson, Tr. 3230) Dr. Simpson 

noted that as these producers produce more and more of a product, they learn better ways of

producing that product. (Simpson, Tr. 3231).
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Response to Finding No. 356:

This finding is inaccurate. As courts have recognized, experience is not a barrier 

to entry because it can be overcome. (Opening Br. at 9-10). Further, the evidence shows that 

learning by doing has not been an entry barrier in the LPG and LIN/LOX markets, as companies 

have successfully entered the market without prior corporate experience in building LIN/LOX

tanks. (See FOF 4.9, 4.121, 4.123 (LPG); FOF 5.22-5.71 (LIN/LOX)). "Learning by doing" is 

also not an entry barrier in the LNG market, as all of the new entrants in this market have the

necessary track record in building LNG tanks to compete effectively in the U.S. (FOF 3.56-

3.227).

357. Builders of LNG tanks benefit from learning by doing. Samuel Leventry, CB&I's 

vice president of technology services, testified: "Again, if you have the same people doing the

same work more continuously, there's going to be some efficiencies in that." (CX 497 at 68

(Leventry, Dep.); CX 392 at 4).

Response to Finding No. 357:

This finding is misleading to the extent it implies that CB&I's competitors in the 

LNG markets are at a disadvantage to CB&I in terms of learning by doing. All of the new

entrants in this market have the necessary track record in building LNG tanks to compete

effectively in the U.S. (FOF 3.56-3.227).

358. Learning by doing in each of the markets is specific to individual countries. Dr. 

Simpson testified that some learning by doing is specific to the United States. (Simpson, Tr.

3242) This learning includes becoming familiar with U.S. regulations, knowing the local work 

force and identifying who the better subcontractors are. (Simpson, Tr. 3242-43). A foreign 

company that has built LNG tanks overseas would therefore still need to learn by doing in order 

to compete in the United States LNG market. (Simpson, Tr. 3242 (citing CX 1204); CX 1204; 

CX 1575; RX 738 at 2).

Response to Finding No. 358:

This finding is inaccurate and not supported by record evidence. The process of 

building an LNG tank does not differ materially from country to country; the process of learning 
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applicable regulations, becoming familiar with the local work force, and identifying

subcontractors is the same. (FOF 3.509-3.570). Further, this finding is misleading to the extent 

it implies that CB&I has a competitive advantage over its competitors in the LNG market in

identifying suitable labor and subcontractors. Foreign entrants have chosen to partner with large 

U.S. construction firms, such as H.B. Zachry and S&B Engineers & Constructors. These

partnerships give these entrants access to any advantages associated with knowing local

workforces and working with local subcontractors. (FOF 3.550-3.559). Further, this finding is 

misleading to the extent it implies that CB&I's prior experience in building LNG tanks in the

U.S. provides any sort of competitive advantage. Because the labor force for such a project is

locally recruited, this prior experience is both dated and irrelevant. (FOF 3.552). This alleged 

CB&I advantage is not quantified and is paltry.

359. According to Dr. Simpson, CB&I and PDM had been building these tanks for

about 40 years. Over time, as they built more of these tanks, they figured out ways to lower their 

costs. When CB&I bought PDM in 2001, CB&I bought the only other company that had

worked its way down the learning curve. Thus, if an entrant were to enter now, it would have

higher costs than CB&I because it has not worked its way down the learning curve. Because

CB&I would have lower costs than this entrant, CB&I could increase its price by some amount 

without losing sales to this entrant. In this way, learning by doing represents an entry barrier in 

this industry. (Simpson, Tr. 3237-38).

Response to Finding No. 359:

This finding is inaccurate and not supported by record evidence. Complaint

Counsel relies solely on the unsupported opinions of its hired expert witness to argue that CB&I 

has lower costs than its competitors because it has some type of "learning by doing" advantage. 

Contrary to Complaint Counsel's claims, new entrants have extensive experiences in building

LNG tanks throughout the world. (FOF 3.56-3.227). Further, even if CB&I had such an

advantage, Complaint Counsel assumes that it would preclude other companies from effectively 

competing in the U.S. This is wrong, as these competitors could still remain competitive in the 
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face of any alleged advantage identified by Complaint Counsel. The record evidence shows that 

new entrants have advantages over CB&I in terms of experience in the concrete portions of LNG 

tanks that could easily offset any advantages that CB&I may have. (E.g., FOF 3.45, 3.66-3.67, 

3.148-3.152).

360. Dr. Harris acknowledges that entry is more difficult if an incumbent firm has

lower costs. (Harris, Tr. 7443). If a prospective entrant found that it has a substantial cost

disadvantage, that would affect the likelihood that it would enter. (Harris, Tr. 7443).

Response to Finding No. 360:

This finding is irrelevant because there is no evidence that an "incumbent firm"

has lower overall costs than new entrants. In fact, as discussed above in connection with Finding 

359, new entrants have advantages over CB&I that could result in cost advantages. Further, the 

fact that companies are actually entering the market suggests that they do not believe they have 

cost disadvantages relative to CB&I. (See FOF 3.68-3.227 (actual entry has occurred in the LNG 

market); FOF 4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new competitors have 

entered the LIN/LOX market); FOF 5.79-5.184 (LIN/LOX customers are satisfied with prices

received and available competitive options)).

361. Both economic experts agree that the economic literature recognizes learning by

doing as a barrier to entry. (Simpson, Tr. 3238; Harris, Tr. 7440).

Response to Finding No. 361:

This finding is irrelevant because there is no credible evidence to support the view 

that "learning by doing" is an entry barrier in this case, as companies have entered or become

more active in the relevant markets. (See FOF 3.68-3.227 (actual entry has occurred in the LNG 

market); FOF 4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new competitors have 

entered the LIN/LOX market); FOF 5.79-5.184 (LIN/LOX customers are satisfied with prices
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received and available competitive options)). For example, learning by doing was not an entry

barrier for AT&V in the LIN/LOX market, because it was actually able to enter the market.

362. Learning by doing can provide a cost advantage to incumbent firms in a market. 

Jean Tirole, an authority identified by Dr. Harris (Harris, Tr. 7416-7), cites Bain (1956) to

explain how learning by doing can provide established firms an absolute cost advantage over

entrants that would prevent supranormal profits of the established firms from being eroded by

entry: "Absolute cost advantages The established firms may own superior production

techniques, learned through experience (learning by doing) or through research and development 

(patented or secret innovations)." J. Tirole, The Theory of Industrial Organization 306 (1988);

id. at 305. Dr. Harris agrees. (Harris, Tr. 7440).

Response to Finding No. 362:

This finding is irrelevant because there is no credible evidence to support the view 

that "learning by doing" is an entry barrier in this case, as companies have entered or become

more active in the relevant markets. (See FOF 3.68-3.227 (actual entry has occurred in the LNG 

market); FOF 4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new competitors have 

entered the LIN/LOX market); 5.79-5.184 (LIN/LOX customers are satisfied with prices 

received and available competitive options)). For example, learning by doing was not an entry

barrier for AT&V in the LIN/LOX market, because it was actually able to enter the market.

363. If the learning-by-doing cost advantage is substantial enough, other firms may

choose not to enter the market. Carlton & Perloff, at 363. Dr. Harris agrees. (Harris, Tr. 7441).

Response to Finding No. 363:

This finding is irrelevant because there is no credible evidence to support the view 

that "learning by doing" is an entry barrier in this case, as companies have entered or become

more active in the relevant markets. (See FOF 3.68-3.227 (actual entry has occurred in the LNG 

market); FOF 4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new competitors have 

entered the LIN/LOX market); 5.79-5.184 (LIN/LOX customers are satisfied with prices

received and available competitive options)). For example, learning by doing was not an entry

barrier for AT&V in the LIN/LOX market, because it was actually able to enter the market.
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364. Dr. Harris further agreed with Scherer & Ross that it is possible that "when

learning economies are important, the capturing of an initial advantage by some company could 

set in motion a dynamic process that ends with the relevant product more or less permanently

monopolized." Scherer & Ross, at 372. (Harris, Tr. 7441).

Response to Finding No. 364:

This finding is irrelevant because there is no credible evidence to support the view 

that "learning by doing" is an entry barrier in this case, as companies have entered or become

more active in the relevant markets. (See FOF 3.68-3.227 (actual entry has occurred in the LNG 

market); FOF 4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new competitors have 

entered the LIN/LOX market); 5.79-5.184 (LIN/LOX customers are satisfied with prices

received and available competitive options)). For example, learning by doing was not an entry

barrier for AT&V in the LIN/LOX market, because it was actually able to enter the market. 

Further, the outcome predicted by Scherer and Ross simply did not occur in this case. The

relevant products are not "monopolized" as Complaint Counsel implies; vibrant competition

exists in each of the product markets in which demand exists. (See FOF 3.68-3.227 (actual entry 

has occurred in the LNG market); FOF 4.16-4.54, 4.59-4.62 (actual entry in the LPG market);

FOF 5.22-5.71 (new competitors have entered the LIN/LOX market); 5.79-5.184 (LIN/LOX

customers are satisfied with prices received and available competitive options)).

5. Inability to Complete Projects on Schedule Impedes Entry

365. According to CB&I's 1995 10-K, "competition is based primarily on performance 

and the ability to provide the design, engineering, fabrication, project management, and

construction required to complete projects in a timely and cost-efficient manner. Chicago Bridge 

believes its position is among the top in its field." (CX 1030 at 7).

Response to Finding No. 365:

Respondents have no specific response to this finding.

366. According to Mr. Kelley, whether a tank supplier can construct a tank on schedule 

"is often a critical factor." (JX 27 at 67 (N. Kelley, Dep.)). An LPG customer, such as ITC,

relies on a tank supplier's expected completion date to accept shipments of LPG, delays in
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schedule exposes the customer to the risk of financial loss for each day the customer cannot

accept shipment: "there's monthly rental that you don't get ... and your money is hanging out

there not making money for you for that period of time." (JX 27 at 66 (N. Kelley, Dep.)).

Response to Finding No. 366:

This finding is misleading to the extent that a tank contractor's ability to construct 

a tank on schedule poses a barrier to entry. CB&I notoriously did not meet their schedules on

time for LPG customers. (Cutts, Tr. 2510-11) (FOF 4.132). PDM did not deliver the Sea-3 

project in Tampa on time. (Warren, Tr. 2308) (FOF 4.137). However, despite these flaws, ITC 

would be willing to accept bids in the future once these problems have been corrected. (N.

Kelley, Tr. 7126-27) (FOF 4.136). Moreover, this finding is irrelevant because all of the new

entrants identified by Respondents have a demonstrated ability to deliver tanks on schedule. For 

example, AT&V is one of the best tank makers in the U.S. as measured by schedule. (Cutts, Tr. 

2510-12) (FOF 5.39). Mr. Kelley, cited by Complaint Counsel, confirmed that AT&V

completed a recent LPG project for ITC on schedule. (N. Kelley, Tr. 7130; FOF 4.39-4.40). 

Finally, PDM's experience on the Sea-3 LPG project and the Penuelas LNG project shows that 

the market need not replace PDM with a firm with a perfect on-time track record. (Izzo, Tr. 

6482; Carling, Tr. 4474-75; FOF 4.137, 4.139, 4.142).

367. To minimize the risk of delays, Fluor reviews a potential LPG tank supplier's

referrals to ensure that in the past the supplier performed adequately, was able to meet the

schedule, and avoided problems, before it allows a tank supplier to bid on an LPG project. 

(Warren, Tr. 2291-92; see CX 415 at 2).

Response to Finding No. 367:

This finding is irrelevant because all of the new entrants identified by

Respondents have a demonstrated ability to deliver tanks on schedule. For example, AT&V is

one of the best tank makers in the U.S. as measured by schedule. (Cutts, Tr. 2510-12) (FOF

5.39). This finding is also irrelevant because it is based on the testimony of a Fluor witness. 
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Fluor is not a current customer for LPG tanks, nor does Fluor have any expectation of procuring 

an LPG tank in the future.

This finding is misleading to the extent Complaint Counsel is asserting that tank 

supplier referrals are a barrier to entry. In addition, Fluor's prequalification practice is irrelevant 

to the current LPG market and lacks foundation. The last time Fluor procured an LPG tank was 

in 1998. (Warren, Tr. 2284, 2318) (FOF 4.148). In fact, Fluor's prequalification process was not 

even utilized on the Tampa Sea-3 project in 1998. (Warren, Tr. 2281) (FOF 4.145). Moreover, 

Fluor has no plans to procure a field-erected LPG tank in the future, and Ms. Warren is not aware 

of any other LPG projects that Fluor has been involved in other than Sea-3. (Warren, Tr. 2315-

16) (FOF 4.154, 4.155).

368. TVC customers are also concerned about the supplier's ability to meet the project 

schedule, as delays in testing a satellite can engender financial liabilities for satellite

manufacturers. A key procurement criteria for [xxxxx] when selecting a supplier for the [xxxx 

xxxx] was the supplier's ability to meet its expedited schedule on prior projects. ([xxxxx], Tr.

1897-98, in camera). To mitigate the risk of a delay in the construction of the [xxxxxxxxxx], 

[xxxxx] spent an additional [xxxxxx] million to ensure that it could test its new [xxxxxx] at

[xxxxx] if the [xxxxxx] was not completed on time. ([xxxxx], Tr. 1898-99, in camera).

Response to Finding No. 368:

Respondents have no specific response to this finding.

369. TRW's selection criteria requires potential suppliers to show a history of 

successfully performing five chamber projects, financial viability including the ability "to pay

their bills for this venture," and "technology innovation." (Neary, Tr. 1443-44, 1492).

Response to Finding No. 369:

Respondents have no specific response to this finding.

6. Lack of Knowledge about Tank Construction

Business Conditions in the United States Impedes Entry

370. LNG tank suppliers have a "home court advantage" when supplying tanks in their 

own countries. (Simpson, Tr. 3227). Dr. Simpson demonstrated this with a world map on which 

Dr. Simpson identified the locations where various firms have built LNG tanks. (CX 1649;

Simpson, Tr. 3227-8). One explanation for this home court advantage is that purchasers in a
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particular area want to buy from companies that have previously supplied tanks in that area. 

(Simpson, Tr. 3229).

Response to Finding No. 370:

This finding lacks any support in the evidentiary record. It is based solely on the 

speculation of Complaint Counsel's expert witness. Further, this finding is irrelevant and

contrary to the evidence, as there is no evidence in the record that any alleged "home court

advantage" has prevented an LNG tank builder from entering the U.S. market. Indeed, those

companies already entering the market have been well-received by U.S. LNG customers. (FOF 

3.247-3.255).

371. In order to compete for the relevant products, an entrant will need to establish a 

local presence in the United States. Respondents and customers perceive that familiarity with

the United States, its codes, and local labor, provides a company that has experience building the 

relevant products in the markets with a competitive advantage. CCFF 373-386.

Response to Finding No. 371:

This finding is irrelevant and inaccurate. It is irrelevant because virtually all of

the new entrants identified by Respondents have a "local presence in the United States." (E.g., 

FOF 3.57, 3.63, 3.66-3.73, 3.102-3.108, 3.155-3.178, 3.195-3.227). Further, the great weight of 

the evidence demonstrates that customers do not believe that a company with experience

building LNG tanks in the U.S. have any competitive advantage. (E.g., Izzo, Tr. 6505-06, 6511-

12; Bryngelson, Tr. 6146, 6160; Carling, Tr. 4487-96; see also FOF 3.247-3.255; RFOF 373-

386).

372. Prior to the acquisition, CB&I and PDM had a competitive advantage over other 

firms because they had an efficient core group of workers for projects, and other workers that 

repeatedly interacted with those workers and were familiar with CB&I and PDM's procedures.

(Simpson, Tr. 3207-08, 3212).
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Response to Finding No. 372:

This finding is vague, irrelevant, and unsupported by the evidence. It is vague

because it does not identify which product market it refers to. Further, Complaint Counsel cites 

no evidence to support its finding of fact, other than the unsupported conclusions of its hired

expert witness. Finally, this finding is irrelevant because the competitive advantages enjoyed by 

PDM and CB&I over its competitors (if any) in the past do not necessarily exist today.

373. Dr. Simpson testified that by hiring workers throughout the U.S. and using these 

workers on projects, CB&I and PDM have learned over time who the good workers are and thus 

learn which workers to hire for which projects. Over time, the workers learn what procedures

CB&I and PDM use. As these workers become familiar with these procedures, they become

more productive. (Simpson, Tr. 3167, 3207-10 (citing CX 615 at 72-73 and Hall, Tr. 1797-78)).

Response to Finding No. 373:

This finding is irrelevant and unsupported by the evidence. It is irrelevant

because the evidence proves that companies other than CB&I have similar access to "good

workers." In fact, the evidence is squarely to the contrary. For example, AT&V currently

employs a number of PDM and CB&I field workers. (Cutts, Tr. 2426-27). Similarly, CB&T

also employs former CB&I and PDM employees, and boasts a workforce that is even more

capable than CB&I's. (See Stetzler, Tr. 6322-23). Similarly, competitors in the LNG markets

have equal access to good workers. In fact, it is likely that CB&I's competitors in the LNG

markets have even better access to good construction workers. For example, Zachry advertises 

itself as the largest open-hire shop in the U.S. (FOF 3.141-3.194; RX 256 (state of mind)). 

Further, this finding not based on credible evidence, as it relies primarily on the testimony of a 

hired expert to generate factual findings.

374. Regional companies are generally limited to knowledge of the work force in their 

regions. (Simpson, Tr. 3210-12). Because they do not know the work forces in other regions, 

they would have some difficulty in doing work in those regions. (Simpson, Tr. 3210-12) (citing 

to CX 485 at 97).
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Response to Finding No. 374:

This finding is irrelevant and unsupported by the evidence. It is irrelevant

because none of the new entrants identified by Respondents are "regional companies." For

example, AT&V recently won a LIN/LOX tank job for BOC in Hillsboro, Oregon, even though 

it is based in Houston. (FOF 5.116). Further, AT&V has an international presence, as do all of 

the entrants in the LNG markets. (FOF 3.56-3.227). Further, this finding is unsupported by

credible evidence, as it relies on the testimony of a paid expert for factual assertions.

375. Respondents' ordinary course of business documents and statements to the

investment community emphasize that they are uniquely positioned to take advantage of their

local knowledge of localized business conditions in the United States. This local knowledge

gives Respondents a competitive advantage. CCFF 377-386.

Response to Finding No. 375:

This finding of fact is vague, irrelevant, and misleading. It is vague because it 

does not refer to a specific document or a specific product market. It is irrelevant because it

assumes that any alleged "competitive advantage" will preclude new entry from occurring in the 

relevant markets. As Respondents have amply demonstrated, this conclusion is false because

entry has already occurred in the relevant markets.

376. On Texaco's Ferndale project, Mr. Raymond Maw of Morse and Mr. James Crider 

of Texaco testified that Morse's proximity to Texaco's Ferndale facility gave Morse a

competitive advantage over other bidders. (Maw, Tr. 6599-600; Crider, Tr. 6721).

Response to Finding No. 376:

This finding is misleading and inaccurate to the extent that it applies to the overall 

Ferndale project. As stated in this finding, Morse's proximity to Texaco's Ferndale facility gave 

Morse a transportation cost advantage of $70,000. However, this transportation cost advantage 

was outweighed by the labor cost disadvantage of $180,000 due to Morse's union collective

bargaining agreement obligations. (Maw, Tr. 6563-64, 6565-66, 6680) (FOF 4.99, 4.108-4.111). 
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As set forth in RFOF 179, this union obligation results in a higher wage payment, greater

benefits, and subsistence cost obligations incurred by Morse that a nonunion employer, such as 

CB&I and PDM, would not be required to pay. (Maw, Tr. 6553-56) (FOF 4.99-4.109). In fact, 

Dr. Simpson even admitted that he did not know Morse was a union employer, that Morse in fact 

paid subsistence costs on the Ferndale project, and that the Ferndale project was a nonunion

project. (Simpson, Tr. 5554-57). Dr. Simpson explicitly stated that Morse would have been "at 

a disadvantage on a merit [nonunion] job." (Simpson, Tr. 5555). Even Dr. Simpson noted that 

he did not know if Morse's disadvantage outweighed any locational cost advantage. (Simpson, 

Tr. 5557).

377. Morse's local presence also gave Morse "a $70,000 cost advantage for

transportation" over the other bidders on the Ferndale project. (Maw, Tr. 6564-5).

Response to Finding No. 377:

Respondents do not dispute the truth of this finding. However, this local

transportation cost advantage was outweighed by the labor cost disadvantage of $180,000 due to 

Morse's union collective bargaining agreement obligations, as set forth in RFOF 179 and RFOF 

376. (Maw, Tr. 6563-64, 6565-66, 6680) (FOF 4.99, 4.108-4.111).

378. Mr. Norman Kelley confirmed that a local presence is preferred, because local 

companies are "just more accessible [] and it 's easier to do business." (JX 27 at 91 (N. Kelley, 

Dep.)). Mr. Kelley stated that "it would be hard [for an LPG company with no local presence in 

the United States]... to get business to start out with." (JX 27 at 73 (N. Kelley, Dep.)). "If they 

don't have anything in the [S]tates for you to go look at, why, I'm not going to go to France to 

look at their stuff." (JX 27 at 73-74 (N. Kelley, Dep.)).

Response to Finding No. 378:

This finding is misleading because Mr. Kelley also testified that a local contractor 

does not hold a competitive advantage as compared to another domestic supplier. For instance, 

he cited AT&V as ITC's (Houston) most competitive supplier and AT&V is located in Alabama. 

(N. Kelley, Tr. 7121) (FOF 4.130). Likewise, ITC dealt with PDM, who was located in
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Pittsburgh at the time. Moreover, Mr. Kelley testified that domestic LPG customers would

consider foreign suppliers of LPG tanks. In fact, some domestic LPG customers, such as ITC,

are foreign owned. (N. Kelley, Tr. 7111) (FOF 4.54). In addition, Mr. Kelley testified that he 

would travel to France or Tokyo if he could take his wife. (CX 689 at 73-74 (N. Kelley, Dep.)).

379. Mr. Blaumueller testified that it is not a "prudent risk" to purchase from a supplier 

with no experience building LNG tanks in the United States. (Blaumueller, Tr. 310).

Response to Finding No. 379:

This finding is irrelevant. Mr. Blaumueller has not been involved in the purchase 

or construction of an LNG tank since 1973 and lacks the necessary foundation to discuss the

LNG market. (FOF 3.642-3.649). Further, Mr. Blaumueller's views have been forcefully

contradicted by virtually every current customer for LNG facilities in the U.S. (FOF 3.247-

3.255).

380. For Black & Veatch, until a new entrant has built an LNG tank in the United

States, "the risks, potential risks, have not gone away." (Price, Tr. 578).

Response to Finding No. 380:

This finding is irrelevant because it is based on the testimony of a witness with a 

personal bias against CB&I. (Opening Br. at 85-87). It is also irrelevant because Black &

Veatch is not a customer for LNG tanks; rather, it is a competitor to CB&I in the LNG markets. 

(Opening Br. at 85-87).

381. An inexperienced supplier can incur delays in securing the necessary regulatory

approvals from FERC. Mr. Blaumueller testified that the FERC approval process can add

approximately twelve months to the process of building an LNG tank. (Blaumueller, Tr. 316).

Response to Finding No. 381:

This finding is irrelevant and lacks evidentiary support. Mr. Blaumueller has not 

been involved in the purchase or construction of an LNG tank since 1973 and lacks the necessary 

foundation to discuss the LNG market. (FOF 3.642-3.649). Further, Mr. Blaumueller's views
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have been forcefully contradicted by customers actually participating in the LNG market. 

Current customers have explained that they, not the tank contractor, are responsible for "securing 

the necessary regulatory approvals from FERC." (FOF 3.519-3.527). Current customers who 

have used foreign suppliers to assist in the FERC process have been satisfied with their work and 

have not experienced any delays in the FERC process caused by the tank contractor. (E.g., 

Eyermann, Tr. 6975) (FOF 3.519-3.527).

382. Customers place a premium on the value of CB&I and PDM's substantial

experience in obtaining project approval. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxx]. (Sawchuk, Tr. 6072-73; see also [xxxxxxxxx], Tr. 719, in camera [xxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxx], Tr. 703, in camera [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]).

Response to Finding No. 382:

This finding is inaccurate and not supported by the evidence. Current customers 

have testified that owners, not tank contractors, are responsible for "obtaining project approval." 

(FOF 3.519-3.527). Further, Complaint Counsel's argument is contradicted by the evidence. 

Two current U.S. customers have used foreign tank suppliers to assist it in preparing FERC

permit applications. These customers have found foreign tank builders' work product in this

regard to be of good quality. (E.g., Eyermann, Tr. 6975) (FOF 3.519-3.527). Finally,

Complaint Counsel's finding is suspect because it relies on the testimony of Patricia Outtrim,

who has little to no foundation to discuss the specifics of the LNG markets and CB&I's alleged 

advantages relative to other competitors. (Opening Br. at 86-87; FOF 3.683-3.696).

383. [xxxxxxxxxxxxxxxxxxxxxxxxx] testified that it is "too big of a hurdle" for a new 

entrant to come in and beat CB&I; it will take years before foreign LNG tank firms can establish 

themselves as effective competition to CB&I: [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 
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xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

([xxxxx], Tr. 703, 716, 727, in camera).

Response to Finding No. 383:

Complaint Counsel's finding is irrelevant and not supported by the weight of the 

evidence. It is irrelevant because it relies exclusively on the testimony of Patricia Outtrim, a

competitor of CB&I. Further, Ms. Outtrim acknowledged that she had no useful information

regarding the abilities of foreign firms vis a vis CB&I. (FOF 3.683-3.696). Perhaps more

importantly, Ms. Outtrim's theories regarding entry barriers have been proven wrong, as new

entry has already occurred in the LNG market. (See FOF 3.68-3.227 (actual entry has occurred 

in the LNG market)).

384. Bidding experience is another country-specific intangible asset that gives CB&I a 

competitive advantage over other firms.

Response to Finding No. 384:

Complaint Counsel's finding is wholly unsupported by record evidence and

should be rejected out of hand.

385. If a firm that is bidding for a particular project lacks good information about the

actual cost of completing that project, there would be some error in its estimate of the cost of

completing the project. The firm might bid too low, or it might bid too high. If the firm bids too

low, it runs the risk of winning the project at a price at which it would lose money. This type of 

error is called the winner's curse. To guard against the winner's curse, a firm that is uncertain of 

the actual cost of completing a project will include a cushion in its bid. As the firm's uncertainty 

increases, the size of the cushion increases. Given this, economic theory would predict that bid 

quotations from firms that are less knowledgeable about the cost of completing projects in the

United States, such as recent entrants, will tend to have a larger cushion than bids from firms that 

are experienced and knowledgeable about costs in the United States, such as CB&I and PDM. 

These larger cushions translate into higher bids for recent entrants. (Simpson, Tr. 3249-50 (citing 

Eric Rasmussen, Games & Information, 590-91, 588-89 (1989))).
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Response to Finding No. 385:

This finding is irrelevant because none of the firms know their competitors' costs, 

including CB&I. (FOF 7.82-7.88). Dr. Simpson himself has done no cost analysis whatsoever, 

so this proposed finding is totally meaningless in this case. (FOF 7.150-7.156).

7. Entrants Face Higher Sunk Costs Because

They Must Buy their Way into the Markets

386. Dr. Simpson testified that an entrant seeking to develop building experience,

bidding experience, and a reputation faces a "catch-22" situation. Dr. Simpson testified that, in 

order to win projects, a firm must have a good reputation and be a low-cost provider. However, 

it is difficult for a firm to establish a good reputation and become a low-cost provider until that 

firm has actually won projects. (Simpson, Tr. 3252-53). In order to overcome the "catch-22 

situation," a new firm may try to buy its way into the market by offering prices that are lower 

than its costs. (Simpson, Tr. 3254).

Response to Finding No. 386:

This finding is vague because it does not refer to a specific product market. It is 

inaccurate and misleading because it assumes that new entrants do not already have the

necessary building experience, bidding experience, and reputation, and would have to "buy in" to 

the market. This assumption is incorrect. All of the new entrants identified by Respondents

already have these assets. In the LNG markets, new entrants are large, sophisticated companies 

with deep experience in LNG bidding contests. (FOF 3.56-3.227). In the LIN/LOX market,

AT&V and Matrix have already successfully bid on and built LIN/LOX to the satisfaction of

customers. (FOF 5.31-5.34, 5.45-5.50). The same is true for AT&V in the LPG market. (FOF 

4.17-4.19).

387. Dr. Harris conceded that foreign LNG tank companies may have to buy their way 

into the U.S. LNG tank market in order to overcome reputation barriers and higher costs (Harris, 

Tr. 7252-53).
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Response to Finding No. 387:

This finding is a distortion of Dr. Harris' testimony. Dr. Harris did not testify that 

LNG tank companies "may have to buy their way" into the LNG market. He merely pointed out 

that it was an option available to any new entrant. (See Harris, Tr. 7252-53).

388. A process by which a new firm would attempt to buy its way into a market would 

represent a significant cost of entry. (Simpson, Tr. 3254 (citing CX 1204)). Because projects in 

the relevant markets are infrequent, it would take an entrant a number of years to buy several

projects, enter the market, and recover its original investment. (Simpson, Tr. 3257; CX 1204). In 

Dr. Simpson's expert opinion, the expectation that it would take several years for an entrant to

recover its original investment would make entry less likely. (Simpson 3257).

Response to Finding No. 388:

For the reasons set forth in CB&I's Response to Finding 386, this finding should 

be rejected.

389. Dr. Simpson's review of the record indicates that U.S. LNG tank customers would 

prefer a U.S. supplier over a foreign supplier at the same price, due to the fact that U.S. suppliers 

know the market, have experience in constructing the tanks, and will be more likely to meet the 

projects' schedules. (Simpson, Tr. 3257).

Response to Finding No. 389:

This finding is inaccurate. It is based solely on the testimony of Complaint

Counsel's hired expert, which contradicts the great weight of the evidence. Current LNG

customers are willing to consider foreign LNG tank builders on a equal footing with CB&I. 

They do not perceive that CB&I has any advantage over foreign companies in terms of knowing 

the market, scheduling, or experience. (FOF 3.565-3.570).

390. Based on his examination of the pre-merger contribution margins and profit

margins in the relevant markets Dr. Simpson concluded that it would not have been profitable for 

a firm to buy its way into the market before the acquisition. (Simpson, Tr. 3257-58). Because 

the contribution margins, or the profit that new entrants would make on the last units sold, on the 

relevant products were small (under 15 percent) prior to the acquisition, a new firm 's cost of

entry would likely not be offset by the contribution margins that it would make on projects. 

(Simpson, Tr. 3258).
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Response to Finding No. 390:

For the reasons set forth in CB&I's Response to Finding 386, this finding should 

be rejected.

391. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. 

([xxxx], Tr. 4752-53, in camera).

Response to Finding No. 391:

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (FOF 3.150-3.151).

J. Other Firms Cannot Replace PDM

Because of Respondents' Competitive Advantages

392. CB&I and PDM were the only two companies that had extensive experience

building the relevant products in the United States. CCFF 136, 151, 172, 192. As a result of

their extensive localized experience and knowledge, Respondents have a distinct competitive

advantage against other firms, particularly foreign suppliers. CCFF 400-418.

Response to Finding No. 392:

Complaint Counsel’s finding number 392 is incorrect because Respondents do not 

have a distinct competitive advantage against other firms, particularly foreign suppliers. RFOF 

400-418. For example, as has been noted already, foreign firms such as Technigaz may have a 

distinct competitive advantage over CB&I for the construction of LNG tanks since increasingly

LNG tanks are double and full containment, which requires an expertise in concrete that CB&I 

lacks. (Jolly, Tr. 4439-40; RFOF 119). Further, since the Acquisition, AT&V has won more 

than half of all LIN/LOX tank projects. (Harris, Tr. 7308). CB&I has no competitive
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advantages in the LPG market. (FOF 4.120-4.143). Moreover, CB&I and PDM were not the

only companies with experience; many other competitors have experience. (E.g. Harris, Tr.

7213; FOF 3.57-3.227). Finally, this proposed finding is vague since Complaint Counsel does

not specify product market.

393. Respondents have emphasized in this proceeding the value of their experience as 

a source of competitive advantage. As CB&I's Chief Engineer described in Respondents' Motion 

for Perpetual In Camera Treatment of certain engineering documents, "CB&I has, for many

years, worked to streamline its processes to reduce costs and improve quality." (CX 392 at 3 

(emphasis supplied)). CB&I expressed concern that information regarding its own and PDM's

"best practices initiative would be valuable to a competitor." (CX 392 at 3). Indeed, as

Respondents pointed out, "CB&I has been in business for over a hundred years; it was unable to 

develop the best practices from PDM without combining the two companies." (CX 392 at 3).

Response to Finding No. 393:

Complaint Counsel’s finding number 393 indicates that there is indeed a high

level of competition in the alleged product markets; that CB&I went to great lengths to shield its 

best practices from competitors indicates that CB&I does not have the market power Complaint 

Counsel alleges. Further, other firms testifying at trial similarly request in camera treatment for 

testimony and documents. If CB&I had market power in the alleged markets, and if there were 

barriers to entry prohibiting competitors from entering the alleged markets, CB&I would not

have filed a motion for in camera treatment. Further, CB&I’s competitors have worked towards 

the very same goals for years. As Respondents have shown, there is competition in the alleged 

product markets; accordingly CB&I is protective of any competitive strengths it may have.

394. CB&I went on to describe how "In the storage tank business, innovations 

provide benefit to the innovator for a lengthy period of time. In this way, our business is

different than high-technology business, which involve technologies that quickly become

obsolete over time. Because of the long-lasting benefits that our innovations will generate, I

believe it is imperative that information regarding these innovations be protected from public

view indefinitely." (CX 392 at 4) (emphasis supplied)).
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Response to Finding No. 394:

Complaint Counsel’s finding number 394 is irrelevant because it does not suggest 

that any “innovations” of CB&I are not surpassed by the innovations of its competitors; indeed 

there is evidence in the record that CB&I’s competitors’ “innovations” place them at a

competitive advantage over CB&I. (E.g. Jolly, Tr. 4439-40; Glenn, Tr. 4141).

395. In a March 2000 presentation, CB&I stated that its "110 years of industry

experience" gave CB&I a "Competitive Advantage." (CX 230 at CB&I-PL055446).

Response to Finding No. 395:

Complaint Counsel’s finding number 395 is misleading. Competitors of CB&I

presently have competitive advantages. For example, Skanska/Whessoe offers a combination of 

skills for the LNG and associated markets that “few can rival.” (RX 870, at 6/138) (FOF 3.60). 

TKK is the “world’s leader” in constructing double and full containment LNG tanks. (Cutts, Tr. 

2572-73) (FOF 3.101). CB&T has stated that it has competitive advantages in the LIN/LOX

market. (FOF 5.66, 5.67). Further, it is inappropriate to cite commercial puffery as verified fact.

396. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 111 at PDMHOU008396, in camera).

Response to Finding No. 396:

Complaint Counsel’s finding number 396 is irrelevant. This expresses what PDM 

thought -- it does not make it true. Further, whether PDM was differentiated from “certain”

competitors in 1995 does not indicate whether CB&I’s acquisition of PDM’s EC division in

2001 will lessen competition in 2003 or thereafter.

397. Mr. Price testified that Respondents' experience in the United States gave them a 

competitive advantage over other companies because both companies "know the lay of the land, 

if you will, in the U.S. and are, in our opinion, better able to quantify that and price accordingly." 

(Price, Tr. 589-90).
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Response to Finding No. 397:

Complaint Counsel’s finding number 397 is irrelevant because the new entrants

all have experienced U.S. partners who have experience in the U.S. know the lay of the land. 

(FOF 3.57-3.227). Further, Brian Price’s testimony lacks foundation and is biased. First, Mr.

Price personally has a patent on technology that competes head-to-head with CB&I. (Price, Tr. 

642) (FOF 3.659). Further, Black & Veatch, for whom Mr. Price works, is a head-to-head 

competitor of CB&I’s. (Price, Tr. 641) (FOF 3.659). Mr. Price and Black & Veatch directly

gain from a decision in this case adverse to CB&I. Further, Mr. Price lacks the requisite firsthand knowledge to make such a statement; neither Black & Veatch nor Brian Price have

procured an LNG tank since 1990. (Price, Tr. 643-44) (FOF 3.665).

398. CB&I's acquisition of PDM has only increased this local knowledge competitive 

advantage. In a 2002 bid proposal, CB&I emphasized that its acquisition of PDM "has also

increased our abilities and expertise for projects such as yours." (CX 449 at 7403).

Response to Finding No. 398:

Complaint Counsel’s finding number 398 is irrelevant. First, CB&I’s sales

pitches are just that: sales pitches. Complaint Counsel’s use of puffery to prove substantive facts

is weak at best. Further, even if it is true that the Acquisition increased CB&I's abilities and

expertise, it is not quantified and cannot negate the fact that it is in highly competitive markets

competing against capable entrants.

1. Respondents Have Unequaled Competitive Advantages in the LNG Market

399. According to CB&I's Chief Engineer, CB&I has worked "years" to "streamline its 

processes" and lower its costs. (CX 392 at 3). CB&I's acquired "experience with special

materials," as characterized by a March 2000 presentation, gave CB&I a "strong position with

proprietary technology" in LNG. (CX 230 at CB&I-PL055440).
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Response to Finding No. 399:

The proposed finding mischaracterizes and inaccurately cites CX 230. Page

CB&I-PL055440 of CX 230 does not even mention "experience with special materials" or

"proprietary technology." Complaint Counsel is mischaracterizing the information on CX 230

because it failed to question any witnesses or deponents about this document. For example, there 

is nothing in CX 230 which suggests that CB&I's alleged experience with "special materials" has 

given CB&I a "strong position in propietary technology". Nor does it account for the similar

experiences of CB&I global competitors.

400. These efforts have resulted in a cost advantage over other competitors on LNG

projects. When asked, post-acquisition, about CB&I's ability to compete for LNG projects, Mr. 

Glenn informed investors that for LNG tanks "we can win the work every time technically." 

(CX 1731 at 44; Glenn, Tr. 4380, emphasis added).

Response to Finding No. 400:

The proposed finding is ambiguous, misleading, and is not supported by the

evidence. Complaint Counsel fails to cite any evidence supporting its conclusory remark that

"these efforts" have resulted in a cost advantage over other competitors on LNG projects. 

Further, Complaint Counsel mischaracterizes Mr. Glenn's statement by attributing them to the

LNG market. Mr. Glenn's statement is classical commercial puffery and referred to CB&I's

global business across all of its products lines, not just the LNG market. (Glenn, Tr. 4402).

401. Mr. Glenn recognized that other companies could not compete at CB&I's cost

level without going out of business, saying "if [other companies] want to dive in and take the

work for less than they can execute it for, that's fine, we'll just sit and watch them go out of

business, too." (CX 1731 at 44; Glenn, Tr. 4380).

Response to Finding No. 401:

The proposed finding is ambiguous, misleading, and is not supported by the

evidence. Complaint Counsel has failed to demonstrate Mr. Glenn's foundation for making a

statement relating to "other companies" "costs." Complaint Counsel also mischaracterizes Mr. 
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Glenn's statement by attributing them to the LNG market. Mr. Glenn's statement referred to

CB&I's global business, across all of its products lines, not the LNG market. (Glenn Tr. 4402) 

(RFOF 401).

402. Mr. Newmeister of Matrix testified that a new entrant into LNG tanks would be 

likely to operate at a higher cost level than an experienced supplier like CB&I for some time

while the entrant learned from its mistakes. (Newmeister, Tr. 1605-6).

Response to Finding No. 402:

The proposed finding is misleading, and mischaracterizes the testimony of Mr.

Newmeister. Mr. Newmeister's testimony is solely limited to his speculation about Matrix's

ability to compete with CB&I for LNG projects; his testimony does not refer to "a new entrant". 

(Newmeister, Tr. 1605-06).

403. In actual LNG tank bidding projects where foreign firms competed against CB&I, 

foreign competitors have bid at higher prices than CB&I did (or could have) and have been

unable to match CB&I's prices. This can be seen in the stories of the Dynegy project CCFF 979-

1007, the [xxx] projects CCFF 832-883, and the Memphis project CCFF 930-944.

Response to Finding No. 403:

The proposed finding grossly misrepresents the evidence, and is speculative. 

CB&I never submitted a bid for the Dynegy project. Dynegy received bids from TKK/AT&V, 

Skanska/Whessoe, and Technigaz/Zachry; not only is there no evidence that the foreign

competitors bid a a higher price than CB&I could have, each of the three foreign bids were

within Dynegy's expected price range, and Dynegy was satisfied with the prices. (Puckett, Tr. 

4556-57, 4559-60; Glenn, Tr. 4137) (FOF 3.287-3.288, 3.303) Further, [xxx] has not even held a 

bidding process for any of its proposed LNG projects. ([xxxxxxxxxxx] 6091) (FOF 3.422). The 

Memphis project is not relevant because the bidding process occurred in 1994, almost nine years 

ago, when foreign companies such as Noell Whessoe were reluctant to enter the U.S. LNG
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market. (Hall, Tr. 1771, 1778-80; Scorsone, Tr. 5014; Kistenmacher, Tr. 895, 939-40) (FOF

3.493-3.508).

2. Respondents Have Unequaled Competitive Advantages in the LPG Market

404. CB&I and PDM were each other's closest competitors because they enjoyed the

same cost advantages, as a result of their similarly extensive experience. CCFF 113, 122-123, 

304-307, 322-420.

Response to Finding No. 404:

This finding is misleading, inaccurate and repetitive for the reasons set forth in

RFOF 113, 122-123, 304-307, and 322-420.

405. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 

486; CX 824; CX 1210, in camera; CX 1212 at 7, in camera; CX 397 at 1, in camera; RX 757).

Response to Finding No. 405:

This finding is misleading, inaccurate, incomplete and duplicative of CCFF 172. 

Accordingly, Respondents refer this Court to RFOF 171-173.

406. There are no LPG tank suppliers in the United States that can match Respondents' 

track record. (CX 152). (See CX 160 at CB&I-PL004768; CX 171 at CB&I-PL009817; CX 172 

at CB&I-PL009975; CX 179; CX 190 at CB&I-PL017044; CX 207 at CB&I-PL031456; CX 217 

at CB&I-PL 034420; CX 244 at CB&I-PL4005377; CX 417 at CB&I 026845-52-HOU).

Response to Finding No. 406:

This finding is misleading and irrelevant because it ignores the current state of

competition in the LPG market and current LPG customer preferences. For instance, Mr. Kelley 

of ITC testified that such experience is not necessary. (N. Kelley, Tr. 7117-18, 7131-32) (FOF 

4.121). In fact, he selected a contractor for the ITC LPG project without any knowledge as to 

AT&V's LPG track record. (N. Kelley, Tr. 7104-05) (FOF 4.123). Further, Morse was selected 

for the Ferndale LPG project by Texaco with full disclosure regarding Morse's lack of any prior 

LPG experience. (Maw, Tr. 6550-51) (FOF 4.90). This finding is also misleading because the 
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record evidence demonstrates that, other LPG suppliers have recently matched CB&I in the LPG 

market. (N. Kelley, Tr. 7092, 7137 ("AT&V beat the socks off of CB&I.")) (FOF 4.56).

407. CB&I is recognized as one of the leading tank builders in the world and markets 

itself as the "largest tank builder in the world." (CX 258 at CB&I-H001794). CB&I has been 

building refrigerated storage tanks, such as LPG tanks, since World War II. (CX 258 at CB&IH001794). CB&I has built over 1100 field-erected low-temperature and cryogenic tanks, which 

includes LPG tanks. (CX 258 at CB&I-H001793).

Response to Finding No. 407:

This finding is misleading and irrelevant for a variety of reasons. First, marketing 

materials are unreliable given their puffery and self-serving nature. Second, the fact that CB&I 

has been building LPG tanks since World War II is irrelevant to the current state of competition 

in the LPG market. In fact, most of the current competitors in that market were not in the LPG 

market during World War II, let alone in existence, such as AT&V and Matrix. (N. Kelley, Tr. 

7088-89, 7085, 7090; Cutts, Tr. 2334; Stetzler, Tr. 6355, 6365; CX 394 at 8 (Cutts, Dep.), CX

396, CX 397) (FOF 4.17-4.19, 4.43-4.46, 4.47-4.49). Further, such historical data does not

account for the lack of demand and virtually non-existent market for LPG tanks. (Harris, Tr.

7281-82) (FOF 4.10-4.15).

408. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxx]. (CX 890 at CB&I 069832 ("Schedule is a major advantage for CB&I."); CX 124 at 

PDM-HOU 2011161 ([xxxxxxxxxxxxxxxxxxxxxxx]CX 217 at CB&I-PL-034447, in camera.

Response to Finding No. 408:

This finding is misleading, inaccurate and contrary to the record evidence. For

instance, Mr. Kelley of ITC testified that such experience is not necessary. (N. Kelley, Tr. 7117-

18, 7131-32) (FOF 4.121). In fact, he selected a contractor for the ITC LPG project without any 

knowledge as to AT&V's LPG track record. (N. Kelley, Tr. 7104-05) (FOF 4.123). Further,

Morse was selected for the Ferndale LPG project by Texaco with full disclosure regarding

Morse's lack of any prior LPG experience. (Maw, Tr. 6550-51) (FOF 4.90). Despite this alleged 
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"extensive experience," CB&I notoriously does not meet their schedules on time for LPG

customers, and makes mistakes in the design of tanks. (Cutts, Tr. 2510-11; N. Kelley, Tr. 7124-

25) (FOF 4.132, 4.134). Similarly, PDM did not deliver the Sea-3 project on time due to poor 

engineering of the tank, resulting in late procurement of equipment and materials. (Warren, Tr. 

2308; Scorsone, Tr. 4826-28) (FOF 4.137-4.143).

409. Customers know of no competitive suppliers, other than CB&I and PDM, of fielderected LPG tanks in the United States. (Newmeister, Tr. 1614; Warren, Tr. 2307-08, 2309,

2283-4 (post-acquisition, CB&I is now the only supplier that is prequalified to bid on LPG

tanks)).

Response to Finding No. 409:

This finding is grossly misleading, inaccurate, and blatantly ignores the record

evidence in this case. The direct testimony of customers in this case reveals that not only has

AT&V successfully built an LPG tank, but "AT&V beat the socks off of CB&I." (Cutts, Tr.

2455-56; N. Kelley, Tr. 7092, 7130-31, 7137) (FOF 4.22, 4.56). Further, post-Acquisition 

activity demonstrates that CB&I is not the only prequalified LPG supplier, as AT&V and Wyatt 

fiercely competed with CB&I on the ABB Lummus project in 2001. (Scorsone, Tr. 5039-43) 

(FOF 4.66-4.70). Moreover, Ms. Warren lacks foundation regarding the LPG market: she has

not been involved in the LPG market or the procurement of such a tank since 1998; she is not

aware of any plans to construct an LPG tank; she has no knowledge of current companies with 

the ability to construct LPG tanks; and has no knowledge of companies Fluor would prequalify 

to build an LPG tank. (Warren, Tr. 2284, 2309, 2315-18) (FOF 4.148-4.157). In fact, Ms.

Warren was not even the customer on the Sea-3 projects -- the actual customer responsible for 

selecting a contractor was Sea-3. (Warren, Tr. 2275, 2280, 2316) (FOF 4.149). Similarly, Mr. 

Newmeister is not an LPG customer, but a direct competitor at Matrix. As a result, his testimony 
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should be discounted as biased, self-serving and financially motivated. (Newmeister, Tr. 2180-

82; N. Kelley, Tr. 7085, 7090) (FOF 4.43-4.46).

410. Dr. Harris stated that he has no evidence that any of the foreign tank companies 

that he (Dr. Harris) identified on his demonstrative exhibit RX-948 have chosen to construct

LPG tanks in the United States. (Harris, Tr. 7779). Dr. Simpson testified that neither TKK,

Skanska-Whessoe, nor Technigaz would be sufficient to restore the preacquisition level of

competition in the LPG market. (Simpson, Tr. 3407; see RX 738 at ¶ 15, in camera

([xxxxxxxxxxxxxxxx] as "no plans" to compete for single containment LNG tanks, LIN/LOX

tanks, LPG tanks or TVCs)).

Response to Finding No. 410:

This finding is misleading and irrelevant because LPG customers in the U.S.,

those actually competing in the market, testified that foreign tank contractors have solicited

business for LPG tanks constructed in the U.S. (N. Kelley, Tr. 7126) (FOF 4.53). Further, the 

actual evidence in the current LPG market as demonstrated on the only post-Acquisition LPG

project indicates sufficient competition exists to force a price decrease on the project from a four 

percent margin to a 2.5 percent margin as well as spur innovation in the tank design. (Scorsone, 

Tr. 5039-43) (FOF 4.66-4.70).

411. Dr. Simpson testified that firms such as AT&V, Matrix Services, and Wyatt Field 

Services would not be able to restore the preacquisition level of competition in the LPG market. 

(Simpson, Tr. 3408-9). Dr. Simpson noted that AT&V is much smaller than PDM was and that 

all three firms lack the building experience and the reputation that PDM possessed. (Simpson, 

Tr. 3409).

Response to Finding No. 411:

This finding is misleading and irrelevant in light of the current events in the LPG 

market post-Acquisition, as set forth in RFOF 182 and 410. On the ITC project, AT&V

constructed a field-erected LPG tank, a project that was completed on time, without any defects, 

to the satisfaction of the customer, at a fair price, and through a competitive bidding process that 

did not include PDM. (N. Kelley, Tr. 7088-89, 7130-31; Cutts, Tr. 2455-56, 2495) (FOF 4.16-

4.42). Moreover, Mr. Kelley of ITC testified that such experience is not necessary. (N. Kelley, 
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Tr. 7117-18, 7131-32) (FOF 4.121). In fact, he selected a contractor for the ITC LPG project 

without any knowledge as to AT&V's LPG track record. (N. Kelley, Tr. 7104-05) (FOF 4.123). 

Further, Morse was selected for the Ferndale LPG project by Texaco with full disclosure

regarding Morse's lack of any prior LPG experience. (Maw, Tr. 6550-51) (FOF 4.90).

3. Respondents Have Unequaled

Competitive Advantages in the LIN/LOX Market

412. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxx]. (See CX 171 at CB&I-PL009817; CX 244 at CB&I-PL005377; CX 449 at CB&I-E 

007403, CX 471 at PDM-CH 003456; CX 1152 at CB&I-HWH 075021; CX 1486 at CB&I

059970; CX 1488 at CB&I 059894; CX 224 at CB&I-PL-039363-390; CX 244 at CB&I-PL4005377 ("CB&I has built over 600 field erected cryogenic storage tanks of all types.")).

Response to Finding No. 412:

The proposed finding is irrelevant and has little bearing on the competitive

successes of LIN/LOX tank suppliers in the United States today because LIN/LOX customers

purchase tanks largely on the basis of low price. As Michael Patterson, of MG Industries, said 

"low price will always get you there." (Patterson, Tr. 480) (FOF 5.145). This quote has been 

proven true through evidence admitted at trial. Post-Acquisition, AT&V has won three of the

four competitively-bid LIN/LOX projects based on low prices. (FOF 5.76-5.78, 5.96, 5.124). 

Moreover, testimony from other customers support the fact that LIN/LOX buyers purchase on

price. For example, Victor Kelly testified that BOC was satisfied with AT&V's "low cost" price 

for LIN/LOX tanks and BOC plans to use AT&V for future projects. (V. Kelley, Tr. 4599-4600, 

5272, 5282). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx.]

413. PDM's lower cost structure for LIN/LOX tanks gave it a cost advantage over

CB&I. In its Marketing Analysis, CB&I admitted that its "[c]ost structure [in low temperature

and cryogenic] is too high, particularly on small jobs." (CX 217 at CB&I-PL034421).
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Response to Finding No. 413:

The proposed finding is irrelevant because current competitors also enjoy the

ability to price below CB&I's cost structures. Specifically, AT&V knows it has an advantage

over CB&I and can sell LIN/LOX tanks at a lower price. (Cutts, Tr. 2572). Further, CB&I

recognized that AT&V has, on recent projects in the relevant markets, offered pricing that "is

below [CB&I's] flat cost." (RX 273).

414. CB&I and PDM personnel comparing pricing data on a LOX tank for Air Liquide 

in Longview, Texas, three weeks after the acquisition had occurred, "found that the PDM cost

was much lower than the CB&I cost for the same project. PDM bid this work for 9% S&GA and 

1 or 2% profit. CB&I's final number included about 9.5% S&GA and -12% profit." (CX 136 at 

CB&I 014195-HOU).

Response to Finding No. 414:

The proposed finding is unreliable and irrelevant. First, no testimony is cited by 

Complaint Counsel explaining what the document is or providing context for the numbers which 

they chose to pull out. The statement is unreliable because it is merely an excerpt from an

Exhibit CX 136 that has never been testified on or put into context. Complaint Counsel never 

called a witness to testify regarding CX 136, despite the fact that it easily could have. Therefore, 

the record is devoid of information with which to place these figures into context and to

understand them.

Moreover, the finding is irrelevant because AT&V has replaced PDM as the low

cost provider of LIN/LOX tanks. ([xxxxxxxxxxxxxxxxxx] V. Kelley, Tr. 4599-4600, 5272; RX 

208). AT&V has beaten CB&I on three of the four competitively bid LIN/LOX projects

awarded post-Acquisition. (Opening Br. at 99) (Scorsone, Tr. 5017-5018) (FOF 5.78).

415. Post-acquisition, CB&I now enjoys the competitive advantages of CB&I and

PDM's combined experience and PDM's low cost structure. CCFF 1082.
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Response to Finding No. 415:

The proposed finding is misleading because since CB&I's Acquisition of PDM in 

2001, CB&I has won only two of the five LIN/LOX projects have been awarded by U.S.

LIN/LOX customers. (Scorsone, Tr. 5015-16) (RFOF 154, 156, and 157). In fact, postAcquisition, AT&V has filled the role of low cost LIN/LOX provider. ([xxxxxxxxxxxxxxxxxx]

V. Kelley, Tr. 4599-4600, 5272; RX 208). All told, AT&V has won three of the four

competitively-bid LIN/LOX projects since the Acquisition. (Opening Br. at 99) (Scorsone, Tr.

5017-5018) (FOF 5.78). CB&I has attempted to compete against AT&V on three of the

competitively bid projects and lost to AT&V each time. CB&I has yet to win a LIN/LOX

project when AT&V was a competitor bidding on the project. (Scorsone, Tr. 5018). Complaint 

Counsel's own expert economist, Dr. Simpson admitted that he may have underestimated the

competitive strength of AT&V in the LIN/LOX market. (Simpson, Tr. 3703-3707).

4. Respondents Have Unequaled Competitive Advantages in the TVC Market

416. PDM gained efficiencies and reduced costs by assigning experienced employees 

on TVC projects. In an e-mail written relating to the Spectrum Astro TVC project, Mr. Scorsone 

wrote that "[t]he retirement of Fred Dilliott will hurt our ability to manage [the Spectrum Astro 

project]" and "Bob Watson has left the company and this will hurt our ability to manage the

engineering and startup program." (CX 1685 at CB&I/PDM-H 4000903).

Response to Finding No. 416:

Complaint Counsel cites CX 1685 which is not evidence which has been admitted 

into the record. Since it relies on non-record evidence, this Court must reject this finding.

417. Mr. Scully testified that CB&I and PDM's extensive experience in TVC has

established an industry-wide confidence level in the two firms that has evolved over the years. 

(Scully, Tr. 1110, 1040).

Response to Finding No. 417:

This finding misstates Mr. Scully's testimony. In fact, Mr. Scully never testifies 

that this industry-wide level of confidence applies to CB&I or PDM. (Scully, Tr. 1110, 1040). 
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Furthermore, Mr. Scully lacked the foundation to speak for the "industry." Complaint Counsel 

also ignores record substantial record evidence that CB&I was a fringe competitor compared to 

PDM because of CB&I's lack of recent experience and its lack of commitment to the fielderected TVC market. (FOF 6.26-6.64; Opening Br. 121-122). Indeed, CB&I has not built a

field-erected TVC since 1984. (Scorsone, Tr. 5055-56; Glenn, Tr. 4089, 4160; Scully, Tr. 1187-

89, 1193; Higgins, Tr. 1276-77) (FOF 6.26). Furthermore, CB&I had already exited from the

field-erected TVC market in the late 1980's, which left PDM as the only competitor for fielderected TVCs in the U.S. until 1997. (Scully, Tr. 1189; [xxxxxxxxxxxxxxxxxxxxx] (FOF 6.40).

418. According to a CB&I marketing analysis document, [xxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxx]. (CX 217 at CB&I-PL034470, in camera).

Response to Finding No. 418:

CB&I marketing documents contain "puffery." (FOF 6.31, 6.33). Additionally,

Complaint Counsel ignores substantial record evidence that CB&I was a fringe competitor

compared to PDM because of CB&I's lack of recent experience and its lack of commitment to 

the field-erected TVC market. (FOF 6.26-6.64; Opening Br. 121-122). Indeed, CB&I has not 

built a field-erected TVC since 1984. (Scorsone, Tr. 5055-56; Glenn, Tr. 4089, 4160; Scully, Tr. 

1187-89, 1193; Higgins, Tr. 1276-77) (FOF 6.26). Furthermore, CB&I had already exited from 

the TVC market in the late 1980's, which left PDM as the only competitor for field-erected TVCs 

in the U.S. until 1997. (Scully, Tr. 1189; [xxxxxxxxxxxxxxxxxxx] (FOF 6.40).

419. CB&I does not consider Howard capable of fabricating a TVC, let alone having 

the capability to design, engineer, and field erect a TVC. (Scorsone, Tr. 5061 ("I think that

would be a real stretch for Howard, very much so.")

Response to Finding No. 419:

Respondents have no specific response, except that it only applies to the past

assessment of Howard Fabrication and that this assessment could change in the future.
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K. Foreign and Domestic Firms Cannot Replace PDM

1. CB&I Does Not Foresee Other Firms Restraining Its Market Power

420. Respondents argue to the Tribunal that any number of foreign and domestic firms 

can replace PDM. However, Respondents have not produced any business records or statements 

from executives inside or outside of the courtroom that any one of these "entrants" have

restrained CB&I's market power since the merger, or that one of these firms has replaced PDM 

as CB&I's closest competitor to the same extent as PDM did before the merger.

Response to Finding No. 420:

Complaint Counsel’s finding number 420, which is without citation, is untrue and 

irrelevant. First, Respondents are not required to prove that entrants “have restrained CB&I’s

market power since the merger, or that one of these firms has replaced PDM as CB&I’s closest 

competitor. A showing of actual entry is not even necessary. The mere threat of entry can rebut 

a prima facie case. Baker Hughes, 908 F.2d at 988. The "mere threat" of entry could rebut a

prima facie case if "these firms would exert pressure on the United States . . . market even if they 

never actually entered the market." Id. Evidence of the absence of entry barriers to the relevant 

markets rebuts a prima facie case. Id. at 989. Respondents have shown actual entry, and even 

Dr. Simpson admits that there has been actual entry. (Simpson, Tr. 3952-53, 5605) (FOF 7.227, 

7.229). Finally, CB&I documents do indicate that prices have been constrained. (E.g. RX 208, 

RX 627). In any case, whether CB&I’s documents talk about whether their prices are

constrained does not bear on whether CB&I’s prices have in fact been constrained and whether 

prices have increased. Finally, specific examples where CB&I’s pricing was constrained include 

a projects for MG Industries, (FOF 5.151-5.158), Air Liquide, (FOF 5.123-5.125), CMS and

Southern LNG (FOF 3.470-3.480, 3.485-3.486), ABB/Lummus (FOF 4.66-4.70) and in Trinidad 

(FOF 3.140, 3.327-3.331).

421. Respondents ordinary course of business documents and communications to the

public prior to the commencement of this proceeding uniformly characterize the competitive

landscape as dominated by CB&I and unthreatened by foreign and domestic firms.
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Response to Finding No. 421:

Complaint Counsel’s finding number 421, completely unsupported by evidence or 

citation, is false. First, as noted above, there are documents specifically discussing competition 

and how it is difficult for CB&I to compete. (E.g. RX 208, RX 627). Further, Complaint 

Counsel has never presented a document or communication since the announcements of potential 

entrants were made of plans to enter that characterizes the competitive landscape as dominated

by CB&I and unthreatened. Further, this proposed finding is clearly irrelevant. because the

foreign entrants/joint ventures had not publicly announced plans to enter the U.S. market until

after the date any CB&I documents presented by Complaint Counsel.

422. Although Respondents suggest that international companies, e.g., TKK, IHI,

Hyundai, Technigaz, and Whessoe, are competitors who can compete effectively at pre-merger 

prices, a PDM document identifies these firms as competitors only on international projects. 

(CX 116 at PDM-HOU019181; see CX 96 at PDM-HOU 2009785).

Response to Finding No. 422:

Complaint Counsel’s finding number 422 is blatantly misleading because the

cited documents all predate foreign entry and fail to consider joint ventures or mergers of these 

firms. (CX 116). CX 116 dates from 1999 or earlier, and similarly, CX 96 dates from 1998. 

The above listed foreign firms had not yet expressed any intent to enter the domestic markets in 

1998 or 1999. (See, e.g. RX 818, RX 82, RX 306. RFOF 421).

423. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxx]. (CX 213 at CB&I-PL033084, in camera).

Response to Finding No. 423:

Complaint Counsel’s finding number 423 is irrelevant because CB&I was wrong 

when it stated that nearly five years ago. There has not, is not, and will not be a competition

void. (Harris, Tr. 7192). The comment is further irrelevant because entry sufficient to fill the
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void within two years is considered under the Merger Guidelines. CB&I clearly expected entry 

to occur, but it occurred faster than expected -- within one year.

424. In its 2001 10-K, CB&I represents to its investors that "Because of our longstanding presence in numerous markets around the world, we have a prominent position as a

local contractor in those markets." (CX 1033 at 4).

Response to Finding No. 424:

Complaint Counsel’s finding number 424 is irrelevant because it clearly addresses 

“numerous markets around the world,” and does not specify the domestic market or the alleged 

product markets. (CX 1033 at 4). The alleged product markets are only a very small percentage 

of CB&I’s overall business. (Scorsone, Tr. 4844; Glenn, Tr. 4168) (FOF 9.14). Thus, the

document more likely refers to other markets.

425. This "long-standing presence" has provided CB&I with a competitive advantage

over other competitors. CB&I management believes that CB&I is a "leading competitor in its

markets," and that "it is viewed as a local contractor in a number of regions it services by virtue 

of its long-term presence and participation in those markets. This perception may translate into 

a competitive advantage through knowledge of local vendors and suppliers, as well as of local

labor markets and supervisory personnel." (CX 1033 at 8; CX 1032 at 8; CX 1575 at 6-7 

(emphasis added))

Response to Finding No. 425:

Again, Complaint Counsel’s finding number 425 is irrelevant because “its

markets” clearly refers to the “numerous markets around the world” quoted in finding number

425 and does not specify the domestic market or the alleged product markets. (CX 1033 at 4). 

The alleged product markets are only a very small percentage of CB&I’s overall business. 

(Scorsone, Tr. 4844; Glenn, Tr. 4168) (FOF 9.14). Thus the document more likely refers to

other markets. Further, it says such a perception “may translate into a competitive advantage,”

not that it does. This supposed advantage is not quantified. Finally, the foreign entrants are not 

perceived by customers as having a disadvantage to CB&I in the US because of CB&I’s longer 
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presence here. (See Harris, Tr. 7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-

7.101, 7.118, 7.113) (See FOF 3.68-3.227; 4.16-4.54; 5.79-5.184).

426. In its amended 10-K, filed April 1, 2002, CB&I notes that "[o]ur experience,

particularly in risk management and project execution, enables us to recognize and capitalize

upon attractive opportunities in our primary end markets...We believe that our ability to identify 

attractive customers and rapid growth markets will provide a competitive advantage during

changing market conditions." (CX 1033 at 5 (emphasis added))

Response to Finding No. 426:

Complaint Counsel’s finding number 426 is irrelevant because CB&I’s “primary 

end markets,” to which CB&I is referring in this 10-K, are not the alleged tank markets which 

provided CB&I over 1.5% in revenue in FY 2002. (Scorsone, Tr. 4844; Glenn, Tr. 4168) (FOF 

9.14).

427. According to CB&I's 10-K, filed April 1, 2002, "[b]ecause of [CB&I's] long and 

outstanding safety record, we are invited to bid on projects for which other competitors do not

qualify." (CX 1033 at 4).

Response to Finding No. 427:

Complaint Counsel’s finding number 427 is irrelevant because CB&I is clearly

referring to its overall business, which is comprised primarily of projects not in the alleged

product markets. (CX 1033 at 4; Scorsone, Tr. 4844; Glenn, Tr. 4168) (FOF 9.14). All of the 

entrants identified by respondents are in fact being qualified to bid in the U.S.. (See Harris, Tr. 

7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-7.101, 7.118, 7.113) (See FOF

3.68-3.227 (actual entry has occurred in the LNG market); FOF 4.16-4.54 (actual entry in the

LPG market); FOF 5.22-5.71 (new competitors have entered the LIN/LOX market); 5.79-5.184 

(LIN/LOX customers are satisfied with prices received and available competitive options)).

428. On October 31, 2002, Mr. Glenn touted CB&I's competitive advantage over other 

competitors in a conference call with the investment community: "[W]e're really proud of the

fact that, you know, a lot of owners out there, if they go to build a sophisticated project, like an 

LNG project or an LNG tank, they don't want to take a chance on a low price and a potential
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second class job or shoddy welding or any of that kind of stuff ... We have an excellent track

record." (CX 1731 at 44-45).

Response to Finding No. 428:

Complaint Counsel’s finding number 428 is irrelevant because CB&I is not the

only supplier capable of building LNG tanks who has an excellent track record. (See Harris, Tr. 

7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-7.101, 7.118, 7.113) (See FOF

3.68-3.227 (actual entry has occurred in the LNG market); FOF 4.16-4.54 (actual entry in the

LPG market); FOF 5.22-5.71 (new competitors have entered the LIN/LOX market); 5.79-5.184 

(LIN/LOX customers are satisfied with prices received and available competitive options)).

429. Mr. Glenn added that CB&I has a pricing advantage: "short of somebody coming 

in, which they do, and just taking a big dive on the price, that we can win the work every time 

technically. And if they want to dive in and take the work for less than they can execute it for,

that's fine, we'll just sit and watch them go out of business, too." (CX 1731 at 44-45).

Response to Finding No. 429:

Complaint Counsel’s finding number 429 is irrelevant because CX 1731 does not 

in any way suggest CB&I has a pricing advantage. It suggests that CB&I does not understand its 

competitors’ ability to price low when CB&I cannot earn a profit on the same price. Further, Mr. 

Glenn does not have foundation to make statements about competitors’ costs. Complaint

Counsel has not provided any evidence that indicates that CB&I knows its competitors costs. 

Conversely, the evidence indicates that CB&I does not know its competitors’ costs. If CB&I

knew its competitors’ costs and had a cost advantage, it would win every project. However,

CB&I has lost more than half the jobs available post-merger. (Harris, Tr. 7223). There is simply 

no support for the notion that CB&I is only losing because competitors are simply “taking a big 

dive,” and Mr. Glenn has never offered testimony suggesting that he is knowledgeable about

competitors’ costs. Finally, ultimately customers will pay less if what Mr. Glenn is saying is true 

-- and it represents the competitive environment CB&I would be competing in.
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430. Mr. Glenn described CB&I's "high" margin levels and faith that CB&I can

maintain its position against competitors because "we can still be low bidder and make more

money on it than most of our competitors, if not all of them." (CX 1731 at 41-42).

Response to Finding No. 430:

Complaint Counsel’s finding number 430 is irrelevant because Complaint

Counsel completely misses the point of what Mr. Glenn was saying when he described CB&I’s 

high margin levels. In fact, CB&I is realizing high overall profits margins, but this is based 

mostly on CB&I’s acquisition of Howe-Baker, and on profits in its overall business, which is

comprised primarily of products not in the alleged markets. (See CX 1527, Glenn, Tr. 4392-93).

431. Mr. Glenn expressed little concern about CB&I's future competitiveness against 

foreign and domestic competitors: "The results speak for themselves, so I will only comment

that our markets and prospects appear more attractive to us today than at any time in our recent 

past... I would give you a general comment that our prospect list and the projects that we're

attracting looks better to us today than at any time since the IPO [initial public offering of stock 

in 1997] certainly. If you had to pick a number, I don't know, maybe it's 30 percent or

something, but it's a big number." (CX 1731 at 4, 27-28).

Response to Finding No. 431:

Complaint Counsel’s finding number 431 is irrelevant for the same reasons as its 

finding number 430: it fails to say anything about the alleged product markets. (See CX 1527, 

Glenn, Tr. 4392-93). Further, the question Mr. Glenn was answering had nothing to do with

CB&I’s future competitiveness against foreign and domestic competitors in the U.S., let alone in 

these markets. (See CX 1731 at 4, 27-28).

432. A key merger planning document acknowledges that Respondents have a "pricing 

advantage" against competitors, and it is the plan of Respondents to use this "pricing advantage 

as necessary to not lose market share to competitors during the merger." (CX 1544 at CB&I

057941).

Response to Finding No. 432:

Complaint Counsel’s finding number 432 is a grotesque distortion of the record 

because it fails to mention that Mr. Glenn explicitly testified that this document reflects goals for 
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CB&I’s overall business, not particularly the alleged product markets. (Glenn, Tr. 4321-22). 

The fact that this is a goal of CB&I does not make it accurate; the record suggests CB&I has no 

pricing advantage. (See Harris, Tr. 7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-

7.101, 7.118, 7.113) (See FOF 3.68-3.227, 4.16-4.54, 5.22-5.71, 5.79-5.184.

433. Another key merger planning document states that one of the "objectives" of the 

merger is to "ensure that we do not allow smaller competitors to take share and pursue business 

in our attractive markets." (CX 101 at PDM-HOU002359).

Response to Finding No. 433:

Complaint Counsel’s finding number 433 is irrelevant because of course PDM

would have wanted to keep its market share; that is not to say that its desire to protect its

business means it could prevent entry. Further, finding number 433 is not market specific, and 

therefore fails to provide evidence useful to an analysis of the relevant product markets. Finally, 

that PDM hoped to retain market share is irrelevant; it was acquired and ceased to exist.

434. The same merger planning document states that foreign and domestic firms will

not impinge CB&I's post-merger growth because "barriers to entry" will be created. (CX 1544 at 

CB&I 057941).

Response to Finding No. 434:

Complaint Counsel’s finding number 434 is irrelevant because CB&I has no

power to create barriers to entry. Further, the evidence supports a finding that entry is easy. 

(FOF 3.509-3.563; 4.71-4.136; 5.219-5.223).

435. Mr. Scorsone's business conduct reflects Respondents' inattention to foreign or

other domestic companies. Mr. Scorsone admitted that he could not recall whether Respondents 

actually maintained a file of press releases concerning the activities of foreign LNG suppliers

(Scorsone, Tr. 5096). Mr. Scorsone further admitted that the press releases relating to joint

ventures with foreign LNG tank suppliers were received from attorneys, and testified that if he 

ever did receive these releases in the course of business, he "probably threw them out." 

(Scorsone, Tr. 5097).
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Response to Finding No. 435:

Complaint Counsel’s finding number 435 is utterly false. Mr. Scorsone testified 

that he did try to track the foreign LNG suppliers. (Scorsone, Tr. 5226-5233). Further, in an

early 2000 document, prior to the Acquisition, Mr. Scorsone wrote of his concern that an

increase in demand for LNG might cause the foreign firms to enter. (Scorsone, Tr. 5233, CX

1737). Mr. Scorsone also said he read LNG Express regularly, and saw the press releases in

there. (Scorsone, Tr. 5227-28). Finally, Mr. Scorsone is a high level executive; filing is not

typically the province of Presidents of companies. Whether CB&I keeps a file of something is 

irrelevant to whether the Acquisition substantially lessens competition in the relevant markets.

2. The Firms Cited by Respondents as Entrants Cannot Replace PDM

436. An entrant faces two disadvantages in competing against CB&I. It lacks the

reputation that CB&I has, and it lacks the cost advantages that CB&I has gained through learning 

by doing. (Simpson, Tr. 3259). If an entrant decides that it will not buy its way into the market, 

then it will have to wait for a project where, for some reason, its services are preferred to the

incumbent firm. (Simpson, Tr. 3258-9). Dr. Simpson then noted that foreign LNG tank builders 

had not been able to win projects in the U.S. when CB&I and PDM were competing. Dr.

Simpson then noted that CB&I is the "best positioned company to win a particular project," and 

that it will win projects if it bids at or near its cost of constructing the project. (Simpson, Tr.

3261). If, however, CB&I bids double its cost, it is more probable that a foreign entrant will be 

able to win projects. (Simpson, Tr. 3261).

Response to Finding No. 436:

Complaint Counsel’s finding number 436 is false. It is important to note that Dr. 

Simpson is not a fact witness, thus that Dr. Simpson states something factual does not make it so. 

First, the evidence indicates that there are entrants with good reputations. For example,

Skanska/Whessoe has a good reputation (See Izzo, Tr. 6496-98; [xxxxxxxxxxxxxxxxxxxxx]; 

Sawchuck, Tr. 6062; Eyermann, Tr. 6994; Rapp, Tr. 1333; Bryngleson, Tr. 6130; Carling, Tr.

4485-86; Hall, Tr. 1805, 1845). (FOF 3.63, 3.77, 3.78-3.85). [xxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 
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xxxxxxxxxxxxx] (Jolly, Tr. 4700-01) (FOF 3.93). Another example is TKK/AT&V, who also 

has an excellent reputation. (See Cutts, Tr. 2572-73; Puckett, Tr. 4584-85; Bryngleson, Tr. 6128; 

Carling, Tr. 4522-23; Rapp, Tr. 1326) (FOF 3.101-3.140). Technigaz/Zachry is yet another

example of an entrant who has a good reputation. (See Puckett, Tr. 4557-78; Izzo, Tr. 6499,

6505; Sawchuck, Tr. 6062-63, 6092; Rapp, Tr. 1325; Carling, Tr. 4487) (FOF 3.178-3.186). 

Clearly, there are entrants with good reputations.

Second, Complaint Counsel has presented no evidence whatsoever indicating that 

CB&I has a cost advantage over any competitors or entrants. Certainly Dr. Simpson offered no 

cost analysis whatsoever. (See Harris, Tr. 7339). There is economic evidence, however,

suggesting that CB&I does not have a cost advantage over its competitors. (Harris, Tr. 7317,

7322-23).

437. Dr. Simpson testified that a new entrant would not gain sufficient learning by

doing and reputation from "winning a single job or a small number of jobs" to compete on an

equal footing with CB&I in the United States. (Simpson, Tr. 3253-4, 3261). As evidence for

this, Dr. Simpson cited two examples. Dr. Simpson noted that Morse Tank was successful in

winning a project to build an LPG tank in Washington state in 1994. However, after having

completed that project, Morse Tank did not win any other projects to build LPG tanks in the U.S. 

Dr. Simpson then noted that later PDM documents identifying competitors for LPG tanks in the 

U.S. do not list Morse Tank as a competitor. (CX 116 at PDM-HOU019181; CX 859 at PDMHOU 017571) Based on this, Dr. Simpson testified: "the Morse Tank experience suggests that it 

was a one-time job that this Morse Tank company was able to win, but winning that job did not 

make them a competitor on an equal footing with CB&I or PDM EC." (Simpson, Tr. 3262).

Response to Finding No. 437:

Complaint Counsel’s finding number 437 does not make sense. If Morse Tank

did not build another LPG tank, it would be impossible to assess whether Morse Tank “learned 

by doing” the Ferndale, Washington project. Further, Complaint Counsel has presented no

evidence that Morse Tank ever bid on another LPG tank; thus it is impossible to say that Morse 

Tank would not have won another LPG project. In fact, Morse Tank never did bid on another

LPG project. (Maw, Tr. 6588-89). Finally, CB&I has never claimed that Morse Tank is now a 
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competitor. Morse Tank simply serves to illustrate how easy entry is in the LPG market --

Morse bid, won, built the project, and made money, without the so-called learning by doing

advantages. This stands as direct evidence refuting Dr. Simpson’s theory that there are

significant learning by doing advantages.

438. Dr. Simpson testified that ATV's entry into the market for pressure spheres

represents a second example where winning one or two jobs did not allow an entrant to compete 

on an equal footing with an established incumbent firm. (Simpson, Tr. 3262-3). Pressure

spheres are large, field erected structures for storing gases under pressure. (Simpson, Tr. 3263). 

Dr. Simpson noted that respondents cite a partnership between TKK, a Japanese engineering

firm, and ATV, a U.S. construction firm, as being a new entrant into the LPG market whose

presence would help discipline CB&I's pricing. (Simpson, Tr. 3263).

Response to Finding No. 438:

Complaint Counsel’s finding number 438, comprised of two non-sequiturs, is

irrelevant. First, pressure spheres should not be included in this case at all. (See Harris, Tr.

7301-02). The issue of pressure spheres has been dropped by Complaint Counsel and there is no 

record evidence regarding competition or entry in the pressure sphere market. Second, AT&V’s 

success in the pressure sphere market is irrelevant to its success in the alleged product markets, 

and is irrelevant to its ability with TKK to enter the LNG market.

439. Dr. Simpson noted that although ATV won and completed three projects to build 

pressure spheres in the mid 1990s, it has not won any subsequent pressure sphere projects. 

(Simpson, Tr. 3263). Dr. Simpson then analyzed the sales of pressure spheres from 1995 to the 

time of the acquisition. According to Dr. Simpson, ATV won its first pressure sphere project in 

1993. By January 1995, ATV should have completed this project. If completing one project 

placed ATV on an equal footing with incumbent firms, then ATV should have had a one-third 

chance of winning subsequent pressure sphere projects. Of the 57 pressure sphere projects

awarded between 1995 and the time of the acquisition, CB&I won 31, PDM won 25, and ATV 

won 1. Given this sample, Dr. Simpson computed the probability that ATV would have won 1 

or fewer pressure sphere projects if it had a one-third chance of winning. Dr. Simpson calculated 

this probability as being extraordinarily small. (Simpson, Tr. 3274-7 (citing CX 1651)). Dr.

Simpson testified: "[b]ased on this, I inferred that you cannot assume that a company competes

on an equal footing with established firms simply because it has completed one project." 

(Simpson, Tr. 3276).
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Response to Finding No. 439:

Complaint Counsel’s finding number 439 is irrelevant because AT&V’s

competitiveness in the pressure sphere market has no bearing on its competitiveness in the

alleged product markets. And, it has won far more than one project in the LIN/LOX market. 

Further, unlike the pressure sphere market, regarding which there is no evidence, there is ample 

evidence of AT&V’s LIN/LOX and LNG capabilities in today’s markets. (See Harris, Tr. 7301-

02).

440. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (Simpson, Tr. 3265 (citing to CX 86 at CH002617; 

CX 1163 at CB&I-H001114, in camera)). Dr. Simpson concluded that buyers of pressure

spheres do not regard ATV as a good substitute for CB&I (Simpson, Tr. 3277).

Response to Finding No. 440:

Complaint Counsel’s finding number 440 is irrelevant because AT&V’s

competitiveness in the pressure sphere market has no bearing on its competitiveness in the

alleged product markets. (See Harris, Tr. 7301-02). Further, there is no record evidence

indicating that AT&V ever performed poorly on a pressure sphere job. Dr. Simpson relies on a 

CB&I document for this conclusion -- whether CB&I documents suggest this does not support a 

conclusion that AT&V ever performed poorly on a pressure sphere project. Finally, the

perceptions of buyers in the LIN/LOX and LPG markets is very favorable. (FOF 4.55-4.58, 

5.79-5.164).

441. Foreign LNG tank suppliers, such as Skanska/Whessoe, and partnerships between 

foreign LNG tank suppliers and domestic firms, such as AT&V/TKK and Technigaz/Zachry,

cannot replace PDM because these firms have higher costs and lack the experience necessary to 

effectively compete against CB&I for LNG projects. CCFF 448-482, 555-7 (AT&V/TKK); 

CCFF 530-541 (Whessoe); CCFF 542-556 (Technigaz/Zachry).
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Response to Finding No. 441:

Complaint Counsel’s finding number 441 is wrong. First, Complaint Counsel has 

presented no evidence or analysis of CB&I’s current or pre-Acquisition costs, PDM’s costs, or

its competitors costs. Further, what evidence there is indicates that CB&I does not have a cost 

advantage, and that competitors are well situated to compete. (See Izzo, Tr. 6496-98; [xxxxxxxx 

xxxxxxxx]; Sawchuck, Tr. 6062; Eyermann, Tr. 6994; Rapp, Tr. 1333; Bryngleson, Tr. 6130;

Carling, Tr. 4485-86; Hall, Tr. 1805, 1845). (FOF 3.63, 3.77, 3.78-3.85); (Jolly, Tr. 4700-01) 

(FOF 3.93); (See Cutts, Tr. 2572-73; Puckett, Tr. 4584-85; Bryngleson, Tr. 6128; Carling, Tr.

4522-23; Rapp, Tr. 1326 (FOF 3.101-3.140); (See Puckett, Tr. 4557-78; Izzo, Tr. 6499, 6505;

Sawchuck, Tr. 6062-63, 6092; Rapp, Tr. 1325; Carling, Tr. 4487) (FOF 3.178-3.186). (See 

Harris, Tr. 7317, 7322-23, 7339).

442. Dr. Simpson testified that Skanska/Whessoe and the partnerships of TKK/ATV

and Technigaz/Zachry appear to be best positioned of the possible entrants to compete in the

U.S. To the extent that these companies have problems, other possible entrants would have even 

greater problems. (Simpson, Tr. 3329).

Response to Finding No. 442:

Complaint Counsel’s finding number 442 does not make sense. Complaint

Counsel only cites Dr. Simpson, who is not a fact witness. There is no evidence that any

companies have “problems” -- whatever these so-called “problems” may be. This proposed

finding, which fails to identify what it is even talking about, is false. The evidence shows that 

Skanska/Whessoe and TKK/AT&V and Technigaz/Zachry can compete on an equal footing with 

CB&I. (See, e.g. Harris, Tr. 7211, 7240, FOF 3.68-3.227).

443. Dr. Simpson testified that partnerships between foreign engineering firms and

U.S. construction firms would be at a competitive disadvantage when compared with an

integrated firm. (Simpson, Tr. 3212-13 (citing to CX 1033 at 4-5)). Dr. Simpson noted that

when foreign engineering firms partnered with U.S. construction firms in 1994 to bid for the

Memphis LNG peak shaving project, their bids were much higher than those of CB&I and PDM. 

(Simpson, Tr. 3213-14).
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Response to Finding No. 443:

Complaint Counsel’s finding number 443 is irrelevant; Skanska/Whessoe and (in 

LPG and LIN/LOX) AT&V, CB&T, Matrix, and others are integrated firms. Further, there is no 

evidence that being an integrated firm creates any competitive advantage.

444. Dr. Simpson testified that the economic literature recognizes circumstances where 

an integrated firm would be more efficient than a loose partnership. (Simpson, Tr. 3214). 

According to Dr. Simpson: "In any type of business environment, certain contingencies would 

arise. With an integrated firm, you have one decision-maker who can look at this contingency

and determine how the firm is going to meet it, but if it's a partnership and one of these

contingencies arise, they have to look at the contract to see how each party is going to behave

under this contingency, and the contract may not specify that, and in that case, they have to sit 

down and negotiate again. So, what the economic literature says is that integrated firms will be 

more efficient in this regard." (Simpson, Tr. 3214).

Response to Finding No. 444:

Complaint Counsel’s proposed finding number 444 is irrelevant; Complaint

Counsel has presented no evidence that the joint ventures actually have had any of these

problems or that they will have any of these problems. The issue is not whether integrated firms 

have some advantages under “certain contingencies” but whether they have those advantages in 

the relevant markets. Complaint Counsel has made no such showing. Instead the evidence

indicates that the joint ventures are poised for success. Further, not all entrants are joint

ventures. Skanska/Whessoe, AT&V, CB&T, Matrix, and others are integrated firms. Finally,

Dr. Harris identified economic examples where it is more efficient not to be integrated. (Harris, 

Tr. 7250).

445. Foreign companies have not replaced the competition provided by PDM, and in

fact, have not won any LPG tank contracts in the United States for the last decade. (Scorsone, 

Tr. 2842-43). Among domestic firms, the only firms to have built an LPG tank in the United

States since 1990 were AT&V and Morse, neither of whom are able to replace PDM. AT&V

lacks the track record and reliability that PDM and CB&I provided, and is not as competitive on 

quality. CCFF 467. Morse has since been acquired by CB&I and no longer competes. CCFF 

529.
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Response to Finding No. 445:

Complaint Counsel’s finding number 445 is false and misleading. AT&V is

perfectly capable of replacing PDM in the LPG market. For example, this proposed finding fails 

to account for AT&V's success in the LPG market from 2000 to the present as well as viable

competitors such as Matrix and Chattanooga Boiler & Tank. (N. Kelley, Tr. 7088-89, 7085, 

7090; Cutts, Tr. 2334; Stetzler, Tr. 6355, 6365; CX 396, CX 397) (FOF 4.17-4.19, 4.43-4.46, 

4.47-4.49). Further, this proposed finding does not account for the lack of demand and virtually 

"non-existent" market for LPG tanks. (Harris, Tr. 7281-82) (FOF 4.10-4.15).

446. Firms such as Matrix, AT&V and BSL have sought LIN/LOX business from time 

to time, but were not significant competitors to CB&I and PDM. These firms have not competed 

on a regular basis, lack the experience and reliability that PDM and CB&I provided, and are not 

as competitive regarding pricing or quality. CCFF 512-525; CCFF 448-482; CCFF 483-489.

Response to Finding No. 446:

Complaint Counsel’s number 446 is false. AT&V is presently dominating the

LIN/LOX market. Matrix is also a strong competitor, as admitted by Dr. Simpson. (Simpson, 

Tr. 4034-35; FOF 7.227). Complaint Counsel’s continued insistence that CB&I is dominant in 

the LIN/LOX market is directly contradicted by the fact that CB&I has lost the majority of the 

post-Acquisition LIN/LOX jobs -- a fact which Complaint Counsel conveniently ignores

completely.

447. Smaller companies, such as Howard Fabrication and XL Technology Systems

lack the size and the capability to replace PDM in the TVC market. CCFF 502-511, 569-570. 

Mr. Scully of XL Technologies is not aware of any foreign companies that have either supplied 

or bid on a TVC in the United States. (Scully, Tr. 1147-48).

Response to Finding No. 447:

Respondents have no specific response to this finding except to note that larger

companies such as Matrix could replace CB&I.
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3. AT&V Cannot Replace PDM

448. Respondents cite AT&V as a potential replacement for PDM in the LNG market 

the LPG market and the LIN/LOX market.

Response to Finding No. 448:

Respondent does not dispute the truth of the proposed finding. (FOF 5.26-5.42, 

5.76-5.78).

449. AT&V faces numerous problems that make it unlikely to replace PDM as CB&I's 

closest competitor.

Response to Finding No. 449:

The proposed finding is contradicted by evidence elicited at trail. In fact, the

evidence shows that, post-Acquisition, AT&V has filled the role of low cost LIN/LOX provider. 

[xxxxxxxxxxx] V. Kelley, Tr. 4599-4600, 5272; RX 208). First, Complaint Counsel ignores

evidence showing that CB&I has attempted to compete against AT&V on three of the

competitively bid projects and lost to AT&V each time. Complaint Counsel cannot dispute that 

since the Acquisition CB&I has yet to win a LIN/LOX project when AT&V was a competitor

bidding on the project. (Scorsone, Tr. 5018) (FOF 5.76-5.78). In fact, AT&V's success has been 

so great and its prices so low that CB&I documents reflect pessimism as to CB&I's ability to

even compete in this market. (RX 208). Moreover, LIN/LOX customers have been pleased

with prices they have received from AT&V. [xxx] and BOC, two customers who awarded

LIN/LOX projects after the Acquisition to AT&V, were satisfied with the prices they received. 

(FOF 5.96, 5.157, 5.158).

450. [xxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 460 at CB&I-E 007235; JX 23 at Exh. 1 

[xxxx]; Simpson, Tr. 3292-3315). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxx]. (CX 460 at CB&I-E 007235; JX 23 at Exh. 1, in camera [xxxx]; CX 1033 at 28). 

CB&I employs approximately 1,000 engineers. (CX 460 at CB&I-E 007235). CB&I estimates 

that AT&V has only a small engineering staff. (CX 460 at CB&I-E 007235).
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Response to Finding No. 450:

The proposed finding is irrelevant. Regardless of AT&V's size it has proven to be 

a strong competitor in the LIN/LOX market. (Opening Br. at 98-103) (FOF 5.26-5.42). 

Complaint Counsel cannot dispute evidence in the record showing that AT&V has won a

majority of the LIN/LOX tank projects awarded post-Acquisition and CB&I has yet to win a

LIN/LOX project when AT&V was a competitor bidding on the project. (Scorsone, Tr. 5018)

(FOF 5.76-5.78). In fact, AT&V's success has been so great and its prices so low that CB&I

documents reflect pessimism as to CB&I's ability to even compete in this market. (RX 208).

451. [xxxxxxxxxxxxxxxxxx]. (Simpson, Tr. 3315 (citing JX 23a at 44, in camera

[xxxxxxxxx]). Dr. Simpson testified that capacity constraints at AT&V would prevent AT&V

from working on as many projects as PDM had worked on prior to its acquisition by CB&I. 

(Simpson, Tr. 3316-7).

Response to Finding No. 451:

The proposed finding is inaccurate and baseless because AT&V's success in the

post-Acquisition LIN/LOX market demonstrates otherwise. First, while Complaint Counsel

claims that AT&V lacks "capacity", the evidence shows that AT&V is committed to this market 

and has provided firm bids and budget prices for numerous LIN/LOX projects in the U.S. (Cutts, 

Tr. 2452-53) (FOF 5.35). Further, AT&V has won three out of four competitively bid LIN/LOX 

jobs since the Acquisition. (Scorsone, Tr. 5018) (FOF 5.76-5.78). In short, the evidence

demonstrates that AT&V's capacity is sufficient to be a major player in this market.

452. Respondents' cast a negative image of AT&V in their profile of competitors. A

PDM "Competitor Profile" states that AT&V's "quality" and "safety" are "poor." (CX 86 at

PDM-CH 002617). Another PDM document notes that on past projects, AT&V "performed

poorly in terms of supplying a quality tank or sphere and has not met customer safety standards. 

Kellogg and Bechtel threw AT&V off projects due to poor quality or poor safety practices. 

Moreover, in the past, Dupont, Shell-Norco and Exxon (Baton Rouge) would not let AT&V to

bid on their projects." (CX 606 at PDM-CH 002617). CB&I describes AT&V's safety practices 

as "severely lacking ... and are being labeled as an undesirable risk by many." (CX 263 at

CB&I-HOU-004606).
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Response to Finding No. 452:

The proposed finding is irrelevant. First, the documents cited by Complaint have 

little bearing on AT&V's recent success in the LIN/LOX market. Further, Complaint Counsel

provides no detail as to when the projects it refers to were completed, if the projects referenced 

were even in the relevant markets, or what the outcome of any alleged disputes were. The

competitor files cited by Complaint Counsel are also untrustworthy because they are based on

second hand intelligence gleaned by competitors and not by authoritative sources, such as the

customers themselves. While Complaint Counsel could have called witnesses about these

documents, Complaint Counsel did not and cites no testimony regarding the documents quoted

above, which deprives the Court of any context or explanation regarding the passages selected by 

Complaint Counsel.

Second, direct evidence from customers details the success of AT&V and

establishes customers' satisfaction with AT&V's recent work. (FOF 5.32, 5.97-5.115). BOC told 

AT&V, after the construction of the Midland project, that AT&V's "quality was exceptional, the 

schedule was good, and the safety was exceptional." (Cutts, Tr. 2453). Victor Kelley, of BOC, 

stated that "BOC was quite satisfied with the work AT&V did at Midland." (V. Kelley, Tr.

5287). Further validation of the quality of AT&V's work is the fact that after AT&V's

performance on the Midland project it was awarded two more LIN/LOX projects, another one by 

BOC and one by Air Liquide. (Cutts, Tr. 2504-2506; Scorsone, Tr. 5017; Kamrath, Tr. 2006)

(FOF 5.34, 5.37, 5.97-5.115).

453. AT&V has recently experienced significant construction problems on-going 

projects that has customers wary of ever doing business with AT&V. CCFF 466, 477-479.
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Response to Finding No. 453:

The proposed finding is irrelevant. First, Complaint Counsel cites no authority

for the proposed finding and names no customers who are weary of ever doing business with

AT&V. Second, AT&V has had success building recent LIN/LOX tanks and customers such as 

BOC have been satisfied with AT&V's performance. (V. Kelley, Tr. 5287) (FOF 5.97-5.112). 

BOC even contracted with AT&V to build another project after AT&V's successful completion 

of the Midland project. (V. Kelley, Tr. 4601, 5281-5282, 5291-5292; RX 813) (FOF 5.113-

5.116). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Patterson, Tr. 464) (FOF

5.161-5.164).

454. [xxxxxxxxxxxxxxxxxxxxx], admits his firm faces reputational and marketing

disadvantages compared to Respondents. ([xxxx], Tr. 2421-22, in camera). "[xxx] is not a

household name for cyrogenic tanks." ([xxx], Tr. 2385, in camera). Mr. [xvvxx] contrasts

CB&I by comparing it to the "Coca-Cola" brand-name. ([xxxxx], Tr. 2385, in camera). [xxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxx]. ([xxxx], Tr. 2389, in camera).

Response to Finding No. 454:

The proposed finding is misleading and irrelevant. The finding is irrelevant

because AT&V's track record since the Acquisition belies any implication that it cannot compete 

with CB&I and/or the former PDM. In fact, CB&I has yet to win a LIN/LOX project when

AT&V was a competitor bidding on the project. (Scorsone, Tr. 5018) (FOF 5.76-5.78). AT&V's 

success has been so great and its prices so low that CB&I documents reflect pessimism as to

CB&I's ability to even compete in this market. (RX 208).

Further, the proposed finding is misleading because Mr. Cutts also testified that

AT&V has competitive advantages over CB&I including: AT&V's ability to sell tanks at low
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prices, the quality of its construction, a low weld rejection rate, and its completion schedule. 

(FOF 5.38-5.40).

455. AT&V has had financial problems in the past that caused some suppliers to put

them on a cash-only basis. (CX 606 at PDM-CH 002617).

Response to Finding No. 455:

The proposed finding is misleading and irrelevant because it relies upon a

"problem" that occurred in 1994, almost ten years ago. (CX 606 at PDM-CH 002617). 

Complaint Counsel fails to present any evidence to support its contention that some suppliers put 

AT&V on a cash-only basis. In fact, despite the supposed "problem" in 1994, the customer

specifically stated that AT&V would be allowed to bid in the future. (CX 606 at PDM-CH 

002617). Additionally, the proposed finding fails to acknowledge that current U.S. LNG

customers and market participants have accepted the TKK/AT&V alliance. (See FOF 3.123-

3.133).

456. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxxx], Tr.

2393-94). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxx]. CCFF 557. [xxx] has never built an LNG tank in the United States. ([xxx], Tr. 2336, in 

camera).

Response to Finding No. 456:

The proposed finding is misleading and incomplete to the extent it fails to

acknowledge that TKK has extensive LNG experience outside the U.S. and AT&V is an

experienced U.S. contractor. (See FOF 3.99-3.108). Furthermore, current U.S. LNG customers 

and market participants have accepted the TKK/AT&V alliance. (See FOF 3.123-3.133).

457. [xxx] does not view AT&V as an LNG tank supplier, and concludes that AT&V 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 691 at [xxxxx] 01 032).
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Response to Finding No. 457:

The proposed finding is misleading and incomplete to the extent it fails to

acknowledge that the document it relies on is from August of 2001 prior to the TKK/AT&V

alliance. (RX 818; Cutts, Tr. 2437-38; see also FOF 3.105) (AT&V did not enter into its alliance 

with TKK until November of 2001).

458. It is unlikely that AT&V will be able to effectively replace PDM because PDM & 

CB&I are able to build larger field-erected LPG tanks than AT&V. (CX 303, CB&I/PDM-H 

4001285 (CB&I is PDM's "only competition on tanks over 100,000 [barrels])). AT&V 's

competitiveness is generally limited to "small tanks...$500K & under." (CX 86, PDM-CH 

002618).

Response to Finding No. 458:

This finding is misleading and irrelevant in light of the current events in the LPG 

market post-Acquisition. Complaint Counsel in this finding relies on evidence that is unreliable 

and irrelevant. CX 303 is an email that quotes Fluor's view on competition in the LPG market as 

of 2000. (See CX 303). As demonstrated above, Fluor's last involvement in procuring an LPG 

tank was in 1998. (Warren, Tr. 2284, 2318) (FOF 4.148). Moreover, CX 86 asserted for

AT&V's competitiveness was prepared in 1994. (See CX 86). Since 1994, AT&V has

established itself as a key player in the LPG market. (Cutts, Tr. 2495; N. Kelley, Tr. 7088-89, 

7130-31; CX 396, CX 397) (FOF 4.17-4.22). Finally, demand in the LPG market is

extraordinarily thin and virtually nonexistent. (Harris, Tr. 7281-82) (FOF 4.10).

459. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 397 at 1, in 

camera). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 397 at 1, in 

camera (AT&V tank measured [xxxxx] in diameter and [xxxxx] high, which translates into an

approximate volume of [xxxxxxx] cubic feet, or [xxxxxxx] barrels.).

Response to Finding No. 459:

This finding is misleading, inaccurate and unsupported by the record evidence. 

This finding relies on CX 397. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 
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xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxx]

460. Large LPG tank projects require substantial engineering work and require several 

crews for various tasks, such as procurement, estimating, construction, piping and electrical. 

(CX 258 at CB&I-H001794).

Response to Finding No. 460:

This finding is misleading and irrelevant in light of the current events in the LPG 

market post-Acquisition. Morse demonstrates that engineering experience and field crews are

not a barrier to entry or an obstacle in competing for an LPG project. For instance, Morse had no 

experience prior to the Ferndale project. (Maw, Tr. 6546) (FOF 4.73). However, Morse timely 

completed the Ferndale project, as planned, without any major defects, and no delays. (Crider, 

Tr. 6714-16; Maw, Tr. 6585) (FOF 4.86). Morse did not incur any additional expenses than it 

normally would on any other tank project. (Maw, Tr. 6556-57) (FOF 4.92, 4.96, 4.98).

461. Dr. Harris concedes that AT&V has "capacity constraints that would prevent it

from building an LPG tank while working on other projects." (Harris, Tr. 7595).

Response to Finding No. 461:

This finding is wholly inaccurate, unsupported by the evidence, and improper.

Absolutely no quote, statement, or reference relating to AT&V appears in the trial record in page 
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7595. (Harris, Tr. 7595). Therefore, this finding is unsupported by the record evidence and is 

inaccurate and improper.

462. Industry participants do not consider AT&V to be a competitive supplier of LPG 

tanks in the United States. Fluor has not accepted AT&V as a qualified bidder on LPG tank

projects. (Warren, Tr. 2309 (Fluor had never considered sole sourcing a field-erected LPG tank 

from any supplier other than CB&I or PDM.)). Matrix does not consider AT&V as a competitor 

for LPG tanks. (Newmeister, Tr. 2202 (Mr. Newmeister is "not aware of any [LPG tanks] that 

[AT&V] ha[s] built.")).

Response to Finding No. 462:

This finding is inaccurate, lacks foundation, is misleading and improper because it 

ignores the record evidence. First, Fluor is not an industry participant. Sea-3 was the client and 

was responsible for selecting the LPG tank supplier. (Warren, Tr. 2316) (FOF 4.149). In

addition, Ms. Warren has not been involved in the LPG market since 1998, and admits that it

does not know who would be currently qualified by Fluor on an LPG project. (Warren, Tr. 2284, 

2318) (FOF 4.148, 4.157). Second, Mr. Newmeister lacks foundation to testify as an LPG

industry participant. Matrix actually bid, and lost to AT&V, on the ITC Deer Park LPG project 

in 2000. (N. Kelley, Tr. 7083-84) (FOF 4.34). The only LPG customer to testify stated that

AT&V had an excellent reputation and completed the project on time, as planned, and to ITC's 

satisfaction. (N. Kelley, Tr. 7088-89, 7130-31) (FOF 4.38, 4.42).

463. Dr. Harris does not think it is accurate to say that "AT&V could constrain CB&I's 

pricing in ... LPG tanks." (Harris, Tr. 7596).

Response to Finding No. 463:

This finding is inaccurate and misleading; it mischaracterizes Dr. Harris'

testimony. Dr. Harris was asked "[y]ou contend that ATV could constrain CB&I pricing in LNG 

tanks, LPG tanks and LIN/LOX/LAR tanks. Do you remember that?" Dr. Harris responded

"No, I don't remember that. I don't think that's exactly what my testimony is. Again, if you want 

any explanation, it's because the way you've stated it I don't think is consistent. I think they are 
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part of the constraint, but I don't think -- I don't think the way you stated it is accurate." (Harris, 

Tr. 7596).

464. It is unlikely that AT&V will be able to replace PDM in the LIN/LOX market. 

AT&V performed poorly on recent projects for BOC. CCFF 466 and Air Liquide CCFF 477-

479.

Response to Finding No. 464:

The proposed finding is inaccurate. First, AT&V has been the most successful

LIN/LOX competitor post-Acquisition. (Scorsone, Tr. 5018) (FOF 5.76-5.78). AT&V has won 

three of the four LIN/LOX tank awards competitively bid and has beaten CB&I each time they

were competitors in a bidding contest for a LIN/LOX tank. (Scorsone, Tr. 5018) (FOF 5.31-

5.34, 5.76-5.78). Moreover, AT&V has been the low price provider of LIN/LOX tanks postAcquisition and customers have been satisfied with the price AT&V has given them. (FOF 5.32, 

5.123-5.125).

Second, Complaint Counsel reference regarding AT&V's performance on jobs for 

BOC and Air Liquide is vague and ambiguous. The evidence shows that BOC has been satisfied 

with AT&V's performance. (V. Kelley, Tr. 5287) (FOF 5.97-5.112). BOC even contracted with 

AT&V to build another project after AT&V's successful completion of its first LIN/LOX project 

for BOC. (V. Kelley, Tr. 4601, 5281-5282, 5291-5292; RX 813) (FOF 5.113-5.116). [xx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxx]

465. BOC awarded a LIN/LOX contract to AT&V in 2000 for a LIN/LOX tank in

Midland, NC. (RX 290 at CB&I 046596-NEW; RX 291 at CB&I-046598).
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CHI:1176893.3

Response to Finding No. 465:

Respondents have no specific response.

466. BOC had to budget 500 man-hours of additional BOC engineering time to ensure 

that AT&V delivered the LIN/LOX tanks "on time, on schedule, on budget"; this was AT&V's 

first experience building LIN/LOX tanks. (JX 28 at 43-46 (V. Kelley, Dep.); RX 290 at CB&I 

046596-NEW).

Response to Finding No. 466:

The proposed finding is irrelevant and misleading to the extent it implies that

BOC was not pleased with the performance with AT&V on its LIN/LOX projects. Complaint 

Counsel ignores the fact that BOC said it was satisfied with AT&V's performance on the

Midland project. Kelley stated that BOC was "satisfied with both [AT&V's] execution of the

contract and the execution of their schedule" and "was satisfied with the approach that they took 

and to meeting the various time lines that they had stated." (V. Kelley, Tr. 5288) (FOF 5.110). 

The most powerful evidence which shows BOC's satisfaction is the fact that BOC chose AT&V 

for the very next project in Hillsboro, Oregon. (FOF 5.113, 5.116-5.121).

467. Dr. Kistenmacher of Linde BOC testified that AT&V has "a very poor track

record." (Kistenmacher, Tr. 862). Although AT&V originally quoted a very low price on its

projects for BOC, "they had many change orders, [so] that in the end the price was higher than of 

the conventional vendors." (Kistenmacher, Tr. 932).

Response to Finding No. 467:

The proposed finding is irrelevant and Dr. Kistenmacher lacks foundation with

which to comment on AT&V's recent performance for BOC on LIN/LOX tanks. Kistenmacher 

testified that he is unaware that BOC awarded AT&V two LIN/LOX tank projects in Midland, 

North Carolina, and Hillsboro, Oregon. (Kistenmacher, Tr. 922). Moreover, testimony from

BOC's Victor Kelley clearly establishes that BOC was satisfied with AT&V's performance and 

that BOC would hire AT&V again. In fact, BOC hired AT&V for the next LIN/LOX tank

project they had in Hillsboro, Oregon. (RFOF 466).
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CHI:1176893.3

468. Mr. Victor Kelley of BOC testified that "there was a design run of pipe [on the 

BOC project] that could have caused liquid oxygen to settle and then dissipate, creating a

hazardous atmosphere in that location." (V. Kelley, Tr. 5269). During the construction, there

was also a "welding error" that caused the steel plate that comprises the tank to buckle at a weld 

joint. (V. Kelley, Tr. 5273-74).

Response to Finding No. 468:

The proposed finding is misleading and inaccurate to the extent it implies that

BOC was not satisfied with the performance of AT&V on the Midland project. As an intitial

matter BOC was very satisfied with the job AT&V did at Midland. (RFOF 466). Further,

Kelley testified that BOC was satisfied with AT&V's performance on the pipe looping. Despite 

Complaint Counsel's attempt to imply that AT&V was at fault for problems on the project,

Kelley said that BOC did not know who was responsible for the pipe looping difficulties, BOC 

or AT&V. (V. Kelley, Tr. 5269-5271, 5293-5294). Kelley said that BOC was satisfied with

AT&V's performance in correcting the pipe looping issue and believes it is an example of

"strength in terms of the two companies working together to overcome an issue." (V. Kelley, Tr. 

5293-5294) (FOF 5.101). In the end, BOC asked AT&V to replicate its piping on a future

project, so AT&V does not believe there were any issues with its piping. (Cutts, Tr. 2553-2555) 

(FOF 5.103).

469. Linde BOC Process Plants does not appear likely to purchase LIN/LOX tanks

from AT&V in the future. Dr. Kistenmacher testified that AT&V's track record of building "one 

plant for BOC [and] one for an undisclosed client" is "not sufficient for me" to purchase a tank 

from AT&V. (Kistenmacher, Tr. 861-2 ("PDM has built many more tanks, many, many more,

and it was never a question that PDM didn't have the proper track record.")).

Response to Finding No. 469:

This finding is flatly contradicted by record evidence. BOC purchased a

LIN/LOX tank from AT&V soon after AT&V completed its work on the Midland project. BOC 

stated that they would use AT&V in the future and in fact hired AT&V to build a LIN/LOX tank 

in Hillsboro, Oregon. (FOF 5.113-5.121).
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470. Like Linde, [xxxxxxxxxx], is unlikely to award future projects to AT&V because 

of problems with AT&V' s performance. CCFF 477.

Response to Finding No. 470:

The proposed finding is irrelevant to the extent it implies that customers are 

unlikely to award future projects to AT&V. Recent customers such as BOC and MG Industries 

have expressed satisfaction with AT&V and have placed AT&V on the bidders list for future

LIN/LOX projects. (RFOF 464).

471. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxxxxxxxxxx], Tr. 2235-36, in 

camera).

Response to Finding No. 471:

Respondents have no specific response.

472. [xxxxxxxxxxxxxxxxxxxxxxx] admitted, "If PDM were in existence at that time

and had a credible and competitive bid, we would have been far less likely to take the risk of

developing a new supplier." ([xxxxxxxxxx], Tr. 2236, in camera).

Response to Finding No. 472:

The proposed finding is irrelevant to the extent that it implies that AT&V is not a 

successful and viable competitor in the LIN/LOX market. [xxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] In

addition to price, [xxxxxxxx] reviewed and took into account AT&V's earlier success with BOC. 

(FOF 5.126-5.127). Also, CB&I submitted a bid in which it cut its margin to zero percent. [xxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxx] (FOF 5.125, 5.128-5.130). Despite this competitive bid, AT&V, not

CB&I, was selected by [xxxxxxxxxx] to build the Freeport project.
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CHI:1176893.3

473. [xxxxxxxxxx] testified that [xxxxxxxxx] has "not performed well from our

perspective," and that [xxxxxxxx] "ability to manage a project is far worse than I would have

possibly imagined." ([xxxxxxx], Tr. 2251, 2253, in camera).

Response to Finding No. 473:

The proposed finding is irrelevant to the extent that it implies AT&V is not a

capable LIN/LOX supplier for several reasons. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxx]

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] In fact, in contrast to AT&V, BOC,

another large LIN/LOX tank purchaser, has stated it is satisfied with AT&V's performance to

date and plans to award them tanks in the future. (RFOF 466).

474. While [xxxxxx] bid to [xxxxxxxx]'s specifications, ... it's been very difficult to get 

them to actually execute to those specifications." ([xxxxx], Tr. 2241; see also [xxxxxx], Tr.

2241-46, in camera (listing other construction problems with [xxxxx]), 2246-47, in camera

(discussing delays in schedule [xxxxx]).
- 220 -

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Response to Finding No. 474:

The proposed finding is irrelevant to the extent it implies AT&V is not a

technically capable LIN/LOX tank provider. (RFOF 473).

475. [xxxxxxxx] has informed AT&V it would not go forward on the [xxxxxxx]

project unless AT&V "conformed to the manufacturer's specifications." ([xxxx], Tr. 2246).

Response to Finding No. 475:

The proposed finding is irrelevant to the extent it implies AT&V is not a

technically capable LIN/LOX tank provider. (RFOF 473). Moreover, the fact that Air Liquide 

feels AT&V has not met Air Liquide's specifications is not evidence that AT&V does not meet 

the industry standard specifications for LIN/LOX tanks. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] In fact, in contrast to AT&V, BOC,

another large LIN/LOX tank purchaser, has stated it is satisfied with AT&V's performance to

date and plans to award them tanks in the future. (RFOF 466).

476. [xxxxxx] has refused to agree to provide liquidated damages in the event they do 

not perform the contract. ([xxx], Tr. 2250).

Response to Finding No. 476:

The proposed finding is irrelevant to the extent it implies AT&V is not a capable 

LIN/LOX tank provider. Moreover, the proposed finding is further evidence of the commercial 

nature of the dispute between Air Liquide and AT&V. The dispute does not change the fact that 

Air Liquide and other LIN/LOX customers believe AT&V to be technically a technically capable 

LIN/LOX tank provider. (RFOF 473).

477. Based on its experience on the [xxxxxx] project, [xxxxxxx] has no interest in

working with [xxxxx] on any other projects. ([xxxxx], Tr. 2255-56).
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Response to Finding No. 477:

The proposed finding is irrelevant to the extent it implies that customers are

unlikely to award future projects to AT&V. First, the reason that [xxxxxxxx] may be dissatisfied 

with AT&V is a business dispute and not because [xxxxxxxxx] feels that AT&V is technically

incapable. (RFOF 473). Further, recent customers such as BOC and MG Industries have

expressed satisfaction with AT&V and a willingness to hire AT&V in the future. Both MG and 

BOC have placed AT&V on the bidders list for future LIN/LOX projects. (RFOF 464).

478. [xxxxxxxxxxxx] testified that if [xxxxxxxx] terminated [xxxxxxxx], "[t]he only

people I'd feel confident in completing this for us is [CB&I], ... [b]ecause of their technical

capability, because of their history, because of our good performance and good relationship

we've had with them over many years." ([xxx], Tr. 2252).

Response to Finding No. 478:

The proposed finding is irrelevant to the extent it implies that customers are

unlikely to award future projects to AT&V. Recent customers such as BOC and MG Industries 

have expressed satisfaction with AT&V and have placed AT&V on the bidders list for future

LIN/LOX projects. (RFOF 464).

479. [xxxxxxxx] recently asked [xxxxxx] to take over the project, but CB&I refused. 

(Scorsone, Tr. 5036).

Response to Finding No. 479:

The proposed finding is misleading and incomplete. Evidence has shown that in 

response to Air Liquide's inquiries regarding the Freeport project, CB&I told [xxxxxxxxx] the

reason it was unwilling to take over the Freeport contract was due to the risk and difficulty that is 

involved in assuming a contract. (Scorsone, Tr. 5036) (FOF 5.140). It is CB&I's corporate

policy not to take over contracts from another company due to problems that may occur. 

(Scorsone, Tr. 5036) (FOF 5.140). Moreover, the fact that, in response to a business dispute,
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CHI:1176893.3

[xxxxxxxxxxx] asked CB&I about the [xxxxx] job does not change the fact that Air Liquide and 

other customers view AT&V as a capable LIN/LOX provider. (RFOF 464, 473).

480. Based on word-of-mouth regarding AT&V's performance on the BOC and

[xxxxxxxx] projects, other LIN/LOX customers are reluctant to work with AT&V. Air Products 

has not qualified AT&V as a LIN/LOX tank supplier, due to its concern over AT&V's

performance and poor reputation. (Cutts, Tr. 2355-56; Hilgar, Tr. 1369).

Response to Finding No. 480:

The proposed finding is irrelevant to the extent it implies that customers are

unlikely to award future projects to AT&V. Recent customers such as BOC and MG Industries 

have expressed satisfaction with AT&V and have placed AT&V on the bidders list for future

LIN/LOX projects. (RFOF 464).

481. [xxxxxxxxx], of [xxxxxxxxx] testified that he would have concerns about

working with AT&V on a LIN/LOX project. ([xxxxxx], Tr. 472, in camera). [xxxxxxxxx]

further testified that "[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxx]." ([xxx], Tr. 472, in camera); see CX 41 at CB&I-E 007336, in 

camera (August 2001 report by CB&I salesman stating that [xxxxxxxxxx] [xxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx])).

Response to Finding No. 481:

The proposed finding is irrelevant to the extent it implies that customers are

unlikely to award future projects to AT&V. Recent customers, such as BOC, have expressed

satisfaction with AT&V and have placed AT&V on the bidders list for future LIN/LOX projects. 

(RFOF 464). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

482. AT&V has never constructed a TVC. (Cutts, Tr. 2334).
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CHI:1176893.3

Response to Finding No. 482:

Respondents have no specific response, except to note that AT&V could be a

TVC competitor in the future with the assistance of Respondent's remedy proposal for the TVC 

market. (FOF 6.99-6.121).

4. BSL Cannot Replace PDM

483. BSL has never built a tank in any of the relevant product markets in the United 

States. CCFF 136, 146, 151, 164, 172, 180, 192. (Hilgar, Tr. 1380).

Response to Finding No. 483:

Respondents have no specific response.

484. Because it is based overseas, CB&I observed that it is difficult for BSL to build 

tanks cost-effectively in the United States. (See CX 164 at CB&I-PL006714 ("BSL can supply

very good material at a very competitive price from their shop in France but their field cost are

outrageous.")).

Response to Finding No. 484:

Respondents have no specific response other than to state that Complaint Counsel 

incorrectly attributed the above quoted statement to CB&I. A plain reading of CX 164

demonstrates that a CB&I employee was repeating a statement that he heard from an employee 

of Air Products. (See CX 164). 

485. On a LIN/LOX project in Baytown, Texas, BSL's price was "very high," more

than 10% over the third-highest bid. (CX 608 at CB&I-PL023631).

Response to Finding No. 485:

Respondents have no specific response other than to state that Complaint

Counsel's finding is incomplete because the Baytown project occurred in 1998. (CX 608). 

486. Mr. Fan testified that, in a 1999 bid, BSL's price was "more than 15% higher"

than PDM. (Fan, Tr. 954-5).
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CHI:1176893.3

Response to Finding No. 486:

Respondents have no specific response other than to illustrate that Complaint

Counsel's finding is incomplete because it fails to state that the proposed 1999 project in

Nashville, Tennessee, was never actually constructed. (Fan, Tr. 954-55). 

487. In response to Air Products' request that BSL lower its pricing for U.S. projects, 

BSL developed an arrangement with InterFab, a U.S. construction firm. (Hilgar, Tr. 1379-80). 

Under this arrangement, BSL would design, manufacture and ship the tank components from

France and InterFab would perform the field erection of the tanks in the U.S. (Hilgar, Tr. 1378-

79).

Response to Finding No. 487:

Respondents have no specific response.

488. BSL bid on a LIN/LOX tank project for Air Products in partnership with InterFab. 

(Hilgar, Tr. 1378-79). BSL's pricing on this project was off "by 30 percent, something higher or 

close to that 20 percent." (Hilgar, Tr. 1379). BSL's arrangement with InterFab "did not provide 

an economically viable solution" for Air Products. (Hilgar, Tr. 1378-79).

Response to Finding No. 488:

Respondents have no specific response other than to state that Complaint

Counsel's finding is incomplete and fails to state that the project occurred in 1998.

489. After the bidding experience with InterFab, BSL stopped submitting bids to Air

Products for LIN/LOX projects in the United States. (Hilgar, Tr.1380)). BSL has exited the

U.S. LIN/LOX market. (Harris, Tr. 7323).

Response to Finding No. 489:

Respondents have no specific response.

5. Chart Industries Cannot Replace PDM

490. Prior to the acquisition, Chart Industries partnered with PDM on some TVC

projects. (Higgins, Tr. 1269-70).

Response to Finding No. 490:

Respondents have no specific response.
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CHI:1176893.3

491. Chart has never built an LNG, LIN/LOX or LPG tank in the United States. CCFF 

136, 146, 151, 164, 172, 180, 192.

Response to Finding No. 491:

Respondents have no specific response.

492. According to Mr. Higgins, the President of the Chart division that supplies the

systems and equipment attached to TVCs, Chart is not "capable" of field-erecting a TVC by

itself. (Higgins, Tr. 1266-67).

Response to Finding No. 492:

Respondents have no specific response.

493. Chart is not interested in supplying TVCs. (Higgins, Tr. 1267, 1272). It wants to 

partner with an experienced chamber builder and considers CB&I as "[t]he only experienced

players out there at this time." (Higgins, Tr. 1272).

Response to Finding No. 493:

Complaint Counsel's finding is misleading because it ignores substantial record

evidence that CB&I was a fringe competitor compared to PDM because of CB&I's lack of recent 

experience and its lack of commitment to the field-erected TVC market. (FOF 6.26-6.64; 

Opening Br. 121-122). Indeed, CB&I has not built a field-erected TVC since 1984. (Scorsone, 

Tr. 5055-56; Glenn, Tr. 4089, 4160; Scully, Tr. 1187-89, 1193; Higgins, Tr. 1276-77) (FOF

6.26). Furthermore, CB&I exited the field-erected TVC market in the late 1980's, which left

PDM as the only competitor for field-erected TVCs in the U.S. until 1997. (Scully, Tr. 1189;

[xxxxxxxxxxxxxxxxxx] (FOF 6.40).

494. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 242 at CB&I-PL 4003340, in camera).

Response to Finding No. 494:

This finding is misleading and inaccurate as set forth in RFOF 6.150-6.153. Mr. 

Lacey was an entry-level marketing employee at CB&I who worked primarily in the aerospace 
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CHI:1176893.3

business during the time that XL was owned by CB&I. (Scully, Tr. 1125; Scorsone, Tr. 5045). 

Mr. Lacey generated a large volume of ideas for management to consider with regard to the TVC 

business, but only part of these ideas were ever acted upon. (Scully, Tr. 1218; CX-242). Mr. 

Lacey typically presented both the extreme case as well as the moderate case in his proposals. 

(Scully, Tr. 1219-21). Mr. Lacey's ideas were ignored. (Scorsone, Tr. 5045-46; Scully, Tr.

1221).

6. Chattanooga Boiler & Tank Cannot Replace PDM

495. Chattanooga Boiler & Tank ("Chattanooga") cannot replace PDM as a competitor 

in the LIN/LOX market. Chattanooga is unable to provide LIN/LOX tanks at pre-merger price 

levels CCFF 500-501, and industry participants do not consider Chattanooga to be a competitor 

in the LIN/LOX market. CCFF 501-502.

Response to Finding No. 495:

The proposed finding is misleading and irrelevant. First, CB&T believes it has

competitive advantages over CB&I with respect to fabricating LIN/LOX tanks, which may help 

it to provide tanks at low price levels. (FOF 5.66-5.67). Moreover, industry participants do

consider CB&T a competitor and have permitted CB&T to bid on recent LIN/LOX tank

opportunities. (FOF 5.69, 5.70). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

496. Chattanooga has never built an LNG or LPG tank or a TVC in the United States.3 

CCFF 136, 146, 172, 180, 192.

 

3

 Chattanooga once built a vacuum facility that is used by NASA to refuel the space shuttle booster

engines store. (Stetzler, Tr. 6341). The facility creates a vacuum condition to prevent an explosion during the

refueling process. (Stetzler, Tr. 6341). The facility does not support hot or cold temperatures necessary to test 

satellites, which is the purpose of TVCs. (CX 623 at FTC000400; Stetzler, Tr. 6406).
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CHI:1176893.3

Response to Finding No. 496:

The proposed finding is incorrect. CB&T has built LNG tanks before. (Stetzler, 

Tr. 6331-6336) (FOF 5.56). CB&T's experience building LNG tanks translates to CB&T's

ability to build LIN/LOX tanks as well. For example, the ability to fabricate components in a

clean environment and the ability to weld materials of certain quality are skills used in

fabrication of both types of tanks. (Stetzler, Tr. 6336-6337) (FOF 5.57).

Further, the finding is irrelevant to the extent that it implies CB&T is incapable of 

building such structures or, more specifically, LIN/LOX tanks. CB&T has constructed tanks and 

structures significantly more difficult than LIN/LOX tanks. CB&T estimates that some of the

structures they have built are 20 times more difficult than a LIN/LOX tank. (Stetzler, Tr. 6337-

6339) (FOF 5.56).

497. Chattanooga has not built a LIN/LOX tank since at least 1990. (CX 623 at

FTC0000399; Stetzler, Tr. 6413-15).

Response to Finding No. 497:

Respondents have no specific response to this finding.

498. Chattanooga has never created any strategic plans or pricing strategy for

designing, engineering, fabricating, or erecting LIN/LOX tanks. (Stetzler, Tr. 6421-22, 6426). 

Mr. Stetzler, Chattanooga's president, testified that the supply of LIN/LOX tanks is "not really a 

business that we've been participating in" because Chattanooga's marketing staff has told Mr.

Stetzler that there isn't "sufficient demand" to enter the LIN/LOX market. (Stetzler, Tr. 6422).

Response to Finding No. 498:

The proposed finding is incorrect to the extent it implies CB&T is not prepared,

able, and intending to build LIN/LOX tanks in the United States. First, CB&T has recently

entered the market for LIN/LOX tanks when it bid on projects post-Acquisition for BOC and

MG Industries. (FOF 5.69, 5.70). Also, CB&T has been visiting LIN/LOX customers such as 

Air Products to discuss future LIN/LOX opportunities. (RX 273) (FOF 5.71). Finally, there is 
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CHI:1176893.3

no question that currently CB&T has the ability to design and build a field erected LIN/LOX

tank. (Stetzler, Tr. 6312-6313). In fact, CB&T has the requisite facilities, equipment and

personal on hand right now to build a LIN/LOX tank. (Stetzler, Tr. 6314-6316) (FOF 5.59-

5.65). Therefore, to imply that CB&T is unprepared or unwilling to enter the LIN/LOX market 

is not accurate -- CB&T is in the LIN/LOX market today.

499. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 189 at CB&I-PL015105; [xxxxxxxxxx], Tr. 457,

in camera (Chattanooga's price was [xxx] higher than [xxxxxxx]).

Response to Finding No. 499:

The proposed finding is irrelevant for several reasons because the New

Johnsonville bids are not necessarily indicative of future bidding in the LIN/LOX market. 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

500. In discussing how customers would react to Chattanooga, CB&I questioned

whether the customer will "trust a 'newbie' firm like CBT to do cryo tanks." (CX 40 at CB&I-
- 229 -

CHI:1176893.3

E007246). An August 2001 report from a CB&I salesman reports that MG Industries "has

doubts" of Chattanooga's "abilities." (CX 41 at CB&I-E007336).

Response to Finding No. 500:

The proposed finding is contradicted by empirical evidence in the record. 

Customers have permitted and continue to solicit bids from CB&T for field erected LIN/LOX

tank opportunities. (RFOF 498).

501. Mr. Cutts of AT&V does not consider Chattanooga as a competitor for LIN/LOX 

tanks in the United States. (Cutts, Tr. 2333).

Response to Finding No. 501:

The proposed finding is contradicted by empirical evidence in the record. 

Customers have permitted and continue to solicit bids from CB&T for field erected LIN/LOX

tank opportunities. (RFOF 498).

7. Howard Fabrication Cannot Replace PDM

502. Howard Fabrication is a domestic company that supplies shop-fabricated thermal 

vacuum chambers and thermal vacuum systems. Howard Fabrication has never supplied, and

does not have the capability necessary to supply, a TVC with a diameter greater than 20 feet. 

(Gill, Tr. 182, 193).

Response to Finding No. 502:

Respondents have no specific response except to state that that Howard could

become a competitor in the field-erected TVC market in the future.

503. Howard has never built an LNG, LPG or LIN/LOX tank in the United States. 

CCFF 136, 146, 151, 164, 172, 180.

Response to Finding No. 503:

Respondents have no specific response.

504. Mr. Gill does not consider Howard to be a competitor of CB&I or, prior to the

acquisition, of PDM. (Gill, Tr. 195, 201). Mr. Gill does not believe his firm has a "real chance" 

to win a contract for a TVC. (Gill, Tr. 192; see Simpson, Tr. 3514-15 (Howard is not a

competitor in the market for TVCs).
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CHI:1176893.3

Response to Finding No. 504:

Respondents have no specific response except to state that that Howard could

become a competitor in the field-erected TVC market in the future.

505. Mr. Scorsone agreed: supplying a TVC of the size needed by TRW "would be a 

real stretch for Howard." (Scorsone, Tr. 5061).

Response to Finding No. 505:

Respondents have no specific response.

506. Although Howard has submitted bids on past TVC projects, it has been eliminated 

from the final bidding phase. (Gill, Tr. 212). As a result, Mr. Gill does not believe that his

pricing had a material effect on competitive bidding. (Gill, Tr. 212).

Response to Finding No. 506:

Respondents have no specific response.

507. With only $2.5 million in annual revenues, Howard does not have the financial

resources to obtain the financial performance guarantee bonds required by customers for large

projects. (Gill, Tr. 181; CX 261 at CB&I-H004031; Neary, Tr. 1470). A TVC project customer 

may require a $13.5 million bond to guarantee the completion of the project, and Howard

Fabrication cannot obtain such a bond because it does not have the necessary "security or liquid 

assets equal to about three times of that bond." (Gill, Tr. 199-200). Howard was not even able 

to obtain a bond of $5 million for a large, shop-fabricated thermal vacuum chamber procured by 

Aerojet. (Gill, Tr. 234).

Response to Finding No. 507:

Respondents have no specific response except to state that Howard could become 

a competitor in the field-erected TVC market in the future.

508. Howard does not employ any engineers with experience engineering and

designing a TVC. (Gill, Tr. 194-95). To replicate PDM, Howard would need "35-40 engineers 

with support staff and general administration staff to go along with that; the computerized design 

equipment for finite element analysis; the construction equipment; the large shop to support that; 

and, you know, it's a — just a completely different animal." (Gill, Tr. 249).

Response to Finding No. 508:

Respondents have no specific response except to state that Howard could become 

a competitor in the field-erected TVC market in the future.
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509. Howard's shop resources only allow it to fabricate chambers with diameters at or 

below 20 feet. (Gill, Tr. 192).

Response to Finding No. 509:

Respondents have no specific response except to state that Howard could become 

a competitor in the field-erected TVC market in the future.

510. Howard does not own the type of equipment necessary to fabricate and erect a

thermal vacuum chamber in the field, such as gantry burners, large plate rolls, annular rolls, post 

stress treat furnaces, automatic profile blasters, preblast and prime units, large horizontal boring 

mills, vertical boring mills, shape burning machines, and transportable cranes. (Gill, Tr. 196-97).

Response to Finding No. 510:

Respondents have no specific response.

511. Mr. Gill of Howard considers gaining the resources and capability that PDM had 

in TVCs as "a big jump" for his company. (Gill, Tr. 248-249). He described this "big jump" as 

going from "a couple million dollars in sales to many hundred millions of dollars of sales." (Id.)

Response to Finding No. 511:

Respondents have no specific response except to state that Howard could become 

a competitor in the field-erected TVC market in the future.

8. Matrix Cannot Replace PDM

512. Matrix is a less experienced and less reliable supplier than either CB&I or PDM

for LIN/LOX tanks. CCFF 514-518. Customers and industry participants consider Matrix to be 

a weaker competitor than PDM, CCFF 519-526, 241. and there is evidence that Matrix's costs

are higher than CB&I or PDM. CCFF 156, 524, 403, 1067, 1101-1103, 1108. Therefore, it is 

unlikely that Matrix will be able to replace PDM in the LIN/LOX market.

Response to Finding No. 512:

Complaint Counsel's finding is a collection of inaccurate, misleading and

unsupported statements. The record evidence has shown that Matrix is a viable competitor in the 

LIN/LOX market that has successfully completed four LIN/LOX projects, received

recommendations from LIN/LOX customers, and continues to offer competitive pricing. (See

FOF 5.43-5.55).
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Contrary to Complaint Counsel's claim that "[c]ustomers and industry participants 

consider Matrix a weaker competitor," LIN/LOX customers believe Matrix to be a viable and

accomplished LIN/LOX supplier. Matrix has successfully constructed four LIN/LOX tanks in

the U.S. for Praxair and Air Products, and won those jobs when PDM was still in the market.

(Newmeister, Tr. 2213-14, 2173-74; FOF 5.47-5.50). Both Praxair and Air Products were

satisfied with Matrix's performance. (Newmeister, Tr. 2173-74, 2176-77; FOF 4.48-4.50). Air 

Products informed CB&I that they consider Matrix to be "a player in the [LIN/LOX] market"

and certainly consider them to be a "viable competitor." (RX 273; FOF 5.54). Air Liquide also 

believes that Matrix is a viable LIN/LOX supplier and has solicited bids from Matrix on at least 

two projects, Freeport and Longview, Texas. (Kamrath, Tr. 2005-06; FOF 5.53). [xxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

Evidence has shown that Matrix does not have higher costs than CB&I. In 2001, 

Air Liquide solicited bids for a LIN/LOX project in Freeport, Texas, from AT&V, CB&I, Matrix 

and BSL. (Cutts, Tr. 2569; Scorsone, Tr. 5032; RX 627 at 2; FOF 5.122). [xxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] FOF 5.124).

513. Matrix has never built an LNG tank or an LPG tank in the United States. 

(Newmeister, Tr. 1596, 1609).

Response to Finding No. 513:

Respondents have no specific response.

514. [xx] 2001 analysis of Matrix's competitiveness concluded that "to our knowledge, 

[xxxxxx] has not supplied tanks for LNG or Cryogenic Liquid service especially in the large

tanks (100,000 m3 plus) used for the LNG Import Terminals." (CX 691 at [xx] 01 032). "[T]he 

reality for today is that in the US, [xxxxxxxxxxxx] are the leading company in the LNG Tank 
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business and [xxxxx] will need to demonstrate [its] capabilities in this market" first. (CX 691 at 

[xx] 01 032).

Response to Finding No. 514:

Respondents have no specific response.

515. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 705 at 8; Kamrath, Tr. 1987 (Longview, TX in 2001);

[xxxxxxxxxxxxxx], Tr. 456-57, in camera ([xxxxxxxxxxx]); Fan, Tr. 960-962, 1018

(Farmington, NM in 2002, and "many" other pricing proposals to Linde)).

Response to Finding No. 515:

Complaint Counsel's finding is incorrect in that it states Matrix has "bid" on six

projects. Record evidence demonstrates that some of the pricing Matrix submitted to LIN/LOX 

customers was budget pricing or some other form of preliminary pricing. (Scorsone, Tr. 5020-21 

(New Mexico); Fan, Tr. 1078 (New Mexico); FOF 5.178-5.179, 5.195).

By way of comparison, CB&I submitted pricing on four competitively bid

LIN/LOX projects since the Acquisition and only won one. (FOF 5.76-5.78).

516. Matrix believes that it has not won these projects either because its pricing has

been too high or because the customer did not believe that Matrix was sufficiently qualified. 

(Newmeister, Tr. 2155-58; Kamrath, Tr. 2000-01; see also Hilgar, Tr. 1381-82).

Response to Finding No. 516:

This finding is inaccurate to the extent it implies that Matrix has bid on all "those 

projects." (RFOF 515). Further, this finding is irrelevant to the extent it relies on Martix's

unsupported beliefs.

517. Matrix has not been price competitive, and its bids have been too high on recent 

projects. (Newmeister, Tr. 2156-58; Fan, Tr. 960-62 (on 2002 project, Matrix bid over

$900,000, while CB&I bid $814,000); Kistenmacher, Tr. 860; Fontenot, Tr. 2029 (CB&I was at 

least 5% below Matrix on Air Liquide's recent Longview, Texas project); Patterson, Tr. 457 (in 

camera) [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]).
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Response to Finding No. 517:

Complaint Counsel's finding is incorrect because Matrix has in fact submitted

competitive pricing. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] FOF 5.124). 

Additionally, Complaint Counsel cites to the testimony of Mr. Fan for support that "on 2002

project, Matrix bid over $900,000, while CB&I bid $814,000." Respondents have demonstrated 

that Linde did not request "bids" but rather budget pricing for its proposed project in New

Mexico. (Scorsone, Tr. 5020-21 (New Mexico); Fan, Tr. 1078 (New Mexico); FOF 5.178-5.179, 

5.195). Further, Complaint Counsel's reliance on the Matrix bid to MG is misplaced. CB&I's

final bid price was the result of negotiations between MG and CB&I after the first round of

bidding. (Scorsone, Tr. 5023-5024) [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Patterson, Tr. 482-483) (FOF

5.151-5.157).

518. Air Liquide's representative testified that Matrix's prices have "never been below 

what we'd seen from any of the other competitors." (Kamrath, Tr. 2000-2001; see CX 289 at

CB&I/PDM-H4000815)).

Response to Finding No. 518:

Respondents have no specific response.

519. Since 1996 when it began developing engineering and marketing expertise for the 

LIN/LOX market, Matrix has designed and constructed only four LIN/LOX tanks. (Newmeister, 

Tr. 1587).

Response to Finding No. 519:

Respondents have no specific response. (See RFOF 512; FOF 5.43-5.55).
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520. Two major purchasers of LIN/LOX tanks, Air Liquide and Linde, do not consider 

Matrix experienced enough to qualify it as their LIN/LOX tank supplier. (Fontenot, Tr. 2021-

2022 (pre-acquisition, the companies on Air Liquide's "bid slate" included CB&I, PDM "and a

little bit lower would be Matrix;" "I didn't feel as comfortable ... with Matrix," as the "number of 

references they had weren't nearly what the other two suppliers had."); Kamrath, Tr. 2022).

Response to Finding No. 520:

Complaint Counsel's finding is incorrect, misleading and not supported by the

record. As an initial matter, Complaint Counsel's proposition that Linde does not believe Matrix 

is a qualified LIN/LOX supplier is untrue. For example, Complaint Counsel failed to provide

record citations to testimony by any Linde employee or any Linde documents. In fact, the 

evidence is to the contrary, as Linde has sought bids from Matrix repeatedly on LIN/LOX tanks. 

(Kistenmacher, Tr. 854)

Complaint Counsel's assertion with respect to Air Liquide is also unsupported by 

the record evidence. Complaint Counsel relies on the testimony of Mr. Fontenot, a former

employee of Air Liquide who has no knowledge of post-Acquisition activity in the LIN/LOX

market. (Fontenot, Tr. 2232-33). Mr. Fontenot testified that he has no knowledge of which

companies Air Liquide has currently pre-qualified or permits to bid for its LIN/LOX projects. 

(Fontenot, Tr. 2232-33).

In contrast to Mr. Fontenot's unreliable opinions, Mr. Kamrath, the current CEO

of Air Liquide, testified that Air Liquide believes that Matrix is a viable LIN/LOX supplier and 

has solicited bids from Matrix on at least two projects, Freeport and Longview, Texas. 

(Kamrath, Tr. 2005-06; FOF 5.53; see RFOF 512; FOF 5.43-5.55).

521. [xxxxxxx] testified that, [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxxx], Tr. 2253, in camera).
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Response to Finding No. 521:

Respondents have no specific response.

522. Air Products, who purchased a LIN tank from Matrix, believes that Matrix has

"more limited capacity to produce field-erected cryogenic storage tanks," as compared to CB&I 

or PDM, and that the former PDM is "much deeper in crews and manufacturing capabilities than 

Matrix is." (Hilgar, Tr. 1354, 1382-83; JX 25 at ¶ 14 (Hilgar Dec.)).

Response to Finding No. 522:

Respondents have no specific response.

523. Matrix sold its fabrication facility, known as Brown Steel, in late 2000.

(Newmeister, Tr. 1589-90). By losing its fabrication capability, Matrix is required to subcontract 

the fabrication work for these tanks, and subcontracting could increase Matrix's costs. 

(Newmeister, Tr. 1569, 1570, 1602 (no company has been a viable LIN/LOX competitor while 

subcontracting out fabrication); Hilgar, Tr. 1381-1382 (Air Products would require Matrix to

become re-qualified if they sold off their fabrication facility)). Therefore, as Mr. Newmeister

testified, the sale of Brown Steel could have the effect of diminishing Matrix's competitive

strength. (Newmeister, Tr. 1590-1591, 1595; see Harris, Tr. 7309 (Matrix's sale of Brown Steel 

competitively disadvantages Matrix in the LIN/LOX Market)).

Response to Finding No. 523:

Complaint Counsel incorrectly assumes that subcontracting will necessarily

increase costs. Record evidence has demonstrated that subcontracting portions of a project does 

not necessarily increase the costs of a particular job. (Bryngelson, Tr. 6143). In some cases,

subcontracting actually decreases costs because subcontractors with an expertise in a particular 

area are able to use a standardized approach in performing work. (Bryngelson, Tr. 6143-44). 

Similarly, subcontracting can reduce costs because specialized subcontractors may be better at

certain job functions than a general contractor, which could improve the overall schedule. 

(Cutts, Tr. 2472; FOF 3.543; 5.219). LIN/LOX customers have testified that the fabrication of a 

LIN/LOX tank can be easily subcontracted to an outside company and supervised by a field

supervisor. (Hilgar, Tr. 1526-27; FOF 5.220).
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Further, this finding is inaccurate and misleading to the extent it implies that

Matrix does not have the ability to fabricate LIN/LOX tanks in-house. In fact, Mr. Newmeister 

testified that Matrix currently has the required fabrication capabilities in-house in Matrix's

existing fabrication facility. (See Newmeister, Tr. 2197). As a result, the sale of Brown Steel

will have very little effect on Matrix. (Harris, Tr. 7309; see also FOF 512, 517).

524. Matrix cannot replace PDM's presence in the TVC market. (Scully, Tr. 1115-16; 

Higgins, Tr. 1268-69). Although Chart Industries ("PSD") was planning to use Matrix to

fabricate the shop-built chambers for the Raytheon TVC project (Higgins, Tr. 1268-69), Mr.

Higgins, the President of the Process Systems Division of Chart Industries, would not partner

with Matrix on a large TVC project because it does not have the capability to engineer and

construct these large chambers. (Higgins, Tr. 1267-68).

Response to Finding No. 524:

Respondents have no specific response except to state that Matrix could become a 

competitor in the TVC market if CB&I's proposed remedy with respect to the TVC market is

implemented. (See FOF 6.99-6.121).

525. Matrix has not expended any significant resources on developing its capability to 

engineer and design TVCs. (JX 37 at 89-90 (Newmeister, Dep.)).

Response to Finding No. 525:

Respondents are not aware of any exhibit entered into evidence with the

designation JX 37. Otherwise, Respondents have no specific response to this finding.

9. Morse Constructors Can Not Replace PDM

526. Morse Constructors will not replace PDM. Morse is a "niche" player whose

ability to compete is restricted to the Northwest. (CX 1485 at MCG-03741 (CB&I assessment of 

Morse); see also CX 1484 at MCG-03746 (CB&I due diligence report)).

Response to Finding No. 526:

This finding is misleading and irrelevant because Respondents have maintained

that Morse is not a competitor in the LPG market. Instead, Morse demonstrates the ease of entry 

and lack of entry barriers in the LPG market. (See Opening Br. at 90-93).
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527. Morse has never built an LNG or LIN/LOX tank or a TVC in the United States. 

CCFF 136, 146, 151, 164, 192.

Response to Finding No. 527:

Respondents do not dispute the truth of this finding. However, Respondents

reassert their responses in RFOF 136, 146, 151, 164 and 192.

528. Morse built one LPG tank in Ferndale, Washington, in 1994, and Morse has not

constructed any low-temperature tank since 1994. (Maw, Tr. 6546-7) Morse also has not bid on 

another LPG tank, or any other relevant product, in the United States since 1994. (Maw, Tr.

6589).

Response to Finding No. 528:

Respondents do not dispute the truth of this finding. (FOF 4.73).

529. On November 30, 2001, Morse was acquired by CB&I. (Maw, Tr. 6545). As a 

result, "Morse [will] not compete against another arm of CB&I for an LPG tank." (Maw, Tr.

6661-62).

Response to Finding No. 529:

Respondents do not dispute the truth of this finding to the extent that the

testimony actually states: "Morse would not compete against another arm of CB&I for an LPG 

tank." (Maw, Tr. 6661-62).

10. Skanska/Whessoe Cannot Replace PDM

530. Skanska/Whessoe has significant competitive disadvantages that make it unlikely 

Skanska/Whessoe can replace PDM. Skanska/Whessoe has higher costs than PDM that hinder it 

from offering competitive prices on LNG projects. CCFF 135, 142, 442, 860, 870-880, 883,

903. Whessoe has a reputation for poor quality and reliability. CCFF 537-538, 542.

Response to Finding No. 530:

The proposed finding is factually misleading and incorrect. First, the proposed

finding fails to cite any evidence to support the assertion that Skanska/Whessoe has "significant 

competitive disadvantages" that make it unlikely that it will "replace PDM." In fact, the

evidence contradicts the proposed finding. Skanska/Whessoe has already entered the United
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States LNG market and is currently competing for several domestic projects. (See FOF 3.268-

3.273). For example, Dynegy recently selected Skanska/Whessoe as the EPC contractor for its

Hackberry, Louisiana LNG import terminal. (Puckett, Tr. 4547; see also FOF 3.268). Dynegy 

choose Skanska/Whessoe over Kvaerner, Technip, CB&I, Kellogg Brown & Root, and Bechtel. 

(Puckett, Tr. 4546; see also 3.264). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxx] (Jolly, Tr. 4691, 4760; see also FOF 3.268). Dynegy is "satisfied" with

Skanska/Whessoe's pricing. (Puckett, Tr. 4587-88; see also FOF 3.309).

The proposed finding is also misleading in regards to Skanska/Whessoe's cost

structure and reputation. First, Complaint Counsel failed to present any evidence regarding

Skanska/Whessoe's internal cost structure. Thus, the proposed finding's assertion that

Skanska/Whessoe has "higher costs" is not supported by the evidence. Second, United States

customers and LNG participants have clearly accepted Skanska/Whessoe. (See FOF 3.74-86). 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxx] (Jolly, Tr. 4700-01; see also 3.93).

531. Skanska/Whessoe has never built an LNG, LIN/LOX or LPG tank or TVC in the 

United States. CCFF 136, 146, 151, 164, 172, 180, 190.

Response to Finding No. 531:

The proposed finding is irrelevant given the fact that [xxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

(Jolly, Tr. 4683; see also FOF 3.162). Since the Acquisition, foreign companies have entered the 

United States market and competed for American LNG projects. (See generally FOF 3.68-73, 

3.109-22, 3.173-78, 3.200-03, 3.212-27). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 
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xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 4760; see 

also FOF 3.307). When completed, the Hackberry facility will be the largest LNG regasification 

facility in the United States. (Puckett, Tr. 4540; see also FOF 3.259).

532. The price quoted by Whessoe for the Memphis project in 1994 establishes that 

Whessoe's prices are substantially higher than Respondents LNG tank prices. CCFF 135, 953.

Response to Finding No. 532:

The proposed finding is misleading and factually incorrect because Whessoe's

portion of Lotepro's 1994 Memphis bid was insignificant. Lotepro, not Whessoe, was the bidder, 

and Noell Whessoe (Whessoe was then owned by Germany's Noell) refused to provide Lotepro a 

bid for the entire LNG tank and in fact was reluctant to participate at all. (Kistenmacher, Tr.

895; see also FOF 3.676). Instead, Whessoe only agreed to provide engineering in support of

Lotepro's LNG tank bid; Whessoe's portion accounted for only $1 million of Lotepro's $40

million total bid. (Kistenmacher, Tr. 900, 938-939; see also FOF 3.498). Lotepro found Titan 

Constructor to construct and erect the LNG tank; Titan Constructor's costs accounted for $14

million of Lotepro's total bid. (Kistenmacher, Tr. 900, 938; see also FOF 3.498). Whessoe had 

no involvement in the construction bid. (See Kistenmacher, Tr. 900, 938; see also FOF 3.498). 

Therefore, Whessoe's "price" for the 1994 Memphis project is not an accurate predictor of

Skanska/Whessoe's current costs. Whessoe only reluctantly provided its $1 million engineering 

quote to Lotepro. (Kistenmacher, Tr. 939-940; see also FOF 3.498). Further, Skanska did not 

acquire Whessoe until 2000, well after Whessoe provided the engineering quote to Lotepro. (RX 

770 at 33/49; see also FOF 3.57). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 4760; see also FOF 3.307).

533. The prices quoted by Whessoe to [xx] in 1998 show that Whessoe's prices are

substantially higher than Respondents' LNG tank prices. CCFF 870-878, 880, 883, 903.
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Response to Finding No. 533:

The proposed finding is misleading and irrelevant. First, the document relied

upon is from 1998, well before the Acquisition. Additionally, the document was created before 

Skanska acquired Whessoe in 2000. (RX 770 at 33/49; see also FOF 3.57). Further, testimony 

at trial contradicts the proposed finding. British Petroleum testified that it would include

Whessoe on a potential bidder list for LNG projects in the United States. (Sawchuck, Tr. 6062; 

see also FOF 3.78). This issue is addressed further in RFOF 870-878, 880, 883 and 903.

534. Since CB&I acquired PDM, the price quoted by Whessoe to Dynegy show that

Whessoe's prices are substantially higher than CB&I's LNG tank prices. CCFF 991, 1000-1001.

Response to Finding No. 534:

The proposed finding is misleading, incomplete and factually inaccurate because 

the record does not contain Whessoe's pricing to Dynegy. Complaint Counsel relies solely on

Mr. Price's concerns about the prices submitted to Dynegy. (See CCFF 1000). However, the

proposed finding fails to account for the following facts: Mr. Price is a head-to-head competitor 

of CB&I; Mr. Price did not see the Dynegy bids; and Mr. Price failed to express his concerns to 

his client, Dynegy. (Price, Tr. 610, 641, 667; see also FOF 3.659, 660, 664). Mr. Price's

"concerns" are further undercut by the fact that Black & Veatch failed to solicit a budget price 

for the Dynegy project from CB&I. (Price, Tr. 603-04; see also FOF 3.661). If Mr. Price was so 

"concerned" with Whessoe's pricing, why wouldn't he obtain an alternate budget price from

CB&I? Mr. Price testified that it was just "natural" to obtain a budget price from Whessoe. 

(Price, Tr. 603-04; see also FOF 3.661). The only relevant evidence regarding Whessoe's

ultimate firm fixed bid pricing to Dynegy is Mr. Puckett's testimony that Dynegy was satisfied 

with the bids it received. (Puckett, Tr. 4587-88; see also FOF 3.309). [xxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 
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xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 4691, 4760; see also

FOF 3.268).

535. Since CB&I acquired PDM, the price quoted by Skanska/Whessoe to CMS

energy for an LNG tank was [xxxxxxx] than the price submitted by CB&I. ([xxxxx], Tr. 6285, 

in camera).

Response to Finding No. 535:

The proposed finding is misleading, incomplete and factually inaccurate because 

it compares [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (J. Kelly, Tr. 

6284; see also FOF 3.473). It is well established that budget pricing does not have any bearing 

on the ultimate competitiveness of firm fixed bids. (See FOF 7.1-7.38). Thus, Complaint 

Counsel is comparing apples to oranges from which it cannot draw meaningful conclusions. 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (J. Kelly, Tr. 6292; see also

3.973). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxx] (J. Kelly, Tr. 6293) (see also FOF 3.974). The proposed finding fails to

account for the fact that CMS Energy [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxx] (J. Kelly, Tr. 6285; FOF 3.474).

536. Whessoe, the LNG tank building firm Skanska purchased, has a spotty record

constructing LNG facilities. CB&I was chosen over Whessoe for an additional fourth tank on an 

LNG tank project managed by Enron in Dabhol, India due to concerns about Whessoe's ability to 

timely complete the original three tanks. (CX 301 at CB&I/PDM-H4002566).

Response to Finding No. 536:

The proposed finding is incomplete, misleading, factually inaccurate and lacks

evidentiary support. Overwhelming evidence has established Whessoe's currently strong

reputation. (See FOF 3.74-3.86, 3.93-3.98). As for the Dabhol project, a former Enron
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executive testified that Enron thought Whessoe's work was "excellent"; Enron was pleased with 

Whessoe's performance on the project. (Carling, Tr. 4459-60, 4464-65; see also FOF 3.91). 

Mr. Izzo concurred with Mr. Carling's opinion and testified that Whessoe finished the Dabhol

project successfully and completed the first LNG tank in 28 months, "probably a record for a

tank of that size." (Izzo, Tr. 6487; see also FOF 3.92).

537. Dr. Simpson viewed Whessoe's experience building three LNG tanks in Dabhol, 

India as a negative for Whessoe. (Simpson, Tr. 5751). Dr. Simpson testified: "[J]ust because a 

project ends up turning out okay doesn't necessarily mean that a company's performance on it 

was good. The fact that Enron had to assign some of its own people to it and had to kind of

sweat out the project for a while I think would be a negative for Whessoe." (Simpson, Tr. 5751).

Response to Finding No. 537:

Complaint Counsel is indeed correct that Dr. Simpson gave this testimony. 

However, Complaint Counsel failed to note the following: (i) Mr. Carling ultimately testified

that he now believes Skanska/Whessoe has a good reputation; and (ii) Enron viewed the need to 

assign extra engineers as its own problem. Dr. Simpson has no foundation for his statement and 

it is contradicted by the record. First, Dr. Simpson cited to Mr. Carling’s deposition testimony 

regarding Whessoe to suggest that Whessoe has a poor current reputation for building LNG

tanks, even though Mr. Carling testified that the problem Enron had at the Dabhol, India project 

was related to Kvaerner, not Whessoe, and that Whessoe, under the ownership of Skanska, is a 

very professional organization. (Simpson, Tr. 3639-50; see also FOF 7.209). Nonetheless, Dr. 

Simpson did not tell the court that Mr. Carling actually views Whessoe has having a good

reputation. (Simpson, Tr. 3648-49; see also FOF 7.209). Second, in regards to assigning more 

engineers to the Dabhol project, Mr. Carling testified that "that was more the fault of then Enron 

management to only put in two people to supervise the contractor." (Carling, Tr. 4507). Neither 

Dr. Simpson, when confronted with adverse facts during cross-examination, nor the proposed

finding accounts for these very important facts.
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The proposed finding also fails to account for the fact that Enron's Dabhol project 

occurred well before Skanska acquired Whessoe; Kvaerner/Whessoe was ultimately the

contractor Enron used for the Dabhol project. (Izzo, Tr. 6486; see also FOF 3.89). Additionally, 

Skanska/Whessoe has a fine reputation among current United States LNG customers and market 

participants. ((See FOF 3.74-3.86). For example, Dynegy selected Skanska/Whessoe as its EPC 

contract based partially on Whessoe's experience on the Dabhol, India project. (Puckett, Tr.

4548-49; see also FOF 3.272). While investigating Skanska/Whessoe's background and

experience, Dynegy learned that Whessoe performed the Dabhol, India project in a satisfactory

manner. (Puckett, Tr. 4565; see also FOF 3.272).

538. On the Atlantic LNG project in Trinidad, Bechtel precluded Whessoe from

bidding on the last of three LNG tanks, although Whessoe had built the first two tanks, citing

Whessoe's poor performance during the construction of the first two tanks. (JX 32 at 57-58 

(Rapp, Dep.)). "Whessoe did not perform at all well in Trinidad, and Bechtel had to provide 

substantial project management support." (CX 693 at [xxx] 01 028).

Response to Finding No. 538:

The proposed finding is misleading for several reasons. First, Mr. Rapp testified 

that Bechtel is satisfied that the tanks Whessoe built in Trinidad are "well-constructed" (Rapp, 

Tr. 1332-33; see also FOF 3.82). Mr. Rapp testified that he did not have personal knowledge

about Whessoe's performance constructing the first two LNG tanks in Trinidad (Rapp, Tr.

1291). Mr. Rapp only heard about Whessoe's performance from second and third-hand sources. 

(Rapp, Tr. 1291). Second, Mr. Rapp testified that he believes Whessoe is able to competitively 

pursue LNG jobs in the United States. (Rapp, Tr. 1326-27; see also 3.82). Third, Skanska had 

not yet acquired Whessoe when Bechtel awarded Whessoe the Trinidad project. (CX 693 at

[xxx] 01 028). Skanska's acquisition of Whessoe created a "formidable pair." (Scorsone, Tr.

4864; see also FOF 3.96).
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539. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 135 at CB&I 009268-HOU, in camera).

Response to Finding No. 539:

The proposed finding is not remotely supported by the evidence because it

erroneously quotes language that does not appear in the cited document. The quotations

provided in the proposed finding do not appear in the cited document. (See CX 135). In fact, the 

record that is in evidence contradicts the proposed finding. Bechtel is satisfied that the LNG

tanks Whessoe built in Trinidad are "well-constructed" (Rapp, Tr. 1332-33; see also FOF 3.82). 

Further, Bechtel believes that Whessoe is able to competitively pursue LNG jobs in the United 

States. (Rapp, Tr. 1326-27; see also 3.82). Other United States LNG customers and industry

participants also have a favorable view of Skanska/Whessoe's reputation. (See FOF 3.74-3.86).

540. Only CB&I and PDM submitted bids for the third LNG tank for an expansion of 

the Atlantic LNG expansion in Trinidad. (JX 32 at 57-58 (Rapp Dep.)).

Response to Finding No. 540:

The proposed finding is not supported by the evidence. The evidence cited does

not even allude to the "fact" provided in the proposed finding. (See Rapp, Tr. 1290-92). 

Therefore, Complaint Counsel has failed to cite any evidence supporting the proposition that

CB&I and PDM were the only bidders for the third LNG tank in Trinidad.

541. PDM noted Whessoe's historically poor performance in communications with

consultants. In August 1999, Luke Scorsone wrote that he expected a potential customer,

Unocal, to look favorably upon PDM relative to Whessoe on a project, "given that Noell

Whessoe has performed poorly at Trinidad and Dabhol." (CX 115 at PDM-HOU017554). Dr. 

Simpson testified: "The record indicates that one customer, Bechtel, is not willing to consider 

them (Skanska); indicates that they've had problems in the past. The competitors of Whessoe are 

knowledgeable about these problems, and these competitors have an incentive to share the

information about Whessoe's poor record with customers, as is indicated by that e-mail from 

Sam Kumar." (Simpson, Tr. 3329).
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Response to Finding No. 541:

The proposed finding is misleading and irrelevant because regardless of what

PDM wrote in 1999 or what Dr. Simpson presently believes, current United States LNG

customers and market participants consider Skanska/Whessoe's reputation excellent. (See FOF 

3.74-3.86). Further, Dr. Simpson's opinion fails to account for the fact that Enron and Bechtel

both considered Whessoe's performance to be very good during the Dabhol and Trinidad

projects. (Carling, Tr. 4459-60, 4464-65; Rapp, Tr. 1332-33; see also FOF 3.82, FOF 3.91 ).

11. [xxxxxxxxxxxxxxxxx] Cannot Replace PDM

542. The joint venture formed between [xxxxxxxxxxxx] and [xxxxxxxxxxxxxxxxxxx]

to compete on LNG project is unlikely to replace PDM. [xxxxxxxxxxxx] is not capable of

competing against CB&I for the majority of CB&I's domestic LNG work: single-containment 

tanks. CCFF 547. [xxxxxxxxxxxxxxx] also lacks the experience and the local knowledge that

CB&I possesses and PDM possessed. CCFF 376. In fact, [xxxxxxxxxxxx] avoids competing 

with CB&I for U.S. projects, and does not bid on projects in direct competition with CB&I. 

CCFF 554-555.

Response to Finding No. 542:

The proposed finding is misleading and factually incorrect because it ignores the 

current trend in the United States toward double and full containment construction. (See FOF

3.11-3.14). Most of the new LNG projects currently under consideration in the United States are 

requiring the use of double or full containment tanks. (Puckett, Tr. 4541-42; Scorsone, Tr. 4988; 

Eyermann, Tr. 6968; RX 185, at TWC000006; see also FOF 3.12). The proposed finding's

broad conclusions are belied by the evidence. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxx] (See FOF 3.162, 3.163, 3.164). Technigaz/Zachry has already entered the U.S. LNG 

market and has been accepted by LNG customers. (See FOF 3.173-3.186). Moreover, the

proposed finding incorrectly states that Technigaz-Zachry avoids competing with CB&I. This is 

patently false. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 
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xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (See FOF 3.174-3.177).

543. [xxxxxxxx] has never built an LNG, LPG or LIN/LOX tank or a TVC in the

United States. CCFF 136, 146, 172, 180, 192.

Response to Finding No. 543:

CB&I has no specific response.

544. The press release announcing the Technigaz/Zachry partnership states only that

the partnership will pursue LNG projects and makes no mention of the other relevant products. 

(RX 35).

Response to Finding No. 544:

CB&I has no specific response.

545. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxx], Tr. 3290-1 (citing in camera

documents). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (Id.)

Response to Finding No. 545:

The proposed finding is irrelevant and misleading. Dr. Simpson's opinions about 

Technigaz/Zachry's ability to compete in the United States are contradicted by evidence from

current LNG customers and market participants. (See FOF 3.179-3.194). [xxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxx] (Fahel, Tr. 1684-85; see also FOF 3.173). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (Jolly, Tr. 4764-65; see also

FOF 3.178). Dr. Simpson was unable to account for any of these significant facts.

546. [xxxxxxxx] admits it is not capable of competing against CB&I for single

containment tanks. ([xxxxxx], Tr. 4725, in camera). [xxxxxx], Vice President of Marketing of 

[xxxxxxxxxxxxxxxxxxx], testified it is likely that CB&I would have a large advantage over

[xxxxxxx] for single-containment LNG tanks. ([xxxx]], Tr. 4711, in camera).
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Response to Finding No. 546:

The proposed finding is misleading, incomplete and irrelevant because it fails to 

account for the fact that the United States LNG market is trending toward double and full

containment tanks. (See FOF 3.11-3.14). Most of the new LNG projects currently under

consideration in the United States are requiring the use of double or full containment tanks. 

(Puckett, Tr. 4541-42; Scorsone, Tr. 4988; Eyermann, Tr. 6968; RX 185, at TWC000006; see 

also FOF 3.12). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] 

(Jolly, Tr. 4693-94; see also FOF 3.163). Thus, Technigaz/Zachry's ability to compete for single 

containment tanks is irrelevant because owners are requiring double and full containment tanks. 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 4693-94; see also FOF 3.163).

547. [xxxxxx]'s expertise is in concrete construction. ([xxxxx], Tr. 1645-46; [xxx], Tr. 

4707, in camera). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxx], Tr. 1645-6, in camera). 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxx]. ([xxx], Tr. 4724-25, in camera).

Response to Finding No. 547:

The proposed finding is incomplete and inaccurate. [xxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxx] (See CCFF 547 (emphasis added); Jolly, Tr. 4724-25). [xxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 4724-25). The 

proposed finding is also inaccurate in that [xxxxxxxx] never stated that [xxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

548. [xxxxxxxx] does not have a sense of the cost of building LNG tanks in the U.S. 

([xxx], Tr. 4755-56, in camera).
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Response to Finding No. 548:

The proposed finding is misleading and inaccurate because it fails to account for 

[xxxxxxxxxxx] vast worldwide LNG experience. [xxxxxxx] currently has eight full containment 

LNG tanks under construction around the world. ([xxxxxxxxxx]; see also FOF 3.150). Contrary 

to the proposed finding, [xxxxxxxxxxxx] has a sense of the costs of building an LNG tank. [xxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (See CCFF 548; Jolly, Tr. 4755-56). This testimony

cannot be accurately extrapolated into Complaint Counsel's proposed finding that [Technigaz]

"does not have a sense of the cost of building LNG tanks in the U.S."

549. [xxxxxxx] added that CB&I would have an advantage in fabrication and erection 

of inner 9% nickels tank for even a full containment tank. ([xxxxxxx], Tr. 4721, in camera). 

[xxxxxx] employees do not have experience in welding nine percent nickel steel. ([xxxxx], Tr. 

1629, in camera).

Response to Finding No. 549:

The proposed finding misrepresents [xxxxxxxxxx] testimony. [xxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, 4721-22; 

see also FOF 3.564). Additionally, it has been well established that fabrication and field erection 

are not barriers to entry. (See FOF 3.550-3.564). [xxxxxxxx] lack of specific nine percent nickel 

steel welding experience is also irrelevant as nine percent nickel steel welders use the exact same 

processes and techniques that carbon steel welders use. (Rano, Tr. 5872-73; see also FOF 3.532. 

Welding skills are not a barrier to entry. (See FOF 3.528-3.540).

550. To compete for LNG projects, [xxxx] would need to acquire specialized

equipment relating to welding, cranes, testing and installation equipment for insulation, all at a

significant cost. ([xxxx], Tr. 1640-41, in camera).
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Response to Finding No. 550:

The proposed finding is inaccurate because CB&I also rents some of the

necessary LNG erection equipment. (Scorsone, Tr. 4897; see also FOF 3.38). [xxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 

4721).

551. [xxxxxx] of [xxxxxx] testified that [xxxxxxxxxxxxxxxx] would have to depend

on less experienced field crews than those to which CB&I has access in the United States. 

([xxxxx], Tr. 4713, in camera).

Response to Finding No. 551:

The proposed finding is misleading and factually inaccurate. The cited evidence 

does not support the proposed finding. [xxxxxxxxxx] did not testify that [xxxxxxxxxxxxxx] 

would have to depend on less experienced field crews than CB&I. (See CCFF 551; [xxxxx], Tr. 

4713). Contrary to the proposed finding, field crews are migratory, hired on a job-by-job basis 

and able to work for any company that needs them. (Glenn, Tr. 4119-20; Rano, Tr. 5917-18, 

5952-53; see also FOF 3.550). Therefore, the lack of experienced local labor/workforce is not a 

barrier to entry. (See FOF 3.550-3.559).

552. [xxxxxxxx], who had been closely involved in establishing the partnership

between [xxxxxxx] and [xxxxxxxx], testified that [xxxxxxxxxxxx] plans to pursue LNG

projects selectively, with the first criteria being who will be competing against [xxxxxxxxx] 

([xxxxxx], Tr. 1672-73, in camera; see also [xxx], Tr. 4750, in camera).

Response to Finding No. 552:

The proposed finding is misleading and factually incorrect because [xxxxxxxxx]

did not testify that [xxxxxxxxxxxxxx] "first criteria" in pursing an LNG project was the

competition. (See CCFF 552; [xxxxx], Tr. 1672-73). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] 

[xxxxx], Tr. 1672-73). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 
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xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (See FOF 3.174-3.177).

553. [xxxxxxxxx] has chosen not to bid on recent projects where CB&I is also a

bidder. [xxxxxxxxxxxxxxx] chose not to bid against CB&I for an LNG project in [xxxxxxxx 

xxxx] because "the [xxxxxx] part' of the joint venture believed that "CB&I would know more

about how to construct that project than we could and that CB&I may be more equipped to

perform that project than we would." ([xxx], Tr. 1653-54, in camera). [xxxxxxxxxxxxxxx]

bowed out of the bidding process, citing that labor and construction issues would make the work 

"very difficult to perform." ([xxx], Tr. 1652-53, in camera).

Response to Finding No. 553:

The proposed finding is incomplete and misleading. For example, [xxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Fahel, Tr. 1653). [xxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (See FOF 3.334,

3.335). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 

4698; see also 3.335). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (See FOF 3.174-3.177).

554. [xxxxxxxxxxxxxx] also chose not to bid against CB&I on either [xxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxx]. (See [xxxxxx] Tr. 1659, in camera; [xxxxx], Tr. 4749, in camera).

Response to Finding No. 554:

The proposed finding is incomplete and misleading. The proposed finding is

incorrect regarding the factors behind [xxxxxxxxxxxxxxxxxx] decision not to bid on Enron's

Bahamas and Elba Island projects and El Paso's Rosarito project. [xxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Fahel, Tr. 1659). [xxxxxxxxxxxxxxxx 
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xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Fahel, Tr. 1659; Jolly,

Tr. 4749). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 4749-50).

555. In [xxxxxxxxxxxx], [xxxxxxxxxxxxxx] submitting a price for LNG tanks to

[xxxxxx] but was eliminated from the field because its price was substantially higher than

Whessoe and TKK. ([xxx], Tr. 4690-91 ([xxx] told us to "sharpen our pencil to be more

competitive next time"). CCFF 1003. This means that on the [xxxxxxxxxxxxxxxxxxxx] project, 

[xxxxxxxxxxxxxxx] was less competitive on price than Whessoe and TKK, and would have been 

even less competitive than CB&I [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx].

Response to Finding No. 555:

The proposed finding is factually inaccurate because [xxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxx] (Jolly, Tr. 4691). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 

4691). Further, the proposition that [xxxxxxxxxxxxxxxx] "would have been even less

competitive than CB&I" is absolute speculation that is wholly unsupported by the record. 

Complaint Counsel cannot possibly know the numbers associated with a bid that CB&I did not 

make; Complaint Counsel failed to present any evidence about [xxxxxxxxxxxxxxx] bid price to 

Dynegy.

556. [xxxxxxxx] testified that [xxxxxxx] will stop competing for LNG projects in the 

United States if it is not successful after 3-5 bids. ([xxxxxx], Tr. 4752-53 (in camera)).

Response to Finding No. 556:

The proposed finding is incomplete and misleading because [xxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly Tr., 4685, 4690; see also FOF 3.166; 3.173). 
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Thus, a decade or more could pass before [xxxxxxxxxxxxxxx] submits three to five bids on U.S. 

projects.

12. TKK Cannot Replace PDM

557. TKK, a Japanese LNG tank builder, has teamed with AT&V to supply LNG tanks 

in the United States. (Cutts, Tr. 2437-38). Pursuant to this partnership, AT&V will supply the 

field labor for the erection of the LNG tank and share some of the responsibility for estimating 

the costs of the project. (Cutts, Tr. 2327-8).

Response to Finding No. 557:

CB&I has no specific response.

558. TKK will "carry the lead responsibility" for engineering and design of the LNG

tank. (Cutts, Tr. 2327). TKK will train AT&V employees on how to construct LNG tanks,

including the use of TKK's welding equipment. (Cutts, Tr. 2379). Mr. Cutts anticipates that the 

newly trained AT&V employees will need several years of experience constructing LNG tanks

before they work as efficiently as experienced CB&I employees. (Cutts Tr., 2379-80).

Response to Finding No. 558:

The proposed finding mischaracterizes Mr. Cutts' testimony as he testified that

AT&V employees will need only a "few" years (not "several") of experience before becoming as 

experienced as CB&I. (Cutts, Tr. 2379-80).

559. Although it has bid on LNG projects, TKK has never built an LNG, LPG,

LIN/LOX tank or TVC in the United States. CCFF 136, 146, 172, 180, 192.

Response to Finding No. 559:

Respondents have no specific response.

560. Based on the prices submitted for the Memphis LNG project, CB&I and PDM

have as much as a 59% cost advantage over TKK for U.S. LNG projects. CCFF 952.

Response to Finding No. 560:

The proposed finding is inaccurate, misleading, irrelevant, and is not supported by 

the evidence. Complaint Counsel fails to cite a single piece of evidence in its proposed finding, 

or CCFF 952, showing that CB&I and PDM had a 59% cost advantage over TKK. Further, the 
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pricing submitted for the Memphis project is irrelevant because the bid process occurred in 1994, 

almost nine years ago. (Scorsone, Tr. 5013-14) (FOF 3.507). Black & Veatch submitted a tank 

price for the Memphis project, using TKK's tank design. (RX 888) (FOF 3.502). TKK's design, 

however, accounted for less than 25% of Black & Veatch's tank price. (RX 888) (FOF 3.502). 

The remaining costs of Black & Veatch's quoted tank price were attributed to Graver Tank. (RX 

888) (FOF 3.502). Thus, it is misleading, and inaccurate for Complaint Counsel to compare

CB&I's and PDM prices to a tank price Black & Veatch sumbitted that incorporated TKK's

design. TKK's correct pricing abilities are shown by its Dynegy bid, which the customer was

satisfied with, and its bid in Trinidad which is a natural experiment simulating TKK's ability to 

price in the U.S. (Puckett, Tr. 4559-60; Harris, Tr. 7351) (FOF 3.304, 7.103).

561. On the Dynegy project, CB&I's price for LNG tanks (had it submitted such

pricing information) would have been substantially below TKK's prices. CCFF 996-997.

Response to Finding No. 561:

The proposed finding is misleading, speculative, and unsupported by the

evidence. While CB&I never submitted a tank price for the Dynegy project, TKK submitted a

bid that met Dynegy's technical expectations and fell within Dynegy's expected price range. 

(Puckett, Tr. 4556-57) (FOF 3.287-3.288). Obviously, Dynegy does not agree with this finding 

or it would have let CB&I bid. (Puckett, Tr. 4559-60; Glenn, Tr. 4137) (FOF 3.304, 3.305). 

Complaint Counsel's proposed finding is purely speculative, as there is no evidence suggesting 

that CB&I's price would have been higher than TKK's bid.

562. TKK considers the United States to be "one of the most difficult if not the most

difficult" countries in which to operate. (Cutts, Tr. 2340). TKK views forming a corporation, 

complying with tax laws, OSHA regulations and environmental regulations as overly

burdensome and a barrier to entry into the U.S. market. (Cutts, Tr. 2339-40). TKK is "cautious" 

about supplying LNG tanks in the United States because it "does not find the atmosphere in

America to be a user-friendly atmosphere." (Cutts, Tr. 2329-30).
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Response to Finding No. 562:

The proposed finding is misleading. TKK has entered the U.S. LNG market

despite any of the alleged difficulties operating in the U.S. (FOF 3.109-3.122). Further, TKK

has partnered with AT&V to help it overcome its unfamiliarity with the U.S. (FOF 3.105).

563. The success of the joint venture between TKK and AT&V will depend to a

significant extent on the capabilities of AT&V, the local contractor. (Carling, Tr. 4521). "[T]he 

number one barrier to entry" in the LNG market is the customer's "attitude or appreciation for

what you've built in the past and/or what you build in the future." (Cutts, Tr. 2344).

Response to Finding No. 563:

Respondents have no specific response.

564. AT&V has experienced construction problems and delays on recent projects for

other customers that have damaged its reputation. CCFF 473-475; 480-481.

Response to Finding No. 564:

The proposed finding is misleading and mischaracterizes the evidence. (RFOF

473-475; RFOF 480-481). Current LNG customers including Dynegy, Calpine, and Freeport

LNG, agree that AT&V has the reputation necessary to build LNG tanks in the U.S. (Puckett,

Tr. 4557-58, 4584-85; Izzo, Tr. 6499, 6536; Eyermann, Tr. 7001-02) (FOF 3.123-3.130).

565. Linde believes the TKK/ATV partnership creates an unacceptable level of risk for 

TKK as AT&V's partner for LNG projects. (Kistenmacher, Tr. 905). (See Carling, Tr. 4522-3) 

(to assess capabilities of AT&V, would examine its track record on similar projects).

Response to Finding No. 565:

The proposed finding is inaccurate and grossly misleading. Mr. Kistenmacher

never testified that AT&V creates a risk for TKK. BOC, which now owns Linde, has awarded 

two LIN/LOX tank projects to AT&V since the acquisition. (Kistenmacher, Tr. 921-22 ; V.

Kelley, Tr. 4599, 5291-92; Scorsone, Tr. 5024; RX 273; RX 813) (FOF 5.87, 5.116, 5.181). 

BOC "was quite satisfied [with AT&V] in all aspects." (V. Kelley, Tr. 5287) (FOF 5.108).
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566. Dr. Simpson believes that the TKK/ATV partnership is not sufficient to restore

the pre-acquisition level of competition. (Simpson, Tr. 3288-9). According to Dr. Simpson, the 

results of the bidding for an LNG tank project for Memphis Light, Gas & Water indicate that a

partnership of TKK and Graver Tank was not competitive. (Simpson, Tr. 3290). Dr. Simpson 

noted that ATV has less experience than Graver did. (Simpson, Tr. 3290).

Response to Finding No. 566:

The proposed finding is not supported by the evidence. There is no record

evidence which supports Dr. Simpson's speculation that AT&V has less experience than Graver. 

In fact, AT&V employs many ex-CB&I workers, and several employees of AT&V have

experience building LNG tanks in the U.S.. (Carling, Tr. 4489; Cutts, Tr. 2463) (FOF 3.108,

3.127). There is no evidence that TKK and Graver formed a partnership for the Memphis

project; rather "TKK clearly came in on a one-shot deal in 1994 to work with" Black & Veatch 

on the project. (Price, Tr. 650) (FOF 3.508). Mr. Carling testified that TKK's prices for LNG

tanks in the U.S. will be competitive to the level of PDM's prices. (Carling, Tr. 4519). (FOF 

3.127).

13. XL Technologies Cannot Replace PDM

567. XL Technology Systems ("XL Technologies") was created in 1995 by Ronald

Scully to produce thermal vacuum systems for satellites (Scully, Tr. 1113). CB&I bought the

company in 1999 and changed its name to XL Technology Systems, Inc. (Scully, Tr. 1113).

CB&I sold the company back to Mr. Scully in 2002. (Scully, Tr. 1113).

Response to Finding No. 567:

Respondents have no specific response to this finding, except that XL does not

produce thermal vacuum systems for satellites. Rather, XL builds thermal vacuum systems for 

TVC's. (See generally RFOF 6.1-6.10).

568. XL Technologies has never built an LNG, LIN/LOX or LPG tank in the United 

States. CCFF 136, 146, 172, 180, 192.

Response to Finding No. 568:

Respondents have no specific response.
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569. XL Technologies admits that it is not capable of supplying a TVC without

partnering with an experienced chamber supplier such as CB&I. (Scully, Tr. 1118, 1134, 1252;

see CX 262 at CB&I-H004037).

Response to Finding No. 569:

Respondents have no specific response.

570. On February 28, 2002, CB&I sold its XL Technologies subsidiary to Mr. Scully. 

(Scully, Tr. 1130). CB&I did not transfer to XL Technologies the assets, engineering knowhow, equipment or personnel necessary to the field-erection of large TVCs. (Scully, Tr. 1133).

Response to Finding No. 570:

Respondents have no specific response.

L. CB&I's Market Power Extends to All Types of LNG Tanks

571. Respondents argue that a "trend" towards full-containment tanks will enable

foreign firms, skilled in building concrete structures, and will erode CB&I's market share and

market power. This argument is specious for at least two reasons. First, there is no evidence

from FERC – the regulatory agency that decides why types of LNG tanks must be built – that it 

has mandated a "trend" towards full-containment tanks. CCFF 574. Second, Respondents have 

as much experience in constructing full-containment tanks as any other firm, and has localized 

competitive advantages against these firms in the United States. CCFF 358, 377-378 . The

recent record of CB&I success in negotiations for full-containment tanks in the United States

underscores these competitive advantages. CCFF 578, 585, 586.

Response to Finding No. 571:

The proposed finding is argumentative, unsupported by the evidence and not an

appropriate "finding of fact." While FERC has not yet mandated the use of double or full

containment LNG tanks, it is apparent from customer testimony and recent project

announcements that owners are trending toward these tank designs. (See FOF 3.12). Dynegy, 

Williams Energy and Freeport LNG, and most of the other new LNG projects currently under 

consideration in the United States are requiring the use of double or full containment tanks. 

(Puckett, Tr. 4541-42; Scorsone, Tr. 4988; Eyermann, Tr. 6968; RX 185, at TWC000006; see 

also FOF 3.12). Further, CB&I has far less experience constructing double and full containment 

LNG tanks than its competitors. For example, Technigaz, is currently constructing eight full
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containment LNG tanks worldwide, [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 4689; see also FOF 3.151). [xxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 4700-01; see also FOF 3.93).

572. Full-containment tanks are more likely to be used "[i]f you are closer to

population in more of an urban setting or close to an urban setting, full-containment typically is 

used just for the extra bit of safety it has." (Bryngelson, Tr. 6133).

Response to Finding No. 572:

The proposed finding is incomplete because LNG customers have also indicated 

that the "enhanced value" of double containment may be greater than the additional cost. (Cutts, 

Tr. 2501; see also FOF 3.12). Customers also view full and double containment tanks as safer 

than single-containment tanks. (Glenn, Tr. 4112-13; Hall, Tr. 1842-43; see also FOF 3.12). 

Further, an owner can site a double and full containment LNG tank on a smaller piece of

property than it could for a single containment tank in order to comply with federal laws relating 

to vapor dispersion and thermal radiation in the event of a spill. (Scorsone, Tr. 4922; see also

FOF 3.11).

573. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxx]. (RX 157 at BP 02 004; CX 124 at PDM-HOU2011156; CX 1075 at CB&I-001240-PLA; 

CX 1161 at CB&I/PDM-H4008131-133, in camera; JX 23a at 89 [xxxxxxxxxx], in camera; 

[xxxxx], Tr. 4724-25, in camera).

Response to Finding No. 573:

Respondents have no specific response.

574. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxx], Tr. 697-98, 727-28, in camera; Bryngelson, Tr. 6133). Respondents presented 

no evidence from FERC that there is a "trend" toward full-containment LNG tanks in the United 

States.
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Response to Finding No. 574:

The proposed finding is irrelevant because it ignores the fact that most of the new 

LNG projects currently under consideration in the United States are requiring the use of double 

or full containment tanks. (Puckett, Tr. 4541-42; Scorsone, Tr. 4988; Eyermann, Tr. 6968; RX 

185, at TWC000006; see also FOF 3.12). While FERC has not yet mandated the use of double 

or full containment LNG tanks, it is apparent from customer testimony and recent project

announcements that owners are trending toward these tank designs. (See FOF 3.12). Owners are 

choosing double and full containment LNG tanks because they are safer, which is particularly

important given recent terrorist concerns, and because owners are able to construct these tank

types on smaller parcels of land. (See FOF 3.11, 3.12, 3.13). It is difficult for an owner to find a 

large enough site to accommodate a single containment LNG tank. (Eyermann, Tr. 7054-55; see 

also FOF 3.387).

575. Given a choice, customers will seek the lowest-cost LNG tank to build. (Izzo, Tr. 

6523; Kelly, Tr. 6260, 6274-75).

Response to Finding No. 575:

The proposed finding is misleading and incomplete because it ignores the fact that 

owners also consider safety and siting concerns when selecting an LNG tank type. (See FOF

3.10, 3.12).

576. CMS Energy, which may shortly begin construction of an LNG tank facility in

Louisiana, has received approval for a single-containment tank. (J. Kelly, Tr. 6260, 6271). 

CB&I will construct the LNG tank for CMS Energy. (Kelly, Tr. 6260).

Response to Finding No. 576:

The proposed finding is misleading, incomplete and factually inaccurate. CMS 

Energy is an exception to the recent trend because it is a one tank expansion of an existing

facility. (Eyermann, Tr. 7054; see also FOF 3.14). Unlike a new facility, the CMS expansion
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project will construct an LNG tank on a site that already contains numerous single containment 

LNG tanks. (Eyermann, Tr. 7054; see also FOF 3.14). Thus, CMS is allowed to build an

additional single containment tank because the new construction is "grandfathered". (Eyermann, 

Tr. 7054; see also FOF 3.14). An owner constructing a new LNG facility would have a difficult 

time finding a large enough site to accommodate a single containment tank. (Eyermann, Tr.

7054-55; see also FOF 3.387).

577. The Dynegy project will consist of a full-containment tank. (Puckett, Tr. 4541). 

CB&I repeatedly refused to quote a price unless it was awarded the project on a turnkey basis, 

and ultimately Dynegy did not accept CB&I's price quote because it was submitted too late in the 

bidding process. CCFF 996.

Response to Finding No. 577:

The proposed finding is misleading and factually inaccurate. First, Dynegy's

Hackberry LNG import terminal will include three full containment tanks, not one full

containment tank. (Puckett, Tr. 4539-40; see also FOF 3.256). Second, the proposed finding

oversimplifies and misstates the facts surrounding CB&I's initial decision not to bid on the tank 

portion of the Dynegy project. The fact that CB&I initially chose not to bid on the project based 

on its concerns about submitting its pricing and designs to Black & Veatch, a competitor and

partner of one of the bidders, is uncontroverted. (See FOF 3.297-3.306). Ultimately, CB&I

decided to submit a bid and Dynegy refused to accept it. (See FOF 3.303, 3.304). The proposed 

finding ignores the fact that one of the reasons Dynegy would not accept CB&I's bid was

because it was satisfied with the bids it received from Skanska/Whessoe, TKK/AT&V and

Technigaz/Zachry. (See FOF 3.304, 3.305).

578. [xxx] is likely to purchase a full-containment tank for an upcoming project. (JX 

31 at 74 ([xxxxxxx] Dep.)). [xx] has decided to negotiate for sole-source agreements with CB&I 

for this and two other pending LNG projects in the United States. (Glenn, Tr. 4180).
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Response to Finding No. 578:

The proposed finding is factually inaccurate and misleading because it fails to cite 

evidence supporting its contention that [xxxx] decided to negotiate sole-source agreements with 

CB&I for three LNG projects. To the contrary, CB&I does not have a contract or a notice to

proceed for any [xxxx] LNG project in the United States. (Glenn, Tr. 4180). [xx] has, however, 

decided to work with CB&I on the front end development of these projects. (Glenn, Tr. 4180). 

If BP is satisfied with CB&I's pricing, schedule and terms and if the projects move forward, [xx]

has indicated that CB&I will be awarded those jobs. (Glenn, Tr. 47180). If [xxx] can not reach 

an agreement with CB&I, it is prepared to explore other options with other contractors. 

(Scorsone, Tr. 4995; see also FOF 3.413). It is not accurate to portray this procedure as agreeing 

"to negotiate for sole-source agreements." (See CCFF 578).

579. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 758 at CB&I-PL031543-59, in camera; CX 145 at 

PDM-S 001430-431).

Response to Finding No. 579:

The proposed finding is incomplete and misleading to the extent that it implies

that CB&I is more qualified to build double and full containment tanks than other competitors. 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxx] (Jolly, Tr. 4732; see also FOF 3.150). [xxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 4689; see also FOF 

3.151). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 4700-01; see also FOF 3.93). For a 

double or full containment tank, CB&I would subcontract the foundation work to a company

with an expertise in concrete work because concrete work is not a "core competency" of CB&I. 

(Rano, Tr. 5920-21; see also FOF 3.43). Further, in regards to double and full containment
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tanks, CB&I has never self-performed the construction of concrete walls for field-erected LNG 

tanks. (Rano, Tr. 5923; see also FOF 3.45).

580. Dr. Simpson testified that he believes that an independent PDM would be a strong 

competitor for full-containment LNG tanks in the U.S. Dr. Simpson based this on the fact that 

PDM had built full-containment LNG tanks overseas. (CX 145 at PDM-S 001430-001431). 

According to Dr. Simpson, if PDM could compete on an equal footing in other parts of the

world, they should have an advantage in the U.S. where they know the regulatory environment, 

the subcontractors, and the work force. Dr. Simpson also noted that PDM had built a doublecontainment LNG tank in Puerto Rico. (Simpson, Tr. 3350).

Response to Finding No. 580:

The proposed finding is misleading, speculative and lacking evidentiary support. 

Despite Dr. Simpson's beliefs, the truth is PDM had problems constructing the double

containment LNG tank in Puerto Rico. (Scorsone, Tr. 4827-28; see also FOF 8.92, 8.93). These 

problems occurred in 2000 right up to the eve and even post-Acquisition by CB&I. (Scorsone, 

Tr. 4831; see also FOF 8.95).

M. CB&I's Post-Merger LNG Project Wins

Show that Other Firms Cannot Replace PDM

581. Respondents contend that entry by foreign and domestic firms will erode CB&I's 

market share and market power. The evidence of post-merger negotiations for LNG projects in 

the United States that may be built in the future indicates the opposite conclusion: CB&I is

likely to maintain or increase its dominant position in the United States LNG tank market.

Response to Finding No. 581:

The proposed finding fails to cite any evidence in support of its conclusions and is 

not an appropriate "finding of fact." The fact that current LNG customers and market

participants are not concerned about the Acquisition because of the presence of foreign

competition contradicts the proposed finding. (See FOF 3.247-3.255).

582. There are at least 11 new LNG projects in the United States today that are in

various stages of development. Depending on business conditions, some or all may never be

built. Of these 11 projects, CB&I has won or has the inside track on winning at least six projects 

(CMS, [xx] (three projects), El Paso, Poten & Partners), a chance of winning in four other
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projects (Yankee Gas, Freeport LNG, Calpine and Williams/Dominion Resources), and has

refused to submit pricing in a timely manner in the 11th project (Dynegy).

Response to Finding No. 582:

The proposed finding fails to cite any evidence in support of its conclusions and is 

not an appropriate "finding of fact." Further, the proposed finding is misleading, factually

inaccurate and incomplete. Foreign competitors are competing, or planning to compete, for the 

projected U.S. LNG projects. (See FOF 3.68-3.73, 3.109-3.122, 3.173-3.178, 3.200-3.203, 

3.212-3.227). Further, owners of the proposed domestic LNG projects are currently considering, 

or would in the future consider, foreign LNG tank suppliers. (See generally, FOF 3.256-3.459). 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] ((Jolly, Tr. 4760; see also FOF

3.307). Contrary to the proposed findings assertion, CB&I attempted to submit a tank-only bid 

for the Dynegy project but was rejected because Dynegy was satisfied with the bids it had

received. (See FOF 3.303, 3.304; see also RFOF 577).

583. CMS Energy intends to build an LNG import terminal in Louisiana. CMS Energy 

has awarded the tank portion of the contract to CB&I. (Glenn, Tr. 4399).

Response to Finding No. 583:

The proposed finding is misleading and factually inaccurate. CMS Energy is

planning to build a one tank expansion to its existing Lake Charles facility. (J. Kelly, Tr. 6260; 

see also FOF 3.468, 3.469). It does not intend to build "an LNG import terminal in Louisiana." 

(See CCFF 583).

584. [xxx] is evaluating the possibility of constructing three new LNG import terminal 

facilities in the United States. CCFF 832. [xx] has decided to negotiate for sole-source 

agreements with CB&I for the three projects. (Glenn, Tr. 4180).
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Response to Finding No. 584:

The proposed finding is factually inaccurate and misleading. The evidence cited 

does not support the proposition that [xxx] has decided to negotiate sole-source agreements with 

CB&I. To the contrary, CB&I does not have a contract or a notice to proceed for any [xxx] LNG 

project in the United States. (Glenn, Tr. 4180). [xxx] has, however, decided to work with CB&I 

on the front end development of these projects. (Glenn, Tr. 4180). If [xxx] is satisfied with

CB&I's pricing, schedule and terms and if the projects move forward, [xxx] has indicated that 

CB&I will be awarded those jobs. (Glenn, Tr. 47180). However, [xxx] is prepared to explore 

other options with other contractors if it cannot reach an agreement with CB&I. (Scorsone, Tr. 

4995; see also FOF 3.413).

585. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxx]. (Glenn, Tr. 4177, 4234; CX 1478 at CB&I 010191-HOU, in camera).

Response to Finding No. 585:

Respondents have no specific response.

586. CB&I is negotiating a sole-source contract to construct an LNG import terminal

for Poten & Partners in the Northeastern United States. (Glenn, Tr. 4399).

Response to Finding No. 586:

Respondents have no specific response.

587. Yankee Gas is considering entering into a turnkey arrangement with CB&I or

CHI. CCFF 1008.

Response to Finding No. 587:

The proposed finding is misleading, incomplete and factually inaccurate. Yankee 

Gas is considering entering into a turnkey arrangement with an EPC contractor or taking bids on 

the component parts of the project. (Andrukiewicz, Tr. 6466-67). However, Yankee Gas hired 

SEA Consultants as its engineering consultant. (Andrukiewicz, Tr. 6444-45; see also FOF
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3.352). SEA Consultants is currently developing project specifications that would allow Yankee 

Gas to solicit proposals. (Andrukiewicz, Tr. 6450; see also FOF 3.353). In addition to

developing specifications, SEA is also charged with sending the specifications to, and soliciting 

information from, appropriate companies, reviewing responses, and assisting Yankee Gas in

analyzing the final proposals. (Andrukiewicz, Tr. 6453; see also FOF 3.353). Yankee Gas

would consider qualifying Skanska/Whessoe, Technigaz, CB&I and CHI for the Waterbury

project. (Andrukiewicz, Tr. 6453-54; see also FOF 3.357).

588. In addition to the projects that are being negotiated as, or may become, solesource arrangements, four other projects are under consideration, but the nature of the bidding 

process – open competitive bidding or sole-source arrangement – has yet to be decided. The

three pending LNG projects are for Freeport LNG, Calpine and Williams. (Glenn, Tr. 4140-2, 

4145-8).4

Response to Finding No. 588:

The first sentence of the proposed finding fails to cite any evidence in support of 

its conclusions and is not an appropriate "finding of fact." The proposed finding also fails to

account for the fact that although they are not completely certain the owners are reasonably

certain that their projects will be completed. (Izzo, Tr. 6521-22; Eyermann, Tr. 7043-44). For 

example, Calpine plans to make a public announcement at the end of the first quarter of 2003 and 

Freeport LNG plans on filing its FERC application in February 2003. (Izzo, Tr. 6490;

Eyermann, Tr. 6977; see also FOF 3.406, 3.388). CX 1607 does not support the contention that 

there is any uncertainty surrounding the Williams Energy/Dominion Resource LNG expansion

project. (See CX 1607).

589. Because the LNG tank owner has not decided how to structure the bidding

process for the LNG tanks, it is unclear who will win the projects.

 

4

 It is uncertain whether these three projects will ever be completed. (Izzo, Tr. 6521; Eyermann, Tr. 7043-

7044; CX 1607 at 1).
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Response to Finding No. 589:

The proposed finding fails to cite any evidence in support of its conclusions and is 

not an appropriate "finding of fact."

590. CB&I has at least a 50% chance of winning each project. (Glenn, Tr. 4267; CX 

1729 at 9). Mr. Glenn will not allow CB&I to spend "any time or money in projects where we 

don't think we have a really good chance of winning. I mean, if there are three bidders, it's a 33 

percent chance, we'd probably pass on that one. If there are three bidders and we've got a 40 or 

50 or 60 percent chance of winning it, we'll go after it." (CX 1729 at 10). CB&I's current

"capture rate" is markedly higher than PDM EC's 34% capture rate in 1999, and higher still than 

PDM EC's 2000 capture rate goal (37%). (CX 94 at PDM-HOU017585).

Response to Finding No. 590:

This finding is vague, as it does not refer to a specific product market. Further, 

this finding is not supported by credible evidence to the extent it relies on CB&I's internal

predictions regarding its chances of winning any particular project. The only entity that knows 

CB&I's true chances of winning a particular job is the owner of the project; Complaint Counsel 

has not cited any evidence to support its claim that owners agree with these statistics. To the

contrary, current customers for LNG tanks believe that there is sufficient competition in the

markets, and that CB&I must keep its prices competitive in order to avoid losing work to other 

companies. (See Opening Br. at 64-80).

591. CB&I declined to submit a price quote for the Dynegy project unless Dynegy

structured the project as a turnkey project. (Glenn, Tr. 4245, 4247-8). CCFF 984.

Response to Finding No. 591:

The proposed finding is misleading and factually incorrect: the evidence cited by 

the proposed finding does not support it. During the EPC contractor search, CB&I submitted a

turnkey proposal and the owner, Dynegy rejected CB&I's approach and disqualified it as a

bidder. (Puckett, Tr. 4558; Glenn, Tr. 4128-29, 4410; see also FOF 3.270). The fact is that

CB&I initially chose not to bid on the project based on its concerns about submitting its pricing 
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and designs to Black & Veatch, a competitor and partner of one of the bidders. (See 3.297-

3.306). Ultimately, CB&I changed its mind and decided to submit a bid only after Dynegy

agreed to analyze the bids itself. (Glenn, Tr. 4411; see also FOF 3.301). Dynegy refused to

accept CB&I's bid because it was satisfied with the bids it received from Skanska/Whessoe,

TKK/AT&V and Technigaz/Zachry. (See FOF 3.304, 3.305).

N. Respondents' Critical Loss Analysis Is Flawed

and Underestimates the Profitability to CB&I

of a Price Increase in the Relevant Markets

592. Dr. Harris uses a critical loss analysis to assess whether new entrants collectively 

can prevent CB&I from exercising market power. (Harris, Tr. 7255-58)

Response to Finding No. 592:

Respondents have no specific response.

593. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxxxxxxxxx], Tr. 

3817, in camera). A critical loss analysis can be used to determine whether a hypothetical

monopolist can profitably increase price by 5 percent. (James Langenfeld and Wenqing Li,

"Critical Loss Analysis in Evaluating Mergers," Antitrust Bull. (2001), at 299-337; Barry C.

Harris & Joseph J. Simons, "Focusing Market Definition: How Much Substitution is Enough?," 

12 Research in L. & Econ., at 207 (1989); Simpson, Tr. 2993-94).

Response to Finding No. 593:

Complaint Counsel’s finding number 593 is irrelevant because Dr. Simpson

botched his critical loss analysis in several key ways. First, Dr. Simpson lacked the underlying 

information necessary to properly conduct a critical loss analysis. Although he relied almost

entirely on a single PDM document for all his assumptions regarding fixed and variable costs, he 

admittedly did not know whether CB&I and PDM had differences in the way they calculated

fixed versus variable costs. (Simpson, Tr. 3875-76) (FOF 7.196). In addition, Dr. Simpson

relies on documents and testimony he admittedly knows nothing about. (FOF 7.197-7.205). Dr. 

Simpson classified entire categories of costs as variable, despite evidence that they are fixed in 
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whole or in part; thus he severely underestimated the critical loss. Moreover, this proposed

finding is irrelevant because even if Dr. Simpson’s critical loss analysis were to be accepted,

CB&I has already lost more business than the “critical loss” estimated by Dr. Simpson. Thus,

CB&I could not keep enough business at higher prices to make a price increase profitable. 

(Harris, Tr. 7263-64).

594. Dr. Simpson testified: "...[A]s the hypothetical monopolist increases price, it

earns a higher profit on those units that it continues to sell....[I]t also loses profit because it's not 

selling as many units as it had before....For the hypothetical monopolist, the price increase is

profitable if the additional profit that it gets from getting a higher price on the units that it

continues to sell exceeds the profit that it loses because it's selling fewer units." (Simpson, Tr. 

2994; CX 1639).

Response to Finding No. 594:

Respondents have no specific response.

595. When the hypothetical monopolist increases price, the profit that it loses on the 

units that it no longer sells is the difference between the price that it had obtained for those units 

and its variable costs of producing those units. (Simpson, Tr. 2995). The difference between

price and variable cost is sometimes called the contribution margin. (Simpson, Tr. 3017).

Response to Finding No. 595:

Respondents have no specific response.

596. The size of the contribution margin determines the critical loss, which is the

amount of sales that a firm could lose before a given price increase becomes unprofitable. 

(Simpson, Tr. 2998). A critical loss analysis then compares this critical loss with information

about the hypothetical monopolist's likely loss of sales if it were to increase price to determine

whether a price increase would be profitable. (Harris, Tr. 7259; Simpson, Tr. 2998-99, 3530).

Response to Finding No. 596:

Respondents have no specific response.

597. A critical loss analysis could also be used as a tool to measure competitive effects 

if one is careful and recognizes several important caveats. (Simpson, Tr. 3525-6; Langenfeld, 

"Critical Loss Analysis," at 299, 313).

Response to Finding No. 597:

Respondents have no specific response. (Harris, Tr. 7156).
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598. Dr. Harris, in performing his critical loss analysis to assess whether new entrants 

can collectively prevent CB&I from exercising market power, makes at least four major errors. 

He underestimates the critical loss, which is the sales loss that would make a price increase

unprofitable for CB&I. (Simpson, Tr. 3527-30; CX 1669). He overestimates the amount of sales 

that CB&I would actually lose as a result of a price increase. (Simpson, Tr. 3536). He ignores 

differences between using a critical analysis to define a market and using a critical loss analysis 

to measure market power within a market. And, he fails to check whether his conclusions are

consistent with other evidence. (Simpson, Tr. 3537).

Response to Finding No. 598:

Complaint Counsel’s finding number 598 is utterly false. Dr. Harris properly

estimates the critical loss in this case, properly estimates the amount of sales that CB&I would 

actually lose as a result of a price increase, understands the difference between using critical loss 

to measure market power and to define a market (Dr. Harris did, after all, invent critical loss

analysis (Harris, Tr. 7156)), and Dr. Harris’ conclusions are fully consistent with record

evidence. Dr. Harris relied on actual CB&I evidence indicating how CB&I calculates fixed and 

variable costs, whereas Dr. Simpson did his calculation based on faulty assumptions made on

documents he knows nothing about and misunderstands. (Harris, Tr. 7341-45) (FOF 7.59-7.81).

599. Dr. Harris testified that an important step in performing a critical loss analysis

involves estimating the contribution margin. (Harris, Tr. 7259). Since the contribution margin is 

the difference between price and variable cost, estimating the contribution margin requires that 

one identify a firm's variable costs. (Harris, Tr. 7259; Simpson, Tr. 3004).

Response to Finding No. 599:

Respondents have no specific response to Complaint Counsel’s proposed finding 

number 599, except to note that whether a particular cost is variable depends on the amount of 

sales lost and on a firm’s overall business practices. Thus, a cost that might be varied if 50% of 

sales are lost and may not be variable if only 25% of sales are lost. (FOF 7.247).

600. The concept of variable cost, for the purpose of computing a critical loss, is an

economic concept rather than an accounting concept. (Simpson, Tr. 3876). Variable costs are

those costs that vary with output. (Carlton & Perloff, at 29; Simpson, Tr. 2995). A cost does not 

need to vary with every minor increment of output to be a variable cost. (Simpson, Tr. 2997).
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Response to Finding No. 600:

Complaint Counsel’s finding number 600 is misleading because, as Dr. Simpson 

admits, the important issue regarding whether a cost is variable or fixed depends on how a

company actually runs its business. (Simpson, Tr. 3872-74) (FOF 7.246).

601. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxx]. ([xxxxxx], Tr. 5774, in camera). [xxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxxxx], Tr. 5774, in camera). [xxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxx], Tr. 5774, in camera). [xxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] ([xxxxxx], Tr. 5774, in camera).

Response to Finding No. 601:

Complaint Counsel’s finding number 601 is irrelevant because whether a 

company “can” vary its workforce or assets does mean that CB&I will reduce its workforce if it 

loses any of its business in the relevant product markets. Further, Dr. Simpson ignores whether 

there are cost benefits to making frequent hire/fire decisions. In fact, the evidence indicates that 

CB&I would not vary its workforce in response to a decrease in projects in the relevant product 

markets. (E.g. Scorsone, Tr. 4904-4919) (FOF 7.70-7.75).

602. Dr. Simpson performed a critical loss analysis for product market definition. 

(Simpson, Tr. 2993, 3416-7). Dr. Simpson identified CB&I's variable costs by applying

economic theory to information from CB&I executives and from CB&I and PDM documents. 

(Simpson, Tr. 2999). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxx]. (Simpson, Tr. 3017; CX 1641, in camera).

Response to Finding No. 602:

Complaint Counsel’s finding number 602, while it is true that Dr. Simpson gave 

this testimony, is false insofar as he did not “apply economic theory.” He made assumptions that 

were not supported by the evidence. (FOF 7.196-7.205).
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603. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxx] (Harris, Tr. 7342, 7900-02; CX 1641, in camera). Dr. Harris estimated

that variable costs accounted for only [xxx] percent of the pre-acquisition price of LNG tanks

and only [xxx] percent of the pre-acquisition price of LPG tanks, LIN/LOX tanks, and TVCs. 

(Harris, Tr. 7900-04; CX 1641, in camera).

Response to Finding No. 603:

Complaint Counsel’s finding number 603 is misleading because, since as Dr.

Simpson admits, the important question in calculating contribution margin is how a company

actually runs its business. (Simpson, Tr. 3872-74) (FOF 7.246). Dr. Simpson never talked to a 

single CB&I witness to find out how CB&I runs its business, and instead relied on his own

interpretation of documents about which he knew very little. (FOF 7.196-7.205). Nor is it true 

that Dr. Harris solely relied on interviews with CB&I witnesses. Dr. Harris relied on all the

record evidence and considered and rejected the support Dr. Simpson claimed for his view of the 

contribution margin. (FOF 7.68).

604. Dr. Simpson testified that the differences in their critical loss estimates means that 

he and Dr. Harris then reach different estimates of what loss of sales would make a given price 

increase unprofitable. (Simpson, Tr. 3528; CX 1668 (demonstrative)). For instance, Dr.

Simpson explained that if variable cost is 85 percent of price, then the initial contribution margin 

is 15 percent, and a firm could lose 25 percent of its sales before a 5-percent price increase

became unprofitable, but, with an initial contribution margin of 33 percent, a firm could lose

only 13 percent of its sales before a 5-percent price increase became unprofitable. (Simpson, Tr. 

3529).

Response to Finding No. 604:

Complaint Counsel’s proposed finding is true -- but the result is that Dr.

Simpson’s critical loss analysis must be rejected.

605. Materials, sublet, freight, and transportation constitute roughly [xxxxxx] of the

cost of an LNG tank. (CX 539, in camera; CX 1641, in camera). [xxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Simpson, 

Tr. 3004-5; CX 1641; Harris, Tr. 7902, in camera). Sublet is the cost of any subcontracts,

freight is the cost of shipping the materials to the job site, and transportation is the cost of

moving workers to the job site. (Simpson, Tr. 3004).
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Response to Finding No. 605:

Respondents have no specific response.

606. Field erection costs constitute about [xxxxxxxx] of the cost of an LNG tank. (CX 

539, in camera; CX 1641, in camera). Field erection costs are variable. (Simpson, Tr. 3005). 

CB&I and PDM EC hired construction workers for individual jobs. Gerald Glenn, CB&I's CEO 

stated: "[P]eople in the field operations are -- they come and go as the work comes and goes. So 

if you need a welder for six weeks, you hire him for six weeks and you terminate him and he's 

hired again at the next job. So they go from project to project." (CX 431 at 72 (Glenn, Dep.)) 

Response to Finding No. 606:

Complaint Counsel’s finding number 606 is false because not all field erection

costs are variable. While much of the field labor is hourly, there are also salaried field personnel 

and project managers who are salaried. (Scorsone, Tr. 4896; Glenn, Tr. 4120). Dr. Simpson

assumed that because there are hourly field workers all field erection costs are variable, a fact 

which is simply not true.

607. CB&I and PDM EC documents indicate that employment of construction

supervisors depends on the overall level of work at the company (Simpson, Tr. 3005-6; CX

1563).

Response to Finding No. 607:

Complaint Counsel’s proposed finding number 607 is wrong for several reasons. 

First, the document relied upon by Dr. Simpson does not indicate that employment depends on 

the overall level of work at the company. The document he relies upon was intended to provide 

management with an idea of how employees were performing and the suggestions to fire people 

were not implemented. (CX 1563; Scorsone, Tr. 4913). CX 1563 does not suggest that CB&I 

employs construction supervisors on the basis of overall work levels. Importantly, Dr. Simpson 

admitted that he did not know if the people listed in CX 1563 were ever laid off, a fact he

admittedly would need to know. (Simpson, Tr. 3905-09) (FOF 7.199). Further, Dr. Simpson’s 

critical loss analysis depends on the notion that CB&I would make reductions based on decreases 
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of business in the relevant product markets, otherwise the calculation would say nothing about 

whether CB&I could increase prices in the relevant markets. Business in the relevant product

markets is a small share of CB&I’s total business. Thus, whether reductions would be made if

there were an overall loss of business is irrelevant.

608. Prior to the acquisition, project management accounted for about [xxxxxxxxx] of 

the total price of an LNG tank. (CX 539, in camera; CX 1641, in camera). Although CB&I and 

PDM documents indicate that employment of project managers depends on the overall level of

work at the company (CX1563; CX 1033, Simpson, Tr. 3007-10), [xxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (Harris, Tr. 7902; CX 

1641, in camera).

Response to Finding No. 608:

Complaint Counsel’s finding number 608 contains clear falsehoods. CX 1563 is, 

on its face, related to employee performance. (See Scorsone, Tr. 4913). CX 1033, a 10-K filing, 

does not indicate anywhere that CB&I’s project manager force depends on the level of work. Dr. 

Simpson admitted that he made an assumption based on VROs offered by CB&I, despite

knowing nothing about what a VRO is or under what conditions one may be offered. (Simpson, 

Tr. 3880-81) (FOF 7.197). Dr. Harris’ reliance on CB&I employees for information about how 

it runs its business is the appropriate manner in which to calculate variable and fixed costs. 

(Harris, Tr. 7342).

609. Prior to the acquisition, fabrication accounted for about [xxxxxxxxx] of the total 

price of an LNG tank. (CX 539, in camera; CX 1641, in camera). The cost of fabrication

represents a variable cost. CB&I and PDM sometimes purchased fabricated steel. (Scorsone, Tr. 

4894-5). Where CB&I uses subcontractors for fabrication, the fabrication is "clearly a variable 

cost," since it "is an expense that they would not have to bear if they did not get the project." 

(Simpson, Tr. 3011). Using an outside fabricator indicates that in-house fabrication is also a

variable cost, since if the company did not do a certain project, that would free up capacity to

avoid the expense of subcontracting for fabrication for another project. (Simpson, Tr. 3011). 

Finally, CB&I changes its fabrication work force in response to changes in workload. (Simpson, 

Tr. 3012).
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Response to Finding No. 609:

Complaint Counsel’s finding number 609, which basically states that fabrication

is an entirely variable costs, is false. Dr. Simpson’s assumption that the use of prefabricated

steel indicates that in-house fabrication is also a variable cost is fatally flawed. Dr. Simpson has 

presented no evidence whatsoever regarding the capacity or capacity utilization of CB&I’s

fabrication facilities or whether they are at full capacity, even with imported pre-fabricated nine 

percent nickel steel. Most critically, Dr. Simpson admits that he does not know the capacity of 

CB&I’s fabrication facilities. (Simpson, Tr. 3888-89). How Dr. Simpson can assume that the 

in-house facilities are “freed up” is beyond comprehension, especially considering the fact that 

Dr. Simpson has done no analysis of the extent to which in-house fabrication facilities are used 

to fabricate materials for other products, like flat-bottom or water storage tanks. Further, CB&I 

has testified that it would not reduce its staff at its fabrication facilities or shut down fabrication 

facilities as a result of a decrease in business in the relevant markets. (Scorsone, Tr. 4908-09). 

Finally, at best, fabrication is variable in the LNG market only, as the only evidence of importing 

pre-fabricated steel is in that tank market.

610. While respondents' expert, Dr. Harris, acknowledges that the fabrication costs

shown in CX 1641 which reflect costs for the [xxxxxxx] LNG tank are variable, he contends that 

fabrication is a fixed cost for LPG tanks, LIN/LOX tanks, and TVCs. (Harris, Tr. 7343-44; 7902-

03; 7940-41). Such a contention is illogical. If CB&I could fabricate tanks at zero variable cost, 

they would never subcontract their fabrication. (Simpson, Tr. 3012). Therefore, Harris'

conclusion that fabrication is a totally fixed cost is not consistent with CB&I's behavior. 

(Simpson, Tr. 3012).

Response to Finding No. 610:

Complaint Counsel’s proposed finding number 610 focuses on what CB&I could

do, not what it does do, which is the proper inquiry. (Simpson, Tr. 3872-74) (FOF 7.246). 

Further, the finding is based on the erroneous assumption that CB&I even could import all its

materials pre-fabricated or inexpensively subcontract its fabrication. Complaint Counsel has
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presented no such evidence. CB&I’s decision whether or not to fabricate steel is based on which 

choice produces the overall lowest cost or fabricated steel delivered to the job site, including

transportation, fabrication, and materials costs. Fabrication costs are only one factor in this

decision. Typically it will fabricate steel other than nine percent nickel steel, which it buys from 

foreign sources, itself. (See Scorsone, Tr. 4892-95). Dr. Simpson’s assumption that all

fabrication costs are variable is totally without basis and contradicts record evidence suggesting 

otherwise.

611. Prior to the acquisition, engineering and drafting accounted for about [xxx]

percent of the total price of an LNG tank. (CX 539, in camera; CX 1641, in camera). The cost 

of engineering and drafting represents a variable cost. Mr. Leventry, CB&I's vice-president of

technology services, said that CB&I would definitely let go of some engineers if there were a

reduction in workload (CX 497 at 63 (Leventry, Dep.); see also CX 497 at 38 (Leventry. Dep.) 

("people get terminated all the time"). Mr. Scorsone also testified if CB&I lost half of its

business across all of its product lines it would make reductions in its engineering department. 

(Scorsone, Tr. 4910-11). Also, CB&I included engineers in a voluntary retirement offer

designed to adjust the size of its workforce to its workload (CX 1033, Simpson, Tr. 3015 (citing 

CX-497)). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxx]. (Harris, Tr. 7902, CX 1641, in camera).

Response to Finding No. 611:

Complaint Counsel’s proposed finding number 611 is wrong and very confused. 

While certainly CB&I might make reductions if it lost half its overall business, the evidence is

unequivocal that CB&I would not fire any engineers as a result of a decrease in work in the

relevant product markets, which account for 1.5% of its revenues. (Scorsone, Tr. 4906-07). 

Further, the cited Mr. Leventry testimony is responding to questions about what Mr. Leventry

would do if he instantly lost half of his entire engineering projects at once -- hardly facts relevant 

to whether CB&I would vary engineers based on a critical loss of 12% or 25% in just the

relevant markets. (CX 497 at 63). Dr. Simpson admits that he had no idea whether Mr. Leventry 

was talking about firing people based on performance or a downturn in work. (Simpson, Tr.
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7.198). This proposed finding is ludicrous. A critical loss calculation, if aimed at calculating

how much CB&I can afford to lose in the relevant product markets, requires a look at the

contribution margin in the relevant product markets. Next, the VRO referred to clearly does not

even suggest that the VRO was designed to adjust the size of its workforce to its workload. (CX 

1033).

612. Prior to the acquisition, selling, general, and administrative costs accounted for

about [xxxxxxxx] of the total price of an LNG tank. (CX 539, in camera; CX 1641, in camera). 

Some of this cost would be fixed and some of this cost would be variable (Simpson, Tr. 3016). 

Dr. Simpson explained: "For instance, there would be some administrative costs associated with 

administering a particular project, and if a company does not win that project, they would not

have to bear that administrative cost." (Simpson, Tr. 3016-17).

Response to Finding No. 612:

Complaint Counsel’s proposed finding 612 is false and totally unsupported by the 

evidence. The only “evidence” cited for the proposition that SG&A is partially variable is Dr.

Simpson. Dr. Simpson gave the above referenced testimony based wholly on conjecture and

cited no evidence whatsoever to support his conclusion. (Simpson, Tr. 3016-17). Dr. Simpson’s 

total guess as to how CB&I’s administrative costs are administered is insufficient to support Dr. 

Simpson’s critical loss calculation, especially given the inaccuracy of his other guesses related to 

variability.

613. Because Dr. Harris relies almost exclusively on Mr. Scorsone to identify variable 

costs, Dr. Harris incorrectly labels some variable costs as fixed costs. In fact, in at least one

instance, Dr. Harris concedes that his reliance on Mr. Scorsone led him to incorrectly label a

variable cost as fixed. Relying on his interview with Mr. Scorsone, Dr. Harris initially treated

LNG tank fabrication costs as fixed. (Harris, Tr. 7344-45). However, Dr. Harris later

acknowledged that, because CB&I purchases its fabricated steel from overseas for its LNG

tanks, the fabrication cost for LNG tanks should be treated as variable. (Harris, Tr. 7344). 

Therefore, Dr. Harris conceded that Dr. Simpson was correct in treating all LNG tank fabrication 

cost as variable. (Harris, Tr. 7344).
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Response to Finding No. 613:

Complaint Counsel’s finding number 613 underscores the care that Dr. Harris

used in calculating critical loss as well as Dr. Harris’ reference to the complete record; this

contrasts with Dr. Simpson’s calculation of critical loss which was based on conjecture and

guessing, ignoring the record and CB&I’s business practices.

614. After learning that Mr. Scorsone had erroneously classified LNG tank fabrication 

costs as fixed, Dr. Harris adjusted his critical loss calculation to make it closer to Dr. Simpson's 

calculation. (Harris, Tr. 7902-04). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 1641, in camera). Dr. Harris

acknowledged that if Mr. Scorsone is wrong in classifying other costs as fixed, Dr. Harris's

critical loss calculation would be incorrect. (Harris, Tr. 7904-05).

Response to Finding No. 614:

There is no evidence that any other category has been incorrectly classified as

variable. It is Dr. Simpson’s stubborn adherence to his original critical loss calculations in the

face of overwhelming contrary evidence that is suspect and has application to Dr. Simpson’s

credibility generally.

615. Additional evidence further indicates that Dr. Harris incorrectly identified some

variable costs as fixed costs.

Response to Finding No. 615:

Complaint Counsel’s proposed finding 615, fails to cite any evidence and is

inappropriate "finding of fact."

616. Dr. Harris testified that variable cost is a proxy for the actual cost saved as a result 

of a reduction in sales. (Harris, Tr. 7887). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 1641, in camera; Harris, Tr. 

7902), even though Mr. Scorsone testified that PDM would have incurred none of the cost items 

of the Cove Point LNG tank if PDM did not build the tank. (CX 535 at 218 (Scorsone Dep.); 

Harris, Tr. 7905-07).
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Response to Finding No. 616:

Complaint Counsel’s proposed finding number 616 does not suggest that those

costs are variable. As Mr. Scorsone noted, and as is noted repeatedly above, CB&I would not

fire salaried employees based on reductions in projects in the relevant product markets. The

costs would be incurred because PDM would have paid the welders whether they welded on that 

job or not. Complaint Counsel grossly distorts Mr. Scorsone’s testimony. The next page of the 

Scorsone deposition shows that he meant something different from incurred as Complaint

Counsel uses the word and that he consistently has testified that these cost categories include a 

lot of overhead. (CX 535 at 219).

617. Dr. Harris acknowledged that fixed costs do not increase as the size of the tank 

increases and that variable costs are affected by the size of the tank. (Harris, Tr. 7923-24). Dr. 

Harris further acknowledged that variable costs may vary with the complexity of a project. 

(Harris, Tr. 7924). Also, Dr. Harris acknowledged that while fixed costs generally do not

increase if a job schedule is accelerated, variable costs may increase. (Harris, Tr. 7924).

Response to Finding No. 617:

Complaint Counsel’s finding number 617 is an utter misstatement of Dr. Harris’

testimony. Dr. Harris stated that “that’s logically possible but not necessarily true.” (Harris, Tr. 

7924). Further, there is no evidence that additional costs would be avoided if CB&I loses one or 

more given projects. Complaint Counsel is trying to obscure the real issue, which is whether

CB&I will continue to carry the cost should it lose business.

618. Dr. Harris treated all field erection supervision costs as fixed, even though Mr.

Scorsone said the number of hours required for field erection supervision depends on the size,

specifications and complexity of the project. (Harris, Tr. 7907).

Response to Finding No. 618:

Complaint Counsel’s proposed finding number 618 is misleading and irrelevant 

because whether the number of man hours required for field erection varies is totally irrelevant 

since field erection supervisors are salaried. They are paid the same amount whether they work 
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on a particular job or not. (Scorsone, Tr. 4896). The appropriate focus is not on the size,

specifications, and complexity of a project, but rather on whether or not CB&I is awarded a

project.

619. Dr. Harris treated all project management costs as fixed even though the number 

of project management man-hours required for a job depend on the size and complexity of the

project and the number of subcontractors that have to be managed. (Harris, Tr. 7946-47).

Response to Finding No. 619:

Complaint Counsel’s proposed finding number 619 is misleading and irrelevant

because whether the number of man hours required for field erection varies is totally irrelevant 

since project managers are salaried. They are paid the same whether they work on a particular 

job or not. (Scorsone, Tr. 4896; Glenn, Tr. 4120). (See supra RFOF 618).

620. Dr. Harris treated all engineering costs as fixed even though the number of

engineering man-hours required for a project depends on the size, specifications and complexity 

of the project. (Harris, Tr. 7907, 7934 (Larger jobs have a higher engineering content), 7935

("Q: ... you treat all engineering costs as fixed even though engineering costs for a large tank are 

greater than engineering costs for a small tank? A: Yes, that's correct.")).

Response to Finding No. 620:

Complaint Counsel’s proposed finding number 620 is misleading and irrelevant

because whether the number of man hours required for engineering a project varies is totally

irrelevant since engineers are salaried. They are paid the same whether they work on a particular 

job or not. (Scorsone, Tr. 4903). (See supra RFOF 618).

621. Dr. Harris treated all drafting costs as fixed even though drafting man-hours are

affected by the size and complexity of the tank. (Harris, Tr. 7936-38).

Response to Finding No. 621:

Complaint Counsel’s proposed finding number 621 is superfluous since drafting 

and engineering are one and the same. (Scorsone, Tr. 4905). (See supra RFOF 618).

622. Dr. Harris treated all fabrication costs as fixed, for projects other than LNG tanks, 

even though Mr. Scorsone testified that the number of hours required for fabrication depends on 
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the size, specifications and complexity of the project. (Harris, Tr. 7907). CB&I uses a computer 

program to calculate the fabrication man-hours of a tank based on the diameter and height of the 

inner and outer tank. (Harris, Tr. 7938-39). CB&I's fabrication man-hours also vary with the

shape and size of the roof and the design of the bottom plates of the tank. (Harris, Tr. 7940).

Response to Finding No. 622:

Complaint Counsel’s proposed finding number 622 is irrelevant since CB&I

would not vary its fabrication facilities based on reductions in business in the relevant product 

markets; it incurs the costs of maintaining and operating its fabrication facilities regardless of

output. (Scorsone, Tr. 4908-09). (See supra RFOF 618).

623. Dr. Harris treated field-erection supervisors and foremen as fixed costs even

though, in some circumstances, as a job gets larger, more field erection foremen and supervisors 

may be added to a job. (Harris, Tr. 7942-43).

Response to Finding No. 623:

Whether Complaint Counsel’s finding number 623 is irrelevant since at the end 

of the day, as Dr. Harris explains, the costs are fixed to CB&I. They may add project managers 

to the job, but those project managers already work for and are paid by CB&I, regardless of

whether they are added to the particular job. (Harris, Tr. 7944). (See supra RFOF 618).

624. Finally, Dr. Harris's critical loss analysis, as he has applied it in this case,

understates the profitability of a price increase for any relevant project because of the way Dr. 

Harris has chosen to define fixed cost and contribution margin. Dr. Harris treats personnel and 

assets as a fixed cost in his critical loss analysis as long as they can be employed anywhere

within the company, even though in the accounting sense, the personnel and assets are not fixed 

with respect to any project or any relevant product. (Harris, Tr. 7981). This ignores the

opportunity cost of personnel and assets used to design, engineer, fabricate and construct the

products in this case.

Response to Finding No. 624:

Complaint Counsel’s finding number 624 makes no sense whatsoever. The

important thing is that CB&I will not vary these costs based on critical losses of 12% or 25% of 

business in the relevant markets, regardless of how some accounting practice would apportion

these costs to projects.
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625. An opportunity cost is the forgone value of an asset in an alternative use. (Harris, 

Tr. 7888). Opportunity costs may be included in the actual cost of a product. (Harris, Tr. 7887). 

In order to justify use, in the production of a product, of an asset that has an alternative use, a 

profit maximizing firm will set a price for the product that takes into account the opportunity cost 

of the asset, i.e., what the asset could have earned in the alternative use. D. Carlton & J. Perloff, 

Modern Industrial Organization (3d ed. 2000). at 33-34. (Crain, Tr. 2594; CX 624 (When CB&I 

had "Idle resources" to utilize, it would bid projects at "negative margins")). Thus, even some

costs that appear to be fixed are in fact variable because the underlying asset can be redeployed 

to alternative uses. Id.

Response to Finding No. 625:

Complaint Counsel’s finding number 625 is false and stands the variable cost

analysis on its head. This is not theory -- we are measuring evidence based on CB&I’s behavior 

to determine variability. The costs are fixed because CB&I pays for them regardless of whether 

it loses business up to the critical loss. The theory espoused in proposed finding 625 is

gibberish. Additionally, Dr. Harris specifically states that Complaint Counsel’s definition of an 

“opportunity cost” is “a rough, a very rough definition of ‘opportunity cost.’” (Harris, Tr. 7888). 

This does not support Complaint Counsel’s asserted definition. That underlying assets can be

redeployed to alternative uses is irrelevant since Complaint Counsel has offered no evidence

regarding CB&I’s capacity and whether it is operating at full capacity in any department.

626. Dr. Simpson testified: "[I]f you think of a company as having a portfolio of

projects that they might be working on, if they assign a worker to one project, that means that the 

worker cannot work on another project, so there 's what's termed an opportunity cost for having a 

worker on a particular project. If they were to lose a project and they could reassign that worker 

to another project and do that project instead, then that worker would be variable." (Simpson, 

Tr. 5774)

Response to Finding No. 626:

Complaint Counsel’s proposed finding number 626 is irrelevant. As stated above, 

Complaint Counsel has offered no evidence whatsoever in support of this assertion. The welder, 

as an asset, may be flexible in terms of deployment, but as a salaried employee, his cost of

employment remains the same whether he is assigned to one project or another.
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627. Because CB&I can redeploy assets and personnel to other markets, it does not

lose the contribution margin earned with these assets and personnel if CB&I increases price in

any of the markets in this case and experiences a reduction in the volume of sales of the relevant 

product as a result of the price increase. When CB&I's total volume of work changes, CB&I

adjusts its staffing accordingly. (CX 1033 at 32; Scorsone, Tr. 4910-11).

Response to Finding No. 627:

Complaint Counsel’s proposed finding number 627 is misleading. Complaint

Counsel has presented no evidence regarding CB&I’s overall volume of work, and is relying on 

a wholly theoretical but factually unsupported contention. The question is one of threshold: at 

what volume of work gained or lost would staffing be adjusted. (Simpson, Tr. 3870-71) (FOF 

7.247). The testimony is that, at the critical loss thresholds of 12% or 25% in these four relevant 

markets, staffing would not be varied. (FOF 7.70-7.81).

628. Dr. Harris could only identify a few costs that CB&I could not shift to other lines 

of business or to work outside the United States when its United States TVC business is slow. 

(Harris, Tr. 7926 ("Engineers move around. Fabrication somewhat but less so. Fabrication – 

project management can move around. ... Erection management can move around as well")) Dr. 

Harris could not identify any category of cost that CB&I would have to charge to its United

States TVC business irrespective of its level of work in that market. except for some minor

fabrication costs. (Harris, Tr. 7928-30). Further, Dr. Harris only identified some local costs

relating to field erection and fabrication that CB&I would have to charge to its United States

LNG tank business irrespective of its level of work in that market. (Harris, Tr. 7930-32). Dr.

Harris made the same observations with respect to CB&I's United States LPG tank business and 

with respect to CB&I 's United States LIN/LOX tank business. (Harris, Tr. 7933).

Response to Finding No. 628:

Complaint Counsel’s proposed finding number 628 is irrelevant because there is

no evidence CB&I “charges” a particular cost to a “TVC business” or any other business. The 

point is that CB&I has an industrial tank business, and it deploys its employees where needed 

and pays them whether in full use or not.

629. Dr Harris acknowledged in his deposition that a lot of the costs that he

characterized as fixed are actually variable when a company is considering large, strategic

moves. (Harris, Tr. 7910-11). CB&I's acquisition of PDM and CB&I's decisions regarding how 

to maximize its profits following the acquisition are large, strategic moves.
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Response to Finding No. 629:

Complaint Counsel’s proposed finding number 629 is irrelevant because we are

not talking about “large strategic moves.” We are trying to measure whether CB&I would vary 

staffing, etc. in response to losses of 12% or 25% of the relevant product markets -- which are 

small markets.

630. Mr. Scorsone testified that losing a project would not cause CB&I to alter its

staffing. (See Scorsone, Tr. 4906. However, this simply means that if nothing changes, i.e., 

CB&I does not get a new project, its staffing requirements are unaffected. (Harris, Tr. 7912 ("if 

nothing changes, then I would agree.")) However, taking on new LNG projects would put

pressure on CB&I to increase staffing and therefore incur additional costs. As explained by

Gerald Glenn, "I don't know that there's enough resources – if all that gets going and LNG

projects, I think we'd tax the skilled resources in our business to be able to do that." (CX 1731 at 

34; Harris, Tr. 7915-16 (CB&I would probably have to hire some people in order to take on a 

new LNG project)).

Response to Finding No. 630:

Complaint Counsel’s proposed finding number 630 is false and irrelevant. The

question to be answered is what would CB&I do if it lost business up to 25% in these markets, 

not how CB&I would treat its costs if it gained business.

631. After calculating the contribution margin and thus the critical loss, the next step in 

a critical loss analysis involves estimating the amount of sales that the firm would lose if it

increased price and then comparing this estimate to the critical loss. (Harris, Tr. 7258; Simpson, 

Tr. 3592–30). Dr. Harris made major mistakes in performing this step.

Response to Finding No. 631:

Complaint Counsel’s proposed finding number 631 is false; Dr. Harris made no 

mistakes in performing this step.

632. Dr. Harris assumed that a price increase would not be profitable to CB&I based 

on his observation that CB&I has only been awarded "18% of the dollars at risk post merger" 

projects in the relevant markets since the acquisition. (Harris, Tr. 7342-43, 7358-59). However, 

Dr. Harris did not examine the volume of sales CB&I would gain if it lowered its price or the

volume of sales CB&I would lose if it raised its price. When asked if CB&I would gain sales if 

it decreased price by 10 percent in the markets in this case, Dr. Harris responded: "It might. I'm 

not sure that I can answer that." (Harris, Tr. 7899-7900). Dr. Harris denied that CB&I would 

experience fewer losses of customers to competitors in the markets in this case if competitors
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raise their price when CB&I raises its price following the acquisition. (Harris, Tr. 7895). 

However, Dr. Harris provided no explanation for his conclusion. Dr. Simpson testified that he

believes that CB&I would lose few sales if it increased the price of LNG tanks, LPG tanks,

LIN/LOX/LAR tanks, and large, field-erected TVCs by 5 to 10 percent. (Simpson, Tr. 3531).

Response to Finding No. 632:

Complaint Counsel’s proposed finding number 632 is misleading. Dr. Harris’ 

observation that CB&I has only been awarded 18% of the dollars available in the relevant

product markets was made to show that even if Dr. Simpson’s critical loss calculation were to be 

accepted, it would not matter because CB&I is losing so badly that it cannot, at this point, afford 

to raise prices. Thus, Dr. Harris pointed out that CB&I has already lost 82% of the available

post-Acquisition revenue in these product markets. Complaint Counsel does not quarrel with

these numbers. Further, if CB&I then decreased prices by 10% in the relevant product markets, 

CB&I would not be imposing price increases. This proposed finding makes no sense. Dr.

Simpson’s testimony that CB&I would lose few sales if it increased price is based on an

improper critical loss calculation and conjecture. Further, this finding totally fails to account for 

the impact of entry in the relevant product markets on CB&I’s current state of mind, which Dr. 

Harris considered in his conclusion regarding whether CB&I would attempt a price increase. 

(Harris, Tr. 7260-61)(FOF 7.79).

633. A profit maximizing firm will choose the price increase that produces the greatest 

increase in profits. (Harris, Tr. 7887). Even if a small price increase may not be profitable, a

large price increase may nevertheless be profitable. (Id.) Dr. Simpson testified that a critical

loss analysis, in determining which costs are variable, should consider various possible price

increases across all of the markets in the FTC complaint. (Simpson, Tr. 5778-9).

Response to Finding No. 633:

Complaint Counsel’s proposed finding number 633 makes no sense and is

irrelevant. Complaint Counsel has presented no evidence indicating that a large price increase
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would be profitable in any of the relevant markets. The evidence is to the contrary. (See FOF

7.59-7.81).

634. Dr. Harris testified that he and his staff prepared a list of LNG, LPG, LIN/LOX, 

and TVC projects awarded after the acquisition. (Harris, Tr. 7346-7) Dr. Harris then testified 

that CB&I had lost six of the ten projects on his list and had lost "something like 82 or 83

percent of the dollars available to be won here." (Harris, Tr. 7356-7). [xxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (RX 951, in camera) [xxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxx]. (Harris, Tr. 7357). Based on his assessment of his list, Dr.

Harris claimed that CB&I could not have a cost advantage over the competition. (Harris, Tr.

7356-7).

Response to Finding No. 634:

Complaint Counsel’s proposed finding number 634 is correct and Dr. Harris was 

correct in his analysis.

635. Dr. Harris, however, based his claim on a highly inaccurate and highly distorted 

compilation of project awards. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (RX 951; Puckett, Tr. 4557 (Decision on tank supplier 

planned for October 2002)).

Response to Finding No. 635:

Complaint Counsel’s proposed finding number 635 is false. The evidence is

uncontroverted that [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxx] Further, the evidence is that Dynegy will proceed with its project. 

(Puckett, Tr. 4567) (FOF 3.257).

636. While including Dynegy's Hackberry project, on which CB&I did not bid, Dr.

Harris failed to include five United States LNG tank projects for which CB&I is currently

negotiating contract terms with the customer for a sole-source arrangement. (Glenn, Tr. 4234, 

4399).

Response to Finding No. 636:

Complaint Counsel’s proposed finding number 636 is false. CB&I attempted to 

bid on the Dynegy project and was rejected. Further, Complaint Counsel exaggerates the solesourcing of CB&I -- only two of these projects, CMS and Southern LNG, are actually in
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negotiation. They have not been awarded and the customer may award them to someone other 

than CB&I. The rest are theoretical and down the road, and Complaint Counsel does not even

identify the projects.

637. Dr. Harris included Atlantic's Trinidad LNG project as a loss by CB&I and a win 

by TKK/AT&V, although the project is an LNG export terminal (not a relevant market) outside 

of the United States (Glenn, Tr. 4238;), and there is no evidence that AT&V is even involved in 

the project. (JX 11 at 1).

Response to Finding No. 637:

Complaint Counsel’s finding number 637 is irrelevant. CB&I bid on and lost a

contract to build an additional LNG tank in Trinidad and LNG tanks are a relevant market. 

Further, whether AT&V was involved is irrelevant since TKK clearly won the project. Finally, 

CB&I views Trinidad as relevant to its U.S. pricing decisions, so it is properly included in

measuring whether CB&I will attempt a price increase. (FOF 7.79, 3.451-3.459).

638. While including the Trinidad project, Dr. Harris excluded El Paso's projects in the 

Bahamas and at Altamira, Mexico, for which El Paso has selected CB&I as the sole-source 

supplier, and CB&I is currently negotiating contract terms with El Paso. (Glenn, Tr. 4234).

Response to Finding No. 638:

Complaint Counsel’s proposed finding is false -- CB&I is trying to be awarded

these projects but it has not been “selected” for these projects. Further, there is no comparative 

price information for the Mexico projects while there is for Trinidad.

639. Dr. Harris treated Air Liquide's Freeport, Texas LIN/LOX tank as a win for

AT&V and a loss by CB&I although Air Liquide has found AT&V's performance unacceptable, 

Air Liquide has requested CB&I to complete the project, and CB&I has refused. (Scorsone, Tr. 

5036-7).

Response to Finding No. 639:

Complaint Counsel’s proposed finding number 639 is irrelevant; AT&V was

indeed awarded the Freeport, Texas job and CB&I lowered its bud to a zero percent margin and 

still lost. (FOF 5.122-5.125).
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640. Dr. Harris treated Raytheon's El Segundo, California TVC as a win by XL/Votaw 

and a loss by CB&I. Dr. Harris acknowledged that the project is not a large, field erected TVC, 

but Dr. Harris failed to disclose, in his direct testimony, that Raytheon picked XL for the project 

when XL was part of CB&I and the bid was accepted by Raytheon in part because CB&I was

going to do the job. (Hart, Tr. 384-5, 402, 405; Harris, Tr. 7787-88). Mr. Hart testified that he 

picked XL because CB&I's technical capability was better than Howard's. (Hart, Tr. 384-5; 

Harris, Tr. 7788). Mr. Hart further testified that he was not informed that Votaw, rather than

CB&I, would build the chamber until well after Raytheon had awarded the contract to CB&I' s 

subsidiary, XL. (Hart, Tr. 405; Harris, Tr. 7790).

Response to Finding No. 640:

Complaint Counsel’s proposed finding is irrelevant because Mr. Hart kept the

project with XL after CB&I sold it. Mr. Hart could have insisted that CB&I perform the

contract; instead he accepted Votaw as the tank builder.

641. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (RX 951, in camera) [xxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxx]. (RX 951, in camera; Harris, Tr. 7354-5).

Response to Finding No. 641:

The BOC job was awarded after the Acquisition was announced but just before it 

was formally consummated. It was not improper for Dr. Harris to include this job which has an 

impact on CB&I’s state of mind as it relates to critical loss.

642. In using a critical loss analysis to analyze whether CB&I has market power, Dr.

Harris ignored differences between using a critical loss analysis for market definition and using a 

critical loss analysis for assessing market power within a market. Dr. Harris underestimated the 

profitability of a price increase to CB&I because he failed to take into account the sales diversion 

between CB&I and PDM and because he failed to take into account price reactions of other firms 

to a price increase by CB&I following the acquisition.

Response to Finding No. 642:

Complaint Counsel’s unsupported proposed finding number 642 is false; Dr.

Harris, the inventor of the critical loss calculation, understands the differences between using

critical loss for market definition and for assessing market power, and he used critical loss in an 

appropriate way to show CB&I could not raise price after the acquisition. Dr. Harris properly
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calculated critical loss -- there is no cite to the contrary. Even if he did not, it is irrelevant since 

it is Complaint Counsel’s burden to present additional compelling evidence that the effect of the 

Acquisition is to substantially reduce competition in the relevant markets.

643. James Langenfeld and Wenquing Li explain that "in a differentiated product

market, there are two important adjustments in calculating the firm's critical loss and in

estimating the firm's actual loss of sales in the competitive effects analysis, as compared to the

critical loss analysis in market definition studies. The first adjustment is to take into account the 

sales diversion between the merging firms when calculating the critical loss. When the sales

diversion between the merging firms is taken into account, the formula for calculating the critical 

loss must be modified, and more information than the firms' premerger profit margins is needed 

to calculate the break-even critical loss. The second adjustment is to take into account price

reactions of other nonmerging firms in the market in estimating the actual sales loss." J.

Langenfeld and Wenquing Li, Critical loss Analysis in Evaluating Mergers, The Antitrust

Bulletin, Summer 2001 299, 313. (Harris, Tr. 7893-94).

Response to Finding No. 643:

Complaint Counsel’s proposed finding number 643 is irrelevant. Dr. Harris

unequivocally testified that Drs. Langenfeld and Li are wrong. (Harris, Tr. 7895). Further, this 

very theory was rejected by the Northern District of California in California v. Sutter Health

System, 130 F. Supp. 2d 1009, 1121 (N.D. Cal. 2001). Further, this article is not evidence and is 

improperly including in this finding; reading it into the record and having the witness say it is

wrong does not make it evidence.

644. Dr. Harris appeared to be confused regarding the distinctions between use of a

critical loss analysis for market definition and use of critical loss in analyzing the effects of an 

acquisition. Dr. Harris stated that the "question makes no sense at all" when he was asked if it is 

correct that the terms of sale of all other products are held constant when a critical loss test is

used for market definition purposes, even though he acknowledged that he himself had made the 

statement in an article he had written. (Harris, Tr. 7884-86).

Response to Finding No. 644:

Complaint Counsel’s proposed finding is misleading because in fact Complaint

Counsel’s questions to Dr. Harris which made no sense at all. (Harris, Tr. 7884-86).

645. Dr. Harris did not recall that Langenfeld and Li instruct, in their article, that in

using a critical loss analysis to analyze the competitive effects of a merger it is necessary to take 
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into account the sales diversion between the merging firms. (Harris, Tr. 7892-93). When shown 

the statement by Langenfeld and Li, Dr. Harris acknowledged that in certain contexts the sales

diversion between the products of the merging firms would matter. (Harris, Tr. 7894). Dr.

Harris denied, however, that sales diversion matters in this case. (Id.)

Response to Finding No. 645:

Complaint Counsel’s proposed finding number 645 is irrelevant because the

Langenfeld article is not evidence and Dr. Harris did not rely on it and stated that it was wrong. 

(See RFOF 643).

646. Dr. Harris then stated that he considered sales diversion between CB&I and PDM 

prior to the merger, but claimed that he could not take it into account after the merger. (Harris, 

Tr. 7897). This admission by Dr. Harris means that Dr. Harris failed to consider whether

following the acquisition, CB&I could profitably increase the price of its tank specification, in

any of the markets, and capture a significant portion of any lost sales by offering PDM's tank

specification as an alternative. Likewise, Dr. Harris failed to consider whether following the

acquisition, CB&I could profitably increase the price of PDM's tank specification and capture a 

significant portion of any lost sales by offering CB&I's tank specification as an alternative. Dr. 

Harris simply assumed that a price increase would not be profitable to CB&I without considering 

the profitability of either of these pricing strategies.

Response to Finding No. 646:

Complaint Counsel’s finding number 646 is irrelevant because Dr. Harris was not 

required to undertake any of the analysis suggested by Complaint Counsel. Dr. Harris performed 

a critical loss analysis in response to Complaint Counsel’s critical loss analysis; Dr. Simpson did 

not consider any of the above mentioned “pricing strategies” either, so it is wholly irrelevant.

647. CB&I conducts union work through its CB&I Services Inc. and non-union work 

through CB&I Industrial. (CX 1033 at 8 ). Following the acquisition, CB&I planned to inform 

at least one LNG tank customer that it could not choose to have its project performed by a nonunion workforce and would have to accept, at higher cost, union workforce job. Previously the 

choice of union or non-union work had been left to the customer. (Id.) However, Dr. Harris

could not comprehend that CB&I could increase the price of non-union jobs and pick up some of 

the loss in sales through its union work. (Harris, Tr. 7918 ("That makes no sense to me at all.")).

Response to Finding No. 647:

Complaint Counsel’s proposed finding number 647 is a misstatement of Dr.

Harris’ testimony; he clearly told Complaint Counsel that his question made no sense. (Harris, 
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Tr. 7918). That Complaint Counsel’s question made no sense to the witness does not mean that 

Dr. Harris could or could not comprehend something. Further, the remainder of this proposed

finding is irrelevant. If Complaint Counsel had asked about this document, they would have

learned that CB&I would not send non-union labor into the location specified in the document. 

It has nothing to do with the acquisition or market power.

648. Langenfeld and Li explain that if other firms in the market increase their price in 

response to the price increase by the merged firm, the merged firm will lose sales to the other

firms in the market only to the extent of the relative increase in its price compared to the price of 

the other firms: "Accordingly, the merged firm will experience fewer losses of customers to

competitors in the market than if all competitors kept their prices constant, and it is more likely 

that a price increase will be profitable. ... When the price responses of the nonmerging firms in 

the market are taken into account, the actual loss of sales for a given price increase by the

merged firm will decrease." J. Langenfeld and Wenquing Li, Critical Loss Analysis in

Evaluating Mergers, The Antitrust Bulletin, Summer 2001 at 319. (Harris, Tr. 7896).

Response to Finding No. 648:

Complaint Counsel’s proposed finding number 648 is irrelevant because this

article is not evidence and is flawed as set forth in RFOF 643. It is improper for Complaint

Counsel to include it in its findings of fact. The Court explicitly stated in his Order that only

evidence should be cited. Further, the article discusses when price increases might be profitable, 

not whether price increases would be profitable in this case.

649. Economic theory predicts that other firms will increase their prices if CB&I

increases its prices. (Simpson, Tr. 3526; see C. Davidson and R. Deneckere, Long-Run 

Competition in Capacity, Short-Run Competition in Price, and the Cournot Model, Rand Journal 

of Economics, 17, 1986, 404; Dalkir, Serdar, John Logan, and Robert Masson, "Mergers in

Symmetric and Asymmetric Noncooperative Auction Markets: The Effects on Prices and

Efficiency," 18 International Journal of Industrial Organization, at 395 (2000)).

Response to Finding No. 649:

Complaint Counsel’s proposed finding number 649 is logically flawed in the

context of this case where projects are won through a bidding process. If CB&I raises its prices, 

why would another firm also raise prices instead of seizing upon the opportunity to win the
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project, particularly when there are so few jobs in the relevant markets? The articles cited are

not evidence. Furthermore, these articles, like the proposed finding, generally ignore the

possibility of entry. The suggestion is ludicrous in this context, and irrelevant to critical loss

because CB&I will not try to increase price.

650. When asked if he agreed with Langenfeld and Li that the price reactions of other 

firms in the market should be taken into account in estimating the actual sales loss, Dr. Harris

first claimed that Langenfeld and Li "got it wrong" factually but acknowledged that what they

wrote is logically correct. (Harris, Tr. 7894-95). Dr. Harris then claimed that price responses of 

other firms "has absolutely nothing to do with this case" (Harris, Tr. 7896), but moments later

claimed that he had taken into account the price reactions of other firms in conducting his critical 

loss analysis. (Harris, Tr. 7898 ("Yes, I considered that.")). Despite Dr. Harris's claim, he made 

no reference to the price reactions of other firms in his various assertions that CB&I cannot

profitably increase price. (See generally Harris, Tr. 7152-8000).

Response to Finding No. 650:

Complaint Counsel’s proposed finding number 650 is irrelevant because Dr.

Harris did not suggest that Langenfeld and Li were correct in the application of their theory to 

this particular case. (Harris Tr. 7894-95). Furthermore, what Dr. Harris said "has absolutely

nothing to do with this case" is a statement from Lagenfeld and Li. (Harris, Tr. 7896) The

remainder of Complaint Counsel’s proposed finding makes no sense and is irrelevant.

651. Dr. Harris failed to check whether the conclusion that he drew from his critical

loss analysis, that CB&I does not currently have market power, is consistent with CB&I

documents and CB&I's post-acquisition behavior. (See generally Harris, Tr. 7152-8000).

Response to Finding No. 651:

Complaint Counsel’s proposed finding is simply untrue and unsupported.

652. Dr. Simpson testified that one could evaluate the competitive effects of an

acquisition by examining whether price increased. (Simpson, Tr. 3541-2) According to Dr.

Simpson: "[I]f there's a price increase, that would be one type of evidence that would indicate

that the acquisition was anticompetitive." (Simpson, Tr. 3542) Dr. Simpson also testified that 

one could evaluate the competitive effects of an acquisition by examining the competitive

strength of the two firms prior to the acquisition and using economic theory to assess how the

combination of the two firms would affect pricing in the marketplace. (Simpson, Tr. 3542)
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Response to Finding No. 652:

Complaint Counsel’s proposed finding number 652 is irrelevant since there is no 

evidence that CB&I has increased prices or that the effects of the Acquisition are

anticompetitive. Further, as is obvious from the proposed finding, Dr. Simpson ignored entry

entirely when he gave his testimony.

653. Similarly, Dr. Harris testified: "[T]he right way to do critical loss ... is to go find 

out how the company itself behaves, ... how they behave in the real world and factor that into

your critical loss analysis." (Harris, Tr. 7342). However, Dr. Harris failed to follow his own

advice. Dr. Harris did not view the evidence of post-merger pricing as demonstrating price

increases after the acquisition. (Harris, Tr. 8080 (Cove Point price increase); Harris, Tr. 8089

(Memphis Light, Gas & Water price increase).

Response to Finding No. 653:

Complaint Counsel’s proposed finding number 653 is misleading. Because there 

is no evidence of post-merger price increases, this finding is predicated on a totally false

assumption. Cove Point is not a price increase and Memphis is not a price increase. (FOF

3.168-3.641, 3.608-3.613).

654. Dr. Simpson testified that the Bureau of Economics policy for analyzing mergers 

is simply to apply economic theory and economic methods to the facts in the case. (Simpson, Tr. 

5743).

Response to Finding No. 654:

Complaint Counsel’s proposed finding number 654 is irrelevant since Dr.

Simpson misapplied economic theories and ignored or distorted the facts in this case.

O. Dr. Simpson Established that the Merger Will Likely Lessen Competition

655. "Prior to the acquisition, CB&I's pricing was constrained by PDM EC, an equally 

strong company. When CB&I acquired PDM EC, ... CB&I could increase their price until other 

firms, such as Technigaz or Whessoe, began to constrain their pricing. But since these other

firms were less good they cannot constrain the price as at low a level as PDM EC had." 

(Simpson, Tr. 3072-3).
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Response to Finding No. 655:

Complaint Counsel’s proposed finding number 655 is irrelevant because Dr.

Simpson was wrong. First and foremost, the evidence is overwhelming that there has been both 

actual entry and that there is potential entry constraining CB&I’s prices. (See Harris, Tr. 7209-

13, 7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-7.101, 7.118, 7.113) (See FOF 3.68-

3.227 (actual entry has occurred in the LNG market); FOF 4.16-4.54 (actual entry in the LPG

market); FOF 5.22-5.71 (new competitors have entered the LIN/LOX market); 5.79-5.184 

(LIN/LOX customers are satisfied with prices received and available competitive options)). 

Second, there is no evidence what CB&I has in fact raised its prices and margins; Complaint

Counsel’s purported examples of price increases are based on inappropriate comparisons,

conjecture, and fabrication. (See FOF 7.1-7.41, 3.597-3.641, 5.182-5.211, 7.164 ). Complaint 

Counsel has not and cannot provide a single instance where CB&I has raised prices on a firm

fixed bid or where a customer has paid a higher price for a product than prior to the Acquisition. 

Complaint Counsel has presented no valid evidence indicating that CB&I has in fact raised

prices. (FOF 3.597-3.641, 5.182-5.211, 7.164).

656. LNG tanks are sometimes sold through a sealed bidding process. (Simpson, Tr. 

3073) "In a sealed bidding process what a bidder tries to do is identify who the other bidders

will be, estimate what their costs will be, and then predict what their bidding behavior will be,

and based upon having done this, then the bidder in a sealed bid submits the bid that would

maximize their expected profit." (Simpson, Tr. 3073).

Response to Finding No. 656:

Complaint Counsel’s finding number 656 contains an important admission made 

by Dr. Simpson: that bidders have to estimate their competitors’ costs. Clearly, firms do not

actually know their competitors’ costs which makes it difficult for CB&I to raise prices. It

cannot be assumed that it has lower costs, particularly when it is losing projects left and right. 

Finally, Dr. Simpson’s description of sealed bidding is not evidence for the truth of the matter.
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657. "[W]hen one strong bidder acquires the other strong bidder, the combined firm is 

much less concerned about losing, and as a result it may increase its price." (Simpson, Tr. 3073).

Response to Finding No. 657:

This proposed finding number 657 is irrelevant because CB&I is constrained by

entry. (See Harris, Tr. 7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-7.101, 

7.118, 7.113). Dr. Simpson’s “theory” is not supported by the evidence.

658. Dr. Simpson testified that economic theory predicts that if a merged firm

increases its price, then other firms in the market will also increase their prices. (Simpson, Tr.

3074). Dr. Simpson cited CX 88 as evidence of this type of behavior in this market. (CX 88 at 

PDM-CH006397; Simpson, Tr. 3074-6).

Response to Finding No. 658:

Complaint Counsel’s proposed finding number 658 is logically flawed in the

context of this case where markets contain a few large projects awarded through bidding or

negotiation. If CB&I raises its prices, other firms cannot be counted on to follow the increase. 

Instead they will win the project from CB&I. In some of the relevant markets, such as LPG or

TVC markets, that may be the only project in several years. CX 88 does not support Dr.

Simpson’s assertion. (CX 88). Dr. Simpson simply does not assume a sealed bidding

environment for this conclusion.

659. Dr. Simpson testified that in an environment where bidders submit sealed bids, a 

three-to-two merger or four-to-three merger can also harm competition. (Simpson, Tr. 3076-7) 

(citing Dalkir, Serdar, John Logan, and Robert Masson, 2000, "Mergers in Symmetric and

Asymmetric Noncooperative Auction Markets: The Effects on Prices and Efficiency,"

International Journal of Industrial Organization, 18, 383-413, p. 395) Dr. Simpson noted that

buyers believe they get better prices with more bidders. As evidence of this, Dr. Simpson cites 

Mr. Hall's testimony as an example of one customer who will go "to great lengths to increase the 

number of bidders from two bidders to four bidders." (Simpson, Tr. 3076-7; Hall, Tr. 1801-2).

Response to Finding No. 659:

Complaint Counsel’s proposed finding number 659 is irrelevant. The articles

relied on by Dr. Simpson does not support his conclusions. The article found that in a sealed
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bidding environment, price increases considered by its model are “modest at best.” (Simpson, 

Tr. 3832-33). Further, Dr. Simpson’s use of theory is not supported by evidence. Dr. Simpson’s 

reliance on Clay Hall’s testimony is misplaced. Clay Hall says nothing to support the notion that 

customers “go to great lengths to increase the number of bidders from two bidders to four

bidders.” Further, whether a merger can harm competition does not address the issue of whether 

CB&I’s Acquisition of PDM’s EC division lessened competition or will lessen competition in

the relevant product markets.

660. The Dalkir article supports two very general propositions. (Simpson, Tr. 5762). 

The first is that, in an environment where projects are sold in a sealed bidding process, a merger 

that combined two bidders would lead to less favorable pricing for the buyer. (Simpson, Tr.

5762-6). The second is that, in an environment where projects are sold in a sealed bidding

process, when the merged firm increased its price, the other firms in the market would increase 

their prices. (Simpson, Tr. 5763). Dr. Simpson testified that the Dalkir, et al. article does not

consider a scenario in which the two lowest cost producers merge. (Simpson, Tr. 5764).

Response to Finding No. 660:

Complaint Counsel’s proposed finding number 660 is irrelevant; if the Dalkir, et 

al. article does not consider a scenario in which the two lowest cost producers merger, which is 

Complaint Counsel’s theory in this case, what Dr. Simpson says about the propositions set forth 

in the article is irrelevant. This finding ignores the article’s conclusion that its predicted price

increase is modest at best. Moreover, the article’s results are based on assumptions that entry

would not prevent anticompetitive price increases. That assumption is inappropriate in the

markets at issue here. Finally, CB&I’s state of mind is relevant to the bid theory Dr. Simpson

cites, and the model does not account for CB&I’s state of mind which suggests it cannot increase 

prices. (See FOF 7.241, 7.243).

661. Dr. Simpson testified that buyers sometimes have information about the costs of

other firms (Simpson, Tr. 3077-9, citing to CX 1175, CX 185). In a bidding contest where the 

various bidders know the costs of competing bidders, economic theory predicts that the lowestcost bidder would undercut the second lowest-cost bidder by a slight amount and obtain the

project at basically the second lowest-cost bid. (Simpson, Tr. 3077). In these cases, a merger of 
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the two lowest-cost competitors in the market means price is set by the third lowest bid rather 

than the second lowest bid. (Simpson, Tr. 3079).

Response to Finding No. 661:

Finding number 661 is irrelevant because Dr. Simpson’s statement is irrelevant;

buyers do not need to know the costs of firms -- they only care about who offers the lowest price. 

There is no support for the notion that bidders know each others’ costs -- Dr. Simpson admits as 

much. (Simpson, Tr. 3073, 3771) (FOF 7.83). The evidence indicates that competitors do not 

know each others costs. (FOF 7.87, 7.88).

662. Instances where the second best bidder sets the price do not describe all sales of

LNG tanks in the United States, because according to this theory, CB&I should always win if it 

is the lowest-cost bidder. (Simpson, Tr. 3086-8). According to Dr. Simpson, observations of

CB&I losing a project post-acquisition are accounted for by a different type of analysis than oralauction theory. (Simpson, Tr. 3088). Dr. Simpson testified that the bidding theory also

incorporates the idea that a low-cost bidder could occasionally lose a bid. (Simpson, Tr. 3089).

Response to Finding No. 662:

Complaint Counsel’s proposed finding 662 makes no sense. The first sentence,

that “instances where the second best bidder sets the price do not describe all sales of LNG tanks, 

because according to this theory, CB&I should always win if it is the lowest-cost bidder” seems 

to be a true statement; CB&I does not always win and is not shown by Complaint Counsel to be 

the lowest-cost bidder. The next sentence, “according to Dr. Simpson, observations of CB&I

losing a project post-acquisition are accounted for by a different type of analysis than oralauction theory,” is irrelevant. No theory can explain away the reality that Complaint Counsel’s 

theory of its case is undermined by entry. The last sentence, that “bidding theory also

incorporates the idea that a low-cost bidder could occasionally lose a bid” is irrelevant since

CB&I has lost more than the occasional bid. CB&I has lost about 80% of the post-Acquisition 

dollars available.
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663. Dr. Simpson testified that buyers in these markets may attempt to play the various 

bidders off against each other in order to obtain lower prices. In these cases, buyers look at bids 

obtained for a particular project and then give the various bidders feedback regarding where their 

bids rank with respect to one another. The bidders then respond by changing their bids. 

(Simpson, Tr. 3079-3080) (citing to CX 272, CX 192, CX 221, CX 147 as examples)).

Response to Finding No. 663:

Complaint Counsel’s proposed finding 663 is incomplete and false because, as

customers have testified, they “bluff” when they play competitors off each other. (Patterson, Tr. 

364). This does not provide competitors with truthful information about each other.

664. Dr. Simpson testified that a bidding process where buyers play bidders off against 

each other can resemble an oral (open-outcry) auction (Simpson, Tr. 3086). In an oral (openoutcry) auction, the lowest-cost bidder wins the bid at a price slightly lower than the second

lowest-cost bidder's cost. (Simpson, Tr. 3084-5). In this type of auction, a merger of the two

lowest-cost bidders means that the second lowest bid no longer establishes the price. Rather, the 

third lowest bid establishes the price. (Simpson, Tr. 3085-6). (citing to the Merger Guideline and 

Tschantz, Steven, Philip Crooke, and Luke Froeb, 2000, "Mergers in Sealed versus Oral

Auctions," International Journal of the Economics of Business, 7(2), 201-212.).

Response to Finding No. 664:

Complaint Counsel’s proposed finding number 664 is inaccurate because Dr.

Simpson does not account for the fact that customers frequently do not tell the truth when

playing competitors against each other. (Patterson, Tr. 364). This means simply that rather than 

working like a normal blind auction, it is a blind auction where competitors are getting false

information and having to make predictions and behave based on misinformation. Dr. Simpson 

admitted this complicates a bidder’s decision to try to hold the line on price. (Simpson, Tr.

3770-71).

665. A PDM document (CX 921) states: [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 921 at CB&I 003613-HOU, in camera). Dr. 

Simpson testified that this suggests that CB&I "will increase price and earn a higher profit

margin and have less sales" post-acquisition. (Simpson, Tr. 3098). Sales decline when prices

increase, and, as Dr. Simpson testified, higher profit margins could not stem from efficiencies in 

this case because efficiencies would cause sales to either stay the same or increase. (Simpson, Tr. 

3098).
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Response to Finding No. 665:

Complaint Counsel’s proposed finding number 665 is irrelevant because Dr.

Simpson admitted that he knows absolutely nothing about CX 921. (Simpson, Tr. 4036-37). 

Further, he admitted that he did not know if CX 921 even pertained to the relevant product

markets. (Simpson, Tr. 4037). It is totally disingenuous for Complaint Counsel to rely on this 

document, when Dr. Simpson admitted to knowing nothing about the document. Luke Scorsone 

testified that the higher profit margin would be the product of cost-savings. (Scorsone, Tr. 1571-

73). The remainder of this proposed finding is irrelevant since there is no evidence that there

will be price increases in the relevant product markets, and it fails to account for the entry that 

has and will constrain CB&I’s prices.

666. Dr. Simpson testified that makers of liquefaction units, such as Black & Veatch

and Lotepro, would be hurt by a reduction in competition for LNG tanks. (Simpson, Tr. 3125). 

According to Dr. Simpson: "The price for an LNG peak-shaving plant would have two

components, the tank and the liquefaction unit and some of the other stuff. So when buyers are 

looking at purchasing one of these, they look at the overall price. To the extent that the tank 

component increases in price, that increases the overall price. To the extent that this higher price 

prompts buyers to purchase fewer of these peak-shaving plants, that would hurt the makers of the 

liquefaction units. So, ... the makers of the liquefaction units would be concerned about a price 

increase for LNG tanks." (Simpson, Tr. 3126).

Response to Finding No. 666:

Complaint Counsel’s finding number 666 is irrelevant because Dr. Simpson is not 

a fact witness and is wrong. There is no factual record cite - only Dr. Simpson’s unsupported

speech. First, whether makers of liquefaction units would be affected by a reduction in

competition for LNG tanks is irrelevant since there has been no reduction of competition for

LNG tanks. Further, there is no support for the notion that makers of liquefaction units would be 

hurt by a reduction in competition for LNG tanks. For example, on cross-examination Mr. Price 

was forced to admit that even if his liquefaction unit had been bid with the lowest tank price, the 
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high cost of his liquefaction unit would have nonetheless resulted in being the last bidder. (Price, 

Tr. 649).

667. Dr. Simpson testified that he believes that CB&I's acquisition of PDM is likely to 

reduce competition in the LNG market and in each of the other markets alleged in the complaint. 

(Simpson, Tr. 2984, 3127).

Response to Finding No. 667:

Complaint Counsel’s proposed finding number 667 is irrelevant because Dr.

Simpson was wrong. His analysis was based on totally inappropriate analysis and assumptions. 

(Harris, Tr. 7338-7376). Further, Dr. Simpson’s testimony is against the weight of the evidence 

which indicates that CB&I’s pricing will be constrained and has been constrained by actual and 

potential entrants.

668. Dr. Simpson testified that the acquisition "already has led to higher prices." 

(Simpson, Tr. 2985). While evidence of actual anticompetitive effect is rare, finding such

evidence confirms that the acquisition is likely substantially to lessen competition. (Simpson, Tr. 

2989). Dr. Simpson testified that the evidence of anticompetitive harm in this case provides

confirmation that CB&I's acquisition of PDM reduced competition. (Simpson, Tr. 3149).

Response to Finding No. 668:

Complaint Counsel’s proposed finding is irrelevant because Dr. Simpson is

wrong; there is no valid evidence of actual anticompetitive effects. FOF 3.597-3.641, 5.182-

5.211, 7.164.

669. Because CB&I's business strategy is to sell its tanks in combination with other

larger portions of a project, such as process units or import terminals, the likely reduction of

competition in LNG tanks will, in turn, affect competition in LNG peak-shaving facilities and

LNG import terminals. (Simpson, Tr. 3127, 3149, 3151 (citing to CX 186)). Dr. Simpson

testified that the reduction in competition for LNG tanks would flow over into the other parts of 

LNG import terminals because CB&I has a preference for selling LNG tanks and the other parts 

of an LNG terminal together. (Simpson, Tr. 3354). Dr. Harris conceded "If CB&I had market 

power that would allow them to harm competition in those vertical integration markets ..." 

(Harris, Tr. 7349).
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Response to Finding No. 669:

Complaint Counsel’s proposed finding number 669 is incorrect; there is no

evidence supporting a finding that there are vertical anticompetitive effects. (FOF 7.137, 7.138). 

The market for EPC (engineering, procurement, construction) contracts for import terminals or

peak shaving plants is very competitive; CB&I is only one of many firms competing for such

contracts. CB&I’s business strategy of trying to sell tanks in conjunction with other parts of a

project pre-dates the Acquisition. (FOF 7.137, 7.138). Moreover, the supposed anticompetitive 

effects in the vertical integration markets depend on there being anticompetitive effects in the

LNG tank markets, and there are no anticompetitive effects in the LNG tank markets. This

proposed finding is simply unsupported by evidence and contrary to the actual record evidence 

and is another example of Complaint Counsel attributing fact witness status to its economist.

P. Dr. Harris Overlooked Critical Evidence Inconsistent with His Conclusions

670. Dr. Harris' conclusions and analysis regarding the effects of the acquisition are

unreliable because they lack support in the record and are contradicted by unrebutted evidence

ignored or rejected by Dr. Harris. Dr. Harris made virtually no reference to CB&I' s and PDM's 

internal documents in his direct testimony and, on cross examination, showed little recollection 

of the companies' key documents. (See generally Harris, Tr. 7152-8000).

Response to Finding No. 670:

Complaint Counsel’s proposed finding 670 is patently false. That Dr. Harris does 

not rely on irrelevant and outdated PDM and CB&I internal documents only supports a finding 

that Dr. Harris’ reasoning was sound and supported by relevant evidence.

671. At trial, Dr. Harris could not identify any CB&I or PDM planning documents that 

he thought supported his testimony. (Harris, Tr. 7579-80 ("I just can't do it.")). Dr. Harris did 

not recall pointing to any internal planning documents to support his direct testimony regarding 

competition in the relevant markets following the acquisition. (Harris, Tr. 7578-79). He was

unable to identify any such documents when asked to do so on cross examination. (Harris, Tr. 

7578). Moreover, Dr. Harris was unable to identify any CB&I business plan that supports the

testimony given by Dr. Harris, by Mr. Glenn or by Mr. Scorsone. (Harris, Tr. 7580-81). Dr.

Harris did not ask Respondents to provide to him any of CB&I's post-acquisition planning

documents that were not in the discovery record of this matter. (Harris, Tr. 7580).
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Response to Finding No. 671:

Complaint Counsel’s proposed finding is irrelevant; CB&I’s planning documents 

do not prove whether the Acquisition will lessen competition in the relevant markets. Further the 

proposed finding is false. On direct examination, Dr. Harris cited to specific internal documents 

supporting his contention that competition will not be lessened. (Harris, Tr. 7321-24). 

Complaint Counsel apparently feels that a memory test rather than the strength of the economic 

evidence in the record determines which theory should be accepted by this Court. (See Harris, 

Tr. 7920-21 (indicating that he did not memorize record)).

672. Dr. Harris acknowledged that Respondents' documents showed that prior to the

acquisition, competition between CB&I and PDM was intense (Harris, Tr. 7588) and that "they 

cared very much about competition with each other" (Harris, Tr. 7589). Dr, Harris

acknowledged that competition in general put pressure on CB&I to lower its costs. (Harris, Tr. 

7588).

Response to Finding No. 672:

Complaint Counsel’s proposed finding number 672 is irrelevant since the

important question is whether in the future prices will be constrained -- the evidence shows that 

it will. (See Harris, Tr. 7180-81).

673. Dr. Harris was unaware of a statement in PDM's 2000 strategic plan that claimed 

CB&I as its "only competitor" in cryogenic tanks in the United States. (Harris, Tr. 7554; CX

660). Dr. Harris was unaware of another statement in PDM's strategic plan that stated that prior 

to the acquisition PDM regarded CB&I as PDM's only competitor in LNG tanks in the United 

States. (Harris, Tr. 7554).

Response to Finding No. 673:

Complaint Counsel’s proposed finding is irrelevant because the only important 

issue is whether competition will be lessened by the Acquisition. Further, that very strategic

plan expressed concern that Skanska and other foreign players might enter the market.

674. Dr. Harris was unaware of a statement in PDM 's most recent strategic plan 

(2000) that stated that "CB&I is PDM EC's only competitor on domestic cryogenic, LNG, LPG, 

ammonia and thermal vacuum projects." (Harris, Tr. 7556 ("I was not specifically aware of this 
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sentence."); Harris, Tr. 7568 ("I was not specifically aware of this document. That' s not – this 

statement, this sentence."); see CX 660 at PDM-HOU 005016).

Response to Finding No. 674:

Complaint Counsel’s proposed finding is irrelevant because the only important

issue is whether competition will be lessened by the Acquisition.

675. Further, although Dr. Harris testified that he had conversations with Mr. Scorsone 

about the case, he stated that did not discuss PDM's 2000 strategic plan with Mr. Scorsone and 

that it did not occur to Dr. Harris to ask Mr. Scorsone about the document. (Harris, Tr. 7561). 

Indeed, Dr. Harris never asked anyone about the document. (Harris, Tr. 7564, 7566).

Response to Finding No. 675:

Complaint Counsel’s proposed finding is irrelevant because the only important

issue is whether competition will be lessened by the Acquisition. Dr. Harris did not ask Mr.

Scorsone about the planning document because it is irrelevant.

676. In an attempt to reconcile inconsistencies between his conclusions and PDM's

strategic planning documents, which recognized CB&I as PDM's only competitor in these

markets, Dr. Harris speculated that the document was "just with blinders on" (i.e. with the

narrow focus on who PDM competed with for current projects when the plan was developed). 

(Harris, Tr. 7558). However, Dr. Harris admitted , "I don't know why they focused on what they 

focused on." (Harris, Tr. 7578 ("I don't know why they did that, why they focused back then –

I'm ignorant of that fact.") (emphasis supplied)). Dr. Harris acknowledged that he did not

discuss with anyone from CB&I or PDM his unsupported notion that CB&I's and PDM's internal 

documents were written with a narrow view of competition. (Harris, Tr. 7566).

Response to Finding No. 676:

Complaint Counsel’s proposed finding mischaracterizes Dr. Harris’ testimony. 

Dr. Harris stated that this snapshot of pre-merger competition does not account for entry. 

(Harris, Tr. 7558). Dr. Harris was unequivocal that the only important evidence to consider is

that which is predictive of future competition. (Harris, Tr. 7222). Complaint Counsel should not 

criticize Dr. Harris for not relying on irrelevant documents.

677. Dr. Harris acknowledged that Respondents' internal business plans were honest

attempts to identify the significant competitive forces faced by Respondents. (Harris, Tr. 7582-

83).
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Response to Finding No. 677:

Complaint Counsel’s finding number 677 is true but irrelevant since these internal 

business plans are old and thus irrelevant. However, Dr. Harris does not truly have foundation to 

express and opine as to whether the internal business plans were honest.

678. Dr. Harris failed to recall that, prior to the acquisition, Mr. Scorsone expected that 

a combination of CB&I and PDM would enable the combined firm to increase price and

margins. (Harris, Tr. 7491 ("I don't specifically remember that.")).

Response to Finding No. 678:

Complaint Counsel’s proposed finding is irrelevant since Complaint Counsel has 

not shown that Mr. Scorsone expected the combined firm to increase price and margins. Further, 

this is irrelevant since Dr. Harris did not rely on this “evidence” and post-Acquisition events

have suggested that Mr. Scorsone’s expectation was wrong.

679. Dr. Harris testified at length regarding his perception of the competitive

environment faced by CB&I following the acquisition. (See e.g. Harris, Tr. 7356-7). However, 

when asked about CB&I deleting, following the acquisition, references to competition in the

mandatory disclosure of risks in its S-1 SEC filings and prospectuses, Dr. Harris responded, "I 

don't remember precisely what they did in their filings." (Harris, Tr. 7497).

Response to Finding No. 679:

Complaint Counsel’s proposed finding is misleading since there is no evidence

that CB&I deleted references to competition in the mandatory disclosure of risks in its S-1 filings 

and prospectuses and it is a gross distortion to suggest otherwise. The very S-1 cited by

Complaint Counsel contained a disclosure in a different part of the same indicating that CB&I 

has numerous competitors. (CX 1031 at 36).

680. Further, Dr. Harris acknowledged that he did not remember the details of CB&I's 

October 31, 2002 conference call with financial analysts in which CB&I executives recounted

CB&I's competitive environment. (Harris, Tr. 7862-63; CX 1731 at 44). When confronted with 

the statements by Mr. Glenn regarding the competitive environment in which CB&I operates, Dr. 

Harris acknowledged that CB&I's statements to investors are "not consistent with [Dr. Harris's] 

view of the market." (Harris, Tr. 7867-68 ("that's not consistent with my understanding of the

market."); CX 1731).
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Response to Finding No. 680:

Complaint Counsel’s finding number 680 is incorrect. Dr. Harris recalled the

conference call but had not memorized the exact statements. Further, the conference call

consists of conclusional statements made in the context of an attempt to make CB&I’s stock

more attractive to investment analysts and which generally apply to all of CB&I’s business, not 

just the small share in the relevant markets. Dr. Harris relied on empirical record evidence

concerning the actual ease of entry in the relevant market and the effects of the acquisition.

681. When asked about CB&I management's recent statement to CB&I's investors that 

CB&I is well-positioned to capitalize on a major share of the LNG tank market, Dr. Harris

responded, "I don't recall the specifics." (Harris, Tr. 7852; CX 1731 at 12; CX 1729 at 9). When 

confronted with the public statement by Mr. Asherman, CB&I's executive vice president and

chief marketing and sales officer, the Economist stated that he did not know what the term

"capitalize on market share" meant and thus could not comment on whether he agreed with Mr. 

Asherman 's statement. Dr. Harris did not ask the CB&I executive what he meant by the

statement. (Harris, Tr. 7853). Dr. Harris did not recall Mr. Asherman's further statement to

investors, on July 17, 2002, that CB&I does not see any significant shifts in the marketplace in 

which it operates. (Harris, Tr. 7882-83; CX 1729 at 10). However, Dr. Harris acknowledged 

that the CB&I executive's statement is "not consistent with my understanding." (Harris, Tr.

7883).

Response to Finding No. 681:

Complaint Counsel’s proposed finding is irrelevant because CB&I was clearly

talking about the worldwide LNG tank market, which, in the context of market capitalization,

says nothing specific about the U.S. LNG tank market. (CX 1729 at 12 (“we remain confident 

that supply and demand. . . will continue to drive new cap ex in LNG around the world. CB&I is 

well positioned to capitalize on that market.” In addition, CB&I’s business is to capitalize on the 

markets in which it participates -- this is not to say that it dominates or that there is no

competition. Again, whether Dr. Harris memorized the record is irrelevant.

682. Dr. Harris had only a vague recollection of Mr. Glenn's statements to investors

that "LNG tank projects are driving CB&I's backlog" and that the CB&I "prospect list and the

projects CB&I is tracking look better to CB&I today than at any time [since CB&I became an 

independent company]." (Harris, Tr. 7853; CX 1731 at 24, 28).
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Response to Finding No. 682:

Complaint Counsel’s proposed finding is false and irrelevant. These statements

were made by Mr. Glenn and Mr. Goodrich. That aside, these statements are not specific to the 

United States markets, which make them useless in examining the U.S. LNG market. Again, Dr. 

Harris’ memorization skills are not at issue in this case.

683. Dr. Harris had only a vague recollection of PDM EC's determination in January

2000 to bid a very competitive price on the Cove Point LNG tank because PDM knew that it

would be bidding against CB&I for the project. (Harris, Tr. 7843; CX 293 at CB&I/PDM-H 

4008141). When asked about PDM increasing its proposed bid for the Cove Point LNG tank

after signing the letter of intent with CB&I, Dr. Harris confessed: "I don't remember every little 

price, ... I don't remember the details." (Harris, Tr. 7498).

Response to Finding No. 683:

Complaint Counsel’s proposed finding is irrelevant because CB&I has not

improperly increased price on the Cove Point LNG tank and Dr. Harris does not rely on the Cove 

Point 2000 bid in his analysis.

684. When asked whether PDM had provided a firm, fixed price to Boeing prior to the 

acquisition, Dr. Harris responded, "They may have. I don't remember that clearly." (Harris, Tr. 

7504). When asked whether, following the acquisition, CB&I increased by over 50% its margin 

on the Spectrum Astro TVC contract, Dr. Harris responded, "I remember general facts ... But I

don't remember the numbers, so I can't answer your question with any specificity."(Harris, Tr.

7506).

Response to Finding No. 684:

Complaint Counsel’s proposed finding is irrelevant since Dr. Harris did not

memorize the entire record. Dr. Harris did, unlike Dr. Simpson, review the entire record,

however. (Harris, Tr. 7172; Simpson, Tr. 3624-26) (FOF 7.48).

685. When asked whether, prior to the acquisition, PDM provided firm prices +/- 5% 

when requested by Linde BOC Process Plants LLC, Dr. Harris acknowledged: "I don't remember 

one way or the other." (Harris, Tr. 7508-9).
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Response to Finding No. 685:

Complaint Counsel’s proposed finding is irrelevant since Dr. Harris did not

memorize the entire record. (Harris, Tr. 7920-21). Dr. Harris did, unlike Dr. Simpson, review 

the entire record, however. (Harris, Tr. 7172; Simpson, Tr. 3624-26) (FOF 7.48).

686. In presenting his analysis and opinions regarding the competitive effects of the

acquisition, Dr. Harris overlooked significant testimony regarding non-competitive behavior by

CB&I and PDM during the pendency of the acquisition. When asked about CB&I and PDM

suspending fractious or unruly competition in TVCs after entering into the acquisition letter of

intent, Dr. Harris stated: "I'm unaware of such an instance." (Harris, Tr. 7466).

Response to Finding No. 686:

The first half of Complaint Counsel’s proposed finding number 686 is false. Dr. 

Harris did not “overlook” any testimony. Again, Dr. Harris did, unlike Dr. Simpson, review the 

entire record. (Harris, Tr. 7172; Simpson, Tr. 3624-26) (FOF 7.48). The second part of this

proposed finding is irrelevant because there is no evidence to support the assertion that “CB&I 

and PDM suspended fractious or unruly competition in TVCs.”

687. Dr. Harris bases his conclusions regarding entry and competitive effects in the

LNG tank market primarily on his observations regarding Dynegy's Hackberry LNG project. 

His testimony reveals a misunderstanding on his part regarding what happened in the Dynegy

project and serious flaws in his analysis of entry and competitive effects.

Response to Finding No. 687:

Complaint Counsel’s proposed finding, unsupported and devoid of explanation, is 

false. Dr. Harris based his views on far more than Dynegy, and he does understand what

happened in that project.

688. Explaining his conclusion that competitors in the United States LNG market have 

changed since 2001 (Harris, Tr. 7220-23), Dr, Harris noted that CB&I has "clearly lost the

Dynegy job." (Harris, Tr. 7223). Dr. Harris testified at length about the significance of this

"loss" in his analysis. Dr. Harris testified that the Dynegy project represents "a natural market 

experiment." (Harris, Tr. 7263).
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Response to Finding No. 688:

Complaint Counsel’s proposed finding is incomplete; Dr. Harris does not

exclusively rely on the Dynegy job to support his conclusion that competitors in the United

States LNG market have changed since 2001.

689. Dr. Harris bases his critical loss analysis on CB&I losing the Dynegy project. 

(Harris, Tr. 7263 ("I looked at critical loss and have determined that CB&I has lost more – way 

more business than they could have afforded to lose even if they had tried a price increase.... ")). 

He concluded from CB&I's "loss" of the Dynegy project that CB&I must not have lower costs

than foreign firms. (Harris, Tr. 7264 ("If ... CB&I is the lowest-cost producer ... CB&I should 

have been able to win this job and be able to win it – well, just win the job.")).

Response to Finding No. 689:

Complaint Counsel’s proposed finding is false. Dr. Harris does not base his

critical loss analysis on CB&I losing the Dynegy project, he considers it as part of his analysis.

690. Dr. Harris infers that CB&I cannot have lower costs, in the United States, than

foreign LNG suppliers, because, according to Dr. Harris, Dynegy would be taking a risk of

losing multiple millions of dollars by not accepting CB&I's tank bid if the other bidders were not 

competitive. (Harris, Tr. 7349-50).

Response to Finding No. 690:

Complaint Counsel’s proposed finding is irrelevant since it is Complaint

Counsel’s theory that CB&I is the lowest cost competitor and has failed to prove this fact or do 

any analysis whatsoever. Dr. Simpson admitted that he knows nothing about the costs of

CB&I’s competitors. (Simpson Tr. 3921-37) (FOF 7.150). Dr. Harris does not have to prove

that CB&I is not the low cost competitor. Further, this finding mischaracterizes Dr. Harris’

analysis. Dr. Harris states that if CB&I is the lowest cost producer and knows its competitors'

costs, which is Complaint Counsel’s contention, it would win every project but has not. It is

certainly relevant evidence that Dynegy did not accept Dr. Simpson’s assumptions.

691. None of the conclusions Dr. Harris draws from his Dynegy "natural market

experiment" has any validity. CB&I did not lose the Dynegy project; CB&I declined to bid. 

Apparently recognizing that Dr. Harris had stretched the facts, Respondents asked Dr. Harris, at 
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the conclusion of his direct testimony, for clarification of his statement that CB&I "lost" the

Dynegy project. (Harris, Tr. 7347-48). He acknowledged that the term "lost" may be

inappropriate, but he failed to explain how the various conclusions he had testified to based on 

what he had perceived to be CB&I's "loss" of the Dynegy project, would withstand CB&I' s

failure to bid on the project. (Id.).

Response to Finding No. 691:

Complaint Counsel’s proposed finding is false. The fact that CB&I initially chose 

not to bid on the project based on its concerns about submitting its pricing and designs to Black 

& Veatch, a competitor and partner of one of the bidders, is uncontroverted. (See 3.297-3.306). 

Ultimately, CB&I decided to submit a bid and Dynegy refused to accept it. (See FOF 3.303,

3.304). That is a loss by CB&I. The proposed finding fails to account for the fact that one of the 

reasons Dynegy would not accept CB&I's bid was because it was satisfied with the bids it

received from Skanska/Whessoe, TKK/AT&V and Technigaz/Zachry. (See FOF 3.304, 3.305).

692. When asked whether CB&I declined to bid separately for front-end engineering 

and design services for Dynegy's Hackberry LNG project, Dr. Harris responded, "I'm not sure. I 

get the FEED and the EPC issues confused." (Harris, Tr. 7511-2).

Response to Finding No. 692:

Complaint Counsel’s proposed finding is irrelevant. This was clearly not

important to Dr. Harris’ analysis.

693. Dr. Harris concluded that the Hackberry project was an unacceptable loss to

CB&I, but he failed to factor into his analysis of his natural experiment regarding the LNG jobs 

not taken by CB&I the statement by Mr. Glenn that CB&I would not object to some slowdown 

in the pace of new LNG projects. (Harris, Tr. 7862-63; CX 1731 at 37).

Response to Finding No. 693:

The proposed finding is irrelevant because CB&I lost the Dynegy job and in the 

process learned its competitors’ prices were at levels satisfactory to the customer.

694. Based on his flawed observation that Dynegy was happy with the other bidders,

Dr. Harris concluded that CB&I has no ability to exercise market power. (Harris, Tr. 7349). 

However, Dr. Harris acknowledged that Dynegy "on its own" does not itself have the expertise 

to analyze the bids on the Hackberry project and make an informed selection. (Harris, Tr. 7794-
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7796). Accordingly, Dynegy hired Black & Veatch to evaluate the bids. (Price, Tr. 609-10; 

Harris, Tr. 7796). Dr. Harris did not remember that Mr. Price, Dynegy's engineering consultant 

from Black & Veatch, testified to his belief that competition between CB&I and PDM EC would 

have produced more favorable terms than those offered to Dynegy by other bidders. (Harris, Tr. 

7796; Price, Tr. 622, 626-28, 630).

Response to Finding No. 694:

Complaint Counsel’s proposed finding is false. First, Mr. Puckett of Dynegy

indeed testified that Dynegy was happy with the bidders. (Puckett, Tr. 4540, 4587-88) (FOF

3.248). Second, Dr. Harris stated that he thought Mr. Puckett testified that it needed the

assistance of a consultant to evaluate bids. (Harris, Tr. 7794-96). Dr. Harris was not making his 

own judgment to that effect. Brian Price’s testimony is irrelevant since he never even saw the

Dynegy bids. (Price, Tr. 610) (FOF 3.660). Black & Veatch made no effort to solicit CB&I for 

the Dynegy project. (Price, Tr. 619). If Mr. Price really believes that Dynegy was not getting 

good prices, it certainly never communicated that fact to its client. (See Price, Tr. 640-41).

695. Dynegy cannot ignore the rules it has established for competitive bidding of the

Hackberry project, because doing so would discourage competitive bidding on future Dynegy

projects. Dr. Simpson testified: "There are reasons why Dynegy would not be willing to accept a 

late bid even if Dynegy thought that the late bid might end up being lower, the reasons being that 

Dynegy would do business with vendors in the future, and if it looks as if Dynegy is willing to 

bend their rules in one case, that this could have adverse effects in their dealings with other

firms." (Simpson, Tr. 3338). Dr. Simpson also testified: "Another reason why a buyer would be 

- might be reluctant to accept a late bid is that the late bidder hadn't complied with the way the 

buyer wanted things done initially, and to the extent that the buyer thought that might indicate

that the person submitting the late bid would not follow the buyer's instructions in other areas, ... 

that would be a basis for why the buyer would be reluctant to purchase from that late bidder." 

(Simpson, Tr. 3341-2).

Response to Finding No. 695:

Complaint Counsel’s suggestion that Dynegy would be willing to lose millions of 

dollars (if Complaint Counsel were correct that CB&I could offer the lowest price) to be “fair” 

and keep with purported “rules” is totally ludicrous, without support, and contrary to the

testimony of Dynegy, who testified under oath that it was happy with the bids it received. (FOF 
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3.304, 3.305). That Complaint Counsel cites Dr. Simpson for this proposition instead of Mr.

Puckett is telling. Dr. Simpson is not a fact witness, and his statement is not admitted for the

truth of the matter asserted.

696. Further, Dr. Harris's conclusion that not accepting a delinquent bid from CB&I

cost Dynegy at the risk of losing "multiple millions of dollars" if CB&I was the lowest cost

producer is based on the unfounded assumption that CB&I would have bid its cost. (Harris, Tr. 

7349-50). If CB&I had bid on the tanks, it would have maximized its profit by bidding at a price 

just below the cost of the other bidders. Merger Guidelines § 2.21 n.21; (Simpson Tr. 5762).

Response to Finding No. 696:

Complaint Counsel’s proposed finding is irrelevant since CB&I could not have

possibly known the cost of the other bidders. (See FOF 7.82-7.88). Complaint Counsel has not 

presented any evidence suggesting CB&I knows its competitors’ costs, and has done no cost

analysis indicating that CB&I is the low-cost producer. (FOF 7.150-7.156).

697. The other "natural market experiment" relied on by Dr. Harris to support his

conclusions with respect to the U.S. LNG tank market is also based on a misinterpretation of the 

evidence by Dr. Harris. Dr. Harris misconstrued the results in Trinidad to speculate that prices 

have not changed in Trinidad and that foreign firms are able to "compete with a cost structure

similar or better than CB&I." (Harris, Tr. 7351). Dr. Harris ignores CB&I 's price increases for 

materials and other cost escalations. (JX 11 at 1). After adjusting for changes in cost between 

the third and fourth tank, CB&I increased the price of the Trinidad LNG tank by 5-6 percent. 

(Id., emphasis supplied).

Response to Finding No. 697:

Complaint Counsel’s proposed finding number 697 ignores the fact that CB&I

lost the contract for the fourth tank to be built at Trinidad. Thus, the price it offered will not be 

the price the customer pays. Furthermore, the proposed finding misapprehends Dr. Harris’

testimony. Dr. Harris testified that CB&I's pricing was roughly 5 percent higher than their

pricing had been on the earlier Trinidad project and the winning price was roughly 5 percent 

lower than the CB&I price; that suggests that the winning bid in Trinidad post-Acquisition was 

almost identical to the winning bid in Trinidad pre-Acquisition after materials cost escalation is 
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accounted for. (Harris, Tr. 7351) (FOF 7.62). Obviously, CB&I’s increased price of 5 percent 

was considered by Dr. Harris -- this is important to the point he makes. Since CB&I’s price was 

5% higher than its previous price, and it lost by 5%, that means the winning price was the same 

as CB&I’s earlier price. Complaint Counsel seems to suggest that CB&I’s three year price old 

on tank three should be compared to its recent price on tank four, without accounting for raw

materials escalation, which lead to an improper comparison.

698. CB&I is likely to have increased its margin on the fourth tank by more than 5-6 

percent. CB&I's actual costs in performing the work would be reduced as compared to its costs

for the third tank because its engineers, project manager, supervisors and foremen were familiar 

with conditions at the site and conditions in Trinidad, CB&I had a skilled LNG tank crew in

place, and CB&I had already transported equipment to the site. (Harris, Tr. 7801-03). However, 

Dr. Harris did not examine CB&I's failure to pass through its cost savings on the fourth LNG

tank in Trinidad (Harris, Tr. 7801-03 ("I didn't do that analysis.")), but acknowledged that CB&I 

would have been more likely to have won the project if it had chosen to pass through its cost

savings. (Harris, Tr. 7808-09).

Response to Finding No. 698:

Complaint Counsel’s proposed finding is unsupported and represents a complete

mischaracterization of Dr. Harris’ testimony. No one performed the analysis Complaint Counsel 

suggests because there is no evidence related to it one way or the other. Thus, this finding is

unsupported “theory” and is neither fact nor evidence. First, Complaint Counsel’s assertion that 

“CB&I is likely to have increased its margin on the fourth tank by more than 5-6 percent” is

totally unsupported. Next, there is no support to Complaint Counsel’s suggestion that CB&I did 

not include “cost savings” in its price. Moreover, Dr. Harris never agreed that CB&I even could 

achieve cost savings - he said they might but he didn’t know. (Harris, Tr. 7802-03). Further,

Complaint Counsel totally mischaracterizes Dr. Harris’ testimony -- Dr. Harris never

“acknowledged that CB&I would have been more likely to have won the project if it had chosen 

to pass through its cost savings.” Dr. Harris stated that “the lower CB&I's bid is for any

particular job, all else equal, the higher the likelihood they'll win. It doesn't mean they would
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win, but all else equal, the higher the likelihood.” (Harris, Tr. 7809). Obviously, the likelihood 

of winning a job will increase the lower a price is -- however there is no support whatsoever for 

Complaint Counsel’s proposed finding.

699. Dr. Harris contradicted himself in his testimony regarding pricing of LNG tanks

in Trinidad. In his direct testimony Dr. Harris claimed to compare the prices of the third and

fourth LNG tanks in Trinidad and testified that the results are "strong evidence that prices ...

have not changed in LNG." (Harris, Tr. 7351). However, on cross examination, when asked

whether he was aware that CB&I had increased the price of the fourth tank in Trinidad by 15% 

over the price of the third tank, Dr. Harris disavowed his previous testimony, stating that "[i]t 

does not make sense" to compare prices on different LNG projects (Harris, Tr. 7798-99) and that 

if he had done so in his direct testimony he "should have been saying margins" (Harris, Tr. 7800; 

Harris, Tr. 7803 ("I meant to say 'margin,' but I may have said 'prices' inadvertently.")).

Response to Finding No. 699:

Complaint Counsel’s proposed finding 699, that Dr. Harris contradicted himself, 

is false. Dr. Harris did not “disavow” his testimony. Dr. Harris obviously clarified his

testimony, arguing that margins are the best basis for comparison. In fact, Complaint Counsel

has devoted many proposed findings of fact to, ostensibly, making comparisons of pre and postAcquisition margins. Complaint Counsel, however, only compares budget prices.

700. Despite his testimony, Dr. Harris examined neither CB&I's bids nor CB&I's

estimates on the third and fourth tanks in Trinidad and did not even ask Respondents to show

him its bids or estimates on the two projects. (Harris, Tr. 7807-08).

Response to Finding No. 700:

Complaint Counsel’s proposed finding is irrelevant; the parties stipulated to the

facts surrounding the Trinidad project. (JX 11).

701. Although Dr. Harris claimed that CB&I's loss of an LNG tank project in Trinidad 

is relevant to analysis of the effects of the acquisition in the United States, he failed to consider 

El Paso's selection of CB&I as the sole-source supplier for an LNG tank in the Bahamas and for 

an LNG tank in Altamira, Mexico. (Harris, Tr. 7676-77; Glenn, Tr. 4234 ).
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Response to Finding No. 701:

Complaint Counsel’s proposed finding number 701 is irrelevant because, while

the contractor has been selected in Trinidad, that is not the case in the Bahamas or Mexico.

Although El Paso is negotiating with CB&I, if El Paso feels that CB&I’s offers are not good

enough, it can pick another supplier. Thus, it is impossible to directly compare competitors as in 

a bidding situation. Further, El Paso held out the possibility of still bidding out those projects. 

(Bryngleson, Tr. 6179-80).

702. The "natural experiments" relied on by Dr. Harris are specious. The results

observed by Dr. Harris are under CB&I' s control and influence, and Dr. Harris misinterpreted

the facts in examining the results. Dr. Simpson testified that he did not view post-acquisition 

events in the markets named in the FTC's complaint as a natural experiment because CB&I could 

control the outcome of the "experiment." (Simpson, Tr. 5758).

Response to Finding No. 702:

Complaint Counsel’s proposed finding 702 is false and totally unsupported. The

results observed by Dr. Harris are not under CB&I’s control and influence, and Complaint

Counsel has presented, and cites, no evidence supporting this assertion. Further, Dr. Simpson

provided no explanation or analysis whatsoever for his bald statement that “I believe that CB&I 

could control the outcome of the experiment.” (Simpson, Tr. 5758). It is likely that Dr. Simpson 

did not explain how this is possible because it does not make any sense. CB&I cannot control its 

competitors or customers. CB&I lost many post-Acquisition projects with very low margins. If 

it increased its price, it would have lost even more.

703. Other experiments Dr. Harris could have conducted, but failed to examine,

confirm the anticompetitive effects of the acquisition: Did competition between CB&I and PDM 

cause prices to fall prior to signing by CB&I and PDM of the acquisition letter of intent? 

(Harris, Tr. 7839, 7840). Would CB&I and PDM cease fractious competition after signing the

acquisition letter of intent? (Harris, Tr. 7646). Would CB&I invite a competitor to coordinate 

on a bid following the acquisition? (Harris, Tr. 7647-48). Would PDM increase the price of the 

Cove Point LNG tank after signing the acquisition letter of intent? (Harris, Tr. 7648-51, 7839-

40). Would CB&I increase the price of the Cove Point LNG tank following the acquisition? 
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(Harris, Tr. 7652-53, 7840). Would CB&I increase the price of large, field-erected TVCs

following the acquisition? (Harris, Tr. 7654-55).

Response to Finding No. 703:

Complaint Counsel’s proposed finding 703 comprises one unsupported statement 

after another. First, there is no evidence that “competition between CB&I and PDM cause[d]

prices to fall prior to the signing by CB&I and PDM of the acquisition letter of intent,” that

CB&I and PDM cease[d] fractious competition after signing the acquisition letter of intent,” that 

“CB&I invite[d] a competitor to coordinate on a bid following the acquisition,” that “PDM

increase[d] the price of the Cove Point LNG tank after signing the acquisition letter of intent,”

that CB&I increase[d] the price of the Cove Point LNG tank following the acquisition,” or that 

CB&I increase[d] the price of large, field-erected TVCs following the acquisition.” Since none 

of these assertions of Complaint Counsel are true, it makes sense that Dr. Harris did not use them 

as natural market experiments.

These statements are unsupported theories of Complaint Counsel which have been 

squarely rebutted in Respondents’ Findings of Fact and in response to other responses to

Complaint Counsel’s proposed findings.

704. Dr. Harris did not recall that Mr. Glenn had recently acknowledged praise for the 

market discipline CB&I has demonstrated during the past two years. (Harris, Tr. 7857-58; CX 

1731 at 42-43). Dr. Harris concluded that increased price discipline by CB&I following the

acquisition is not relevant to this case. (Harris, Tr. 7860).

Response to Finding No. 704:

Complaint Counsel’s proposed finding 704 is incomplete because Dr. Harris

specifically stated that “I think there's evidence that they [CB&I] have lowered prices, so I guess 

the answer is no, I don't agree [‘that CB&I holds the line on prices’.]” (Harris, Tr. 7857).

705. Despite his speculation that CB&I does not have lower costs than the firms with 

which it competes following the acquisition, Dr. Harris acknowledged that he did not have any 

basis to either agree or disagree with the recent statement by CB&I' s CEO that "because of our 
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concentration on lowering our costs and keeping our costs down, we can still be low bidder and 

make more money on it than most of our competitors, if not all of them." (Harris, Tr. 7862). Dr. 

Harris did not even recall Mr. Glenn's statement that "we think that short of somebody coming 

in, which they do, and just taking a big dive on the price that we can win the work every time

technically. And if they want to dive in and take the work for less than they can execute it for, 

that's fine. We'll just sit and watch them go out of business, too." (Harris, Tr. 7865-66; CX 1731 

at 44-45).

Response to Finding No. 705:

Complaint Counsel’s proposed finding 705 is irrelevant because it is Complaint 

Counsel’s assertion that CB&I has lower costs than its competitors, and this assertion is

completely unsupported. (FOF 7.150-7.156). It is Complaint Counsel’s burden to prove its case, 

which depends on its unsupported notion that CB&I is the low-cost provider. It is not

Respondents’ burden to disprove Complaint Counsel’s totally unsupported arguments. Further, 

Dr. Harris’ testimony that CB&I does not have lower costs than its competitors is actually

supported by evidence. For example, the Trinidad project supports Dr. Harris’ conclusion. 

(Harris, Tr. 7351) (FOF 7.103). CB&I’s continued loss to AT&V in the LIN/LOX market is

evidence that CB&I is not the low cost competitor Complaint Counsel asserts it is.

706. When pressed to state whether he agrees with CB&I's CEO that CB&I can win

LNG projects every time unless someone offers a price below its cost of doing the work, Dr.

Harris acknowledged that Mr. Glenn's statement is not consistent with Dr. Harris's assumption

regarding costs. (Harris, Tr. 7867-68 ("That's not my understanding.")).

Response to Finding No. 706:

Complaint Counsel’s proposed finding is flawed because Mr. Glenn never stated 

that “CB&I can win LNG projects every time. . . .” There is no mention of product or

geographic location anywhere in Mr. Glenn’s statement. (CX 1731 at 44-45).

707. Dr. Harris repeatedly avoided giving direct answers to questions. Dr. Harris

equivocated when asked if he agreed with CB&I's CEO's statement that "for sophisticated

projects like LNG projects and LNG tanks customers don't want to take a chance on a low price 

and a potential second-class job or shoddy welding or any of that kind of stuff." (Harris, Tr.

7868; CX 1731 at 44). Only when pressed by the Court to give a non-evasive answer did Dr. 

Harris acknowledge "[t]hat's consistent with my understanding." (Harris, Tr. 7869).
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Response to Finding No. 707:

Complaint Counsel’s proposed finding 707 ignores the fact that Dr. Harris could 

not understand most of the questions posed by Complaint Counsel. The remainder of this

proposed finding is irrelevant.

708. Dr. Harris could not say whether he agreed or disagreed with Mr. Glenn, and

claimed that he lacked sufficient context to make any sense of Mr. Glenn's August 1, 2000,

statement to investors, that "in some of the larger projects we don't have as much competition

and it utilizes more resources and with our cost structure we can still be very competitive and

make up good returns, so we are not out buying projects, the margins in our work coming in,

including the large projects, are as good or better than the margins that you're seeing now." 

(Harris, Tr. 7874-76; CX 1730 at 30). However, Dr. Harris did not ask Mr. Glenn what he had in 

mind when he said "we are not out buying projects." (Harris, Tr. 7876).

Response to Finding No. 708:

Complaint Counsel’s proposed finding 708 is irrelevant -- what Mr. Glenn said on 

August 1, 2000 about competition is irrelevant today because of entry. Further, in his question, 

Complaint Counsel took Mr. Glenn’s statement out of context -- of course Dr. Harris lacked

sufficient context to agree or disagree.

709. Dr. Harris drew unsupported parallels between the facts of this case and facts in

prior cases on which he had worked. In his direct testimony Dr. Harris represented: "The Baker 

Hughes case I think is very, very close in facts to this case." (Harris, Tr. 7166). However, when 

confronted on cross examination, with the stark and significant differences between the record in 

this case and the record in Baker Hughes (Harris, Tr. 7467-525), Dr. Harris acknowledged, "I've 

thought often over the years about the logic of that case, so I have thought a lot about it, but I

have not thought about the facts – the detailed facts of that case probably in ten or fifteen years." 

(Harris, Tr. 7478-79). When confronted with one fundamental difference in the facts, the court's 

finding in Baker Hughes that the market in that case was mainly an import market, Dr. Harris

simply acknowledged: "They may have. Most of the purchases were of imported rigs, but I don't 

remember one way or the other exactly what the court said." (Harris, Tr. 7479).

Response to Finding No. 709:

Complaint Counsel’s proposed finding 709 is false. First, it is false that Dr.

Harris was “confronted on cross examination with stark and significant differences” between this 

case and Baker Hughes. On cross-examination, Complaint Counsel read the Baker Hughes
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decision to Dr. Harris, and asked questions like: “Is that what the district court opinion says?” to 

which Dr. Harris would respond: “I believe you read it correctly.” (Harris, Tr. 7472). That Dr. 

Harris had not memorized the decision is irrelevant to whether, as an economist, he found Baker 

Hughes to be factually similar to the case at hand.

Q. Industry Members Are Concerned that the Merger

Will Likely Lead to Higher Prices and Poorer Quality

710. Based on his experience in soliciting bids for the construction of an LNG tank to 

store liquid methane, Mr. Eckhard Blaumueller predicts that CB&I's acquisition would lead to

higher prices. (Blaumueller, Tr. 281-282, 323-324).

Response to Finding No. 710:

This proposed finding is irrelevant, as Complaint Counsel has not presented any 

evidence to suggest that Mr. Blaumueller has any foundation for his economic opinion. He has 

not been not been involved in the purchase or construction of an LNG facility since 1973. 

(Blaumueller, Tr. 286) (FOF 3.642). Further, Mr. Blaumueller has not been involved in or done 

research regarding the LNG industry since December of 2001. (Blaumueller, Tr. 279, 325, 329) 

(FOF 3.643). Mr. Blaumueller has no current knowledge regarding any foreign LNG tank

suppliers or their efforts to enter the U.S. market. (Blaumueller, Tr. 321, 332-35) (FOF 3.644, 

3.645). Further, this finding contradicts the weight of the evidence. Current customers do not 

believe that the Acquisition will lead to higher prices and poorer quality. (See Opening Br. at 

64-80). Finally, contrary to Complaint Counsel's proposed finding, Mr. Blaumueller sought to

purchase a methane tank, not an LNG to store liquid methane. (Blaumueller, Tr. 325-26). 

Methane tanks are not part of the relevant product markets.

711. Since the acquisition, [xx] has noticed that CB&I fails to "show signs of wishing 

to reduce costs or schedule through technical innovation." (CX 693 at [xx] 01 027). CB&I is

reticent to consider "novel tank concepts that do not require welded steel plate." (CX 693 at [xx]

01 027)
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Response to Finding No. 711:

This finding is unsupported by the evidence. It relies exclusively on a [xxx]

document, and is wholly unsupported by testimony from [xxxx] corporate representative who

testified in this case. There is no evidence that this document is accurate, or that the author's

recitation of these views was accurate.

712. Robert Davis of Air Products stated that, if Air Products cannot partner with

CB&I to compete on LNG projects, that "would make it more difficult for us to compete

successfully with them... [W]e couldn't find another domestic tank builder with their experience 

and their market presence." (Davis, Tr. 3199-200). "To my knowledge, today, the LNG tank 

supply would be CB&I." (Davis, Tr. 3198).

Response to Finding No. 712:

This proposed finding is irrelevant, as Complaint Counsel has not presented any

evidence to suggest that Mr. Davis has any foundation for his opinions. Mr. Davis

acknowledged that the sole reference point for his testimony was the Memphis LNG

peakshaving project. (Davis, Tr. 3204) (FOF 3.668). Further, Mr. Davis has no responsibility

for LNG in his current position, has not had experience with the construction of an LNG tank

since 1974, lacks current knowledge regarding companies that are constructing LNG tanks in the 

U.S. or worldwide, and is not familiar in any specific way with LNG import terminals. (Davis, 

Tr. 3177-79, 3187-88) (FOF 3.666, 3.668). Further, this finding contradicts the weight of the

evidence. Current customers do not believe that the Acquisition has hindered their ability to

purchase LNG tanks, as recent entry from foreign companies have created competition in this

market. (See Opening Br. at 19-45).

713. Mr. Cleve Fontenot, VP of Air Liquide, testified that "The reason we felt that

there would be a cost increase to Air Liquide is that less competitive situation on similar type of 

major equipment where we have seen constriction of markets in the past, we have seen some

price increases, to us at least." (Fontenot, Tr. 2031).
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Response to Finding No. 713:

Complaint Counsel’s proposed finding 713 is irrelevant because Mr. Fontenot

lacks foundation to testify about the competitive effects of the Acquisition; he left Air Liquide on 

July 1, 2001. (Fontenot, Tr. 2012). Mr. Fontenot has not kept up to date current or potential

suppliers on LIN/LOX tanks in the United States. (Fontenot, Tr. 2032). Mr. Fontenot is not

aware of current market conditions. (Fontenot, Tr. 2032). Mr. Fontenot has no knowledge of

which companies Air Liquide has currently pre-qualified or permits to bid for the supply of fielderected LIN/LOX tanks. (Fontenot, Tr. 2033) (FOF 5.144). Further, Mr. Fontenot's unsupported 

prediction regarding cost increases is contradicted by the weight of the evidence. (See Opening 

Br. at 110-115).

714. John Gill of Howard Fabrication testified that the post-acquisition pricing for

these chambers "can't be as good" as when two suppliers are competing for these projects. (Gill, 

Tr. 211). Mr. Gill further testified that "[w]ith the lack of a second competitor in the market, I'm 

sure [customers of TVCs] are not better off." (Gill, Tr. 249).

Response to Finding No. 714:

This finding is unsupported by the evidence. It is clear from Mr. Gill's testimony 

that he is speculating regarding the effect of the Acquisition. There is no evidence in the record 

to suggest that Mr. Gill has any economic training or that he has personal knowledge regarding 

the issue of price increases. Further, to the extent the testimony quoted by this finding has any

relevance, it is limited to the TVC market.

715. Clay Hall testified that Memphis Light, Gas & Water is concerned that prices will 

rise "[b]ecause we don't see anyone out there with experience that could come into the market 

and compete with CB&I/PDM ... in the United States," and because Memphis does not know

"where we're going to get competition for our bids in the next few years." (Hall Tr. 1830).

Response to Finding No. 715:

Complaint Counsel’s proposed finding 715 is irrelevant because Mr. Hall lacks

foundation to testify about the competitive effects of the Acquisition. Neither Mr. Hall nor
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anyone else at MLGW has made any efforts to locate LNG tank builders. (Hall, Tr. 1843-45) 

(FOF 3.653). MLGW has not received firm bids on such a tank since 1994, nor does it plan to 

purchase another until at least 2006. (Hall, Tr. 1832-33) (FOF 3.650). Further, Mr. Hall is not 

familiar in any significant way with LNG import terminals, current competition for LNG tanks in 

the U.S. today, or pricing submitted by any foreign company for an LNG tank in the U.S. over 

the last five years. (Hall, Tr. 1854-57) (FOF 3.652, 3.653). Finally, Mr. Hall's concerns are not 

shared by the great majority of current customers who have engaged in efforts to learn about

current market participants. (See Opening Br. at 19-45).

716. Even if a new company were to enter the market, Mr. Hall remains concerned 

because "[t]here's a long time between these projects, they're highly specialized, and even if

additional firms come into this market, it would be our concern that they wouldn't be able to

exhibit the depth of experience that these firms provide." (Hall, Tr. 1831).

Response to Finding No. 716:

This finding is irrelevant for the reasons stated in RFOF 715.

717. Joseph Hilgar of Air Products believes that the price of cryogenic storage tanks

will increase as a result of the acquisition. "I would think that you remove a competitor ... from a 

marketplace that had three to four bidders in our business, it's my estimation the price could go 

up, yes." (Hilgar, Tr. 1353; see also, JX 25 at ¶ 14 (Hilgar Aff.) ("If CB&I purchases PDM, I 

believe that the price of field-erected cryogenic storage tanks will increase, because one of the 

low-cost, preferred bidders will be removed from the market.")).

Response to Finding No. 717:

Complaint Counsel’s proposed finding 717 is an incomplete summation of Mr.

Hilgar’s view of the effects of the Acquisition. Air Products believes there are a sufficient

number of competitors in the market to ensure that it will receive reasonable prices on its next 

project. (Hilgar, Tr. 1540-41). Air Products testified that although it obtained competitive

pricing with only two bids, it believes it has more potential bidders for pre-qualification today

than it has had in the past. (Hilgar, Tr. 1531-32, 1540). Air Products believes entry into the

LIN/LOX market is easy because any company in the business of constructing industrial storage 
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tanks would require only minimal investment to have the capability to construct LIN/LOX/LAR 

storage tanks. (Hilgar, Tr. 1538-39). If market conditions change and a substantial demand for 

LIN/LOX/LAR tanks reemerges, existing tank construction companies could easily seek out

opportunities to enter into the LIN/LOX field erected tank construction market. (Hilgar, Tr.

1543-44). (FOF 5.169-5.170).

718. David Kamrath, CEO of Air Liquide Process and Construction, testified that "The 

concerns were that with Graver/Iteq going out of business and CB&I acquiring PDM, there was 

only one viable tank supplier left in the industry." (Kamrath, Tr. 1991). Mr. Kamrath also

described why that was a concern for Air Liquide: "When there's only one supplier, the concern 

will always be that there's no constraint on pricing, there's no competition, and the pricing will 

have a tendency to rise." (Kamrath, Tr. 1991; see Fontenot, Tr. 2025).

Response to Finding No. 718:

Complaint Counsel’s proposed finding 718 is misleading to the extent it implies

that Air Liquide does not have competition sufficient to ensure a reasonable price for LIN/LOX 

tanks. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxx] (Kamrath, Tr. 2260-61). (FOF 5.1) This finding is also misleading to the 

extent it implies that Air Liquide does not consider other suppliers to be viable. For example, 

Air Liquide sees Matrix as a viable competitor in the LIN/LOX market. (Kamrath, Tr. 2005-06).

719. Dr. Hans Kistenmacher, vice-president of Linde BOC Process Plants, testified

that his company is concerned that "our choices of qualified vendors has been dramatically

limited to one vendor, and relative to my experience in the industry, that means we have less

competition, and less competition in my view always leads to higher prices." (Kistenmacher, Tr. 

878)
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Response to Finding No. 719:

Complaint Counsel’s proposed finding 719 is irrelevant because Mr.

Kistenmacher has no foundation to give such testimony. Mr. Kistenmacher does not personally 

get involved in reviewing the prices submitted for LIN/LOX tanks. (Kistenmacher, Tr. 926). 

Further, he has no personal knowledge of the prices that Linde has received for its proposed

LIN/LOX project. (Kistenmacher, Tr. 927). Mr. Kistenmacher does not know if any of the

companies that have purchased a LIN/LOX tanks since the Acquisition have paid higher prices 

than before the Acquisition. (Kistenmacher, Tr. 928-29). Mr. Kistenmacher testified that as a

result of a merger, Linde is now a part of BOC. (Kistenmacher, Tr. 921-22; V. Kelley, Tr. 4649-

50:7; 4650-51). However, Mr. Kistenmacher was unaware of the fact that BOC has awarded

AT&V two LIN/LOX tanks projects in Midland, North Carolina and Hillsboro, Oregon. 

(Kistenmacher, Tr. 922) (FOF 5.180-5.181).

720. Patrick Neary of TRW testified that TRW estimates that, post-acquisition, "the

growth [in price] would probably be a 50 percent increase in the future." (Neary, Tr. 1456-57).

Response to Finding No. 720:

This finding is misleading and speculative. CB&I has not and will not attempt to 

raise its prices post-Acquisition for field-erected TVC's. (FOF 6.122-6.125). In fact, CB&I has 

offered to supply field-erected TVC's on a cost plus four percent basis to customers in the future 

as part of Respondents' remedy offer. (FOF 6.100-6.101). Customers testified that if CB&I

were to offer customers in this market a firm fixed bid price with a four percent profit margin on 

any project that arose for the next 7-10 years, customers would be receiving a good price. 

(Scully, Tr. 1231-32; Gill, Tr. 261; Neary, Tr. 1482) (FOF 6.110). Howard Fabrication, for

example, normally attempts to bid out at a 7-10 percent profit margin, which is still a good value 
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for the customer. (Gill, Tr. 260-61) (FOF 6.110). Neary himself stated that CB&I is acting

responsibly in offering the four percent deal. (Neary, Tr. 1482) (FOF 6.111).

721. Mr. John Newmeister, president of Matrix, testified that CB&I's acquisition of

PDM is likely to increase prices of LPG tanks because "when a customer knows in the tank

business that they have limited competition, they raise their price. They adjust to the market

conditions to increase the maximum profitability." (Newmeister, Tr. 2203).

Response to Finding No. 721:

Complaint Counsel’s proposed finding is irrelevant because it is based on a

general statement by Mr. Newmeister. It does not refer specifically to LPG tanks. Further, Mr. 

Newmeister lacks foundation for offering economic opinions regarding the LPG market, as there 

is no evidence that he has seen LPG tank prices of his competitors since the Acquisition. 

Finally, Mr. Newmeister's testimony should be given little weight, as he is a direct competitor of 

CB&I's in the LIN/LOX and LPG markets. Matrix recently entered both of these markets. (See 

Newmeister, Tr. 2180-84).

722. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxxxxxxxxx], Tr. 701, in 

camera). [xxxxxxxxx] testified that the [xxxxxxxxxxxxxxxxxxxxxxxxxxxx] was supplied by

CB&I on a sole-source basis cost that was [xxxxxxxxx] more than comparable facilities, [xxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxx]. ([xxxxxx], Tr. 720-21, in camera).

Response to Finding No. 722:

This finding is irrelevant, as Ms. Outtrim lacks foundation for her views. [xxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxx] Further, the veracity of Ms. Outtrim's testimony is suspect, as she owns part of a
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company called Cryocrete, which is in a position to compete with CB&I in the LNG markets. 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] 

(Outtrim, Tr. 787) (FOF 3.690). Finally, and perhaps more importantly, actual customers in the 

LNG market disagree with Ms. Outtrim's opinions. Current customers respect new entrants in

the U.S. LNG market and are willing to work with them on U.S. LNG projects. (Opening Br. at 

19-45; FOF 3.683-3.696).

723. [xxxxxxxxxx] also testified that LNG facility owners are "[concerned about being 

able to find other tank manufacturers and LNG facility constructors that can provide the same

services in the U.S., and they're concerned about costs and customer service basically.]" 

([xxxxx], Tr. 725, in camera).

Response to Finding No. 723:

This finding is irrelevant for the reasons set forth in RFOF 722.

724. Michael Patterson, Director of Engineering at MG Industries, [xxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxxxx], 

Tr. 476, in camera).

Response to Finding No. 724:

This finding is irrelevant because Mr. Patterson does not have the necessary

foundation to arrive at this conclusion.. It is also contradicted by Mr. Patterson's testimony. He

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxx] and believes that he can get a competitive price for these tanks with three bidders. 

(Patterson, Tr. 348, 488) (FOF 5.147, 5.158). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxx] (Patterson, Tr. 494) (FOF 5.160). [xxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Patterson, Tr. 494-95) 
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(FOF 5.159, 5.160). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Patterson, Tr. 495) (FOF 5.159, 5.160).

725. Brian Price of Black & Veatch testified that "the lack of a domestic supplier that 

we can go to bid with on a peak-shaving unit that includes a tank puts us at a disadvantage to 

compete on that project." (Price, Tr. 636).

Response to Finding No. 725:

This finding is irrelevant, as it is based on Mr. Price's unsupported speculation. 

Mr. Price's views are based primarily on the irrelevant 1994 Memphis project. (Price, Tr. 650-

51, 661-62). Further, despite the fact that Mr. Price professes to be part of the Dynegy project 

team, the evidence on Dynegy contradicts his views. Mr. Puckett explained that Dynegy was

satisfied with its choices of LNG contractors and prices provided by those contractors. (Puckett, 

Tr. 4540, 4587-88) (FOF 3.248). Mr. Price has no reason to dispute Mr. Puckett's conclusion, as 

he has never seen the pricing on the Dynegy bids. (Price, Tr. 610) (FOF 3.660). In addition,

despite these concerns, Black & Veatch was touting itself as a partner of Skanska to Freeport

LNG. (RX 935 (state of mind)) (FOF 3.662). Finally, Mr. Price's testimony is inherently biased. 

Mr. Price himself holds a patent on process technology that directly competes with CB&I. 

Further, his employer -- Black & Veatch -- is a "head to head" competitor of CB&I on peakshaving facilities. (Price, Tr. 641) (FOF 3.659).

726. Ronald Scully, who was a CB&I employee at the time of the acquisition, testified 

that the acquisition may lead to higher pricing for TVCs. (Scully, Tr. 1181).

Response to Finding No. 726:

This finding is unsupported by the evidence, as it consists only of Mr. Scully's

unsupported speculation on economic issues. Further, Respondents have set forth a remedy

package that addresses the possibility of higher prices with a promise to sell field-erected TVC's 

on a cost plus four percent basis in the future. (FOF 6.100-6.101).
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727. David Thompson of Spectrum Astro testified that the acquisition of PDM

removed one of "two vicious competitors." (Thompson, Tr. 2099).

Response to Finding No. 727:

Respondents have no specific response to this finding.

728. The concerns of industry participants verifies Dr. Simpson's testimony that postacquisition, prices of the relevant products are likely to increase because CB&I's pricing is

"constrained by much weaker competitors and constrained at a higher price." (Simpson, Tr.

3406). If past competition between PDM and CB&I led to lower prices for the relevant products 

"then the elimination of that competition should enable the merged firm to set a higher price." 

(Simpson, Tr. 3406, 3501).

Response to Finding No. 728:

Complaint Counsel’s proposed finding 728 is false because the referenced

“industry participants” are, on the whole, not even current participants and overwhelmingly lack 

foundation to give the views given. See RFOF 710-728.

R. CB&I and PDM Recognized that the Merger Would

Reduce Competition and Lead to Higher Margins and Prices

729. Respondents' merger planning documents and testimony at trial illustrate CB&I's 

own belief that PDM's demise created an opportunity for CB&I to raise prices and margins in the 

United States. CCFF 730-749.

Response to Finding No. 729:

Complaint Counsel’s proposed finding 729 is irrelevant because Respondents’

merger planning documents do not make the effects of the Acquisition more or less competitive. 

At the time of the Acquisition, Respondents could not predict the actual and potential postAcquisition entry. Respondents, to the extent that they made any such predictions, were wrong.

730. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 213

at CB&I-PL033037, in camera). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxx]. (CX 213 at CB&I-PL033084, in camera).
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Response to Finding No. 730:

Complaint Counsel’s proposed finding 730 is irrelevant because Respondents’

merger planning documents do not make the effects of the Acquisition more or less competitive. 

At the time of the Acquisition, Respondents could not predict the actual and potential postAcquisition entry. CB&I was wrong.

731. PDM also assessed the benefits of acquiring CB&I in 1999, and determined that 

acquiring CB&I would give PDM "Market dominance in Western Hemisphere." (CX 74 at

PDM-C 1005941). Scorsone admitted that when he wrote the document he believed PDM could 

achieve "market dominance" by acquiring CB&I. (Scorsone, Tr. 5169).

Response to Finding No. 731:

Complaint Counsel’s proposed finding 731 is irrelevant because Respondents’

merger planning documents do not make the effects of the Acquisition more or less competitive. 

At the time of the Acquisition, Respondents could not predict the actual and potential postAcquisition entry. Luke Scorsone’s saying in 1999 that the Acquisition could give PDM market 

dominance does not make it so. Mr. Scorsone testified that this was made with the best

information they had at that time. (Scorsone, Tr. 5264).

732. In August 2000, CB&I and PDM agreed to merge, thereby transforming

aspirations of "market dominance" and creating a "competition void for 1-3 years" into reality. 

(CX 79 at PDM-C 1002684).

Response to Finding No. 732:

Complaint Counsel’s proposed finding 732 is false -- CB&I does not have market 

dominance and there is no competition void.

733. Gerald Glenn saw the merger as a "once-in-a-lifetime opportunity." (CX 1627 at 

133; Glenn, Tr. 4271-4272). Glenn added that the acquisition could provide "the next major step 

in our announced strategy to achieve significant growth in sustainable revenue, profitability and 

shareholder value." (CX 79 at PDM-C 1002684).
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Response to Finding No. 733:

Respondents have no specific response to finding 733, except that the fact that

Mr. Glenn called the Acquisition a “once-in-a-lifetime opportunity” supports the notion that the 

reasons were unrelated to the relevant product markets, which comprise a very small percentage 

of CB&I’s business.

734. At PDM's offices, in August 2000, PDM began to analyze the benefits of the

merger. In a document titled "Benefits of Combining PDM with CB&I," PDM listed the

following benefits: (1) "Dominance of the cryogenic (LNG/LOX/LIN) markets;" and (2) 

"Allows CB&I to have a low cost USA tank producer." (CX 621 at PDM-HOU006702).

Response to Finding No. 734:

Complaint Counsel’s proposed finding is false: “PDM” did no such thing; Dan

Knight, a low-level PDM salesperson, created this document without foundation and without

being asked to do so. FOF 5.224-5.234.

735. Dan Knight, PDM's then account manager and today CB&I's Business

Development Manager, added that PDM had "been beating CB&I for years in this market, and as 

long as they recognize why that has happened ... this merger will benefit us all." (CX 621 at 

PDM-HOU006702).

Response to Finding No. 735:

Complaint Counsel’s proposed finding 735 is a distortion of the record; Mr.

Knight’s comment makes no sense. Complaint Counsel’s use of Mr. Knight’s title does not

change the fact that he is a low-level salesman who was incorrect. (FOF 5.224-5.234).

736. Numerous documents describe Respondents' internal assessment of where the

merged firm stood in the competitive landscape.

Response to Finding No. 736:

This finding is wholly unsupported by the record evidence as it contains no date.

737. At CB&I, Glenn stated that CB&I/PDM had "unequaled capability in our chosen 

field." (CX 1720 at CB&I/PDM-H 4000784). Rich Goodrich, Executive Vice President and

Chief Financial Officer, called CB&I/PDM the "900 pound gorilla." (CX 1681 at CB&I/PDM 

4005289). Daniel Knight, the same person who anticipated that the combination of CB&I &
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PDM would "create barriers to entry," stated, in a post-acquisition e-mail, that "We are by far the 

'big-dog' of the industry and I think we need to better educate our customers of what they gain 

by buying from CB&I." (CX 459 at CB&I-E 007218; see CX 101 at PDM-HOU002359). 

CB&I boasted internally regarding the LNG market that "no other company in the world is more 

uniquely or strategically positioned to capitalize on that emerging market." (CX 823 at CB&I-E 

009355).

Response to Finding No. 737:

Complaint Counsel’s proposed finding 737 is irrelevant because it cites preAcquisition thoughts that do not take into account future entry. Further, the comments do not

refer to the relevant products.

738. Mr. Glenn testified that CB&I "bought the company with the intention that the

overall company's revenues and profitability would go up." (Glenn, Tr. 4259; see CX 1532 at 1; 

CX 1719 at 1 (CB&I tells its investors, "This acquisition is a major step in CB&I's strategy to 

achieve sustainable growth in revenues and profitability.")).

Response to Finding No. 738:

Complaint Counsel’s proposed finding 738 is irrelevant; first the referenced

documents talk about both the acquisition of PDM and Howe Baker, another unrelated company 

purchased at around the same time. (See Glenn, Tr. 4086). Second, whether the company’s

overall revenues and profitability goes up is irrelevant to whether the Acquisition will lessen

competition in the relevant product markets.

739. At PDM, Scorsone thought CB&I/PDM will be a "powerhouse." (CX 72 at

PDM-C 1004409). Scorsone later added that CB&I/PDM "will truly be the world leader in

storage tanks." (CX 1686 at CB&I/PDM-H 4005550; Scorsone, Tr. 5203). At trial, Scorsone

reiterated his belief that CB&I/PDM would be a "dominant force." (Scorsone, Tr. 5203, 5204).

Response to Finding No. 739:

Complaint Counsel’s proposed finding is irrelevant and contains a misstatement; 

Mr. Scorsone only testified at trial that indeed he believed those statements to be true at the time 

he made them. (Scorsone, Tr. 5203-04). This is irrelevant because Mr. Scorsone was wrong. 
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All of these documents are contradicted by actual competitive events. (FOF 5.151-5.158, 5.123-

5.125, 3.470-3.480, 3.485-3.486, 4.66-4.70, 3.140, 3.327-3.331).

740. Having agreed to merge, CB&I and PDM personnel began the business of

integrating and implementing the objectives of the merger.

Response to Finding No. 740:

Respondents have no specific response to finding 740 except that the “objectives” 

of the Acquisition were to gain efficiencies and grow CB&I’s worldwide LNG market. (Tr.

4080-81).

741. In October 2000, Scorsone and other executives held a "brainstorming" session. 

(Scorsone, Tr. 5204). The "brainstorming" team compiled a list of objectives entitled "PDM

Merger Objectives Brainstorm Results." (CX 101 at PDM-HOU002359).

Response to Finding No. 741:

Complaint Counsel’s finding 741 is misleading because there is no support in the 

record for the notion that the team together compiled a list of objective -- Mr. Scorsone did not 

testify to this fact. (Scorsone, Tr. 5204-08).

742. Among other things, the "PDM Merger Objectives Brainstorm Results" outlined 

the following objectives of the merger: (1) "Create barriers to entry as they can be built;" (2) 

"Defend an expanding market share;" (3) "Ensure that we do not allow smaller competitors to

take share and pursue business in our attractive markets;" (4) "Put plans in place to command

premiums for the services we provide;" and (5) "Improve pricing to achieve margin growth from 

12.5% to 17%." (CX 101 at PDM-HOU002359-60).

Response to Finding No. 742:

Complaint Counsel’s proposed finding is irrelevant because the document neither 

proves nor disproves Complaint Counsel’s case. First, it is not product specific. Further, this is 

particularly irrelevant since PDM was the acquired firm and now has no market share; whether 

PDM had “objectives” is irrelevant since CB&I was the acquiring firm. Ultimately, CB&I has 

not been able to “create barriers to entry.”
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743. Scorsone circulated the "PDM Merger Objectives Brainstorm Results" document 

to key members of the integration team with the instruction that they read it to "introduce you to 

this process." (CX 1683 at CB&I/PDM-H 4005384; Scorsone, Tr. 5206).

Response to Finding No. 743:

Respondents have no specific response to finding 743, except Mr. Scorsone

makes this statement on page 5207 of the trial transcript.

744. Shortly after the "brainstorming" session, Scorsone and other members of the

integration team held an "Integration Kick-off Meeting." (CX 1544 at CB&I 057915; CX 1682 

at CB&I/PDM-H 4005307).

Response to Finding No. 744:

Respondents have no specific response.

745. Consistent with the principles outlined in the "PDM Merger Objectives 

Brainstorm Results" document, the "kick-off meeting" agenda prioritized the objectives of the

merger: (1) "Ensure we do not allow smaller companies to take share and pursue business in our 

attractive markets;" (2) "Defend an expanding market share;" (3) "Create barriers to entry;" and 

(4) "Use pricing advantage as necessary to not lose market share to competitors during the

merger." (CX 1544 at CB&I 057941).

Response to Finding No. 745:

Complaint Counsel’s proposed finding is irrelevant because the document neither 

proves nor disproves Complaint Counsel’s case. First, it is not product specific. Further, this is 

particularly irrelevant since PDM was the acquired firm and now has no market share; whether 

PDM had “objectives” is irrelevant since CB&I was the acquiring firm. Ultimately, CB&I has 

not been able to “create barriers to entry.”

746. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 921, in camera). [xxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxx]. (CX 921 at CB&I 003613-HOU, in camera). [xxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxx]. (CX 921 at CB&I 003609-HOU, in camera; Simpson, Tr. 3099-100).
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Response to Finding No. 746:

Complaint Counsel’s proposed finding is irrelevant because [xxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxx] (Simpson, Tr. 4036-44) (FOF 7.171-7.175).

747. Dr. Simpson testified that instances where CB&I has increased price following its 

acquisition of PDM indicate that CB&I's management believes that they can profitably increase 

price. (Simpson, Tr. 5781)

Response to Finding No. 747:

Complaint Counsel’s finding 747 is predicated on the erroneous assertion that

CB&I has increased price following the acquisition. Complaint Counsel has presented no valid 

evidence indicating that CB&I has in fact raised prices. (FOF 3.597-3.641, 5.182-5.211, 7.164). 

Further, there has been entry in the alleged product markets which has prevented CB&I from

raising prices. (See Harris, Tr. 7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-

7.101, 7.118, 7.113) (See FOF 3.68-3.227 (actual entry has occurred in the LNG market); FOF 

4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new competitors have entered the

LIN/LOX market); 5.79-5.184 (LIN/LOX customers are satisfied with prices received and

available competitive options)).

748. As will be discussed below, the objectives developed during the "brainstorming

session" and the "kick-off meeting" soon became reality.

Response to Finding No. 748:

Complaint Counsel’s proposed finding 748 is false.
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VII.

THE MERGER HAS HAD ACTUAL ANTICOMPETITIVE EFFECTS

A. The Merger Has Resulted in Higher Prices and Margins in All Markets

749. Complaint Counsel has established that the merger will likely have

anticompetitive effects through evidence of (1) Respondents' dominant position in highly

concentrated markets, (2) the elimination of PDM as CB&I's closest competitor, and (3) the

inability of foreign and domestic firms to replace PDM as a competitive constraint on CB&I.

Response to Finding No. 749:

Complaint Counsel’s proposed finding 749 is patently false. First, there has been 

successful actual entry in the alleged product markets, and there is viable potential entry. (See 

Harris, Tr. 7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-7.101, 7.118, 7.113)

(See FOF 3.68-3.227 (actual entry has occurred in the LNG market); FOF 4.16-4.54 (actual entry 

in the LPG market); FOF 5.22-5.71 (new competitors have entered the LIN/LOX market); 5.79-

5.184 (LIN/LOX customers are satisfied with prices received and available competitive

options)). Complaint Counsel has presented no valid evidence indicating that CB&I has in fact 

raised prices. (FOF 3.597-3.641, 5.182-5.211, 7.164). Complaint Counsel has failed to prove its 

case.

750. Although not required to do so under Section 7 of the Clayton Act or Section 5 of 

the FTC Act, Complaint Counsel also presented evidence that in the two years since the merger, 

Respondents have in fact implemented anticompetitive price and margin increases.

Response to Finding No. 750:

Complaint Counsel’s finding number 750 is entirely false, unsupported by

evidence, and contrary to the weight of record evidence. First and foremost, the evidence is

overwhelming that there has been both actual entry and that there is potential entry constraining 

CB&I’s prices. (See Harris, Tr. 7209-13, 7239-47, 7286-87, 7308, 7315-17) (FOF 7.58, 7.92-

7.101, 7.118, 7.113) (See FOF 3.68-3.227 (actual entry has occurred in the LNG market); FOF 
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4.16-4.54 (actual entry in the LPG market); FOF 5.22-5.71 (new competitors have entered the

LIN/LOX market); 5.79-5.184 (LIN/LOX customers are satisfied with prices received and

available competitive options)). Second, there is no evidence what CB&I has in fact raised its

prices and margins; Complaint Counsel’s purported examples of price increases are based on

inappropriate comparisons, conjecture, and fabrication. (See FOF 7.1-7.41, 3.597-3.641, 5.182-

5.211, 7.164 ). Complaint Counsel has not and cannot provide a single instance where CB&I has 

raised prices on a firm fixed bid or where a customer has paid a higher price for a product than 

prior to the Acquisition.

751. Examples of anticompetitive effects include, among others, an LNG project in

Cove Point, Maryland CCFF 778-831; LNG projects for [xx] CCFF 832-833; an LNG project in 

Memphis, Tennessee CCFF 848, 930-955; an LNG project in Fairbanks, Alaska CCFF 956-978; 

an LNG project for Dynegy CCFF 979-1007; an LNG project for Yankee Gas CCFF 1008-1027; 

LIN/LOX projects for Linde and Praxair in New Mexico CCFF 1059-1087 and for MG

Industries 1088-1108; and TVC projects for Spectrum Astro CCFF 1109-1165; [xxx] CCFF

1182-1221 and TRW CCFF 1166-1181.

Response to Finding No. 751:

Complaint Counsel’s finding 751 is false. Complaint Counsel’s purported

examples of price increases are based on inappropriate comparisons, conjecture, and fabrication 

See FOF 7.1-7.41, 3.597-3.641, 5.182-5.211, 7.164. See RFOF 778-833, 848, 930-955, 956-978, 

979-1007, 1008-1165, 1182-1221, 1166-1181.

752. The evidence of actual anticompetitive effects further belies Respondents'

argument that entry by foreign and domestic firms will deter or counteract any anticompetitive 

harm that may flow from the merger.

Response to Finding No. 752:

Complaint Counsel’s proposed finding 752 is false. There are no actual

anticompetitive effects. That CB&I is losing the majority of post-Acquisition projects in the

relevant markets belies Complaint Counsel’s assertion that entry will not deter or counteract any 

anticompetitive harm that may flow from the merger.
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1. CB&I Publicly Acknowledges that

Competition Has Been Substantially Lessened

753. Beginning in 1997, CB&I filed a series of "S-1" forms with the Securities and

Exchange Commission in connection with a public stock offering. The S-1s contain statements 

of "Risk Factors" that investors should be aware of before purchasing CB&I's stock. (CX 1633 

at 13; CX 1635 at 11; CX 1714 at 14; CX 1715 at 14; CX 1716 at 10).

Response to Finding No. 753:

Respondents have no specific response.

754. One of the "Risk Factors" that CB&I warned about before the acquisition was the 

impact that competition from firms such as PDM had on CB&I's profitability.

In recent years, competition has resulted in substantial pressure 

on pricing and operating margins. The Company expects

overcapacity and other competitive pressures in the industry to

continue for the foreseeable future... The Company's competitors,

either alone or together with competitors having sufficient

resources, could engage in a variety of actions, including

aggressive price competition, increased commitment of resources 

to compete, offering a higher level of customer service and efforts 

to recruit the Company's customers, which may have the effect of

delaying or preventing the implementation of the Company's

business strategy or adversely affecting the Company's ability to 

compete profitably...."

(CX 1633 at 18 (emphasis supplied); see also CX 1635 at 18; CX 1714 at 18; CX 1715 at 19-20; 

CX 1716 at 15).

Response to Finding No. 754:

Respondents have no specific response.

755. CB&I's statements in its S-1 filings about the competitive pressures exerted by

PDM are consistent with Respondents' contemporaneous business records and testimony in this 

case about the vigorous head-to-head competition between CB&I and PDM before the merger. 

CCFF 203-290.

Response to Finding No. 755:

Complaint Counsel’s proposed finding 755 is misleading because the S-1 did not 

mention “the competitive pressure created by PDM.” These filings do not provide useful
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information regarding competition six years later, when the competitive landscape is changed

completely.

756. Today, CB&I does not face the same competitive pressure from PDM or any

other domestic or foreign firm. In November of 2001 (nine months after completing the

acquisition of PDM) and in July 2002 (four months before the start of the FTC's trial), CB&I

filed prospectuses with the SEC in connection with two separate stock offerings, the first for 1.3 

million shares and the second for 2.7 million shares. (CX 1718 at 1 of 15 (filed as of November 

9, 2001); CX 1021 (dated July 2, 2002)).

Response to Finding No. 756:

Complaint Counsel’s proposed finding 756 is false; CB&I faces competitive

pressure from other domestic and foreign firms. The remainder of the proposed finding is

irrelevant.

757. Unlike the S-1s filed before acquiring PDM, the post-merger prospectuses contain 

discussions about "Risk Factors" but say nothing about competition having a negative impact on 

prices and margins or forcing CB&I to bid at less than attractive rates. Indeed, the "Risk

Factors" section ignores competitors entirely. (CX 1021 at 7-13; CX 1718 at 3 of 15 - 9 of 15).

Response to Finding No. 757:

Complaint Counsel’s proposed finding 757 is misleading because, indeed, the

prospectus states that “[t]here are numerous regional, national and international competitors that 

offer products and services similar to ours.” (CX 1021 at 36). Further, the S-1 is not talking

about the relevant products which, representing 1.5% of the company’s revenues, would not be 

material enough to mention.

758. The 2002 prospectus contains a separate section about "Competition," but CB&I's 

discussion only highlights its market leading position: "We believe that we are a leading

competitor in most of the products and services that we sell. Price, quality, reputation, safety

record and timeliness of completion are the principal competitive factors within the industry. 

There are numerous regional, national and international competitors that offer products and

services similar to ours." (CX 1021 at 36).
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Response to Finding No. 758:

Complaint Counsel’s finding 758 is irrelevant; whether CB&I is a “leader” is

irrelevant to whether CB&I will raise prices or will be able to raise prices. This is particularly 

true since CB&I acknowledges that it is not the only the competitor. (CX 1021 at 36). Further, 

this document is not product specific. See supra RFOF 757.

759. By its own admission, CB&I no longer encounters (1) "substantial pressure on

pricing and operating margins," (2) "aggressive price competition," (3) conditions "adversely

affecting the Company's ability to compete profitably," or (4) the need to "bid [its] services out 

for hire at less than attractive rates." (CX 1633 at 15).

Response to Finding No. 759:

Complaint Counsel’s proposed finding 759 is a distortion of the facts. First, as

Dr. Harris testified, securities filings are prepared for different purposes and by different people 

than regular company business documents. As Dr. Harris testified, these filings are “designed to 

be for purposes of presenting things in the best light.” (Haris, Tr. 7584). Further, none of these 

S-1s are talking about the relevant products. Finally, Complaint Counsel’s effort to stitch

together these documents is wholly inconsistent with the post-Acquisition record of intense

competition that is, unlike the S-1s, specific to the relevant products.

760. As CEO of CB&I, Mr. Glenn's responsibility is to ensure that its SEC filings are 

"accurate, truthful, and complete." (Glenn, Tr. 4376). To omit pertinent information or present 

false information in an SEC filing would be characterized as fraud, and would have punitive

consequences. (Glenn, Tr. 4377).

Response to Finding No. 760:

Respondents have no specific response.

761. In the third and fourth quarters of 2001, CB&I's "Investor Fact Sheet," displayed 

on CB&I's web site, described the acquisition of PDM as a "major step in CB&I's strategy to

achieve sustainable growth in revenues and profitability." (CX 1532; CX 1719). The "Investor 

Fact Sheet" states that CB&I's "competitive advantages" include "global execution capabilities

unmatched by competitors." (CX 1532) CB&I underscored LNG as a product market with

continuing opportunities: "Key Growth Strategies: Capture a major share of the worldwide

market for Liquefied Natural Gas (LNG)." (Id.)
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Response to Finding No. 761:

Complaint Counsel’s proposed finding 761 is irrelevant and misleading; as the 

quoted portion of CX 1532 states, CB&I was referring to the “worldwide market” for LNG and 

“global execution capabilities.” In any case that CB&I hopes to be a successful business is

irrelevant.

762. In its July 2002 "Investor Presentation," CB&I emphasizes its "Multi-tiered 

Growth Strategy." Among other objectives, CB&I lists "Gain Share in High Growth Markets,"

"Market Expanded Capabilities," and "Growth through Strategic Acquisitions" as ways to grow

its business. (CX 1628 at 14).

Response to Finding No. 762:

Complaint Counsel’s proposed finding 762 is irrelevant; growing its business is

not an anticompetitive act and does not have anticompetitive results. This is particularly true

considering the majority of CB&I’s business is in non-relevant product markets. Further, this

explicitly include the Acquisition of Howe-Baker -- this document does not provide information 

relevant to the issues in this case. (CX 1628 at 14).

763. The same growth strategy was repeated on CB&I's web site for the third quarter

of 2002. (CX 1527 at 2). CB&I reports to investors that it anticipates "margin improvement and 

accelerating earnings growth" going forward.

Response to Finding No. 763:

Complaint Counsel’s proposed finding 763 contains error: CX 1527 says nothing 

about margin improvements; it is a 2000 document entitled “Strategic Business Plan” and

discusses reducing procurement costs. (CX 1527).

764. Unrestrained by competition, CB&I's financial picture has improved since the

merger. CB&I's July 2002 "Investor Presentation" reports that since the "transformational

acquisitions" in 2000, which includes the PDM acquisition, CB&I's gross margins increased

from 11.3% in 2000 to 12.6% in 2001 and 13.0% in 2002. (CX 1628 at 23). Revenues jumped 

from $612 million in 2000 to around $1.1 billion in 2001 and 2002. (Id.). Respondents made no

mention of any threat from competition, much less of entry by foreign competitors.
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Response to Finding No. 764:

Complaint Counsel’s proposed finding 764 contains the inaccurate representation 

that CB&I is “unrestrained by competition.” Further, that CB&I’s overall business has improved 

is totally irrelevant. Further, Mr. Glenn testified that this document was referring to the HoweBaker Acquisition which has been responsible for the gains reflected in CCFF 764. (Glenn, Tr. 

4403-04).

765. CB&I added that it was "well positioned for revenue growth and margin

improvement." (CX 1628 at 22; see also CX 1629 at 26 (CB&I revenue will be $1.2 billion in 

2002); CX 1532; CX 1719 (On CB&I's web site, investors are told that CB&I's "Performance

Goals" are to achieve revenues of $1.5 billion per year by 2005)).

Response to Finding No. 765:

Complaint Counsel’s proposed finding 765 is irrelevant; that CB&I is well

positioned for revenue growth says nothing about whether the effects of the Acquisition of

PDM’s EC Division is likely to lessen competition in the relevant U.S. product markets. Further, 

Gerald Glenn testified that this document was referring to the Howe-Baker Acquisition, which

has been responsible for the gains reflected in CCFF 765. (Glenn, Tr. 4403-04).

766. On October 31, 2002, CB&I reported third-quarter results that exceeded the

expectations set forth in July of 2002. CB&I 's recorded gross profit for the first nine months of 

2002 were 13.6% of revenues, compared with 12.2% of revenues in the comparable 2001 period 

and 13.0% as projected in the July 2002 "Investor Presentation." (CX 1576 at 1; compare to CX 

1628 at 23).

Response to Finding No. 766:

Complaint Counsel’s proposed finding 766 is irrelevant; that CB&I’s revenues

say nothing about whether the effects of the Acquisition of PDM’s EC Division is likely to

lessen competition in the relevant U.S. product markets. Further, Mr. Glenn testified that this the 

Howe-Baker Acquisition has been responsible for the gains reflected in CCFF 766. (Glenn, Tr.

4403-04).
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767. On October 31, 2002, CB&I held a conference call with the investment

community to discuss its third-quarter financial results. Financial analysts asked questions and 

CB&I executives, including Glenn, addressed issues pertinent to the FTC's action.

Response to Finding No. 767:

Complaint Counsel’s proposed finding 767 is false; the questions asked were not 

pertinent to the FTC’s action.

768. An analyst asked how the competitive environment had changed: "[W]hat is the 

competitive environment for the services that you provide that has changed over the last five to 

ten years? I mean, are there fewer, better qualified contractors to be able to take advantage of

this?" (CX 1731 at 44).

Response to Finding No. 768:

Complaint Counsel’s proposed finding is irrelevant since the question was not

product or market specific.

769. Glenn's answer touts CB&I's new-found market leadership position – unfettered

by foreign and domestic competition:

Well, I don't know that there are fewer. There are some that have 

run on hard times. There are those that have stubbed their toe. 

You know, you're only as good as your last job. And we're really 

proud of the fact that, you know, a lot of owners out there, if they

go to build a sophisticated project, like an LNG project or an LNG 

tank, they don't want to take a chance on a low price and a

potential second class job or shoddy welding or any of that kind of 

stuff. The kind of work that we do is very specialized, very

sophisticated. We have an excellent track record.

And we think that, short of somebody coming in, which they do,

and just taking a big dive on the price, that we can win the work 

every time technically. And if they want to dive in and take the

work for less than they can execute it for, that's fine, we'll just sit 

and watch them go out of business, too.

(CX 1731 at 44-45) (emphasis supplied).

Response to Finding No. 769:

Complaint Counsel’s proposed finding is irrelevant because, first, this is not U.S. 

specific and is contradicted by factual evidence. Further, Mr. Glenn’s statement that CB&I
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thinks it can win the work every time technically does not suggest that CB&I will raise prices. 

Mr. Glenn has no foundation for his assertion that competitors must “take the work for less than 

they can execute it.” CB&I does not know its competitors’ costs, but knows that CB&I is losing 

projects to foreign competitors and cannot raise prices.

770. Another analyst asked about CB&I's higher margins: "Lastly, the gross margin

keeps like coming up quite a bit. What do you think would be a reasonable margin of going

forward like with your focus on more like a higher margin, Howe-Baker work? What's a

reasonable margin run rate you think?" (CX 1731 at 41).

Response to Finding No. 770:

Complaint Counsel’s proposed finding is irrelevant since the question addresses

the Acquisition of Howe Baker.

771. Glenn's answer confirms CB&I's "high" margins, and ability to achieve higher

margins than competitors:

The margin levels are high. It's all got to do with the mix of the 

work and the timing of the revenues and ... [p]roject execution...

So, I don't want to point to something other than just to say that, as 

I said before, we're trying to focus more of our energy, more of our 

efforts, more of our resources on the higher margin work... And

that 's work that we – you know, we have to compete in some

manner with others and because of our concentration on lowering 

our costs and keeping our costs down, we can still be low bidder 

and make more money on it than most of our competitors, if

not all of them.

(CX 1731 at 41-42) (emphasis supplied).

Response to Finding No. 771:

Complaint Counsel’s proposed finding is misleading since, as is evidenced by the 

question asked, this relates to Howe Baker. Further, this is irrelevant -- Mr. Glenn is talking

about overall profit margins.

772. Another analyst asked about CB&I's prospects going forward: "If we look at the 

business opportunities that you see for CB&I, going over the next 12 months, and you go back 

to, you know, either December 31st or a year ago, either way you want to do it, can you give us 

an order of magnitude, does the business look the same, does it look better, and just give us some 
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way – you know, your target list projects pursued, you know, some way to quantify?" (CX 1731 

at 27).

Response to Finding No. 772:

Complaint Counsel’s proposed finding is irrelevant since the question was not

product or market specific.

773. Glenn responded that CB&I's prospects look "30%" better today than in the past:

With this report, CB&I has exceeded many of our previous records 

in areas like new business taken, backlog and several others. 

We're extremely pleased with the efforts and performance of our

entire team. The results speak for themselves, so I will only

comment that our markets and prospects appear more

attractive to us today than at any time in our recent past.

I would give you a general comment that our prospect list and

the projects that we're attracting looks better to us today than 

at any time since the IPO [initial public offering of stock in

1997]. If you had to pick a number, I don't know, maybe it's 30 

percent or something, but it's a big number.

(CX 1731 at 4, 28 (emphasis supplied); see also CX 1735 at CB&I 004168-HOU (new business 

taken has risen dramatically since 2001); [xxx], Tr. 5302, in camera).

Response to Finding No. 773:

Complaint Counsel’s proposed finding is irrelevant since the answer was not

product or market specific. Further, that CB&I is doing well overall is irrelevant to whether

CB&I is doing well in the alleged product markets, and is irrelevant to whether the results of the 

Acquisition is to lessen competition.

774. None of CB&I's post-merger communications mention anything about foreign

firms, domestic firms or joint ventures threatening CB&I's ability to win projects and raise prices 

and margins.

Response to Finding No. 774:

Complaint Counsel’s proposed finding is irrelevant; while competition will

prevent CB&I from raising prices in the relevant product markets, this does not does not have
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significance to CB&I’s overall business such that it needs to be communicated to investors, since 

CB&I’s business in the relevant product markets is so small.

775. On December 16, 2002, six-weeks after the conference call with investors, Glenn 

gave the Tribunal a less sanguine assessment of CB&I's prospects. [xxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxxxxxxxx], Tr. 

4223-4224, in camera). This testimony is not credible considering Mr. Glenn's public statements 

as well as CB&I's higher prices and profit margins.

Response to Finding No. 775:

Complaint Counsel’s proposed finding contains the false statement that Mr.

Glenn’s testimony is “not credible considering Mr. Glenn’s public statements as well as CB&I’s 

higher prices and profit margins. "There is no evidence that CB&I’s prices are higher, and there 

is no evidence that CB&I’s margins on projects in the relevant projects are higher. Nothing Mr. 

Glenn has said publicly contradicts Mr. Glenn’s testimony.

776. Respondents' argument to the Tribunal – that ["vicious"] competition from foreign 

and domestic firms restrains CB&I – is a claim that CB&I has chosen to share with the Tribunal 

but not with the SEC or the investment community.

Response to Finding No. 776:

Complaint Counsel’s proposed finding 776, which is pure argument and

unsupported, is irrelevant.

B. The Merger Has Had Actual Anticompetitive Effects in the LNG Market

1. The Cove Point, Maryland Project

777. The LNG project at Cove Point, Maryland ("Cove Point") illustrates two

important themes of this case. (1) Prior the merger, CB&I and PDM competed vigorously to win 

this project, and Cove Point benefitted in the form of lower prices. (2) Since the merger, the

elimination of PDM as CB&I's closest competitor and the inability of other firms to replace

PDM as a price constraint has permitted Respondents to raise prices and margins markedly. On 

at least four occasions, Respondents implemented price increases that raised the current price of 

the Cove Point tank by more than 60% from pre-merger levels, with a nearly five-fold increase 

in the dollar margins that the combined entity expects to earn.
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Response to Finding No. 777:

For the reasons set forth in RFOF 779-830, the proposed finding is factually

incorrect, misleading, conclusory, incomplete, and is not supported by the evidence.

778. The Cove Point story involves three phases. Phase 1 is the January 2000 period 

when CB&I and PDM were in head-to-head competition to win a 750,000 barrel LNG tank

project with Columbia LNG, and its successor, Williams Gas Company. CCFF 779-788. Phase 

2 is the September 2000-February 2001 period when Respondents had agreed to merge but had 

not yet finalized the acquisition. In Phase 2, Williams Gas Company obtained price quotes from 

PDM for the 750,000 barrel tank and alternatively for a 850,000 barrel tank, and accepted PDM's 

final bid for the 850,000 barrel tank. CCFF 789-811. Phase 3 is the period after February 2001 

when Respondents had merged to create one entity. CCFF 812-825.

Response to Finding No. 778:

For the reasons set forth in RFOF 779-830, the proposed finding is factually

incorrect, misleading, conclusory, incomplete, and is not supported by the evidence.

2. Cove Point Phase 1 – CB&I - PDM Competition Brings Prices Down

779. During Phase 1, CB&I and PDM competed aggressively to win a 750,000 barrel

LNG tank for Columbia LNG to be built at Cove Point. (CX 293 at CB&I/PDM-H 4008141).

Response to Finding No. 779:

The proposed finding is misleading and mischaracterizes the evidence. CX 293 is 

an internal PDM document, and there is nothing in the cited page suggesting that CB&I

"competed agressively" for the Cove Point project.

780. In January 2000, PDM's Mike Miles, the lead sales representative on Cove Point, 

announced to PDM staff working on the Cove Point bid, as well as his boss, Jeff Steimer, that (a) 

"PDM is bidding against CB&I on this one;" and (b) PDM needed a "very competitive price to 

be successful." (CX 293 at CB&I/PDM-H 4008141).

Response to Finding No. 780:

The proposed finding is misleading and is unsupported by the evidence. There is 

no record evidence suggesting either that (1) Mr. Miles was the lead sales representative on Cove 

Point, and (2) that Jeff Steimer was Mr. Miles' boss.
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781. PDM initially quoted a price of approximately [xxx] million. (CX 226 at CB&IPL044978, in camera). PDM subsequently bid [xxxxxx] million. (CX 1058 at PDM-HOU 

017465).

Response to Finding No. 781:

The proposed finding is incomplete, misleading, and is unsupported by the

evidence. First, Complaint Counsel failed to ask any witness at trial about CX 226, and thus, its 

interpretation of this document is suspect. Second, CX 226 is a CB&I document. CB&I was

speculating as to what PDM's pricing was for the Cove Point project based on CB&I's

discussions with Cove Point. (CX 226 at CB&I-PL44978). Third, as CX 226 indicates, PDM

initial pricing to Cove Point was a budget price, which cannot be fairly compared to a firm, fixed 

price bid. (FOF 7.1-7.38). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] Rather than asking any witnesses at trial

about CX 1058, Complaint Counsel instead attempts to speculate as to the meaning of certain

undefined numbers contained in this document.

782. CB&I initially bid [xxx]. (RX 127 at CB&I-H008204).

Response to Finding No. 782:

The proposed finding is misleading and unsupported by the evidence. First,

Complaint Counsel failed to question a single witness at trial regarding RX 127. As such,

Complaint Counsel is merely speculating as to what the pricing numbers contained in this

document represent. Second, RX 127 contains comments made a bid review meeting, and states: 

"To Be Completed Prior to Final Proposal Submittal". (RX 127 at CB&I-HO08200). Thus,

while RX 127 contains proposed pricing for the Cove Point project, there is no record evidence 

suggesting that this pricing was actually submitted or used as a bid for the project.

783. CB&I's March 2000 bid review report shows that CB&I's bid consisted of a

"profit" of [xxxxxx], amounting to [xxxxxx] of the price, and a "Technical Services Fee,"

CB&I's equivalent of additional margin for sales, general and administration ("SGA"), of
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[xxxxx], amounting to [xxxxxx], for a total "margin" of [xxxxxxxxx], or [xxxxxx] of the price. 

(RX 127 at CB&I-H008204).

Response to Finding No. 783:

The proposed finding is misleading, incomplete, unsupported by the record

evidence, and mischaracterizes the cited document. First, for the reasons set forth in RFOF 782, 

there is no evidence suggesting that the pricing information contained in RX 127 was actually

submitted, or used in a bid for the Cove Point project. Second, Complaint Counsel fails to

provide any record citation supporting its theory that "Technical Service Fee" is the "equivalent 

of additional margin for sales, general and administration". Instead, Complaint Counsel

speculates on how CB&I calculates its margins, and ignores other line items such as "Admin"

which contributed to its pre-acquisition margins. (RX 127 at CB&I-HO08204).

784. A CB&I report summarizing conversations with the customer shows that by

March of 2000, competition from CB&I forced PDM to lower its initial bid by approximately

[xxx]. (CX 226 at CB&I-PL044978, in camera).

Response to Finding No. 784:

The proposed finding is unsupported by the evidence and mischaracterizes the

evidence, as there is nothing in [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] 

Again, Complaint Counsel failed to question a single trial witness about this document.

785. On March 29, Gary Marine of CB&I relayed minutes of a meeting that he had

with [xxxxxxxxx], a representative from Columbia. (CX 226, in camera). Marine wrote: [xx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxx]. (CX 226 at CB&I-PL044978, in camera).

Response to Finding No. 785:

Respondents have no specific response.

786. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxx]. (CX 226 at CB&I-PL044978, in camera).
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Response to Finding No. 786:

The proposed finding is patently false, and grossly mischaracterizes CX 226. 

There is nothing contained in CX 226 suggesting that Columbia believed CB&I and PDM

coordinated on their bids. Complaint Counsel bases this unfounded, speculative conclusion on

the following innocuous sentence: "Wally confirmed that when he said the proposals were very

similar ('as thought we were looking over each other's shoulder'), it was based on our base offer." 

Complaint Counsel failed to question a single witness about this document, and instead relies on 

innuendo to make an unwarranted accusation.

787. After Marine's March memo, the threat of losing Cove Point to PDM prompted

CB&I to lower its price even further. (CX 1388 at CB&I/PDM-H 4015263). Marine advised 

that CB&I should reduce its price to [xxxxx] million, a reduction of [xxxxx] from its initial 

[xxxxxxxxx] bid, and offer a further discount tied to how quickly the customer places its order. 

(CX 226 at CB&I-PL044979, in camera; RX 127 at CB&I-H008204).

Response to Finding No. 787:

The proposed is factually incorrect, based on gross speculation, and is not

supported by the evidence. Nothing in CX 1388 suggests that CB&I lowered its bid due to the

threat of losing the Cove Point project to PDM. To the contrary, CX 1388 is a PDM document 

containing budget pricing information. Further, as stated in RFOF 782 and 783, there is no

evidence suggesting that the pricing contained in RX 127 was submitted to the customer, and

therefore, any proposed finding based on that assumption is erroneous.

788. Columbia sold Cove Point to Williams in June of 2000. (See CX 863; Harris, Tr. 

7724-25). After Williams acquired the Cove Point facility, PDM continued to look for ways to 

reduce costs for Cove Point. In June of 2000, PDM's Miles reminded the team that Cove Point 

was a "very competitive situation," and, "in accordance with Luke [Scorsone's] direction,"

emphasized the need to get to "the lowest price possible" and to "save every dollar we can." (CX 

863 at CB&I/PDM-H 4018410).

Response to Finding No. 788:

Respondents have no specific response.
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3. Cove Point Phase 2 – The First Price Increase

789. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. 

(CX 863 at CB&I/PDM-H 4018410; Scorsone, Tr. 4964-4966; [xxxx], Tr. 8061-8062, in 

camera).

Response to Finding No. 789:

Respondents have no specific response.

790. On August 29, 2000, CB&I and PDM agreed to merge, thereby diminishing each 

party's incentive to compete against the other.

Response to Finding No. 790:

The proposed finding mischaracterizes the evidence, as there is nothing in the

record evidence suggesting that the proposed acquisition diminished CB&I's and PDM's

incentive to compete against each other.

791. In contrast to its pre-merger eagerness to beat PDM, CB&I chose not to rebid on 

Cove Point. (Scorsone, Tr. 4965).

Response to Finding No. 791:

The proposed finding mischaracterizes the evidence, as there is no record 

evidence suggesting that CB&I "chose not to rebid". In fact, there is no evidence suggesting that 

CB&I was actually invited to submit another bid for the Cove Point project.

792. On September 8, 2000, PDM quoted Williams a budget price of [xxxxx] million 

for an 850,000 barrel tank and [xxxxxxxxxx] for a 750,000 barrel tank. (CX 1388 at

CB&I/PDM-H 4015363). PDM's bid is significant for two reasons.

Response to Finding No. 792:

The proposed finding is misleading and mischaracterizes the evidence, as PDM's 

submitted budget price did not constitute a "bid", and there was nothing "significant" about this 

budget price.

793. First, just one week after agreeing to merge with its closest competitor, PDM

raised its price by [xxxxxxxx] from pre-merger levels. PDM's September quote of [xxxx 
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xxxxxxx] for a 750,000 barrel tank is [xxxx] higher than PDM had bid for the same-size tank six 

months earlier when it was in head-to-head competition with CB&I, [xxx] higher than CB&I's

March 2000 bid of [xxxxx] million and [xxxxx] higher than CB&I's proposed bid of [xxxxx]

million. (CX 226 at CB&I-PL044978, in camera).

Response to Finding No. 793:

The proposed finding is misleading, mischaracterizes the evidence, and is

unsupported by the evidence. First, there is no evidence suggesting what PDM's bid for the

Cove Point project was prior to the date the letter of intent was signed. As stated in RFOF 781, 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxx] Rather than asking any witnesses at trial about CX 1058, Complaint Counsel

instead attempts to speculate as to the meaning of certain undefined numbers contained in this

document. Second, for the reasons stated in RFOF 782 through RFOF 787, Complaint Counsel 

has no evidence indicating what CB&I's previous firm, fixed price bids were for the Cove Point 

project. Third, even assuming that Complaint Counsel is accurately representing PDM's and

CB&I's initial bids for this project, they cannot be compared to a budget price submitted by PDM 

in September 2000. (FOF 7.1-7.38). Additionally, Complaint Counsel fails to account for the 

inevitable scope changes of a typical LNG project that occur over the course of several months, 

which preclude any meaningful comparison of prices. Complaint Counsel has provided no

evidence that the scope of the Cove Point LNG project when Columbia owned it was identical to 

when Williams owned it. Because Complaint Counsel failed to bring in a single expert witness 

or engineer to testify about these prices, any attempt to analyze the different prices is based on 

pure speculation.

794. Second, PDM's price schedule demonstrates that the price differential between a 

750,000 barrel tank and a 850,000 barrel tank is [xxxxxx], i.e., [xxxxxx]. (CX 1388 at

CB&I/PDM-H 4015363).
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Response to Finding No. 794:

The proposed finding is misleading and mischaracterizes the evidence. CX 1388 

demonstrates what PDM's budget prices were for a 750,000 barrel tank and a 850,000 barrel tank 

given the project scope and requirements at the time the budget prices were submitted in

September 2000. However, the proposed finding is misleading and false to the extent Complaint 

Counsel suggests that there will always be a $2 million dollar, or 9%, differential between the

two different sized tanks proposed for the Cove Point project. Because Complaint Counsel

failed to bring in a single expert witness or engineer to testify about these prices, any attempt to 

analyze the different prices is based on pure speculation.

795. Scorsone claimed at trial that he believed CB&I was competing against PDM at 

the time, but nevertheless decided to increase PDM's prices without fear of losing. (Scorsone, 

Tr. 4965, 4974-4979; see Scorsone, Tr. 4983).

Response to Finding No. 795:

The proposed finding mischaracterizes Mr. Scorsone's testimony. While Mr.

Scorsone believed PDM was competing against CB&I, PDM needed to change its price for the 

Cove Point project because Williams modified the project's specifications, increasing the tanks

size from 750,000 barrels to 850,000 barrels. (Scorsone, Tr. 4964) (FOF 3.619). As a result,

PDM needed to re-design, and re-price the tank to account for the specification change. 

(Scorsone, Tr. 4964) (FOF 3.619).

4. Cove Point Phase 2 – The Second & Third Price Increases

796. In October of 2000, PDM and CB&I began integration discussions in which they 

exchanged bidding and estimating methodologies. (Scorsone, Tr. 5194-5197).

Response to Finding No. 796:

The proposed finding mischaracterizes Mr. Scorsone's testimony. Any

information that was shared between PDM and CB&I during October 2000 were for "non-
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competition sensitive projects already sold and were entirely appropriate" "in the context of due 

diligence." (Scorsone, Tr. 5195). In fact, CB&I and PDM created a "clean team" to avoid the 

exchange of ongoing bids. (Scorsone, Tr. 5246).

797. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 863; CX 1160 at CB&I/PDM-H 

4007484-7487, in camera; Scorsone, Tr. 4967).

Response to Finding No. 797:

The proposed finding is misleading, argumentative, and mischaracterizes the

evidence. At the bid review meeting, PDM examined whether costs had been accurately

projected by analyzing "on a line-by-line basis" each of the components, risks, and scope of the 

bid. (Scorsone, Tr. 4966-67) (FOF 3.622). There is no evidence suggesting that the purpose of 

PDM's Cove Point team meeting was "to identify costs that could be added to PDM's estimate." 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 1160 at CB&I/PDM-H 4007485).

798. On November 1, PDM reviewed the September quote of [xxxxxxxxxx] for the

850,000 barrel tank and increased the price to [xxxxxxxxxxx]. (CX 1160 at CB&I/PDM-H 

4007485). This was an increase of [xxxxxxxx] over the September quote. (CX 1388 at

CB&I/PDM-H 4015363, CX 226 at CB&I-PL044978, in camera; CX 1160 at CB&I/PDM-H 

4007485, in camera).

Response to Finding No. 798:

The proposed finding is false, misleading, incomplete, and grossly

mischaracterizes the evidence. First, there is no evidence that PDM reviewed the budget price it 

submitted in September on November 1 and increased the price to [xxxxxxxxxxxx] Second,

Williams modified the project's specifications, increasing the tank size from 750,000 barrels to

850,000 barrels. (Scorsone, Tr. 4964) (FOF 3.619-FOF 3.623). As a result, PDM needed to redesign, and re-price the tank to account for the specification change. (Scorsone, Tr. 4964) (FOF 
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3.619). The re-design took approximately 200 hours, and the follow-up estimating for the

project took between 100 and 200 hours. (Scorsone, Tr. 4964) (FOF 3.619). PDM then prepared 

a "brand-new estimate" for the 850,000 barrel tank because the "tank geometry changed". 

(Scorsone, Tr. 4966) (FOF 3.621). Finally, it is inappropriate for Complaint Counsel to compare 

a budget price that was submitted in September to a firm price that was developed in November, 

after the owner provided these specification changes. (FOF 7.1-7.38). Because Complaint

Counsel failed to bring in a single expert witness or engineer to testify about these prices, any

attempt to analyze the different prices is based on pure speculation.

799. Scorsone's November 1 proposal of [xxxxxxxx] for a 850,000 barrel tank is

identical to the price Scorsone approved in March (pre-merger) as PDM's initial quote for a

750,000 barrel tank – [xxxxxx] – plus the [xxxxxxxx] to account for the larger-sized tank.

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx].

Response to Finding No. 799:

The proposed finding is grossly inaccurate, misleading, incomplete, and is not

supported by the evidence. First, for the reasons stated in RFOF 781, there is no credible

evidence suggesting that PDM submitted a bid of [xxxxxxxxxxxx] in March. Second, there is no 

evidence supporting Complaint Counsel's claim that a meaningful comparison can be made

between alleged pricing submitted in March 2000 for a 750,000 barrel tank and pricing

developed in November for an 850,000 barrel tank, after a re-design and re-estimate was

accomplished for this project. (Scorsone, Tr. 4964) (FOF 3.619). Because Complaint Counsel 

failed to bring in a single expert witness or engineer to testify about these prices, any attempt to 

analyze the different prices is based on pure speculation.

800. On November 2, PDM submitted a bid to Williams for the 850,000 barrel tank of 

approximately [xxxx] million, a further increase of [xxxxx] above the November 1 proposal, and 

[xxxxx] higher than PDM's September [xxxxx] million quote. (CX 1160 at CB&I/PDM-H 

4007484-7485, in camera; CX 1388 at CB&I/PDM-H 4015363).
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Response to Finding No. 800:

The proposed finding is misleading, inaccurate, incomplete, mischaracterizes the 

testimony, and is not supported by the evidence. First, for the same reasons stated in RFOF 798 

and RFOF 799, it is inappropriate for Complaint Counsel to compare firm and detailed pricing 

estimates to budgetary pricing previously sent to the customer. (FOF 7.1-7.38). Second,

Complaint Counsel fails to account for any specification and scope changes that occurred on the 

project during the time these different prices were submitted. For example, Mr. Scorsone

testified that PDM prepared a "brand-new estimate" for the 850,000 barrel tank because the "tank 

geometry changed". (Scorsone, Tr. 4966) (FOF 3.621).

801. PDM's prices for the 850,000 barrel tank, as reviewed on November 1, and as

submitted to Williams on November 2, are shown in the table below:

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

[xxxxxxxxxxxxxxxxxxxx] [xxxxxxxxxxxxxxxxxxx]

[xxxxxxxxxxx] [xxxxxxxxxxx] [xxxxxxxxxxx]

[xxxxxxxxxxx] [xxxxxxxxxxx] [xxxxxxxxxxx]

[xxxxxxxxxxx] [xxxxxxxxxxx] [xxxxxxxxxxx]

[xxxxxxxxxxx] [xxxxxxxxxxx] [xxxxxxxxxxx]

[xxxxxxxxxxx] [xxxxxxxxxxx] [xxxxxxxxxxx]

(CX 1160 at CB&I/PDM-H 4007485, in camera).

Response to Finding No. 801:

The proposed finding is incomplete. Mr. Scorsone testified that PDM's

management team increased the cost estimates for the Cove Point project because there was "a 

very uncertain date for this project . . . ." (Scorsone, Tr. 4978) (FOF 3.630).

802. PDM's "Margin" of [xxxxxxx], as calculated by Scorsone, is the sum of the

"SGA" and the "Profit" line items. (CX 1160 at CB&I/PDM-H 4007485, in camera). [xxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (Id.)
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Response to Finding No. 802:

The proposed finding is misleading and incomplete, to the extent it is unclear

whether Complaint Counsel is referring to profit margin or gross margin.

803. PDM's November 2 bid of [$28.6 million] anticipates a "margin" of [xxxx 

xxxxxx], or [xxxx] on the sold price. (CX 1160 at CB&I/PDM-H 4007485, in camera). This 

margin is nearly three times the margin of [xxxxxxxxx] and, measured as a percent of the price, 

more than double the total margin of [xxxxx] that CB&I anticipated for itself in March, before

the merger. (RX 127 at CB&I-H008204; CCFF 784 (March 2000 bid shows total margin of

[xxxxx]).

Response to Finding No. 803:

The proposed finding is misleading, factually incorrect, and mischaracterizes the 

evidence. First, the proposed finding is misleading and incomplete, to the extent it is unclear

whether Complaint Counsel is referring to profit margin or gross margin. Second, it is

inappropriate for Complaint Counsel to compare the firm pricing PDM submitted to Williams for 

a 850,000 barrel tank in November 2000 to pricing CB&I allegedly submitted to Columbia for a 

750,000 barrel tank in March 2000. As discussed in RFOF 798, PDM encounterd various scope, 

design, and size changes of the LNG tank between March and November. (Scorsone, Tr. 4963-

64) (FOF 3.619). Third, the proposed finding mischaracterizes, and incorrectly states, what

margin CB&I anticipated in March. For example, [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (RX 127 at CB&I-H008204; 

Scorsone, Tr. 5335). Thus, even if CB&I submitted the pricing contained in RX 127 to

Columbia (there is no evidence it did (RFOF 782)) Complaint Counsel is making an apples to 

oranges comparison of it to PDM's November pricing.

804. PDM's November 2 bid of [xxxxxxxxxxx] anticipates a "profit" of [xxxxxxxxxx], 

or [xxxxx] on the sold price. (CX 1160 at CB&I/PDM-H 4007 485, in camera). This profit is 

more than triple the profit of [xxxxxxxxx] and, measured as a percent of the price, more than
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double the profit of [xxxxx] that CB&I anticipated for itself in March, before the merger. (RX 

127 at CB&I-H008204).

Response to Finding No. 804:

The proposed finding is misleading, speculative, factually incorrect, and

mischaracterizes the evidence for the reasons set forth in RFOF 803.

805. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 1160 at CB&I/PDMH 4007486-7487, in camera). Steimer believed the original estimate was [xxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxx]. (CX 1160 at CB&I/PDM-H 4007486-7487, in camera).

Response to Finding No. 805:

The proposed finding is misleading and incomplete. Steimer was one of several 

individuals who participated in PDM's bid review meeting for the Cove Point project, which also 

included an estimator, an engineer, and operational personnel. (Scorsone, Tr. 4968) (FOF

3.623). While Mr. Steimer did not agree with the revised pricing estimate, he was the lone

dissenter; neither Mr. Scorsone nor the bid review group agreed with Mr. Steimer's comments. 

(Scorsone, Tr. 4973-82) (FOF 3.628-3.631). Mr. Steimer has never been involved in the

engineering, fabrication, field erection, or materials estimating of an LNG tank, and does not

have the basis of knowledge to hold a valid opinion on these subjects. (Scorsone, Tr. 4974,

4982) (FOF 3.628, 3.630). Mr. Steimer "was a salesperson on the project and it's not untypical 

for salespersons to have concerns when prices are increased." (Scorsone, Tr. 4973) (FOF 3.628). 

Overall, Mr. Scorsone considered the bid price submitted by PDM for the Cove Point expansion 

"to be reasonably lean considering the scope of this project . . . . " (Scorsone, Tr. 4980) (FOF 

3.631).

806. Steimer emphasized that with respect to the profit figure, [xxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 1160 at

CB&I/PDM-H 4007486-7487, in camera).
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Response to Finding No. 806:

The proposed finding is misleading and incomplete for the reasons set forth in

RFOF 805.

807. Overall, Steimer viewed the November 2 [xxxxxxx] bid for Cove Point as [xx 

xxxx]. (CX 1160 at CB&I/PDM-H 4007486, in camera).

Response to Finding No. 807:

The proposed finding is misleading and incomplete for the reasons set forth in

RFOF 805.

808. Scorsone ignored Steimer's comments and instructed Steimer and the rest of the

Cove Point team that "We are not however, to make any new price submittals to Williams as a 

result of your meeting." (CX 291).

Response to Finding No. 808:

Respondents have no specific response.

809. Williams accepted PDM's November 2 bid of [xxxxxxxxxxxxx]. (Scorsone, Tr. 

4963).

Response to Finding No. 809:

The proposed finding is unsupported by the evidence and mischaracterizes the

evidence. Mr. Scorsone never testified that Williams accepted PDM's November 2 bid. In fact, 

Mr. Scorsone stated that Williams entered into sole-source negotiations with PDM for the project 

after the bid. (Scorsone, Tr. 4963). Thus, the evidence does not support Complaint Counsel's

speculation that Williams accepted PDM's November 2 bid without further negotiations.

810. Steimer's prediction that the margins realized on Cove Point would greatly exceed 

the November estimates proved correct.

Response to Finding No. 810:

The proposed finding is factually incorrect and unsupported by the evidence. Mr. 

Scorsone testified that CB&I is currently forecasting a profit margin, not including SG&A, of
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[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxx] (Scorsone, Tr. 5335-36) (FOF 3.634-3.635). [xxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Scorsone, Tr. 5336)

(FOF 3.635).

811. In June 21, 2001, CB&I prepared a "Quarterly Review" that records the merged 

entity's projected margins on Cove Point. The "Quarterly Review" reports that the "projected

GP" – projected gross profit – on Cove Point would be [xxxxxxxxxxxxxxx] compared to the

[xxxxxxxxx] projected on November 2.5 (RX 323 at CB&I 004066-HOU). The [xxxxx] gross 

profit represents a margin of [xxxxxx] of the sold price, and a [xxxxxx] increase since the

November 2 bid. (RX 323 at CB&I 004066-HOU).

Response to Finding No. 811:

The proposed finding is incomplete. Complaint Counsel failed to question a

single witness at trial regarding RX 323, and therefore, any statements made about this document 

are based on speculation.

5. Cove Point Phase 3 – The Fourth Price Increases

812. Since the November 2, 2000, bid, CB&I has [xxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Scorsone, Tr. 5333, in camera).

Response to Finding No. 812:

The proposed finding is incomplete. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Scorsone, Tr. 5334)

(FOF 3.633). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxx] (Scorsone, Tr. 5336). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

 

5

 [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxx]. (CX 1160 at CB&I/PDM-H 4007484-7485, in camera).
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CHI:1176893.3

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Scorsone, Tr. 5337). [xxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Scorsone, Tr. 5337-38).

813. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. 

(Scorsone, Tr. 5334, 5337-39, in camera).

Response to Finding No. 813:

The proposed finding is incomplete and mischaracterizes the evidence for the

reasons set forth in RFOF 812. (Scorsone, Tr. 5334).

814. CB&I currently projects that it will earn a margin of approximately [xxxxxxxx]

on Cove Point, or [xxxxx] of the current price. (Scorsone, Tr. 5334, in camera). This dollar 

amount is a little less than five times the projected margin of [xxxxxxxx] that CB&I was willing 

to accept in March of 2000 when it was trying to beat PDM on Cove Point, and a percentage

margin that is nearly three times greater [xxxxxxxxx]. (RX 127 at CB&I-H008204).

Response to Finding No. 814:

The proposed finding is misleading, factually incorrect, mischaracterizes the

evidence, and is unsupported by the record. First, for the reasons stated in RFOF 812, CB&I

projects it will earn a higher margin on the Cove Point project than it first anticipated because the 

project was significantly delayed; this allowed CB&I to spend several months to logistically

preparing for the project. (RFOF 812).
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CHI:1176893.3

For the reasons discussed in RFOF 803 and RFOF 812, it is inappropriate to

compare CB&I current pricing information for the Cove Point project (involving a 850,000

gallon tank) to the pricing developed in March 2000 (involving a 750,000 gallon tank). (RFOF 

803, 812). Any meaningful comparison between prices submitted for the Cove Point project

over the course of many months would need to be conducted by an expert witness after hearing 

testimony about the documents upon which Complaint Counsel relies. No such expert testimony 

occurred in the present case; instead, Complaint Counsel is speculating about documents.

815. CB&I currently projects that it will earn a profit of about [xxxxxxxxxxxx] on

Cove Point, or [xxxxxxx] of the current price. (Scorsone, Tr. 5314, in camera). This dollar

amount is a little less than six times the projected profit of [xxxxxx] that CB&I was willing to 

accept in March of 2000 when it was trying to beat PDM on Cove Point, and a percentage profit 

that is over three times greater [xxxxxxxxxxx]. (RX 127 at CB&I-H008204).

Response to Finding No. 815:

The proposed finding is misleading, factually incorrect, mischaracterizes the

evidence, and is unsupported by the record. First, CB&I is currently forecasting a profit margin 

of approximately 10 percent for the Cove Point project. (Scorsone, Tr. 5336) (FOF 3.634). 

Second, for the reasons discussed in RFOF 803 and RFOF 812, it is inappropriate to compare

CB&I current pricing information for the Cove Point project (involving a 850,000 gallon tank) to 

the pricing developed in March 2000 (involving a 750,000 gallon tank). (RFOF 803, 812). Any 

meaningful comparison between prices submitted for the Cove Point project over the course of

many months and various scope changes would need to be conducted by an expert witness after 

hearing testimony about the documents upon which Complaint Counsel relies. No such expert 

testimony occurred in the present case; instead, Complaint Counsel is speculating about

documents.
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6. Cove Point – What Could Have Been Absent the Merger

816. A CB&I "Tank Estimate Summary Sheet," dated February 21, 2001, immediately 

following the CB&I/PDM merger, shows that CB&I, as an independent competitor, could have 

significantly undercut PDM's bids on Cove Point. The estimate may have been prepared before 

this date.

Response to Finding No. 816:

The proposed finding is factually incorrect, misleading, unsupported by the

evidence, and mischaracterizes the evidence. First, there is no evidence that the "Tank Estimate 

Summary Sheet" Complaint Counsel refers to in the proposed finding "may have been prepared 

before" February 21, 2001. In fact, because Complaint Counsel failed to question any witness

about this document, it is unclear, based on the four corners of the document, when this

document was prepared. Second, as decribed in RFOF 818 through RFOF 824, there is no

evidence supporting Complaint Counsel's speculation that CB&I could have undercut PDM's bid 

on the Cove Point project.

817. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. 

(CX 906 at CB&I 031076-HOU, in camera).

Response to Finding No. 817:

For the reasons stated in RFOF 818, the proposed finding is incomplete.

818. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxx]. (CX 906 at CB&I 031076-HOU, in camera). The document shows a

price of [xxxxxxx]. (CX 906 at CB&I 031076-HOU, in camera). This compares to PDM's

quote to Williams for the same tank of [xxxxxxxxxxx] on September 8, 2000; PDM's bid of

[xxxxxxxx] on November 2, 2000; and the current price of [xxxxxxxx]. CCFF 792, 800, 812.

Response to Finding No. 818:

The proposed finding is misleading, unsupported by the evidence, and grossly

mischaracterizes the evidence. First, CX 906 does not calculate what CB&I would have bid for 

the Cove Point project. Rather, Mr. Scorsone testified that CB&I performed a re-estimate of the 
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price that PDM submitted for the 850,000 barrel tank "to make sure that the bid contained the

sufficient budgets [for CB&I] to successfully execute the project and return the sold margin on 

the job." (Scorsone, Tr. 4984; CX 906) (FOF 3.636).

Second, CX 906 contains grossly inaccurate pricing information, as CB&I's

estimator that prepared the document did not have any experience estimating PDM's tank

designs. (Scorsone, Tr. 4987) (FOF 3.638). Only a "few hours" of work was put into this reestimate. (Scorsone, Tr. 4985) (FOF 3.638). Further, there are various inaccuracies contained in 

the re-estimate: (1) the estimate did not properly account for the erection method that PDM used 

for the tank roof; (2) the estimator did not add in certain subcontractor costs; and (3) the

estimator failed to add in man-hours associated with the work. (Scorsone, Tr. 4985-87) (FOF

3.638-3.640). If these errros were taken into account, the difference in price between the reestimate (CX 906) and PDM's bid price would be approximately $500,000. (Scorsone, Tr. 4986) 

(FOF 3.640).

Third, it is inappropriate for Complaint Counsel to compare the price estimates 

contained in CX 906 to the budget pricing PDM submitted in September 2000 (FOF 7.1-7.38), 

PDM's bid in November 2000 (RFOF 800-804, 809), and the project's current price. (RFOF 814, 

815).

819. The "Tank Estimate Summary Sheet" includes a "margin" of [xxxx] over cost and 

a "technology services fee" of [xxxxx], which combined amounts to a total margin on the project 

of [xxxxx] or [xxxxx] million of the tank's price. (CX 906 at CB&I 031076-HOU, in camera). 

CB&I's estimated margin is almost identical to PDM's margin of [xxxxx] million included in

PDM' s March 2000 bid to Columbia for the Cove Point tank, a coincidence that suggests that

CB&I had access to PDM's March 2000 bid estimate during the companies' pre-acquisition 

exchange of information regarding estimating methodology. (Scorsone, Tr. 5195 (Mr. Scorsone 

testified that it was "entirely appropriate" to exchange information about projects "already sold" 

prior to the acquisition)). CB&I's margin on its March 2000 competing bid was [xxxx] million. 

(RX 127 at CB&I-H008204, in camera).
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CHI:1176893.3

Response to Finding No. 819:

The proposed finding is misleading, factually incorrect, speculative, unsupported

by the evidence, and grossly mischaracterizes the evidence. First, Complaint Counsel

improperly calculates the gross or total margin contained in CX 906; Complaint Counsel failed 

to include SG&A (administrative fees) amounting to over 5% in its calculation. Second, there is 

no record evidence suggesting that CB&I exchanged pricing information for competitive projects 

with PDM prior to the acquisition. Third, Complaint Counsel improperly attempts to compare

pricing information from a March 2000 bid involving a 750,000 barrel tank to a re-estimating 

exercise (that occurred after the acquisition) involving a 850,000 barrel tank. Finally, for the 

reasons stated in RFOF 782 and RFOF 783, Complaint Counsel improperly characterizes RX

127 as containing CB&I's March 2000 bid, and also fails to properly calculate the gross margin 

from this document.

820. A note at the bottom of the "Tank Estimate Summary Sheet" shows that, based on 

PDM's actual sold price, the margin is nearly double the margin CB&I would have earned:

[xxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 906 at CB&I 31076-HOU, in camera).

Response to Finding No. 820:

The proposed finding is not supported by the evidence and mischaracterizes CX 

906. First, Complaint Counsel failed to question a single witness regarding the handwritten

notations contained in CX 906, and thus, any conclusions drawn from these handwritten

notations is pure speculation. Second, Mr. Scorsone testified that CX 906 cannot provide an

accurate estimate of what CB&I could have built the Cove Point project for. (Scorsone, Tr.

4985) (FOF 3.638-3.640). Thus, it is inappropriate for Complaint Counsel to compare this

inaccurate estimate to PDM's previous bid.

821. CB&I's estimate of the margin it would have earned had it bid on Cove Point –

[xxxx] – is approximately half of what the merged entity currently expects to earn on Cove

Point. (See CX 906 at CB&I 31076-HOU, in camera ([xxx]);CCFF 814 [xxx]).
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CHI:1176893.3

Response to Finding No. 821:

The proposed finding is factually incorrect and mischaracterizes the evidence for 

the reasons stated in RFOF 818 through RFOF 820.

822. If CB&I and PDM had not merged, the customer at Cove Point could have

avoided these price increase, and may have been able to reduce prices even further by leveraging 

CB&I and PDM against each other.

Response to Finding No. 822:

The proposed finding is not supported by record evidence, and is factually

incorrect, and misleading for the reasons contained in RFOF 779 through RFOF 820.

823. Thus, the price of the 850,000 barrel Cove Point tank has jumped from the premerger levels of [xxxxxxxx] in March of 2000 to (1) PDM's initial post-merger quote of

[xxxxxxxxxxxx] in September of 2000, then again to (2) PDM's post-merger bid of [xxxxxxxxx 

xxxx] in November of 2000, and then once again to (3) the current price of [xxxxxxxxxxx]. At 

the same time, margins have jumped from [xxxxxxxx] in March of 2000 to approximately [xxxx 

xxxxxxxxxx] today.

Response to Finding No. 823:

The proposed finding is not supported by record evidence, and is factually

incorrect, and misleading for the reasons contained in RFOF 779 through RFOF 820.

824. Respondents presented no evidence that these price and margin increases on Cove 

Point were in any way impacted by any foreign or domestic competitor.

Response to Finding No. 824:

The proposed finding is not supported by record evidence, and is factually

incorrect, and misleading for the reasons contained in RFOF 779 through RFOF 820.

825. The table attached hereto shows the history of PDM's and CB&I's prices, profit 

and margin for Cove Point, from early 2000 (when CB&I and PDM were in head-to-head 

competition) through December 2002.6

 

6

 CB&I's June 21, 2001, Industrial Quarterly Review shows CB&I's "margin," but not CB&I's "profit"

without "SGA." (RX 323 at CB&I 004066-HOU). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 1160 at CB&I/PDM-H 4007485, in camera), [xxxx 

xxxxxxxxxxxx]. Accordingly, the table includes a projected "profit" figure as of June 21, 2001, which is calculated 
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CHI:1176893.3

Response to Finding No. 825:

The proposed finding is not supported by record evidence, and is factually

incorrect, and misleading for the reasons contained in RFOF 779 through RFOF 820.

826. The table attached hereto graphically shows the price history of Cove Point. The 

blue bars represent the decreasing prices quoted by CB&I and PDM in head-to-head competition 

for the 750,000-barrel tank. The red bars represent the increasing prices quoted by PDM after 

Respondents agreed to merge. The green bar represents the price CB&I internally estimated it 

would have bid on Cove Point had the merger not occurred.

Response to Finding No. 826:

The proposed finding is not supported by record evidence, and is factually

incorrect, and misleading for the reasons contained in RFOF 779 through RFOF 820.

827. The table attached hereto graphically shows the history of dollar margins ("profit" 

plus "SGA") on Cove Point. As shown by the red bars, the projected margin on Cove Point

increased substantially after CB&I and PDM signed the letter of intent to merge. As shown by 

the blue bar, Respondents' projected margin pre-merger was substantially below the levels

anticipated today. The green bar shows the margin CB&I estimated it would have earned on

Cove Point had the merger not occurred.

Response to Finding No. 827:

The proposed finding is not supported by record evidence, and is factually

incorrect, and misleading for the reasons contained in RFOF 779 through RFOF 820.

828. The table attached hereto takes the same information from the previous table and 

graphs the data in percentages.

Response to Finding No. 828:

The proposed finding is not supported by record evidence, and is factually

incorrect, and misleading for the reasons contained in RFOF 779 through RFOF 820.

829. The table attached hereto graphically shows the history of dollar "profits"

("margin" minus "SGA") on Cove Point. As shown by the red bars, the projected profit on Cove 

Point increased substantially after CB&I and PDM signed the acquisition letter of intent. As

shown by the blue bar, Respondents' projected profit pre-merger was substantially below the

 

as CB&I's projected "profit," as of November 2, 2000, plus the difference between CB&I's "margin," as projected on 

June 21, 2001, and CB&I's "margin" as projected on November 2, 2000.
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CHI:1176893.3

levels anticipated today. The green bar shows the profit CB&I estimated it would have earned 

on Cove Point had the merger not occurred.

Response to Finding No. 829:

The proposed finding is not supported by record evidence, and is factually

incorrect, and misleading for the reasons contained in RFOF 779 through RFOF 820.

830. The table attached hereto takes the same information from the previous table and 

graphs the data in percentages.

Response to Finding No. 830:

The proposed finding is not supported by record evidence, and is factually

incorrect, and misleading for the reasons contained in RFOF 779 through RFOF 820.

7. The [xx] Projects

831. CB&I's ability to convince [xxxxxxxxxxxxxxxxxx] to enter into sole-source 

negotiations illustrates five important themes. (1) Based on actual prices obtained from CB&I, 

PDM and Whessoe, [xx] knew that CB&I and PDM offered significantly lower prices than other 

firms. (2) [xxx] knew that with the acquisition of PDM, CB&I dominated the United States

market. (3) Without PDM to turn to, [xxx] could encourage competition only by turning to

untested, higher-priced alternatives. (4) Requiring guaranteed access to resources necessary to 

complete LNG projects in the United States, [xxx] has no choice but to acquiesce to CB&I' s

demand that [xxx] work exclusively with CB&I, which may increase the costs to [xxx]. (5) A

sole-source relationship to provide engineering, procurement and construction services and the

LNG tank itself is far more lucrative for CB&I than having to competitively bid with other firms 

or to bid just for the LNG tank alone.

Response to Finding No. 831:

The proposed finding fails to cite any evidence in support of its conclusions and is 

not an appropriate "finding of fact." In fact, the evidence contradicts the proposed finding. (See

RFOF 852-882).

832. [xxx] is a global petrochemical company based in [xxxxx] with operations all

over the world. (JX 33 at 19-20 ([xxxxx], Dep.)). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 
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CHI:1176893.3

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxx].

7

 (JX 33 at 9-10 (Sawchuk, Dep.)).

Response to Finding No. 832:

CB&I has no specific response to this finding.

8. A Sole-Source/Turnkey Contract Leads to Higher Prices for Customers

833. Because the three projects were in the early stages of development in 2001, [xxx]

weighed its options about how to bring the projects to completion. Among other things, at issue 

was (a) who would perform the engineering, procurement and construction functions for the

entire facility, (b) who would supply the LNG tanks, and (c) how should the relationship with the 

firm(s) be structured, i.e., selected through competitive bidding among multiple suppliers or a

sole-source relationship with one firm. (CX 693 at [xxx] 01 026-028).

Response to Finding No. 833:

CB&I has no specific response to this finding.

834. The development and planning of an LNG tank construction project can be

broken into three major phases. The first phase is "Front End Engineering and Design"

("FEED"). (JX 31 at 50-51 (Puckett, Dep.)). The FEED phase involves a study of the site and 

assessment of what the construction project will entail. (Puckett, Tr. 4548; Price, Tr. 546). The 

second phase is the selection of a contractor to handle the "Engineering, Procurement and

Construction" ("EPC") of the LNG facility. (Puckett, Tr. 4543). Among other things, the EPC 

contractor is responsible for all aspects of the construction of the LNG facility, including

procurement of the tank, tank support systems, equipment, materials, and engineering. (Puckett, 

Tr. 4543). The third phase is the selection of a firm to supply the LNG tank itself.

Response to Finding No. 834:

The proposed finding is misleading, incomplete and inaccurate because it fails to 

account for the fact that an owner can choose to negotiate on a sole-source basis. (See FOF

3.460-3.467). In addition, the proposed finding is confusing and inconsistent because it contends 

that the second phase in the planning and development of an "LNG tank construction project"

involves selecting a contractor to work on the entire "LNG facility."

 

7

 Because the [xxxxxxxx] and [xxxxxxx] projects have not, to date, been publicly announced, their

locations and names are kept confidential. (JX 31 at 9 ([xxxxxx], Dep.)).
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CHI:1176893.3

835. The LNG industry uses the phrase "turnkey" to refer to a project in which one

firm is retained to handle most or all of the various phases of the construction project, including 

the EPC contracting and LNG tank construction. (Puckett, Tr. 4570; Price, Tr. 520-521).

Response to Finding No. 835:

CB&I has no specific response to this finding.

836. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 364 at CB&I-E 009279; see CX 906 at 

CB&I 031075-HOU, CB&I 031076-HOU, in camera [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxx]).

Response to Finding No. 836:

The first sentence of the proposed finding fails to cite any evidence in support of 

its conclusions and is not an appropriate "finding of fact." The evidence cited to support the rest 

of the proposed finding is speculative and incomplete as Complaint Counsel failed to elicit any 

testimony regarding these documents. For example, the documents do not establish, as the

proposed finding attempts to infer, that turnkey providers enjoy higher margins. The fact is, a

single contractor can often provide an owner with lower costs. (See Bryngelson, Tr. 6134;

Scorsone, Tr. 4959; see also FOF 3.463).

837. Generally, "turnkey, design build projects typically return higher margins than

stand-alone storage tank projects." (CX 660 at PDM-HOU 005013). Mr. Scorsone agreed that 

industry participants view a turnkey project to result in "higher margins." (Scorsone, Tr. 2812-

3).

Response to Finding No. 837:

The proposed finding is incomplete because it fails to acknowledge that using one 

contractor can provide an owner with greater flexibility, lower costs, and can also save time

when a project is under development. (Bryngelson, Tr. 6134; Scorsone, Tr. 4959; see also FOF 
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CHI:1176893.3

3.463). It is well established that an owner has the power to choose the contracting method it 

believes will work best. (See generally FOF 3.460-3.467).

838. Generally, a sole-source supplier earns higher margins than if competing against 

other firms in a competitive bidding situation. (See CX 112 at PDM-HOU 011513-4 (PDM 

observes that CB&I's price to an LNG customer "is probably substantially high due to their

perceived sole-source position"); Kamrath, Tr. 2030 ("we found that always a competitive bid

resulted in a better cost for us, lower cost [xxxxxxxxxxx]"); [xxxxxxxx], Tr. 720-21 (cost of

sole-sourced LNG tank from CB&I was [xxxxxx]more than comparable facilities") (in camera).

Response to Finding No. 838:

The proposed finding is misleading, incomplete and contradicted by the evidence. 

It is well established that sole-sourcing is a valid contracting options that many owners prefer. 

(See generally FOF 3.460-3.467). Sole-sourcing can provide an owner with greater flexibility, 

lower costs, and can also save time when a project is under development. (Bryngelson, Tr. 6134; 

Scorsone, Tr. 4959; see also FOF 3.463). Furthermore, the documents cited in the proposed

finding fail to establish that sole-source contractors provide higher margins. CX 112 relates to

Peoples Gas' proposed methane project; it is well established that this methane facility is

irrelevant because it is unrelated to the LNG industry. (See FOF 3.646, 3.647; see also RFOF 

267). Additionally, PDM did not know what CB&I's margins were, it merely ventured a guess. 

(See CX 112, at PDM-HOU 011514). The cited testimony of Mr. Kamrath and Ms. Outtrim is 

also purely speculative. Neither witnesses testified that they had knowledge of any of the costs 

or margins associated with a sole-source contract.

839. Even more lucrative is to be the sole-source EPC contractor. Mr. Price from

Black & Veatch explained that as a sole-source EPC contractor "we don't have to develop the

lowest cost. You can be – put more profit into the project because you don't have any

competition." (Price, Tr. 558-9).

Response to Finding No. 839:

The proposed finding is misleading, inaccurate and incomplete because it fails to 

recognize that sole-source contracts are often beneficial to, and chosen by, owners. ((See 
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CHI:1176893.3

generally FOF 3.460-3.467; see also RFOF 838). Further, the flaws in Mr. Price's testimony

have been extensively addressed. (See RFOF 990; see also FOF 3.658-3.665). [xxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (See 3.478-3.479).

840. By securing a sole-source relationship with a customer, CB&I earns 8-10% for

negotiated work versus an average of 2.5% for CB&I's total work sold. (CX 227 at CB&IPL045109). In a review of its North American operations, CB&I compared its 1997 margin

levels for negotiated work against its average total margin for all work sold in each product line. 

(CX 227 at CB&I-PL045109). For low temperature and cryogenic tanks, CB&I' s average total 

margin for all work sold was 2.5%; its margin for negotiated work was 8-10%, three to four

times as high. (CX 227 at CB&I-PL045109).

Response to Finding No. 840:

The proposed finding is misleading, inaccurate and speculative because

Complaint Counsel failed to elicit any testimony regarding CX 227. Further, CX 227 is

irrelevant because it relates to data from 1997, more than three years prior to the Acquisition. 

(See CX 227, at CB&I-PL045109). Additionally, Complaint Counsel merely speculates as to

what the data on this document represents. Complaint Counsel does concede, however, that

these old margins relate to all low temperature and cryogenic projects and are not specific to

LNG tanks or LNG projects. Further, the proposed finding fails to account for the fact that solesource contracts can provide owners will lower prices. (Bryngelson, Tr. 6134; Scorsone, Tr.

4959; see also FOF 3.463).

841. CB&I prefers to perform LNG projects on a negotiated basis, in other words, as

the sole-source turnkey contractor. (Glenn, Tr. 2659-60).

Response to Finding No. 841:

CB&I has no specific response to this proposed finding.

842. Generally, petrochemical facility owners prefer to avoid a sole-source or turnkey 

relationship with a contractor because doing so will likely increase the costs to the facility owner 

and, therefore, owners prefer competitive bidding. A project manager explained that separate

competitive bidding made it "easier to subcontract something that we want done, rather than
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CHI:1176893.3

having to go through and pay CB&I 10% of everything that Joe does over here, when you can 

save that 10% by having Joe do what you want him to do." (Crider, Tr. 6719).

Response to Finding No. 842:

The proposed finding is misleading and inaccurate to the extent it does not

recognize that subcontracting certain portions of an LNG tank job does not necessarily increase 

the costs of a particular job. (Bryngelson, Tr. 6143; see also FOF 3.543). In some cases,

subcontracting actually lowers costs because subcontractors with an expertise in a particular area 

are able to use a standardized approach in performing work. (Bryngelson, Tr. 6143-44; see also 

FOF 3.543). Similarly, subcontracting can reduce the price of a bid because specialized

subcontractors may be better at certain job functions than the general contractor, which could

improve the overall schedule. (Cutts, Tr. 2472; see also FOF 3.543).

843. For example, Dynegy "had the option of either going out for somebody who

[would] do the entire project for us, everything, or we had the choice to go out and break it up 

into what we felt were logical pieces for the project." (Puckett, Tr. 4544). Dynegy "made the 

decision that we would go out for separate quotes for the tanks, view that as a separate contract, 

and we would also go out and purchase most of the other major equipment separately from the 

EPC firm, with their support but still run it across Dynegy's books. Simple answer, we didn't

want that EPC firm to be doing additional markups on items that we felt that we could run across 

our books." (Id.)

Response to Finding No. 843:

The proposed finding is misleading and incomplete because it fails to

acknowledge the many reasons an owner would choose to enter into a sole-source negotiation. 

(See FOF 3.460-3.467). Although Dynegy chooses to utilize a competitive bidding process,

other owners have decided that a sole-source agreement would be more beneficial. (See

generally FOF 3.468-3.492).

844. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxx]. (CX 428 at CB&I-E 009331; CX 364 at CB&I-E 009279).
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Response to Finding No. 844:

The first sentence of the proposed finding fails to cite any evidence in support of 

its conclusions and is not an appropriate "finding of fact." The proposed finding is also

misleading, incomplete and factually inaccurate to the extent it implies CB&I and PDM are the 

only tank suppliers a general contractor can select for an LNG project. The very document cited 

by Complaint Counsel states that other possible LNG tank suppliers include: TKK, IHI, MHI,

Entropose, Whessoe and Technigaz. (CX 428, at CB&I-E 009331). The evidence clearly 

establishes that many foreign suppliers have entered the U.S. market since the Acquisition. (See 

generally FOF 3.57-3.227).

845. CB&I is one of the few firms in the world that has the capability to serve as both 

the EPC contractor and the LNG tank supplier. (CX 428 at CB&I-E 009331; CX 310 at CB&I 

049044).

Response to Finding No. 845:

The proposed finding is misleading and inaccurate to the extent it infers that there 

are not a sufficient number of competitors capable of serving as EPC contractors and LNG tank 

suppliers. EPC contractor competition is plentiful. (See generally FOF 3.228-3.246). Most

recently, Skanska/Whessoe beat CB&I, Kvaerner, Technip, Kellogg Brown & Root, and Bechtel 

for Dynegy's EPC contract. (Puckett, Tr. 4546-47; see also FOF 3.265, 3.272). 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] 

(Jolly, Tr. 4760; see also FOF 3.307).

846. CB&I knows that its ability to perform the EPC function and build LNG tanks

gives it a competitive advantage on LNG tank projects. In 1997, CB&I was approached by

Lotepro, the engineering firm that had partnered with Whessoe on the Memphis project only to 

be resoundingly beaten on price by CB&I (and PDM), which had bid for the engineering work 

and the supply of the LNG tank itself. CCFF 847. Lotepro felt their engineering bid was

competitive but their total price was "really strained by not being able to include a CB&I or

PDM tank." (CX 186 at CB&I-PL012447). Lotepro inquired whether CB&I would be

interested in teaming with Lotepro now on future LNG projects. (Id.)
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Response to Finding No. 846:

The first sentence of the proposed finding fails to cite any evidence in support of 

its conclusions and is not an appropriate "finding of fact." The irrelevancy of the Memphis bids 

has already been established in detail. (See FOF 3.493-3.508; see also RFOF 135). The

proposed finding is also misleading and incomplete to the extent that it attempts to establish that 

Lotepro has few tank suppliers to choose between by citing a 1997, pre-Acquisition, document. 

(See CCFF 846; CX 186, at CB&I-PL012447). The proposed finding fails to account for the fact 

that liquefaction suppliers have more tank suppliers to choose from post-Acquisition than they

did pre-Acquisition; many foreign LNG tanks suppliers have entered the U.S. market. (See 

generally FOF 3.57-3.227.)

847. Following an internal analysis based on the outcome of the Memphis project,

CB&I decided "it is in CB&I's best interest NOT to quote separate tank price [to Lotepro]." (CX 

186 at CB&I-PL012446). CB&I reasoned that quoting "a separate tank price will only serve to 

make the process-only contractors viable...If we had quoted a tank only price, the combination of 

Lotepro process and CB&I tank would have been a serious threat to CB&I total facility

price...Lotepro's total facility bid using Whessoe tank and Pritchard's bid using TKK tank did not 

turn out to be very competitive." (Id.)

Response to Finding No. 847:

The proposed finding is misleading, irrelevant and incomplete for the reasons set 

forth in RFOF 846.

848. CB&I declared that it would "quote turnkey for the total facility with process and 

tank, and NOT bid tank only" on United States LNG projects. (CX 186 at CB&I-PL012446). 

CB&I liked "our chances better in what then boils down to a 2 horse race." (Id.)

Response to Finding No. 848:

The proposed finding is misleading, irrelevant and incomplete for the reasons set 

forth in RFOF 846.

849. CB&I and PDM were the two horses that competed most closely for LNG tanks 

in the United States. By acquiring PDM, CB&I turned it into a one-horse race, thereby giving 

CB&I an even greater leg up against other firms to secure not only the LNG tank business itself, 
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CHI:1176893.3

but also the more lucrative EPC work. Without a low-cost LNG tank supplier that can compete 

against CB&I's prices, an EPC engineering firm will likely face the same competitive

disadvantages as Lotepro and Black & Veatch did in the Memphis project. For the LNG facility 

owner, the race would also come down to one horse – CB&I.

Response to Finding No. 849:

The proposed finding fails to cite any evidence in support of its conclusions and is 

not an appropriate "finding of fact." The proposed finding also fails to acknowledge that there

are more potential EPC contractors and LNG tank suppliers now than there were prior to the

Acquisition. (See RFOF 845, 846). Numerous potential EPC contractors, like

Skanska/Whessoe, Technigaz and TKK, are also able to construct LNG tanks. (See generally

FOF 3.228-3.246). The proposed finding is also misleading, irrelevant and incomplete for the

reasons set forth in RFOF 846.

850. Mr. Glenn of CB&I alluded to the sole-source, turnkey strategy during the

October 31, 2002 investors conference call when he said that CB&I's margin levels are "high"

because CB&I is "trying to focus more of our energy, more of our efforts, more of our resources 

on the higher margin work." (CX 1731 at 41-42).

Response to Finding No. 850:

The proposed finding is misleading, speculative and not an appropriate "finding

of fact." Complaint Counsel attempts to assert a statement that it believes Mr. Glenn "alluded to" 

as a "finding of fact." This is inappropriate. The fact is, contrary to the proposed finding's 

contention, Mr. Glenn's above cited quotation does not refer to a "sole-source, turnkey strategy." 

Complaint Counsel fails to recognize that Mr. Glenn was speaking about CB&I's business in

general across all product markets. (Glenn, Tr. 4402-03). Likewise, Mr. Glenn did not limit his 

comments, in any way, to the four product markets in this litigation. (Glenn, Tr. 4403).

851. It is this higher-margin sole-source/turnkey strategy that drives CB&I's

relationship with [xxx].
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Response to Finding No. 851:

The proposed finding fails to cite any evidence in support of its conclusions and is 

not an appropriate "finding of fact."

9. The Absence of Effective Competition Leaves [xxx] with No Choice but to Enter 

Into Sole-Source, Turnkey Negotiations with CB&I

852. Until 2001, CB&I had performed some of the preliminary design work. (JX 33 at 

10 ([xxxxxx], Dep.)). For at least one project, CB&I wanted a more expansive role: [xxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxx] (CX 693 at [xxxxx] 01 026).

Response to Finding No. 852:

The proposed finding is misleading and incomplete because it fails to recognize

that [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxx] (CX 693, at BP 01 026).

853. [xxx] prepared a memorandum, dated June 19, 2001, to brief [xxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

about the available options. (CX 693 at [xxx] 01 026, in camera). The memorandum was

prepared by [Ben Ho and Mark Howard.] (Id. at [xxx] 01 028, in camera).

Response to Finding No. 853:

Respondents have no specific response.

854. [xxxxx] first assessed the [xxxxxxxxxxxx] and the various firms within it that

could be considered for the projects. The list included numerous general contractors from the

United States, Europe and Asia [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (CX 693 at [xxx] 01 026-7).

Response to Finding No. 854:

Respondents have no specific response.

855. [xxxx] identified only [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 693 at [xxx] 01 027).

Response to Finding No. 855:

Respondents have no specific response.
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CHI:1176893.3

856. [xxx] stated that with respect to LNG tank suppliers, [xxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 693 at [xxx] 01 027).

Response to Finding No. 856:

The proposed finding is misleading and incomplete because it fails to account for 

Mr. Sawchuck's testimony regarding CX 693. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxx] (Sawchuck, Tr. 6105-06). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Sawchuck, Tr. 6106). For example, Technigaz and 

Zachry had not even formally announced its alliance until after CX 693 was written. (See RX 43 

at ZCC000002). Furthermore, the proposed finding ignores the fact that BP believes that the

current level of competition will provide it with a fair and reasonable LNG tank price. 

(Sawchuck, Tr. 6075; see also FOF 3.427).

857. [xxx] stated that since the acquisition of PDM, [xxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxx]. (CX 693 at [xxx] 01 027) (emphasis supplied).

Response to Finding No. 857:

The proposed finding is misleading and incomplete because it fails to account for 

Mr. Sawchuck's testimony regarding CX 693. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Sawchuck, Tr. 6099). [xxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Sawchuck, Tr. 6100). [xxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Sawchuck, Tr. 6100). Furthermore, the proposed finding 

ignores the fact that BP believes that the current level of competition will provide it with a fair 

and reasonable LNG tank price. (Sawchuck, Tr. 6075; see also FOF 3.427).

858. The memorandum adds that the use of CB&I as a "main contractor" has "potential 

limitations." (CX 693 at [xxx] 01 027). Among other things, CB&I seeks "an up-front 

commitment to the entire project." (Id.) CB&I is "technically strong," but "have yet to open up 
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CHI:1176893.3

to us about technology or show signs of wishing to reduce costs or schedule through technical 

innovation." (Id.) CB&I is "very negative towards novel tank concepts that do not require

welded steel plate" because CB&I views itself as "'metal erectors.'" (Id.) This last observation 

was important because [xxx] was researching the use of concrete materials in LNG tanks that

may reduce construction time and costs considerably. (Id. at 01 028).

Response to Finding No. 858:

The proposed finding is misleading and incomplete because it fails to recognize

that [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxx] (See CCFF 857; CX 693 at BP 01 027). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 

693 at BP 01 026). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 693 at BP 01 026).

859. [xxx] took a cautious tone with respect to Whessoe and its new owner Skanska. 

The memorandum observes that "CB&I quoted Whessoe as a new entrant into the US market in 

their FTC submission," and that Whessoe had "confirmed their interest" in the United States to 

[xxx]. (CX 693 at [xxx] 01 027). The memorandum adds that Whessoe "did not perform at all 

well in Trinidad, and Bechtel had to provide substantial project management support." (Id. at 

[xxx] 01 028) It was "not yet clear" to [xxx] what Skanska's strategy for Whessoe will be, but 

Skanska is a "very major civil contractor" in the United States and "may help Whessoe to

compete there." (Id.)

Response to Finding No. 859:

The proposed finding is misleading an incomplete because it relies on a 2001

document yet fails to account for Mr. Sawchuck's more recent testimony. Mr. Sawchuck

testified that BP would include Whessoe on a potential bidder list for LNG projects in the United 

States. (Sawchuck, Tr. 6062; see also FOF 3.78). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] 

(Sawchuck, Tr. 6092; see also FOF 3.78). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Sawchuck, Tr.
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CHI:1176893.3

6088; see also FOF 3.78). Additionally, the sufficiency of Whessoe's performance in Trinidad 

has been well established. (See RFOF 538).

860. [xxx] had only a brief discussion about Technigaz. The memorandum states that 

Technigaz is "not active in the US," but, based on the "technical exchanges" with Technigaz,

appeared "experienced," "professional," and a "credible contractor in most parts of the world." 

(Id.).

Response to Finding No. 860:

Like CCFF 859, the proposed finding is misleading an incomplete because it

relies on a 2001 document yet fails to account for [xxxxxxxxxxxx] more recent testimony. [xxxx

xxxxxxxxxx] testified that [xxxxxxxxxxxxx] accepted Technigaz's bid for an LNG project in

Bilboa, Spain. ([xxxxxxxxxx], Tr. 6053; see also FOF 3.183). Furthermore, [xxxxxxxxxxxxxx]

believes that Technigaz has the technical capabilities to construct and execute an LNG import

terminal. ([xxxxxxxx], Tr. 6062-63; see also FOF 3.183). Additionally, at the time this CX 693 

was written Technigaz was not active in the U.S.; Technigaz did not announce its alliance with 

Zachry until almost seven months after CX 693 was written. (See RX 43, at ZCC000002). The 

proposed finding's assertions that Technigaz is an "experienced," "professional" and "credible

contractor in most part of the world" is correct.

861. Having assessed the firms that could supply the LNG tanks as a subcontractor or 

as a main contractor, [xxx] asked what would be the best way of going forward. [xxx] "key

choices in the US will be: • do we form a closer relationship with CB&I in order to guarantee

access to the resources we need for our US regas projects? • or do we deepen the market in the 

US by encouraging competition?" (CX 693 at [xxx] 01 028).

Response to Finding No. 861:

The proposed finding is misleading and incomplete to the extent it does not

convey the fact that CX 693 was written in 2001 before many foreign LNG tank suppliers

entered the U.S. (See RX 43 at ZCC000002). Regardless of [xxxx] efforts to encourage

competition, foreign tanks suppliers have entered the U.S. (See generally FOF 3.57-3.227). 
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CHI:1176893.3

Furthermore, the proposed finding ignores the fact that [xxxx] believes that the current level of

competition will provide it with a fair and reasonable LNG tank price. (Sawchuck, Tr. 6075; see 

also FOF 3.427).

862. The memorandum states that the answer will turn on CB&I's performance in the 

preliminary design and cost work it has agreed to perform on one of the projects. (CX 693 at 

[xxx] 01 028).

Response to Finding No. 862:

Respondents have no specific response.

863. [xx] does not "believe that a 'single source' arrangement with CB&I is likely to be 

appropriate outside of the US, where we would prefer them to offer conventional FEED and EPC 

services." (Id.) One reason a single source arrangement may not be appropriate elsewhere is

because [xxx] would have a greater competitive selection of firms with experience constructing 

LNG tanks outside of the United States. [xxx] believed it had to make a special exception here 

because CB&I "dominate[s] the US market." (CX 693 at [xxx] 01 027).

Response to Finding No. 863:

The proposed finding is misleading and factually incorrect in so far that it

contends that [xx] was forced to enter into a sole-source agreement. [xxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (See CCFF 857; CX 693

at [xxx] 01 027). CB&I agreed to an arrangement whereby [xxx] maintained the option of solesourcing with CB&I or conducting a competitive bid process. ([xxxxx], Tr. 6058-59; see also 

FOF 3.412). Furthermore, [xxx] believes that the current level of competition will provide it

with a fair and reasonable LNG tank price. ([xxxx], Tr. 6075; see also FOF 3.427). RFOF 856 

addressed what little, if any, weight should be given to the document's contention that CB&I

dominated the U.S. market in 2001.

864. In July and August of 2001, [xx] further clarified why it would be prudent to turn 

exclusively to CB&I in the United States.
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CHI:1176893.3

Response to Finding No. 864:

The proposed finding fails to cite any evidence in support of its conclusions and is 

not an appropriate "finding of fact."

865. On July 27, [xxx] executive in charge of the three new United States LNG

facilities circulated an e-mail to [xxxxxxxxxxxxxx] and Tom Quigley regarding "CB&I's

acquisition of PDM." Gerald Glenn of CB&I asked [xxx], a [xxx] executive to provide an

affidavit in connection with the FTC's action "to the effect that CB&I's acquisition of [PDM]

does not significantly affect the competitive of construction of low temperature and cryogenic

industrial storage tanks." (CX 691 at [xxx] 01 033). Glenn cited to [xxx] "potential international 

competitors such as Skanska/Whessoe, TKK, MHI and Bouygues [xxxxxxxx] and maintains that 

the market for construction of such tanks will remain competitive." (Id.) [xxx] added that

"Gerald and I have a relationship that I value so if I could help him out on this I would like to do 

so." (Id.) [xxx] pointed out that "[t]his is a bit of a sticky one but maybe some advice from the 

two of you would help me decide the right course of action." (Id.)

Response to Finding No. 865:

Respondents have no specific response.

866. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. 

(CX 691 at [xxx] 01 032, in camera).

Response to Finding No. 866:

Respondents have no specific response.

867. Sawchuk then wrote to his supervisor: "While we could provide a reasonable

argument that CB&I has competition in the US, especially in the conventional metal tank

business, the reality for today is that in the US, they are the leading company in the LNG Tank 

business and the other competitors will need to demonstrate their capabilities in this market. 

This may occur however it will be highly dependent on the eventual expansion of the market in 

the LNG area." (CX 691 at [xxx] 01 032, in camera).

Response to Finding No. 867:

The proposed finding is misleading and incomplete to the extent it fails to

acknowledge Mr. [xxxxxxxxxx] testimony regarding post-Acquisition competition. [xxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxx] (Sawchuck, Tr. 6089-90). Furthermore, the proposed finding ignores the fact that BP 
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CHI:1176893.3

believes that the current level of competition will provide it with a fair and reasonable LNG tank 

price. ([xxxxxxxxxx], Tr. 6075; see also FOF 3.427). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxx] (See FOF 3.424-3.426). [xxx] has a list of potential tank contractors that it 

would consider accepting bids from for the construction of one or more of the LNG tanks on the 

various projects in the United States. ([xxxxxxxx], Tr. 6062; see also FOF 3.423). The potential 

bidder list includes: Whessoe, Mitsubishi Heavy Industries, IHI, Daewoo, Hyundai, Technigaz

and CB&I. ([xxxxxxxxx], Tr. 6062; see also FOF 3.423). [xxx] believes that all seven of these 

companies have the capabilities and skills to construct LNG tanks in the United States. 

([xxxxxxx], Tr. 6062-63; see also FOF 3.423).

868. [xxx] possesses real data on which to base its decision that the cost-effective 

strategy going forward is to enter into a sole-source relationship with CB&I.

Response to Finding No. 868:

The proposed finding fails to cite any evidence in support of its conclusions and is 

not an appropriate "finding of fact." In addition, the proposed finding is misleading, incomplete 

and factually inaccurate for the reasons set forth in RFOF 867.

869. In November 1998, [xxx] compiled "bids" from PDM, CB&I, and Whessoe for

various sizes and types of LNG tanks. (RX 157 at [xxx] 02 001-002, 02 004, in camera). [xxx]

then prepared a chart analyzing each firm's "bids" for various sizes and types of LNG tanks. The 

table below repeats [xxx] analysis of single-containment LNG tanks.

[xxxxxxxxxxx]

[xxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx]

[xxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx]

[xxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx]

[xxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx] [xxxxx]

(RX 157 at [xxx] 02 004, in camera).
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CHI:1176893.3

Response to Finding No. 869:

The proposed finding is factually incorrect, misleading, and incomplete. First,

because Complaint Counsel failed to question a single witness from [xxxxx] about the numbers 

contained in the above-referenced chart, Complaint Counsel cannot attest to the reliability of

these records. For example, Complaint Counsel cannot show how these numbers were

developed, what they mean, where they came from, or whether they relate to a foreign or U.S.

project. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (RX 157 at [xxxxx] 02 004). [xxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (RX 157 at

[xxxx] 02 001). This budget pricing, provided over four years ago, is not representative of firm, 

fixed pricing that these companies are capable of submitting today. (FOF 7.1-7.38). Since that 

time, Skanska (with a large U.S. presence) acquired Whessoe, and is vigorously competing for 

U.S. LNG projects today. (FOF 3.57-3.73).
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CHI:1176893.3

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxx] (RX 157 at [xxx] 02 004). [xxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxx]

870. CB&I's Scorsone testified to the accuracy of the analysis. "[xx], being one of the 

leading global, very global, petroleum/petrochemical companies, gas company, has spent time

developing a rather sophisticated pricing model that one of their Ph.D. engineers [xxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxx] -- has developed, that some of our engineers have worked with this

model and discussed the model with [xxxxx] and have come away very impressed that it very, 

very accurately can predict the cost of some of these facilities." (Scorsone, Tr. 4996).

Response to Finding No. 870:

The proposed finding is factually incorrect and misleading. First, [xxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx], but the record does not reflect that [xxxxxxx] was 

even an employee of [xxx] in 1998. Further, Mr. Scorsone never testifed about the accuracy of 

the numbers or analysis contained in RX 157. In fact, Mr. Scorsone is prohibited from viewing 

this document as it was granted in-camera treatment for [xxx].

871. [xxx] "very, very accurate[]" pricing model shows that Whessoe's prices are

nearly double CB&I's prices. (Scorsone, Tr. 4996; RX 157 at [xxx] 02 004, in camera).

Response to Finding No. 871:

The proposed finding is factually incorrect, misleading, and mischaracterizes the 

evidence for the reasons stated in RFOF 869 and RFOF 870.

872. Whessoe's prices for a single containment LNG tank were far higher than CB&I's, 

ranging from [xxxxxx] higher, for [xxxxxxxxxxxxxx] cubic meter tanks, to [xxxxxxx] higher for 

an [xxxxxxxxx] cubic meter tank. (RX 157 at [xxx] 02 004, in camera).
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Response to Finding No. 872:

The proposed finding is misleading and mischaracterizes the evidence for the

reasons stated in RFOF 869.

873. [xxx] internal pricing analysis underscores why it viewed CB&I as the "leading

company in the LNG Tank business" and that CB&I "now dominate the US market." (CX 693 at 

[xxx] 01 027, in camera; CX 691 at [xxx] 01 032, in camera).

Response to Finding No. 873:

The proposed finding is misleading and mischaracterizes the evidence. First,

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] ([xxxxxxxx], Tr. 6099). In fact, Mr.

[xxxxxxxxx] deposition testimony (read into the record), occurred months after CX 693 was

written. Mr. [xxxxxxx], a corporate representative of [xxx], stated [xxx] belief that the current 

level of competition in the U.S. LNG market will provide [xxx] with a fair and reasonable LNG 

tank price. ([xxxxxx], Tr. 6075) (FOF 3.427). It is a complete mischaracterization of the record 

to quote the older viewpoint when observing that viewpoint has changed.

874. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (RX 157 at 

[xxx] 02 004, in camera).

Response to Finding No. 874:

The proposed finding is misleading and unsupported by the evidence. First, for

the reasons stated in RFOF 869 and RFOF 870, Complaint Counsel failed to demonstrate the

reliability and relevance of the pricing information contained in RX 157. Second, [xxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxx] (RX 157 at [xxx] 02 004).

875. Based on [xxx] data, PDM was CB&I's closest competitor for LNG tanks. (RX 

157 at [xxx] 02 004, in camera).
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Response to Finding No. 875:

The proposed finding is misleading and inaccurate for the reasons set forth in

RFOF 869, RFOF 870, and RFOF 874. Further, [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] 

(RX 157 at [xxx] 02 004).

876. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxx]. (RX 157 at [xxx] 02 004, in camera).

Response to Finding No. 876:

The proposed finding is misleading and inaccurate for the reasons set forth in 

RFOF 869, RFOF 870, and RFOF 874. Further, [xxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

(RX 157 at [xxx] 02 004). Under these circumstances, CB&I would have to actually lower its

pricing to match the level of Whessoe's pricing.

877. Without PDM as a competitive constraint, CB&I can increase its prices [xxxxxx]

for [xxxxxxxxxxxxxxx] cubic meter tanks before Whessoe becomes competitive. (RX 157 at

[xxx] 02 004, in camera).

Response to Finding No. 877:

The proposed finding is misleading, incomplete and inaccurate for the reasons set 

forth in RFOF 869, RFOF 870, and RFOF 874. Additionally, because the pricing contained in 

RX 157 was submitted in 1998, prior to Skanska's acquisition of Whessoe, Whessoe's pricing is 

not remotely predictive of its ability to price LNG tanks today. Further, [xxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxx] (RX 157 at [xxx] 02 004). For example, [xxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 
- 385 -

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xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxx] (RX 157 at [xxx] 02 004).

878. Without PDM as a competitive constraint, CB&I can increase its prices for a

[xxxxxxx] cubic meter tank by [xxxx] before Whessoe's prices become competitive. (RX 157 at 

[xxx] 02 004, in camera).

Response to Finding No. 878:

The proposed finding is misleading, incomplete and inaccurate for the reasons set 

forth in RFOF 869, RFOF 870, and RFOF 874. Additionally, because the pricing contained in 

RX 157 was submitted in 1998, prior to Skanska's acquisition of Whessoe, Whessoe's pricing is 

not remotely predictive of its ability to price LNG tanks today. Further, [xxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxx] (RX 157 at [xxx] 02 004). For example, [xxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (RX 157 at 

[xxx] 02 004).

879. [xxx] internal analysis, using real-life data, demonstrates that in order to "deepen 

the market in the US by encouraging competition," [xxx] would have to pay Whessoe

significantly more for LNG tanks than it would pay to CB&I. (CX 693 at [xxx] 01 028, in 

camera).

Response to Finding No. 879:

The proposed finding is misleading, incomplete and inaccurate for the reasons set 

forth in RFOF 869, RFOF 870, and RFOF 874. Additionally, because the pricing contained in 

RX 157 was submitted in 1998, prior to Skanska's acquisition of Whessoe, Whessoe's pricing is 

not remotely predictive of its ability to price LNG tanks today. [xxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 693

at [xxx] 01 028).

880. Despite the fact that CB&I could increase its prices significantly to [xxx] and still 

beat Whessoe, and the fact that a turnkey or sole-source arrangement generally results in higher 
- 386 -

CHI:1176893.3

margins for the EPC contractor and LNG tank supplier, acquiescing to CB&I's pressure to enter 

into a sole-source turnkey relationship would at least provide [xxx] with "guarantee[d] access to 

the resources we need for our US regas projects." (CX 693 at [xxx] 01 028, in camera).

Response to Finding No. 880:

For the reasons set forth in RFOF 869, RFOF 870, and RFOF 874, there is no

evidence suggesting that CB&I could increase its costs and still beat Whessoe. This finding

assumes that CB&I has perfect knowledge of Whessoe's costs; as Dr. Simpson admits, CB&I has 

imperfect knowledge of its competitors because LNG tanks are sold through a sealed bid

process. (Simpson, Tr. 3073, 3771) (FOF 7.83). Further, Complaint Counsel fails to cite any

evidence supporting its claim that sole-source arrangments result in higher margins. To the

contrary, sole-sourcing with one contractor can provide an owner with less costs, greater

flexibility, and can save time when a project is under development. (Bryngelson, Tr. 6134;

Scorsone, Tr. 4959) (FOF 3.463). Additionally, Complaint Counsel fails to acknowledge that

[xxx], a sophisticated multi-national company, rejected CB&I's sole-source approach, and 

maintained the option of conducting a competitive bid process for the LNG tanks. (Sawchuck, 

Tr. 6058-59, 6069) (FOF 3.411-3.412).

881. Given the limited choices, [xxx] has decided to negotiate for sole-source 

agreements with CB&I for its three pending LNG import terminal projects in the United States. 

([xxxxxxxx], Tr. 4995, in camera).

Response to Finding No. 881:

The proposed finding is factually incorrect, misleading, incomplete, and

mischaracterizes the evidence. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Scorsone, Tr. 4995) (FOF 3.413). [xxx]

has a list of potential tank contractors that it would accept bids from including: Whessoe, MHI,

IHI, Daewoo, Technigaz, and CB&I. (Sawchuck, Tr. 6062) (FOF 3.423). [xxx] believes that the 
- 387 -

CHI:1176893.3

current level of competition will provide a fair and reasonable LNG tank price if decides to go

the competitive bidding route. ([xxxxxxxxx], Tr. 6075).

882. The following graph shows that the CB&I, PDM, and Whessoe values depicted in 

[xxx] pricing analysis lie along trend lines. (RX 157 at [xxx] 02 004, in camera; [xxxx], Tr.

8122, in camera; CX 1760 at 1 (demonstrative)):

Response to Finding No. 882:

The proposed finding and chart is misleading, incomplete and inaccurate for the

reasons set forth in RFOF 869, and RFOF 870.

10. Respondents' Pricing Pattern for Cove Point Compared to [xxx] Pricing 

Analysis Illustrates Why CB&I Can Exercise Market Power

883. The prices quoted to [xxx] by CB&I, PDM and Whessoe for various sizes of LNG 

tanks can be plotted to establish price curves for each firm. CB&I's and PDM's price quotes on 

the 2000 Cove Point project can also be plotted against the 1998 [xxx] quotes. CCFF 891. After 

examining the data observations, a comparison can be made between the prices quoted on the

Cove Point project and the prices quoted to [xxx] for its tanks.

Response to Finding No. 883:

The proposed finding is misleading, irrelevant, factually incorrect, and

mischaracterizes the evidence. First, for the reasons stated in RFOF 869 and RFOF 870, the

pricing information quoted to [xxx] by CB&I, PDM, and Whessoe are irrelevant, unreliable, and 

cannot accurately establish price curves for each firm.

Second, there is no record evidence suggesting that budget pricing for two

different projects (Cove Point and [xxx]), at two different locations, during two different time

periods, for two different customers that inevitably have two different sets of specifications is

relevant. In fact, there is no evidence even suggesting that the budget pricing [xxx] obtained was 

for a U.S. LNG project. As Mr. Eyermann testified: "[t]he price of an LNG tank has very many 

factors. It depends on the size, on the location, on the foundation, and there are so many facets 

to it that you cannot possibly compare an LNG tank built in Dabhol, India with an LNG tank in 
- 388 -

CHI:1176893.3

Malaysia with an LNG tank on the Gulf Coast of Texas. . . The labor rates, the labor efficiencies 

are completely different. . . LNG tanks are such a big cost factor and such a multifaceted

construction that you cannot possibly compare one or the other." (Eyermann, Tr. 7071-72).

Third, despite the complexity involved in efforts to compare LNG tank pricing,

Complaint Counsel failed to have an expert witness make this comparison. Instead, Complaint 

Counsel makes broad generalizations without accompanying testimony. Accordingly, Complaint 

Counsel's attempt to compare these two sets of numbers is nothing more than unreliable and pure 

speculation.

884. The comparison demonstrates five important points: 1) Immediately prior to the

acquisition, competition between CB&I and PDM disciplined the two firms to keep their bids to 

customers within a price curve best demonstrated by bids given to [xx] in 1998. CCFF 891, 893; 

2) After the letter of intent was signed, PDM attempted to increase the price curve, indicating an 

across-the-board price increase. CCFF 907; 3) Post-acquisition, CB&I is no longer constrained 

by any competitor's pricing, and has abandoned adherence to any price curve. CCFF 913; 4)

CB&I's post-acquisition bids to Cove Point reflect a 61.6% price increase over pre-acquisition 

pricing levels. CCFF 926; 5) Post-acquisition, CB&I possesses sufficient information about

foreign competition to know how much it can increase its price before foreign firms become a 

price constraint. CCFF 935.

Response to Finding No. 884:

For the reasons set forth in RFOF 883, and RFOF 885 through RFOF 927, the

proposed finding is conclusory, argumentative, factually inaccurate, unsupported by the

evidence, based on lack of expert testimony, and mischaracterizes the evidence. Complaint

Counsel's expert witness had ample opportunity before and during trial to develop pricing

comparisons and be subject to cross-examination. Complaint Counsel now seeks to introduce its 

own speculative and unreliable pricing comparison model without seeking any expert opinions or 

testimony from the authors of the documents upon which Complaint Counsel cites.

885. There are three sections of the Cove Point/[xxx] comparison. Part I of the

comparison demonstrates the similarities between CB&I's and PDM's bidding practices in 2000 

for the Cove Point project and in 1998 for the [xxx] project. Part II of the comparison details 

PDM and CB&I's behavior after the letter of intent was signed, and illustrates that currently,
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CHI:1176893.3

CB&I pricing deviates from any price curves that existed prior to the acquisition because, in the 

competitive void that exists post-acquisition, CB&I has no price constraints (other than the

significantly higher prices of Whessoe). Part III examines the comparison and relevant 

calculations on a demonstrative aid.

Response to Finding No. 885:

For the reasons set forth in RFOF 883, and RFOF 885 through RFOF 927, the

proposed finding is conclusory, argumentative, factually inaccurate, unsupported by the

evidence, based on lack of expert testimony, and mischaracterizes the evidence. Complaint

Counsel's expert witness had ample opportunity before and during trial to develop pricing

comparisons and be subject to cross-examination. After trial, Complaint Counsel now seeks to 

introduce its own speculative and unreliable pricing comparison model without seeking any

expert opinions or testimony from the authors of the documents upon which Complaint Counsel 

cites.

11. Phase I: PDM Restrained CB&I's Pre-merger Prices

886. Prior to the acquisition, PDM's preliminary budget price for the Cove Point

750,000 barrel LNG tank was [xxxxxxxxxxx]. (CX 226 at CB&I-PL044978, in camera; CCFF 

781.

Response to Finding No. 886:

The proposed finding is incomplete, misleading, and is unsupported by the

evidence. First, Complaint Counsel failed to ask any witness at trial about CX 226, and thus, its 

interpretation of this document is suspect. Second, CX 226 is a CB&I document. CB&I was

speculating as to what PDM's pricing was for the Cove Point project based on CB&I's

discussions with Cove Point. (CX 226 at CB&I-PL44978). Thus, Complaint Counsel's attempt 

to extract what PDM's preliminary budget price was for the Cove Point project is based on pure 

speculation.
- 390 -

CHI:1176893.3

887. Competition between CB&I and PDM lowered both firms' prices for the 750,000 

barrel tank from [xxxxxxxxx] to what CB&I believed to be approximately [xxxxxxxxxx]. (CX 

226 at CB&I-PL044979, in camera). CCFF 785.

Response to Finding No. 887:

The proposed finding is incomplete, misleading, and is unsupported by the

evidence. First, Complaint Counsel failed to ask any witness at trial about CX 226, and thus, its 

interpretation of this document is suspect. Second, CX 226 is a CB&I document. In this

document, CB&I was speculating as to what PDM's pricing was for the Cove Point project based 

on CB&I's discussions with Cove Point. (CX 226 at CB&I-PL44978). Thus, Complaint

Counsel's attempt to extract how much CB&I and PDM's pricing decreased is based on pure

speculation, and is not supported by the evidence.

888. A 750,000 barrel tank equals 119,237 cubic meters, or approximately 120,000

cubic meters. (See Price, Tr. 539 (one cubic meter of liquid x 6.29 = barrels of liquid)).

Response to Finding No. 888:

Respondents have no specific response.

889. The threat of PDM winning the Cove Point project prompted CB&I to lower its 

final bid for the Cove Point tank to [xxxxxxxx] dollars for a 750,000 barrel (*120,000 cubic

meter) tank, a price only $100,000 dollars less than CB&I's price quoted to [xxx] in 1998 for its 

120,000 cubic meter tank. (CX 226 at CB&I-PL044979; RX 157 at [xxx] 02 004, in camera). 

CCFF 787.

Response to Finding No. 889:

For the reasons stated in RFOF 883, the proposed finding is inaccurate, based on 

speculation, not supported by the evidence, and not supported by expert testimony. Complaint 

Counsel's own expert witness had ample opportunity before, and during, trial to develop pricing

models, pricing curves, and reports incorporating expert opinions. Complaint Counsel's expert 

witness failed to do so, and thus, was not subject to cross-examination. After trial, Complaint 

Counsel now seeks to introduce its own speculative and unreliable pricing comparison model
- 391 -

CHI:1176893.3

without seeking any expert opinions or testimony from the authors of the documents upon which 

Complaint Counsel cites. Accordingly, any such anaylsis is inherently suspect and not remotely 

reliable.

890. PDM's price to Columbia for the Cove Point tank was [xxxxxxxxxx], although

CB&I believed it to be approximately [xxxxxxxxxx]. (CX 1058 at PDM-HOU017465, in 

camera; CX 226 at CB&I-PL044979).

Response to Finding No. 890:

The proposed finding is speculative and unsupported by the evidence. [xxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] 

Rather than asking any witnesses at trial about CX 1058, Complaint Counsel instead attempts to 

speculate as to the meaning of certain undefined numbers and terms contained in this document.

891. PDM's quote of [xxxxxxxxxxx] for the Cove Point 750,000 barrel (*120,000 

cubic meter) tank immediately preceding the acquisition is almost identical to the preacquisition [xxxxxxx] price that PDM quoted to [xxxx] in 1998 for the same size tank. 

Moreover, the two prices lie exactly on the price curves of the bids given to [xxx] in 1998. The 

difference in the two prices is indicated in the following table: [

[xxx]

[xxxxxxxx] [xxxxxxxx]

[xxxxxxxxxxxxxx] [xxx] [xxx]8

[xxxxxxxxxxxxxx] [xxx] [xxx]9

]

Response to Finding No. 891:

For the reasons set forth in RFOF 883, the proposed finding is misleading,

speculative, unsupported by the evidence, and unsupported by expert testimony. Complaint

Counsel's own expert witness had ample opportunity before, and during, trial to develop pricing 

models, pricing curves, and reports incorporating expert opinions. Complaint Counsel's expert 

 

8

 (CX 1058 at PDM-HOU017465).

9

 (RX 157 at [xxx] 02 004 in camera).
- 392 -

CHI:1176893.3

witness failed to do so, and thus, was not subject to cross-examination. After trial, Complaint 

Counsel now seeks to introduce its own speculative and unreliable pricing comparison model

without seeking any expert opinions or testimony from the authors of the documents upon which 

Complaint Counsel cites. Accordingly, any such anaylsis is inherently suspect and not remotely 

reliable.

892. The minuscule difference in the price is accounted for by the slight difference in 

tank size. The Cove Point tank is 0.6% smaller than the equivalent [xxx] tank, and costs 0.6% 

less than the [xxx] tank. (CX 1058 at PDM-HOU017465, in camera; RX 157 at [xxx] 02 004, in 

camera).

Response to Finding No. 892:

For the reasons set forth in RFOF 883, the proposed finding is misleading,

speculative, unsupported by the evidence, and unsupported by expert testimony. First, there is

no record evidence or expert testimony supporting Complaint Counsel's claim that the 

"minuscule difference" in the prices Complaint Counsel erroneously compares are a result of the 

"slight difference in the tank size." Rather, this statement is based on pure speculation without 

any fact witness testifying about the prices or documents Complaint Counsel relies on.

Second, Complaint Counsel's own expert witness had ample opportunity before,

and during, trial to develop pricing models, pricing curves, and reports incorporating expert

opinions. Complaint Counsel's expert witness failed to do so, and thus, was not subject to crossexamination. After trial, Complaint Counsel now seeks to introduce its own speculative and

unreliable pricing comparison model without seeking any expert opinions or testimony from the 

authors of the documents upon which Complaint Counsel cites. Accordingly, any such anaylsis 

is inherently suspect and not remotely reliable.

893. CB&I's pre-acquisition [xxxxxxx] price for the Cove Point 750,000 barrel

(*120,000 cubic meter) tank is almost identical to the pre-acquisition [xxxxxxxxxxx] bid for

[xx]'s 120,000 cubic meter tank, and lies exactly on the price curves of the bids given to [xx] for 

the various sized tanks. (CX 226 at CB&I-PL044978; RX 157 in camera; CX 1760
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CHI:1176893.3

(demonstrative), in camera). The comparison between the two bids is represented on the

following table: [

[xxx]

[xxxxxxxxxxxxxxxx] [xxxxxxxxxxxxxxxx]

[xxxxxxxxx] [xxx] [xxx]10

[xxxxxxxxx] [xxx] [xxx]11

]

Response to Finding No. 893:

For the reasons set forth in RFOF 883, the proposed finding is misleading,

speculative, unsupported by the evidence, and unsupported by expert testimony. Complaint

Counsel's own expert witness had ample opportunity before, and during, trial to develop pricing 

models, pricing curves, and reports incorporating expert opinions. Complaint Counsel's expert 

witness failed to do so, and thus, was not subject to cross-examination. After trial, Complaint 

Counsel now seeks to introduce its own speculative and unreliable pricing comparison model

without seeking any expert opinions or testimony from the authors of the documents upon which 

Complaint Counsel cites. Accordingly, any such anaylsis is inherently suspect and not remotely 

reliable.

894. Like the PDM bid, the minuscule difference in CB&I's price is accounted for in

the slight difference in tank size. The Cove Point tank is 0.6% smaller than the equivalent [xxx]

tank, and costs 0.5% less than the [xxx] tank. (RX 157 at [xxx] 02 004, in camera).

Response to Finding No. 894:

For the reasons set forth in RFOF 883, the proposed finding is misleading,

speculative, unsupported by the evidence, and unsupported by expert testimony. First, there is

no record evidence or expert testimony supporting Complaint Counsel's claim that the

"minuscule difference" in the prices Complaint Counsel erroneously compares are a result of the 

 

10

 (CX 226 at CB&I-PL044979).
- 394 -

CHI:1176893.3

"slight difference in the tank size." Rather, this statement is based on pure speculation without 

any fact witness testifying about the prices or documents Complaint Counsel relies on.

Second, Complaint Counsel's own expert witness had ample opportunity before,

and during, trial to develop pricing models, pricing curves, and reports incorporating expert

opinions. Complaint Counsel's expert witness failed to do so, and thus, was not subject to crossexamination on this subject. After trial, Complaint Counsel now seeks to introduce its own

speculative and unreliable pricing comparison model without seeking any expert opinions, or

testimony from the authors of the documents upon which Complaint Counsel cites. Accordingly, 

any such anaylsis is inherently suspect and not remotely reliable.

895. Overall, the [xxxxxxxx] CB&I price proposed by Mr. Marine for the 119,237

cubic meter (750,000 barrel) Cove Point LNG tank is only [xxxxxx] below CB&I's equivalent 

price quotation for the same size [xxx] tank. (RX 157 at [xxx] 02 004, in camera; CX 226 at 

CB&I-PL044979).

Response to Finding No. 895:

For the reasons set forth in RFOF 883, the proposed finding is misleading,

speculative, unsupported by the evidence, and unsupported by expert testimony. Also, [xxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxx] Rather, [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 226 at CB&I-PL044979). Complaint 

Counsel failed to establish that Mr. Marine (who never testified in these proceedings) has the

foundation and authority to change CB&I's pricing. Thus, any price comparison analysis that 

Complaint Counsel attempts to make based on a number burried in a document, of which no

witness testified to at trial, is mere speculation and unreliable.

 

11

 (RX 157 at [xxx] 02 004 in camera).
- 395 -

CHI:1176893.3

896. PDM's [xxxxxxxxxxxxx] price to Columbia for the 750,000 barrel tank, as of

March 29, 2000, was equivalent to its price quote to [xxx] for the same size tank after accounting 

for the difference in price and size. (CX 1058 at PDM-HOU017465; RX 157; CX 1760

(demonstrative), in camera, emphasis supplied).

Response to Finding No. 896:

For the reasons set forth in RFOF 883, the proposed finding is misleading,

speculative, unsupported by the evidence, and unsupported by expert testimony. First, [xxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] 

Rather than asking any witnesses at trial about CX 1058, Complaint Counsel instead attempts to 

speculate as to the meaning of certain undefined numbers and terms contained in this document. 

Second, Complaint Counsel makes an unfounded conclusion, without supporting testimony from 

an expert or an engineer, that the prices it erroneously compares are "equivalent" "after

accounting for the difference in price and size." This statement is based on pure speculation

without any fact witness testifying about the prices or documents Complaint Counsel relies on.

897. When CB&I and PDM sharpened their pencils to compete for projects before the 

acquisition, both firms were forced to maintain a price that was within a close range of their costs 

in order to win contracts. The price curve established with CB&I and PDM's bids to [xx] in

1998 still accurately depicted a competitive range of pricing in late 2000.

Response to Finding No. 897:

For the reasons set forth in RFOF 883, the proposed finding is misleading,

speculative, unsupported by the evidence, and unsupported by expert testimony. Complaint

Counsel fails to cite any evidence supporting the proposition that CB&I's and PDM's pricing

submitted in 1998 "accurately depicted a competitive range of pricing in late 2000." Complaint 

Counsel also fails to disclose who "established" this "price curve" relating to CB&I and PDM's 

bids, as Dr. Simpson neither included this information in his expert report, nor did he testify

about this subject during trial. Accordingly, the conclusory remarks made in this proposed

finding are grossly speculative, highly suspect, and unsupported by the evidence.
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12. Phase II: Post-merger, CB&I Has Increased Prices

898. At the time that the letter of intent was signed on August 29, 2000, Williams had 

already increased the specifications of the proposed Cove Point tank to 850,000 barrels (135,135 

cubic meters) and initiated another round of bidding. (Scorsone, Tr. 4964-6; Harris, Tr. 8061-2; 

see Price, Tr. 539 (one cubic meter of liquid x 6.29 = barrels of liquid)); CCFF 789.

Response to Finding No. 898:

The proposed finding is misleading to the extent it suggests that Williams did not 

further change the specifications for the Cove Point project after the letter of intent was signed. 

For example, Mr. Scorsone testified that the [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Scorsone, Tr. 5334) (FOF 3.633). [xxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Scorsone, Tr. 5337-38).

899. At this point in the bidding process, CB&I declined to further pursue a contract

for the Cove Point tank. Based on the fact that CB&I and PDM had met and discussed pending 

bids, it is reasonable to infer that Respondents had either implicitly or explicitly agreed that

CB&I not bid. (Scorsone, Tr. 5113; CX 617 at 6; Thompson, Tr. 2068; CX 1705 at PDMHOU009169).
- 397 -

CHI:1176893.3

Response to Finding No. 899:

The proposed finding is misleading and is unsupported by the evidence. First,

there is no evidence suggesting that CB&I "declined to further pursue a contract for the Cove

Point tank." In fact, there is no evidence suggesting that CB&I was actually invited by Williams 

to submit another bid for the Cove Point project. Second, there is no evidence supporting

Complaint Counsel's claim that CB&I and PDM met to discuss pending LNG tank bids prior to 

the acquisition. Any information that was shared between PDM and CB&I prior to the

acquisition were for "non-competition sensitive projects already sold and were entirely

appropriate" "in the context of due diligence." (Scorsone, Tr. 5195) (RFOF 796).

900. On September 8, 2000, PDM sent new budgetary prices for both a 750,000 barrel 

and 850,000, barrel tank. (CX 1388 at CB&I/PDM-H 4015363; CCFF 792. PDM would charge 

[xxxxxxxxxxxxx], for a 750,000 barrel LNG tank, and [xxxxxxxxxxxx] for an 850,000 barrel

LNG tank. (CX 1388 at CB&I/PDM-H 4015363).

Response to Finding No. 900:

The proposed finding mischaracterizes the purpose of why PDM submitted

budgetary pricing on September 8, 2000. This budgetary pricing did not represent what "PDM 

would charge" for the Cove Point LNG tanks. A budget price is "not a buying offer." (Scorsone, 

Tr. 5250). Rather, budget prices are numbers used by an owner to set up an investment budget. 

(Kistenmacher, Tr. 925). Budget prices typically have an accuracy of plus or minus 40%, and 

are regularly referred to as a "guesstimate" or a SWAG -- a "scientific wild assed guess." (Hall, 

Tr. 1863-66; Carling, Tr. 4472) (FOF 3.599, 3.600). Accordingly, Complaint Counsel's attempt 

to equate PDM's budget pricing to what PDM would actually charge for the project is wholly

inappropriate. (FOF 7.1-7.38).

901. On September 8, 2000, PDM's price for the 850,000 barrel tank was [xxxxxxx], 

i.e., [xxxxxx], more than its price for the 750,000 barrel tank. (CX 1388 at CB&I/PDM-H 

4015363 in camera ). This difference is consistent with, and only slightly more than, the [xxx]
- 398 -

CHI:1176893.3

difference in the equivalent prices quoted by PDM to [xx] for these size LNG tanks. (RX 157 in 

camera; CX 1760 (demonstrative), in camera).

Response to Finding No. 901:

For the reasons set forth in RFOF 883, the proposed finding is misleading,

speculative, unsupported by the evidence, and unsupported by expert testimony. There is no

record evidence or expert testimony supporting Complaint Counsel's claim that the difference in 

the budgetary pricing PDM provided to Williams for two different size tanks in 2000 is

"equivalent" to the pricing differential for two tanks that PDM may have provided BP. Rather, 

this statement is based on pure speculation without any fact witness testifying about the prices or 

documents Complaint Counsel relies on.

Further, Complaint Counsel's own expert witness had ample opportunity before,

and during, trial to develop pricing models, pricing curves, and reports incorporating expert

opinions relating PDM's budget pricing. Complaint Counsel's expert witness failed to do so, and 

thus, was not subject to cross-examination on this subject. Complaint Counsel now seeks to

introduce its own speculative and unreliable pricing comparison model without seeking any

expert opinions, or testimony from the authors of the documents upon which Complaint Counsel 

cites. Accordingly, any such anaylsis is inherently suspect and not remotely reliable.

902. Although the price quotations that [xx] received from CB&I, PDM, and Whessoe 

did not include a quote for a 135,135 cubic meter (850,000 barrel) tank, the range of bids that 

[xxx] received can be used to calculate prices for a 135,135 cubic meter single containment LNG 

tank. (RX 157 at [xxx] 02 004 in camera). The prices quoted by the three companies for a

120,000 cubic meter tank and for a 140,000 cubic meter tank, and the interpolated prices for a

135,135 cubic meter (850,000 barrel) LNG tank, are shown in the table below: [
- 399 -

CHI:1176893.3

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

[xxxxxxxxxxxxxxxxxxxxxxx]

[xxxxx xxx] [xxxx] [xxxx] [xxxx]

[xxx] [xxxxxxxx] [xxxxxxxx] [xxxxxxxx]

[xxx] [xxxxxxxx] [xxxxxxxx] [xxxxxxxx]

[xxx] [xxxxxxxx] [xxxxxxxx] [xxxxxxxx]

] (Id.)

Response to Finding No. 902:

For the reasons set forth in RFOF 883, the proposed finding is misleading,

speculative, unsupported by the evidence, and unsupported by expert testimony. Also, because 

Complaint Counsel failed to question a single witness from [xxx] about the numbers contained in 

the above-referenced chart, Complaint Counsel cannot attest to the reliability of these records. 

For example, Complaint Counsel cannot show how these numbers were developed, what they

mean, where they came from, or whether they relate to a foreign or U.S. project. [xxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxx] (RX 157 at [xxx] 02 004). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxx]
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CHI:1176893.3

Complaint Counsel's contrived chart further includes "interpolated" data, without 

the assistance of an expert, to ascertain the price of a 135,135 cubic meter LNG tank. Complaint 

Counsel's own expert witness had ample opportunity before, and during, trial to develop pricing 

models, pricing curves, and reports incorporating expert opinions relating PDM's, CB&I's, and 

Whessoe's budget pricing. Complaint Counsel's expert witness failed to do so, and thus, was not 

subject to cross-examination on this subject. Complaint Counsel now seeks to introduce its own 

speculative and unreliable pricing comparison model without seeking any expert opinions, or

testimony from the authors of the documents upon which Complaint Counsel cites. Accordingly, 

any such anaylsis is inherently suspect and not remotely reliable.

903. CB&I's and PDM's [xxx] price quotations for a 120,000 cubic meter LNG tank

and for a 140,000 cubic meter LNG tank show that over this range the percent increase in the

price of the tank is substantially smaller than the percent increase in the capacity of the tank. 

(RX 157 at [xxx] 02 004 in camera; CX 1760 (demonstrative), in camera).

Response to Finding No. 903:

For the reasons set forth in RFOF 883 and RFOF 902 the proposed finding is

misleading, speculative, conclusory, unsupported by the evidence, and unsupported by expert

testimony. Complaint Counsel attempts to make a tenuous, if not unfounded, generalization

about the trends of LNG tank pricing as it relates to tank capacity. Unsurprisingly, Complaint 

Counsel tries to make this generalization by citing to one document, from 1998, that contains

budget pricing information. (RX 157 at [xxx] 02 004). Complaint Counsel's own expert witness 

had ample opportunity before, and during, trial to develop pricing models, pricing curves, and

reports incorporating expert opinions relating PDM's, CB&I's, and Whessoe's budget pricing. 

Complaint Counsel's expert witness failed to do so, and thus, was not subject to crossexamination on this subject. Accordingly, any such anaylsis is inherently suspect and not

remotely reliable.
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904. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxx]. (RX 157 at [xx] 02 004 in camera; CX 1760 (demonstrative), in camera).

Response to Finding No. 904:

For the reasons set forth in RFOF 883 and RFOF 902 the proposed finding is

misleading, speculative, conclusory, unsupported by the evidence, and unsupported by expert

testimony. Complaint Counsel's own expert witness had ample opportunity before, and during, 

trial to develop pricing models, pricing curves, and reports incorporating expert opinions relating 

PDM's, CB&I's, and Whessoe's budget pricing. Complaint Counsel's expert witness failed to do 

so, and thus, was not subject to cross-examination on this subject. Accordingly, any such

anaylsis is inherently suspect and not remotely reliable.

905. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 1388 at CB&I/PDM-H 4015363,

in camera).

Response to Finding No. 905:

For the reasons set forth in RFOF 883 and RFOF 902 the proposed finding is

misleading, speculative, conclusory, unsupported by the evidence, and unsupported by expert

testimony. Complaint Counsel attempts to make a tenuous, if not unfounded, generalization

about the trends of LNG tank pricing as it relates to tank capacity. Unsurprisingly, Complaint 

Counsel tries to make this generalization by citing to one document, from 1998, that contains

budget pricing information. (RX 157 at [xxx] 02 004). Complaint Counsel's own expert witness 

had ample opportunity before, and during, trial to develop pricing models, pricing curves, and

reports incorporating expert opinions relating PDM's, CB&I's, and Whessoe's budget pricing. 

Complaint Counsel's expert witness failed to do so, and thus, was not subject to cross-
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examination on this subject. Accordingly, any such anaylsis is inherently suspect and not

remotely reliable.

906. PDM's [xxxxxxxx] adjustment for the difference in tank size does not explain the 

movement of PDM's entire price curve after the letter of intent was signed nor other subsequent 

price increases post-acquisition.

Response to Finding No. 906:

For the reasons set forth in RFOF 883 through RFOF 905 the proposed finding is 

misleading, speculative, conclusory, unsupported by the evidence, and unsupported by expert

testimony.

907. PDM's September 8, 2000 bids reflect an overall price increase, and suggest that, 

after the letter of intent was signed, the price curve for PDM jumped to higher levels than PDM's 

price curve pre-acquisition. PDM's September 8, 2000 Cove Point bids indicate a [xxxx]

increase above its equivalent pre-acquisition price quotes to [xx] for the same size tanks. (CX 

1388 at CB&I/PDM- H 4015363; RX 157 in camera; CX 1760 (demonstrative) in camera, 

emphasis supplied).

Response to Finding No. 907:

For the reasons set forth in RFOF 883 through RFOF 905 the proposed finding is 

misleading, speculative, conclusory, unsupported by the evidence, and unsupported by expert

testimony.

908. Moreover, PDM's proposed price for the 850,000 barrel tank, was also [xxx]

above PDM's interpolated price quote for an 850,000 barrel (135,135 cubic meter) LNG tank. 

(CX 1388 at CB&I/PDM-H 4015363; see RX 157 at [xx] 02 004 in camera ; CX 1760

(demonstrative), in camera).

Response to Finding No. 908:

For the reasons set forth in RFOF 883 through RFOF 905 the proposed finding is

misleading, speculative, conclusory, unsupported by the evidence, and unsupported by expert

testimony.

909. On November 1,2 and thereafter, PDM raised the price quote on Cove Point: to

[xxxxxxxxxxxx] on November 1; to [xxxxxxxxxx] on November 2; to [xxxxxxxxxxx] thereafter. 

Each of these price increases was well above PDM's pre-merger price curves. (CX 1160 at
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CB&I/PDM-H 4007485, in camera; CX 1388, in camera; RX 157 at [xx] 02 004, in camera; 

Scorsone, Tr. 5333, in camera).

Response to Finding No. 909:

For the reasons set forth in RFOF 796 through RFOF 815 the proposed finding is 

misleading, speculative, conclusory, unsupported by the evidence, and unsupported by expert

testimony.

910. CB&I's current price of [xxxxxxxx] for the Cove Point LNG tank is [xxxxxx]

above CB&I's equivalent [xx] price of [xxxxxxxx] for a tank of that size, and [xxxxxx] above

PDM's equivalent [xx] price of [xxxxxxxxxx] price for the same size tank. (xxxxxxxxx Tr. 5333 

in camera; RX 157 at [xx] 02 004 in camera; CX 1760 (demonstrative) in camera).

Response to Finding No. 910:

For the reasons set forth in RFOF 883 through RFOF 905 the proposed finding is 

misleading, speculative, conclusory, unsupported by the evidence, and unsupported by expert

testimony. Additionally, Complaint Counsel is inappropriately attempting to compare actual,

firm, current pricing for the Cove Point project to budget pricing that CB&I and PDM submitted 

to [xxx] in 1998. (FOF 7.1-7.38).

911. While increasing the price of the Cove Point LNG tank since the acquisition,

CB&I has still maintained the price below Whessoe's interpolated price of [xxxxxx] million for a 

tank of that size. (RX 157 at [xx] 02 004 in camera; CX 1760 (demonstrative) in camera). 

CB&I could still increase the price of the [xxxxxxxxx] Cove Point LNG tank by an additional

[xxxxxx] before reaching Whessoe's equivalent price for that size tank. (RX 157 at [xx] 02 004 

in camera; CX 1760 (demonstrative), in camera).

Response to Finding No. 911:

For the reasons set forth in RFOF 883 through RFOF 905 the proposed finding is 

misleading, speculative, conclusory, unsupported by the evidence, and unsupported by expert

testimony. Additionally, Complaint Counsel is inappropriately attempting to compare actual,

firm, current pricing for the Cove Point project to budget pricing that Whessoe allegedly

submitted to [xxx] in 1998. (FOF 7.1-7.38).
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13. The [xx]/Cove Point Comparison Shows that Foreign Firms Cannot Restrain 

CB&I as Effectively as PDM

912. The following graph shows the history of PDM's and CB&I's prices for the Cove 

Point LNG tank, from early 2000 through December 2002, as well as the price quotations 

submitted to [xx] by CB&I, PDM and Whessoe for various size single containment LNG tanks. 

Trend lines show approximate prices for CB&I, PDM and Whessoe for intermediate tank sizes.

Response to Finding No. 912:

For the reasons set forth in RFOF 779 through RFOF 820, the proposed finding 

and the accompanying graph representing pricing for the Cove Point project is misleading,

speculative, unsupported by the evidence, and unsupported by expert testimony. For the reasons 

set forth in RFOF 869 through RFOF 882, the proposed finding and the accompanying graph

representing the budget pricing submitted to [xx] in 1998 is misleading, speculative, unsupported 

by the evidence, and unsupported by expert testimony. For the reasons set forth in RFOF 883 

through RFOF 911, the proposed finding and the accompanying graph attempting to compare

pricing for the Cove Point project to [xxx] budget pricing is misleading, speculative, unsupported 

by the evidence, and unsupported by expert testimony.

913. The most important point made by the graph is that PDM and CB&I's pricing

after the letter of intent was signed does not fall within a range of any price curve. CB&I's

current pricing, reflected on the graph, shows the lack of pricing methodology in the postacquisition period when compared with pre-acquisition levels of pricing to [xx] or Columbia

Gas.

Response to Finding No. 913:

For the reasons set forth in RFOF 779 through RFOF 820, the proposed finding 

and the accompanying graph representing pricing for the Cove Point project is misleading,

speculative, unsupported by the evidence, and unsupported by expert testimony. For the reasons 

set forth in RFOF 869 through RFOF 882, the proposed finding and the accompanying graph

representing the budget pricing submitted to [xxx] in 1998 is misleading, speculative,

unsupported by the evidence, and unsupported by expert testimony. For the reasons set forth in 
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RFOF 883 through RFOF 911, the proposed finding and the accompanying graph attempting to 

compare pricing for the Cove Point project to [xxx] budget pricing is misleading, speculative, 

unsupported by the evidence, and unsupported by expert testimony.

914. As shown in the above graph, PDM's initial price to Columbia for the Cove Point 

LNG tank, approximately [xxxxxxx], was substantially [xxxxx] above PDM's corresponding

price quote to [xx] of [xxxxxxxxxxx] interpolated for the same size tank, 750,000 barrels

(119,237 cubic meters). (in camera)

Response to Finding No. 914:

For the reasons set forth in RFOF 883 through RFOF 911, the proposed finding 

and the referenced graph attempting to compare pricing for the Cove Point project to [xxx]

budget pricing is misleading, speculative, unsupported by the evidence, and unsupported by

expert testimony.

915. As further shown in the above graph, CB&I's price to Columbia of [xxxxxx 

xxxxxxxx], as recorded in CB&I's March 3, 2000, Bid Review, is substantially below PDM's

initial price quotation and slightly (5.3%) above CB&I's price quote to [xx] of [xxxxxxxx]

interpolated for the same size tank, 750,000 barrels (119,237 cubic meters). (RX 127 at CB&IH008204).

Response to Finding No. 915:

For the reasons set forth in RFOF 883 through RFOF 911, the proposed finding 

and the accompanying graph attempting to compare pricing for the Cove Point project to [xxx]

budget pricing is misleading, speculative, unsupported by the evidence, and unsupported by

expert testimony.

916. As recognized by the customer and recognized by CB&I's Mr. Marine,

competition from CB&I, prior to the acquisition, brought PDM's price down to [xxxxxxxxxxxx], 

6% below PDM's corresponding price quote to [xx], interpolated for a tank of approximately the 

same size, and exactly on the price quote trendline to [xx] for the 750,000 barrel tank. (CX 226 

at CB&I-PL044978).
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Response to Finding No. 916:

For the reasons set forth in RFOF 883 through RFOF 911, the proposed finding 

and the accompanying graph attempting to compare pricing for the Cove Point project to [xxx]

budget pricing is misleading, speculative, unsupported by the evidence, and unsupported by

expert testimony.

917. As further shown in the above graph, CB&I's proposed price, as recommended by 

Mr. Marine on March 29, 2000, is exactly on CB&I's price quote trendline to [xx] for the

750,000 barrel (119,237 cubic meter) tank.

Response to Finding No. 917:

For the reasons set forth in RFOF 883 through RFOF 911, the proposed finding 

and the accompanying graph attempting to compare pricing for the Cove Point project to [xxx]

budget pricing is misleading, speculative, unsupported by the evidence, and unsupported by

expert testimony.

918. As further shown in the above graph, PDM' s September 8, 2000, price quotes to 

Williams for the 750,000 barrel LNG tank is [xxxx] higher than PDM's March 2000 price of

[xxxxxxxxxxx] as estimated by CB&I's Mr. Marine. (CX 226 at CB&I-PL044978; CX 1388 at 

CB&I/PDM-H 4015363).

Response to Finding No. 918:

For the reasons set forth in RFOF 883 through RFOF 911, the proposed finding 

and the accompanying graph attempting to compare pricing for the Cove Point project to [xxx]

budget pricing is misleading, speculative, unsupported by the evidence, and unsupported by

expert testimony.

919. As further shown in the above graph, PDM's September 8, 2000 price quotes to

Williams are above PDM's equivalent price quotes to [xx] for the same size tanks. The price

quote to Williams is approximately [xxxx] above the equivalent price quote to [xx] for the

750,000 barrel (119,237 cubic meter) LNG tank and [xxxx] above the equivalent price quote to 

[xx] for the 850,000 barrel (135,135 cubic meter) LNG tank. (RX 157 at [xx] 02 004; CX 1388 

at CB&I/PDM-H4015363, in camera).
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Response to Finding No. 919:

For the reasons set forth in RFOF 883 through RFOF 911, the proposed finding 

and the accompanying graph attempting to compare pricing for the Cove Point project to [xxx]

budget pricing is misleading, speculative, unsupported by the evidence, and unsupported by

expert testimony.

920. As further shown in the above graph, PDM's September 8, 2000, price quotes to 

Williams, show a [xxx] difference in price between the 750,000 barrel tank and the 850,000

barrel LNG tank approximately equivalent to the [xxx] difference in price indicated by the trend 

line for PDM' s price quotes to [xx]. (CX 1388 at CB&I/PDM-H 4015363, in camera).

Response to Finding No. 920:

For the reasons set forth in RFOF 883 through RFOF 911, the proposed finding 

and the accompanying graph attempting to compare pricing for the Cove Point project to [xxx]

budget pricing is misleading, speculative, unsupported by the evidence, and unsupported by

expert testimony.

921. As further shown in the above graph, PDM's November 1, 2000, estimate of xxxx 

million for the 850,000 barrel (135,135 cubic meter) LNG tank is [xxxx] higher than PDM's

initial price of approximately [xxxxxxxxx] for the 750,000 barrel tank, before competition from 

CB&I forced PDM to reduce its price. (CX 1160 at CB&I/PDM-H 4007485, in camera; CX 226 

at CB&I-PL044978).

Response to Finding No. 921:

For the reasons set forth in RFOF 779 through RFOF 820, the proposed finding 

and the accompanying graph representing pricing for the Cove Point project is misleading,

speculative, unsupported by the evidence, and unsupported by expert testimony.

922. The [xxxx] increase in price is almost identical to the [xxxxx] difference in price 

for the two size tanks contained in PDM's September 8, 2000, price quote to Williams, and is

comparable to, and only slightly higher than, the [xxxxxx] difference between PDM's equivalent 

price quotes to [xxx] for those size tanks: [xxxxxxxxxx] for a 750,000 barrel (119,237 cubic

meter) tank and [xxxxxxxxxxx] for an 850,000 barrel (135,135 cubic meter) tank). (CX 1388 at 

CB&I/PDM-H 4015363; RX 157 at [xxx] 02 004, in camera).
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Response to Finding No. 922:

For the reasons set forth in RFOF 883 through RFOF 911, the proposed finding 

and the accompanying graph attempting to compare pricing for the Cove Point project to [xxx]

budget pricing is misleading, speculative, unsupported by the evidence, and unsupported by

expert testimony.

923. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxx (CX 226 at CB&I-PL044978; CX 1388 at CB&I/PDM-H 4015363, 

in camera; CCFF 785.

Response to Finding No. 923:

For the reasons set forth in RFOF 779 through RFOF 820, the proposed finding 

and the accompanying graph representing pricing for the Cove Point project is misleading,

speculative, unsupported by the evidence, and unsupported by expert testimony.

924. As further shown in the above graph, PDM's further [xxxx] increase in the price 

of the tank, following Mr. Scorsone's November 1, 2000, meeting to review the price prior to

submitting PDM's bid to Williams on November 2, 2000, brought the price up to [xxxxxxxxxxx], 

[xxxxx] above PDM's [xxxxxxxxxxxxxx] interpolated price quote to [xx] for an 850,000 barrel

(135,135 cubic meter) tank. (RX 157 at [xx] 02 004; CX 1160 at CB&I/PDM-H 4007485, in 

camera).

Response to Finding No. 924:

For the reasons set forth in RFOF 883 through RFOF 911, the proposed finding 

and the accompanying graph attempting to compare pricing for the Cove Point project to [xxx]

budget pricing is misleading, speculative, unsupported by the evidence, and unsupported by

expert testimony.

925. The above graph further shows the [xxxxxxxxx] price CB&I would have bid on

the 850,000 barrel tank as stated on CB&I's February 21, 2001, Estimate Summary Sheet. As

shown on the graph, the price paid by Williams is [xxxxxx] above CB&I's estimate for the tank. 

(CX 906 at CB&I 031076-HOU, in camera). CCFF 818.
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Response to Finding No. 925:

For the reasons set forth in RFOF 816 through RFOF 820, the proposed finding 

and the accompanying graph attempting to compare pricing for the Cove Point project contained 

in CX 906 (Estimate Summary Sheet) to actual pricing for the Cove Point project is misleading, 

unsupported by the evidence, and unsupported by expert testimony.

926. Finally, the graph shows CB&I's current price of [xxxxxxxxx] for the Cove Point 

LNG tank. As shown in the graph, the current price is [xxxxx] above the price stated on CB&I's 

February 21, 2001, Estimate Summary Sheet and [xxxxxx] above CB&I's interpolated price

quote to [xx] of [xxxxxxxxxxxx] for the 850,000 barrel (135,135 cubic meter) tank. (xxxxxxxxx 

Tr. 5333, in camera).

Response to Finding No. 926:

For the reasons set forth in RFOF 883 through RFOF 911, the proposed finding 

and the accompanying graph attempting to compare pricing for the Cove Point project to [xxx]

budget pricing is misleading, speculative, unsupported by the evidence, and unsupported by

expert testimony.

927. As shown in the graph, CB&I could nevertheless increase its current price for the 

tank by an additional [11.7%] before reaching Whessoe's interpolated price quote of [xxxxxx 

xxxxxxxx] to [xx] for the 850,000 barrel (135,135 cubic meter) tank. (RX 157 at [xx] 02 004, in 

camera)

Response to Finding No. 927:

For the reasons set forth in RFOF 883 through RFOF 911, the proposed finding 

and the accompanying graph attempting to compare pricing for the Cove Point project to [xxx]

budget pricing is misleading, speculative, unsupported by the evidence, and unsupported by

expert testimony.

928. Absent the acquisition, CB&I and PDM would have constrained each others'

pricing to levels that are within the ranges of the two firms' price curves prior to the acquisition. 

Because CB&I is now unrestrained, it is now able to increase its price more than [xxx] above 

pricing levels that existed prior to the acquisition.
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Response to Finding No. 928:

For the reasons set forth in RFOF 898 through RFOF 911, the proposed finding is 

misleading, speculative, unsupported by the evidence, and unsupported by expert testimony.

14. The Memphis, Tennessee Project: Pre-merger Price Competition Between 

Respondents

929. Since Cove Point, CB&I has used PDM's "fat" and "excessive" cost estimates on 

Cove Point as a benchmark to implement higher prices and margins to other LNG customers.

Response to Finding No. 929:

The proposed finding is inaccurate, conclusory, argumentative, misleading, and

unsupported by citations or the evidence.

930. The LNG projects for Memphis Light, Gas & Water ("Memphis") illustrate three 

important themes of this case. (1) Prior to the merger, CB&I and PDM competed vigorously to 

win this project, and Memphis benefitted in the form of lower prices (and CB&I suffered in the 

form of single-digit margins). (2) Prior to the merger, foreign firms – Whessoe and TKK – bid 

against CB&I and PDM but were not competitive because their costs and prices were at least

40% higher. (3) Since the merger, CB&I recognizes that with the elimination of PDM as its

closest competitor and the inability of other firms to replace PDM as a price constraint, CB&I 

can now raise prices and earn significantly higher margins.

Response to Finding No. 930:

For the reasons set forth below (RFOF 931-942), the proposed finding is grossly 

inaccurate, conclusory, argumentative, misleading, and unsupported by citations or the evidence.

931. In 1994, Memphis sought bids for the construction of a peak-shaving plant in

Capleville, Tennessee. (Hall, Tr. 1778-1779; Price, Tr. 650). This peak-shaver would provide 

additional LNG supply to compensate for peak demand of LNG in the year 2001. (Hall, Tr.

1779).

Response to Finding No. 931:

Respondents have no specific response.

932. Memphis viewed CB&I and PDM as the most capable domestic suppliers for the 

project. Clay Hall, project engineer and manager for Memphis, believed that "essentially we had 

two viable companies in the United States that could compete" for the project – CB&I and

PDM. (Hall, Tr. 1799-1800).
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Response to Finding No. 932:

The proposed finding is misleading and incomplete. In addition to CB&I and

PDM, Mr. Hall also testified that "we had others overseas that could compete". In fact, Memphis 

"actively encouraged" Black & Veatch and Lotepro to "team up with a foreign tank builder to

compete . . . ." (Hall, Tr. 1799).

933. Memphis sought additional bidders to maximize competition and obtain a lower 

price. (Hall, Tr. 1800). Memphis encouraged Black & Veatch, an engineering firm, "to team up 

with a foreign tank builder to compete, " and also encouraged Lotepro, a German engineering

firm, to compete in the bidding process. (Hall, Tr. 1799).

Response to Finding No. 933:

Respondents have no specific response.

934. Black & Veatch partnered with TKK for the LNG tank portion of the project, and 

Lotepro partnered with Whessoe. (CX 319 at CB&I-ATL003104; Hall, Tr. 1804-1805).

Response to Finding No. 934:

The proposed finding is inaccurate, misleading, and overstates the evidence. 

Black & Veatch never entered into a formal partnership with TKK, as TKK clearly came in on a 

one-shot deal in 1994 to work with Black & Veatch on the Memphis project. (Price, Tr. 650)

(FOF 3.508). IHI was initially going to build the LNG tank for Black & Veatch, but Black & 

Veatch's tank contractor changed during the course of the bidding process. (Hall, Tr. 1804-05) 

(FOF 3.500). Black & Veatch actually listed three different tank contractors in its bid for the

Memphis project: (1) IHI/Rocky Mountain Fabricators; (2) TKK/Graver Tank; and (3) Sunkyong 

Belmont/Titan Constructors. (CX 319).

Lotepro never entered into a formal partnership with Whessoe, as Whessoe was

reluctant to get involved in the Memphis bid, and would not bid the entire LNG tank to Lotepro. 

(Kistenmacher, Tr. 895, 939-40) (FOF 3.497). In fact, Lotepro "had difficulties" getting Noell

Whessoe to even provide an engineering quote for the Memphis project. (Kistenmacher, Tr.
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940) (FOF 3.497). This stands in stark contrast from Skanska/Whessoe's voluntary, even eager, 

market participation today.

935. The prices quoted by CB&I, PDM, Lotepro/Whessoe and Black & Veatch/TKK

for the LNG tank portion of the project reflect CB&I's and PDM's significant cost advantage visa-vis foreign firms. The following chart shows each firm's bid for the LNG tank. (CX 829 at 5; 

Hall, Tr. 1876; Price, Tr. 648).

Firm Price

PDM $10,500,000

CB&I $10,500,000

Lotepro/Whessoe $15,000,000

Black & Veatch/TKK $16,700,000

Response to Finding No. 935:

The proposed finding is inaccurate, incomplete, misleading, mischaracterizes the

evidence, and is unsupported by the evidence. It is not remotely clear from the record what

CB&I's and PDM's "tank only" prices were. Although Memphis "requested a specific breakout 

of the price for the LNG tank, both PDM and Lotepro ignored the requirement and did not

breakout their tank costs." (RX 888; Scorsone, Tr. 5010) (FOF 3.506). Thus, it is difficult to 

determine what the cost break-out of PDM's tank bid was for the Memphis project. (Scorsone, 

Tr. 5011-12) (FOF 3.506). Evidence suggests that PDM's tank price may have been between

$13 million and $15 million. (Simpson, Tr. 5548-50) (FOF 3.506). Further, PDM's bid was

disqualified because it had approximately 157 shortcomings that were out of line with the request 

for proposal. (Hall, Tr. 1823-24; Scorsone, Tr. 5012) (FOF 3.505). Therefore, PDM's bid was

"not quoted on the same item" as CB&I's bid. (Hall, Tr. 1839-40) (FOF 3.505).

The record evidence is unclear as to whether the $10.5 million price associated

with CB&I's bid included CB&I's engineering costs. (RX 888). Other evidence suggests that

CB&I's tank bid (which may have included its engineering costs) for the Memphis project, was 

between $13 million and $15 million. (Simpson, Tr. 5548-50) (FOF 3.506).
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Lotepro incorporated an LNG tank construction quotation from Titan

Constructors in its Memphis bid. (Kistenmacher, Tr. 895-96) (FOF 3.498). Noell Whessoe's

engineering package accounted for $1 million of the $15 million tank bid, while Titan

Constructor's construction/erection costs accounted for the remaining $14 million. 

(Kistenmacher, Tr. 900, 938) (FOF 3.498).

Black & Veatch's tank price, using TKK's design, was approximately $13 million. 

(RX 888) (FOF 3.502). Of the $13 million tank price, over $10 million of the cost was attributed 

to materials and labor that would be supplied by Graver for the project. (RX 888) (FOF 3.502).

936. Memphis considered the level of competition between CB&I and PDM to be very 

"very competitive." (Hall, Tr. 1804).

Response to Finding No. 936:

Respondents have no specific response.

937. In contrast, Whessoe's bid was 43% higher than CB&I and PDM, and TKK's bid 

was 59% higher. (See also Hall, Tr. 1810; Price, Tr. 561; Kistenmacher, Tr. 901).

Response to Finding No. 937:

The proposed finding mischaracterizes Whessoe's and TKK's participation in the 

Memphis project. Whessoe merely submitted an engineering package which accounted for $1

million of the $15 million tank bid that Lotepro provided. (Kistenmacher, Tr. 900, 938) (FOF

3.498). The balance of the Lotepro tank bid was provided by Titan Constructors. 

(Kistenmacher, Tr. 900, 938) (FOF 3.498). Similarly, TKK's pricing accounted for less than

25% of the $13 million tank price submitted by Black & Veatch. (RX 888) (FOF 3.502). 

Additionally, the percentages (43% and 59%) contained in the proposed finding appear to be

arbitrary, as none of Complaint Counsel's citations support these numbers.

938. Lotepro later lamented to CB&I that Lotepro's bid on the Memphis project "was 

really strained by not being able to include a CB&I or PDM tank, and his current market study
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prompted his call to discuss whether [CB&I's] position [about partnering with Lotepro] may

have changed at all since [Memphis]." (CX 184 at CB&I-PL012440).

Response to Finding No. 938:

The proposed finding mischaracterizes CX 184, as Lotepro never "lamented".

939. To this day, Black & Veatch has "concerns" about whether a foreign tank supplier 

can provide a "competitive price" against CB&I. (Price, Tr. 634-635).

Response to Finding No. 939:

The proposed finding is not supported by the preponderance of the evidence. Mr. 

Price's "concerns" about foreign tank suppliers do not represent the views of Black & Veatch, as 

Black & Veatch has touted its "alliance" with Skanska/Whessoe as as a positive aspect of Black 

& Veatch's corporate LNG strategy. (RX 935) (state of mind) (FOF 3.662). In fact, Black &

Veatch never even requested budget pricing from CB&I for the Dynegy project because it was

working with Skanska, and thus, "it was natural" to request a budget price from Whessoe. 

(Price, Tr. 603-04) (FOF 3.661). Mr. Price also lacks foundation to make any statements on

behalf of Black & Veatch because he has not seen the bids submitted for the Dynegy project, and 

did not know that Dynegy was satisfied with the foreign tank suppliers' prices. (Price, Tr. 609-

10, 641, 667) (FOF 3.660, 3.664). Further, Black & Veatch has neither procured an LNG tank, 

nor received any firm, fixed-price bids for an LNG trank from either PDM or CB&I since at least 

1990. (Price, Tr. 644) (FOF 3.665).

940. PDM was not selected because its specifications for non-tank portions of the

project, such as paving the driveways, did not meet Memphis' specifications. (Hall, Tr. 1878-

1879).

Response to Finding No. 940:

The proposed finding is misleading, incomplete and is not supported by the

citation. PDM's bid had approximately 157 shortcomings that were out of line with Memphis' 

request for proposal. (Hall, Tr. 1823-24) (FOF 3.505). PDM also failed to address a variety of 
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engineering issues. (Hall, Tr. 1838-40) (FOF 3.505). The citation to Mr. Hall's testimony does 

not indicate that the shortcomings contained in PDM's bid were "for non-tank portions of the

project".

941. Memphis awarded the contract to CB&I. (Hall, Tr. 1777; CX 46 at CB&I

033870-ATL).

Response to Finding No. 941:

Respondents have no specific response.

942. CB&I's firm fixed price to Memphis included an [xxx] profit margin.

Response to Finding No. 942:

The proposed finding is inaccurate, misleading, incomplete, and unsupported by

any citation to record evidence. Complaint Counsel cannot cite to a single document or any

testimony corroborating the proposed finding.

943. The Memphis project shows that foreign firms are at a significant cost

disadvantage against CB&I. In the absence of PDM, CB&I's closest competitor, CB&I could

have increased its tank price between 43% and 59% before one of the foreign firms would have 

constrained CB&I's bid. See also Merger Guidelines § 2.21, n. 21 ("A merger involving the first 

and second lowest-cost sellers could cause prices to rise to the constraining level of the next

lowest-cost seller.").

Response to Finding No. 943:

The proposed finding is irrelevant, inaccurate, speculative, conclusory, and is not 

supported by the evidence. The Memphis project is irrelevant in that it happened over nine years 

ago, and neither TKK nor Whessoe had "planted their flag at that point". (Scorsone, Tr. 5014)

(FOF 3.507). Neither TKK nor Whessoe were committed to entering the U.S. market in 1994: 

(1) TKK participated in the Memphis project on a "one-shot deal in 1994" (Price, Tr. 650) (FOF 

3.508); and (2) Whessoe was very reluctant to get involved in the Memphis project, did not form 

a partnership with Titan Constructors to construct the tank, and only provided an engineering

package acounting for $1 million of the $15 million tank price. (Kistenmacher, Tr. 895, 900-01, 
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938-40 (FOF 3.497, 3.498, 3.499). TKK's and Whessoe's participation in the Memphis project 

stands in stark contrast their present day efforts in forming partnerships, and competing on

several U.S. LNG projects. (FOF 3.57-3.140). Complaint Counsel did not, and cannot, cite any 

evidence supporting how CB&I "could have increased its tank price" during the Memphis

project.

15. The Memphis, Tennessee Project: Post-Merger Price Increase by CB&I

944. In 2002, Memphis sought pricing information for another 300,000 barrel LNG

peak shaving tank. (Hall, Tr. 1824-1825).

Response to Finding No. 944:

The proposed finding is misleading, inaccurate, and incomplete. Mr. Hall

testified that he requested some "budgetary guesses", not a formal pricing estimate, for an LNG 

tank to be used in 2008. (Hall, Tr. 1824-25). Complaint Counsel states that the tank size would 

be 300,000 barrels, but fails to cite any record evidence supporting this assertion.

945. In January 2002, Memphis contacted CB&I's Eric Frey, a business development 

manager. Memphis called CB&I because CB&I is the [xxxxxxxxxxxxxx] that can provide

[xxxxxxxxxx] tank pricing in the United States. (CX 422 at CB&I-E009500, in camera; Hall, 

Tr. 1825, 1826, 1827).

Response to Finding No. 945:

The proposed finding is misleading and incomplete. Mr. Hall called CB&I

because Memphis has a "working relatiohship with CB&I", and Mr. Hall has "contacts there . . . 

." (Hall, Tr. 1825-26).

946. Memphis did not contact other LNG firms because Memphis cannot "trust" the

pricing information from foreign firms. (Hall, Tr. 1828).

Response to Finding No. 946:

The proposed finding is incomplete and is irrelevant. Mr. Hall testified that he

did not approach a foreign tank supplier because he "had a working relationship already with
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CB&I, had the contacts, I knew who to call." (Hall, Tr. 1828). Mr. Hall lacks foundation to

discuss foreign LNG tank companies because Memphis is not a current participant in the LNG

tank market, and admitted that he would need a lot of additional information from Whessoe and 

TKK to determine if they were viable competitors in the U.S. (Hall, Tr. 1832-33, 1846-48, 

1853-54) (FOF 3.650, 3.655, 3.657).

947. On January 15, 2002, Mr. Frey e-mailed Marty Smith, a CB&I vice president of

global LNG sales, with the proposal to quote Memphis a price that "reflect about a [xxx] margin 

after Total Internal Cost." (RX 732 at CB&I 071501, in camera).12

Response to Finding No. 947:

The proposed finding is ambiguous, misleading and incomplete. Customers do 

not purchase LNG tanks based on a budget price. (Carling, Tr. 4472-73) (FOF 3.607). Margins 

contained in budget prices are not remotely representative of the actual profit margin that CB&I 

seeks in fixed, firm price bids. (Scorsone, Tr. 5003) (FOF 3.606). As explained in FOF 3.599-

3.606, there are numerous contingencies and uncertainties when CB&I submits budget pricing to 

a customer. Because CB&I's internal budget documentation does not contain a line item for

these contingencies, CB&I accounts for these contingencies in the margin line calculation of the 

budget estimate. (Scorsone, Tr. 5002-03) (FOF 3.606). Thus, although a margin line item on a 

budget price may be [xxx], this does not mean that CB&I will seek a [xxx] profit margin if, and 

when, a firm, fixed price bid is submitted. (Scorsone, Tr. 5003) (FOF 3.606).

948. On January 15, Mr. Smith instructed Mr. Frey to quote Memphis xxx million,

almost [xxxxxxxx] higher than what Frey had originally prepared. (RX 732 at CB&I 071502, in 

camera; CX 422 at CB&I-E 009500, in camera; xxxxxxxxxx, Tr. 5323, in camera). Mr. Smith 

explained that Mr. Frey's original estimate was [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (RX 732 at 

CB&I 071501, in camera).

 

12

 Frey testified at his deposition that the [xx]% margin quoted to Memphis represented "about [xx]% of 

what you want to call margin on this other estimate and about [xx]% of cushion." (CX 416 at 71 ([xxx]), in 

camera). Assuming the [xx]% margin is comprised of a [xx]% "margin" and a [xx]% "cushion," as Frey contended, 

CB&I's margin still represents a [x]% increase over pre-acquisition margins.
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Response to Finding No. 948:

The proposed finding is misleading, and incomplete. The purpose of preparing

the budgetary estimate was to provide a rough idea of LNG tank pricing over the next 10 to 50

years, while assisting Memphis in conducting a long-term planning exercise. (Hall, Tr. 1864-65; 

Scorsone, Tr. 5251) (FOF 3.608). Mr. Smith instructed Mr. Frey to increase the budget price

because nine percent nickel steel pricing has fluctuated considerably over the past 12 months. 

(CX 422). Mr. Smith further stated: "Since we do not know when the tank would be bought we 

are trying to ensure that our budget price is at least considerate of this situation. (i.e. includes a 

small contingency for material escalation)". (CX 422).

949. On January 16, Mr. Frey quoted Memphis a budget price of [xxx] million for a

300,000 barrel tank. (RX 732 at CB&I 071499-500, in camera).

Response to Finding No. 949:

The proposed finding is incomplete. The budget price CB&I provided "was not a 

buying offer." (Scorsone, Tr. 5250) (FOF 3.609). Rather, the estimate that CB&I provided to 

Memphis was a SWAG -- a "scientific wild assed guess." (Hall, Tr. 1865-66) (FOF 3.609). Mr. 

Hall testified that Memphis did not provide CB&I nearly enough information to receive an

accurate price, and agreed that "volumes more" information would be required for this purpose. 

(Hall, Tr. 1865-66) (FOF 3.609). Because Memphis was asking CB&I to "extrapolate" into the 

future, and because it did not provide detailed information, Mr. Hall was not expecting a number 

of more than plus or minus 40% accuracy. (Hall, Tr. 1866-68).

950. On July 17, 2002, Clay Hall of Memphis e-mailed Mr. Frey to comment that "we 

all know that CB&I/PDM is, in fact, the only qualified US based firm capable of executing the 

work." (CX 786 at CB&I 065153).
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Response to Finding No. 950:

The proposed finding based on CX 786 is inaccurate, misleading, and not

supported by the preponderance of the evidence. First, Complaint Counsel is citing a document 

containing an e-mail written by its own witness, Clay Hall. Yet, Complaint Counsel failed to

elicit this evidence from Mr. Hall on the witness stand. Second, CX 786 is ambiguous because it 

does not specify whether Mr. Hall is discussing an LNG project, or any number of different

potential projects. Finally, even if CX 786 can be construed as relating to an LNG project, Mr. 

Hall lacks foundation to testify about the current LNG market. Since 1994, Mr. Hall has not

conducted any searches for builders of field-erected LNG tanks, he does not monitor the LNG

markets, and he admits that he is not familiar with the current state of competition in the LNG 

market. (Hall, Tr. 1843-45, 1857) (FOF 3.653).

951. Mr. Hall added that Memphis is "concerned about where we're going to get

competition for our bids in the next few years ... because we don't see anyone out there with

experience that could come into the market and compete with CB&I/PDM." (Hall, Tr. 1830).

Response to Finding No. 951:

The proposed finding is irrelevant. Mr. Hall lacks foundation to testify about the 

LNG market: (1) since 1994, Mr. Hall has not conducted any searches for builders of fielderected LNG tanks; (2) Mr. Hall does not monitor the LNG markets; and (3) Mr. Hall admits that 

he is not familiar with the current state of competition in the LNG market. (Hall, Tr. 1843-45, 

1857) (FOF 3.653). Mr. Hall also testified that he would investigate the foreign tank builders

were he to actually build a new tank. (FOF 3.655, 3.657).

952. Based on the 1995 Memphis bidding experience, CB&I knew that it had a

competitive advantage against foreign firms. Joe Godown, a CB&I employee, wrote in a

November 30, 1994, e-mail that there was an absence of "tough competition" from foreign firms 

because an "economical" LNG tank price was not "available" from Whessoe. (CX 319 at CB&IATL003104). Carroll Davis, a CB&I vice president, observed that Whessoe's and TKK's bids

"did not turn out to be very competitive." (CX 184 at CB&I-PL012440).
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Response to Finding No. 952:

The proposed finding is irrelevant. Noell Whessoe's and TKK's participation in

the Memphis bid in 1994 do not bear upon CB&I's current perceptions of their ability to compete 

in the U.S. (Scorsone, Tr. 5013) (FOF 3.507). First, the Memphis project occurred nine years 

ago. (Scorsone, Tr. 5014) (FOF 3.507). Second, neither Noell Whessoe nor TKK announced 

plans to construct LNG facilities in the U.S. in 1994. (Scorsone, Tr. 5014) (FOF 3.507). CB&I's 

current state of mind is influenced by current events, not the 8 year-old Memphis bidding. (FOF 

3.451-3.459).

953. Respondents presented no evidence that its post-merger pricing to Memphis was 

negatively impacted by any competitor, foreign or domestic.

Response to Finding No. 953:

The proposed finding is irrelevant. There was no actual work at stake in

connection with CB&I providing Memphis the budget estimate; the budget price was given to

Memphis as a matter of courtesy -- to assist Memphis. (Hall, Tr. 1864-65; Scorsone, Tr. 5251) 

(FOF 3.608). In fact Memphis expected the SWAG from CB&I to be higher than it otherwise

might be for two reasons: (1) Memphis assumed that CB&I would assume that Memphis was

planning on making its budget based on the numbers; and (2) the number was not provided under 

competitive conditions -- in other words, no formal bidding process had been entered into at this 

point. (Hall, Tr. 1869-70) (FOF 3.610). Memphis is at least five or six years away from entering 

into a bidding process. (Hall, Tr. 1869-70).

954. In the 1995 Memphis bidding contest, CB&I had to bid at a low price that

garnered it only an xx margin in order to beat PDM. Post-merger, unrestrained by PDM and

knowing that foreign firms cannot provide an "economical" or "very competitive" price, CB&I 

exercised market power by offering a higher price that includes at least a [xxxx] margin, a nearly 

four-fold increase from pre-merger levels.
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Response to Finding No. 954:

The proposed finding is factually incorrect, unsupported by the evidence, and

argumentative. First, Complaint Counsel fails to cite any evidence demonstrating that CB&I's

margin in 1995 was 8%. Second, Complaint Counsel fails to distinguish between a fixed, firm

price bid (as submitted in 1994), and a budget price (as provided in 2002). For the reasons set 

forth in RFOF 947-954. (See also FOF 3.608-3.613).

16. The Fairbanks, Alaska Project: Post-Merger Price Increase by CB&I

955. The LNG project for Fairbanks Natural Gas, LLC in Alaska ("Fairbanks") 

illustrates that, since the merger, CB&I recognizes that the elimination of PDM as its closest

competitor and the inability of other firms to replace PDM as a price constraint provide CB&I 

with the opportunity to raise prices and earn significantly higher margins.

Response to Finding No. 955:

The proposed finding fails to cite any evidence to support its conclusions and is

not an appropriate "finding of fact." In fact, the evidence in the record contradicts the proposed 

finding. CB&I perceives fierce competition and realizes that it must price competitively. (See

FOF 3.451-3.459). CB&I does not believe that it can get away with a 5% price increase on LNG 

tanks now that PDM is no longer a competitor of CB&I. (Scorsone, Tr. 5062-63; see also FOF 

3.453).

956. In 2002, Fairbanks explored the possibility of expanding its storage capacity with 

a field-erected LNG tank. Fairbanks considered LNG tanks capable of storing one million and 

five million gallons. (CX 370 at 21, 30 (Britton, Dep.); Simpson, Tr. 3107).
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Response to Finding No. 956:

The proposed finding attempts to support its conclusions by relying on CX 370, 

an exhibit that has not been admitted into evidence.1 Respondents humbly move that all

argument related to this exhibit be stricken.

957. Fairbanks retained the services of CDS Research, an LNG consulting firm, to

assist in the project. CDS Research helped prepare a budget for the project. CDS Research's

methodology consisted of taking the "industry standard for benchmarking at costs per gallon and 

then factored in an adjustment factor for size of the tank and referred back to ... recent projects to 

kind of do a comparison ... " (CX 370 at 97 (Britton, Dep.)).

Response to Finding No. 957:

The proposed finding attempts to support its conclusions by relying on CX 370, 

an exhibit that has not been admitted into evidence. (See RFOF 956). Respondents humbly

move that all argument related to this exhibit be stricken. Further, even if the document was

properly admitted into evidence, the proposed finding is misleading, incomplete, irrelevant and 

factually incorrect. The proposed finding represents that CDS Research "helped prepare a 

budget for the [2002] project." Complaint Counsel fails to cite any evidence supporting this

assertion because it is incorrect. CDS Research assisted with a 1999 Fairbanks business plan. 

(CX 370, at 18-19, 96-97). Thus, the quote used in the proposed finding relates to the work CDS 

performed in 1999, two years prior to the Acquisition.

958. CDS Research's analysis included a "15% adjustment factor on the industry

standard for size of the facility ... the industry standard budget pricing for the size." (CX 370 at 

98 (Britton, Dep.)).

 

1

 CX 370 was not included in any of the joint exhibit lists or entered into evidence by the Court. Although 

Respondents entered into a letter agreement with Complaint Counsel agreeing to the admission of parts of the Dan 

Britton deposition transcript, CX 370 includes deposition testimony that was specifically excluded per the letter

agreement. See December 1, 2002 Letter Agreement; CX 370. Additionally, Complaint Counsel failed to move CX 

370 or any other exhibit containing a redacted version of the Dan Britton deposition transcript into evidence. 

Despite the fact that CX 370 is not in evidence, Complaint Counsel repeatedly cites it in support of many of its

proposed findings. Therefore, this Court should ignore any of Complaint Counsel's proposed findings that rely on 

CX 370. 
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Response to Finding No. 958:

The proposed finding attempts to support its conclusions by relying on CX 370, 

an exhibit that has not been admitted into evidence. (See RFOF 956). Respondents humbly

move that all argument related to this exhibit be stricken. Further, even if the document was

properly admitted into evidence, the proposed finding is misleading and irrelevant because Mr. 

Britton is referring to the business plan CDS Research helped develop in 1999. (CX 370, at 96-

97).

959. Based on CDS Research's analysis, Fairbanks concluded that a one-million gallon 

field-erected LNG tank would cost approximately $2.2 million dollars. (CX 370 at 18, 19, 21 

(Britton, Dep.)). Fairbanks further concluded that the total cost of the LNG tank and the

necessary systems would be approximately $5 million. (CX 370 at 46-8 (Britton, Dep.)).

Response to Finding No. 959:

The proposed finding attempts to support its conclusions by relying on CX 370, 

an exhibit that has not been admitted into evidence. (See RFOF 956). Respondents humbly

move that all argument related to this exhibit be stricken. Even if Complaint Counsel believed 

that CX 370 was properly moved into evidence, the proposed finding cites deposition testimony, 

CX 370 at 48, which was specifically excluded by letter agreement. Moreover, even if CX 370 

was properly admitted into evidence, the proposed finding is misleading, incomplete and

factually inaccurate. Fairbanks did not have a valid and reliable method for concluding what an 

LNG tank ought to cost.

Fairbanks admitted that it did not know how to use its previous estimating

experience, with smaller facilities, to extrapolate pricing for its 2002 LNG project. (CX 370, at 

44). While Fairbanks attempted to use the budgetary numbers from the 1999 business plan as a 

basis to determine what a field-erected LNG would cost in 2002, Fairbanks did not know if the 

budgetary numbers in the 1999 business plan were turnkey numbers or tank-only numbers. (CX 
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370, at 31-32). In fact, Mr. Britton testified that there was a great deal about CDS Research's 

1999 business plan that Fairbanks did not know. (CX 370, at 95:19-96).

Another problem is that Fairbanks did not know how to extrapolate 1999 prices

into 2002 prices. For example, in determining its expected 2002 LNG tank price, Fairbanks

failed to account for inflation and increased costs over time and instead simply extrapolated up 

from the 1999 price. (CX 370, at 55-56). Fairbanks also failed to take into account 2002 prices 

for materials, labor and other items. (CX 370, at 74). Likewise, Fairbanks did not know if steel 

prices had increased since 1999 or if steel tariffs would increase costs. (CX 370, at 62). 

Additionally, Fairbanks is currently unaware of foreign LNG tank suppliers. (CX 370, at 33-

35).

960. CDS Research contacted multiple tank suppliers in order to create a competitive 

bidding situation for Fairbanks. CDS Research found that suppliers were unwilling to provide

budgetary pricing information. (CX 370 at 33 (Britton, Dep.)).

Response to Finding No. 960:

The proposed finding attempts to support its conclusions by relying on CX 370, 

an exhibit that has not been admitted into evidence. (See RFOF 956). Respondents humbly

move that all argument related to this exhibit be stricken. Further, even if the document was

properly admitted into evidence, the proposed finding is misleading and incomplete. Mr.

Britton, whose testimony the proposed finding relies upon, stated that he did not specifically

know who CDS Research contacted. (CX 370, at 33). CDS Research did not discuss with Mr. 

Britton who they contacted. (CX 370, at 33). Mr. Britton does not know, therefore, that CDS

Research "contacted multiple tank suppliers."

961. The only firm willing to submit pricing information was CB&I. Having only one 

competitor left Fairbanks in an undesirable position because it prefers to "have more than one

company to get quotes from." (CX 370 at 89 (Britton, Dep.); see Simpson, Tr. 3120 (Dr. 

Simpson concluded that foreign builders of LNG tanks were not interested in building this tank 

for Fairbanks)).
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Response to Finding No. 961:

The proposed finding attempts to support its conclusions by relying on CX 370, 

an exhibit that has not been admitted into evidence. (See RFOF 956). Respondents humbly

move that all argument related to this exhibit be stricken. Further, even if the document was

properly admitted into evidence, the proposed finding is misleading and incomplete. 

Additionally, the first sentence is not supported by the evidence. The proposed finding

misconstrues the quote it cites. Mr. Britton provided the above cited quote in response to a

question regarding his opinion of post-Acquisition competition. (See CX 370, at 89). Mr.

Britton responded: "My only opinion is that it's always nice when you have more than one

company to get quotes from. I don't have an opinion specific to this case." (CX 370, at 89). The 

quote does not have anything to do with the budget prices Fairbanks solicited for its 2002 LNG 

project.

962. On May 17, 2002, CB&I prepared a total budget price of $14.2 million for the

turnkey services provided on the one million gallon tank.13 (RX 407 at CB&I 066666; see

Simpson, Tr. 3107 (The 20% margin was much higher than margin levels prior to the

acquisition).

Response to Finding No. 962:

The proposed finding is incomplete, misleading and speculative. First, Complaint 

Counsel failed to elicit any admissible testimony regarding RX 407. Thus, the record is

completely devoid of any specific information about the document including, inter alia, who

wrote the document and when, who viewed the document and when and what the document

means. The conclusions Complaint Counsel draws from RX 407, therefore, are completely

speculative. Second, as for Dr. Simpson's belief that the "20% margin was much higher than

margin levels prior to the [A]cquisition," he failed to account for the following factors: a budget 
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price for a project in Alaska will be "very rough" unless the customer provides very specific

information; Fairbanks, Alaska is in a very remote location, and is a very difficult area to work; 

it is more expensive to work in Alaska than in the continental U.S.; due to the climate CB&I will 

encounter safety issues and productivity problems working in Alaska. (Scorsone, Tr. 5004-06; 

see also FOF 3.615). There are more unknowns when CB&I submits budget estimates or ROM 

prices for projects in Alaska than there are for projects in the continental U.S. (Scorsone, Tr.

5006; see also FOF 3.616).

963. CB&I's internal estimate worksheet shows that of the $14.2 million total price, the 

price of the one-million gallon tank was $3.6 million. (RX 407 at CB&I 066666).

Response to Finding No. 963:

The proposed finding is incomplete, misleading and speculative. Complaint

Counsel failed to elicit any admissible testimony regarding RX 407. The conclusions Complaint 

Counsel draws from RX 407, therefore, are completely speculative. (See RFOF 962).

964. CB&I's $3.6 million price was $1.4 million higher than Fairbanks' estimate of

$2.2 million based on its consultant's analysis. (RX 407 at CB&I 066666; CX 370 at 19 (Britton, 

Dep.)).

Response to Finding No. 964:

The proposed finding attempts to support its conclusions by relying on CX 370, 

an exhibit that has not been admitted into evidence. (See RFOF 956). Additionally, Complaint 

Counsel failed to elicit any admissible testimony regarding RX 407. The conclusions Complaint 

Counsel draws from RX 407, therefore, are completely speculative. (See RFOF 962). Even if

CX 370 was properly admitted into evidence, the proposed finding is still misleading and

incomplete because it fails to recognize that Fairbanks did not have a reasonable basis to rely on 

 

13

 CB&I quoted a total budget price of $18 million for the same service on the five million gallon tank. 

(RX 407 at CB&I 066664-066665; CX 370 at 42 (Britton, Dep.)).
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the $2.2 million budget price provided in 1999 business plan prepared by CDS Research. (See

RFOF 959).

965. Fairbanks expected "margina[l]" cost increases between 1999 and 2002, but saw

no reason that such increases would be "significant" enough to raise the tank price by more than 

60%. (CX 370 at 21 (Britton, Dep.)).

Response to Finding No. 965:

The proposed finding attempts to support its conclusions by relying on CX 370, 

an exhibit that has not been admitted into evidence. (See RFOF 956). Further, even if CX 370 

was properly admitted into evidence, the proposed finding is still misleading and incomplete

because it fails to recognize that Fairbanks did not have a reasonable basis with which it could 

expect what an LNG tank would cost in 2002. (See RFOF 959).

966. In addition to the $3.6 million for the tank alone, CB&I estimated $7.3 million in 

other costs for the component systems and plant facilities. (RX 407 at CB&I 066666). This

$10.9 million figure "includes 20% margin." (RX 407 at CB&I 066666). CB&I then added 30% 

to the $10.9 million figure to account for the location. (RX 407 at CB&I 066666).

Response to Finding No. 966:

The proposed finding is misleading and speculative. Complaint Counsel failed to 

elicit any admissible testimony regarding RX 407. The conclusions Complaint Counsel draws

from RX 407, therefore, are completely speculative. (See RFOF 962). For example, Complaint 

Counsel does not know how CB&I arrived at the estimates on this document, what factors are

accounted for in the "margin," or what the makes up the "30%" figure. The document itself

states that the 30% figure is only a suggestion. (CX 407, at CB&I 066666).

967. Respondents presented no evidence that its post-merger pricing to Fairbanks was 

negatively impacted by any competitor, foreign or domestic.

Response to Finding No. 967:

The proposed finding fails to cite any evidence to support its conclusions and is

not an appropriate "finding of fact."
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17. Comparing Fairbanks' Post-Merger Price

with British Columbia Gas' Pre-Merger Price

968. From Fairbanks' perspective, CB&I's pricing to Fairbanks compares unfavorably

with PDM's pricing on a comparable project before the merger.

Response to Finding No. 968:

The proposed finding fails to cite any evidence to support its conclusions and is

not an appropriate "finding of fact."

969. In 1996, BC Gas sought budget prices from PDM for various sized LNG tanks to 

be built in Vancouver, British Columbia. (CX 791 at PDM-HOU 2015258).

Response to Finding No. 969:

Respondents have no specific response.

970. PDM's response included a budget estimate of $3.6 million Canadian dollars for a 

1.2 million gallon LNG tank. (CX 791 at PDM-HOU 2015260 (the project was calculated was a 

1.38 exchange rate)). Calculating what the price would have been in U.S. dollars in 1996,

PDM's price would have converted to $2.6 million. (See CX 370 at 94 ("Q: Do you know what 

the exchange rate was in 1996?/ A: Probably about 1.4.") (Britton, Dep.)).

Response to Finding No. 970:

The proposed finding attempts to support its conclusions by relying on CX 370, 

an exhibit that has not been admitted into evidence. (See RFOF 956). Respondents humbly

move that all argument related to this exhibit be stricken. Additionally, Complaint Counsel

failed to elicit any admissible testimony regarding CX 791. The conclusions Complaint Counsel 

draws from CX 791, therefore, are completely speculative. (See RFOF 962). For example,

neither Complaint Counsel nor its expert knows how the figures listed on CX 791 were

formulated. (Simpson, Tr. 5387-88).

971. PDM's $2.6 million price to BC Gas was only $400,000 more than the $2.2

million estimate CDS Research provided to Fairbanks, which was based on "industry standard

for benchmarking at costs per gallon" and "recent projects." (CX 370 at 97 (Britton, Dep.)).
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Response to Finding No. 971:

The proposed finding attempts to support its conclusions by relying on CX 370, 

an exhibit that has not been admitted into evidence. (See RFOF 956). Respondents humbly

move that all argument related to this exhibit be stricken. Further, even if CX 370 had been

properly admitted into evidence, the proposed finding is incomplete, inaccurate and speculative 

because it relies on several faulty premises. First, PDM did not have a $2.6 million price to BC 

Gas. In CX 791, CB&I appears to provide BC Gas a price of $3.6 million for a 1.2 million

gallon tank. (See CX 791, at PDM-HOU 2015260). Second, the proposed finding attempts to 

compare the 1996 PDM Canadian budget to a budget price CDS Research compiled in 1999 for a 

business plan to Fairbanks. Comparing these two prices is not meaningful because the proposed 

finding fails to take into account that the two prices include the following: different sized tanks; 

different locations; different time periods; different constructors. Third, The BC Gas budget

estimate was prepared in 1996 by Jeff Steimer, a PDM salesman without training in estimating; 

Mr. Steimer derived this estimate by extrapolating from a prior estimate to a different client. 

(See CX 791). By contrast, CB&I derived the Fairbanks estimate in 2002 using a formal

budgetary exercise. (Compare RX 626 to CX 791). The conclusions drawn by the proposed

findings are therefore speculative and irrelevant.

972. PDM's $2.6 million price was for a 1.2 million gallon LNG tank, whereas 

Fairbanks sought a 1.0 million gallon tank. Applying a downward adjustment in the price to

account for smaller size of the Fairbanks tank, PDM's $2.6 million price to BC Gas would have 

been lower for a 1.0 million gallon tank. (See CX 791 at PDM-HOU 2015258).

Response to Finding No. 972:

The proposed finding is inaccurate, misleading and speculative. Complaint

Counsel failed to elicit any admissible testimony regarding CX 791. The conclusions Complaint 

Counsel draws from CX 791, therefore, are completely speculative. (See RFOF 962). 
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Additionally, comparing a 1996 Canadian PDM budget price to a 1999 CDS budget price

generated for a business plan is not meaningful. (See RFOF 971). Lastly, the proposed finding 

is not an appropriate finding of fact because it attempts to draw an inference that is not supported 

by the evidence (i.e. the price "would have been lower").

973. Dr. Simpson compared the budget price for the Fairbanks project to budget price 

provided by PDM to BC Gas in 1996 for a 1.2 million- gallon LNG tank. The expert found that 

the low end for the range of accuracy for the Fairbanks price exceeded the high end for the range 

of accuracy for the BC Gas price by approximately 20 percent. (Simpson, Tr. 3108-3110; CX

791).

Response to Finding No. 973:

This finding is irrelevant and misleading. It is irrelevant because Dr. Simpson's

analysis is wholly devoid of merit, as it attempts to compare two different budget prices at two 

different points in time -- essentially comparing apples and oranges. As Respondents have

already established, budget pricing is often rough and inaccurate, and is not suitable for use in 

the manner contemplated by this finding. Further, the Fairbanks budget price contained a very

high margin figure to account for lack of information and contingencies associated with an

Alaska project, such as a cold climate, a short construction seasons, and burdensome labor

regulations. (See FOF 3.614-3.617). There is no evidence in the record to suggest that the BC 

Gas budget price was calculated in a similar manner. In fact, the evidence is squarely to the

contrary. It was prepared in 1996 by Jeff Steimer, a PDM salesman without training in

estimating; he derived the estimate by extrapolating from a prior estimate to a different client. 

(See CX 791). By contrast, CB&I derived the Fairbanks estimate in 2002 using a formal

budgetary exercise. (Compare RX 626 to CX 791). Further, Complaint Counsel has not shown 

that the costs for the BC Gas job (such as material or shipping costs) would be the same as those 

on the Fairbanks job located deep in interior Alaska. In fact, Dr. Simpson acknowledged that

these factors would be relevant in any comparison of the two projects. (Simpson, Tr. 5385). 
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Accordingly, this finding is misleading to the extent it implies that CB&I has implemented price 

increases post-Acquisition.

974. Dr. Simpson testified that he did not believe that general inflation could account 

for the price increase (Simpson, Tr. 3110). Dr. Simpson noted that wages for construction

workers had increased about four percent per year between the two bids, but that steel prices had 

fallen during this period and that CB&I and PDM had become more efficient over time

(Simpson, Tr. 3110).

Response to Finding No. 974:

This finding is irrelevant and misleading for the reasons set forth in response to

Finding No. 973.

975. Dr. Simpson did not believe the location of the LNG tank in Fairbanks could

explain the price increase because the tank in British Columbia was also located in a remote area. 

(Simpson, Tr. 3110-11).

Response to Finding No. 975:

This finding is irrelevant and misleading for the reasons set forth in response to

Finding No. 973.

976. Finally, Dr. Simpson testified that he did not believe that the price difference

could be explained by a lower cost for Canadian labor because the field erection cost of a project 

is only about 25 percent of the price and because PDM did not have a trained work force in

western Canada in 1996. (Simpson, Tr. 3111 (citing to CX 1204)).

Response to Finding No. 976:

This finding is irrelevant and misleading for the reasons set forth in response to

Finding No. 973.

977. Using and factoring all of the variables that should have made CB&I's Fairbanks 

price equal to, if not lower than, PDM's BC Gas price, PDM's pre-merger price to BC Gas of

$2.6 million on a 1.2 million gallon tank as a benchmark, CB&I's post-merger price to Fairbanks 

of $3.6 million on a 1.0 million gallon tank appears anticompetitive.

Response to Finding No. 977:

The proposed finding fails to cite any evidence to support its conclusions and is

not an appropriate "finding of fact." The proposed finding is further misleading, incomplete and 
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speculative because it relies on countless unfounded and unsupported assumptions to arrive at its 

ultimate conclusion. (See RFOF 971).

18. The Dynegy Project: CB&I Attempts to Exercise Market Power

978. The LNG project for Dynegy illustrates two important themes of this case. (1) 

CB&I recognizes that with the elimination of PDM as its closest competitor and the inability of 

other firms to replace PDM as a price constraint, CB&I will attempt to leverage its market power 

and force customers to accept CB&I's terms and forego competitive bidding. (2) If a customer 

balks, CB&I will walk away and leave the customer to deal with higher-priced competitors.

Response to Finding No. 978:

The proposed finding fails to cite any evidence to support its conclusions and is

not an appropriate "finding of fact." Further, the proposed finding is directly contradicted by the 

evidence. The fact is that CB&I tried to submit a tank-only bid but Dynegy refused to let CB&I 

bid because it was satisfied with the three bids it had already received from foreign bidders. (See

Puckett, Tr. 4559-60; Glenn, Tr. 4137; see generally, FOF 3.297-3.306).

979. In 2001, Dynegy announced that it would build an LNG regasification facility

containing three LNG tanks in Hackberry, Louisiana. (Puckett, Tr. 4540).

Response to Finding No. 979:

Respondents have no specific response.

980. On the Dynegy project, in order to maximize competition and obtain the best

price, Dynegy chose to "break the project up into pieces," rather than let one firm handle all

phases of the project on a turnkey basis. (Puckett, Tr. 4543-44). CCFF 843. Dynegy separated 

the LNG tank contract from the EPC contract and sought competitive bidding for the LNG tanks. 

(Puckett, Tr. 4544). Dynegy's project manager explained that Dynegy chose to competitively bid 

the LNG tanks because "experience has shown us that when we can competitively bid a

project...we will typically get what we think will be the best value." (Id. at 4571).

Response to Finding No. 980:

The proposed finding is misleading, incomplete and factually inaccurate. First,

although the evidence establishes that Dynegy decided to break the Hackberry project into its

major components, the evidence does not suggest, as the proposed finding implies, that Dynegy 
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decided to proceed in this manner to "maximize competition and obtain the best price." (See

CCFF 980; Puckett, Tr. 4543-44). Second, the quotation cited in the last sentence of the

proposed omits the fact, through the use of ellipses, that Mr. Puckett testified that competitive

bidding is a good procedure when an owner has the time to conduct a bidding process. (Puckett, 

Tr. 4571). In many cases, an owner does not have the time or resources necessary to conduct a

competitive bidding process. (See generally, FOF 3.460-3.467). Ultimately, an owner chooses 

the contracting method it prefers. (See generally, FOF 3.460-3.467).

981. In order to minimize competition and obtain the highest margin, CB&I attempted 

to force Dynegy to accept CB&I as a turnkey contractor so that it could supply the LNG tanks as 

well as facilitate the other portions of the project.

Response to Finding No. 981:

The proposed finding fails to cite any evidence to support its conclusions and is

not an appropriate "finding of fact." Further, the proposed finding is contradicted by evidence

presented at trial. Dynegy actually rejected CB&I's turnkey proposal on two separate occasions, 

as well as CB&I's effort to submit a tank-only bid for this project. (Puckett, Tr. 4558-4559; 

Glenn, Tr. 4410; see also FOF 3.269, 3.270, 3.300).

982. Dynegy included CB&I on a list of prospective candidates to competitively bid

for the FEED study, but CB&I "elected at that time to remove [its] name from consideration for 

performing the FEED study." (CX 518 at CB&I 019777-HOU; see also Glenn, Tr. 4244 (Glenn 

confirmed that CB&I elected not to participate in the FEED study proposal because it did not

want to send its facility information on the tanks for others to evaluate)).

Response to Finding No. 982:

The proposed finding is misleading and incomplete. The proposed finding

ignores the fact that CB&I ultimately submitted a proposal to become Dynegy's EPC contractor. 

(Glenn, Tr. 4128-29; see also FOF 3.270). Dynegy rejected this approach and disqualified CB&I 

as a bidder for the EPC portion of the job. (Puckett, Tr. 4558; Glenn, Tr. 4410; see also FOF

3.270).
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983. Dynegy used a competitive bidding process to select its EPC contractor. Seeking 

as many competitors as possible, Dynegy interviewed CB&I, Kvaerner, Technip, Skanska, KBR, 

and Bechtel. (Puckett, Tr. 4544-46).

Response to Finding No. 983:

Respondents have no specific response.

984. CB&I refused to bid on the EPC portion of the project if it could not construct the 

facility on a turnkey basis, i.e., be the entity that would perform the EPC function, including

selecting the LNG tank supplier, and the entity that supplied the LNG tanks. (Glenn, Tr. 4242; 

Puckett, Tr. 4570). On November 20, 2001, Michael Miles, CB&I's representative to Dynegy, 

alerted Dynegy that CB&I would not bid because of an "internal company decision" that the

"project as structured does not fit our corporate strategy." (CX 139 at CB&I 019781-HOU; see 

also Glenn, Tr. 4242).

Response to Finding No. 984:

The proposed finding is misleading, incomplete and factually inaccurate. 

Evidence cited by Complaint Counsel does not support this proposed finding. For example,

Complaint Counsel erroneously cites CX 139 and Mr. Glenn's testimony to support its

contention that CB&I refused to bid on Dynegy's EPC contract. (See CCFF 984). The testimony 

Complaint Counsel cites, however, refers to CB&I's initial decision not to bid on the LNG tank 

portion of the Dynegy project; a decision CB&I later reversed. (See Glenn, Tr. 4242, see also

FOF 3.297-3.306). The fact is, CB&I submitted a proposal to become Dynegy's EPC contractor 

and Dynegy rejected CB&I's approach and disqualified CB&I as a bidder. (Puckett, Tr. 4558;

Glenn, Tr. 4128-29, 4410; see also FOF 3.270). Dynegy selected Skanska/Whessoe based on a

deal it negotiated for the Front End Engineering and Design ("FEED") work, Skanska's

experience on recent LNG projects for other owners, its ability to execute the Hackberry project, 

and its willingness to perform the project on Dynegy's schedule. (Puckett, Tr. 4548-49; see also

FOF 3.272).

985. CB&I preferred to bid Dynegy turnkey because "[t]urnkey, design build projects 

typically return higher margins than stand alone storage tank projects." (CX 660 at PDMHOU005013). Executives at CB&I such as Mr. Scorsone acknowledge that turnkey is indicative 
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of "higher margins" to many industry participants. (Scorsone, Tr. 2812-13; see CX 431 at 46

(Glenn, Dep.)).

Response to Finding No. 985:

The proposed finding is misleading, inaccurate and lacking evidentiary support. 

For example, the first sentence erroneously attempts to support an affirmative statement about 

CB&I's intentions regarding the Dynegy project with a PDM document. (See CCFF 985; CX

660). The PDM document does not adequately support the proposed finding's assertion. The

second sentence suffers from the same evidentiary deficiency. The proposed finding cites Mr.

Scorsone's deposition testimony in which he is reading into the record sections of a PDM

document. The citation does not support the proposition. (See Scorsone, Tr. 2812-13).

986. Dynegy's point person on the Hackberry project, William Puckett, understood

CB&I's position to be that CB&I was "not interested in participating in the terminal portion of

the project if [Dynegy was] going to competitively bid the LNG tanks." (CX 518 at CB&I

019777-HOU; Puckett, Tr. 4558; CX 1528 at CB&I 071381 ("CB&I...would not competitively

bid the LNG tanks")).

Response to Finding No. 986:

The proposed finding is misleading, incomplete and factually inaccurate because 

it completely ignores the fact that CB&I submitted a proposal to become Dynegy's EPC

contractor and Dynegy rejected CB&I's approach and disqualified CB&I as a bidder. (Puckett,

Tr. 4558; Glenn, Tr. 4128-29, 4410; see also FOF 3.270). As one of the documents cited by

Complaint Counsel reveals, CB&I had concerns about submitting a tank-only bid to one of its

competitors and preferred a turnkey approach. (See CX 1528 at CB&I 071381; see also FOF

3.298). The fact is, CB&I ultimately decided to submit a tank-only bid to Dynegy after Dynegy 

assured it that its competitors would not have access to CB&I's bid. (See generally FOF 3.297-

3.306).

987. Acceding to CB&I's ultimatum would have denied Dynegy the fruits of

competitive bidding – lower LNG tank prices. Thus, on August 3, 2001, Dynegy informed
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CB&I that it was dropped from consideration on the EPC contract. Dynegy reasoned that CB&I 

could not be expected to "provide a competitive price for the LNG tank, given that this scope

would be self-performed by CB&I." (CX 516 at CB&I 019867-HOU).

Response to Finding No. 987:

The proposed finding fails to cite any evidence to support its argumentative first 

sentence and it is not an appropriate "finding of fact." In fact, the first sentence is contradicted 

by evidence showing that many owners prefer a sole-source contracting method as opposed to a

competitive bidding process. (See generally FOF 3.460-3.467). Further, the proposed finding's 

third sentence is misleading and incomplete. The claim that Dynegy reasoned that CB&I could 

not "provide a competitive price" is not supported by the evidence (See CCFF 387; CX 516, at 

CB&I019867-HOU). CB&I believed that it could provide a competitive price for the LNG tanks 

and the balance of the plant that "would provide the best overall value to Dynegy." (CX 516, at 

CB&I019867-HOU).

988. CB&I urged Dynegy to reconsider. (Puckett, Tr. 4559; Glenn, Tr. 4245; CX 516 

at CB&I 019867-HOU). CB&I's tactic was to remind Dynegy of the regulatory difficulties

Dynegy would face without CB&I's experience and contacts. On August 14, 2001, Miles wrote 

Dynegy that "CB&I brings unmatched experience in preparing the documents describing the

facility that are necessary for permitting and/or filings for FERC authorization permits... This

critical stage of your project in Hackberry is best undertaken by CB&I, whom the permitting

agencies, most especially FERC, know and respect." (CX 516 at CB&I 019867-HOU, CB&I

019868-HOU).

Response to Finding No. 988:

The proposed finding is misleading, inaccurate and incomplete. First, CB&I did 

not "urge CB&I to reconsider." The evidence shows that CB&I offered on two occasions to

complete the project on a turnkey basis; Dynegy rejected both of CB&I's proposals. (Puckett, 

Tr. 4558-4559; Glenn, Tr. 4410; see also 3.269, 3.270, 3.300). Second, CB&I's sales pitch

regarding its FERC experience is irrelevant because Dynegy was able to get the resources it

needed to complete its FERC filing without CB&I's assistance. (Puckett, Tr. 4551-51; see also 
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FOF 3.312). In fact, FERC recently gave preliminary approval to Dynegy to build the Hackberry 

facility. (RX-926; see also FOF 3.525). The need to make a filing with FERC is not an entry

barrier to the LNG market. (See generally, FOF 3.519-3.527).

989. On October 17, 2001, Dynegy chose Skanska, who would work with Black &

Veatch, to perform the EPC portion of the project. (Puckett, TR. 4547-48; CX 138 at CB&I

019913). Skanska was chosen because it agreed to Dynegy's condition that the LNG tank

supplier be selected from a competitive bidding process open to multiple suppliers, not just itself. 

(CX 138 at CB&I 019913-HOU).

Response to Finding No. 989:

The proposed finding is misleading, incomplete and factually inaccurate. 

Although the proposed finding attempts to establish Dynegy's reasoning behind choosing

Skanska/Whessoe as its EPC contractor through a CB&I document, Dynegy itself is a better

more reliable source of information. Mr. Puckett made it clear that Dynegy chose

Skanska/Whessoe based on a deal it negotiated for the FEED work, Skanska's experience based 

on the recent work it had done for Enron in Dabhol, Skanska/Whessoe's ability to execute the

Hackberry project, and its willingness to meet Dynegy's expected schedule. (Puckett, Tr. 4548-

49; see also FOF 3.272).

990. In late 2001, Dynegy solicited tank pricing from CB&I, TKK/ATV, Technigaz,

and Skanska/Whessoe. (Puckett, Tr. 4552-53). Black & Veatch was eager to have CB&I's bid 

because of "concerns that if we do not have a domestic tank price for that project that the prices 

that [Dynegy] would receive for those tanks would be higher." (Price, Tr. 622).

Response to Finding No. 990:

The proposed finding is misleading because it gives improper weight to Mr.

Price's testimony. First, Mr. Price, as a Black & Veatch employee, is a head-to-head competitor 

of CB&I. (Price, Tr. 641; see also FOF 3.659). Second, Mr. Price's testimony is inconsistent 

because on the one hand he claims he is "concerned" about not receiving a domestic tank price 

but on the other hand he failed to solicit a budget price for a "domestic supplier" for the Dynegy 
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project. (Price, Tr. 603-04; see also FOF 3.661). Third, there is no evidence to suggest that Mr. 

Price ever shared his "concerns" with his client, Dynegy. Mr. Price did not even know that

Dynegy was satisfied with the bids it received. (Price, Tr. 667; see also 3.664). In sum, Mr. 

Price's "concerns" should be given little weight. (See FOF 3.658-3.665).

991. CB&I refused to submit its LNG tank pricing information to Dynegy's EPC

contractor, the Skanska/Black & Veatch team. (CX 517 at CB&I 019784-HOU).

Response to Finding No. 991:

Respondents have no specific response.

992. CB&I believed that construction by CB&I of the LNG tanks would aid Skanska 

in observing CB&I's crews, suppliers and construction methods. (CX 1528 at CB&I 071381). 

In an October 22, 2001 internal e-mail, CB&I's Marty Smith advised Miles against submitting a 

bid to Dynegy: "Mike, right now I can't see any merits to bid the tanks to this group. Besides 

Skanska, B&V is also a competitor... They may eventually get here but we don't need to give

them any assistance." (CX 1528 at CB&I 071381).

Response to Finding No. 992:

The proposed finding is incomplete because it fails to account for the fact that 

CB&I had serious concerns about submitting its pricing and engineering designs to its

competitor. (See FOF 3.297-3.306). When Dynegy promised not to share this information with 

Black & Veatch and agreed to review the bids itself, CB&I decided to submit a bid. (See FOF 

3.302, 3.303).

993. CB&I advised Dynegy that it would submit a price for the LNG tanks only

"directly to Dynegy" and that the bid would only be "a lump sum, firm fixed price proposal for 

the total EPC scope of the project." (CX 517 at CB&I 019784-HOU).

Response to Finding No. 993:

The proposed finding is misleading, inaccurate and incomplete because CB&I did 

not, as the proposed finding suggests, refuse to submit a bid unless it was allowed to bid on the 

total EPC scope of the project. The evidence contradicts the proposed finding because CB&I
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eventually attempted to submit a tank-only bid. (Glenn, Tr. 4412; Puckett, Tr. 4578; see also

FOF 3.3.03).

994. Dynegy rejected CB&I's conditions, and CB&I chose not to submit a bid for the 

LNG tanks. (CX 518 at CB&I 019777-HOU; Puckett, Tr. 4556-7; Glenn, Tr. 4248).

Response to Finding No. 994:

The proposed finding is misleading and incomplete because it fails to account for 

the fact that CB&I attempted to submit a tank-only bid. (Glenn, Tr. 4412; Puckett, Tr. 4578; see 

also FOF 3.3.03). CB&I initially declined to submit a tank-only bid because it had serious 

concerns about submitting its pricing and engineering designs to its competitor. (See FOF 3.297-

3.306). When Dynegy promised not to share this information with Black & Veatch and agreed 

to review the bids itself, CB&I decided to submit a bid. (See FOF 3.302, 3.303). Dynegy

rejected CB&I's bid offer. (See FOF 3.304).

995. Because CB&I refused to bid, Dynegy was "very concerned" about "maintaining 

competition" for the LNG tank. (Price, Tr. 609). Dynegy attempted to persuade CB&I to

rethink its position: Dynegy "invested time and effort to insure that there would not be any

conflict of interest," by establishing a procedure whereby CB&I's and other tank bids would be 

evaluated by someone other than Skanska. (CX 518 at CB&I 019777-HOU). Dynegy offered 

that if this procedure was not sufficient, CB&I should "please let us know what would meet your 

needs to bid the LNG tanks." (CX 518 at CB&I 019777-HOU).

Response to Finding No. 995:

First and foremost, Complaint Counsel completely misrepresents the record by

asserting that "Dynegy was 'very concerned' about 'maintaining competition'". (CCFF 995). 

First, Complaint Counsel attempts to support this false statement by citing Brian Price, an

employee of Black & Veatch and not Dynegy. The flaws in Mr. Price's testimony have been

extensively addressed. (See RFOF 990; see also FOF 3.658-3.665). Second, and more

importantly, the proposed finding entirely ignores the fact that Mr. Puckett, of Dynegy, testified 

that he had no doubt Dynegy did the right due diligence in selecting competent bidders to bid on 
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the LNG tanks. (Puckett, Tr. 4587). Dynegy was satisfied with the three tank-only bids it

received. (Puckett, Tr. 4559-60; Glenn, Tr. 4137; see also FOF 3.304). The first sentence of the 

proposed finding is patently false and contrary to the evidence.

The remaining part of the proposed finding is also misleading and inaccurate. 

Complaint Counsel incorrectly asserts that CB&I failed to bid because it wanted become the

EPC contractor of the entire terminal. Although CB&I initially made a turnkey pitch, which

Dynegy rebuffed, Complaint Counsel fails to recognize that CB&I was concerned about

submitting a tank-only bid because it did not want Black & Veatch and Skanska/Whessoe to

view its bidding documents. (See generally, FOF 3.3.297-3.306). Complaint Counsel fails to

account for the fact that in CX 518, the document cited in the proposed finding, Dynegy finally 

recognized CB&I's concern and for the first time offered to conceal CB&I's bid documents from 

Black & Veatch. (CX 518 at CB&I 019777-78-HOU). Dynegy's assurances satisfied CB&I's

concerns and led CB&I to attempt to submit a tank-only bid; Dynegy rebuffed this attempt. (See 

FOF 3.303, 3.304). Complaint Counsel completely ignores these facts.

996. By the time CB&I changed its mind, it was too late. Dynegy felt compelled to

decline CB&I's offer to bid "due to both the timing ... it was so late in the bidding cycle in that 

we had received bids, if I recall, that I did not feel it would be fair to the other bidders." 

(Puckett, Tr. 4572).

Response to Finding No. 996:

The proposed finding is incomplete and misleading because it ignores the fact that 

one of the reasons Dynegy would not accept CB&I's late bid was that Dynegy was satisfied with 

the three bids it had already received. (Puckett, Tr. 4559-60; see also FOF 3.304). Dynegy had 

ample time to accept CB&I's late bid because CB&I attempted to submit its bid only two or three 

weeks after Dynegy made its offer to review the bids itself. (Glenn, Tr. 4136; see also FOF

3.303). In fact, after learning from Mr. Puckett that Dynegy would not accept its bid, Mr. Glenn 
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personally phoned Dynegy's CEO, Chuck Watson. (Glenn, Tr. 4137; see also FOF 3.305). 

Based on his conversation with Mr. Watson, Gerald Glenn believed Dynegy was perfectly happy 

with the three bids it received. (Glenn, Tr. 4137; see also FOF 3.305) (state of mind). CB&I's 

perception was that Dynegy believed it had everything it needed to proceed with the Hackberry

project and did not need CB&I's bid. (Glenn, Tr. 4137; see also FOF 3.305) (state of mind).

997. Dynegy is likely to pay a higher price for the LNG tanks supplied by TKK,

Whessoe or Technigaz than it would if CB&I had bid.

Response to Finding No. 997:

The proposed finding fails to cite any evidence to support its conclusions and is 

not an appropriate "finding of fact." In fact, the proposed finding is contradicted by the evidence 

as Mr. Puckett testified that all three bids were within Dynegy's expected price range; Dynegy

was satisfied with the bids. (Puckett, Tr. 4557, 4559-60; see also FOF 3.288, 3.304).

998. Dynegy does not have the "staff, experience and knowledge to analyze the bids

and make an informed decision," so it must rely on the analysis of its consultants about LNG

tank prices. (CX 138 at CB&I 019913-HOU).

Response to Finding No. 998:

The proposed finding is misleading and incomplete because it relies on a CB&I 

document to support an assertion about Dynegy's ability to analyze the Hackberry bids. (See

CCFF 998; CX 138 at CB&I 019913-HOU). Complaint Counsel has provided no credible

evidence to support its finding. In fact, the evidence contradicts this finding: Dynegy agreed to 

accept CB&I's bid itself and analyze the bids without Black & Veatch's assistance. (CX 518 at 

CB&I 019777-78-HOU).

999. Dynegy's consultant, Brian Price of Black & Veatch, was involved in the bidding 

for the Memphis project in 1994 and has first-hand knowledge about the higher prices of foreign 

suppliers. There, Black & Veatch partnered with TKK against CB&I, PDM and

Lotepro/Whessoe. As explained earlier, TKK's LNG tank price was at least 43% higher, and

Whessoe's price was at least 59% higher than CB&I's and PDM 's tank prices. CCFF 937.
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Response to Finding No. 999:

The proposed finding is misleading, incomplete and inaccurate because it

insinuates that Brian Price had access to and knowledge of the Dynegy bids. This is simply not 

accurate. Mr. Price specifically testified that he never saw the bids. (Price, Tr. 610; see also

3.660). The flaws in Mr. Price's testimony have been extensively addressed. (See RFOF 990; 

see also FOF 3.658-3.665). Further, the proposed finding attempts to buttress Mr. Price's

credibility by pointing to his knowledge about the 1994 Memphis bids. This is a hollow

argument, however, as the irrelevancy of the Memphis bids has already been established in

detail. (See FOF 3.493-3.508; see also FOF 3.135).

1000. Based on his experience on the Memphis project and industry knowledge, Mr.

Price expressed "concerns" that the price Dynegy will pay for the LNG tanks would be "higher" 

without CB&I's participation in the bidding. (Price, Tr. 622).

Response to Finding No. 1000:

The irrelevancy of Mr. Price's "concerns," particularly in light of the fact that he 

never felt the need to share his concerns with his client, have been well established. (See RFOF 

990, 995, 999; see also FOF 3.658-3.665).

1001. CB&I also knows that its LNG prices in the United States are lower than the

prices of its Dynegy competitors. CB&I learned from the Memphis bidding example that foreign 

firms could not provide "economical" or "competitive" LNG prices. CCFF 952, 939. CB&I tells 

the public in its SEC filings that it has a "competitive advantage" against foreign firms because 

of its superior knowledge of local business conditions. CCFF 426. CB&I's merger integration 

and planning documents state that CB&I will use its "pricing advantage" against foreign

competitors to its strategic advantage. CCFF 433.

Response to Finding No. 1001:

This finding is inaccurate, misleading, and unsupported by the evidence. 

Complaint Counsel allegations regarding CB&I's knowledge of competitors' costs is wholly

without support. In fact, recent information, including information regarding bidding contests

elsewhere in North America, has led CB&I to believe that its competitors' costs are equal to or
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lower than CB&I. (See, e.g., FOF 3.236, 3.323, 3.325, 3.330, 3.451-3.453) Complaint Counsel's 

claim that CB&I has "learned" anything from the Memphis project is unsupported by the

evidence, as it is evident that the Memphis project provides only stale, dated data. (See, e.g., 

FOF 3.493-3.508). Further, this finding is misleading to the extent it relies on CB&I's prior SEC 

filings, as those filing are very general in nature and do not specifically examine particular

product lines, such as LNG tanks. Any statements by CB&I regarding its competitors' costs are

naturally made without specific information regarding those costs, as CB&I has no access to that 

information. Finally, this finding is misleading to the extent it implies that CB&I has any ability 

to dictate terms to LNG owners. As the Dynegy fact pattern made clear, CB&I cannot attempt to 

do so without risking the loss of significant work. (See FOF 3.297-3.306).

1002. Technigaz cannot provide competitive tank prices. Technigaz/Zachry submitted a 

bid for the LNG tanks, but [xxxxxxxxxxxxxxxxxxxxxxxxxx] in August of 2002. (Fahel, Tr.

1632, in camera).

Response to Finding No. 1002:

The first sentence of the proposed finding fails to cite any evidence to support its 

conclusions and is not an appropriate "finding of fact." Further, the fact that Dynegy ultimately 

eliminated [xxxxxxxxxxxxxxx] from the bidding process does not mean [xxxxxxxxxxx] is

unable to provide competitive pricing; obviously each project can only have one winner. The

proposed finding is further contradicted by the fact that [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 4691; see also FOF 3.307).

1003. It remains to be seen whether the Dynegy project can be completed on a reliable 

and timely basis, in the same manner that CB&I and PDM did throughout the 1990s when they

won every LNG project in the United States. Black & Veatch is concerned that the foreign

suppliers will not meet Dynegy 's construction schedule, a concern Black & Veatch would not 

have had with PDM. (Price, Tr. 626-628).
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Response to Finding No. 1003:

The first sentence of the proposed finding fails to cite any evidence to support its 

conclusions and is not an appropriate "finding of fact." Further, the allegation that Black &

Veatch and Mr. Price are concerned about a foreign tank suppliers' ability to meet Dynegy's

construction schedule is suspect because they did not express such a concern to Dynegy. 

Further, Black & Veatch is partnered with one of the companies it is concerned about,

Skanska/Whessoe. (See Puckett, Tr. 4579; see also FOF 3.64). Despite its "concerns," Black & 

Veatch appears to be touting its alliance. (Eyermann, Tr. 6992; RX 935, at CHE0357; see also

FOF 3.65) (state of mind). The flaws in Mr. Price's testimony have been extensively addressed. 

(See RFOF 990; see also FOF 3.658-3.665).

1004. Respondents contend that the Dynegy project demonstrates that entry by foreign 

firms has occurred and is sufficient to restrain CB&I from engaging in anticompetitive conduct. 

Respondents' contention is belied by Gerald Glenn's statements to the investment community on 

October 31, 2002, which is void of any perceived competitive threat:

Well, I don't know that there are fewer. There are some that have 

run on hard times. There are those that have stubbed their toe. 

You know, you're only as good as your last job. And we're really 

proud of the fact that, you know, a lot of owners out there, if they 

go to build a sophisticated project, like an LNG project or an LNG 

tank, they don't want to take a chance on a low price and a

potential second class job or shoddy welding or any of that

kind of stuff. The kind of work that we do is very specialized,

very sophisticated. We have an excellent track record.

And we think that, short of somebody coming in, which they do,

and just taking a big dive on the price, that we can win the work

every time technically. And if they want to dive in and take the 

work for less than they can execute it for, that's fine, we'll just 

sit and watch them go out of business, too.

(CX 1731 at 44-45) (emphasis supplied).
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Response to Finding No. 1004:

This finding is inaccurate and misleading to the extent it relies on CX 1731. CX 

1731 does not "belie" the fact that foreign competitors have successfully entered the LNG

market. Rather, it suggests that CB&I does not understand its competitors’ ability to price low 

when CB&I cannot earn a profit on the same price. Further, Mr. Glenn does not have foundation 

to make statements about competitors’ costs. Complaint Counsel has not provided any evidence 

that indicates that CB&I knows its competitors costs. Conversely, the evidence indicates that

CB&I does not know its competitors’ costs. (FOF 7.82-7.88) If CB&I knew its competitors’

costs and had a cost advantage, it would win every project. However, CB&I has lost more than 

half the jobs available post-merger. (Harris, Tr. 7223). There is simply no support for the notion 

that CB&I is only losing because competitors are simply “taking a big dive,” and Mr. Glenn has 

never offered testimony suggesting that he is knowledgeable about competitors’ costs. Finally, 

ultimately customers will pay less if what Mr. Glenn is saying is true -- and it represents the

competitive environment CB&I would be competing in. In fact, the Dynegy fact illustrates

CB&I's lack of information regarding its competitors' costs. (See RFOF 1001).

1005. Respondents presented no evidence that CB&I's post-merger strategy with

Dynegy was influenced by the presence of TKK, Technigaz and Whessoe. While Respondents 

point to the fact that some foreign firm will likely win the LNG tank contract with Dynegy,

Respondents did not present any business documents indicating that its executives felt

competitive pressure because of the foreign suppliers.

Response to Finding No. 1005:

The proposed finding fails to cite any evidence to support its conclusions and is

not an appropriate "finding of fact." Further, Mr. Glenn and Mr. Scorsone testified extensively

regarding CB&I's current view of competition in the LNG market. (See FOF 3.451-3.459). 

1006. The teaching of the Dynegy project is that CB&I attempts to leverage its

dominant position against customers in order to extract higher prices and margins. In order to
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avoid CB&I' s stranglehold, some customers perceive no other choice but to seek inferior

alternatives. This is neither competition nor sufficient entry. It is an anticompetitive effect.

Response to Finding No. 1006:

The proposed finding fails to cite any evidence to support its conclusions and is

not an appropriate "finding of fact." What the Dynegy project truly teaches is that owners have 

access to alternative LNG tank suppliers. Dynegy received three satisfactory bids from three

separate LNG tank suppliers. (Puckett, Tr. 4559-60; see also FOF 3.304). Dynegy was so

satisfied with the bids it received that it was able to completely exclude CB&I from its bidding 

process. (Puckett, Tr. 4559-60; Glenn, Tr. 4137; see generally, FOF 3.256-3.315). 

19. The Yankee Gas Project: CB&I Attempts to Exercise Market Power

1007. The LNG project for Yankee Gas is similar to the themes of the Dynegy project, 

except that with Yankee Gas, CB&I's strong-arm tactics have achieved considerable success.

Response to Finding No. 1007:

The proposed finding fails to cite any evidence to support its conclusions and is

not an appropriate "finding of fact." Further, it is flatly contradicted by the record evidence. 

(See Reply Brief at Part III, supra).

1008. In 2001, Yankee Gas, a natural gas distribution company, initiated plans to

construct a 360,000-barrel LNG peak shaving facility in Waterbury, Connecticut. (JX 21 at 17-

18 (Andrukiewicz, Dep.)).

Response to Finding No. 1008:

Respondents have no specific response.

1009. During the first quarter of 2001, Yankee Gas retained the services of CHI

Engineering ("CHI"), a consulting firm, to perform a preliminary engineering and budget study. 

(JX 21 at 23 (Andrukiewicz, Dep.); CX 1507 at CB&I 059483).

Response to Finding No. 1009:

Respondents have no specific response.
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1010. On April 23, 2001, CHI issued a request for prices exclusively for the LNG tank 

portion of the project rather than "facility turnkey pricing." (CX 1507 at CB&I 059483).

Response to Finding No. 1010:

The proposed finding is misleading and incomplete because it fails to

acknowledge that CHI sent a second request of prices for the liquefaction process. (CX 1507, at 

CB&I 059483).

1011. CHI's request was sent to CB&I, Skanska/Whessoe and Technigaz. (CX 1507 at 

CB&I 059483; JX 21 at 24 (Andrukiewicz, Dep.)).

Response to Finding No. 1011:

Respondents have no specific response.

1012. As with the Dynegy project, CB&I did not want to deal with a middleman. CB&I 

wanted the owner's ear alone and refused to submit pricing information unless it was selected as 

the turnkey contractor.

Response to Finding No. 1012:

The proposed finding fails to cite any evidence to support its conclusions and is

not an appropriate "finding of fact." In fact, the proposed finding is flatly contradicted by the

evidence as CB&I submitted a tank-only budget price to CHI. (See Andrukiewicz, Tr. 6445; RX 

4, at 4/4; see also FOF 3.342).

1013. On May 4, 2001, Frey wrote Chris Beschler, VP of Operations at Yankee Gas,

that CB&I wanted to do the work on a turnkey basis, emphasizing its experience and capability 

in that type of project. (CX 417 at CB&I 026845-6-HOU).

Response to Finding No. 1013:

The proposed finding is misleading, incomplete and factually incorrect. Although 

Mr. Frey's letter highlighted CB&I's turnkey experience, the letter explicitly stated that Mr. Frey 

hoped to discuss with Mr. Beschler "how CB&I would be an excellent choice to support any

project Yankee Gas Services may have in the LNG industry." (CX 417, at CB&I 026845-HOU) 
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CHI:1176893.3

(emphasis added). Thus, the proposed finding is clearly contradicted by the evidence because

CB&I was willing to discuss and support any Yankee Gas project, be it tank-only or turnkey.

1014. CB&I told Yankee Gas that it would not submit pricing information for the tank 

portion to CHI because CHI was a "competitor," even though in its own internal documents

CB&I refers to CHI as a "relatively small consulting/engineering firm" in New Hampshire. (CX 

430 at CB&I 026934-HOU; CX 1507 at CB&I 059483). There is no evidence that CHI has ever 

constructed any kind of field-erected storage tank in the United States.

Response to Finding No. 1014:

The proposed finding is inaccurate and misleading. It completely ignores the fact 

that CB&I did submit tank-only budget pricing to CHI. (See Andrukiewicz, Tr. 6445; RX 4, at 

4/4; see also FOF 3.342). Thus, the proposed finding is misleading and factually inaccurate. 

Additionally, it is undisputed that CB&I viewed CHI as a competitor. (See CX 430, at CB&I

023964-HOU; Andrukiewicz, Tr. 6466; see also FOF 3.355). CB&I's concerns were wellfounded, as CHI expressed an interest in being involved in the project. (Andrukiewicz, Tr. 6459-

60; see also FOF 3.354). Based on CHI's interest in competing for the project, Yankee Gas

determined that CHI should not provide further engineering services. (Andrukiewicz, Tr. 6450; 

see also FOF 3.354). Yankee Gas considers CHI to be a potential EPC contractor. 

(Andrukiewicz, Tr. 6450; see also FOF 3.354).

1015. CB&I's Eric Frey, the sales representative to Yankee Gas, vowed to "make every 

effort to restructure how the project will be bid and executed." (CX 430 at CB&I 026934-HOU).

Response to Finding No. 1015:

The proposed finding is irrelevant and misleading to the extent it implies that

CB&I has any specific ability to force Yankee Gas or any other owner to structure a project in a 

particular way. (See FOF 3.460-3.467). It is the right of the owner to structure the project as it 

see fit. Further, the proposed finding is misleading to the extent it implies that CB&I withheld 
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pricing in an attempt to exercise market power; in fact, CB&I did submit tank-only budget 

pricing to CHI. (See Andrukiewicz, Tr. 6445; RX 4, at 4/4; see also FOF 3.342).

1016. CB&I acquiesced only slightly to Yankee Gas' request that CB&I temporarily

table the turnkey issue, and first provide pricing information for the LNG tank alone. Frey

"agreed but indicated [to Yankee Gas] that we would not be putting our best numbers on the

table until we had the opportunity to meet directly with Yankee Gas." (CX 1507 at CB&I

059483). Frey instructed his team to prepare budgetary pricing "with very little detail." (CX 430 

at CB&I 026934-HOU). In the meantime, Frey would "continue to pursue a meeting with

Yankee Gas as soon as possible." (CX 430 at CB&I 026934-HOU).

Response to Finding No. 1016:

The proposed finding is misleading and incomplete. CB&I submitted tank-only 

budget pricing to CHI in June of 2001. (RX 4, at 4/4). Further, the proposed finding is

misleading to the extent it implies that CB&I was attempting to "strong arm" Yankee Gas by

providing rough pricing. In fact, Yankee Gas only requested "broad" numbers from CB&I. (CX 

1507, at CB&I 059483). Yankee Gas only wanted enough information to make a "broad 'go/no 

go' decision." (CX 1507, at CB&I 059483). Further, this finding ignores the fact that CB&I also 

did not to submit precise numbers to CHI because CB&I viewed CHI as a potential competitor. 

(CX 1507, at CB&I 059483).

1017. On June 27, 2001, CB&I submitted a range of budget prices "with very little

detail" to CHI for the tank portion of the project. (CX 1507 at CB&I 059483; CX 430 at CB&I 

026934-HOU).

Response to Finding No. 1017:

The proposed finding is misleading and factually inaccurate. CB&I submitted its 

budgetary pricing to CHI on June 12, 2001. (RX 4, at 4/4). CB&I submitted rough pricing

because: (1) the owner requested "broad" numbers; and (ii) CB&I viewed CHI as a potential

competitor. (See RFOF 1016).

1018. CB&I understood that Yankee Gas was relatively inexperienced in the LNG

industry and would have to rely on consultants to advise it on tank pricing. At a September 8, 

2001, meeting with CB&I, Yankee Gas "readily admitted that they know very little about the
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LNG industry and that they were banking heavily on the report from CHI." (CX 1507 at CB&I 

059484).

Response to Finding No. 1018:

The first sentence of the proposed finding fails to cite any evidence to support its 

conclusions and is not an appropriate "finding of fact." While Complaint Counsel correctly

states that Yankee Gas relied on CHI's preliminary engineering report, it omits the fact that CHI's 

preliminary report indicated Yankee Gas would be required to build a double containment LNG 

tank. (Andrukiewicz, Tr. 6443; see also FOF 3.344). CHI's report specifically proposed a

double containment tank, with a concrete roof, in which both the inner tank and outer tank would 

be made of concrete. (Andrukiewicz, Tr. 6464-65; see also FOF 3.344). The concrete double

containment tank cited in CHI's report was specifically related to the Skanska/Whessoe proposal 

not the CB&I proposal. (Andrukiewicz, Tr. 6447; see also FOF 3.344). Thus, Yankee Gas was 

relying on CHI's recommendation that Yankee Gas use the Skanska/Whessoe double concrete

containment LNG tank.

1019. In October of 2001, CHI announced its "intent to bid the [Yankee Gas] project

turnkey." (CX 1507 at CB&I 059484).

Response to Finding No. 1019:

The proposed finding is misleading and incomplete because despite announcing

its intentions in late 2001, Yankee Gas has not yet begun a pre-qualification process let alone 

solicit bids. (Andrukiewicz, Tr. 6451-52; see also FOF 3.356). In fact, Yankee Gas replaced

CHI with SEA Consultants. (See FOF 3.353, 3.354). SEA Consultants is currently responsible 

for the Yankee Gas bidding process. (See FOF 3.354).

1020. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxx " (CX 1507 at CB&I 059484; see also CX 787 at CB&I 065244, in 

camera) (xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx)).
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Response to Finding No. 1020:

The proposed finding is misleading and factually inaccurate. Complaint Counsel 

erroneously cites CB&I documents to support affirmative statements about Yankee Gas. 

Complaint Counsel failed to present any evidence that CB&I submitted a total facility proposal

to Yankee Gas. Further, Yankee Gas is not limited to two tank suppliers as Mr. Andrukiewicz 

testified that Yankee Gas has many potential tank constructors available. Although Yankee Gas 

has not yet started its pre-qualification procedure, it would consider qualifying

Skanska/Whessoe, Technigaz, CB&I and CHI for the Waterbury project. (Andrukiewicz, Tr.

6453-54; see also FOF 3.357). Yankee Gas has not disqualified any company from the prequalification process. (Andrukiewicz, Tr. 6452-53; see also FOF 3.357). Further, Complaint

Counsel fails to recognize that CHI's preliminary engineering report, a report Yankee Gas is

undeniably relying upon, recommended the Skanska/Whessoe tank design. (See RFOF 1018). 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 4685; see also

FOF 3.351). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 4693; see also

FOF 3.351).

1021. As CB&I had direct access to Yankee Gas, CHI turned to turn to higher-priced 

foreign firms for bids on the LNG tank. CHI received pricing information from Whessoe and

Technigaz. (JX 21 at 24 (Andrukiewicz, Dep.); CX 1507 at CB&I 059484).

Response to Finding No. 1021:

The first sentence of the proposed finding fails to cite any evidence to support its 

conclusions and is not an appropriate "finding of fact." Additionally, the first sentence is

unintelligible. The cited evidence in no way supports Complaint Counsel's allegation that

current contracts are "higher-priced."
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1022. CB&I knows from the Memphis bidding experience and other sources that

Whessoe and other foreign firms cannot provide "economical" or "competitive" LNG tank prices 

in the United States. CCFF 952, 939.

Response to Finding No. 1022:

The first sentence of the proposed finding fails to cite any evidence to support its 

conclusions and is not an appropriate "finding of fact." In fact, the proposed finding is

contradicted by the evidence as CB&I believes that the new foreign competitors pose a major

threat on U.S. LNG projects. (See generally FOF 3.451-3.459). Foreign competition poses an 

even greater threat for the Yankee Gas project as Yankee Gas appears to be favoring a concrete 

double containment tank for which CB&I does not have a design. (Andrukiewicz, Tr. 6447;

Glenn, Tr. 4141; Scorsone, Tr. 4989; see also FOF 3.344, 3.346). It is also well established that 

the 1994 Memphis Gas bidding process is irrelevant to foreign LNG contractors' current pricing. 

(See FOF 3.493-3.508).

1023. Reasonably assured that its Yankee Gas competitors cannot undermine it and

without PDM as a restraint, CB&I is free to exercise market power. Thus, CB&I's budget 

estimate for the Yankee Gas project anticipates a margin of [xxx], well-above its pre-merger 

levels. (RX 54 at CB&I 026812-HOU, in camera; CX 421 at CB&I 026843-HOU; xxxxxxx, Tr. 

5317, in camera). CB&I cited the price paid for the Cove Point LNG tank in setting the price for 

Yankee Gas. (CX 421 at CB&I 026843-HOU ("Yankee Gas margin xxxxx, Cove Point sold @ 

xxxxxxx with xxxx profit")).

Response to Finding No. 1023:

The first sentence of the proposed finding fails to cite any evidence to support its 

conclusions and is not an appropriate "finding of fact." The first sentence is also contradicted by 

the evidence as described in RFOF 1022. The proposed finding's contention that CB&I's budget 

price to Yankee Gas was significant is likewise meritless. It is well established that budget 

pricing is inaccurate and unreliable for the purpose Complaint Counsel seek to use it for. (FOF 

7.1-7.34). Additionally, Complaint Counsel failed to establish that the documents it relies upon 

were even submitted to Yankee Gas.
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1024. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

(CX 787 at CB&I 065242, in camera).

Response to Finding No. 1024:

The proposed finding is misleading and inaccurate because it relies on a document 

that is over a year old. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (See FOF 3.361). Yankee Gas has left all its 

options open. (Andrukiewicz, Tr. 6453-54; see also FOF 3.357).

1025. Respondents presented no evidence that its post-merger strategy with Yankee Gas 

was negatively impacted by any competitor, foreign or domestic.

Response to Finding No. 1025:

The proposed finding fails to cite any evidence to support its conclusions and is

not an appropriate "finding of fact." Further, Mr. Glenn and Mr. Scorsone testified extensively

regarding CB&I's current view of competition in the LNG market. (See FOF 3.451-3.459). Both 

testified that foreign competition posed a major threat on this job, especially if Yankee Gas

chooses a full containment tank. (See FOF 3.360).

1026. If PDM had not been acquired by CB&I, Yankee Gas would be in a better

negotiating position because it would have had three bidders instead of two today, one of whom 

– CHI – appears to have little experience in the construction of LNG tanks. Marc Andrukiewicz, 

Director of Gas Management at Yankee Gas, confirms that if PDM "were a separate entity ... I 

would be looking to as many potential constructors of these facilities as is reasonably possible to 

ask to bid. That serves our company the best." (JX 21 at 55 (Andrukiewicz, Dep.)).

Response to Finding No. 1026:

The first sentence of the proposed finding fails to cite any evidence to support its 

conclusions and is not an appropriate "finding of fact." Additionally, the proposed finding fails 

to recognize that Yankee Gas has a large number of tank constructors from which it can choose. 

(Andrukiewicz, Tr. 6453-54; see also FOF 3.357). There is no evidence in the record that

Yankee Gas would have more options available to it absent the Acquisition. [xxxxxxxxxx 
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xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Jolly, Tr. 4693-94; see also FOF 3.163).

20. Post-Merger LNG Margins Are

Substantially Higher than Pre-Merger Margins

1027. Respondents' business records show pre-merger margins on LNG projects ranging 

from xxx to xxxx. CCFF 1029-1033, 1037.

Response to Finding No. 1027:

The proposed finding is factually incorrect, misleading, and is unsupported by the 

evidence for the reasons discussed in RFOF 1029-1033, 1037.

1028. CB&I's business records show post-merger margins on LNG projects ranging

from xxx to above xxxx. CCFF 1038-1041.

Response to Finding No. 1028:

The proposed finding is factually incorrect, misleading, and is unsupported by the 

evidence for the reasons discussed in RFOF 1038-1041.

1029. A 1997 overview of CB&I's business in North America records that CB&I's

"Comparative Margin Levels" for "low temp/cryogenic [all the relevant products]" were 2.5%

for "average total work sold," and 8-10% for "negotiated" business. CX 227 at CB&I-PL 

045109).

Response to Finding No. 1029:

The proposed finding is misleading and factually incorrect. First, Complaint

Counsel failed to question any of Respondents' witnesses, despite having ample opportunity,

about the cited page contained in CX 227. Therefore, Complaint Counsel is merely speculating 

as it attempts to misconstrue terms such as "Comparative Margin Levels" and "Average Total

Work Sold". Complaint Counsel has no idea what is or is not included in "Comparative Margin 

Levels" or in "Average Work Sold." Second, the line on this document referring to "low

temp/cryogenic" products does not refer to "all relevant products." There are various other "low 

temp/cryogenic" products that CB&I builds, such as ammonia tanks, that are not relevant
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CHI:1176893.3

products in this proceeding. In fact, this document is a snapshot in time referring to 1997 margin 

levels. However, in 1997, CB&I sold no LNG, LPG, or TVC work. (CCFF 136, 172, 192). 

Thus, at best, CX 227 shows that LIN/LOX tanks and other non-relevant products had the

margins referenced in 1997. It does not identify what margins were before or after 1997, or what 

margins were on LNG, LPG, or TVC projects.

1030. In 1994, Memphis Light, Gas & Water sought bids for an LNG tank to be

constructed at Capleville, Tennessee. CB&I quoted a price of $8,668,306 to Memphis Light,

Gas & Water for its LNG tank. CB&I's price included a margin of [xxxx]. (CX 906 at CB&I 

031074-HOU, in camera).

Response to Finding No. 1030:

The proposed finding is factually incorrect, misleading, ambiguous, and is even

flatly inconsistent with Complaint Counsel's previous proposed findings. First, Complaint

Counsel cites to a page on CX 906, without questioning a single CB&I witness about it. This

page is an internal document entitled, [xxxxxxxxxxxxxxxxxxxxxxx] (CX 906 at CB&I

031074-HOU) (emphasis added). Second, the term "margin" in CX 906 does not refer to the

gross margin which would include SG&A, and a technology services fee ("TSF"), as well as

profit. In the margin comparisons Complaint Counsel is making throughout its proposed

findings, Complaint Counsel goes back and forth between profit margins and gross margins, thus 

making apples to oranges comparisons. Third, there is no record evidence indicating that the

pricing contained in CX 906 was ever sent to a customer, as it was developed as part of an

internal re-estimating exercise that was conducted seven years after the 1995 Memphis bid. 

(Scorsone, Tr. 4984-85) (FOF 3.637-3.641). Fourth, Complaint's Counsel's speculation of CX

906 is inconsistent with the price that Complaint Counsel alleges CB&I bid for the Memphis

project in CCFF 935.
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1031. Prior to the acquisition, CB&I was the sole-source contractor for the Pine Needle 

Peakshaver Project. In 1995, CB&I quoted a price of [xxxxxxxxxxxx] for the Pine Needle LNG 

tank, including a [xxxxx] margin. (CX 906 at CB&I 031075-HOU, in camera).

Response to Finding No. 1031:

The proposed finding is factually incorrect, ambiguous and misleading. First,

Complaint Counsel cites to a page on CX 906, without questioning a single CB&I witness about 

it. This page is an internal document entitled, [xxxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 906 at

CB&I 031074-HOU) (emphasis added). Second, the term "margin" in CX 906 refers to the

profit margin, and does not refer to gross margin, which would add profit margin, SG&A, and 

TSF. (See e.g., RX 594 at CB&I 060834). Third, there is no record evidence indicating that the 

pricing contained in CX 906 was ever sent to a customer, as it was developed as part of an

internal re-estimating exercise. (Scorsone, Tr. 4984-85) (FOF 3.637-3.641).

1032. In 1997, CB&I priced an LNG tank for Columbia Gas, to be built in Ohio, at

[xxxxxxxxxxxxx], including a margin of [xxxx]. (CX 168 at CB&I-PL007243, in camera).

Response to Finding No. 1032:

The proposed finding is incomplete, inaccurate, misleading, irrelevant and not

supported by the evidence. First, Complaint Counsel cites to a page on CX 168, without

questioning a single CB&I witness about it. Second, the proposed finding refers to a budget

price, as noted on the cited page: [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxx] (CX 168 at CB&I-PL007243). Margins contained in budget prices are not

remotely similar to, or representative of, actual fixed, firm priced bids. (FOF 7.1-7.38). 

Moreover, the term "margin" in CX 168 refers to the profit margin, and does not refer to gross

margin, which would add profit margin, SG&A and TSF. (See e.g., RX 594 at CB&I 060834).

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxx] (CX 168 at CB&I-PL007238).
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1033. In 1997, Southern Union Company also solicited pricing for an LNG tank to be

constructed at Kansas City, Missouri. CB&I submitted a price for the LNG tank of [xxxxxxxxxx]

with a margin of [xxxx]. (CX 613 at CB&I-PL010926, in camera).

Response to Finding No. 1033:

The proposed finding is incomplete, inaccurate, misleading, irrelevant and not

supported by the evidence. First, the proposed finding refers to a budget price as noted on the

page Complaint Counsel cites: [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxx] (CX 613 at CB&I-PL010926). Budget prices (and margins contained therein) 

are not remotely similar to, or representative of, actual fixed, firm priced bids. (FOF 7.1-7.38). 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx.] (CX 613 at

CB&I-PL010922-23). Finally, the term "margin" in CX 613 refers to profit margin and does not 

refer to gross margin, which adds profit margin, SG&A, and TSF. (See e.g., RX 594 at CB&I 

060834).

1034. In a 1998 sales document, PDM lists an LNG tank for Westcoast, Vancouver as 

one with a "Pending Quot[e]" of $26,676,000 with a margin of $2,861,000. (CX 426 at PDMHOU016215).

Response to Finding No. 1034:

The proposed finding is misleading to the extent it suggests that PDM's margin

was calculated the same way that CB&I's margin is or was calculated. The term "margin" in CX 

426 refers to the profit margin and was not referring to gross margin, which adds profit margin, 

SG&A, and TSF. No witness at trial ever testified about CX 426. There is no evidence

suggesting whether this pricing was actually given to the customer, given as a firm, fixed price 

bid, or whether it was given as a budget price.

1035. In 1999, Citizens Gas sought pricing information for an LNG tank to be

constructed at Indianapolis, Indiana. PDM responded with a price of $15,000,000, including a

margin of $2,000,000. (CX 1038 at PDM-HOU011315).
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Response to Finding No. 1035:

The proposed finding is misleading and not supported by the evidence. 

Complaint Counsel failed to question a single witness at trial regarding CX 1038. Further, there 

is no evidence that PDM actually submitted a price to Citizens Gas. Even if PDM submitted a 

price, there is no evidence suggesting whether it was a budget price or a fixed, firm bid. The

finding is also misleading to the extent it suggests that PDM's margin was calculated the same

way that CB&I's margin is or was calculated. The term "margin" is ambiguous, and Complaint 

Counsel failed to ask any witness what the margin in CX 1038 refers to.

1036. In March 2000, CB&I quoted a price of xxxxxxxxxxxx to Columbia LNG for the 

Cove Point LNG tank, including a xxxxxx margin. (RX 127 at CB&I-H008204).

Response to Finding No. 1036:

The proposed finding is factually incorrect, misleading, ambiguous, and not

supported by the evidence. First, no witness testifed at trial regarding RX 127. Thus, any

conclusions that Complaint Counsel draws from this document is mere speculation. Second, 

there is no evidence that the alleged pricing was ever sent to Columbia, as the document is titled 

"Bid Review" and states "To Be Completed Prior to Final Proposal Submittal." (RX 127 at

CB&I-H008200). The finding is also misleading to the extent it suggests that PDM's margin

was calculated the same way that CB&I's margin is or was calculated. The term "margin" is

ambiguous, and Complaint Counsel failed to ask any witness what the margin in RX 127 refers 

to.

1037. PDM's pre-acquisition quote to Columbia LNG for the Cove Point project was

xxxxxxxxxx, with a profit of xxxxxxxxxx and an SG&A fee of xxxxxxxxxx. (CX 1058 at PDMHOU017465).
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Response to Finding No. 1037:

The proposed finding is factually incorrect, misleading, ambiguous, and not

supported by the evidence. First, no witness testifed at trial regarding CX 1058. Thus, any

conclusions that Complaint Counsel draws from this document is mere speculation. Second,

there is no evidence that the pricing was ever sent to Columbia. The finding is also misleading 

to the extent it suggests that PDM's profit was calculated the same way that CB&I's profit is or 

was calculated. The terms "profit" and "SG&A" are ambiguous, and Complaint Counsel failed 

to ask any witness whether PDM used these terms consistent with CB&I. The proposed finding 

is also misleading and inaccurate to the extent that Complaint Counsel is trying to compare

PDM's pricing contained in CX 1058 to CB&I's pricing contained in RX 127, as the two prices 

are wholly inconsistent with each other.

1038. In June 2001, four months after the acquisition, CB&I provided Yankee Gas with 

pricing information for its LNG Tank to be built in Waterbury, Connecticut. The price provided 

to Yankee Gas included a [xxxx] margin. (xxxxxxxx, Tr. 5317, in camera; CX 421 at CB&I

026843-HOU).

Response to Finding No. 1038:

The proposed finding is factually incorrect, misleading, ambiguous, and not

supported by the evidence. First, there is no evidence that the pricing contained in the proposed 

finding was ever sent to Yankee Gas, as neither CX 421 nor Mr. Scorsone's testimony support 

this. In fact, [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] 

(Scorsone, Tr. 5316-17). Second, Yankee Gas does not plan on receiving firm, fixed-price bids 

until April or May 2003. (Scorsone, Tr. 4989). Thus, any pricing that CB&I submitted to

Yankee Gas was a budget price, which can not be compared to a firm, fixed price bid. (FOF 7.1-

7.38). Finally, the term "margin" is ambiguous, and Complaint Counsel failed to ask any witness 
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CHI:1176893.3

whether the margin it is referring to in CX 421 or during Mr. Scorsone's testimony is gross

margin or profit margin.

1039. In January of the following year, CB&I's pricing information to Fairbanks Natural 

Gas for an LNG tank included a 20% margin on a $14,200,000 tank, as well as an additional

30% padding for the Alaska location. (RX 407 at CB&I 66666, 66668, 66672).

Response to Finding No. 1039:

The proposed finding is incomplete, misleading, ambiguous, and not supported by 

the evidence. First, the pricing contained in RX 407, and that was submitted to Fairbanks

Natural Gas, was a budget price, and cannot be compared to a firm, fixed price bid. (RX 407) 

(FOF 7.1-7.38). A budget price for a project in Alaska will be "very rough" unless the customer 

provides very specific information. (Scorsone, Tr. 5006) (FOF 3.615). Fairbanks, Alaska is in a 

very remote location, and is a very difficult area to work. (Scorsone, Tr. 5004-05) (FOF 3.615). 

It is also more expensive to work in Alaska than in the lower 48 contingent states. (Scorsone, Tr. 

5005). It is difficult to ship construction materials to Alaska, and due to the climate, CB&I will 

encounter safety issues and productivity problems working in Alaska. (Scorsone, Tr. 5005-06) 

(FOF 3.615). Because of the uncertainty of the project, RX 407 states that the accuracy of the 

proposed pricing is plus or minus 15 percent. (RX 407 at CB&I 66666).

1040. When Memphis Light, Gas & Water requested pricing for a new LNG tank to be 

built at its existing Capleville, Tennessee location in January 2002, CB&I's price to Memphis

Light, Gas & Water included a [xxxx] margin and a [xxxxxxx] Technology Services Fee. (CX 

423 at CB&I-E 009509-10, in camera).

Response to Finding No. 1040:

The proposed finding is ambiguous, misleading and incomplete. The pricing that 

Respondents submitted to Memphis was a budget price, or a SWAG -- a "scientific wild assed 

guess." (Hall, Tr. 1865-66; Scorsone, Tr. 5250) (FOF 3.608, 3.609). Customers do not purchase 

LNG tanks based on a budget price. (Carling, Tr. 4472-73) (FOF 3.607). Margins contained in 
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budget prices are not remotely representative of the actual profit margin that CB&I seeks in

fixed, firm price bids. (Scorsone, Tr. 5003) (FOF 3.606). As explained in FOF 3.599-3.606, 

there are numerous contingencies and uncertainties when CB&I submits budget pricing to a

customer. Because CB&I's internal budget documentation does not contain a line item for these 

contingencies, CB&I accounts for these contingencies in the margin line calculation of the

budget estimate. (Scorsone, Tr. 5002-03) (FOF 3.606). Thus, although a margin line item on a 

budget price may be 30%, this does not mean that CB&I will seek a 30% profit margin if, and 

when, a firm, fixed price bid is submitted. (Scorsone, Tr. 5003) (FOF 3.606). Additionally, the 

term "margin" is ambiguous, and Complaint Counsel failed to ask any witness at trial whether 

the margin it is referring to in RX 423 includes gross margin, profit margin, SG&A, or

technology services fee.

1041. In June 2002, [xx] sought tank pricing information for its Tampa facility, CB&I

quoted a price to [xx] of [xxxxxxxxxxxx], including a [xxxx] margin and a [xxxxxx] Technology 

Services Fee. (RX 643 at CB&I 069175, in camera).

Response to Finding No. 1041:

The proposed finding is factually incorrect, incomplete, misleading, ambiguous,

and not supported by the evidence. First, despite having ample opportunity at trial, Complaint 

Counsel failed to question a single witness about RX 643. Second, there is no evidence that the 

pricing contained in RX 643 was ever sent to [xxx], as RX 643 is a CB&I internal document

containing a tank estimate summary sheet. Third, any pricing information that CB&I has

submitted to [xxx] was a budget price, and therefore, for the reasons stated in FOF 7.1-7.38, 

cannot be compared to a firm, fixed price bid. ([xxxxxxxx], Tr. 6075) (FOF 3.416, 7.1-7.38). 

Finally, the term "margin" is ambiguous, and Complaint Counsel failed to ask any witness

whether the margin it is referring to in CX 643 includes gross margin, profit margin, SG&A, or 

technology services fee.
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1042. According to Mr. Scorsone, CB&I's December 2002 pricing for the Cove Point 

tank is [xxxxxxxxxxx], with a [xxxxxxxxx] profit and a [xxxxxxxxxx] Technology Services Fee. 

(xxxxxxxxxx, Tr. 5313-14; RX 123).

Response to Finding No. 1042:

The proposed finding is incomplete, misleading, ambiguous, and is unsupported

by the cited evidence. First, RX 123 is a document prepared in 1999, and does not even relate to 

an LNG tank. (RX 123). Further, there is no support in the cited pages to Mr. Scorsone's

testimony either of the price of the Cove Point tank, or of the value of Technology Services Fee. 

Second, the proposed finding is incomplete and misleading because [xxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxx] (Scorsone, Tr. 5336) (FOF 3.635). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Scorsone, Tr. 5336) (FOF

3.635). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxx] (Scorsone, Tr. 5336) (FOF 3.634).

1043. Net profit margins and margin as a percent above cost can be calculated using the 

above data for both CB&I and PDM 's LNG tank projects between 1994 and 2003:

Response to Finding No. 1043:

The proposed finding and the accompanying chart is factually incorrect,

misleading, incomplete, based on speculation, and is not in any way supported by the evidence 

presented during trial. First, for the reasons set forth in RFOF 1030 through RFOF 1042, the

data provided in the following chart is grossly inaccurate.

Second, rather than asking any of CB&I's witnesses about any of the documents 

cited within the chart, Complaint Counsel instead attempts to speculate about all of the prices

contained in the cited documents. Indeed, Complaint Counsel failed to even have Dr. Simpson, 

its own expert witness, either create or testify about this chart. Complaint Counsel has no
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testimony indicating whether these prices reflect internal estimates, budget prices, bids that were 

actually quoted to customers, prices that were used for forecasting purposes, or profits realized 

after the construction of the projects. Furthermore, because no witnesses testified about the

majority of these documents, Complaint Counsel is unable to determine whether each of the

margins identified in the chart were net margins, profit margins, or gross margins.

Third, Complaint Counsel's chart fails to distinguish between budget pricing that 

CB&I may have provided to customers for planning purposes, and fixed, firm priced bids. With 

the exception of only one (Cove Point), each of the post-acquisition prices referenced on the

chart were budget prices. (Scorsone, Tr. 5317; RX 407; RX 643 at CB&I 069175; CX 423). For 

the reasons discussed in FOF 7.1 through 7.38, budget pricing is not remotely representative of

the margins contained in firm, fixed price bids. (FOF 7.1-7.38).

Unsurprisingly, Complaint Counsel, on its chart, intentionally fails to include two 

post-acquisition projects: (1) the CMS Lake Charles, Louisiana LNG tank project; and (2) the El 

Paso Elba Island, Georgia LNG tank project. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxx] (Scorsone, Tr. 5074, 5077-80; J. Kelly, Tr. 6285) (FOF 3.468, 3.484-3.486).

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (J. Kelly, Tr.

6283) (FOF 3.472). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (RX 595 at CB&I 060850). 

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxx] (Scorsone, Tr. 5075) (FOF 3.477). [xxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (RX 595 at CB&I 060850). 

Nonetheless, Complaint Counsel simply wants to ignore the CMS story.
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[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (RX 640 at CB&I 069126). [xxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (Scorsone, Tr. 5079) (FOF 3.486).

Finally, there are several factually incorrect representations shown on the chart. 

For example, Complaint Counsel lists a project titled "Alabama Gas (1999)" which is identified 

as an LNG project involving an LNG tank. Once again, Complaint Counsel fails to ask a single 

witness about this project. As Robert Davis of Air Products testified, this project involved the 

replacement of a liquefier for its existing peak shaving facility, and did not involve the

construction of an LNG tank. (Davis, Tr. 3193-94, 3204) (FOF 3.23). Furthermore, Complaint 

Counsel oddly includes a Canadian project titled "Westcoast Vancouver," but fails to include

several other foreign LNG tank projects, such as projects located in Spain, India,Taiwan, and

Trinidad. (CX 1058 at PDM-HOU017467).

1044. Net profit margin ("Profit Margin") is calculated as a percentage of the project

price, while margin as a percent above cost ("Margin") is calculated using the equation:

Profit Margin+ Technical Service Fee (SG&A)14

Total Price - (Profit Margin + Technical Service Fee/SG&A)

Response to Finding No. 1044:

The proposed finding is factually incorrect, unsupported by the evidence, and

ambiguous. Complaint Counsel fails to cite to any authority supporting that the proposed

formula is the formula CB&I uses to calculate its margins. Further, there is no evidence

 

14

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 
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suggesting that PDM used the proposed formula to calculate its margins. Additionally, the terms 

used in the proposed formula are undefined.

1045. The table shows that the pre-acquisition unweighted average of the reported profit 

margins is [xxxx].

Response to Finding No. 1045:

The proposed finding is unsupported by the evidence, misleading, incomplete,

and grossly inaccurate for the reasons set forth in RFOF 1030 through RFOF 1044.

1046. The table also shows that the post-acquisition unweighted average reported profit 

margin is [xxxxx], a 14.5% increase over pre-acquisition margin levels.

Response to Finding No. 1046:

The proposed finding is unsupported by the evidence, misleading, incomplete,

and grossly inaccurate for the reasons set forth in RFOF 1030 through RFOF 1044.

1047. The table also shows that the unweighted average of the pre-acquisition margins 

is xxxx.

Response to Finding No. 1047:

The proposed finding is unsupported by the evidence, misleading, incomplete,

and grossly inaccurate for the reasons set forth in RFOF 1030 through RFOF 1044.

1048. The table also shows that the unweighted average of the post-acquisition margins 

is xxxxx, a 13.9% increase over pre-acquisition margin levels.

Response to Finding No. 1048:

The proposed finding is unsupported by the evidence, misleading, incomplete,

and grossly inaccurate for the reasons set forth in RFOF 1030 through RFOF 1044.

1049. The following graph repeats the information shown in the previous table, and

reflects the increase in LNG tank margins post-acquisition calculated as percent above cost:

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxx]
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Response to Finding No. 1049:

The proposed finding is unsupported by the evidence, misleading, incomplete,

and grossly inaccurate for the reasons set forth in RFOF 1030 through RFOF 1044.

1050. The graph demonstrates that prior to the acquisition, margin levels ranged from

xx to xxxxxx..

Response to Finding No. 1050:

The proposed finding is unsupported by the evidence, misleading, incomplete,

and grossly inaccurate for the reasons set forth in RFOF 1030 through RFOF 1044.

1051. The graph also demonstrates that post-acquisition, margin levels increased,

ranging from xxxxx to xxxxx.

Response to Finding No. 1051:

The proposed finding is unsupported by the evidence, misleading, incomplete,

and grossly inaccurate for the reasons set forth in RFOF 1030 through RFOF 1044.

1052. The highest margin quoted by PDM and CB&I to customers before the

acquisition as a percent of cost is xxxxx. The lowest margin quoted to customers by CB&I postacquisition is xxxxx, 1.81% higher than the highest margin quoted before the acquisition.

Response to Finding No. 1052:

The proposed finding is unsupported by the evidence, misleading, incomplete,

and grossly inaccurate for the reasons set forth in RFOF 1030 through RFOF 1044. This finding 

is patently false, as it ignores post-acquisition firm, fixed price pricing CB&I provided to CMS 

and El Paso for LNG tank projects. (RFOF 1044).

C. The Merger Has Had Actual Anticompetitive Effects in the LIN/LOX Market

1053. Since the merger, CB&I has implemented the same 8.7% price increase on at least 

three different occasions: (1) to Linde BOC Process Plants LLC in April of 2002; (2) to Praxair 

in April of 2002; and (3) to Praxair again in June of 2002.
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Response to Finding No. 1053:

Complaint Counsel's finding is false and misleading. Complaint Counsel's

proposed finding cites three alleged price increases without relying on any evidence. The

evidence has demonstrated that there have been no price increases in any post Acquisition

LIN/LOX project. (See FOF 5.79-5.211). As an initial matter, Complaint Counsel's allegations 

of "three different" price increases all revolve around the same air separation facility that was to 

be constructed in Farmington, New Mexico. (See FOF 5.165-5.166, 5.178-5.179). Praxair and 

Linde were competing against each other for the air separation facility and both requested budget 

pricing from CB&I for a LIN tank with drastically different design specifications. (See 5.186-

5.206 (Linde); 5.207-5.211 (Praxair)). The client ultimately awarded the air separation facility to 

Praxair and selected Kirkland, New Mexico, as the site for the project. (See FOF 5.165-5.166, 

5.179).

Complaint Counsel's first alleged price increase to Linde in 2002 presumably

relies on a budget price that was submitted to Chung Fan for the proposed New Mexico project. 

Record evidence has demonstrated the unreliability of budget pricing. (See FOF 7.1-7.38). 

Respondents also showed that Mr. Fan's analysis suggesting there was a price increase was

flawed. (See FOF 5.185- 5.204). In addition, Mr. Fan in fact admitted that he did not observe a 

price increase. (See Fan, Tr. 1006) (stating that CB&I's "price has been consistent and has not 

changed . . . .") (See also FOF 5.185-5.206). 

Complaint Counsel's second attempt at an alleged price increase involves an

inaccurate comparison between projects with different scopes stages of pricing. CB&I submitted 

a budget price to Linde based upon general specifications for a proposed project in New Mexico. 

CB&I also submitted a firm fixed price to Praxair for a proposed tank for the same project. As 
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was demonstrated by Respondents, Complaint Counsel attempts to perform and apples to

oranges comparison between the two prices. The undisputed record evidence that is ignored by 

Complaint Counsel demonstrates that although the two tanks were intended for the same project 

site, the tanks had significantly different designs with significantly different costs. (See FOF

5.207-5.211). Therefore, the mere existence of an alleged 8.7 percent price difference has no 

bearing because of the different scope designs and different levels of pricing.

The third price alleged price increase is an attempt to compare two budget prices 

from two separate Praxair projects. Complaint Counsel attempts yet another flawed apples and 

oranges comparison between a budget price submitted in 2000 and a budget price submitted for a 

different project in 2001. Complaint Counsel's alleged price difference of 8.7 percent is

irrelevant because it ignores the numerous differences in scope between the two projects. This 

alleged price increase is the most desperate attempt of the three alleged by Complaint Counsel

because during the course of the lengthy trial before this Court, Complaint Counsel failed to ask 

a single witness about the documents it relies on to assert this alleged price increase. Rather,

Complaint Counsel relies on its own erroneous and inaccurate interpretation of documents that 

were never placed before any witness at trial.

Respondents demonstrated at trial that Praxair re-negotiated a sole-source 

partnership agreement with CB&I shortly prior to the Acquisition. (See Scorsone, Tr. 5018-19; 

see also FOF 5.165-5.166). Any projects between Praxair and CB&I are governed by the open 

book partnering agreement which established a four percent margin on all LIN/LOX projects.

(Scorsone, Tr. 5019-20; see also FOF 5.165-5.166). No evidence was presented at trial

regarding alleged price increases to Praxair because, despite flying him to Washington, D.C., in 

preparation for his testimony, Complaint Counsel elected not to call the representative from
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Praxair. As a result, it is disingenuous for Complaint Counsel to now, at the eleventh hour,

allege a price increase on behalf of a customer who was not called to testify by Complaint

Counsel presumably because his testimony did not support their theory. As a result, Complaint 

Counsel lacks any evidence from Praxair to support its accusations of price increases.

1054. The 8.7% price increase contrasts dramatically to the period prior to the merger 

when CB&I and PDM would routinely undercut each other by slashing prices to the point of

negative margins. CCFF 1090.

Response to Finding No. 1054:

Complaint Counsel's finding is inaccurate and misleading. As has been

demonstrated by Respondents during trial and during post-trial briefing, the evidence has shown 

that there have been no increases in price. (See RFOF 1053; Fan, Tr. 1006; [xxxxxxxxxxx 

xxxxxxxxxxxxxxxx]; see also FOF 5.182-5.211). CB&I's internal assessment is that it has "a

very hard time competing on [LIN/LOX] tanks." (RX 208) (state of mind). CB&I knows that if 

it increases its prices on LIN/LOX tanks, it will lose work to its competitors. (Scorsone, Tr.

5030-31) (state of mind). CB&I knows that it needs to find ways to cut its prices on LIN/LOX 

tanks in order to win future LIN/LOX projects. (Scorsone, Tr. 5031) (state of mind) (See also

FOF 5.212-5.218).

1055. Respondents presented no evidence that CB&I's post-merger pricing on these

three instances were negatively impacted by any competitor, foreign or domestic.

Response to Finding No. 1055:

Complaint Counsel's proposed finding is vague, illogical and not supported by

any record citations. Complaint Counsel's first of the alleged "three instances" involved a budget 

price submitted to Linde for a proposed project. (See RFOF 1053). Since Linde was not

awarded the air separation facility, Linde did not engage in additional pricing discussions or

competitive negotiations with CB&I or any other supplier. (See FOF 5.179). Respondents are
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uncertain what "evidence" Complaint Counsel believes Respondents were required to present

since Linde lost the project and there was no opportunity for the natural negotiation process to 

drive prices down among the competitors. (See Fan, Tr. 1039-40; Scorsone, Tr. 5020; see also

FOF 5.178-5.179).

The two other "instances" alleged by Complaint Counsel involve a firm fixed

price and a budget price submitted to Praxair for the same New Mexico project. (See RFOF

1053). Once again, Respondents are uncertain what "evidence" Complaint Counsel believes was 

required since Respondents established undisputed record evidence that Praxair is obligated to

contract with CB&I pursuant to their exclusive partnering agreement. Praxair is required to use 

CB&I for its domestic non-union LIN/LOX projects and CB&I is obligated to provide Praxair 

open book pricing with a four percent margin level. (See Scorsone, Tr. 5018-20; see also FOF 

5.165-5.166). Due to the existence of the partnering agreement, Praxair's consideration of any 

other competitors would have violated their agreement. (See FOF 5.165-5.166).

1056. A fourth example of the anticompetitive effects of the merger involves MG

Industries. This situation highlights how customers are handicapped by the absence of PDM as a 

leverage point against CB&I.

Response to Finding No. 1056:

Contrary to Complaint Counsels accusations, MG was not "handicapped" by the

absence of PDM. MG has only sought pricing and awarded one project in New Johnsonville,

Tennessee, since the Acquisition. CB&I originally submitted a bid to MG Industries for its New 

Johnsonville project at a four percent profit margin. (Scorsone, Tr. 5023). MG Industries told 

CB&I that its price was too high, and as a result, CB&I reduced the margin on their price

submission. (Scorsone, Tr. 5023). Due to negotiation tactics used by MG Industries to

demonstrate the competition for the project, CB&I lowered its price in order to win the work. 

(Scorsone, Tr. 5023-24; FOF 5.151). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 
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xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxx] FOF 5.153).

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] see also FOF 5.182-5.183).

1057. These four instances illustrate that, since the merger, CB&I recognizes that the

elimination of PDM as its closest competitor and the inability of other firms to replace PDM as a 

price constraint provide CB&I with the opportunity to raise prices and earn significantly higher 

margins.

Response to Finding No. 1057:

Complaint Counsel's finding is false, misleading and wholly unsupported by the

record evidence as is demonstrated by its inability to provide any citation in support of this

proposed finding. CB&I knows that the competition in the LIN/LOX market is very "intense"

and that there are a variety of well established contractors that compete against CB&I. 

(Scorsone, Tr. 5038-39) (state of mind). CB&I knows that it has "a very hard time competing on 

[LIN/LOX] tanks." (RX 208) (state of mind) (See FOF 5.212). CB&I internal emails

demonstrate that AT&V and CBT "have hired expertise that used to work for Brown

Minneapolis Tank and Graver Tank. Graver used to be very competitive in these LIN LOX

tanks and it sounds like their 'know-how' moved on to another company. Matrix is another
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CHI:1176893.3

recent player in the LIN LOX market, so there are three competitors now to CB&I." (RX 208; 

Scorsone, Tr. 5029-30) (state of mind) (See FOF 5.214).

The record evidence also demonstrates that CB&I knows if it increases its prices 

on LIN/LOX tanks, it will lose work to its competitors. (Scorsone, Tr. 5030-31) (state of mind). 

CB&I believes it needs to find ways to cut its prices on LIN/LOX tanks in order to win

LIN/LOX projects. (Scorsone, Tr. 5031) (state of mind). CB&I's state of mind is corroborated 

by the fact that AT&V has defeated CB&I on every LIN/LOX project where the two companies 

have competitively bid against each other. (Scorsone, Tr. 5018; see also FOF 5.76-5.78).

1. The Linde-New Mexico Project: CB&I Raises Prices by 8.7%

1058. In 2002, Linde BOC Process Plant LLC ("Linde") sought bids for a 344,000

gallon LIN/LOX tank to be located in Farmington, New Mexico ("Linde-New Mexico"). (Fan, 

Tr. 1002; CX 1344 at LPPI 0000259).

Response to Finding No. 1058:

In 2002, Linde did not solicit "bids" but rather requested budget pricing for a

proposed project in an undisclosed location in New Mexico. (Fan, Tr. 987-88; Scorsone, Tr.

5020-21; RX 860 at CB&I 071847; see also FOF 5.178-5.179). In his request for proposal, Mr. 

Fan did not tell CB&I the construction schedule (Fan Tr., 1073), where in the state of New

Mexico the project would be located (Fan, Tr. 1075), the time of year that the tank would be

constructed (Fan, Tr. 1076), the conditions of the project site (Fan, Tr. 1077), or the identity of 

the end-user (Fan, Tr. 1078; see also RX 860 at CB&I 071847). Due to the lack of specific

information, CB&I interpreted Mr. Fan's request as a budget request and responded to his inquiry 

by submitting a budget proposal for the proposed project. (See CX 1344; Fan, Tr. 987-88; 

Scorsone, Tr. 5020-21; see also FOF 5.186-5.189). Complaint Counsel's proposed finding is

misleading because it fails to convey that the project was merely a proposed project which did 

not materialize and Linde did not disclose numerous details, including the project location, in its 
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budget pricing requests. (Fan, Tr. 1060-62, 1073, 1075-78, Scorsone, Tr. 5020-21; see also FOF 

5.178-5.179, 5.194-195).

1059. Chung Fan was Linde's manager for evaluating prices of LIN/LOX suppliers and 

recommending which vendor should be selected. (Fan, Tr. 1021). Fan has 20 years of

experience reviewing pricing information from LIN/LOX suppliers. (Fan, Tr. 946, 953). Linde 

has always followed Fan's recommendations concerning which LIN/LOX tank suppliers to

select. (Fan, Tr. 1022).

Response to Finding No. 1059:

Compliant Counsel's proposed finding is false and misleading. Complaint

Counsel attempts to distort the Chung Fan's trial testimony. Mr. Fan testified that his official job 

title is "proposal manager" and he has "never [been] in charge or had responsibility to purchase 

the LIN/LOX tanks." (Fan, Tr. 947, 951; see also FOF 5.190). Mr. Fan does not posses the

requisite knowledge, skill, experience, training or education to conduct an analysis of LIN/LOX 

tank prices. Mr. Fan has a masters degree in food technology and chemical engineering. (Fan, 

Tr. 949; 1028). Mr. Fan does not have a degree in statistics or economics. (Fan, Tr. 1028; see 

also FOF 5.191).

1060. Prior to the merger, Linde purchased most of its LIN/LOX tanks from PDM. 

(Fan, Tr. 1023). Linde found PDM's prices reliable because its final price did not deviate

significantly from its budget price. (Fan, Tr. 1023). In its "LNG 2000" customer slide

presentation, PDM cited as a contracting innovation a "Phased Contracting" procedure in which 

the first phase would include "enough design to come up with a fixed firm price for Phase II." 

(CX 124 at PDM-HOU 2011162-63).

Response to Finding No. 1060:

Complaint Counsel's proposed finding is incomplete and misleading. The last

time that Linde purchased a LIN/LOX tank was in Bozarah, Connecticut, and Lincoln, Nebraska, 

in 1999. Linde selected PDM to construct two LIN/LOX tanks after receiving bids from CB&I, 

PDM and Graver. (Kistenmacher, Tr. 869-70; see also FOF 5.176). Prior to 1999, record

evidence demonstrates that Linde used PDM for the construction of a small LIN/LOX tank in
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Atlanta, Georgia, in 1996. (RX 860 at LPPI 0000292, column 7). There is no evidence of Linde 

purchasing any other LIN/LOX tanks from PDM. Contrary to Complaint Counsel's suggestion, 

Linde did not purchase many LIN/LOX tanks from PDM or any other supplier prior to the

Acquisition. Linde has not been very successful at winning air separation facility projects and 

therefore does not purchase many LIN/LOX tanks. (Fan, Tr. 1040-42, see also FOF 5.205-

5.206). Respondents have no specific response to the remaining of Complaint Counsel's

proposed finding.

1061. Linde sent requests for quotes to AT&V, Matrix and CB&I. (Fan, Tr. 960, 962, 

1002). Linde requested a "close to firm plus or minus 5% price." (Fan, Tr. 1002).

Response to Finding No. 1061:

Respondents have no specific response. (See FOF 5.178; 5.186-5.187).

1062. Linde was "very anxious" to see the price quotes for the Linde-New Mexico

project because it wanted to know what would happen to prices with PDM absent from the

picture. (Fan, Tr. 1003).

Response to Finding No. 1062:

Respondents have no specific response.

1063. AT&V quoted a firm-fixed price of approximately $600,000. (Fan, Tr. 960-961). 

Matrix responded with a firm-fixed price of over $900,000. (Fan, Tr. 962).

Response to Finding No. 1063:

Complaint Counsel's proposed finding is entirely false and misleading. There is

no evidence within the record to support Complaint Counsel's claim that AT&V and Matrix

submitted "firm-fixed" prices. Since Linde was not awarded the air separation facility, Mr. Fan 

did not call any of the suppliers to discuss the price submissions or any attempts made to

negotiate a lower price. (See 5.179, 5.187). As a result, neither Mr. Fan nor Complaint Counsel 

know what type of pricing AT&V and Matrix provided to Linde. Mr. Fan's own trial testimony 

refutes Complaint Counsel's finding because he admitted that he did not provide the tank
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suppliers with sufficient information to be able to produce a firm-fixed price. (Fan, Tr. 1078; see 

also FOF 5.194-5.195).

1064. On April 17, 2002, CB&I disregarded Linde's instructions and responded with a 

"budget" price, rather than a firm-fixed price as Linde had requested. (CX 1344 at LPPI

0000259; Fan, Tr. 1002-1003; see Harris, Tr. 7506-07 ("Linde made a request for a firm price, 

but the actual price that they received was a budget price.")). CB&I's "budget" price was

$814,000. (CX 1344 at LPPI 0000261).

Response to Finding No. 1064:

Complaint Counsel's proposed finding is false, misleading and inconsistent with

its own proposed findings. As acknowledged by Complaint Counsel above in CCFF 1061, Linde 

did not request a "firm-fixed price" as is suggested here, but rather a "close to firm plus or minus 

5% price." (See CCFF 1061, Fan, Tr. 1002; see also FOF 5.178; 5.186-5.187). CB&I

interpreted that request to be a budget price request because Linde provided an insufficient

amount of information which would have been required for CB&I to produce a estimate within a 

plus or minus 5 percent range. (See RFOF 1058; Fan, Tr. 1060-62, 1073, 1075-78; see also FOF 

5.194-5.195). Even Mr. Fan has admitted that he did not provide CB&I with sufficient

information to produce a firm-fixed price. (Fan, Tr. 1078; see also FOF 5.194-5.195). Although 

Mr. Fan requested a plus or minus 5 percent price and received a budget price from CB&I, he did 

not call CB&I and tell them that they did not submit the type of price he requested. (Fan, Tr.

1064; see also FOF 5.186-5.187). Since Mr. Fan never spoke with CB&I, the budget price that 

he received from CB&I was not the result of any negotiation and does not take into account any 

reductions that CB&I may have made as a result of the negotiation process. (Fan, Tr. 1039-40; 

see also FOF 5.186-5.187). Respondent's do not dispute the actual budget quotation amount that 

was provided to Linde. (RX 860 at CB&I 071805).

1065. Fan agreed that he did not consider AT&V's price "reliable" because it diverged 

so widely from CB&I and Matrix. (Fan, Tr. 963). Fan could not see "how [AT&V] can they

(sic) be able to do it so cheap compared to CB&I." (Fan, Tr. 963). Fan reasoned that if AT&V's 
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price was reliable, "CB&I should be out of business." (Fan, Tr. 963). In addition, Mr. Fan did 

not believe that AT&V had the necessary experience to construct the tank: "their [AT&V's] tank 

has not been operating for many years." (Fan, Tr. 998).

Response to Finding No. 1065:

Complaint Counsel's proposed finding is incorrect and irrelevant. Although

Respondents do not dispute the fact that Mr. Fan provided the cited testimony, both Mr. Fan and 

Linde lack sufficient foundation to cast negative opinions of ATV. For example, BOC Process 

Plants has awarded two contracts to ATV, one in Midland, North Carolina, and another in

Hillsboro, Oregon. (Cutts, Tr. 2504-06; V. Kelley, Tr. 5291-92; RX 813; see also FOF 5.31-

5.34). BOC has testified that it "was satisfied with the price" it received on the field erected

LIN/LOX tanks at Midland and that "BOC is satisfied with the work that AT&V did at

Midland." (V. Kelley, Tr. 5285; see also FOF 5.31). Unlike BOC, Mr. Fan has admitted that

Linde has not assessed the capabilities and experience of AT&V in the LIN/LOX market. (Fan, 

Tr. 1018). While AT&V's low price has caused some concerns for Linde, there has been

pressure within Linde to use AT&V because "the low price make it very interesting." (Fan, Tr. 

1016-18; see also FOF 5.178). Mr. Fan's and Complaint Counsel's questioning of the reliability 

of ATV's prices is easily refuted by the fact that ATV has defeated CB&I on every LIN/LOX

project where the two companies have competitively bid against each other. (Scorsone, Tr.

5018; see also FOF 5.76-5.78). Mr. Fan is in fact correct in stating that if ATV's price is

reliable, "CB&I should be out of business." (Fan, Tr. 963). CB&I believes it needs to find ways 

to cut its prices on LIN/LOX tanks in order to win LIN/LOX projects. (Scorsone, Tr. 5031)

(state of mind). CB&I believes that it has "a very hard time competing on [LIN/LOX] tanks"

against ATV. (RX 208) (state of mind)(See also FOF 5.212-5.218).

1066. Fan dismissed Matrix because its "price for non-union tank was always high." 

(Fan, Tr. 1019).
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Response to Finding No. 1066:

Complaint Counsel's proposed finding is incorrect and irrelevant. Respondents'

do not dispute that Mr. Fan testified as indicated, however, Mr. Fan has insufficient foundation 

to make such a statement due to its lack of experience with Matrix. Matrix's experiences with

Praxair and Air Products and Air Liquide indicate that Matrix is not "always high" as is

suggested by Complaint Counsel. Matrix was the low bidder and was awarded a LIN/LOX

project by Praxair in Delaware City in 1998 over CB&I. (Newmeister, Tr. 2173; 2176-77; see 

also FOF 5.47-5.48). Praxair was satisfied with Matrix's performance. (Newmeister, Tr. 2176-

77). In 2000, Matrix was again the low bidder and was awarded a LAR tank for Praxair in East 

Chicago. Once again, Matrix successfully completed construction of the project to the

satisfaction of Praxair. Praxair was satisfied with the construction and the project was erected on 

schedule. (Newmeister, Tr. 2173; 2176-77; see also FOF 5.49). Also in 2000, Matrix was

awarded a LIN tank as the low bidder by Air Products for a project in Kingsport, Tennessee. 

Matrix completed the Kingsport project on schedule and to the satisfaction of Air Products. Air 

Products awarded the tank to Matrix over CB&I and PDM, despite the fact that Matrix had never 

built a tank for Air Products before. (Newmeister, Tr. 2173-74; see also FOF 5.50). In addition, 

the bid prices submitted to Air Liquide for its project in Freeport, Texas, demonstrate that

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]; see also FOF 5.124). 

The evidence presented at trial demonstrates that Mr. Fan's statement is not only incorrect but

lacks foundation.

1067. Fan compared CB&I's quote with a PDM quote from a year earlier and thought 

"Wow, it...went up." (Fan, Tr. 1004).
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Response to Finding No. 1067:

Complaint Counsel's proposed finding is entirely false and misleading. As was

clearly demonstrated by Mr. Fan's testimony, Mr. Fan attempted to compare CB&I's New

Mexico budget price submitted in 2002 to a firm fixed price submitted by PDM in 1999. (Fan, 

Tr. 1069-70; see also FOF 5.193). Complaint Counsel's claim that "Fan compared CB&I's quote 

with a PDM quote from a year earlier" is false and inaccurate. Mr. Fan admitted that he

attempted to compare a CB&I budget price, which was not the result of any negotiation, to a 3

year old PDM firm fixed price which was the result of significant negotiation. (Fan, Tr. 1069-

70; see also FOF 5.193). In addition, Complaint Counsel failed to acknowledge that Mr. Fan

moved away from his first impression and testified that he does not believe that CB&I has raised 

its prices and stated from what he has seen "their price has been consistent and has not changed . 

. . ." (Fan, Tr. 1006). Fan told the FTC that he had a "feeling" CB&I's price went up, but was 

"not sure" and "said that's personal opinion, it doesn't have much value, it's hearsay." (Fan, Tr.

1004). Fan stated that his method was not accurate enough to determine if CB&I's prices went 

up because he did not have CB&I's metal pricing. (Fan, Tr. 1056; see also FOF 5.185). 

1068. In order to confirm his belief that CB&I had increased prices since the merger,

Fan analyzed CB&I's price with a pricing model that Linde routinely uses to distinguish between 

reasonable and unreasonable price quotes from vendors. (CX 1584; Fan, Tr. 966, 1024). Using 

the Linde pricing model, Fan is able to accurately estimate the total price of a LIN/LOX tank

within as little as 1% of the firm-fixed price that he receives from vendors. (CX 1584 at 1).

Response to Finding No. 1068:

Complaint Counsel's proposed finding is irrelevant and inaccurate. Despite

Complaint Counsel's continuing assertions, Mr. Fan testified that he does not believe that CB&I

has raised its prices and stated from what he has seen "their price has been consistent and has not 

changed . . . ." (Fan, Tr. 1006; see also FOF 5.185). In addition, Mr. Fan's analysis cannot be

relied on as a basis to adjudge CB&I's budget price to be high because Mr. Fans' method does
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not use reliable principles and methods. Prior to April 2002, the time of the New Mexico

estimate, Fan had not updated his estimating spreadsheet for approximately two years. (Fan, Tr. 

973; see also FOF 5.192). Mr. Fan testified that he uses the year 1998 as a baseline for his

spreadsheet and the further away from his baseline year of 1998 he gets, the less accurate his

estimating attempts become. (Fan, Tr. 1069). Mr. Fan also stated that his calculations do not

account for price changes between the time the project is bid and the time it is awarded because 

that is not the purpose of his spreadsheet. (Fan, Tr. 1055-56; see also FOF 5.192). Mr. Fan

admitted that he is attempting to compare the CB&I price, which was not the result of any

negotiation, to a PDM price which was the result of significant negotiation. (Fan, Tr. 1069-70; 

see also FOF 5.193). All of the flaws in Mr. Fan's analysis can be found in Respondents'

Findings of Fact 5.185-5.206. Since Mr. Fan attempted to compare a budget price from CB&I to 

a firm fixed price from PDM that was submitted three years earlier, his analysis was flawed. 

(Fan, Tr. 1069-70; see also RFOF 1069, FOF 5.193).

1069. Linde's pricing model accounts for multiple variables, including the weight of the 

metal, the dimensions of the tank, labor rates, field labor, engineering, insulation quality and

profit margins. (Fan, Tr. 985-86).

Response to Finding No. 1069:

Complaint Counsel's proposed finding states what is included in Mr. Fan's

analysis, however, it fails to describe the numerous variables that are not included within the

analysis. As demonstrated above, Mr. Fan's analysis was not the product of reliable principles 

and methods. (See RFOF 1068; see also FOF 5.192-5.193, 5.197-5.204). Mr. Fan's spreadsheet 

does not contain any actual numbers or cost information but rather is his attempt to guess at

specific cost information. Mr. Fan's chart is merely a collection of final lump-sum prices that 

have been provided to Linde. (Fan, Tr. 1071-72; see also FOF 5.196.) In order to perform his 

analysis, when a LIN/LOX tank supplier submits a drawing with its estimate, Mr. Fan must
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calculate for himself the volume or quantity of Perlite (Fan, Tr. 1033), quantity of foamglass

(Fan, Tr. 1033-34), and the quantity of concrete (Fan, Tr. 1035-36; see also FOF 5.198). Fan

does not know the quantity of perlite used for any of the tanks in his spreadsheet. (Fan, Tr. 

1045). In addition to calculating the actual amount, Fan also had to calculate the thickness of the 

perilite needed for the tanks. (Fan, Tr. 1045-47; see also FOF 5.199). Rather than investigating 

the actual cost of items required in the construction of a LIN/LOX tank, Fan made educated

guesses at the prices. Fan did not call up any suppliers to determine the current rates for items 

involved in the construction of the tank. (Fan, Tr. 1049-50; see also FOF 5.202). Fan also did 

not know the thickness of the metal CB&I intended to use for the New Mexico project and

attempted to calculate the metal thickness based upon drawings from other non-CB&I tanks. 

(Fan, Tr. 1047; see also FOF 5.203). Fan does not know what prices CB&I pays for steel. (Fan, 

Tr. 1051). In order to determine the price of steel, Fan called some "guy" whose name was given 

to him and asked about the current steel prices. (Fan, Tr. 1050-51; see also FOF 5.204). Since 

the spreadsheet created by Mr. Fan contains inaccurate and insufficient information, any opinion 

with respect to pricing changes based upon the spreadsheet is flawed.

1070. Using the Linde pricing model and past price information from PDM, Fan

concluded "quite confidently" that the quote he received from CB&I was 8.7% higher than Linde 

would have paid to PDM. (Fan, Tr. 1009-10).

Response to Finding No. 1070:

Complaint Counsel's proposed finding is irrelevant and inaccurate. Mr. Fan

testified that he does not believe that CB&I has raised its prices and stated from what he has seen 

"their price has been consistent and has not changed . . . ." (Fan, Tr. 1006; see also FOF 5.185). 

Additionally, as demonstrated above, any opinion derived from Mr. Fan's spreadsheet is fatally

flawed. (See RFOF 1068-70; see also FOF 5.186-5.204). 
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2. The Praxair-New Mexico Project 1: CB&I Raises Prices by 8.7%

1071. It appears that Linde and Praxair were competing against each other for the same 

LIN/LOX project in Farmington, New Mexico. CCFF 1058.

Response to Finding No. 1071:

Complaint Counsel's finding is incorrect because Linde and Praxair were not

competing for the same "LIN/LOX project," they were competing against each other for the

same air separation facility. (Scorsone, Tr. 5020; see also FOF 5.179, 5.207). CB&I, Matrix and 

AT&V were the companies competing for the LIN/LOX project. (FOF 5.178).

1072. Respondents contend that Fan's conclusion that CB&I had increased prices to

Linde is based on flawed data and methodology. As noted above, CB&I submitted a "budget

price" to Linde of $814,000 for a 334,000 gallon LIN/LOX tank to be built in Farmington, New

Mexico. CCFF 1065. $814,000 was the price that Fan used to conclude that CB&I had

increased prices by 8.7% above PDM's pre-merger prices. CCFF 1070.

Response to Finding No. 1072:

Complaint Counsel's proposed finding inaccurately states an important piece of

evidence. At the time CB&I submitted its budget price to Linde, it was unaware of the proposed 

location of the project. (Scorsone, Tr. 5020-21; see also FOF 5.178-5.179). Linde's pricing

request stated that the proposed project was to be located somewhere in the state of New Mexico. 

(See RX 860 at CB&I 071847; see also FOF 5.178-5.179). Respondents refer the Court to its

responses illustrating that the analysis performed by Mr. Fan is fatally flawed and hereby

incorporate its responses to CCFF 1067-70. (See RFOF 1067-70).

1073. On June 15, 2002, CB&I submitted a bid to [xxxxx] for a [xxxxxxxx] gallon

LIN/LOX tank to be built in [xxxxxxxxxxxxxxxxxxxxxxx]. (CX 1508 at CB&I 059657, in 

camera).

Response to Finding No. 1073:

Complaint Counsel's proposed finding is inaccurate and misleading because

Praxair re-negotiated a sole-source exclusive partnership agreement with CB&I shortly prior to 
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the Acquisition. (See Scorsone, Tr. 5018-19; see also FOF 5.165-5.166). As a result, CB&I

does not submit "bid[s]" to Praxair, but rather pricing proposals. Under the agreement Praxair is 

obligated to contract with CB&I for its domestic non-union LIN/LOX tanks, and CB&I is

required to provide open book pricing with a four percent margin. (Scorsone, Tr. 5019-20; see 

also FOF 5.165-5.166).

1074. CB&I's quote to [xxxxxxx] was [xxxxxxxxxx]. (CX 1508 at CB&I 059657, in 

camera).

Response to Finding No. 1074:

Respondents have no specific response. 

1075. The difference in CB&I's price to Praxair and CB&I's price to Linde – for the

virtually the same-sized tank and same location – is only [xxxxxx], or less than [xxxxx].

Response to Finding No. 1075:

Complaint Counsel's proposed finding is entirely inaccurate and misleading. As

an initial matter, Compliant Counsel fails to provide any citation to support the assertion made in 

this finding. Nonetheless, record evidence demonstrates that comparing the budget price that

CB&I submitted to Linde for its proposed New Mexico project to the firm fixed price that CB&I

submitted to Praxair pursuant to a partnering agreement is comparing apples to oranges. (See

Scorsone, Tr. 5020-22; see also FOF 5.207-5.211). While the proposed projects may have the

same capacity and a similar price, the similarities between the projects ends there.

The tanks proposed by Linde and Praxair for the same location were drastically

different in scope and design. Complaint Counsel attempts to mislead this Court by ignoring the 

undisputed record evidence. In contrast to the Linde tank, Praxair designed a more slender tank 

which resulted in an additional horizontal weld seam as well as required thicker steel throughout 

the tank. (Scorsone, Tr. 5021; see also FOF 5.209). The Praxair project scope also included a 

full-time welding supervisor, an increased 50 hour work week, additional subsistence in order to 
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attract field labor to the remote site, and a more complex nozzle structure. (Scorsone, Tr. 5021-

22). Praxair specifically defined the complex nozzle structure they wanted for their tank, while 

Linde provided only basic information concerning its anticipated nozzle configuration. 

(Scorsone, Tr. 5022; see also FOF 5.210). The undisputed evidence illustrates that there are

approximately $60,000 worth of additional cost items included in the Praxair pricing that were

not included in the Linde budget price. (Scorsone, Tr. 5022; see also FOF 5.211). Complaint 

Counsel chose to simply ignore this evidence.

In addition to the numerous differences in scope between the Linde and Praxair 

tanks, Complaint Counsel also ignores the undisputed fact that Praxair and Linde were at

different stages of pricing. Linde requested a budget price and provided minimal detail to CB&I, 

which included omitting the actual location of the project. (Scorsone, Tr. 5020-21; see also FOF 

5.194-5.195, 5.208). Praxair on the other hand requested firm fixed pricing while providing

CB&I with all of the detail necessary to arrive at a firm price. Due to the inherent differences 

between the tank specifications and the detail of the requested pricing, the Linde and Praxair

prices cannot be accurately compared. 

1076. CB&I implemented the same [8.7%] price increase to Praxair as it did to Linde.

Response to Finding No. 1076:

Complaint Counsel's proposed finding is false and unsupported by the record. 

CB&I has not increased prices and Respondents hereby incorporate its responses to CCFF 1053-

75. (See RFOF 1053-75).

3. The Praxair-New Mexico Project 2: CB&I Raises Prices by 8.7%

1077. In late 2000, Praxair requested PDM to provide a budget price for a 500,000

gallon LOX tank in Colorado Springs, Colorado. (CX 448 at CB&I-E 007391; see RX 90 at

PDM-CH 002717).
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Response to Finding No. 1077:

Complaint Counsel proposed finding is irrelevant and assumes facts that are not in 

evidence. Complaint Counsel attempts to use two documents that, although admitted into

evidence, were never used at trial with any witness. Complaint Counsel attempts to decipher

technical information contained within these documents without using any deposition or trial

testimony to support its assumptions. While emails contained within CX 448 appear to indicate 

that some type of pricing was provided to Praxair for a project in Colorado Springs, the

document fails to provide Complaint Counsel with any of the project's technical specifications, 

including the proposed tank size. Complaint Counsel attempts to use a chart contained within

RX 90 to speculate on the size of the proposed Colorado Springs project. Unfortunately, 

Complaint Counsel failed to ask any witness if its interpretation of the chart, corresponding

assumptions made from the chart, or even if the contents of the chart itself were accurate. Since 

there is no testimony to verify that the assumptions Complaint Counsel is making are true,

Complaint Counsel's proposed finding is irrelevant and not supported by the record evidence.

1078. On November 27, 2000, PDM quoted a price of $850,000. (CX 448 at CB&I-E 

007392).

Response to Finding No. 1078:

Complaint Counsel's proposed finding attempts to interpret statements within a

document which were not supported by any testimony at trial. (See RFOF 1077). The document 

cited by Complaint Counsel demonstrates that the price provided Praxair was a rough budget

price because "there was no design done" on the proposed project. (CX 448 at CB&I-E 007392). 

As a result, the pricing can only be described as a rough budget price which was never refined. 

Since Complaint Counsel failed to use this document at trial, there is no support within the
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record evidence to support the accuracy or inaccuracy of the statement made within the

document. Thus, the details surrounding this price quotation are unknown.

1079. On November 6, 2001, after the PDM merger, Praxair asked CB&I to provide a

budget price for an identical volume (LR-60) LIN tank in Farmington, New Mexico. (CX 448 at 

CB&I-E 007391). The tank was based on the standard Praxair design, which was the same

design used by PDM in prior projects. (CX 448 at CB&I-E 007393).

Response to Finding No. 1079:

Complaint Counsel once again attempts to interpret documents and technical

information which was never presented to any witness at trial. (See RFOF 1077). As an initial 

matter, this budget price submission is irrelevant because Praxair did not construct the tank

according to these specifications. Praxair revised its designs for the New Mexico project and

ultimately accepted a firm fixed price that CB&I submitted in 2002. (CX 1508). Nonetheless, 

Complaint Counsel assumes that Praxair requested pricing for a tank of "identical volume"

without any support from trial testimony. Complaint Counsel also fails to note that the document 

indicates that "this will be a LIN tank vs a LOX. Please advise . . . of any impact this will have 

vs the past LOX estimate." (CX 448 at CB&I-E 007391). Since Complaint Counsel failed to

ask any witness about this document, there is no possible way to determine what effect that

change will have on the ultimate cost and price of the project.

Additionally, Complaint Counsel has no basis for the statement that both tanks 

were based upon a "standard Praxair design." The document cited by Complaint Counsel in

support of this proposition fails to provide Complaint Counsel with any information regarding

what a "standard Praxair design" is, what it was prior to the Acquisition, or if any changes were 

made to the designs since the Acquisition. As a result, Complaint Counsel's proposed finding 

lacks any support from the record.

1080. Praxair thought CB&I would, at a minimum, match the price if not reduce it in

light of the presumed cost savings flowing from the merger. Praxair wrote to CB&I wondering 
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whether the $850,000 price would be "OK to win the business or are you better with the CB&I 

influence." (CX 448 at CB&I-E 007392).

Response to Finding No. 1080:

Complaint Counsel's proposed finding is erroneous and is not by record evidence. 

Rather than call a representative from Praxair at trial, Complaint Counsel has now elected to use 

its clairvoyant powers to discover what Praxair "thought" at the time it wrote an email. During 

the course of the trial, Complaint Counsel did not ask a single witness about a document which it 

now cites as a basis for a proposition that Praxair expected and in fact "presumed" a cost savings. 

Complaint Counsel has no basis for knowing what Praxair "thought," and as result its proposed 

finding fails to be supported by record evidence.

1081. CB&I formed a budget price for Praxair, based on the cost advantages and

reduced cost structure that it had acquired from PDM. CB&I estimating staff were instructed to 

use PDM's price on the Colorado Springs tank as a basis for determining the price for the New 

Mexico project, if necessary. (CX 448 at CB&I-E 007393).

Response to Finding No. 1081:

Respondents have no specific response other than the documents cited by

Respondents were never presented before any witness at trial and therefore lack support from the 

record. (See RFOF 1077). 

1082. CB&I staff noted that the New Mexico LIN tank may cost less than the LOX tank 

for Colorado Springs because the New Mexico tank required less steel. "Since LIN is much

lighter than LOX, we can reduce the shell plate thicknesses significantly." (CX 448 at CB&I-E 

007391).

Response to Finding No. 1082:

Respondents do not dispute the contents of CX 448, however, since the

documents cited by Complaint Counsel were never presented before any witness at trial,

Complaint Counsel's assumptions as to what was intended by such statements is without support. 

(See RFOF 1077). Although the reduction in steel plate may be one difference between a LIN 
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and a LOX tank which may effect cost, we have no way of knowing what other changes are

inherent when switching a design from a LIN tank to a LOX tank because Complaint Counsel

failed to ask any witness about this sequence of events at trial. As a result, Complaint Counsel's 

proposed finding lacks support in the record.

1083. On April 30, 2002, despite CB&I's lower costs and Praxair's expectation of a

lower price, CB&I submitted "tight budget pricing" of $924,000 for the New Mexico tank. (CX 

449 at CB&I-E 007411).

Response to Finding No. 1083:

Complaint Counsel has no basis for making an assumption as to what Praxair

thought or expected with respect to the price submitted by CB&I. (See RFOF 1080). Since

Compliant Counsel elected not to call a representative from Praxair at trial, and neglected to ask 

any witness about the contents of the documents it now relies upon, Complaint Counsel has no 

basis for its conclusions regarding CB&I's costs and Praxair's "expectation." Respondents

acknowledge that CB&I provided Praxair with the pricing cited by Complaint Counsel in CX

449, however, are unable to verify its truthfulness because it was never presented before any

witness at trial.

1084. Although the New Mexico tank required less steel (CX 448 at CB&I-E 007391), 

CB&I explained the increase in price was due, in part, "to increasing stainless [steel] costs." (RX 

92 at CB&I-E 007401). In fact, the cost of stainless steel fell by 13.58% between November

2000 and April 2002. (CX 1605 at 2).

Response to Finding No. 1084:

Complaint Counsel's proposed finding is inaccurate, incomplete and misleading. 

As an initial matter, over one year separated the time that CB&I provide a budget price to Praxair 

for the Colorado Springs tank and the time it provided a budget price for the New Mexico tank. 

Complaint Counsel ignores the changes in cost that occurred during that year time span. 

Complaint Counsel erroneously assumes that prices should remain the same from year to year.
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Complaint Counsel also has no basis for the statement that the New Mexico tank 

"required less steel." Complaint Counsel relies on one sentence within an email that was never 

presented before any witness during trial or depositions. Complaint Counsel has not reviewed 

the actual project specifications to determine if the New Mexico tank in fact requires less steel, 

nor asked any witness on the stand if the statement made within the email is true. In fact,

Complaint Counsel ignores the undisputed record evidence which shows that the tank Praxair

awarded to CB&I had a slender tank design which resulted in an additional horizontal weld seam 

and thicker steel throughout the tank. (Scorsone, Tr. 5021; see also FOF 5.209).

Additionally, Complaint Counsel cites RX 92 as stating that CB&I explained that 

the price was a result of "increasing stainless [steel] costs." (CCFF 1084). Complaint Counsel

failed to cite the remainder of the comments which indicate that the increased cost is also the

result of "adjusting for the additional nozzles, earthquake zones, interior 5 psig pressure, use of

2002 labor rates, etc." (RX 92 at CB&I-E 007401). In fact, the letter to Praxair containing the 

pricing explicitly states that the additional cost is also the result of the fact that "[y]our group has 

requested many more nozzles that [sic] we typically see. I'm sure that some of them will be

deleted during a more detailed review, but for now this pricing is probably more conservative 

and/or more costly than previous budgets." (RX 92 at CB&I-E 007401). This is further

supported by evidence showing that Praxair in fact requested a complex nozzle structure for the 

tank that it awarded to CB&I. (Scorsone, Tr. 5022; see also FOF 5.210).

Finally, Complaint Counsel uses CX 1605 as evidence that the price of stainless 

steel fell during the time period in question. Such evidence is insufficient to support such a

proposition because Complaint Counsel failed to demonstrate that CX 1605 has any relationship 

whatsoever to CB&I's steel pricing. Complaint Counsel failed to show this document to any
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CB&I witness in an effort to determine if it corresponded to the steel pricing CB&I receives. 

Complaint Counsel's expert witness was the only witness who testified about CX 1605 and was 

unable to determine what types of products were included in the document, if it correlated to any 

steel products utilized by CB&I, or if it had any correlation to CB&I's pricing. (Simpson, Tr.

5399-409). In fact, Dr. Simpson stated that "it would be preferable to use the actual prices" as 

opposed to the PPI index. (Simpson, Tr. 5409). Since Complaint Counsel failed to ask any

CB&I witness about the documents cited in this finding or its steel pricing during this period of 

time, it lacks any support from the record evidence.

1085. The increase in price from $850,000 to $924,000 is precisely 8.7%, the same price 

increase observed by Fan of Linde and Praxair on the Praxair-New Mexico Project 1.

Response to Finding No. 1085:

Complaint Counsel's proposed finding is wholly inaccurate, misleading and lacks 

any support from record evidence. As an initial matter, Complaint Counsel demonstrates its

inability to provide support for such a statement by its lack of citations to any part of the record. 

Any alleged price differential of 8.7 percent is irrelevant due to the inability to compare two

budget prices on two separate projects with different scopes. (See FOF 7.1-7.38). Respondents 

hereby incorporate their responses to CCFF 1053-1084. (See RFOF 1053-84).

1086. After years of intense head-to-head competition between CB&I and PDM, three

separate instances of 8.7% price increases shortly after the merger cannot be coincidental.

Response to Finding No. 1086:

Complaint Counsel's proposed finding is inaccurate and lacks any support in the

record. Although it is doubtful that Complaint Counsel's argumentative and accusatory

statement above can even be classified as a finding, Respondents have demonstrated its

inaccuracy. Neither Linde nor Praxair have experienced price increases since the Acquisition. 
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(See RFOF 1067-70, 1071-84; see also FOF 5.185-5.211). Respondents hereby incorporate

their responses to CCFF 1053-1085. (See RFOF 1053-85).

4. MG Industries: Without PDM,

Customers Lose the Benefit of Competitive Bidding

1087. The experience of MG Industries, a subsidiary of Messer, ("MG Industries") is an 

example of how the elimination of PDM has reduced the ability of customers to obtain lower

prices from LIN/LOX tank suppliers.

Response to Finding No. 1087:

This finding is wholly unsupported by the evidence. Since the Acquisition, MG 

Industries has continued to use its skilled negotiation tactics in order to receive lower prices on 

LIN/LOX tanks. (FOF 5.151-5.153). For example, CB&I originally bid the New Johnsonville 

project at a four percent profit margin. (Scorsone, Tr. 5023; FOF 5.151). MG used its

negotiation tactics to make CB&I believe its price was too high. (Scorsone, Tr. 5023; Patterson, 

Tr. 460; FOF 5.151; 5.153). CB&I reduced their margin in response to this pressure. (Scorsone, 

Tr. 5023). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxx] As a result of MG's negotiation tactics, CB&I lowered its price on the New 

Johnsonville project. (Scorsone, Tr. 5023-24; FOF 5.151). CB&I believed MG Industries when 

it was told that its price was high and subsequently lowered its price in response to this pressure. 

(Scorsone, Tr. 5024; FOF 5.152). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxx]

1088. MG Industries, "a producer of industrial gas products," purchased 16 LIN/LOX

tanks in the last nine years. (Patterson, Tr. 338, 341).

Response to Finding No. 1088:

Respondents have no specific response to this finding.
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1089. Before the merger, the same three firms bid on most of MG Industries' LIN/LOX 

projects: CB&I, PDM and Graver. (Patterson, Tr. 351, 355, 363, 365). On each of MG

Industries' LIN/LOX projects after 1997, Mr. Patterson used each of the other firms as

bargaining chips to obtain lower prices on LIN/LOX tanks.

Response to Finding No. 1089:

Respondents have no specific response to this finding.

1090. There was vigorous competition between CB&I and PDM. CB&I and PDM

would vigorously undercut each other's prices, to the extent that the firms sold LIN/LOX tanks at 

negative margins, e.g., -23%, -12%, and -2 to -3%. (CX 136 at CB&I 014195-HOU; CX 193 at 

CB&I-PL020339; CX 600 at CB&I-PL012354). (See CX 455 at CB&I-E 007334 (xxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx id. 

at CB&I-E 007335 (xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxx); id. at CB&I-E 007335 (xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxx).

Response to Finding No. 1090:

This finding is misleading to the extent it implies that competition between CB&I 

and PDM caused those companies to bid at negative margins to compete against each other. The 

evidence shows that, during the 1990s, [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] Competition from Graver triggered this 

competition. Further, this finding is inaccurate to the extent it implies that MG cannot get

competitive prices from LIN/LOX tank suppliers today. MG has only awarded one LIN/LOX

project since the Acquisition; it awarded the a project to CB&I after negotiations forced CB&I to 

reduce its price on the project. (See RFOF 1087; FOF 5.151). [xxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxx] FOF 5.157).

1091. In most of the competitive bidding situations, PDM was either the lowest or

second lowest priced bidder, followed by Graver, and finally CB&I.
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Response to Finding No. 1091:

Complaint Counsel has failed to provide any record citations in support of its

proposition. In fact, the evidence directly contradicts this finding. [xxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

1092. PDM played an important role in maintaining competition: [xxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (Patterson, Tr. 462, in 

camera).

Response to Finding No. 1092:

This finding is inaccurate to the extent it implies that MG actually contracted with 

PDM for a LIN/LOX tank. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxx] This finding is misleading to the extent it implies that the presence of 

PDM is necessary to receive competitive prices on LIN/LOX tanks. Further, there is no

evidence that any change in CB&I's margins is relate to anticompetitive effects, as opposed to

CB&I's efforts to lower costs associated with building LIN/LOX tanks. MG's New Johnsonville 

project [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (See

RFOF 1087). MG received three bids from CB&I, Matrix and CB&T, and [xxxxxxxxxxxxxxxx 

xxxxxxxxxxxxx] (Scorsone, Tr. 5023; [xxxxxxxxxxxxxxxxxx] FOF 5.150, 5.157).

1093. PDM reported that MG Industries was "very interested in having PDM quote,"

based upon its experience where PDM had been the low bidder on a project. (CX 113 at PDMHOU014389).

Response to Finding No. 1093:

This finding is irrelevant to the extent it implies that PDM was the low bidder on 

any LIN/LOX project for MG Industries. As noted in RFOF 1091, [xxxxxxxxxxxxxxxxx 
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xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxx]

1094. In 1997 CB&I, PDM and Graver were competitors for the Rockport, Indiana

project. According to Mr. Patterson, MG Industries' negotiating tactics "lowered the price." 

(Patterson, Tr. 352). Graver was the lowest bidder for the Rockport project, but after "verbal

negotiations" using PDM's and CB&I's bids as leverage, Graver "knocked a few percent off [its] 

price." (Patterson, Tr. 351, 353).

Response to Finding No. 1094:

In response to this finding, Respondents incorporate herein their response to

CCFF 1092. (See RFOF 1092).

1095. CB&I, PDM, and Graver also competed for the contract to the combined

Chattanooga and Johnsonville, Tennessee projects in 1997. (Patterson, Tr. 355). PDM was the 

lowest bidder, with both Graver and CB&I bidding 15 percent higher than PDM. (Patterson, Tr. 

356-57; see CX 194 at CB&I-PL023449)). Mr. Patterson informed the bidders that "they were 

way higher than what it would take to be awarded any of those type projects," and that "if they 

expected to receive any orders, they would have to significantly lower their price." (Patterson, 

Tr. 357-58). As a result of Mr. Patterson's negotiating, the firms "lowered their price." 

(Patterson, Tr. 358). CB&I lowered its price to a level that, instead of 15% higher than PDM's 

quote, was within 5% of PDM's quoted price. (CX 165 at CB&I-PL006839). The Johnsonville 

project was later "postponed," while the Chattanooga tanks were built. (Patterson, Tr. 356).

Response to Finding No. 1095:

Respondents have no specific response.

1096. MG Industries also combined the LIN/LOX tanks for the Albany, New York;

Delisle, Mississippi; and Johnsonville, Tennessee projects for one bidding process. (Patterson, 

Tr. 361-62). PDM was the lowest bidder, Graver's bid was 4% above PDM's, and CB&I's bid 

was 7% above PDM' s bid. (Patterson, Tr. 362). Once again, Mr. Patterson used PDM as

leverage, informing Graver that "somebody has a better price than they do." (Patterson, Tr. 363). 

The customer was again successful in promoting the most competitive environment he could, as 

"Graver dropped the price substantially." (Patterson, Tr. 364 (emphasis supplied)).

Response to Finding No. 1096:

In response to this finding, Respondents incorporate herein their responses to

CCFF 1087-95. (See RFOF 1087-95). 
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1097. On the Waxahatchie LIN/LOX project, PDM, Graver, and "probably CB&I" bid 

for the LIN tank. MG Industries successfully used PDM, the "low bidder for the liquid nitrogen 

tank," as a point of leverage to get "good prices." (Patterson, Tr. 366).

Response to Finding No. 1097:

This finding is misleading to the extent that it suggests PDM was the low bidder 

on the project. Complaint Counsel fails to cite the remainder of the testimony which indicates

that Graver, not PDM, was the low bidder and was awarded the project. (Patterson, Tr. 366-67). 

Otherwise, Respondents have no specific response and incorporate their responses to CCFF

1087-95. (See RFOF 1087-95).

1098. In April 2002, MG Industries sought pricing for a LIN/LOX tank project in [xxxx 

xxxxxxxxxxxxxxxxxxxxx]. (xxxxxxxxxxxx, Tr. 456-57, in camera).

Response to Finding No. 1098:

Respondents have no specific response. (See FOF 5.149-5.150).

1099. Because PDM had merged with CB&I and Graver went out of business, MG

Industries had to look for alternative suppliers besides CB&I.

Response to Finding No. 1099:

This proposed finding is not supported by any citation to the record. 

1100. Requests for prices were sent to [xxxxxxxxxxxxxxxxxxxxxxxxxxx]. (xxxxxxxxx, 

Tr. 456-57, in camera). [xxxxxxxxx] was included in the bid because it had acquired personnel

from [xxxxxx]. (xxxxxxxxx, Tr. 458, in camera).

Response to Finding No. 1100:

This finding is misleading to the extent it implies that Chattanooga Boiler & Tank 

actually "bid" on this project. While CB&T submitted budget pricing, it did not submit a formal 

bid. (Stetzler, Tr. 6351; FOF 5.70).

1101. [xxxxx] was the lowest bidder. (Patterson, Tr. 457, in camera). [xxxxxxx] price 

was [xxx] higher than [xxxxxx]. (xxxxxxxxxx, Tr. 457, in camera). [xxxxxxxxxxxx] price was 

[xxxx] higher than [xxxxx]. (xxxxxxxxx, Tr. 457, in camera).
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Response to Finding No. 1101:

This finding is misleading for the reasons set forth in RFOF 1100. (See RFOF

1100).

1102. Because [xxxxxxxxx] and [xxxxxxxxxxxxxx]'s prices were substantially higher

than [CB&I's], MG Industries was unable to use them to negotiate a lower price from [xxxxxx]. 

(xxxxxxxxxxxx, Tr. 460-61, in camera).

Response to Finding No. 1102:

Complaint Counsel's finding is inaccurate and not supported by record evidence. 

Record evidence shows that MG did negotiate with CB&I in order to receive a lower price. (See

RFOF 1087; FOF 5.151-5.153). CB&I originally bid the New Johnsonville project at a four

percent profit margin and reduced its margin after MG told CB&I that its price was too high. 

(Scorsone, Tr. 5023; FOF 5.151). In addition, Mr. Patterson testified that [xxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] In

short, Complaint Counsel's finding is contradicted by the evidence.

1103. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (xxxxxxxxxx, Tr.

460-61, in camera). When MG Industries attempted to negotiate with [xxxxxx], [xxxxxxxxxxx 

xxxxxxxxxxxxxx], at which point Mr. Patterson abandoned his post-acquisition attempts to

secure a lower price. (xxxxxxxxxxxxxx, Tr. 461, in camera).

Response to Finding No. 1103:

Complaint Counsel's finding is inaccurate. CB&I lowered its price on MG's New 

Johnsonville project in response to negotiations with MG. (Scorsone, Tr. 5023-24; RFOF 1087; 

FOF 5.151-5.153). The evidence indicates that CB&I originally bid the New Johnsonville
- 496 -

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project at a four percent profit margin but lowered its margin to approximately .5% in response 

to pressure applied from MG. (Scorsone, Tr. 5023; FOF 5.151).

1104. PDM's absence left MG Industries without means to negotiate with CB&I. [xx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. (xxxxxxxxxxxxxxx, Tr. 

462, in camera).

Response to Finding No. 1104:

Complaint Counsel's proposed finding is incorrect and not supported by the

evidence. MG was able to use the competitive pressure of the other bidders on the New

Johnsonville project to receive a better price; CB&I felt this competitive pressure. (See RFOF 

1087, 1095, 1102-03; FOF 5.151-5.153). In addition, [xxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] FOF 

5.157).

1105. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (xxxxxxxxxxxxx, Tr. 462, in camera).

Response to Finding No. 1105:

This finding is unsupported by the evidence. There is no credible evidence to

suggest that the removal of PDM "took away" a lower price to MG Industries. In fact, the

evidence is to the contrary. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] FOF 5.157-5.158).

1106. The large price gap between CB&I and firms such as Matrix leave customers with 

only one option – CB&I– and CB&I does not get "involved in these bidding wars" like PDM did. 

(Patterson, Tr. 363). As a result, customers will be forced to pay the higher price set by CB&I.
- 497 -

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Response to Finding No. 1106:

Complaint Counsel's finding is incorrect, misleading and not supported by the

record. Evidence has shown that there are currently three viable alternatives to CB&I in the

LIN/LOX market: AT&V, Matrix and CB&T. (See FOF 5.22-5.71). One of CB&I's

competitors, AT&V, has defeated CB&I on every competitively bid LIN/LOX project since the 

Acquisition. (See FOF 5.76-5.78). Evidence has also shown that CB&I is concerned about these 

competitors and believes that it needs to lower its costs on LIN/LOX projects in order remain a 

viable competitor in the LIN/LOX market. (Scorsone, Tr. 5030-31; FOF 5.72-5.75, 5.212-

5.218). The evidence has shown that companies such as MG Industries and Air Liquide have

been successful in using the other competitors in order to force CB&I to lower its prices. (See

FOF 5.128-5.130, 5.151-5.153). Respondents also hereby incorporate their responses to CCFF 

1087-1104. (See RFOF 1087-1104).

1107. Prior to the acquisition, PDM was responsive to competitive pressures, giving

customers the lowest price possible, even when it was originally the lowest bidder. Today,

CB&I is the only option available to MG Industries. Graver is no longer in business, and

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (xxxxxxxxx, Tr. 466-467, 471, in 

camera; Kamrath, Tr. 1988-1989). But because their prices are [xxxxxxxx] higher, CB&I will

not leave money on the table in the next round of prices and will likely fill the gap by increasing 

its prices. (CX 278 at CB&I-H4004204). CCFF 231.

Response to Finding No. 1107:

Complaint Counsel's finding is incorrect, misleading and not supported by the

record. MG solicited bids from three viable LIN/LOX suppliers [xxxxxxxxxxxxxx

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] As a result, Complaint Counsel has no basis for 

asserting that "CB&I is the only option available to MG Industries" since MG Industries has

admitted that it [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx of
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xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxx] Further, there is no credible evidence to support a claim that

Matrix or CB&T "have higher costs and are unreliable suppliers." For additional responses to

Complaint Counsel's proposed finding, Respondents hereby incorporate their responses to CCFF 

1087-1106. (See RFOF 1087-1106).

D. The Merger Has Had Actual Anticompetitive Effects in the TVC Market

1. Spectrum Astro: Pre-Merger, Respondents

Compete Vigorously Against Each Other

1108. In the fall of 1999, Spectrum Astro required a thermal vacuum chamber in order

to be considered for the Space Based Infrared System (SBIRS) Low Phase 2 Program, sponsored 

by the United States Air Force. (CX 969 at CB&I-PL014693).

Response to Finding No. 1108:

Respondents have no specific response.

1109. Spectrum Astro "tried to do a survey of everybody in the country that we thought 

would be a qualified bidder, and the two bidders that we found at that time were Chicago Bridge 

& Iron and PDM down in Texas." (Thompson, Tr. 2040-2041). Spectrum Astro "did not find 

any other contractors – U.S. contractors." (Thompson, Tr. 2040-2041).

Response to Finding No. 1109:

Respondents have no specific response.

1110. Spectrum Astro informed CB&I and PDM several times that they were competing 

against each other for the project. (Scully, Tr. 1169 (explaining how he knew that CB&I and

PDM were the competitors for the Spectrum Astro project, Mr. Scully testified, "the customer 

readily stated that several times"); Higgins, Tr. 1270 (the Spectrum Astro job was "competitively 

bid" and the only company other than PDM that bid was CB&I)).

Response to Finding No. 1110:

Respondents have no specific response.
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1111. Mr. Thompson, Spectrum Astro's president testified that he competitively bid the 

project, because "we wanted obviously to get the best price we could get." (Thompson, Tr.

2051). Additionally, Spectrum Astro used a competitive bidding process because "we were

looking for technical innovation. We generally find that when we have contractors in

competition, they will - it will tend to drive innovation into the system." (Thompson, Tr. 2051).

Response to Finding No. 1111:

Respondents have no specific response.

1112. On September 14, 1999, Spectrum Astro held an equipment briefing meeting to 

provide an overview of the bidding process. (CX 969 at CB&I-PL014692). Representatives

from both CB&I and PDM/PSI attended the meeting. (CX 969 at CB&I-PL014692).

Response to Finding No. 1112:

Respondents have no specific response.

1113. Spectrum Astro retained both CB&I and PDM to develop specifications for a

large field-erected thermal vacuum chamber; Spectrum Astro also entered into an engineering

and design contract with each company in which Spectrum Astro paid each company [xxxxxxxx]

for precontract design work. (CX 969 at CB&I-PL014693; CX 1162 at CB&I-ATL000941, in 

camera; Thompson, Tr. 2047-2048).

Response to Finding No. 1113:

Respondents have no specific response.

1114. The xxxxxxx payment from Spectrum Astro was for "trade and design effort

sufficient to obtain a costed design with intent to award a firm fixed price contract." (CX 969 at 

CB&I-PL014693). This xxxxxxx "was paid on milestones," as work was completed. 

(Thompson, Tr. 2066)

Response to Finding No. 1114:

Respondents have no specific response.

1115. The contract was to be awarded according to a "rolling down-select between

CB&I and PDM/PSI team." (CX 969 at CB&I-PL014693).

Response to Finding No. 1115:

Respondents have no specific response.

1116. On March 31, 2000, PDM valued the Spectrum Astro TVC contract at

$8,500,000. (CX 1058 at PDM-HOU017464).
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Response to Finding No. 1116:

This finding is incomplete, ambiguous, and lacks any basis in the record. 

Complaint Counsel accurately states that PDM estimated the "contract value" of the Spectrum

Astro field-erected TVC at $8,500,000. (CX 1058 at PDM-HOU017464). However, the concept 

of "contract value" was never discussed by a single witness at trial, nor does this document

explain the concept. In fact, the document does not discuss whether "contract value" is

calculated to include or exclude profit or SG&A. (See generally CX 1058). Spectrum Astro's

own document indicates that PDM's total costs for its field-erected TVC project totaled

$9,929,990, suggesting that contract value does not include margin or "SG&A" since the

"contract value" logically should be higher than the total costs. (CX 1570 at 22).

1117. In April 2000, six months after the equipment briefing meeting, CB&I's sales

representative for this project, Mr. Rich Kooy, informed CB&I's CEO, Gerald Glenn, that PDM 

was CB&I's only competition for the Spectrum Astro project. (CX 1726 at CB&I-PL 4004590).

Response to Finding No. 1117:

Respondents have no specific response.

1118. Spectrum Astro received initial proposals from both CB&I and PDM in May

2000. CB&I and PDM's unadjusted proposed prices were $9,929,990 and $10,825,853

respectively. (CX 1570 at 22).

Response to Finding No. 1118:

This finding is misleading and inaccurate because it misstates the numbers found 

in the document. The document provides "total cost" amounts for CB&I and PDM's proposals

instead of "unadjusted proposed prices." (CX 1570 at 22).

2. Spectrum Astro: Respondents Collude to Raise Prices

1119. CB&I and PDM engaged in collusive behavior while the acquisition was being

negotiated. CCFF 1122, 1177.
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Response to Finding No. 1119:

Respondents did not engage in collusive behavior. (FOF 6.138-6.153).

1120. On August 1, 2000, at a meeting between management from CB&I and PDM to 

discuss the acquisition, Bob Jordan, CB&I' s Chief Operating Officer, discussed the ongoing

Spectrum Astro project with Luke Scorsone, the President of PDM EC. Mr. Jordan explained to 

Mr. Scorsone that he believed the Spectrum Astro project was "D.O.A." (Scorsone, Tr. 5111,

5114).

Response to Finding No. 1120:

This finding is misleading and inaccurate as set forth in RFOF 6.140. Complaint 

Counsel mischaracterizes a joke between Bob Jordan and the other attendees as something more 

nefarious. In fact, everyone in the room laughed at the joke, because Spectrum Astro's financial 

troubles were well-known. (See FOF 6.140)

1121. Mr. Scorsone relayed Mr. Jordan's statement that the Spectrum Astro project was 

"D.O.A." to Jeff Steimer, Spectrum Astro's main sales contact at PDM. (Scorsone, Tr. 5113;

CX 617 at 6; Thompson, Tr. 2068).

Response to Finding No. 1121:

This finding is misleading. Complaint Counsel points to a handwritten internal

note reflecting a conversation between a CB&I and PDM executive calling this project "D.O.A." 

Complaint Counsel argues that "[o]bviously, the meaning [of this document] was that Spectrum 

Astro wouldn't see the type of fractious competition [it] was expecting and was simply dead

meat." (CC Br. at 31; see also CC Br. at 5) (citing CX 1705). This conclusion is not "obvious." 

In fact, it is flatly contradicted by the evidence. Luke Scorsone explained that this comment

related to Spectrum Astro's financial condition, not to project pricing. In fact, Mr. Scorsone

explained that issues of pricing, profit margins, costs or anything else related to the Spectrum

Astro project were never discussed with anybody at CB&I, or more particularly, with the CB&I 

executive who made the "D.O.A." comment. (Scorsone, Tr. 4796-97, 5045-46) (FOF 6.141).
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CHI:1176893.3

1122. Although Mr. Scorsone claimed that the discussion with Mr. Jordan was "a joke" 

(Scorsone, Tr. 4796), the conversation between Mr. Jordan and Mr. Scorsone, along with the

commentary describing Spectrum Astro as "D.O.A" was noted in the contract file PDM kept on 

Spectrum Astro. (CX 1705 at PDM-HOU009169).

Response to Finding No. 1122:

As the previous rebuttal finding of fact explains, the comment regarding Spectrum 

Astro was a joke that referred to Spectrum Astro's financial condition, and contrary to Complaint 

Counsel's assertion that the joke was "kept in the contract file," the comment was handwritten on 

a letter which happened to be kept in a file. (RFOF 1121).

1123. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. (xxxxx, Tr. 

4425, in camera).

Response to Finding No. 1123:

Respondents have no specific response.

1124. Additionally, Mr. Thompson of Spectrum Astro testified that "[i]t would be

improper for the two competing bidders to discuss the price in a situation where price is a factor 

in the competition." (Thompson, Tr. 2057).

Response to Finding No. 1124:

Respondents have no specific response.

1125. In November of 2000, Spectrum Astro requested both CB&I and PDM to provide 

best and final offers to Spectrum Astro. (Thompson, Tr. 2049-2050). Thompson testified that 

the purpose of these bids was to "get competition." (Thompson, Tr. 2050). An e-mail discussing 

CB&I 's response to Spectrum Astro's request for a best and final offer shows that the rationale 

behind requesting a best and final offer is that the [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxx] (CX 242 at CB&I-PL 4003340, in camera).

Response to Finding No. 1125:

Complaint Counsel points to an internal CB&I memorandum from an low level

line salesman (Dave Lacey) to support their argument (CC Br. at 31) (citing CX 242), the

evidence establishes that no plan to coordinate bidding was ever created or executed. (Scorsone, 

Tr. 5045; Scully, Tr. 1217) (FOF 6.151-6.153). Mr. Scorsone testified that he was involved in
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the bidding process from PDM's end, that he had approval power over any price submitted by

PDM, that he did not have any discussions with Mr. Lacey prior to the Acquisition, and that he 

"did not in any way, shape or form" collude, coordinate or do anything improper with regard to 

PDM's pricing to Spectrum Astro. (Scorsone, Tr. 5045-46) (FOF 6.141).

1126. Mr. Dave Lacey, a CB&I sales representative labelled the competition between 

CB&I and PDM as a "tight race." In order to win the project, CB&I would have to "cut price to 

the bone ... (assume PDM [xxxxxxxxxxxxxxxxx] under CB&I)). (CX 242 at CB&I-PL 

4003340, in camera).

Response to Finding No. 1126:

This finding is misleading as set forth in RFOF 1125.

1127. On November 17, 2000, prior to the submission of "best and final" prices to

Spectrum Astro, Dave Lacey, the CB&I sales representative for thermal vacuum chambers,

circulated "some thoughts" on the Spectrum Astro project. (Scorsone, Tr. 5115-16).

Response to Finding No. 1127:

Respondents have no specific response, except that Dave Lacey is a lower-level 

salesperson at CB&I and his ideas were ignored and never implemented. (See FOF 6.147-6.153; 

see also RFOF 1125).

1128. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxx." (CX 242 at CB&I-PL 4003339, in camera). Two approaches were listed. One 

approach was to have "[n]o bid by either company. Both advise [xxxxxxxxxxxxxxx] to

negotiate directly [xxxxxxxxxxx]." (CX 242 at CB&I-PL4003340, in camera).

Response to Finding No. 1128:

This finding is misleading as set forth in RFOF 1125.

1129. The second approach was to have "CB&I & PDM bid high, [and] PDM offers

[xxxxxxxxxxxxxxxxxxxxx], then owned by CB&I, in lieu of [xxxxx] as means of changing the 

offering." (CX 242 at CB&I-PL4003340, in camera). PDM could only have offered XL

Technologies with the consent of CB&I.

Response to Finding No. 1129:

This finding is misleading as set forth in RFOF 1125.
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1130. Unlike the competition for [xxxxxxxxxxxxxxxxx] where PDM had cut its price in 

order to prevent CB&I from winning the award (xxxxxxxxx, Tr. 1911, in camera), PDM did not 

did not lower its pricing for Spectrum Astro's thermal vacuum chamber. (Thompson, Tr. 2049, 

2058, 2061; CX 565 at CB&I 007188-HOU).

Response to Finding No. 1130:

This finding is incorrect. First, PDM pursued this project bid vigorously, but

failed to win it. (Scorsone, Tr. 4797, 5044, 5046; FOF 6.142-6.143). In fact, PDM bid this work 

at a zero percent profit margin, and PDM really wanted this work because its shops were

operating under capacity at that time and they needed work to cover overhead costs. (Scorsone, 

Tr. 5044, 5046; FOF 6.144). PDM's total price was higher than CB&I's because of the price

offered by its thermal technology partner, Chart Industries. (Scorsone, Tr. 5045; FOF 6.145). 

Second, CB&I competed for the project just as vigorously. CB&I lowered its price in order to 

win the job, and CB&I's price came in under Spectrum Astro's budget estimates. (Thompson, Tr. 

2058 ("We were very pleased with this bid."), 2119-21; FOF 6.146). Third, Complaint Counsel's 

misquotes the testimony of Thompson and CX 565 in violation of this Court's Order. 

Specifically, the record evidence never indicates that PDM did not lower its pricing to compete

for the Spectrum Astro job. The record evidence cited only indicates that PDM bid for the work. 

(Thompson, Tr. 2049, 2058, 2061; CX 565 at CB&I 007188-HOU).

1131. Although CB&I assumed PDM would price "[xxxxxxxxxxxxxxxxxx] lower than 

CB&I," Mr. Scorsone instead requested that PDM increase its cost estimate for the Spectrum

Astro project. (CX 1570 at 37; CX 242 at CB&I-PL 4003340, in camera).

Response to Finding No. 1131:

Complaint Counsel's finding is flatly false. First, Mr. Scorsone never requested

that PDM increase its cost estimate for the Spectrum Astro project. Complaint Counsel relies on 

a document that only shows PDM's "total cost" without showing any change in cost or any

evidence that would demonstrate that a cost increase occurred that was not a result of Chart
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Industries' portion of the bid. (CX 1570 at 37; CX 242 at CB&I-PL 4003340, in camera). 

Second, Complaint Counsel wrongly assumes that a lower-level salesperson speaks for CB&I. 

(FOF 6.147-6.153). Lacey's ideas do not represent the official view of CB&I management, and 

his ideas were ignored. (FOF 6.147-6.153). Thus, Complaint Counsel misappropriates Lacey's 

thought that "[$500K to $1,000K] lower than CB&I" to CB&I.

1132. In November 2000, both CB&I and PDM submitted best and final offers for the

Spectrum Astro project. (Thompson, Tr. 2051).

Response to Finding No. 1132:

Respondents have no specific response.

1133. Instead of cutting their prices to the bone to win the job, both CB&I and PDM

increased their prices above their earlier submissions to Spectrum Astro, which was in line with 

Lacey's proposal. (CX 1570 at 22, 37).

Response to Finding No. 1133:

This finding is misleading and inaccurate as set forth in FOF 6.169-6.202. 

PDM's price was higher because of problems with its technology partner, Chart Industries. (FOF 

6.145). CB&I and PDM both competed vigorously for this job. (FOF 6.142-6.146). CB&I did 

not submit a best and final offer (BAFO) price until December 4, 2000, thus any price or cost 

changes documented prior to that date in CX 1570 are the result of changes in work scope and 

tend to increase over time as materials and labor rates change. (FOF 6.177). Complaint Counsel 

mischaracterizes pre-bid cost information as a "price" in a futile attempt to show a price increase 

in this finding. (See generally CX 1570).

1134. Of the two offers that were submitted, CB&I's final price was lower. (Thompson, 

Tr. 2051). CB&I bid $10,760,880, an increase of 8.4% above its previous price. (CX 1570 at 9). 

PDM bid $11,528,900, an increase of 6.5% above its previous price. (CX 1570 at 5, 37).
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Response to Finding No. 1134:

This finding is incorrect, because neither CB&I nor PDM had submitted prices on 

the project prior to submitting their best and final prices on December 4, 2000. Complaint

Counsel relies entirely on a document which only shows cost information as it changed over time 

to account for changes in work scope. (See CX 1570 at 1-37).

1135. Ronald Scully, President of XL Technology Systems, admitted that he did not see 

the same sort of fractious pricing behavior on the November 2000 Spectrum Astro bidding as he 

had seen on previous TVC projects for which CB&I and PDM had competed. (Scully, Tr. 1193-

1194).

Response to Finding No. 1135:

This finding is misleading for two reasons. First, PDM pursued this project and 

bid vigorously, but failed to win it. (Scorsone, Tr. 4797, 5044, 5046; FOF 6.142-6.143). In fact, 

PDM bid this work at a zero percent profit margin, because PDM's shops were operating under 

capacity at that time and they needed work to cover overhead costs. (Scorsone, Tr. 5044, 5046; 

FOF 6.144). PDM's total price was higher than CB&I's because of the price offered by its

thermal technology partner, Chart Industries. (Scorsone, Tr. 5045; FOF 6.145). Second, CB&I 

competed for the project just as vigorously. CB&I lowered its price in order to win the job, and 

CB&I's price came in under Spectrum Astro's budget estimates. (Thompson, Tr. 2058 ("We

were very pleased with this bid."), 2119-21; FOF 6.146).

1136. CB&I's best and final offer included a margin of xxxxxx. (CX 1489 at CB&I

060015). Mr. Scully learned that PDM's margin was higher than CB&I's. (Scully, Tr. 1194).

Response to Finding No. 1136:

Respondents have no specific response.

1137. Spectrum Astro's procurement team rated the proposals from CB&I and PDM,

based on each company's price, technology offerings, past performance, designed systems

capability, and financing plan. (CX 294 at CB&I/PDM-H4014777; CX 318 at CB&IATL001091).
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Response to Finding No. 1137:

Respondents have no specific response.

1138. Spectrum Astro gave CB&I a higher overall rating than PDM. (Scully, Tr. 1169; 

CX 1569 at 5). In a related proposal evaluation document, Mr. Thompson stated that "CB&I

price was considerably lower, CB&I operating cost is estimated to be lower, CB&I presented

many innovative engineering solutions, CB&I presented a more complete and acceptable

financial/leasing proposal for negotiation." (CX 317 at CB&I-ATL000825).

Response to Finding No. 1138:

Respondents have specific response to this finding, except to note that the

decision to award the source selection was based almost entirely on the technology solutions

provided by XL Systems. (Scully, Tr. 1169, 1177-78; see also Thompson, Tr. 2083-84; FOF

6.48).

1139. After evaluating the proposals submitted by PDM and CB&I, Spectrum Astro

elected to proceed with CB&I, in December 2000. (Thompson, Tr. 2061; CX 926 at CB&I

007212-HOU).

Response to Finding No. 1139:

Respondents have no specific response.

1140. After selecting CB&I for the project, Spectrum Astro proceeded "based upon the 

price we had in our hands," that is the firm fixed price of approximately $10.7 million. 

(Thompson, Tr. 2065; CX 1489 at CB&I 060015). Mr. Thompson anticipated the negotiation of 

contractual terms and conditions, but "we don't expect the price to change." (Thompson, Tr.

2065; see CX 926 at CB&I 007212-HOU).

Response to Finding No. 1140:

Respondents have no specific response, except to note that the price provided to 

Spectrum Astro in December, 2000 expired after 90 days, as is typical in the this industry,

because costs are expected to escalate or fluctuate beyond the 90 day period. (FOF 6.176-6.177). 

Spectrum Astro did not request an updated price until nearly one year later in November, 2001. 

(Scorsone, Tr. 5048; FOF 6.176).
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1141. Following the selection of CB&I in December 2000, Spectrum Astro did not

immediately award the project because he was "working to get financing complete, so we [didn't] 

award." (Thompson, Tr. 2066).

Response to Finding No. 1141:

Respondents have no specific response, except to note that Spectrum Astro

informed CB&I on more than one occasion that it had obtained financing, but financing was

never secured. (Thompson, Tr. 2105; FOF 6.173).

1142. Although Spectrum Astro could not immediately award the entire chamber,

Spectrum Astro wanted to pay CB&I to proceed with the engineering portion of the project. 

(Thompson, Tr. 2066).

Response to Finding No. 1142:

Respondents have no specific response.

1143. In the summer of 2001, after the acquisition of PDM, Spectrum Astro agreed to 

pay CB&I $200,000 for performing the engineering work on the thermal vacuum chamber so

that the project could stay on schedule. (Thompson, Tr. 2067).

Response to Finding No. 1143:

Respondents have no specific response.

1144. CB&I insisted that Spectrum Astro pay the entire $200,000 up front, rather than 

in milestones as with the original xxxxxxxx payment. (Thompson, Tr. 2067-68). In an internal 

e-mail, CB&I staff threatened to "do no further work until [xxxxxxxxxxxx] agrees to pay us, and 

that we should require a down payment." (CX 1296 at CB&I 002930-HOU, in camera).

Response to Finding No. 1144:

Respondents have no specific response, except to note that Spectrum Astro

informed CB&I on more than one occasion that it had obtained financing, but financing was

never secured. (Thompson, Tr. 2105; FOF 6.173). As a result, CB&I was understandably leery 

about investing its own money on pre-contract work for a project that would likely never be

built.
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1145. Spectrum Astro complied with CB&I's demand for up front payment and CB&I 

continued with engineering (Thompson, Tr. 2069, 2071). Mr. Thompson testified that this type 

of demand is unheard of in the industry. (Thompson, Tr. 2068-2069, 2071).

Response to Finding No. 1145:

This finding is misleading. Mr. Thompson testified that this type of up front 

payment is unheard of in the satellite industry. However, he did not testify that such an up front 

payment is unheard of in the construction industry, of which CB&I is a member. (Thompson, 

Tr. 2116).

1146. Soon after, Spectrum Astro requested updated pricing for rates and factors, which 

would include updates in pricing for labor and material. (Thompson, Tr. 2069).

Response to Finding No. 1146:

Respondents have no specific response, except to note that CB&I was under no 

obligation to provide its cost information to Spectrum Astro during this negotiation. (Thompson, 

Tr. 2118-21; FOF 6.187).

1147. During the $200,000 engineering study, "there [we]re some items that were taken 

out of the design which should have caused the price to go down." (Thompson, Tr. 2071, 2073). 

Due to other "offsetting kinds of things" in the design, Mr. Thompson testified that on balance, 

he believed the price of the chamber "would have stayed about the same." (Thompson, Tr.

2073).

Response to Finding No. 1147:

Respondents have no specific response, except to note that CB&I and Spectrum

Astro were still in a negotiation at this time and that the Acquisition had no impact on the

increase in price. (Thompson, Tr. 2071; Scorsone, Tr. 5048-49; see also Scully, Tr. 1223-24; 

FOF 6.178, 6.188).

1148. According to a pricing analysis written by Scott O'Leary, Spectrum Astro's chief 

of facilities, Spectrum Astro was "expecting a decrease in cost due to the decrease in

requirements." (CX 1570 at 5; Thompson, Tr. 2095).
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Response to Finding No. 1148:

Respondents have no specific response, except to note that Spectrum Astro had no 

access to CB&I's costs. (Thompson, Tr. 2118-21; FOF 6.187). In fact, Spectrum Astro never 

had access to CB&I's estimated costs for the new additions to the work scope. (Thompson, Tr. 

2122; FOF 6.182). Since Spectrum Astro was not provided with any cost information, their 

estimators had to guess at the results of the price increase. (Thompson, Tr. 2122-23; FOF

6.182).

1149. One year after submitting its "best and final offer," CB&I provided Spectrum

Astro with updated pricing for the Spectrum Astro chamber. (Thompson, Tr. 2069-2070).

Response to Finding No. 1149:

Respondents have no specific response.

1150. CB&I's updated price for the Spectrum Astro thermal vacuum chamber was

$12,019,000 – almost $1.2 million greater than its price 12 months prior. (Thompson, Tr. 2074; 

CX 567 at CB&I 007139-HOU; Glenn, Tr. 4356-57).

Response to Finding No. 1150:

Respondents have no specific response, except to note that the price provided to 

Spectrum Astro in December, 2000 expired after 90 days, as is typical in the this industry,

because costs are expected to escalate or fluctuate beyond the 90 day period. (FOF 6.176-6.177).

1151. CB&I's updated price of $12,019,000 included a margin of xxxxxx. (CX 1489 at 

CB&I 060015). This represents an 11.7% increase in the price of the chamber.

Response to Finding No. 1151:

This finding is misleading for several reasons. First, extra profit was included in 

the November, 2001 re-pricing as a means of recovering some of the pre-contract costs, which 

was consistent with CB&I's policy at the time. (Scorsone, Tr. 5049; FOF 6.180). CB&I has not 

received compensation for all of the pre-contract work that it has done for Spectrum Astro. 

(Thompson, Tr. 2108-09; FOF 6.180). Only some of the pre-contract costs associated with the 
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Spectrum Astro job were included in the initial price, while others were not included. (Scorsone, 

Tr. 5117, 5235; FOF 6.181). Second, changes to the work scope also account for the price

increase. After the original price expired, Spectrum Astro added some items to the work scope

and deleted others. (Thompson, Tr. 2071, 2121-22; FOF 6.182). The costs on the project

increased on this re-pricing, according to CB&I's documents. (Scorsone, Tr. 5116-17; FOF

6.182). Spectrum Astro never had access to CB&I's estimated costs for the new additions to the 

work scope. (Thompson, Tr. 2122; FOF 6.182). Third, another reason for the extra profit was 

the perceived need to mitigate some of the risks of moving forward with the project. (Scorsone, 

Tr. 5049; FOF 6.183). CB&I was trying to account for several risks including the risks

associated with the relocation of the chamber site and any costs that would be associated with

moving the vessel into the building. (Scorsone, Tr. 5049-50; FOF 6.183). Fourth, the risk of

delay causes prices to increase. Satellite programs awarded by the Government are sometimes 

delayed. (Thompson, Tr. 2129; FOF 6.184). As a result, vendors of satellites must take account 

of the risk that these programs might be cancelled or delayed. (Thompson, Tr. 2129; FOF

6.184). Fifth, the November, 2001 price increase also reflected changes in material costs and

labor rates. (Scully, Tr. 1222; FOF 6.185). Sixth, some of the extra profit was also the result of 

posturing in the negotiation with Spectrum Astro, because the final terms of the contract were

never set. (Scorsone, Tr. 5049-51; FOF 6.186).

Spectrum Astro knew the price was going to go increase, but hoped it would only 

increase by less than $1.2 million. (Thompson, Tr. 2138-40; FOF 6.187). But Spectrum Astro 

admitted that it had no basis for that hope. (Thompson, Tr. 2123). Spectrum Astro does not

have access to CB&I's labor rates, for example. (Thompson, Tr. 2118-19; FOF 6.187). 

Basically, the Acquisition had no influence on the decision to add profit into the new price,
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because the project had already been awarded. (Scorsone, Tr. 5048-49; see also Scully, Tr.

1223-24; FOF 6.188).

1152. Mr. Thompson of Spectrum Astro testified that he was "surprised" at the price

increase, which he considered substantial. (Thompson, Tr. 2074).

Response to Finding No. 1152:

Respondents have no specific response, except to note that Spectrum Astro and

CB&I were still in a negotiation. (FOF 6.169-6.202).

1153. Dr. Simpson testified that the price increase did not result from an increase in the 

cost of raw materials used to build the chamber. (Simpson, Tr. 3508-09, citing (CX 1589). First, 

Mr. Thompson of Spectrum Astro "did not understand why the cost had increased ..." (Simpson, 

Tr. 3508-09, citing (CX 1589). Second, the Producers Price Index for steel did not show any

cost increases from the time of CB&I's bid in November 2000 and its updated pricing in

November 2001. (Simpson, Tr. 3508-09, citing (CX 1589).

Response to Finding No. 1153:

This finding is misleading and inaccurate as set forth in RFOF 1151. 

Additionally, the Producers Price Index for steel, by itself, does not account for CB&I's internal 

materials and labor costs, and Spectrum Astro never had access to these numbers. (FOF 6.182).

1154. CB&I's increase in the pricing for Spectrum Astro's thermal vacuum chamber

included a four percentage point increase in the net profit margin before taxes. (CX 1492 at

CB&I-060000; Scorsone, Tr. 5048, 5119-20; RX 385 at 064565; Scully, Tr. 1174). CB&I

increased its margin on the project from [xxxxxxx] in November 2000, to [xxxxxxxx], in

November 2001, an increase of 66%. (CX 1489 at CB&I 060015). CB&I similarly increased 

XL's margin on the project, increasing CB&I's total margin on the project from [xxxxxx] to

[xxxxxx], an increase of 67%. (CX 1489 at CB&I 060015).

Response to Finding No. 1154:

Respondents do not have a specific response to this finding, except to note that

the price increased for reasons set forth in RFOF 1151.

1155. This margin increase was directed by Mr. Scorsone, who told CB&I staff to "to 

insert the precontract costs incurred previously on the bid effort for this project even though

those costs had been incurred in the previous year and had been written off." (CX 1492 at CB&I 

060000 (emphasis added); see Scorsone, Tr. 5118, 5120-21; Scully, Tr. 1173-74).
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Response to Finding No. 1155:

Respondents have no specific response, except to note that the price increased for 

many reasons as set forth in RFOF 1151.

1156. Mr. Scorsone had no basis to add precontract costs that had already been paid into 

the final price. Mr. Scorsone admitted that Spectrum Astro and CB&I had a contract addressing 

how pre-contract costs were to be handled, and that there was no additional agreement that

Spectrum Astro should pay any more. (Scorsone, Tr. 5121, 5123).

Response to Finding No. 1156:

The first statement has no basis of support in the record. In fact, only some of the 

pre-contract costs associated with the Spectrum Astro job were included in the initial price, while 

others were not included. (Scorsone, Tr. 5117, 5235; FOF 6.181). The second statement is

entirely false, since Mr. Scorsone testified that not all of the pre-contract costs were covered by 

the design study agreement. (Scorsone 5121, 5123).

1157. Mr. Scorsone's decision to have CB&I add precontract costs to its margins is

inconsistent with industry practice. Pre-bid costs are typically absorbed "into the G&A costs of 

the [bidding] corporation." (Scully, Tr. 1174-75; Thompson, Tr. 2044, 2078-2079).

Response to Finding No. 1157:

Respondents have no specific response, except to note that this decision was

consistent with CB&I corporate policy at the time. (Scorsone, Tr. 5049; FOF 6.180).

1158. Mr. Scorsone also testified that the margin was increased to account for the added 

risk of "erecting the "vessel outside the building and moving it in[to the building]" with the

containment vessel. (Scorsone, Tr. 5122). However, this alternate method of erecting the

chamber did not come up until after the November 2001 price increase. (Thompson, Tr. 2078-

2079; CX 566 at 2; CX 1570 at 63 (alternate method was discussed in May 2002)). CB&I's

"apples to apples" comparison of its November 2000 and November 2001 proposals specifically 

states that estimates did not include "the alternate plan of erecting the chamber outside and then 

moving it into position." (CX 1489 at CB&I 060013).

Response to Finding No. 1158:

Respondents have no specific response.
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1159. In CB&I's November 13, 2001, updated price quote to Spectrum Astro, Mr. Jeff

Steimer listed nine reasons for its increase in price. (CX 567 at CB&I 007136-HOU, CB&I

007137-HOU). None of Mr. Scorsone's reasons for the increase in price are listed in Mr.

Steimer's November 13 price quote. (CX 567).

Response to Finding No. 1159:

Respondents have no specific response, except to note that the list of nine reasons 

contained in CX 567 does not purport to be exhaustive. (See CX 567).

1160. On December 19th, 2001, CB&I provided Spectrum Astro with a follow-up 

justification letter to explain the bases for CB&I's price increase. (CX 1570 at 57-59).

Response to Finding No. 1160:

Respondents have no specific response.

1161. At no time did CB&I tell Spectrum Astro that the price was increased because of 

pre-contract costs. (Thompson, Tr. 2078).

Response to Finding No. 1161:

Respondents have no specific response, except that CB&I was under no

obligation to explain its pricing breakdown to Spectrum Astro, since the two companies were

still attempting to negotiate the terms of a contract at the time. (FOF 6.170, 6.182, 6.191).

1162. Neither the November 13 nor the December 19 letter mentions any added risk of 

having to erect the chamber from outside the building as a factor that increased the price of the 

chamber. (CX 1570 at 46-59).

Response to Finding No. 1162:

Respondents have no specific response, except to note that Spectrum Astro does

not have access to CB&I internal documents which relate to cost breakdowns. (FOF 6.182).

1163. At no time did CB&I inform Spectrum Astro that it had increased its margin on

the thermal vacuum chamber project. (Thompson, Tr. 2137-38).

Response to Finding No. 1163:

Respondents have no specific response.
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1164. The pricing changes for Spectrum Astro's TVC demonstrate that, after the

acquisition, CB&I increased price and margin in this market. (Simpson, Tr. 3501-3508, citing

CX 317, CX 1489).

Response to Finding No. 1164:

This finding is inaccurate and relies entirely on Complaint Counsel's own expert 

witness, Dr. Simpson. For the reasons set forth in RFOF 1151, CB&I did not increase its

updated pricing on the Spectrum Astro project as a result of the Acquisition. (FOF 6.188).

3. TRW: Post-Merger Coordination by

CB&I Foreshadows Anticompetitive Effects

1165. Having eliminated its only competitor in the TVC market, CB&I continued,

following the acquisition, to attempt to coordinate on making a TVC bid or price quote with the 

next closest alternative available to TVC customers.

Response to Finding No. 1165:

Rather than cite evidence in the record, Complaint Counsel ignores the record and 

draws an unsupportable conclusion in this finding. (See FOF 6.127-6.137). Several pieces of

record evidence show that this finding is inaccurate. First, CB&I never submitted an actual bid 

or price quote for the TRW project; rather CB&I only submitted a budget estimate. (FOF 6.130). 

Second, Complaint Counsel's accusation fly in the face of its own position. On one hand, it

accuses CB&I of colluding with " the next closest available alternative" (CCFF 1165) or a

"potential competitor" (CC Br. at 32) -- Howard Fabrication. On the other, it vehemently argues 

that Howard is not (nor could it be) a competitor to CB&I. In support, it cites Mr. Gill's

admission that Howard is not a competitor of CB&I, and that this fact is known by CB&I and 

throughout the industry. (Gill, Tr. 182, 195). Complaint Counsel disingenuously tries to have it 

both ways. Third, Complaint Counsel wrongly accuses CB&I of coordinating with Howard

Fabrication on a bid to TRW. (CC Br. at 5, 32-33). CB&I and its employees did nothing

unlawful. Mike Miles, a low-level CB&I salesman, met with John Gill of Howard Fabrication to 
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discuss the possibility of Howard serving as a subcontractor to CB&I on an undisclosed TVC

project. (CC Br. at 32). Such an arrangement was nothing new. Pre-Acquisition, Howard had 

acted as a subcontractor to PDM on prior TVC projects. (Scorsone, Tr. 5060-61; FOF 6.136). In 

mid-meeting, Mr. Gill learned that Mr. Miles was discussing the TRW project. At that point,

Mr. Gill told Mr. Miles that he had provided ROM pricing to TRW. (FOF 6.129-6.130). 

Contrary to Complaint Counsel's allegations (CC Br. at 5), CB&I and Howard did not know they 

had separately provided pricing to TRW until this meeting. (Gill, Tr. 274; FOF 6.130). Fourth, 

Mr. Miles' actions were not authorized by Luke Scorsone (who would be responsible for

deciding whether to subcontract with Howard) or anyone else at CB&I. Further, Mr. Scorsone 

would approach TRW for permission to subcontract to Howard before actually doing so. 

(Scorsone, Tr. 5060) (FOF 6.137).

1166. In 1999, TRW decided to procure a TVC, and requested rough order of magnitude 

("ROM") pricing from CB&I and PDM, the "two large field-erected manufacturers" in the

market. (Neary, Tr. 1430-31).

Response to Finding No. 1166:

Respondents have no specific response.

1167. According to Mr. Neary, no other possible competitors existed in the TVC market 

prior to February 2001. (Neary, Tr. 1430).

Response to Finding No. 1167:

Respondents have no specific response.

1168. After the acquisition removed PDM from the market, TRW requested TVC

pricing from Howard Fabrication, a small producer of shop-built thermal vacuum chambers, in

order to obtain some check on the price it would have to pay to CB&I. (Neary, Tr. 1442-43).

Response to Finding No. 1168:

Complaint Counsel's positions are contradictory. On one hand, it accuses CB&I 

of colluding with "the next closest available alternative" (CCFF 1165), "a small producer of
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shop-built thermal vacuum chambers" (CCFF 1168), or a "potential competitor" (CC Br. at 32) 

-- Howard Fabrication. On the other, it vehemently argues that Howard is not (nor could it be) a 

competitor to CB&I. In support, it cites Mr. Gill's admission that Howard is not a competitor of 

CB&I, and that this fact is known by CB&I and throughout the industry. (Gill, Tr. 182, 195). 

Complaint Counsel disingenuously tries to have it both ways.

1169. TRW considers Howard Fabrication to be unqualified to compete in the TVC

market. Mr. Neary testified that Howard Fabrication does not have "the technical competence

nor the financial backing" necessary for TRW to award it a TVC project. (Neary, Tr. 1443).

Response to Finding No. 1169:

Complaint Counsel's positions are contradictory. On one hand, it accuses CB&I 

of colluding with "the next closest available alternative" (CCFF 1165), "a small producer of

shop-built thermal vacuum chambers" (CCFF 1168), or a "potential competitor" (CC Br. at 32) 

-- Howard Fabrication. On the other, it vehemently argues that Howard is not (nor could it be) a 

competitor to CB&I. In support, it cites Mr. Gill's admission that Howard is not a competitor of 

CB&I, and that this fact is known by CB&I and throughout the industry. (Gill, Tr. 182, 195). 

Complaint Counsel disingenuously tries to have it both ways.

1170. TRW nevertheless requested pricing from Howard Fabrication because it wanted 

to maximize competition for the TVC project. (Neary, Tr. 1444; see Simpson, Tr. 3523 ("In a

case where you're confronted with a strong firm and you're negotiating to try to get a price ... you 

want to have some competition between that firm and some other firm simply to try to get as

good a price as you possibly could under the circumstances.")).

Response to Finding No. 1170:

Complaint Counsel's positions are contradictory. On one hand, it accuses CB&I 

of colluding with "the next closest available alternative" (CCFF 1165), "a small producer of

shop-built thermal vacuum chambers" (CCFF 1168), or a "potential competitor" (CC Br. at 32) 

-- Howard Fabrication. On the other, it vehemently argues that Howard is not (nor could it be) a 

competitor to CB&I. In support, it cites Mr. Gill's admission that Howard is not a competitor of 
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CB&I, and that this fact is known by CB&I and throughout the industry. (Gill, Tr. 182, 195). 

Complaint Counsel disingenuously tries to have it both ways.

1171. Patrick Neary, the manager of the environment test organization at TRW, testified 

that he requested a bid from Howard Fabrication for the TVC facility to attempt to "help []

maintain the competitiveness...within the marketplace." (Neary, Tr. 1442-1444). According to 

Mr. Neary, "if there was no Howard there we would really be hosed since there's nowhere for us 

to go to if there's no competition." (Neary, Tr. 1444).

Response to Finding No. 1171:

Complaint Counsel's positions are contradictory. On one hand, it accuses CB&I 

of colluding with "the next closest available alternative" (CCFF 1165), "a small producer of

shop-built thermal vacuum chambers" (CCFF 1168), or a "potential competitor" (CC Br. at 32) 

-- Howard Fabrication. On the other hand, it vehemently argues that Howard is not (nor could it 

be) a competitor to CB&I. In support, it cites Mr. Gill's admission that Howard is not a

competitor of CB&I, and that this fact is known by CB&I and throughout the industry. (Gill, Tr. 

182, 195). Complaint Counsel disingenuously tries to have it both ways.

1172. Although "Howard does not have the capabilities to satisfy customers" in the

market for TVCs, Dr. Simpson concluded that Howard "appears to be the next strongest

competitor" in the post-acquisition competitive environment. (Simpson, Tr. 3517-8).

Response to Finding No. 1172:

Complaint Counsel's positions are contradictory. On one hand, it accuses CB&I 

of colluding with "the next closest available alternative" (CCFF 1165), "a small producer of

shop-built thermal vacuum chambers" (CCFF 1168), "the next strongest competitor" (Simpson, 

Tr. 3517-8; CCFF 1172), or a "potential competitor" (CC Br. at 32) -- Howard Fabrication. On 

the other, it vehemently argues that Howard is not (nor could it be) a competitor to CB&I. In

support, it cites Mr. Gill's admission that Howard is not a competitor of CB&I, and that this fact 

is known by CB&I and throughout the industry. (Gill, Tr. 182, 195). Complaint Counsel

disingenuously tries to have it both ways.
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1173. In October of 2002, Mike Miles, the CB&I sales representative handling the TRW 

account, proposed to John Gill, the President of Howard Fabrication that they meet to discuss a 

potential opportunity for Howard and CB&I to work together. (Gill, Tr. 244).

Response to Finding No. 1173:

Respondents have no specific response, except that the alleged opportunity was

not known to Miles or Gill until mid-way through the meeting. (FOF 6.127-6.129).

1174. Mr. Miles had no responsibility or authority regarding subcontracting. (Scorsone, 

Tr. 5059-61). According to Mr. Scorsone, if CB&I were seriously considering subcontracting to 

Howard any part of the work on a TVC project, CB&I would first approach the customer

regarding the proposal before contacting Howard. (Scorsone, Tr. 5060).

Response to Finding No. 1174:

Respondents have no specific response.

1175. Neverthless, Mr. Miles visited Mr. Gill and asked him "would you like to possibly 

work together on giving TRW a price on this job?" (Gill, Tr. 245).

Response to Finding No. 1175:

Respondents have no specific response, except that the alleged opportunity as

well as the fact that both CB&I and Howard had provided budget pricing to TRW were not

known to Miles or Gill until mid-way through the meeting. (FOF 6.127-6.129).

1176. According to Mr. Gill, at the meeting Mr. Miles gave him a copy of design

specifications that he recognized as the same specifications that he was given by TRW for their 

TVC project. (Gill, Tr. 245). Consequently, Mr. Gill "knew" that Mr. Miles had been at TRW. 

(Gill, Tr. 245). Mr. Gill told Mr. Miles that he knew the job was for TRW and that he had

already presented a proposal to TRW for the job. (Gill, Tr. 245, 252-53, 274).

Response to Finding No. 1176:

Respondents have no specific response, except that the alleged opportunity was

not known to Miles or Gill until mid-way through the meeting. (FOF 6.127-6.129).

1177. Mr. Gill testified that, nevertheless, Mr. Miles asked him whether Howard "could 

coordinate on making a bid or a price quote to TRW." (Gill, Tr. 247). Mr. Gill confirmed that 

Mr. Miles proposed coordinating on the TRW bid after Mr. Gill had told him that Howard was

bidding on the project. (Gill, Tr. 274).
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Response to Finding No. 1177:

Respondents do not dispute the information contained in this finding, except to

note that Mr. Miles was not authorized by anyone at CB&I to act on CB&I's behalf. (FOF

6.131).

1178. TRW believes that CB&I's proposal to Howard to coordinate on the price and bid 

to TRW deprives TRW of any chance for relief from CB&I's monopoly price. At trial, Mr.

Neary of TRW testified that "it's not right" for a bidder to ask a competing bidder to coordinate 

on making a bid or price quote to TRW. (Neary, Tr. 1451). Mr. Neary further testified that

"[w]e're not going to get a fair and equitable price. It goes back to why do we even have two

competitors. We're at a disadvantage. We're going to get – we're basically hosed, as I would 

say." (Neary, Tr. 1451, emphasis added). (See Simpson, Tr. 3522 (CB&I's actions may "cause 

Howard to no longer bid as an independent company.")).

Response to Finding No. 1178:

Complaint Counsel's positions are contradictory. On one hand, it accuses CB&I 

of colluding with "the next closest available alternative" (CCFF 1165), "a small producer of

shop-built thermal vacuum chambers" (CCFF 1168), "the next strongest competitor" (Simpson, 

Tr. 3517-8; CCFF 1172), or a "potential competitor" (CC Br. at 32) -- Howard Fabrication. On 

the other, it vehemently argues that Howard is not (nor could it be) a competitor to CB&I. In

support, it cites Mr. Gill's admission that Howard is not a competitor of CB&I, and that this fact 

is known by CB&I and throughout the industry. (Gill, Tr. 182, 195). Complaint Counsel

disingenuously tries to have it both ways.

Secondly, Complaint Counsel wrongly accuses CB&I of coordinating with

Howard Fabrication on a bid to TRW. (CC Br. at 5, 32-33). CB&I and its employees did nothing 

unlawful. Mike Miles, a low-level CB&I salesman, met with John Gill of Howard Fabrication to 

discuss the possibility of Howard serving as a subcontractor to CB&I on an undisclosed TVC

project. (CC Br. at 32). Such an arrangement was nothing new. Pre-Acquisition, Howard had 

acted as a subcontractor to PDM on prior TVC projects. (Scorsone, Tr. 5060-61; FOF 6.136). In 
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mid-meeting, Mr. Gill learned that Mr. Miles was discussing the TRW project. At that point,

Mr. Gill told Mr. Miles that he had provided ROM pricing to TRW. (FOF 6.129-6.130). 

Contrary to Complaint Counsel's allegations (CC Br. at 5), CB&I and Howard did not know they 

had separately provided pricing to TRW until this meeting. (Gill, Tr. 274; FOF 6.130).

Third, Mr. Miles' actions were not authorized by Luke Scorsone (who would be

responsible for deciding whether to subcontract with Howard) or anyone else at CB&I. Further, 

Mr. Scorsone would approach TRW for permission to subcontract to Howard before actually

doing so. (Scorsone, Tr. 5060) (FOF 6.137).

1179. Based on his analysis of the TRW story, Dr. Simpson concluded that the

coordination between CB&I and Howard would eliminate Howard's ability to bid independently 

and, consequently, "TRW would be hurt by this coordination." (Simpson, Tr. 3522). "If CB&I 

coordinates [pricing] with Howard, then that would remove Howard as a constraint and then the 

next constraint would be even higher." (Simpson, Tr. 3517-18).

Response to Finding No. 1179:

Dr. Simpson's conclusions ignore the testimony of the witnesses involved in this 

project acknowledging that such an arrangement could result in lower prices to TRW. (Gill, Tr. 

254-55; Neary, Tr. 1480; FOF 6.134, 6.136). Mike Miles, a low-level CB&I line salesman, met 

with John Gill of Howard Fabrication to discuss the possibility of Howard serving as a

subcontractor to CB&I on an undisclosed TVC project. (CC Br. at 32). Such an arrangement 

was nothing new. Pre-Acquisition, Howard had acted as a subcontractor to PDM on prior TVC 

projects. (Scorsone, Tr. 5060-61; FOF 6.136). Thus, Dr. Simpson's conclusion that "TRW

would be hurt by this coordination" is incorrect. Further, Mr. Scorsone would approach TRW

for permission to subcontract to Howard before actually doing so. (Scorsone, Tr. 5060) (FOF

6.137).

1180. In the post-acquisition competitive environment, CB&I, a large, unopposed firm

with low costs and efficient practices is in a position of power over other, smaller firms. These 

smaller firms know that they cannot compete with CB&I and will instead acquiesce to "join"
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CB&I. The acquisition has therefore increased the risk of collusion among suppliers of large,

field-erected thermal vacuum chambers.

Response to Finding No. 1180:

Complaint Counsel submits this finding without any citations to the record or any 

evidence to support it. This finding is pure argument and should be treated accordingly. In fact, 

the Acquisition has had no anti-competitive effects on the market for field-erected TVC's. (See

FOF 6.122-6.202).

4. [xxxxxx]: Pre-Merger Competition Between Respondents Lowers Prices

1181. Respondents' TVC pricing to [xxxxxx] demonstrates both how competition

between CB&I and PDM drove TVC prices down prior to the acquisition and how, following the 

acquisition, CB&I has increased price.

Response to Finding No. 1181:

This finding is misleading and inaccurate because "competition" did not lower the 

prices. In fact, PDM engaged in anti-competitive behavior in order to keep CB&I out of the

field-erected TVC market by bidding the C-1 project at below cost. (Scully, Tr. 1193-94, 1166; 

[xxxxxx, Tr. 1916).] Additionally, in direct contravention of this Court's Order, this finding

does not rely on any evidence in the record.

1182. In [1997], [xxxxxx], which is now owned by [xxxxxx], procured a large, fielderected, mailbox-shaped thermal vacuum chamber that [xxxxxx] now calls the [xxxxxxxxxx]. 

([xxxx] Tr. 1740, [xxxx], in camera).

Response to Finding No. 1182:

Respondents have no specific response.

1183. [xxxxxx] used a competitive bidding process to procure the [xxxxxxxxxxx]. 

([xxxxxx], Tr. 1889, in camera). [xxxxxxxx] testified that his responsibility was to complete the 

project below cost and that the competitive bidding process would provide [xxxxxx] with the

lowest cost possible. ([xxxxxx], Tr. 1890, in camera).

Response to Finding No. 1183:

Respondents have no specific response.
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1184. Both PDM and CB&I each attempted to preempt the competitive bidding process 

and win the project on a sole-source basis. Bob Swinderman, PDM sales representative, told

[xxxxxx] that sole-sourcing the chamber with PDM "would be the cheapest and fastest way" to 

get the chamber built. ([xxxxx], Tr. 1889-90, in camera). CB&I echoed the same sentiment,

giving similar assurances to [xxxxxx] if it sole-sourced the chamber with CB&I. Id.

Response to Finding No. 1184:

Respondents have no specific response.

1185. CB&I's initial sole-source estimate for the TVC was $7.5 million dollars higher

than PDM's. PDM gave [xxxxxx] a price estimate "in the [xxxxxx] million range" and CB&I's 

budgetary pricing was "high-sided at" [xxxx] million. ([xxxxx], Tr. 1891, 1906, in camera).

Response to Finding No. 1185:

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] Comparing a sole-source estimate with a

competitively bid price or a budgetary price is misleading and unreliable. (See generally FOF

7.1-7.38).

1186. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. ([xxxxx], Tr. 1890, in camera).

Response to Finding No. 1186:

Respondents have no specific response.

1187. Rather than sole-source the project, [xxxxxx] made the specifications for the

project available to "all the interested bidders." ([xxxxx], Tr. 1892, in camera). [xxxxxx] 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxx]" ([xxxxxx], Tr. 1890-91, in camera).

Response to Finding No. 1187:

Respondents have no specific response.

1188. Four companies responded to [xxxxxxx]'s request for proposals: CB&I, PDM,

[xxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxx], Tr. 1899, in camera). These bidders presented 

"their conceptual design," cost estimate material, and other information required by [xxxxxxx]. 

([xxxxxx], Tr. 1892, in camera).
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Response to Finding No. 1188:

Respondents have no specific response.

1189. Quality and timeliness of completion were of paramount importance to [xxxxxx]. 

[xxxxxxxx] project required the construction schedule to be expedited significantly. (Proulx, Tr. 

1897-1898 , in camera). A project of this magnitude normally required a three-year 

construction; [xxxxxx] wanted the project completed in 18 months. ([xxxxxx], Tr. 1897-1898, in 

camera ). Therefore, [xxxxxx] was particularly concerned about "the credibility and integrity of 

the construction plan" of each of the suppliers bidding for the project. ([xxxxxx], Tr. 1897-98, in 

camera).

Response to Finding No. 1189:

Respondents have no specific response.

1190. [xxxxxxxxxxxxxxxxxx] submitted the lowest bid in response to [xxxxxx]'s 

performance specifications. However, [xxxxxxxxxxxxxxxxx] did not meet [xxxxxxx] standards. 

[xxxxxx] eliminated [xxxxxxxxxxxxxxxx] from the bidding because "they did not show that they 

had a complete wherewithal as to the scope of the project in order to come in at cost," they "did 

not have clear solutions on some of the items delineated in ... [xxxxxxxxx] preliminary proposal 

review," and "...they lacked the demonstrated experience of building something of that size." 

(xxxxxxx, Tr. 1900, in camera).

Response to Finding No. 1190:

Respondents have no specific response.

1191. [xxxxxx] also eliminated [xxxxxx] as a possible competitor because "... their

proposal couldn't meet the spec...they took exception to some of our specs." ([xxxxx], Tr. 1901, 

in camera).

Response to Finding No. 1191:

Respondents have no specific response.

1192. In addition to the four original bidders, [xxxxx] also contacted two other

suppliers, "[xxxxxxxxxxxxxxxxxxxxxx], and requested that they submit proposals for the

project. (xxxxxx, Tr. 1902-1903, in camera). [xxxxxx] refused to submit a bid because "they felt 

the size of the project was beyond their company's means." ([xxxxxx], Tr. 1903, in camera).

Response to Finding No. 1192:

Respondents have no specific response.
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1193. The elimination of [xxxxxxxxxxxxxxx] and [xxxxxx] from the competition, and 

the refusal of [xxxxxx] to submit a bid, left PDM and CB&I as the two down-selected bidders for 

the [xxxxxxxxxx]. ([xxxxxx], Tr. 1892, in camera).

Response to Finding No. 1193:

Respondents have no specific response.

1194. About the time CB&I and PDM became the two remaining bidders for the project, 

CB&I and PDM provided [xxxxxx] with initial pricing bids. According to [xxxxxxxx], CB&I 

provided [xxxxxx] with a "high-sided" bid of [xxx] million. ([xxxxxx], Tr. 1906, in camera). 

PDM also submitted a bid of approximately [xxx] million to [xxxxxx] for the project. ([xxxxxx], 

Tr. 1906-1907, in camera).

Response to Finding No. 1194:

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxx] Comparing a sole-source estimate with a competitively bid price or a 

budgetary price is misleading and unreliable. (See generally FOF 7.1-7.38).

1195. At the end of this phase in [xxxxx]'s procurement process, [xxxxxx] asked for a

"best and final" price from CB&I and PDM. ([xxxxxx], Tr. 1908, in camera).

Response to Finding No. 1195:

Respondents have no specific response.

1196. [xxxxx] told CB&I and PDM that they were competing against each other for the 

[xxxxxxxxxxx]. ([xxxxxx], Tr. 1909, in camera). Mr. [xxxxxxxxxxx] project manager, testified 

that he wanted CB&I and PDM to know that they were competing against each other because

"when you have competitors bidding best and final, one number takes all, [that] is when we

would receive the lowest price..." ([xxxxxx], Tr. 1909, in camera).

Response to Finding No. 1196:

Respondents have no specific response.

1197. [xxxxxx] asked each company for "cost-saving initiatives, what could be done to 

reduce costs." ([xxxxxx], Tr. 1907, in camera). xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx ([xxxxxx], Tr.

1907-1908, in camera).
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Response to Finding No. 1197:

Respondents have no specific response.

1198. After receiving the final pricing offers for the [xxxxxxxxxx], [xxxxxxx] added

some items to the TVC specifications. ([xxxxxx], Tr. 1911, in camera). [xxxxxx] strategically 

added these items because it wanted an "all or none price." ([xxxxxx], Tr. 1911-12, in camera). 

Even though xxxxxxxxxxx believed these additional items "would have increased the price,"

[xxxxxxxx] asked CB&I and PDM to "sharpen their pencils and give me their lowest price." 

([xxxxxx], Tr. 1911-12, in camera).

Response to Finding No. 1198:

Respondents have no specific response.

1199. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

x]. ([xxxxxxxxxxxx], Tr. 1911, in camera).

Response to Finding No. 1199:

Respondents have no specific response.

1200. Despite the increase in cost from the additional items, xxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx ([xxxxxxx], Tr. 1910-11, in camera; see Scully, Tr. 1166 

(after the bid was awarded, CB&I learned that, at the last opportunity in the bidding process,

PDM had further lowered its price by "something in the order of as much as $2 million."); CX 

261 at CB&I-H004029 (" ... in a last minute maneuver PDM changed their offer to a cost

reimbursable open book contract with a 5% margin")).

Response to Finding No. 1200:

PDM bid the C-1 project in 1997 at below cost with the intention of keeping

CB&I completely out of the market. (Scully, Tr. 1193-94, 1166; FOF 6.58). [xxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxx] (FOF 6.58).

1201. [xxxxxxxx] perceived, based on comments, that PDM lowered its pricing to

demonstrate "technical prowess, boasting rights, so to speak, of having won or the desire to win 

for future business prospectives that [xxxxxxxxxx] contract ..." ([xxxxxx], Tr. 1916, in camera).
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Response to Finding No. 1201:

PDM bid the C-1 project in 1997 at below cost with the intention of keeping

CB&I completely out of the market. (Scully, Tr. 1193-94, 1166; FOF 6.58). [xxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] 

(Proulx, Tr. 1916). (FOF 6.58).

1202. Sometime after [xxxxxxx] awarded the contract to PDM, [xxxxxxxxx] talked with 

Bob Swinderman, the PDM sales representative, about the competition for the [xxxxxxx] project:

PDM felt that CB&I had been out of the market for several years

and that if they allowed them to win that particular project, which 

was a very significant project, that they would be back in and

become a significant competitor, and it was important to PDM

management that they not win that, and so through telephone calls 

they developed a price, lowered the price and offered it to [xxxxx]

at the last minute ...

(Scully, Tr. 1166; Scully, Tr. 1193 (PDM cut its price to try to keep CB&I out of the market)).

Response to Finding No. 1202:

Respondents do not dispute the evidence contained in this finding. (FOF 6.58).

1203. The lowest price was the deciding factor in who won the project. [xxxxxx]

awarded the [xxxxxxxxx] contract to PDM and its subcontractor, Chart Industries, primarily

because they offered a lower price than the CB&I/XL team. ([xxxxxxx], Tr. 1891, in camera).

Response to Finding No. 1203:

Respondents have no specific response.

1204. PDM's final price was approximately [xx] million less than PDM's initial bid and 

approximately [xxxxxx] million less than CB&I's initial bid. ([xxxxxxx], Tr. 1891, in camera). 

(See Higgins, Tr. 1266 (project value was about $10-12 million)).

Response to Finding No. 1204:

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 
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xxxxxxxx] (Proulx, Tr. 1906-07). Comparing a sole-source estimate with a competitively bid 

price or a budgetary price is misleading and unreliable. (See generally FOF 7.1-7.38). 

Complaint Counsel is comparing apples and oranges when it compares budgetary prices with

firm fixed bid prices. (FOF 7.1-7.38).

1205. [xxxxxxxxx] testified that his procurement strategy had saved [xxxxx] $4 million 

below what he had originally estimated as the likely cost of the [xxxxxxxxxxxxx]. ([xxxxx], Tr. 

1910, in camera).

Response to Finding No. 1205:

Respondents have no specific response.

1206. [xxxxx] made an effort to find alternative TVC companies to compete effectively 

against CB&I and PDM, but was unsuccessful. CCFF 1188-1193. [xxxxxx] was able to use the 

close competition between CB&I and PDM to lower the price of a TVC from a high bid of [xxx]

million down to its final price of approximately [xxxxxx] million, to obtain additional items, and 

to benefit from CB&I and PDM's cost-saving, design innovations. CCFF 1194-1205. As the

acquisition eliminated this competition between CB&I and PDM, these benefits are no longer

available to [xxxxxxx].

Response to Finding No. 1206:

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxx] (Proulx, Tr. 1906-07). Comparing a sole-source estimate with a competitively bid 

price or a budgetary price is misleading and unreliable. (See generally FOF 7.1-7.38). 

Complaint Counsel is comparing apples and oranges when it compares budgetary prices with

firm fixed bid prices. (FOF 7.1-7.38).

5. Following the Acquisition, CB&I Increased the Price

for [xxxxxx]'s [xxxxxxxxxx] TVC Project by [xx]%

1207. On June 30, 1999, PDM provided [xxxxxxx] with a firm fixed price proposal for a 

large, field-erected thermal vacuum chamber for [xxxxxxxx]'s Seal Beach facility. (CX 1573 at 

5-6, in camera; [xxxxxx], Tr. 1925-27, in camera).
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Response to Finding No. 1207:

Respondents have no specific response, except to note that this firm fixed bid

price was [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxx] (FOF 6.155).

1208. Pre-acquisition, PDM quoted a price of [xxxxxxxxxx] in its proposal to [xxxxxx], 

but the customer chose to postpone the project. (CX 1573 at 6, in camera; [xxxxxx], Tr. 1926, in 

camera).

Response to Finding No. 1208:

Respondents have no specific response, except to note that this price [xxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxx]

1209. In May 2001, [xxxxxx] undertook a study to determine whether it should procure 

the new large, field-erected thermal vacuum chamber for the [xxxxxxxxxx] facility or

alternatively expand its [xxxxxxxxx] facility. ([xxxxxx], Tr. 1927-28, in camera). [xxxxxx] also 

asked CB&I to provide it with updated pricing on the proposal previously submitted by PDM. 

([xxxxxx], Tr. 1928-29, in camera).

Response to Finding No. 1209:

Respondents have no specific response, except to note that CB&I [xxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxx]

1210. In order to analyze the costs of the two alternatives, [xxxxxxxxx] requested "cost 

verification from CB&I ... of the price ... [xxxxxxxxxxxxxx] based on PDM's earlier proposal." 

(xxxxxx, Tr. 1929, in camera). [xxxxxxx] contacted Dave Lacey of CB&I, asked him to review 

PDM's prior proposal and submit a renewed price based on the specifications and schedule of the 

prior bid. ([xxxxxxx], Tr. 1930, in camera).
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Response to Finding No. 1210:

Respondents have no specific response, except to note that CB&I [xxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxx]

1211. [xxxxxxxx]'s official request was for a firm fixed price renewal of PDM's earlier 

bid for the TVC. ([xxxxxx], Tr. 1933, 1935, in camera).

Response to Finding No. 1211:

Respondents have no specific response, except to note that CB&I [xxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxx).]

1212. [xxxxxxxxxx] expected the price for the [xxxxxxxxx] thermal vacuum chamber

project to increase marginally to cover "reasonable inflation." He anticipated the new pricing

information to be [xxxxxxxxxxxxxxxxxxxxxxxxxxxx] ([xxxxxxx], Tr. 1934, in camera).

Response to Finding No. 1212:

Respondents have no specific response.

1213. Instead of conforming to [xxxxxxxx] request for a "firm fixed price renewal,"

CB&I submitted Rough Order of Magnitude Pricing. ([xxxxx], Tr. 1933, 1935-1936, in camera; 

CX 1573 at 3, in camera). On May 16, 2001, Mr. Lacey provided [xxxxxx] with a "ROM [xxxx 

xxxxxxxxxxxxxxx] of [xxxxxxxxxxx] for a fully commissioned thermal vacuum chamber." 

([xxxxxx], Tr. 1930-31, in camera; CX 1573 at 3, in camera).

Response to Finding No. 1213:

Respondents have no specific response.

1214. CB&I's new price represented an increase of 35%, or over [xxxxxxxxx]. (CX 

1573 at 2, in camera; [xxxxx], Tr. 1935, in camera; see Simpson, Tr. 3509-10 (the price quoted 

by CB&I after the acquisition is "much higher than the previous price" which was quoted by

PDM).
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Response to Finding No. 1214:

This finding is misleading and inaccurate because it compares a rough order of

magnitude price with a firm fixed bid price, which are two completely different concepts. (See

FOF 6.160-6.163, 7.1-7.38).

1215. [xxxxxxxxxx] of [xxxxxxx] accepted that the [xxxxxxxxxxx] price quoted in [xxx

xxxxxxx] letter as "the price [xxxxxxx] would now have to pay to have that chamber built." 

([xxxxxx] Tr. 1933, in camera).

Response to Finding No. 1215:

This finding is misleading and inaccurate as set forth in RFOF 1214.

1216. [xxxxxxxxx] was "disappointed that the cost had gone up" and that Mr. Lacey had 

not presented the updated price quote as a firm fixed price in his letter. ([xxxxx] Tr. 1936, in 

camera).

Response to Finding No. 1216:

Respondents have no specific response, except to note that CB&I [xxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxx]

1217. Respondents realize that [xxxxxxx] is unhappy with CB&I because of the price

increase. (See [xxxxxxx], Tr. 5333, in camera (When asked if he was aware that [xxxxxx] was 

displeased with CB&I for its unresponsiveness and price increase on the [xxxxxxxxx] project,

Mr. Scorsone replied: "I've heard that, yes.").

Response to Finding No. 1217:

Respondents have no specific response, except to note that CB&I [xxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxx]
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1218. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxxxxxxxx], Tr. 5332, in 

camera).

Response to Finding No. 1218:

Respondents have no specific response, except to note that CB&I [xxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

1219. The price quoted by Mr. Lacey "biased" the [xxxxxxxxxxx] option "more

negatively" and "favored the [xxxxxxxxxxx] expansion." ([xxxxxxxx], Tr. 1936, in camera).

Response to Finding No. 1219:

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxx]

1220. In the absence of PDM, CB&I, the only existing competitor for large, fielderected thermal vacuum chambers uses its sole position as a TVC competitor to its advantage.

CB&I now dictates its own bidding conditions and victimizes customers who have no other

suppliers to turn to.

Response to Finding No. 1220:

This finding is false, and Complaint Counsel cannot cite any record evidence in

support of this assertion. No anticompetitive effects have resulted from the Acquisition in the

field-erected TVC market. (See FOF 6.122-6.202).
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VIII.

CB&I'S "EXITING ASSETS" DEFENSE IS MERITLESS

A. Overview

1221. Respondents assert an "exiting assets" defense that has never been recognized by 

any court as an antitrust defense, and rejected by the few courts that have addressed it. In

essence, Respondents claim that had the merger not occurred, PDM would have made a business 

decision to liquidate the firm, thereby eliminating PDM from the competitive landscape.

Response to Finding No. 1221:

This finding is unsupported by any record evidence and is completely

argumentative. That fact that the Exiting Assets Defense has never been recognized by any court 

as an antitrust defense is not true because the Ninth Circuit in Olin Corp. v. F.T.C., 986 F.2d 

1295, 1307 (9th Cir. 1993) (citing J. Kwoka and F. Warren-Boulton, "Efficiencies, Failing

Firms, and Alternatives to Merger: A Policy Synthesis," 31 Antitrust Bull. 431 (1986)), did in 

fact recognize the defense, despite affirming the FTC Commissioners' decision on grounds that

petitioner had not meet the elements of the Exiting Assets Defense. Respondents do not dispute 

this finding's assertion that regardless of the merger, the competitive landscape in the relevant

markets would have been the same as it is now post-Acquisition because PDM was irrevocably 

committed to selling itself and exiting the industry. (Byers, Tr. 6741-42, 6755, 6757-58; 

Scheman, Tr. 2911, 2919, 6907, 6952) (FOF 8.16, 8.20, 8.38, 8.115). This issue has been

extensively briefed and need not be repeated here. (See Opening Br. at 152-55).

1222. Respondents' sole support for this proposed defense lies in a1986 article, J.

Kwoka and F. Warren-Boulton, "Efficiencies, Failing Firms, and Alternatives to Merger: A

Policy Synthesis," 31 Antitrust Bull. 431, 445-46 (1986). However, Kwoka and Warren-Boulton 

require that the proponent of an exiting asset argument must show that the exiting asset was

shopped unsuccessfully and that there is no alternative purchaser willing to pay more than scrap 

value to use the assets in the market. Id. at 446-49. Further, the proponent of the argument must 

show that the assets would no longer be used in the market, i.e., liquidation of the assets through 

sale of the assets for use in the market does not constitute an exiting asset. Id. at 450 ("analysis 

should focus on the alternative uses of the assets").
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Response to Finding No. 1222:

Respondents do not dispute the truth of most of this finding. In fact, Respondents 

have established that PDM EC and PDM Water were "shopped unsuccessfully" and that there "is 

no alternative purchaser" in the event that the Acquisition by CB&I fell through. For example, 

Mr. Scheman testified that an extensive marketing strategy was implemented and executed. 

(Scheman, Tr. 6943-45, 6910-11, 2921-22) (FOF 8.46-8.49, 8.53). Further, Mr. Byers and

Tanner confirmed that no alternative purchasers existed. (Byers, Tr. 6776-78; RX 28 at 2) (FOF 

8.55). This finding, however, is inaccurate because "the financial condition of a firm is neither 

necessary nor sufficient for a per se defense for merger. Rather, analysis should focus on the

alternative uses of the assets and presume that preservation of the assets in the market, even by a 

leading firm, is preferable to exit from the market." Kwoka, 31 Antitrust Bull., 431, 450. 

Moreover, Respondents also rely on the authority and arguments its cites in its brief. (See

Opening Br. at 138-158).

1223. The defense recognized by courts and the Merger Guidelines which most closely 

resembles Respondent's asserted "exiting assets" defense is the failing firm defense.

Response to Finding No. 1223:

The failing firm defense is similar. However, as stated in RFOF 1221, the Exiting 

Assets Defense is distinct from the failing firm defense as indicated in Olin Corp. v. F.T.C., 986 

F.2d 1295, 1307 (9th Cir. 1993), and is in fact not necessarily a "defense" but the logical

application of the evidence. (See Opening Br. at 138-58).

1224. The Merger Guidelines provide that a merger is not likely to create or enhance

market power or facilitate its exercise if the following circumstance are met: 1) the allegedly

failing firm would be unable to meet its financial obligations in the near future; 2) it would not 

be able to reorganize successfully under Chapter 11 of the Bankruptcy act; 3) it has made

unsuccessful good-faith efforts to elicit reasonable alternative offers of acquisition of the assets

of the failing firm that would keep its tangible and intangible assets in the relevant market and 

pose a less severe danger to competition than does the proposed merger; and 4) absent the
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acquisition, the assets of the failing firm would exit the relevant market. Merger Guidelines

§ 5.1.

Response to Finding No. 1224:

Respondents do not ever assert the failing firm defense. Further, the Merger 

Guidelines are not law and the applicable legal standards are set forth in Respondents Opening 

Brief at 152-55.

1225. Respondents failed to prove each element of the defense.

Response to Finding No. 1225:

Complaint Counsel seems to acknowledge this defense.

B. PDM Would Have Been Able to Meet its Financial Obligations

1226. Pitt-Des Moines's regular course of business documents reflect a strong and

profitable firm.

Response to Finding No. 1226:

This finding is wholly unsupported by the record evidence for a number of

reasons. This finding contains absolutely no cite to any record evidence. Further, to the extent 

this finding applies to the Exiting Assets Defense, this finding is completely inaccurate and

contradicted by the record evidence. (See Opening Br. at 138-58) (FOF 8.1-8.133).

1227. Pitt-Des Moines was a "profitable" company. (Scheman, Tr. 2923; CX 520 at

TAN 1003317). The company's EBITDA earnings increased from $20.5 million in 1994 to

$49.3 million in 1999. (CX 520 at TAN 1003317).

Response to Finding No. 1227:

This finding is irrelevant because Complaint Counsel cites what PDM was before 

the year 2000 when it lost $30 million. (Scheman, Tr. 6917, 6921, 6926; Byers, Tr. 6789) (FOF 

8.87).

1228. Pitt-Des Moines' E&C [Engineering & Construction] business unit was also

profitable, increasing its margin each year from 1994 through 1999 and increasing its EBITDA
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earnings at a 5-year combined annual growth rate ("CAGR") of 18.7% on 5-year sales CAGR of 

9.5%. (CX 520 at TAN 1003317).

Response to Finding No. 1228:

Respondents do not dispute the truth of this finding from 1994 through 1999. 

However, this finding is not true in fiscal year 2000 because PDM EC reported substantial losses 

of $30 million. (Scheman, Tr. 6917, 6921; Byers, Tr. 6789) (FOF 8.87). As a result, this finding 

is irrelevant. (Byers, Tr. 6763-64; RX 163 at 4) (FOF 8.83).

1229. PDM EC was a profitable division of Pitt-Des Moines. The division's EBIT

earnings increased from $5.4 million in 1995 to $9.5 million in 1999, a CAGR of 15.3%. (CX 

522 at TAN 1003373; Scheman, Tr. 2950). Revenues increased from $121.7 million in 1995 to 

$185.7 million in 1999. (CX 522 at TAN 1003373).

Response to Finding No. 1229:

Respondents do not dispute that from 1995 to 1999 PDM EC was profitable. 

However, this finding as stated is false because in fiscal year 2000, PDM EC recorded a

substantial loss as set forth in RFOF 1228. (Scheman, Tr. 6917, 6921; Byers, Tr. 6789) (FOF

8.87). Therefore, PDM EC's performance from 1995 to 1999 is irrelevant to this case based on 

the substantial loss in 2000 that negatively impacted the marketability of PDM EC. (Byers, Tr. 

6763-64; RX 163 at 4) (FOF 8.83).

1230. PDM EC had its best year ever in 1999, the year before CB&I and Pitt-Des 

Moines signed the acquisition agreement. (Scorsone, Tr. 4823-24). As of July 2000, the month 

before CB&I and Pitt-Des Moines signed the acquisition letter of intent, PDM EC projected

earnings before interest and taxes of $2 million in 2000. (CX 522 at TAN 1003373).

Response to Finding No. 1230:

CCFF 1230 is only partially true, and blatantly ignores the record evidence that is 

of greatest importance to this issue. From 1999 to 2000, PDM EC has the worst year of the

company's history and recorded a $30 million loss as set forth in RFOF 1228. (Scheman, Tr.

6917, 6921; Byers, Tr. 6789) (FOF 8.87). To completely ignore this evidence is a gross mistake. 
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CHI:1176893.3

This ignored $30 million loss greatly impacted PDM and Tanner's ability to market the EC

Division and negatively impacted potential purchaser's interest. (Byers, Tr. 6763-64; RX 163 at 

4) (FOF 8.83). For example, AT&V wanted no part of the EC Division, stating that the EC

Division was "consistently losing money" in the industrial tank business. (Cutts, Tr. 2458, 2534) 

(FOF 8.85). Shortly before the letter of intent was signed, it became clear that PDM EC was

having a poor year. These losses wiped out Complaint Counsel's reliance on a projected profit of 

$2 million, leading to projected losses of $9 million by the end of the year. (Scheman, Tr. 6920-

21; Byers, Tr. 6763-64) (FOF 8.83, 8.87).

1231. After Respondents announced the acquisition, PDM EC's earnings for 2000

declined, resulting in a loss for the year of $8 million. (Scorsone, Tr. 4825). After the

acquisition was consummated, CB&I and Pitt-Des Moines adjusted PDM EC's loss upward to

$18 million for 2000. (CX 1023). A short-term reduction in capital expenditures in the

petroleum and petrochemical industries in 1999 negatively impacted all tank suppliers in 2000, 

including CB&I. (CX 522 at TAN 1003372; CX 529 at TAN 1000596 ("1999 - Down -

Mergers in Oil + Gas * Market Driver (Oil + Gas)")).

Response to Finding No. 1231:

Respondents do not dispute the truth of this finding to the extent that after closing, 

it was determined that the EC Division lost approximately $30 million in fiscal year 2000 on a 

revenue base of $180 million. (Scheman, Tr. 6917, 6921) (FOF 8.87). Respondents agree that 

all tank suppliers were negatively impacted in 2000 as well as tightened credit markets, thus

making the ability to borrow funds more difficult. These factors affected the salability of PDM's 

divisions. (Byers, Tr. 6763-64; RX 163 at 4).

1232. The loss in 2000 did not, however, impact PDM EC's ability to meet its financial 

obligations. As of June 30, 2000, PDM EC had cash of $2.6 million, total assets of $79.2

million, no outstanding debt and shareholder' equity of $56.8 million. (CX 385 at 30).

Response to Finding No. 1232:

As stated, CCFF 1232 is misleading because PDM EC's substantial losses did not 

become apparent until shortly after the letter of intent was signed on August 29, 2000. (Byers, 
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Tr. 6763-66; Scheman, Tr. 6920-21) (FOF 8.83, 8.87, 8.105). Second, Complaint Counsel's

assertion that PDM EC's loss in 2000 did not impact its ability to meet its financial obligations is

wholly unsupported by any cite to the record evidence. Moreover, it is not certain whether or not 

PDM EC was able to meet its financial obligations as a result of these substantial losses in 2000 

because the transaction closed on February 7, 2001. (Byers, Tr. 6764-66) (FOF 8.105).

1233. Dr. Simpson testified that, in his opinion, PDM EC's negative earnings in 2000

did not imply that PDM EC would have exited the market but for this acquisition. (Simpson Tr., 

3575).

Response to Finding No. 1233:

Dr. Simpson's opinion on this subject matter lacks foundation and is really

irrelevant. Dr. Simpson stated that he was not an investment banker and has no experience in 

this field or in buying or selling a business. (Simpson, Tr. 5678-5686). Consequently, his

testimony on this subject is unreliable, speculative and solely self-serving. Moreover, his

opinion is directly contradicted by the PDM Board's Resolutions in May and June in which the 

company was put up for sale. (Byers, Tr. 6742, 6757-63, 6948; Scheman, Tr. 2919) (FOF 8.20, 

8.23-8.25, 8.38).

1234. Mr. Scorsone, PDM EC's President, Mr. Byers, Pitt-Des Moines's Vice President 

of Finance, and PDM's investment banker all believed that PDM EC's poor performance in 2000 

would be short-lived, and if PDM EC had remained independent, PDM EC would have returned 

to profitability the very next year and continued to grow. (Scorsone, Tr. 4838; Byers, Tr. 6899; 

CX 529 at TAN 1000596 ("2001 – will be good year [for PDM] – the bookings are higher"); see 

also CX 522 at TAN 1003372 ("This decline is expected to be short lived" PDM EC projects 

2001 revenue and EBIT of $168.0 million and $6.1 million, respectively)).

Response to Finding No. 1234:

Regardless of the truth of this finding, CCFF 1234 is irrelevant because no matter 

what the projected profitability of PDM EC was for the future, the fact remained that PDM's

Board was irrevocably committed to selling the EC Division and closing down its business as

stated in RFOF 1221. (Byers, Tr. 6741-42, 6755, 6757-58; Scheman, Tr. 2911, 2919, 6907,
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6952) (FOF 8.16, 8.20, 8.38, 8.115). In addition, as stated this finding is not true because Mr.

Byers testified that Mr. Scorsone's projections for a return to profitability for PDM EC in 2001 

was overstated and optimistic. In fact, Mr. Byers altered this projection to a break even year at 

best in 2001 for the EC Division. (Byers, Tr. 6752-54, 6876) (FOF 8.99). Even Mr. Scorsone 

testified at trial that his projection was proven inaccurate. (Scorsone, Tr. 5242-45) (FOF 8.97). 

Mr. Scheman testified that buyers in the market would not believe the profitability projections

because PDM had been wrong so many times before. (Scheman, Tr. 6926-27, 6951). Finally, 

these projections were made prior to the realization of PDM EC's substantial losses for 2000. 

For instance, CX 522 was made as part of a presentation in July 2000, well before the EC's

discovery of such losses in the fall of 2000. (CX 522 at 1003365).

1235. In September of 2000, Mr. Scorsone made a presentation to CB&I and its

advisors about PDM' EC's future prospects, "assuming that the company was not acquired [by

CB&I]." (Scorsone, Tr. 5201; CX 1695 at CB&I/PDM-H 4005659). Mr. Scorsone projected

PDM EC's earned revenues to be $151 million for 2000, and $168 million for 2001. (CX 1695 at 

CB&I/PDM-H 4005701; CX 529 at TAN 1000596; see also CX 1713 at CB&I/PDM-H 

4015086-89 (income from operations increase each year from $6.4 million to $9.1 million,

between the years 2001 and 2004)).

Response to Finding No. 1235:

There is no relevance to this finding because PDM EC was going to be sold as

stated in RFOF 1221 and 1234. But, as to Complaint Counsel's reliance on Mr. Scorsone's

projections in September 2000, Mr. Scorsone testified that these forecasts have not been proven 

to be accurate. Further, Mr. Scorsone does not regard his projection for PDM EC sales from

2000 to 2002 to be accurate either. (Scorsone, Tr. 5242-45) (FOF 8.97). Mr. Byers adjusted

these projections to a break even year for 2001, consistent with Mr. Scorsone's tendency to

overstate the projected performance and profitability of his division. (Byers, Tr. 6752-54, 6876) 

(FOF 8.99). Finally, the very projection Complaint Counsel touts in CCFF 1235 turned out to be 

false as CB&I's total revenue in 2001 and 2002 in the PDM EC business lines was the same as 
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Mr. Scorsone projected for PDM alone, and Mr. Scorsone was not projecting CB&I would

capture zero dollars. (Scorsone, Tr. 5242-45). Scorsone's projections for 2001 and 2002 were

way off. (Scorsone, Tr. 5242-45).

1236. As late as February 7, 2001, the date CB&I consummated the acquisition, PittDes Moines' management projected that PDM EC would make a profit of $4.8 million in 2001. 

(Scheman, Tr. 2961-2962; RX 163 at TAN 1000385).

Response to Finding No. 1236:

Respondents do not dispute that as of February 7, 2001, Pitt-Des Moines'

management projected that the best case scenario for PDM EC in 2001 was a $4.8 million profit. 

However, Mr. Scheman testified that based on his years of investment banking experience, he

had reason to doubt that any purchaser would have given PDM credit for $4.8 million in earnings 

with such substantial losses the year before. (Scheman, Tr. 2961-62). Further, the very

projection Complaint Counsel touts in CCFF 1235 turned out to be false as CB&I's total revenue 

in 2001 and 2002 in the PDM EC business lines was the same as Mr. Scorsone projected for

PDM alone, and Mr. Scorsone was not projecting CB&I would capture zero dollars. (Scorsone, 

Tr. 5242-45). Scorsone's projections for 2001 and 2002 were way off. (Scorsone, Tr. 5242-45).

1237. Mr. Glenn of CB&I considered PDM to be a "well-run company." (Glenn, Tr.

4249). He considered PDM a good competitor against CB&I for a long period of time and a

successful company in the engineering and construction business. (Glenn, Tr. 4249). PDM

made money and was attractive to its investors. (Id.) It is doubtful that CB&I would have been 

willing to pay a premium price if PDM's future prospects looked bleak or if it was on the verge 

of bankruptcy. CCFF 1255-1256, 1261.

Response to Finding No. 1237:

Complaint Counsel sets forth no support from the record for its assertion that it 

was doubtful CB&I would pay a premium price. Respondents refer this Court to its RFOF 1255-

56, 1261. In fact, Mr. Byers testified that CB&I did not pay a premium price for PDM EC,

especially in light of the reduction in purchase of over $22 million due to EC's poor performance. 
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(Byers, Tr. 6775-77, 6789-91, 6793-94; Scheman, Tr. 6929-31) (FOF 8.61, 8.88, 8.103, 8.110, 

8.112, 8.113). Finally, Mr. Glenn's statements are belied by the record evidence concerning

PDM's actual financial performance.

1238. Respondents presented no evidence that PDM EC would be unable to meet its

financial obligations.

Response to Finding No. 1238:

Complaint Counsel offers no evidentiary support for this assertion. Further, this 

finding is irrelevant because PDM EC's ability to meet its financial obligations did not and would 

not have changed the fact that PDM's Board had irrevocably committed to closing down and

selling off PDM EC. (Byers, Tr. 6741-42, 6755, 6757-58; Scheman, Tr. 2911, 2919, 6907,

6952) (FOF 8.16, 8.20, 8.38, 8.115). Further, Complaint Counsel offers no evidence that this

finding is even required under the elements of the Exiting Assets Defense.

C. Respondents Have Not Shown that PDM Would Not

Be Able to Reorganize Successfully Under Chapter 11

1239. Respondents presented no evidence (1) that PDM was going to file under Chapter 

11 of the Bankruptcy Act, or (2) that PDM would not be able to reorganize under Chapter 11.

Response to Finding No. 1239:

Respondent do not dispute the truth of this finding. It is irrelevant for the reasons 

set forth in Respondents Opening Brief at 138-58.

D. PDM Did Not Make Good-Faith Efforts to Elicit Reasonable Alternative Offers

1240. In May 2000, Pitt Des-Moines decided to sell the company. (Byers, Tr. 6742). In 

June, PDM interviewed Goldman Sachs and Tanner to advise on the sale. (Byers, Tr. 6742-

6743).

Response to Finding No. 1240:

Respondents do not dispute the truth of this finding. (FOF 8.20).

1241. Goldman Sachs recommended that PDM pursue "five to ten strategic buyers and 

10 to 20 LBO buyers." (Byers, Tr. 6838; see also CX 380 at PDM-C 1004026).
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Response to Finding No. 1241:

Respondents do not dispute the truth of this finding, except to note that the PDM 

Board decided not to pursue that option. (Byers, Tr. 6838-39, 6755, 6757-58; Scheman, Tr.

2914-15, 2919, 7911-12, 6907-08; RX 25 at 2) (FOF 8.26-8.29, 8.30, 8.38). Further, Mr.

Scheman explained in detail why strategic and LBO buyers would not have been interested. 

(Scheman, Tr. 6913-16) (FOF 8.60).

1242. Pitt-Des Moines's investment banker, Tanner & Company, assembled a

preliminary list of potential buyers, in June 200, including 18 steel companies, 15 engineering

and construction companies, and four financial buyers. (CX 520 at TAN 1003258).

Response to Finding No. 1242:

Respondents do not dispute the truth of this finding to the extent that this list was 

presented to the PDM Board on June 1, 2000. (CX 520 at TAN 1003256; Scheman, Tr. 6929-31, 

6914) (FOF 8.60, 8.61).

1243. Financial buyers, who would have maintained PDM as an independent on-going 

entity, were available and had been recommended by Goldman Sachs and Tanner as alternative 

buyers. (Byers, Tr. 6744; see also CX 520 at TAN 1003258; CX 380 at PDM-C 1004026).

Response to Finding No. 1243:

This finding is false. Mr. Scheman testified that financial buyers were not an

option. (Scheman, Tr. 6929-31) (FOF 8.61).

1244. Tanner was chosen as the investment banker over Goldman Sachs because Tanner 

believed that breaking up the company and selling it in parts would result in a higher total value. 

(Byers, Tr. 6745, 6755).

Response to Finding No. 1244:

Respondents do not dispute the fact that Tanner was chosen because PDM was

concerned that Goldman's estimate per share was too low. (Byers, Tr. 6743-45; RX 23 at 13)

(FOF 8.26). Therefore, PDM selected Tanner and its recommendation to sell off the divisions in 
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pieces rather than in a single transaction to a single purchaser. (Byers, Tr. 6755, 6757-58; 

Scheman, Tr. 2919) (FOF 8.30, 8.38).

1245. In July of 2000, Pitt Des-Moines announced that it would sell the company. Peter 

Scheman, Tanner's representative to Pitt Des-Moines, had the responsibility to "coordinate and 

lead everything." (Scheman, Tr. 2921).

Response to Finding No. 1245:

Respondents do not dispute the truth of this finding. (FOF 8.49).

1246. Pitt Des-Moines offered PDM to CB&I in a telephone call to Mr. Glenn of CB&I: 

"I received a call from Bill McKee, who was the chief executive officer of Pitt-Des Moines ... He 

said that the Jackson family, who had controlling interest in PDM, had made a decision that they 

wanted to sell the company in total for cash." (Glenn, Tr. 4077-4078). Mr. McKee offered PDM 

to CB&I during that telephone call. (Glenn, Tr. 4078).

Response to Finding No. 1246:

Respondents do not dispute the truth of this finding to the extent that as stated,

Complaint Counsel omitted the complete quote where Mr. Glenn actually stated that: "I received 

a call from Bill McKee, who was the chief executive officer of Pitt-Des Moines or PDM. He

said that the Jackson family, who had controlling interest in PDM, had made a decision that they 

wanted to sell the company in total for cash and go out of that business and concentrate on some 

of the company's other investments." (Glenn, Tr. 4077-78) (emphasis added) (FOF 8.102).

1247. PDM did not make efforts to contact any buyers other than CB&I and Enron: "I 

don't know of anybody that PDM contacted, anybody other than CB&I and Enron." (Byers, Tr. 

6812).

Response to Finding No. 1247:

This finding is misleading because Mr. Byers testified that he was not aware of

any buyers other than CB&I and Enron that PDM contacted, not that PDM did not make efforts 

to contact any others. (Byers, Tr. 6764, 6812) (FOF 8.62). Further, this finding is irrelevant 

because this responsibility was delegated to Tanner. (Byers, Tr. 6758-59) (FOF 8.40).
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1248. Tanner & Company was given the responsibility to contact potential purchasers. 

(Byers, Tr. 6758). Pitt-Des Moines management was instructed to direct all inquiries to Tanner 

& Company. (Byers, Tr. 6758). However, Tanner & Company never contacted any prospective 

buyer other than CB&I and was never instructed to do so.

Response to Finding No. 1248:

Respondents do not dispute that Tanner was given the responsibility to contact

potential purchasers and that PDM management was instructed to direct all inquiries to Tanner. 

(Byers, Tr. 6758-59) (FOF 8.40). However, Complaint Counsel's statement that Tanner never

contacted any prospective buyer other CB&I is false, misleading, and wholly unsupported by any 

cite to the record evidence. First, this last statement in CCFF 1248 contains no cite to the record 

evidence. Second, this last statement is false because after initiating a mass marketing and

dissemination campaign, Tanner fielded numerous inquiries and contacts regarding its press

release announcing the sale of PDM and ruled out other potential purchasers as not being viable. 

(Scheman, Tr. 6910-13, 6944-46, 2921-22; Byers, Tr. 6884-85) (FOF 8.49-8.55).

1249. By August 4, 2000, Tanner was communicating with CB&I via e-mail about

whether "there is a deal to be made between PDM and CB&I or if [Tanner] should be contacting 

other parties who have similarly expressed interest." (CX 70 at PDM-C 1002706).

Response to Finding No. 1249:

Respondents do not dispute the truth of this finding. (See, e.g., FOF 8.102)

1250. Tanner & Company prepared an offering memorandum for the sale of the PDM

EC Division (Scheman, Tr. 2930-31). Tanner & Company started with the PDM EC division

planned to prepare a similar offering memorandum for each Pitt-Des Moines division. 

(Scheman, Tr. 2934 ("The plan was to have an EC book and a water book. ... EC was the one we 

started on first. If we had continued down a different path and had not moved forward with

CB&I, there would also be a water book")).

Response to Finding No. 1250:

Again, Respondents do not dispute the truth of this finding.

1251. Mr. Scheman recalled sending the PDM EC offering memorandum to only one

company – CB&I – because by the time the offering memorandum was completed, negotiations 
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between CB&I and PDM were at a point "that it didn't make sense to send it out to other people." 

(Scheman, Tr. 2931).

Response to Finding No. 1251:

Respondents do not dispute the truth of this finding to the extent that it is partially 

incomplete. Mr. Scheman also stated that investment bankers agree that it is a bad decision to

send such marketing materials when you know that you will not be able to speak with potential 

suitors because of entering negotiations and a quiet period with another purchaser. (Scheman,

Tr. 6912-13) (FOF 8.54). Such offering memorandum take time to compile, and by the time this 

particular book was completed, the letter of intent was entered with CB&I. (Scheman, Tr. 2931).

1252. In contrast, Pitt Des-Moines actively sought buyers for its other divisions. As of 

August 18, 2000, "over ten parties had received the Confidential Memorandum for Steel

Distribution and six groups had received Bridge Division books." (CX 521 at TAN 1000339).

Response to Finding No. 1252:

This finding is irrelevant. The evidence is clear that Tanner spoke with nearly 25 

potential purchasers for the EC and Water Divisions, although it was determined that non of

these purchasers were available. (Scheman, Tr. 6911, 2922; RX 164-166) (FOF 8.53).

1253. On August 20, Tanner presented to Pitt-Des Moines's president additional lists of 

prospective acquirers for the various Pitt-Des Moines divisions, including fourteen parties who 

initiated contact expressing interest in possible acquisition of the various divisions and 32

prospective financial buyers. (CX 527 at TAN 1002453-2455).

Response to Finding No. 1253:

Respondents do not dispute the truth of this finding. However, the fact that some 

companies expressed interest does not mean that they were appropriate or viable buyers. 

(Scheman, Tr. 6916) (FOF 8.56). (See, e.g., FOF 8.61-8.82).

1254. On August 29, 2000, Respondents announced that they had signed a letter of

intent for the acquisition of PDM by CB&I. (CX 285; CX 1565; see Glenn, Tr. 4377).
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Response to Finding No. 1254:

Respondents do not dispute the truth of this finding. (FOF 8.105).

1255. CB&I initially agreed to pay $93.5 million for PDM, which was at the "high end" 

of Tanner's estimates of PDM's sales value. (CX 521 at TAN 1000328). Tanner believed "it is 

doubtful that PDM could achieve a value exceeding $93.5 million in an alternative transaction." 

(CX 521 at TAN 1000329).

Response to Finding No. 1255:

This finding is partially false as CB&I first agreed to pay $93.5 million for PDM 

EC and Water, not for "PDM." (FOF 8.105-8.106, 8.114). Further, the actual purchase price 

was ultimately reduced by $22 million based on PDM EC's poor performance and substantial

losses from PDM's foreign subsidiary in Venezuela. (Byers, Tr. 6793-94, 6873-75) (FOF 8.112-

8.114).

1256. Alternative buyers would unlikely pay a premium price for PDM because they

would face continued tough competition from CB&I. (Scheman, Tr. 2966-67). Handwritten

notes of PDM's investment banker state "Need informed buyer willing to fund war wCB&I -

unlikely to pay premium." (CX 534 at TAN 1001619). Mr. Glenn of CB&I conceded that he

thought PDM was worth more to CB&I than it was to other firms. (Glenn, Tr. 4261-62).

Response to Finding No. 1256:

This finding is misleading because alternative buyers were unlikely to pay a

premium given PDM EC's substantial losses in 2000. Relying on his years of experience in the 

industry as an investment banker, Mr. Scheman believed that it would have been very difficult to 

convince a buyer that EC would be profitable after losing a substantial amount of money the year 

before under the market conditions that existed at the time. (Scheman, Tr. 6924-25, 6926-27, 

2961-63; Byers, Tr. 6794) (FOF 8.100, 8.113, 8.116). Moreover, Mr. Glenn's complete

testimony on this issue is that PDM was worth more to CB&I than it was to other firms because 

of CB&I's ability to utilize PDM's resources and compete on a global basis, not in the domestic 

market. (Glenn, Tr. 4261-62). This explains why financial buyers were not interested.
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1257. Mr. Scheman considered CB&I to be a "preemptive buyer" and this meant "that 

we never went out to other people. Their status as a preemptive buyer made it so we didn't go 

down the route of calling other people." (Scheman, Tr. 2938-39; see also Id. at 2939-40 (Tanner 

did not believe it was "prudent" to "go out and contact people"), 2938 (Tanner and Pitt-Des 

Moines had "reached a point with CB&I where we thought we had a good deal, and we,

ultimately, I believe, entered into a letter of intent, and, therefore, did not show it to other

people")).

Response to Finding No. 1257:

Respondents do not dispute the truth of this finding, to the extent that locating a 

"preemptive buyer" did not mean that Tanner ceased communications with other potential

purchasers. (FOF 8.53). Mr. Scheman testified that Tanner continued to receive inquiries in

response to the issued press release, and evaluated each offer. Based on Tanner's combined

years of experience in the investment banking industry and participating in hundreds of such

deals, continuing to contact potential purchasers under those conditions is damaging to a firm's

salability. (Scheman, Tr. 6911-13, 2922) (FOF 8.53-8.54).

1258. PDM turned away prospective buyers who might have made reasonable

alternative offers. Matrix, then the third-largest United States tank constructor made efforts to

buy PDM EC. (Vetal, Tr. 418-19).

Response to Finding No. 1258:

As stated, this finding is inaccurate and wholly unsupported by the record

evidence for a number of reasons. First, in the EC industry, just because a substantial number of 

companies existed does not mean that they were appropriate buyers. (Scheman, Tr. 6916) (FOF 

8.56). Further, Tanner evaluated numerous potential purchasers and concluded that none of

these "prospective buyers" were viable purchasers, especially in light of the lending conditions at 

the time. (FOF 8.61-8.84) (Opening Br. at 140-42). Third, Matrix at no time "made efforts to 

buy PDM EC." In fact, the record evidence is directly to the contrary. The record is clear that 

PDM was selling EC and Water together. (Scheman, Tr. 6922-23, 2959-60; Scorsone, Tr. 4779; 

Byers, Tr. 6731) (FOF 8.5, 8.37) (Opening Br. at 141). Matrix had absolutely no interest in
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PDM Water, and had recently exited the water market because it was not a good fit for Matrix. 

(Vetal, Tr. 419, 442) (FOF 8.64). Further, Matrix wished to purchase the assets of the Water

Division, and the personnel of the EC Division (a combination that was never discussed nor a

realistic alternative). (Vetal, Tr. 441-42; Byers, 6780-82) (FOF 8.69-8.70). More importantly, 

Matrix could not finance such a transaction. Mr. Scheman testified that Matrix did not have the 

earnings or balance sheet to finance a transaction for PDM, and Matrix's stock was illiquid. 

(Scheman, Tr. 6931-33, 6934-38) (FOF 8.67, 8.68, 8.71, 8.72). Specifically, Matrix never

discussed possible financing for a PDM acquisition. (Vetal, Tr. 441) (FOF 8.74). Mr. Vetal did 

not even know PDM's asking price. (Vetal, Tr. 423, 440) (FOF 8.75). In addition, Mr. Vetal

never even saw the consolidated balance sheet, revealing the substantial losses for PDM EC. 

(Vetal, Tr. 420) (8.78). However, Mr. Vetal did state that if due diligence revealed a $10 million 

loss for the following fiscal year, such a projection would have been a factor in whether Matrix 

would have pursued PDM EC. (Vetal, Tr. 421-22, 439) (FOF 8.65) (Opening Br. at 148-51).

1259. Matrix's President, Brad Vetal, called Pitt Des Moines's President, William

McKee, and informed him of Matrix's interest in purchasing PDM EC. (Vetal, Tr. 422). Mr.

McKee told Mr. Vetal that Pitt Des Moines could not talk with Mr. Vetal about a sale of the

business because Pitt Des Moines already had a buyer, but Mr. McKee would call him if that 

deal fell through. (Vetal, Tr. 422-23; see also RX 168 at TAN 1000654 (handwritten notes of

Peter Scheman indicating Mr. Vetal had contacted Mr. McKee)).

Response to Finding No. 1259:

Respondents have no specific response to this finding. To the extent that Matrix 

was really interested in purchasing PDM EC, Respondents refer this Court to RFOF 1258.

1260. Pitt Des-Moines' Board of Directors meeting minutes illustrate that PDM had

viable alternatives to liquidation. On November 28, 2000, PDM's President, William McKee

stated that if the CB&I transaction fell through, PDM would continue to seek other purchasers:

Mrs. Townsend inquired what effect would a failure to

consummate the PDM/CB&I transaction have on the proposed 

transaction with Russell Metals. Mr. McKee responded that he

believed the transaction should still proceed since the Company
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would continue its efforts to sell as PDM EC and PDM Water

divisions by seeking other purchasers.

(CX 1590 at PDM-C 1006065) (emphasis added).

Response to Finding No. 1260:

As stated, this finding is irrelevant and inaccurate because subsequent to the

November 28, 2000 Board meeting, Mr. McKee reported to the Board on December 19, 2000

that in fact "there is a thin market and no other serious potential purchaser was identified." 

(Byers, Tr. 6872-73; RX 28 at 2) (emphasis added) (FOF 8.122). Therefore, the record evidence 

directly contradicts Complaint Counsel's position and renders CCFF 1260 irrelevant as it is later 

superceded by the record evidence surrounding the December 19, 2000 Board meeting. (FOF

8.122).

1261. Tanner & Company's report supporting its fairness opinion for the sale of PDM to 

CB&I identified various alternative strategies for the sale of PDM. (RX 163). As one alternative 

to the sale of PDM, Tanner wrote that "[w]hile it would likely be costly and difficult to separate 

the two Divisions, PDM's EC and Water Divisions could be marketed independently in standalone transactions... However, due to the historical connection between the Divisions and their 

sharing of facilities, the cost of separating the two businesses may be as high $5 to $10 million." 

(RX 163 at TAN 1000406). Other alternatives included a leveraged buyout for about $65

million. (RX 163 at 1000404).

Response to Finding No. 1261:

This finding is grossly misleading because the referenced LBO was for the Water 

Division only. (Byers, Tr. 6769-70, 6773) (FOF 8.118). There were no interested buyers for

PDM EC and it would have been liquidated. (FOF 8.115-8.126).

1262. Respondents presented no evidence that Pitt Des Moines made good-faith efforts 

to elicit reasonable alternative offers other than from CB&I.

Response to Finding No. 1262:

This finding wholly ignores the record evidence and is easily contradicted. For

instance, Mr. Scheman testified as to the strategy and marketing plan implemented to sell PDM. 
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(Scheman, Tr. 6944-45) (FOF 8.47). This marketing strategy and plan was the product of the

combined years of experience of Mr. Scheman (14 years as an investment banker and over 100 

such deals himself), his partners, and associates. (Scheman, Tr. 2912-13, 6906, 6908-09, 6941-

43, 6945) (FOF 8.18, 8.31, 8.48). For instance, Tanner released a mass dissemination campaign 

that included a press release throughout the industry. This release was then published in major 

trade journals and periodicals, such as the Wall Street Journal. (Scheman, Tr. 6910-11, 6944-46, 

2921-22) (FOF 8.49-8.52). Tanner fielded inquiries from potential purchasers as well as

contacted various potential sources of interest. (Scheman, Tr. 6911l RX 164-66) (FOF 8.53). At

the end of the day, Mr. Scheman and Tanner conducted themselves consistent with a similarly

situated investment banker and in accordance with its fiduciary duty in representing PDM EC

and Water. (Scheman, Tr. 6943-44, 6947; Byers, Tr. 6881-82) (FOF 8.44, 8.46).

E. Absent the Acquisition, PDM EC's Assets Would Not Have Exited

1263. Dr. Simpson testified that, in his opinion, if CB&I had not bought PDM as a

going concern, someone else would. (Simpson, Tr. 5674). Dr. Simpson testified that if PDM

were acquired by a large international firm, similar to how Skanska acquired Whessoe, then

PDM would have the backing of a large international engineering company. (Simpson, Tr.

3583-4). Dr. Simpson noted that PDM EC had a stronger reputation than Whessoe. (Simpson, 

Tr. 3584).

Response to Finding No. 1263:

Dr. Simpson lacks any foundation to assert such opinions, which are contrary to

the record evidence. Dr. Simpson stated that he was not an investment banker and has no

experience in this field or in buying or selling a business. (Simpson, Tr. 5678-5686). 

Consequently, his testimony on this subject is unreliable and solely self-serving. In fact, Dr.

Simpson offers no support for this opinion and fails to identify one single alternative purchaser. 

(Simpson, Tr. 5674). Contrary to Dr. Simpson's assertions, no large international firm was

interested in entering the U.S. EC industry. (See, e.g, Jolly, Tr. 4683-84, 4701-02) (FOF 8.82). 
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Finally, Dr. Simpson's opinion that PDM EC has a stronger reputation than Whessoe is irrelevant 

to PDM's decision to exit the market.

1264. Dr. Simpson testified that in his opinion PDM EC and PDM Water were strong

divisions. Dr. Simpson noted:

...CB&I made Luke Scorsone, who had been president of PDM

EC, president of CB&I Industrial. They had made, I believe, Mr. 

Brady, who had been in charge of PDM Water, they made him in 

charge of the CB&I's water tank unit. So, PDM's management

seemed solid.

CB&I has kept PDM's fabrication plants, so the fabrication plants 

seemed to be solid and competitively significant. CB&I has

adopted some of PDM EC's and PDM Water's construction

techniques, so the skill of PDM EC seemed to be solid. The

testimony in this case indicates that PDM EC had a good

reputation and PDM EC had been commercially successful as far

as getting jobs. So that - all of that suggests that PDM EC was a 

strong competitor in this marketplace." 

(Simpson, Tr. 3578).

Response to Finding No. 1264:

Dr. Simpson lacks any foundation to testify as to the Exiting Assets defense as set 

forth in RFOF 1233 and 1263. This lack of foundation is amplified by Dr. Simpson's blatant

disregard for the impact of PDM EC's substantial losses in fiscal year 2000. (See, e.g., Scheman, 

Tr. 6916-18, 6921-23, 6926, 2950-51) (FOF 8.83-8.88) Consequently, this finding is misleading 

and irrelevant to the Exiting Assets Defense. This finding as to PDM EC and PDM Water's

strength is irrelevant to this case because PDM's Board was irrevocably committed to selling

these divisions and exiting the industry. (See RFOF 1221) (Byers, Tr. 6741-42, 6755, 6757-58; 

Scheman, Tr. 2911, 2919, 6907, 6952) (FOF 8.16, 8.20, 8.38, 8.115).

1265. Dr. Simpson testified that, as a stand-alone firm, PDM would have been about the 

same size as Matrix Services and would have been bigger than companies such as ATV or

Chattanooga Boiler & Tank. (Simpson, Tr. 3583). Dr. Simpson testified that a stand-alone PDM 

could compete for projects in partnerships with another firm and that a stand alone PDM would 

be a stronger partner than AT&V. (Simpson, Tr. 3584).
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Response to Finding No. 1265:

Dr. Simpson's opinions in this finding are unsupported by any evidence in the

record and therefore are unreliable. Moreover, this finding is irrelevant due to PDM's

commitment to exit the market and sell its assets. (See RFOF 1221) (Byers, Tr. 6741-42, 6755, 

6757-58; Scheman, Tr. 2911, 2919, 6907, 6952) (FOF 8.16, 8.20, 8.38, 8.115). Even so, PDM 

EC benefited from being part of an aggregate division structure much larger than Matrix because 

PDM EC could use the aggregate revenues of all operating units to obtain larger insurance values 

and bonding capabilities. (Byers, Tr. 6734-38) (FOF 8.7). Finally, Dr. Simpson's assumption

regarding partnering with another firm is unsupported by the record, and Complaint Counsel

cites no instance where another firm was even interested in partnering with PDM as a standalone company. The bottom line is a Matrix sized company would not have been large enough 

to qualify for LNG work. (Newmeister, Tr. 2163).

1266. PDM could not sell the EC Division without the Water Division because of their 

shared services. (Byers, Tr. 6800 ("We could not sell EC without Water because of the shared 

services)). Moreover, Pitt Des-Moines' Board wanted to sell the EC and Water division as a

going concern because that would get Pitt Des-Moines more money. (Byers, Tr. 6801-02).

Response to Finding No. 1266:

This finding is misleading because, as of December 2000, PDM would have

separated the Division by selling PDM Water in an LBO and liquidating PDM EC. (Byers, Tr. 

6769-70, 6773) (8.118).

1267. Pitt-Des Moines would not have had difficulty finding an alternative buyer for

PDM. It simply would have had to settle for a buyer not willing to pay the premium CB&I

offered for the market power the acquisition afforded it. Dr. Harris observed in his expert report 

that capital markets generally function well, and that companies that have profitable

opportunities to expand generally can find the financial resources to do so. (Harris, Tr. 7793). 

The PDM EC Division was a successful and profitable business and was projected to sustain

earnings growth. (CX 1695 at CB&I/PDM-H 4005701; CX 529 at TAN 1000596; see also CX 

1713 at CB&I/PDM-H 4015086-89). Under these circumstances it must be assumed that the

assets of PDM's EC Division would have remained in the market.
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Response to Finding No. 1267:

This finding is conclusory and unsupported by any record evidence. Complaint 

Counsel fails to provide any record cites for its assertion that Pitt-Des Moines would not have

had difficulty finding an alternative buyer for PDM. In actuality, Pitt-Des Moines did have

difficulty as evidenced in the December 19, 2000 Board meeting minutes (..."no other serious

potential purchaser was identified") as well as PDM management's decision to have Tanner run 

liquidation scenarios. (RX 28 at 2; Byers, Tr. 6872-73, 6769-70, 6773) (FOF 8.118, 8.122). 

These scenarios established a liquidation value that no identified alternative purchaser could

afford. (Scheman, Tr. 6924-26) (FOF 8.116). Further, Complaint Counsel also assumes that 

Pitt-Des Moines "would have to settle for a buyer not willing to pay the premium CB&I offered 

for the market power . . . ." Again, no record cite is offered for this assertion. To the contrary, 

CB&I hardly paid a premium given that its initial offering of $93.5 million was negotiated

downward to $83 million and ultimately to $72 million based entirely on the EC Division's poor 

performance. (Byers, Tr. 6788-91, 6793-94; RX 28 at 4; CX 388 at 2) (FOF 8.110, 8.112-

8.114). CB&I never sought an adjustment based on the Water Division's performance. (Byers, 

Tr. 6873-75) (FOF 8.114). Therefore, CB&I ended up purchasing PDM EC within the

liquidation value and did not pay a premium for the EC Division. (Byers, Tr. 6794) (FOF

8.113). As to Complaint Counsel's statements regarding PDM EC's projected earnings growth,

Respondents reassert their responses in RFOF 1221 and 1226-1228 that this fact is irrelevant

given the Board's resolution to sell the Division and the failure to account for the subsequent

substantial losses sustained in 2000. (See, e.g., FOF 8.83-8.100).

1268. Dr. Harris believes that if CB&I had acquired only PDM's Water Division, PDM's 

EC Division would have been liquidated. (Harris, Tr. 7975-76).
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Response to Finding No. 1268:

Respondents do not dispute the truth of this finding. (See, e.g., 8.115-8.133).

1269. Dr. Harris did not undertake an independent financial analysis of whether PDM

EC qualified as an exiting asset. (Harris, Tr. 7333). Instead, he relied on the testimony of Mr. 

Byers and Mr. Scheman. (Harris, Tr. 7333).

Response to Finding No. 1269:

This finding is irrelevant because Mr. Scheman and Mr. Byers are the only two

witnesses with foundation and experience in such transactions. Mr. Scheman has been in the

industry for 14 years and handled over 100 such deals. (Scheman, Tr. 2910, 6906, 6941-43) 

(FOF 8.18). Mr. Byers, similarly, has been actively involved in the purchase or sale of business 

units while at PDM at least 12 times, and has worked extensively with investment bankers over 

his career. (Byers, Tr. 6730-31) (FOF 8.10).

1270. Although Tanner & Company supplied to Mr. McKee extensive lists of

prospective purchasers, Mr. McKee never identified any potential purchaser, other than CB&I

and Enron, called by him, by Tanner & Company, or by anyone else. (Byers, Tr. 6903).

Response to Finding No. 1270:

This finding as stated is confusing and misleading. Mr. Byers testified that to his 

knowledge -- Mr. Byer's knowledge, Mr. McKee never identified any potential purchaser called 

before or after December 19, 2000. (Byers, Tr. 6902-03). That is not to say that none existed, 

nor does it mean that Tanner was not in contact with potential purchasers. (Scheman, Tr. 6911, 

2922) (FOF 8.53). Mr. McKee never testified in this proceeding so the record is unsupported as 

to what Mr. McKee actually identified. Finally, it was not Mr. McKee's job to identify other

purchasers, it was Tanner's, and he relied on his investment banker to do so. (Byers, Tr. 6758-

59) (FOF 8.40).

1271. Dr. Harris did not recall that Mr. McKee, PDM's president, informed PDM's

Board in November 2000 that in the event the sale to CB&I were not consummated PDM would 

continue its efforts to sell its EC and Water Divisions. (Harris, Tr. 7966-68; CX 1590 at PDM-C 
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1006065). Further, Dr. Harris said that even if PDM's president had made such a statement to 

the PDM Board, Dr. Harris would not change in, any way, his exiting asset conclusion. (Harris, 

Tr. 7968).

Response to Finding No. 1271:

Respondents do not dispute the truth of this finding because it is irrelevant. At the 

December 19, 2000 PDM Board Meeting, Mr. McKee reported that in fact "there is a thin market 

and no other serious potential purchaser was identified." (Byers, Tr. 6872-73; RX 28 at 2)

(emphasis added) (FOF 8.122). Further, such a statement by Mr. McKee in November 2000

would not have an impact on the Exiting Assets defense because Pitt Des-Moines' Board of

Directors was irrevocably committed to selling its assets and its business as set forth in RFOF 

1221. (Byers, Tr. 6741-42, 6755, 6757-58; Scheman, Tr. 2911, 2919, 6907, 6952) (FOF 8.16, 

8.20, 8.38, 8.115).

1272. Before recommending any disposition of the EC Division, Mr. Byers would have 

checked to see if there were any alternative purchasers. (Byers, Tr. 6799-6800). Mr. Byers

never got to that point. (Byers, Tr. 6800). Tanner would have done the same. (JX 34 at 83

(Scheman, IHT)).

Response to Finding No. 1272:

Respondents do not dispute the truth of this finding to the extent that PDM

management did in fact begin looking for alternatives for the sale of PDM EC and Water. In

fact, PDM management instructed Tanner to run liquidation scenarios in December 2000. 

(Byers, Tr. 6769-70, 6877-78) (FOF 8.118, 8.123). While not presented to the Board, Mr.

McKee and Mr. Byers were prepared to present the liquidation of PDM EC to the Board. (Byers, 

Tr. 6769-70, 6773) (8.118).

1273. Mr. Byers further testified that before making any recommendation to liquidate

the PDM EC Division, his fiduciary duties would have required him to investigate to assure

himself that there was no alternative purchaser for either for PDM or for PDM EC willing to pay 

more than liquidation value of the business. (Byers, Tr. 6799-800, 6893, 6895). Mr. Byers

never got to that point. (Byers, Tr. 6800). Mr. Byers never investigated whether there was a

possibility of another purchaser. (Byers, Tr. 6895).
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Response to Finding No. 1273:

This finding is contrary to the weight of the record evidence because Mr. Byers

also testified that he was acting within his fiduciary duty by recommending the liquidation of

PDM EC to the Board had the CB&I deal fallen through. (Byers, Tr. 6774-75) (FOF 8.126). 

Mr. Byers properly relied on Tanner to present the options in terms of alternative purchasers for 

PDM EC and Water. (Byers, Tr. 6758-59, 6880-81) (FOF 8.40). Tanner also was acting in its 

fiduciary duty by recommending liquidation. (Scheman, Tr. 6947; Byers, Tr. 6881-82) (FOF

8.44).

1274. Pitt Des-Moines' Board of Directors never took up the issue of liquidating the

PDM EC Division. (Byers, Tr. 6891).

Response to Finding No. 1274:

This finding is misleading to the extent that the Pitt-Des Moines Board did not

vote on the liquidation of PDM EC because the contingency never arose. (Byers, Tr. 6891). 

However, Pitt-Des Moines management did in fact consider the liquidation of PDM EC as

demonstrated by its directions to Tanner to run liquidation scenarios in December 2000. (Byers, 

Tr. 6769-70, 6773) (FOF 8.118). Moreover, Mr. Byers and Mr. McKee were prepared, if need 

be, to present such a liquidation recommendation to the PDM Board. (Byers, Tr. 6770, 6773)

(FOF 8.118).

1275. Dr. Harris acknowledged that exiting asset essentially means the assets must leave 

the market. (Harris, Tr. 7956; Harris, Tr. 7332 ("if you knew for a fact that the assets were going 

to exit and no one else was going to buy them and be a low-cost producer, if you knew that as a 

fact")). However, Dr. Harris's characterization of PDM EC as an exiting asset does not

withstand this test. Dr. Harris uses the term "exiting asset" despite evidence that, even if PDM 

EC were liquidated, the assets would remain in the market.

Response to Finding No. 1275:

As stated, this finding is not accurate. Dr. Harris testified that Complaint

Counsel's interpretation of the exiting asset defense misstates the theory and how it applies to
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this case. (Harris, Tr. 7956). Moreover, the record evidence reveals that other than CB&I, no 

other firm in the industry was an alternative purchaser. (Byers, Tr. 6872-73; RX 28 at 2) (FOF 

8.122). Finally, Complaint Counsel's attack on Dr. Harris' testimony fails to include any cite, let 

alone support, to the record evidence. In particular, Complaint Counsel's assertion that the PDM 

assets would have remained in the market is contrary to the record evidence. (See, e.g., FOF 

8.115-8.126).

1276. If PDM EC were liquidated, its tangible and intangible assets would have become 

available for purchase by foreign and United States firms attempting to compete against CB&I. 

According to Dr. Harris, "Graver is instructive. When they left, their assets were auctioned,

auctioned off, and you know, the same sort of thing could have happened here." (Harris, Tr.

7335).

Response to Finding No. 1276:

Respondents do not dispute the truth of this finding, and specifically agree that

Graver is instructive as a natural market experiment because the Graver assets left the market

when made available to purchase. (FOF 8.127-8.133).

1277. According to Dr. Harris, Chattanooga Boiler and Tank purchased many of

Graver's assets at auction and has employed people who had been employed by Graver. (Harris, 

Tr. 7312). "Apparently these competitors have hired expertise that used to work for Brown

Minneapolis Tank" (RX 208; Harris, Tr. 7320-1). "Graver used to be very competitive in these 

LIN/LOX tanks and it sounds like their know-how moved on to another company." (RX 208; 

Harris, Tr. 7321).

Response to Finding No. 1277:

This finding is misleading and contrary to its own assertions: Complaint Counsel 

simply cannot have it both ways. In these findings, Complaint Counsel argues that CB&T lacks 

sufficient personnel and sophistication to compete in the relevant product markets. (See, e.g., 

CCFF 320, 342, 409, 411). Now here, in CCFF 1277, Complaint Counsel is asserting that

CB&T has competitively benefited in the product markets by purchasing Graver assets and

employing former Graver personnel. Complaint Counsel cannot shift its position depending on 
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CHI:1176893.3

the point it wishes to prove at any given time. As a result, Complaint Counsel's Findings of Fact 

relating to Graver are misleading and unreliable.

1278. Dr. Harris demonstrated repeatedly in his testimony his misapplication of the

exiting asset argument in this case. Dr. Harris acknowledges that he would continue to

characterize PDM EC as an exiting asset although the fabrication facilities continued to be used 

by another tank company. (Harris, Tr. 7956). Dr. Harris asserted that his characterization of

PDM EC as an exiting asset would be unaffected even if PDM EC had continued to complete

projects, including construction of the Cove Point LNG tank, which is now under construction. 

(Harris, Tr. 7956-58).

Response to Finding No. 1278:

Complaint Counsel fails to provide a single cite to the record for its assertion that 

Dr. Harris "repeatedly" demonstrated his misapplication of the exiting asset argument, namely

what constitutes proper application of the defense. As to the remainder of this finding,

Respondents do not dispute the truth of this finding. (See Cutts, Tr. 2425) (FOF 8.131) (See also

FOF 8.127-8.133).

1279. Dr. Harris acknowledged that PDM EC's intellectual property could be valuable

to competitors of CB&I. (Harris, Tr. 7974). However, Dr. Harris asserted that his exiting asset 

conclusion would be unaffected even if PDM EC's intellectual property were acquired and used 

by another company to compete in the relevant markets (Harris, Tr. 7958) and even if PDM EC's 

customer records and files were acquired and used by another company to compete in the

markets. (Harris, Tr. 7959).

Response to Finding No. 1279:

Respondents do not dispute the truth of this finding. (FOF 8.127-8.133).

1280. Mr. Byers testified that in the event of liquidation, PDM would have sought

customer consent to sell its backlog of unfinished contracts to other companies to complete. 

(Byers, Tr. 6802-05). Mr. Byers testified that for existing contracts, PDM was prepared to get 

consents from customers to transfer those contracts to other companies. These contracts

included one for the Cove Point project. (Byers, Tr. 6802, 6804-5).

Response to Finding No. 1280:

Respondents do not dispute the truth of this finding. (See, e.g., FOF 8.127-8.133).

1281. Respondents have failed to show that PDM EC would have been an exiting asset 

if PDM were not acquired by CB&I.
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Response to Finding No. 1281:

As stated, this finding is wholly unsupported by the record evidence. Complaint 

Counsel fails to include a single cite in support of this assertion. Moreover, this finding is

contradicted by the record. For instance, PDM's Board was irrevocably committed to selling 

PDM EC's assets and exiting the industry, as set forth in RFOF 1221. (Byers, Tr. 6741-42, 6755, 

6757-58; Scheman, Tr. 2911, 2919, 6907, 6952) (FOF 8.16, 8.20, 8.38, 8.115). Further, there

were no other serious potential purchasers for PDM EC. Finally, this finding is simply false. 

(See, e.g., RFOF 1221-1281; FOF 8.1-8.133).

IX.

DIVESTITURE IS THE PROPER REMEDY FOR THIS ILLEGAL MERGER

A. CB&I Must Be Ordered to Divest and Restore PDM

1282. Complaint Counsel's Opposition to Respondents' Motion for Directed Verdict on 

the Issue of Remedy sets forth the legal principles, statute and caselaw establishing that

divestiture is the required remedy if the Tribunal determines that the CB&I/PDM merger violates 

Section 7 of the Clayton Act and Section 5 of the FTC Act.

Response to Finding No. 1282:

Complaint Counsel is correct that its Opposition to Respondents' Motion for

Directed Verdict on the Issue of Remedy sets forth its view of the legal principles regarding

remedy. However, Complaint Counsel's view is incorrect as explained in Respondents' Opening 

Brief at 158-172 and Respondents' Findings of Fact at 9.1-9.39. Respondents have further

demonstrated that the record evidence fails to support Complaint Counsel's proposed remedy and 

as a result divestiture cannot be imposed. (See Respondents' Motion for Directed Verdict on the 

Issue of Remedy). In addition, Respondents' post-trial filings have sufficiently demonstrated that 

contrary to Complaint Counsel's assertions, if this Court should find a violation of Section 7, a

breakup of CB&I through divestiture is not the only available or even appropriate remedy. (See
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CHI:1176893.3

Opening Br. at section IX, p. 158-172; Reply Br. at section V). Precedent from Commission

opinions as well as Federal law demonstrate that although breakup through divestiture is an

option, it should only be imposed after full consideration of lesser alternative remedies. Id. 

Finally, any remedy imposed by this Court must be supported by the record evidence. Id.

1283. Divestiture to an appropriate acquirer of the reconstituted assets of PDM EC and 

PDM Water as an ongoing, viable business would effectively restore competition and remedy

any lessening of competition that resulted from the acquisition of PDM. (Simpson, Tr. 3608-09). 

(See Robert Rogowsky, "The Economic Effectiveness of Section 7 Relief," 31 Antitrust Bull.

187, 194, 199 (1986) (When two firms have combined, "the highest probability of restoring

competition comes from full divestiture of the combined entity" that creates a "viable,

independent effective entity within a reasonable time, e.g. spin-off.")).

Response to Finding No. 1283:

Complaint Counsel's proposed finding is incorrect and unsupported by the record 

evidence. Initially, Respondents have demonstrated that there has been no lessening of

competition as a result of CB&I's Acquisition of PDM. (See Harris, Tr. 7375-76; Scorsone, Tr. 

4881-82 (state of mind); see also FOF 9.6-9.7). It is telling that Complaint Counsel cites to Dr. 

Simpson and a law review article instead of presenting evidence from the extensive record in this 

case showing that there exists an "appropriate acquirer" or that its remedy would be effective in 

this case. Respondents have demonstrated that Dr. Simpson's opinions regarding remedy are

flawed because he failed to cite any customers who supported his opinion of remedy and failed 

to rely on any record evidence when arriving at his opinion that the acquisition resulted in a

lessening of competition. (See Simpson, Tr. 3611, 5715, 5718; see also FOF 9.3-9.5). In

addition, Respondents have illustrated that if a violation is found, divestiture is not always the

best remedy where lesser alternatives are available. (See Opening Br. at section IX, p. 158-172; 

Reply Br. at section V).

1284. An effective remedy requires the divestiture of intangible as well as tangible

assets. (Simpson, Tr. 3608). CCFF 1297-1373.
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Response to Finding No. 1284:

Complaint Counsel's proposed finding is inaccurate, incomplete, misleading and

not supported by the record evidence. First, Respondents have demonstrated that there is no

need for a remedy. (See RFOF 1283). Additionally, Complaint Counsel fails to cite any fact

testimony in support of its proposition but rather relies on the testimony provided by its expert

witness, Dr. Simpson. (See FOF 9.3-9.5). Complaint Counsel has failed to present any evidence 

that a breakup by divestiture would be an "effective remedy" or that other alternative remedies 

would not be as effective or more effective in addressing any violations that this Court may find. 

Not a shred of fact evidence has been presented to support Complaint Counsel's proposed 

remedy.

1285. There is substantial evidence in the record that shows what assets would be

included in an effective divestiture. The record provides information as to the structure,

composition, and competitive viability of PDM and CB&I premerger, the precise PDM assets

and personnel acquired by CB&I, and the disposition of those assets and personnel. See CX 385, 

25 (listing PDM EC's salaried and hourly employee headcount); CX 385 at 21-23 (listing PDM 

EC's facilities and equipment); CX 134 (organization chart for PDM EC); CX 133 (organization 

chart for PDM Water); and CX 328-339 (asset purchase agreement, listing all assets of the PDM 

EC and Water Divisions purchased by CB&I, including all owned real property, tangible

personal property, inventories, contract rights, accounts receivables, and intellectual property);

CX 1033 at 32 (number of employees terminated).

Response to Finding No. 1285:

Respondents do not dispute that the documents cited by Complaint Counsel detail 

many of the physical assets acquired from PDM. However, Complaint Counsel incorrectly

states, and without any support, that all of these assets are required to be divested in order to

have "effective relief." Complaint Counsel has failed to present any evidence, other than the

unsubstantiated opinions of Dr. Simpson, that their proposed remedy would be "effective" in

restoring the competition that was allegedly lost as a result of the Acquisition. (See FOF 9.3-

9.5).
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1286. Customers would benefit from the increased competition resulting from an

effective divestiture. (Neary, Tr. 1502 (TVC; competition would be restored if PDM EC were

returned to the marketplace); CX 370, 89 (Britton, Dep.) (LNG; prefers to have more than one

competitor, CB&I, for a project); [xxxxxxxx], Tr. 462, in camera ([xxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxx]); Simpson, Tr. 3606-07, 3611 (customers would benefit by

reconstituting PDM EC)).

Response to Finding No. 1286:

Complaint Counsel's finding presupposes its own result: an "effective divestiture" 

would be effective. That is an ideal not supported by record evidence. Further, Complaint

Counsel attempts to mislead this Court by citing irrelevant, unsubstantiated, and inadmissible

testimony in support of its proposition that customers would benefit from a divestiture. First,

Complaint Counsel cites CX 370, a document which was not admitted into evidence. Even if it 

was in evidence, the statement Complaint Counsel cites does not support their proposition

because the witness stated: "it's always nice when you have more than one company to get

quotes from. I don't have an opinion specific to this case." (CX 370 at 89)(not admitted into

evidence). Respondents have demonstrated that there are numerous competitors in the LNG

market. (See FOF 3.56-3.459). Complaint Counsel also misleadingly cites a witness from the

LIN/LOX market. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxx] see also FOF 5.157-5.158). Despite Complaint Counsels assertions, [xx 

xxxxxxxxxx] has not been harmed by the Acquisition. Complaint Counsel also cites a witness

from the TVC market. Respondents have demonstrated that demand in the TVC market is

virtually non-existent and have provided this Court with an alternative remedy proposal should a 

violation be found. (See FOF 6.11-6.64, 6.91-6.121). The final person cited by Complaint
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Counsel is their expert witness, Dr. Simpson. When Dr. Simpson was asked to identify any

customers that favor a breakup, he stated "[n]one come to mind." (Simpson, Tr. 5718; see also

FOF 9.3-9.5).

Complaint Counsel's proposed finding also runs contrary to the manifest weight 

of the evidence that customers do not support Complaint Counsel's proposed remedy. For

example, CB&I's acquisition of PDM has given LNG customers additional "comfort" in the

bidding process because CB&I is now a larger company with more financial assets. 

(Bryngelson, Tr. 6154). LNG customers testified that they have "some real concerns" about

Complaint Counsel's proposed remedy and believe it would be a disadvantage to breakup CB&I. 

(Sawchuck, Tr. 6077; J. Kelly, Tr. 6265; Bryngelson, Tr. 6155; see also FOF 9.9). LIN/LOX

customers also believe that there is benefit to CB&I's Acquisition of PDM. LIN/LOX customers 

believe a breakup would harm the industrial gas industry. (Hilgar, Tr. 1540; see also FOF 9.10).

1287. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxx], Tr. 

4758, in camera).

Response to Finding No. 1287:

Complaint Counsel attempts to mislead this Court and misconstrue the testimony 

of Mr. Jolly by citing the words of Complaint Counsel and attributing them to Mr. Jolly. (Jolly, 

Tr. 4758). An accurate reading of the testimony demonstrates that Mr. Jolly simply agreed that 

if CB&I were broken up by the FTC there would be two companies as opposed to one. In

addition, Respondents have demonstrated that there is already robust competition in the LNG

market, including Technigaz. (See FOF 3.56-3.255).

1288. Howard Fabrication believes that it "could make more money ... if CB&I and

PDM were to emerge again as two competitors for thermal vacuum chambers." (Gill, Tr. 271-

72). According to Mr. Gill, the re-emergence of PDM would increase the likelihood that

Howard Fabrication is chosen as a subcontractor for TVC projects. (Gill, Tr. 271-72).
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Response to Finding No. 1288:

Complaint Counsel's proposed finding is irrelevant and misleading. As is

demonstrated by the citations provided above, Mr. Gill's opinions are biased because he stands to 

benefit monetarily if Complaint Counsel's proposed remedy is imposed. Additionally,

Respondents have demonstrated that due to the lack of demand in the TVC market there is no 

need to impose a remedy. (See FOF 6.11-6.56). In the event that this Court should see the need 

for a remedy, Respondents' offer is sufficient to address any problems the Court may find. (See

FOF 6.91-6.121).

B. Divestiture Must Be Complete and Must Include

Full Restoration of Both the PDM EC and Water Divisions

1289. As the viability of PDM EC depended upon the viability of the PDM Water

division, both must be included in an order for complete divestiture.

Response to Finding No. 1289:

Complaint Counsel cites no evidence to support this finding. Further, the link

between EC and Water was strong when it was owned by PDM. (Byers, Tr. 6731). There is no 

evidence of a strong interdependence between the Water and Industrial Divisions as CB&I is 

managing the business. Finally, Complaint Counsel has it backwards: it is not that the EC

Division depended on the Water Division for viability, but rather the use of shared resources

made it difficult to separate them. (Byers, Tr. 6780). There is no evidence to support the same 

assumption with respect to CB&I today.

1290. PDM EC and PDM Water were inextricably intertwined. Mr. Richard Byers, a

former PDM Board director, testified that it is "impossible to split [PDM EC and PDM Water]" 

in two because "they shared many services. They shared human resources, they shared physical 

plant." (Byers, Tr. 6780). PDM's investment banker, Tanner & Company, testified that "there 

was not a bright line that separated the two businesses but in certain places they kind of meshed 

together." (JX 34 at 33-34 (Scheman, Dep.)).
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Response to Finding No. 1290:

Respondents incorporate the response to CCFF 1289 and note that CCFF 1290 is 

misleading to the extent it claims that "it is" difficult to split EC and Water as Mr. Byers

testimony merely referred to the interdependence that existed in the way that the divisions were 

organized at PDM. (See RFOF 1289).

1291. Evidence, including testimony by Mr. Scorsone, suggests that PDM EC and PDM 

Water routinely shared field erection personnel, fabrication facilities, and field erection

equipment. (Scorsone, Tr. 4779-80; CX 552 at 45-48 (Braden, Dep.); (Scorsone, Tr. 2852 (PDM 

EC and PDM Water shared field personnel and field construction equipment); see Rano, Tr.

5894, 5898 (same engineering processes are used for a flat-bottom tank as is used for an LNG

tank)).

Response to Finding No. 1291:

Respondents agree with Complaint Counsel's finding as related to PDM's

management of EC and Water. (See RFOF 1289-90). Further, Complaint Counsel's finding

supports Respondents' continuing position that entry into each of the relevant product markets is 

easy because each of the relevant products uses the "same engineering processes [that] are used 

for a flat-bottom tank." (Rano, Tr. 5894, 5898). Any company capable of constructing a flatbottom tank or a water tank has the ability to construct one of the relevant products through the 

use of "shared field erection personnel, fabrication facilities, and field erected equipment." (See

CCFF 1291; see also Scorsone, Tr. 4779-80, 2852; Rano, Tr. 5894, 5898; CX 552 at 45-48) (See

also RFOF 1289; FOF 8.4-8.7, 8.34-8.37, 9.11-9.31).

1292. PDM EC and Water maintained "at least one shared facility ... or multiple shared 

facilities." (JX 34 at 133 (Scheman, Dep.); see CX 552 at 43-44 (Braden, Dep.) ("PDM Water 

shared fabrication facilities with PDM EC at that time. We shared construction resources.")).
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Response to Finding No. 1292:

Respondents do not dispute Complaint Counsel's proposed finding except as set 

forth in RFOF 1289-90, and to note for the benefit of the Court that Respondents are not aware 

of any document labeled JX 34. (See also FOF 8.4-8.7, 8.34-8.37, 9.11-9.31).

1293. Additionally, both divisions shared skilled personnel. (CX 552 at 45, 46-47 

(Braden, Dep.) (construction crews and project managers would seamlessly transfer from a PDM 

Water job to a PDM EC job with their tools and equipment); CX 442 at 210 (Knight, Dep.) (tank 

field-erection crews are switched from cryogenic tanks to flat-bottom tanks)).

Response to Finding No. 1293:

Respondents do not dispute Complaint Counsel's proposed finding as long as it is 

limited to PDM's management of EC and Water. (See RFOF 1289-1291; see also FOF 8.4-8.7, 

8.34-8.37, 9.11-9.31).

1294. As PDM EC and PDM Water were so interdependent prior to the acquisition,

PDM did not consider it feasible to sell them as separate entities. A Tanner & Company 

analysis, based on conversations with PDM executives, concluded that "due to the historical

connection between the Divisions and their sharing of facilities, the cost of separating the two

businesses may be as high as $5 to $10 million." (CX 525, TAN-1000406; Scheman, Tr. 6922-

23; see Byers, Tr. 6781 ("It was not practical to split [PDM EC and PDM Water] and sell them 

separately.")).

Response to Finding No. 1294:

Respondents do not dispute Complaint Counsel's proposed finding as it relates to 

PDM's management of EC and Water. (See RFOF 1289-1291; see also FOF 8.4-8.7, 8.34-8.37, 

9.11-9.31). There is no evidence that the cost of splitting EC and Water is that high today given 

the greater independence of the divisions. Further, Complaint Counsel ignores the likely large

cost of cracking CB&I's current Industrial Division in two because that division is clearly using 

all the resources that Complaint Counsel claims are required to be split apart.

1295. PDM EC and PDM Water's sharing of resources provided the two divisions with a 

cost advantage. James Braden, formerly the President of PDM's Water Division, testified that

splitting PDM Water from PDM EC "would have lessened our ability to stand alone, and
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certainly would have diminished the profitability of the operation." (CX 552 at 44 (Braden, 

Dep.)).

Response to Finding No. 1295:

Respondents do not dispute Complaint Counsel's proposed finding as it relates to 

PDM's management of EC and Water. (See RFOF 1289-1291; see also FOF 8.4-8.7, 8.34-8.37, 

9.11-9.31).

1296. Because PDM EC and Water acted as one cohesive division, divestiture must be 

complete and include the Water division of PDM. In order to restore both the tangible and

intangible assets that the divisions shared, the proposed Order mandates that CB&I divest what it 

acquired from PDM, plus any additions or improvements that have been made to the assets. 

(Order, ¶ II.A; see Order, ¶ I.U. (definition of "PDM Assets")).

Response to Finding No. 1296:

Complaint Counsel's proposed finding is irrelevant and incomplete. As has been 

demonstrated by Respondents, there is no need for a remedy because no competitive harm has

occurred. (See FOF 9.6-9.7). Respondents do not dispute that the PDM EC and PDM Water

divisions were intertwined, but there is no evidence that the existing CB&I Industrial Tank

Division and the CB&I Water Divisions are still inseparably joined. Further, as has been

expressed above, an attempt to breakup CB&I will cause more competitive harm than good

because it will create two weak and competitively vulnerable companies. (See RFOF 1289-

1291; see also FOF 8.4-8.7, 8.34-8.37, 9.11-9.31).

C. In Order to Create a Viable, Effective Competitor, the Tribunal Must Provide

the Divested Entity ("New PDM") with Certain Tangible and Intangible Assets

1. A Revenue Base Comparable to PDM's and CB&I's Pre-Acquisition

1297. In order to be a viable and effective competitor, the new company must have a

sufficiently large revenue base to compete for work. CCFF 310-321, 1298-1309. Customers

prefer suppliers with a substantial revenue base so that they can be satisfied that constructors will 

not default on contracts and so that suppliers may more easily secure bonding and other financial 

guarantees.
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Response to Finding No. 1297:

Complaint Counsel's proposed finding is incomplete. Respondents agree with

Complaint Counsel that that financial size of a company is vital to its survival and ability to

compete for certain large projects in the LNG and TVC markets. However, customer testimony 

has demonstrated that a breakup of CB&I would result in two companies with insufficient

financial resources to qualify for large projects. (See [xxxxxxxxxxxxxxxxxxx]; Izzo, Tr. 6511-

12; Bryngelson, Tr. 6155-56; Sawchuck, Tr. 6077-78; see also FOF 9.21-9.22). Since CB&I in 

its current state is often too small to compete for projects, a divested company even with EC and 

Water would certainly fail for its inability to provide financial backing for its projects. (See

Glenn, Tr. 4080, 4168; Izzo, Tr. 6511-12; Bryngelson, Tr. 6155-56; Sawchuck, Tr. 6077-78; see 

also FOF 9.21-9. 24). As a result, any divestiture order that would result in a breakup of CB&I 

would in fact make both resulting companies less competitively viable. (See FOF 9.11-9.31).

1298. In order to secure a bond for a project, a company generally needs "either security 

or liquid assets equal to about three times of that bond to guarantee the bond." (Gill, Tr. 200).

Response to Finding No. 1298:

Respondents have no specific response. (See FOF 9.21-9.26).

1299. Howard Fabrication's annual revenues, of $2.5 to $3 million (Gill, Tr. 181), are

too small to enable it to compete against CB&I for larger thermal vacuum projects. (Gill, Tr. 

199-200; see id. at 201 (Although Mr. Gill is in the thermal vacuum chamber business, "financial 

ability dealt me out.")).

Response to Finding No. 1299:

Respondents have no specific response.

1300. Also, [xxxxxxxxxxxxxx], who had annual revenues of [xxxxxxx] million in 2001 

testified that he would need "a little more financial strength and bonding capacity" to compete 

for larger low temperature and cryogenic tank projects. ([xxxxx], Tr. 2374, in camera; JX 23a at 

49 ([xxxxx], Dep.)).
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Response to Finding No. 1300:

Complaint Counsel's proposed finding is inaccurate, misleading and not supported 

by the record evidence. As an initial matter, respondents are unaware of any exhibit with the

designation "JX 23a" being admitted into evidence. Contrary to Complaint Counsel's assertions, 

AT&V has in fact become a strong competitor in the low temperature and cryogenic tanks

markets. AT&V has on its own emerged as the strongest competitor in the LIN/LOX market 

winning three projects since the Acquisition. CB&I has attempted to compete against AT&V on 

three competitively bid LIN/LOX projects and has lost to AT&V every time. CB&I has yet to 

win a LIN/LOX project when AT&V was a competitor bidding on the project. (Scorsone, Tr.

5018; see also FOF 5.76). AT&V has also become a competitor in the LNG tank market as a

result of its partnership with TKK which has allowed it to make financial guarantees. (See FOF 

3.99-3.140). AT&V has also entered the LPG market and has become a strong competitor. (See

FOF 4.16-4.22).

1301. Daniel Knight, a sales representative for CB&I does not believe that a company

with $20 million in revenue, such as Chattanooga Boiler & Tank, "would be able to stay in

business" if "a problem occurred with one of their projects that cost them $10 million in legal

damages." (CX 442 at 152 (Knight, Dep.)).

Response to Finding No. 1301:

Complaint Counsel's proposed finding is misleading. Respondents have

previously acknowledged that financial size is an important factor in the competitive viability of 

a company. (See RFOF 1297, FOF 9.21-9.26). However, Complaint Counsel once again

attempts to use words spoken by an attorney for Complaint Counsel and attribute them to a

CB&I witness. Consistent with what Respondents have previously acknowledged, Mr. Knight, a 

low level salesperson at CB&I, testified that a company with larger revenue will be able to

provide more security than a company with less financial assets. (CX 442 at 152). There is no 
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foundation for Mr. Knight's testimony, and it is contradicted by Mr. Stetzler of Chattanooga

Boiler and Tank who testified that they are pursuing LIN/LOX and LPG projects. (FOF 4.43

(LPG), 5.68-5.71 (LIN/LOX)).

1302. Because Matrix has annual revenues of approximately $190 million, and lacks a

larger company to financially back its operations, Matrix has difficulty convincing LNG

customers that they are qualified suppliers. (CX 460 at CB&I-E 007235).

Response to Finding No. 1302:

Respondents have no specific response.

1303. Without a revenue base comparable to PDM's, New PDM will be unable to secure 

the bonding and financial guarantees required by customers. (Scorsone, Tr. 4939-40 (admitting 

that a company's size affects a customer's willingness to accept a financial guarantee from a

company)).

Response to Finding No. 1303:

Complaint Counsel is incorrect because New PDM will not have the same size as 

old PDM because old PDM was a five division company with over $600 million in revenue. 

Although two of those divisions were acquired by CB&I, the assets of the three remaining

divisions were sold to other companies. (Scheman, Tr. 6909, 6950; FOF 8.2).

1304. LNG customers have testified that they would not purchase from a divested entity 

unless it was able to financially guarantee its work. (Izzo, Tr. 6508 ("[T]he first thing I'd be

concerned about with a NewCo is whether I'd put them on my bid list because of ability to

bond."); Bryngelson, Tr. 6157 (Q... So is it beneficial to El Paso to have a company that has size, 

even if a lot of that size doesn't necessarily come from the revenue generated by building tanks? / 

A. Yes."); Carling, Tr. 4467-4468 ("We expected the lead contractor to stand behind his work, 

so the bonds and the guarantees would have to come from [a divested entity's] parent

company.")).

Response to Finding No. 1304:

Complaint Counsel's proposed finding is incomplete. LNG customers testified

that they would not purchase from either company remaining after a divestiture. (See FOF 9.21-

9.26). Contrary to Complaint Counsel's assertions, LNG customers are concerned about the

financial stability of both companies resulting from a divestiture, the divested entity and CB&I. 
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For example, [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxx] see also FOF 9.21). Complaint Counsel cannot dispute that any type of

divestiture will inevitably create two parts that are smaller than the whole. LNG customers have 

stated that they are "concerned about whether either of the two residual companies would have 

the bonding or guarantee ability to make [their] bid list," and "seriously doubt" that both portions 

of a broken-up company would be large enough to qualify for LNG projects. (Izzo, Tr. 6511-12 

(emphasis added); see also Bryngelson, Tr. 6155-56; Sawchuck, Tr. 6077-78; FOF 9.23-9.24).

Contrary to Complaint Counsel's assertions, record evidence has demonstrated

that customers do not support a divestiture of CB&I. CB&I's acquisition of PDM has given

LNG customers additional "comfort" in the bidding process because CB&I is now a larger

company with more financial assets. (Bryngelson, Tr. 6154). LNG customers have "some real

concerns" about Complaint Counsel's proposed remedy and believe it would be a disadvantage to 

breakup CB&I. (Sawchuck, Tr. 6077; J. Kelly, Tr. 6265; Bryngelson, Tr. 6155; see also FOF

9.09). LIN/LOX customers also believe that there is benefit to CB&I's acquisition of PDM. 

LIN/LOX customers believe a breakup would harm the industrial gas industry. (Hilgar, Tr.

1540; see also FOF 9.10).

1305. In order to be an effective competitor, New PDM will need a revenue base

comparable to CB&I and the former PDM' s prior to the acquisition. As of June 30, 2000,

PDM's 6-month revenues were approximately $355 million. (CX 1567 at 3). This base of

revenues was sufficient to provide the financial guarantees necessary to compete for LNG

projects. (Carling, Tr. 4529 (PDM able to provide sufficient financial guarantees to Enron to be 

employed for an LNG tank built in Penuelas, Venezuela); [xxxxx], Tr. 1895-96, in camera ([xxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]).
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Response to Finding No. 1305:

Complaint Counsel's proposed finding is inaccurate, misleading and unsupported 

by record evidence. Complaint Counsel asserts that "New PDM will need a revenue base

comparable to CB&I and the former PDM's prior to the acquisition" without providing any

evidentiary support for its proposition. Complaint Counsel failed to present any evidence at trial 

to determine what size a divested company would need to be in order to be competitively viable. 

However, Respondents have demonstrated that LNG customers do not believe that anyone

smaller than CB&I would be capable of providing financial backing for LNG projects.. ([xx 

xxxxxxxxxxxxxxxx] see also RFOF 1304, FOF 9.21-9.26).

Complaint Counsel also ignores the fact that its revenue figure cited above is for 

all five divisions of the former PDM. The revenue of the EC and Water divisions constituted

approximately one third of PDM's total revenues for that time period. (FOF 8.2-8.7). Finally, 

Complaint Counsel attempts to mislead this Court by citing Mr. Carling for the proposition that 

PDM's former size was sufficient to provide financial backing for LNG projects. (Carling, Tr.

4529). Complaint Counsel ignores the rest of Mr. Carling's testimony which illustrated that

while PDM was able to win the Venezuela project, its size was insufficient to win a project in

Dabhol, India. (Carling, Tr. 4529-30).

1306. Part of these revenues will have to be based upon work outside the United States. 

In the 3 years between 1997 and 1999, 50% of PDM EC's revenue was derived from the U.S., 

47% of PDM EC 's revenue was derived from the Western Hemisphere outside of the U.S. and 

3% of PDM's revenue was derived from other areas. (CX 522 at 18; see CX 1731 at 18 (CB&I's 

revenues from LNG projects are split 50/50 between North America and the rest of the world); 

CX 1730 at 5-6 (Western Hemisphere business accounted for 72% of new business taken); CX 

1729 at 13 (the proportion of new business awarded in the U.S. versus the rest of the world is

shifting from 75/25 to 60/40); CX 32 at 3 (international operations provide approximately 20-

30% of the revenues for PDM EC and PDM Water on a combined basis)).
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Response to Finding No. 1306:

Most of the revenues outside of the United States were from PDM's Venezuela

operation which has been dismantled. There is no evidence that the new PDM which Complaint 

Counsel seeks to create can capture overseas work. In addition, this Court and the Commission 

lack the authority to order divestiture of overseas assets of CB&I, much of which is owned by

CB&I subsidiaries that do not do business within the United States. Critically, there has been no 

trial testimony to test any of these hypothesis. Complaint Counsel admits that a new company 

would need overseas revenue to be viable, however, no evidence has been presented that the

divested entity could compete or gain overseas revenue.

1307. CB&I had annual revenues of between $600 to $800 million in the years between 

1997 and 2001. (CX 891 at 40-41 (Glenn, Dep.); CX 892; CX 310 at CB&I 049068). These

revenues made CB&I large enough to win large LNG projects between the time it was spun off 

from Praxair and the time it acquired PDM. (CX 891 at 47-48 (Glenn, Dep.).

Response to Finding No. 1307:

Respondents have no specific response. (See RFOF 1304-05).

1308. This base of revenues provided CB&I with the financial backing to compete for

projects. Gerald Glenn testified that he could not recall any LNG bid contests or thermal

vacuum chamber bid contests lost by CB&I prior to the acquisition because it could not provide 

sufficient financial guarantees to the customer to ensure timely completion of the project. (CX 

891 at 48-49, 70 (Glenn, Dep.)).

Response to Finding No. 1308:

Complaint Counsel's finding is misleading, inaccurate and unsupported by the

record evidence. Complaint Counsel failed to cite for this Court the entirety of the question and 

answer that it relied upon for the proposition within this finding. Although Mr. Glenn initially

responded to Complaint Counsel's question by stating "I don't recall," during the question and

answer immediately following the one relied upon by Complaint Counsel, Mr. Glenn corrected 

he previous answer and stated "[a]ctually, I can recall a project where CB&I is regarded by the 
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owner as not being large enough to compete for an LNG project. It was for Marathon and it's in 

Baha, Mexico." (CX 891 at 49-50). As a result, Complaint Counsel's proposed finding is

directly contradicted by the record evidence.

1309. By providing New PDM with comparable revenues, it will address customer

concerns that a divestiture will create two small companies incapable of handling LNG projects. 

(Bryngelson, Tr. 6155-56).

Response to Finding No. 1309:

Complaint Counsel's proposed finding is inaccurate, misleading and unsupported 

by the record evidence. Respondents have previously demonstrated that customers would not

purchase from either company remaining after a divestiture. (See RFOF 1304-05, FOF 9.21-

9.26). Regardless of how Compliant Counsel attempts to formulate a breakup divestiture, it will 

still result in two companies that are smaller than the current CB&I. The math is revealing: onehalf of $800 million equals $400 million, which would result in two companies that are even

smaller than PDM was before the acquisition. In addition, to even achieve two $400 million

companies this Court would have to breakup CB&I's Howe-Baker and its international

subsidiaries, all of which contributed hundreds of millions to CB&I's bottom line. There is no 

record evidence as to the impact of breaking up all of these unrelated businesses, and it is

grotesque and desperate overreaching by Complaint Counsel to even suggest such a result. To

split part CB&I's U.S. Industrial Tank and Water Divisions would result in an entity a fraction

the size of pre-acquisition PDM. Complaint Counsel has recognized its problem: it must come 

up with two large companies to even have a prayer of effectiveness. However, it has uncovered 

no solutions. Any way this Court slices CB&I, New PDM will not be able to compete on LNG 

and TVC projects. Further, and contrary to Complaint Counsel's assertions, record evidence has 

demonstrated that its remedy will not "address customer concerns" since customers are

concerned about the financial stability of both companies resulting from a divestiture. (Izzo, Tr. 
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6511-12 (emphasis added); see also Bryngelson, Tr. 6155-56; Sawchuck, Tr. 6077-78; [xxxxxx 

xxxxxxx]; FOF 9.21-9.26).

Prior to the Acquisition, the combined revenues of CB&I and PDM totaled

approximately 1.5 billion dollars in revenue. However, since CB&I only acquired two of PDM's 

five divisions, over two thirds of that 1.5 billion dollars is now beyond the control of CB&I,

PDM, Complaint Counsel, this Court or the Commission. Complaint Counsel refuses to come to 

grips with the consequences of the loss of financial size caused by PDM's sale of its three other 

divisions.

2. Assets and Equipment Used to Manufacture the Relevant Products

1310. In order to successfully compete in the relevant markets, New PDM will need the 

assets and equipment necessary to manufacture the relevant products. CCFF 321-385, 1311-

1326.

Response to Finding No. 1310:

Complaint Counsel's proposed finding is not supported by the record. New PDM 

could compete successfully by subcontracting and does not need to own the assets. (FOF 3.541-

3.546, 5.219-5.220). Further, Complaint Counsel failed to present any evidence on what a

divested entity would need to obtain in order to be a viable entity. (See RFOF 1282-1374; FOF 

9.1-9.39). Additionally, Complaint Counsel failed to present any evidence to determine if it was 

even possible for CB&I to divest the assets that Complaint Counsel suggests. Id.

1311. CB&I purchased "tangible personal property" from PDM, which included "[a]ll

design, manufacturing, construction, erection, maintenance, research and development, testing

and other machinery equipment, vehicles, tools, dies, molds, furniture, fixture, office equipment, 

field equipment,...supplies and other tangible personal property (together with all spare and

maintenance parts, operating manuals, equipment specifications and diagrams) used by PDM's

EC and Water divisions." (CX 328 at CB&I 001264-CHI). This equipment must be divested, in 

order to replace PDM.
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Response to Finding No. 1311:

Respondents agree that CB&I purchased the assets listed in Complaint Counsel's 

proposed finding and as contained in the Asset Purchase Agreement dated February 7, 2001. 

(See CX 328). Complaint Counsel has failed to present any evidence that it would be necessary 

to divest all of the referenced "tangible personal property," that it is possible for CB&I to divest 

the assets or that the assets will be effective in resurrecting PDM. (See RFOF 1282-1374; FOF 

9.1-9.39). As a result, Complaint Counsel's proposed finding is not supported by record

evidence.

1312. Tank suppliers benefit from having many field crews and a substantial inventory

of equipment because these resources give them "more flexibility in scheduling the work." (CX 

615 at 46 (Knight, IHT)). Renting construction equipment from a third party "is traditionally

more expensive" than owning the equipment. (CX 615 at 47 (Knight, IHT)).

Response to Finding No. 1312:

Contrary to Complaint Counsel's assertions, record evidence has demonstrated

owning and maintaining too many field crews and too much equipment can increase costs. Soon 

after the Acquisition, CB&I auctioned off a substantial amount of the equipment that it

purchased from PDM in an effort to reduce costs. (Scorsone, Tr. 2888). Additionally,

subcontracting certain portions of the construction process can in fact lower the costs of a

particular job. (Bryngelson, Tr. 6143). In some cases, subcontracting actually lowers costs

because subcontractors with an expertise in a particular area are able to use a standardized

approach and may be better at certain job functions than a general contractor. (Bryngelson, Tr.

6143-44; Cutts, Tr. 2472; Hilgar, Tr. 1537-38; see also FOF 3.543, 5.219-5.220). There is ample 

evidence that CB&I itself does not own much of its construction equipment. (Scorsone, Tr.

4902-11). Finally, Complaint Counsel's only evidentiary support are comments from a low level 
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CB&I salesperson, Dan Knight, who is not involved in construction or finance and has no

foundation for the views expressed. (FOF 5.224-5.225, 5.233-5.234).

1313. A complete divestiture will include equipment that is used for constructing low

temperature and cryogenic tanks, as well as TVCs. For example, CB&I will have to divest

automatic welding equipment which "provides a consistent weld, which is typically smoother,"

and improves the efficiency of field erection work. (CX 442 at 154 (Knight, Dep.); CX 624 at 

131 (Crain, IHT)). According to Mr. Gill, the newly divested competitor will also need cranes in 

order to efficiently construct TVC's. (Gill, Tr. 268; see Cutts, Tr. 2388. (Mr. Cutts described the 

potential equipment that would make AT&V more competitive with CB&I: "[T]hose four crews 

I talked about would be fully equipped and a fully equipped crew has a crane with them, has air 

compressors, welding machines, all sorts of general rigging equipment and other incidentals. 

You can figure a standard crew, it's about a half a million dollars worth of equipment that goes

with the crew.")).

Response to Finding No. 1313:

Complaint Counsel's finding is unsupported by the record because it has failed to 

show that the divestiture of such equipment will create a competitive entity or that such a

divestiture is actually possible. (See RFOF 1282-1374; FOF 9.1-9.39). Record evidence also

demonstrates that new market entrants have become competitively viable without owning or

acquiring all of the assets suggested by Complaint Counsel. Record evidence demonstrates that 

tank suppliers are capable of subcontracting or renting all types of equipment for any stage of a 

project and continue to offer competitive pricing. (Bryngelson, Tr. 6143-44; Cutts, Tr. 2472;

Hilgar, Tr. 1537-38; see also FOF 3.543, 5.219-5.220).

1314. Because CB&I owns equipment that gives it a competitive advantage over other 

firms, Respondents must divest its specialized equipment to the newly created entity. For

example, CB&I's automatic welding equipment includes "some self-contained automatic girth

welders" which have an advantage over other types of automatic welding equipment. (CX 706 at 

99 (Newmeister, IHT)). Mr. Newmeister of Matrix testified that automatic welding equipment is 

needed to be cost competitive in the construction of LNG tanks. (CX 706 at 98 (Newmeister, 

IHT); see CX 706 at 98-99 (Newmeister, IHT). (CB&I has patented welding equipment that is 

useful for welding large tanks); see also Cutts, Tr. 2379 ("Well, these tanks are built out of fairly 

sophisticated materials. You don't just weld them up any old way. And it's actually automated 

equipment that you weld them up with. The equipment is quite expensive to develop.")).
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Response to Finding No. 1314:

Record evidence has demonstrated that CB&I does not have a competitive

advantage over other firms in the relevant product markets. (See FOF 3.53-3.255, 4.16-4.54, 

5.22-5.78). Complaint Counsel has not demonstrated that acquiring such equipment will create a 

competitively viable entity, that CB&I has such equipment available to be divested, or that it is 

possible to be divested from CB&I. (See RFOF 1282-1374; FOF 9.1-9.39). Record evidence

has demonstrated that both Matrix and AT&V, the testimony relied upon by Complaint Counsel 

in support of this finding, have become successful competitors in the cryogenic market without 

acquiring the equipment and assets cited by Complaint Counsel. (See FOF 5.22-5.78). Further, 

most of CCFF relies on Mr. Newmeister for views regarding LNG requirements, views he lacks 

foundation to express because neither he nor his company has been involved in LNG projects.

1315. The newly divested firm will need additional equipment that will allow it to have 

blasting, painting, and pressing capabilities. As this equipment is multi-functional for LIN/LOX 

tanks, LPG tanks, and LNG tanks, the new firm will need these capabilities in order to compete 

against CB&I. (See CX 706 at 64-66 (Newmeister, IHT)) (A large press and a large number of

dyes for pressing the dome roofs used for LIN/LOX tanks costs roughly $2 million. Additionally 

the automated blast and paint system used to paint the outer tank on a LIN/LOX tank costs

roughly $2-3 million. John Newmeister of Matrix testified that his firm can not justify an

investment in this equipment based solely on the LIN/LOX business. However, this equipment 

can be used for other products, including pressure spheres, LNG tanks and LPG tanks); see also

Cutts, Tr. 2388 (Mr. Cutts testified that additional field crews would require an additional $2

million in equipment.)).

Response to Finding No. 1315:

Blasting and painting is frequently subcontracted and therefore not required in

order to become a viable competitor. (FOF 3.541-3.546, 5.219-5.220). Additionally, a press is 

not required to effectively compete, and in any event a new press is certainly unnecessary when 

used presses are substantially less expensive. (Harris, Tr. 7309). Complaint Counsel's proposed 

finding is also not supported by record evidence because Complaint Counsel has not

demonstrated that acquiring such equipment will create a competitively viable entity, that CB&I 
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has such equipment available to be divested, or that it is possible to be divested from CB&I. 

(See RFOF 1282-1374; FOF 9.1-9.39). Record evidence has also demonstrated that both Matrix 

and AT&V, the testimony relied upon by Complaint Counsel in support of this finding, have

become successful competitors in the cryogenic market without acquiring the equipment and

assets cited by Complaint Counsel. (See FOF 5.22-5.78).

1316. In order for New PDM to compete with CB&I, it needs to enjoy the same

advantages and have the same capabilities as Respondents. A full restoration of the equipment 

that PDM EC and Water possessed before the acquisition is therefore warranted.

Response to Finding No. 1316:

Initially, Complaint Counsel failed to provide any citations to support its finding. 

There is no evidence that a new PDM would need exactly the same capabilities as CB&I to act as 

a constraint on CB&I's alleged ability to raise prices. Nonetheless, record evidence has

demonstrated that CB&I does not have a competitive advantage over other firms in the relevant 

product markets. (See FOF 3.53-3.255, 4.16-4.54, 5.22-5.78). Complaint Counsel has not

demonstrated that acquiring such equipment will create a competitively viable entity, that CB&I 

has such equipment available to be divested, or that it is possible to be divested from CB&I. 

(See RFOF 1282-1374; FOF 9.1-9.39).

1317. In order to be as efficient and as cost-competitive as CB&I and the former PDM, 

New PDM will need fabrication facilities within the United States. CCFF 307-308. [x

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxx]. ([xxxxx], Tr. 1635-37, in camera ([xxxxxxx] lack of a U.S.

fabrication facility is cost disadvantage versus CB&I.)).

Response to Finding No. 1317:

Record evidence has demonstrated that this finding is inaccurate because access

to fabrication facilities does not provide a cost advantage in the LNG markets since the

fabrication for LNG tanks takes place overseas, rendering a U.S. fabrication facility useless. 

(See FOF 3.560-3.564). Additionally, Complaint Counsel has not demonstrated that acquiring a 
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fabrication facility is necessary to create a competitively viable entity or that it is possible for a

fabrication facility to be divested from CB&I. (See RFOF 1282-1374; FOF 9.1-9.39). Record

evidence presented by Respondents has illustrated that CB&I does not have a cost advantage

over other firms in the relevant product markets. (See FOF 3.53-3.255, 4.16-4.54, 5.22-5.78).

1318. A U.S. fabrication facility also provides New PDM with control over schedule

and quality, two key factors that customers consider when selecting a tank supplier. 

(Newmeister, Tr. 1569-1570 (If the divested entity must subcontract fabrication work, it will

"lose control of schedule and quality, and those are two key important things the customers are 

looking for.")).

Response to Finding No. 1318:

Mr. Newmeister was not talking about a divested entity and Complaint Counsel's 

attempts to make it appear as if he was are misleading. Further, all of CB&I's current

competitors have access to fabrication facilities. (See 5.22-5.78). Additionally, record evidence 

shows subcontracting certain portions of the construction process, such as fabrication, can in fact 

lower the costs of a particular job. (Bryngelson, Tr. 6143). In some cases, subcontracting

actually lowers costs because subcontractors with an expertise in a particular area are able to use 

a standardized approach and may be better at certain job functions than a general contractor. 

(Bryngelson, Tr. 6143-44; Cutts, Tr. 2472; Hilgar, Tr. 1537-38; see also FOF 3.543, 5.219-

5.220).

1319. Possessing multiple fabrication facilities is advantageous because it allows a

competitor to rationalize its freight costs. (Vetal, Tr. 428, 432-33; see CX 615 at 45 (Knight, 

IHT) (In competitive situations, a tank supplier benefits from having a fabrication facility located 

close to a job so that its freight costs are minimal.); CX 849 at 214 (Steimer, IHT) (having a

fabrication facility in the Gulf region would have made PDM more competitive by lowering its 

freight costs)).

Response to Finding No. 1319:

Possessing multiple fabrication facilities does not provide a cost advantage

because freight costs are a minimal portion of the entire cost of a project. (Maw, Tr. 6564-65; 
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see also FOF 4.111). CB&I itself had only one fabrication facility -- in Houston, Texas -- prior 

to Acquiring PDM. Complaint Counsel's proposition is proven incorrect because CB&I's local

fabrication shop does not provide it with any cost advantage in comparison to AT&V.

1320. Multiple facilities not only promote a geographic competitive advantage but also 

flexibility in fabrication. Daniel Knight, a salesman for CB&I, testified that tank suppliers with 

multiple fabrication shops and many field crews can "be more flexible in order to meet [changes 

in customers' schedules]," including needing "the project faster or at a different time period..." 

(CX 442 at 152 (Knight, Dep.); see id. at 156).

Response to Finding No. 1320:

Complaint Counsels' finding is incorrect and not supported in the record because 

the evidence has shown that fabrication costs account for less than five percent of the total cost 

of a project. (Glenn, Tr. 4119; FOF 3.560). With respect to the LNG market, maintaining the

overhead on multiple fabrication shops would constitute a cost disadvantage since the fabrication 

of nine percent nickel steel is generally done by the steel supplier located overseas. (Bryngelson, 

Tr. 6153). The steel mills in Europe and Japan, which provide nine percent nickel steel, typically 

provide a fabrication service in which the steel plates are squared, beveled, cut, rolled, and then 

exported to the job site. (Scorsone, Tr. 4891-92; FOF 3.561). Since nine percent nickel steel is 

internationally sourced, it can be cheaper to fabricate the steel overseas, rather than importing the 

steel and fabricating it locally. (Izzo, Tr. 6503; FOF 3.562).

Complaint Counsel's finding is also flawed because it relies on the statements of

Mr. Knight, a low level salesmen with no experience with fabrication facilities sufficient to have 

the foundation to render opinions about them. (See FOF 5.225). Mr. Knight does not manage or 

supervise anyone at CB&I and did not have any supervision or management authority at PDM. 

(Scorsone, Tr. 4809). As a result, Mr. Knight does not have the requisite basis of knowledge to 

issue opinions on the benefits of fabrication facilities. (Scorsone, Tr. 4809-10; FOF 5.225).
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1321. CB&I has procurement offices and fabrication facilities located throughout the

world, which enables CB&I to supply materials to its various job sites effectively. (CX 258,

CB&I-H001794; Scorsone, Tr. 4894).

Response to Finding No. 1321:

Complaint Counsel's proposed finding is incorrect and not supported by the

record. Complaint Counsel has cited no evidence to support its proposition that CB&I has

fabrication facilities located "throughout the world." There is no record evidence that shows

CB&I owns, maintains or operates any fabrication facilities outside of the United States.

1322. CB&I's facilities include those facilities that it acquired from the former PDM EC 

and Water Divisions, located in Provo, Utah; Clive, Iowa; and Warren, Pennsylvania. (CX 332 

at CB&I 001350-CHI).

Response to Finding No. 1322:

Respondents have no specific response.

1323. Each of these former PDM facilities have different fabrication capabilities. See

CX 535 at 182-3 (Scorsone, Dep.) ("the Provo plant does not have a very large capacity press, 

whereas the Clive plant and the Houston plant do. The Houston plant is very efficient at rolling 

and beveling shell plates where the Provo plant and Warren plant and Clive plant for that matter 

probably aren't that efficient. The Provo plant has a little bit more floor space for weldment and 

their assemblies, and Houston doesn't have as much."); CX 615 at 46 (Knight, IHT) (Some 

fabrication plants cannot fully fabricate storage tanks in the manner required by PDM because

they do not support "[c]ertain types of rolling and pressing operations" for thick steel plate)).

Response to Finding No. 1323:

Respondents have no specific response.

1324. Absent the divestiture of a fabrication facility, it will take the divested company

approximately nine months and about $9 million to build another fabrication facility in order to 

compete effectively. (See CX 922; Simpson, Tr. 3166).

Response to Finding No. 1324:

Respondents have no specific response.

1325. In order to transfer the former PDM facilities to New PDM, CB&I will need to 

divest the leases for what were PDM's fabrication facilities to the newly created entity.

According to Peter Scheman, the investment banker from Tanner, Iron Bridge Holdings owns the 
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Warren, Pennsylvania and Clive, Iowa fabrication plants and leases these plants to CB&I under a 

ten year agreement. (JX 34 at 12-13 (Scheman, Dep.)).

Response to Finding No. 1325:

Complaint Counsel's finding is unsupported by the record evidence. As an initial 

matter, Complaint Counsel is unaware of any document with the designation JX 34 being

admitted into evidence. Complaint Counsel has also failed to show that divesting the former

PDM fabrication facilities will be effective in creating a competitive entity or that it is possible 

for CB&I to divest those assets. (See RFOF 1282-1374; FOF 9.1-9.39).

1326. Complaint Counsel's proposed Order requires that CB&I divest its interest in all

three of PDM's former fabrication facilities, the tangible assets necessary to manufacture the

relevant products, and all additions and improvements thereto. (Order, ¶ II.D.) The divestiture 

of these assets are necessary to effectively restore competition. (See Simpson, Tr. 3155-56)

Response to Finding No. 1326:

Complaint Counsel's proposition is not supported by any record evidence other

than the economic opinions of Dr. Simpson. Notably, Dr. Simpson did not rely on anything

within the record when rendering his opinions. (See Simpson, tr. 3155-56). Complaint Counsel 

has failed to show that divesting the former PDM fabrication facilities will be effective in

creating a competitive entity or that it is possible for CB&I to divest those assets. (See RFOF 

1282-1374; FOF 9.1-9.39). There is no evidence a new PDM could fill or manage three

fabrication facilities, or that it would need to have all three in order to be competitive.

3. Assets, Equipment And Operational Resources

Used to Manufacture More Than the Relevant Products

1327. An effective divestiture would need to include resources necessary to make flat

bottom tanks, gravel tanks, and other tanks outside of the relevant market.

Response to Finding No. 1327:

Complaint Counsel failed to provide any record citations for its proposition. 

Additionally, Complaint Counsel failed to present any evidence during trial regarding what
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impact a divestiture would have on other non-relevant markets. As a result, Complaint Counsel's 

proposed remedy cannot be imposed because significant harm may be caused to products outside 

of the relevant markets. (See FOF 9.14-9.15).

1328. There is not enough business in the relevant markets to sustain a divested entity. 

Projects within the relevant markets are awarded infrequently. (CX 1212 at 6, in camera (CB&I 

has won [xxxx] LNG projects and [xxxx] LPG projects since 1990)).

Response to Finding No. 1328:

Respondents have no specific response, except to note that this finding concedes 

the case of supply side substitution, which is a basis not to challenge an acquisition under the

Merger Guidelines § 1.3, 3. (See RFOF 1327; FOF 9.1-9.39).

1329. CB&I and, prior to the acquisition, PDM, use their resources to manufacture both 

the relevant products, as well as other products.

Response to Finding No. 1329:

Respondents have no specific response, except to note that this finding concedes 

the case of supply side substitution, which is a basis not to challenge an acquisition under the

Merger Guidelines § 1.3, 3. (See RFOF 1327; FOF 9.1-9.39).

1330. Engineers can be utilized for both low temperature and cryogenic tank

construction and the construction of other types of tanks. Mr. Samuel Leventry testified that

CB&I's policy in the engineering department is to "move people from area to area. We move

people from flat bottom tanks to cryogenic tanks. We move people from pressure vessel tanks 

depending on our workload." CX 497 at 365 (Leventry, Dep.)).

Response to Finding No. 1330:

Respondents have no specific response, except to note that this finding concedes 

the case of supply side substitution, which is a basis not to challenge an acquisition under the

Merger Guidelines § 1.3, 3. (See RFOF 1327; FOF 9.1-9.39).

1331. Sales representatives also service both the low temperature and cryogenic tank

market and the industrial tank market. CB&I 's sales staff, such as Daniel Knight, sell industrial 

tanks, cryogenic tanks and pressure spheres. (CX 615 at 12, 14 (Knight, IHT) (also sold both

industrial tanks and cryogenic tanks for PDM)).
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Response to Finding No. 1331:

Respondents have no specific response, except to note that this finding concedes 

the case of supply side substitution, which is a basis not to challenge an acquisition under the

Merger Guidelines § 1.3, 3. (See RFOF 1327; FOF 9.1-9.39).

1332. Mr. Scorsone testified that, prior to the acquisition, PDM's "water division and the 

EC division routinely swapped field labor." (Scorsone, Tr. 2842). "The field labor that builds a 

water tank one day can go and build a flat-bottom tank and go build LOX/LIN, can go build an 

LNG... [M]ost of the people that do our LNG work and the low-temp work, they work most of 

the time on flat-bottom tanks." (CX 535 at 96 (Scorsone, Dep.)). At CB&I, field construction 

employees are shared among the CB&I's water tank, industrial tank, and cryogenic/low

temperature tank businesses. (CX 535 at 140 (Scorsone, Dep.)).

Response to Finding No. 1332:

Respondents have no specific response, except to note that this finding concedes 

the case of supply side substitution, which is a basis not to challenge an acquisition under the

Merger Guidelines § 1.3, 3. (See RFOF 1327; FOF 9.1-9.39).

1333. PDM Water and PDM EC shared fabrication facilities, tool houses, and field

erection equipment. (CX 552 at 47-48 (Braden, Dep.)). PDM's Water and EC divisions also 

swapped equipment stored in tool houses, including "off-the-shelf items [such as] welding

machines, air compressors, generators." (CX 535 at 95 (Scorsone, Dep.)).

Response to Finding No. 1333:

Respondents have no specific response. (See RFOF 1327; FOF 9.1-9.39).

1334. Sharing resources benefitted both PDM EC and PDM Water because it

"facilitated a more steady flow of work, a more consistent flow of work through ... [xxx]

warehouses [xxx] fabricating plants." (CX 552 at 52-53 (Braden, Dep.) (emphasis added);

Scorsone, Tr. 4779-80).

Response to Finding No. 1334:

Respondents have no specific response, except to note that while this was true for 

the way PDM managed the two divisions, there is no evidence that this sharing would be needed 

for a newly created entity. (See RFOF 1327; FOF 9.1-9.39).
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1335. Currently, CB&I's Water and Industrial divisions share field erection personnel,

project managers, field erection equipment, and fabrication facilities. (CX 552 at 49-50 (Braden 

Dep.); CX 535 at 141 (CB&I Water and CB&I Industrial share equipment.)).

Response to Finding No. 1335:

Respondents have no specific response, except to note that while this was true for 

the way PDM managed the two divisions, there is no evidence that this sharing would be needed 

for a newly created entity. (See RFOF 1327; FOF 9.1-9.39).

1336. The sharing of resources between PDM EC and PDM Water was beneficial to the 

company because, among other things, it allowed for a more consistent flow of work through the 

company's fabrication facilities. (Scorsone, Tr. 4779-80; CX 552 at 52-53 (Braden, Dep.)).

Response to Finding No. 1336:

Respondents have no specific response, except to note that while this was true for 

the way PDM managed the two divisions, there is no evidence that this sharing would be needed 

for a newly created entity. (See RFOF 1327; FOF 9.1-9.39).

1337. Mr. Glenn testified that a firm that supplies both standard industrial tanks and the 

specialized products in the relevant markets will be more financially stable, and can even result 

in a competitive advantage over other firms:

Certainly, if you're in a number of different businesses making a

number of different products, different product offerings, your

sales force is probably more efficient, your revenues are probably

going to be higher than if you were just in one smaller segment,

allowing you to spread overheads, probably can have higher

utilization in construction equipment, in fabrication plants, et.

cetera. We at least believe that the higher revenues that we can

achieve over various markets is advantageous to us. I would just 

add there that in spreading those overheads, we're better able to bid 

at a lower cost which allows us to win more work and we're able to 

spread – the customer gets the benefit of that lower cost and the

company gets some benefit of that.

(CX 431 at 23 (Glenn, Dep.)).
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Response to Finding No. 1337:

Respondents have no specific response, except to note that while this was true for 

the way PDM managed the two divisions, there is no evidence that this sharing would be needed 

for a newly created entity. (See RFOF 1327; FOF 9.1-9.39).

1338. In order to replace the competition that was eliminated by the acquisition, New

PDM would need the economies of scope that PDM obtained from the shared operations of its

EC and Water divisions. (Simpson, Tr. 3607). To provide New PDM with the same advantages 

PDM obtained from its shared operation of its Water and EC divisions, the Order requires CB&I 

to divest whatever intangible and tangible assets it acquired from both PDM EC and PDM

Water. (Order, ¶ II.D.; see Order, ¶I.T. (assets to be divested are defined as "all rights, title and 

interest in and to all assets, tangible or intangible, acquired by CB&I from PDM in the

Acquisition.").

Response to Finding No. 1338:

Complaint Counsel's proposed finding is inaccurate and unsupported by record

evidence. (See RFOF 1327; FOF 9.1-9.39). As an initial matter, while PDM managed the water 

and EC division closely together, there is no evidence that this sharing would be needed for a

newly created entity. (See RFOF 1327; FOF 9.1-9.39). CB&I's acquisition of PDM did not

harm competition therefore there is no need to impose a remedy. (See FOF 9.6-9.7). Complaint 

Counsel cites its expert, Dr. Simpson, in support of its finding despite the fact that Dr. Simpson 

testified that he does not know how the remedy proposed by Complaint Counsel would be

implemented and that he is not qualified to oversee a breakup of CB&I. (Simpson, Tr. 5715;

FOF 9.4). Complaint Counsel failed to present any evidence that the divestiture contained within 

its proposed order is supported by the record evidence. (See FOF 9.1-9.5).

4. A Track Record of Building Tanks Successfully in the United States

1339. A divested entity will require a backlog of work, both in the relevant markets and 

in general industrial and water tanks, to sustain it while it regains customer recognition.

Response to Finding No. 1339:

Respondents have no specific response.
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1340. There is a disincentive to purchase from a company that has not constructed a

tank within the United States because of the business risks involved. With no track record, New 

PDM would be unable to compete "short of ... taking a big dive on the price." (CX 1731 at 44).

Response to Finding No. 1340:

Complaint Counsel's finding is not supported by the record because the evidence 

shows that a company's lack of experience has not been a barrier in the LPG and LIN/LOX

markets, as companies have successfully entered the market without prior corporate experience. 

(See FOF 4.9, 4.121, 4.123 (LPG); FOF 5.22-5.71(LIN/LOX)). The citation Complaint Counsel 

relies upon for this finding also demonstrates that experience is not as crucial as Complaint

Counsel suggests because "you're really only as good as your last job." (CX 1731 at 44).

1341. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxx], Tr. 

2385, in camera). [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. ([xxxxx], Tr. 2385, in 

camera; CX 258 at CB&I-H001816-832; CX 1731 at 44 (LNG tank owners do not want to

purchase from a second-rate company without a track record because the work is "very

specialized, very sophisticated.")).

Response to Finding No. 1341:

There is no evidence that CB&I has a current backlog of LPG, LIN/LOX or TVC 

projects to give to a new PDM now or at some future time when divestiture is ordered. 

Complaint Counsel asserts that experience in the relevant markets is a prerequisite to getting

work in the relevant markets, however if CB&I has no backlog in these markets to divest,

Complaint Counsels' theory requiring divestiture of the backlog will accomplish nothing. New

PDM establishes nothing in the relevant markets by building other types of tanks. Complaint 

Counsel's assertion that "CB&I has successfully built most of the relevant products" not

supported in the record. Evidence from the LNG market demonstrates that [xxxxxxxx] has for 

more experience in LNG tanks than CB&I. ([xxxxxxxxxxxxxx] see also FOF 3.151-3.152). 
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Complaint Counsel also states that "customers are more willing to purchase from CB&I" but

failed to cite the testimony of any customer.

1342. It takes time to build a track record from scratch. (CX 167 at CB&I-PL007052; 

Cutts, Tr. 2372, 2385).

Response to Finding No. 1342:

Respondents have no specific response. (See RFOF 1440-41).

1343. New PDM must be given sufficient projects that are currently in progress or are

about to begin construction, in order to provide it with a track record at the time of divestiture. 

As of December 31, 2001, CB&I had a backlog of contract work worth $835.3 million. (CX 

1033 at 7).

Response to Finding No. 1343:

First, much of the cited backlog of work relates to work being performed

overseas. Second, there is no evidence that CB&I has a current backlog of LPG, LIN/LOX or 

TVC projects to give to new PDM now or at some future time when divestiture is ordered. 

Complaint Counsel asserts that experience in the relevant markets is a prerequisite to getting

work in the relevant markets; however, if CB&I has no backlog in these markets to divest,

Complaint Counsels' theory requiring divestiture of the backlog will accomplish nothing. 

Complaint Counsel has failed to show that providing a divested company with a "backlog" of

work will allow it to create a successful track record. (See RFOF 1282-1374; FOF 9.1-9.39). 

Complaint Counsel continues to ignore undisputed evidence that many of CB&I's contracts have 

non-assignability clauses which require CB&I to maintain control of the contract and prohibit it 

from assigning it to any other company or entity. (Glenn, Tr. 4168-69).

1344. [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. (Cutts, Tr. 2385, in camera

(track record and reputation are important); Blaumueller, Tr. 300-02 (experience is important);

Vetal, Tr. 427-28 (experienced personnel is important to a company's reputation because "[y]ou 

have to convince the customers that you're qualified, and you need to have the resumes and the 

experienced people to do so.")). By providing New PDM with a backlog of work and the
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experienced personnel to successfully complete the work, a divestiture would address customers' 

concerns that personnel may be pulled off current projects. (Kelly, Tr. 6156).

Response to Finding No. 1344:

This contradicts Complaint Counsel's claim that you need to give new PDM a

backlog of work. Complaint Counsel's own citations illustrate that hiring experienced people is 

enough to impress a customer. However, Complaint Counsel has failed to show that providing a 

divested company with experienced personnel will create an entity capable or replacing PDM. 

(See RFOF 1282-1374; FOF 9.1-9.39). Most importantly, Complaint Counsel failed to present 

any evidence that CB&I currently employs sufficient "experienced" people such that it could

divest enough employees to establish two competitive companies. It is one thing to theorize, it is 

another to try and implement this breakup plan in the real world. Finally, Complaint Counsel

ignores the undisputed testimony establishing that many of CB&I's contracts contain key

personnel clauses which require CB&I to maintain the same personnel for the duration of a

project. Removing or replacing those employees would create numerous contractual issues. 

(Glenn, Tr. 4168-69; FOF 9.17).

1345. As companies in the relevant products learn by trial and error, CB&I would need 

to divest some of its experienced employees. A divested entity would benefit from the wisdom 

of experienced people from CB&I and former PDM by obtaining "the history, the successful

history, knowing the technology and all of the issues that have caused problems in the past that 

people know and won't make mistakes – make the same mistakes again. Conversely, if people 

were starting from scratch, they would have to make the mistakes that we've experienced over 

the years and correct them and thus know not to make them again." (Scully, Tr. 1240). (See 

Newmeister, Tr. 1582-83 (There are special welding procedures and construction skills related to 

LIN/LOX tanks that Matrix learned and developed from former PDM employees with

experience building LIN/LOX tanks.)).

Response to Finding No. 1345:

Complaint Counsel's finding is unsupported by record evidence because it grossly 

mischaracterizes the testimony of Mr. Scully. Contrary to Complaint Counsel's assertions, Mr. 

Scully did not indicate that a divested entity would benefit from the combination of knowledge, 
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but rather that one of the benefits to CB&I's Acquisition of PDM was the merging of knowledge 

and experience. (Scully, Tr. 1240). When asked his opinion of a potential divestiture, Mr.

Scully was concerned about such a possibility and responded "I think you would end up with two 

entities that are substantially weaker than what exists today and as CB&I-PDM." (Scully, Tr.

1240).

1346. To make sure that the new entity has the reputation, experience and sufficient

business base to be a viable competitor, CB&I must contribute a portion of its existing backlog 

of work, for work within, as well as outside, the relevant product markets, to New PDM. (See 

Order, ¶ II.C.).

Response to Finding No. 1346:

Complaint Counsel's proposed finding is not support by any record citations. 

Respondents have no specific responses other than the incorporation of its responses to CCFF

1339-1345. (See RFOF 1339-1345; see also FOF 9.1-9.39).

5. Customer Approval to Transfer Projects to the Divested Company

1347. In order to provide New PDM with a backlog of work, CB&I will have to obtain 

its customers' approvals to transfer the work to the acquirer of New PDM.

Response to Finding No. 1347:

Complaint Counsel's finding fails to cite to any record evidence for support. 

Complaint Counsel states that "CB&I will have to obtain its customers' approvals" without

providing any indication of how CB&I is supposed to force its customers to consent to a transfer 

of their contracts to a company that currently does not exist, does not have a successful history of 

tank construction and may have a questionable ability to actually complete the assigned work. 

Neither CB&I nor Complaint Counsel have a magic wand. There is absolutely no evidence in

the record to indicate that customers would agree to such an assignment. In fact, customers have 

testified to the exact opposite in expressing their concern about the viability of a divested entity. 

(J. Kelly, Tr. 6265; Izzo, Tr. 6511-12; FOF 9.21-9.31). As a result, the undisputed record 
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evidence demonstrates that customers will not agree to a transfer of their existing contracts to a 

newly divested entity.

1348. Many of the company's contracts have non-assignability clauses and key

employee provisions that require the customer to approve the assignment of the contract or the 

replacement of key employees on a project. (Glenn, Tr. 4168-69; Izzo, Tr. 6508).

Response to Finding No. 1348:

Respondents agree with Complaint Counsel's finding. (See FOF 9.16-9.17).

1349. Obtaining customer approvals is feasible. Prior to its acquisition, PDM received 

approvals from its customers to transfer its contracts to CB&I. (Byers, Tr. 6804). Should PDM 

have decided to liquidate the EC division, Mr. Byers testified that PDM was fully prepared to go 

out and gain consents from its customers to allow the sale of its contract backlog to third parties 

for completion. (Byers, Tr. 6804-05).

Response to Finding No. 1349:

Complaint Counsel erroneously uses PDM's assignment of contracts to CB&I at 

the time of the Acquisition as support for the feasibility of its finding. Complaint Counsel fails 

to recognize that PDM was going out of business and customers recognized that they had little 

choice but to assign their contracts to someone. Further, PDM was assigning its contracts to an 

already established and accomplished tank contractor as opposed to the government created

company that customers will be asked to assign their contracts to. Complaint Counsel's proposed 

remedy order requires CB&I to somehow force its customers to agree to this assignment without 

specifying how customer acceptance is even remotely possible. Due to the thousands of

uncertainties that are involved in such a proposal, customers have testified that they are

unwilling to agree to such a proposition. (See J. Kelly, Tr. 6265; FOF 9.21-9.31).

1350. Complaint Counsel's Order requires Respondents to gain customer approval to

transfer work contracts in order to strengthen the competitiveness of the New PDM. (Order ¶

II.C.).
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Response to Finding No. 1350:

Complaint Counsel has failed to cite any evidence within the record which

supports the proposition that customers will consent to an assignment of their existing contracts 

to a newly formed tank contractor that has been created from divested assets. (See RFOF 1347, 

1349). Customers have testified to that they are concerned about the viability of a divested 

entity. (J. Kelly, Tr. 6265; FOF 9.21-9.31). Complaint Counsel has failed to provide any record 

evidence to explain how it is possible to "require Respondents to gain customer approval." (See

RFOF 1349).

6. Key Personnel

1351. In order to be an effective competitor, New PDM will need personnel with

experience in the relevant product markets.

Response to Finding No. 1351:

Respondents have no specific response.

1352. Currently, CB&I enjoys a competitive advantage over other firms due to the

concentration of experienced industry personnel in its divisions. Luke Scorsone testified that the 

combination of human resources was the primary benefit of a merger of CB&I and PDM,

specifically "the coming together of some of the technical capability, the ability to execute work 

more efficiently, the ability to serve our customers better." (CX 646 at 106 (Scorsone, IHT)).

Response to Finding No. 1352:

Complaint Counsel's proposed finding is incorrect. Respondents do not have a

competitive advantage over other firms in the relevant product markets. (See FOF 3.53-3.255, 

4.16-4.54, 5.22-5.78). Respondents have no specific response to the statement of Mr. Scorsone.

1353. Experienced employees are specially trained and therefore valuable in this

industry. Mr. Knight, formerly a salesman for PDM EC, testified that hiring people off the street 

for PDM field crews is "not economical." It "would involve training costs" because PDM' s

"field crews are trained in our procedures and with our equipment." (CX 615 at 25, 47 (Knight, 

IHT)). Similarly, project managers with no past experience in managing tank construction

projects must be trained. (CX 615 at 50 (Knight, IHT)).
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Response to Finding No. 1353:

Complaint Counsel's proposed finding is irrelevant and incorrect. Complaint

Counsel relies on the statements of Mr. Knight, a first level salesmen with no responsibility or 

experience with hiring personnel or field crews. (See FOF 5.225). Mr. Knight does not manage 

or supervise anyone at CB&I and did not have any supervision or management authority at

PDM. (Scorsone, Tr. 4809). Mr. Knight is a salesmen that is solely focused on selling his

products. (Scorsone, Tr. 4809-10; FOF 5.225).

Record evidence has shown that CB&I hires field crew personnel on a job to job 

basis. Field crew workers are free to work for a number of companies (Rano, Tr. 5952-53), and 

tend to move from job to job depending on where work is available. (Rano, Tr. 5957). Because 

field crews are very migratory, CB&I hires its general field labor on a job to job basis. (Glenn, 

Tr. 4119-20; Rano, Tr. 5917-18, 5952-53; see also FOF 5.550). Using local labor is cheaper

than employing traveling workers because it reduces the need to pay increased expenses

associated with room and board for out-of-town workers. (Rano, Tr. 5909-10). CB&I recruits 

local labor by advertising in the local media, and making contacts with local labor leaders and 

local government officials. (Rano, Tr. 5908-09; see also FOF 5.554).

1354. In order to manufacture the relevant products, CB&I must transfer personnel that 

are experienced in the construction of low temperature and cryogenic tanks and TVCs. Mr.

Braden, the President of CB&I's Water Division testified that "there's a fairly steep learning

curve in our business, and to go out and try to fill experienced positions would require some

effort... People have to become familiar with our products and our processes. Processes more

than anything." (CX 552 at 62 (Braden, Dep.)).

Response to Finding No. 1354:

Record evidence has shown that CB&I hires field crew personnel on a job to job 

basis. Field crew workers are free to work for a number of companies (Rano, Tr. 5952-53), and 

tend to move from job to job depending on where work is available. (Rano, Tr. 5957). Because 
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field crews are very migratory, CB&I hires its general field labor on a job to job basis. (Glenn, 

Tr. 4119-20; Rano, Tr. 5917-18, 5952-53; see also FOF 5.550). Using local labor is cheaper

than employing traveling workers because it reduces the need to pay increased expenses

associated with room and board for out-of-town workers. (Rano, Tr. 5909-10). CB&I recruits 

local labor by advertising in the local media, and making contacts with local labor leaders and 

local government officials. (Rano, Tr. 5908-09; see also FOF 5.554).

1355. Lack of sufficient personnel will limit New PDM's capacity to handle multiple

projects. Mr. Cutts of AT&V testified that AT&V faces capacity constraints from the lack of

field, marketing and engineering personnel. (Cutts, Tr. 2372-73 (In order to replace PDM,

AT&V would need "a key marketing person in cryogenics and a key technical person in

cryogenics. And then I'd probably also want the foremen and pushers and all the gear for about 

four more crews."); Harris, Tr. 7595).

Response to Finding No. 1355:

Complaint Counsel's proposed finding is incorrect, incomplete, and unsupported

by the record evidence. Complaint Counsel relies on statements by Mr. Cutts of AT&V that are 

not supported by the record. Mr. Cutts testified that he was able win three LIN/LOX projects

with his current staff. Despite AT&V's lack of any LIN/LOX specific sales personnel, ATV was 

able to sell the LIN/LOX projects to BOC and Air Liquide. (Cutts, Tr. 2568-69; see also FOF 

5.26-5.42). Record evidence has shown that the hiring of experienced personnel is an easy

process. Although it had never done so before, AT&V is in the process of hiring a sales person 

with LIN/LOX experience and knowledge of the LIN/LOX customers. ATV is using the

salesperson as a consultant and in negotiation to hire the individual full time. (Cutts, Tr. 2560-

61; see also FOF 5.26-5.42).

Finally, the record cite Harris, Tr. 7595 provided by Complaint Counsel has

absolutely nothing to do with the proposed finding. Dr. Harris is not providing any opinions

about personnel or AT&V at this point in the record.
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1356. Prior to the acquisition, PDM EC employed 231 salaried employees and 768

hourly employees. (CX 822 at 8; see CX 522 at 26 (in July 2000, PDM EC employed 717

hourly field personnel)). PDM EC's salaried employees included 46 engineers, 36 draftsmen,

and 17 estimators. (CX 522 at 26).

Response to Finding No. 1356:

Respondents have no specific response.

1357. CB&I employees work on a number of projects simultaneously. (Glenn, Tr.

4168). Dr. Simpson stated his expert opinion that CB&I and PDM EC were able to compete so 

effectively, in part, because "they had large engineering staffs to design the structures, and they

had field erection crews in the U.S. to build the structures." (Simpson, Tr. 3156). Dr. Simpson's 

understanding is that PDM EC and CB&I each had over a hundred engineers alone. (Simpson, 

Tr. 3157).

Response to Finding No. 1357:

Respondents have no specific response.

1358. Although Respondents laid off personnel as a result of the acquisition, Mr.

Braden, the President of CB&I's Water Division, is not aware of any "employment agreements 

or conditions" that preclude CB&I from hiring additional personnel in the event of a divestiture 

or break-up of the company." (CX 552 at 61-62 (Braden, Dep.)). Therefore, CB&I can hire

additional employees to be transferred to New PDM or can hire employees to replace those

already transferred.

Response to Finding No. 1358:

Complaint Counsel's finding assumes CB&I can replacement employees, but has 

failed to show what costs will CB&I incur as a result, and if that cost will prevent CB&I from

acting as a low cost competitor, which Dr. Harris says is required for any remedy to be effective. 

(Harris, Tr. 7367-68; 7375-76; FOF 9.18-9.20). Complaint Counsel presents a theory that was 

not discussed at trial and with no evidence to support its implications.

1359. Without sufficient experienced personnel, New PDM will not be able to compete 

with CB&I. Complaint Counsel's Order therefore requires CB&I to take any actions necessary 

"to ensure the transfer to or employment by the Acquirer" of sufficient experienced personnel. 

(Order, ¶ II.F.).

Response to Finding No. 1359:

Respondents have no specific response.
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7. Intellectual Property, Including PDM's Name

1360. In order for a divestiture order to be effective, Respondents must divest all of the 

intellectual property and other intangible assets related to the relevant products, including the

PDM name, rights to which are under the collective control of Respondents.

Response to Finding No. 1360:

Complaint Counsel's proposed finding is not supported by the record evidence. 

Complaint Counsel has failed to provide any record citations for its proposition. Additionally, 

Respondents have not presented any evidence to demonstrate that its proposed remedy will be

effective. (See FOF 9.1-9.39).

1361. Mr. Cutts, vice president of AT&V, testified that AT&V would need the

following assets to effectively compete in the relevant markets: "... their customer base, a list of 

all their customers, all their bids, everyone they've bid to in the last ten years. Second, their

technical specifications associated with cryogenic LNG applications. Their welding systems

associated with certain cryogenic applications. Their name, so I don't have to spend ten years

building our name and fighting everybody in the industry who says things that aren't true about 

us." (Cutts, Tr. 2372).

Response to Finding No. 1361:

Complaint Counsel's proposed finding is not supported by the record evidence

because Mr. Cutts' own admissions illustrate that AT&V did not need the list of assets recited by 

Complaint Counsel to effectively compete in the relevant product markets. Mr. Cutts said his

wish list would "improve [his] ability to compete," not that it would allow him to compete. 

(Cutts, Tr. 2371; FOF 9.35-9.39). Mr. Cutts, further admitted that he is already familiar with the 

customers in the relevant product markets. (Cutts, Tr. 2559-60). AT&V did not need CB&I's

customer list to learn this information. AT&V also has adequate sales staff to be competitive. 

ATV's current sales staff enabled it to sell the LIN/LOX projects to BOC and Air Liquide. 

(Cutts, Tr. 2568-69). AT&V was also able hire a salesperson with cryogenic experience as a

consultant. (Cutts, Tr. 2560-61). AT&V was also capable of developing its own technical

specifications for LIN/LOX tanks which enabled AT&V to successfully construct a LIN/LOX
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tank to the satisfaction of BOC. (Cutts, Tr. 2563-64). AT&V did not need to acquire CB&I's

technical specifications in order to develop their own design. (Cutts, Tr. 2564). AT&V's

welding systems were also more than sufficient to enable it to successfully construct the

LIN/LOX tank for BOC. (Cutts, Tr. 2565; see also FOF 5.26-5.42).

Finally, Complaint Counsel's proposition suggests that AT&V needs CB&I's

name to be competitive. AT&V did not need to change its name in order to be awarded three

LIN/LOX projects. (Cutts, Tr. 2568-69). Additionally, as demonstrated by Complaint Counsel's 

subsequent question, changing a companies name is not that valuable: "You don't think that the 

procurement person might at some point figure that you're not actually the CB&I that he thought 

he was going to be dealing with?" (Cutts, Tr. 2242). Since participants in the industry will know 

the history of a company, they will not be fooled by a simple name change. As a result,

Compliant Counsel's proposed finding is not supported by the evidence.

Most critically, this finding disproves Complaint Counsel's own proposed remedy. 

Why create a new entity from scratch when an existing competitor can be given some targeted 

assets to make it more competitive? The very passage that Complaint Counsel cites from Mr.

Cutts' testimony proves that he only needs a few things to reach PDM levels. (Cutts, Tr. 2242;

FOF 9.35-9.39). Why create a new entity, with all the attendant risks -- not the least of which is 

risking turning CB&I into a high cost competitor, which would neutralize the creation of a new 

PDM, assuming that it will be competitive -- when this Court can focus on giving an existing

competitor what little more it might need to become more competitive? Not only is this more

likely to make a competitor lower cost, it creates less risk of raising CB&I's costs to the point 

where it is no longer a low cost supplier. (Harris, Tr. 7367-68, 7375-76; FOF 9.18-9.20).

1362. Because tank suppliers learn through trial and error, New PDM would need

CB&I/PDM's standards, manuals and guides relating to the relevant products, in order to avoid 
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repeating past mistakes and improve its design and product line. (Cutts, Tr. 2373 (technological 

information includes "purchasing standards, design standards, calculations, drafting standards,

vendor list[s]"); Cutts, Tr. 2388-89 (AT&V considers the manual information valuable because

"there could be information that improves our design, product line")).

Response to Finding No. 1362:

AT&V did not need to obtain all of the technical information suggested by

Complaint Counsel in order to be awarded three LIN/LOX projects. (Cutts, Tr. 2568-69; see

RFOF 1361). AT&V was capable of developing its own technical specifications for LIN/LOX 

tanks which enabled AT&V to successfully construct a LIN/LOX tank to the satisfaction of

BOC. (Cutts, Tr. 2563-64). AT&V did not need to acquire CB&I's technical specifications in

order to develop their own design. (Cutts, Tr. 2564; see also FOF 5.26-5.42). Given AT&V's 

already formidable abilities, focusing on adding to its existing capabilities is a more sensible

remedy.

1363. Without providing New PDM with CB&I/PDM's intellectual property, it may take 

New PDM as long as two years from developing the initial concept to securing its first contract. 

(Newmeister, Tr. 1585).

Response to Finding No. 1363:

Complaint Counsel never presented any evidence to determine how long it would 

take a divested company to compete effectively. (See FOF 9.1-9.39). The record citation to a

statement by Matrix indicating how long it took Matrix to enter the LIN/LOX market fails to

support Complaint Counsel's hypothetical situation involving a potentially divested company. 

As a result, Complaint Counsel's finding is not supported by the record. Additionally, it is more 

likely to be effective by adding such intellectual property to an existing competitor than

attempting to create a new one.

1364. CB&I currently possesses over 100 U.S. patents which give CB&I a cost

advantage over other competitors. (CX 230 at CB&I-PL 055446). These patents provide CB&I 

with a "strong position with proprietary technology." in the LNG market. (CX 230 at CB&I-PL 

055453). For example, CB&I has a patent for an ultrasonic technique for examining welds. This 
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technique is used in LNG tank projects and is safer and more efficient than examining welds

using radiography. (CX 1550 at 258-61 (Bacon, Dep.); CX 241 at CB&I-PL 4000565; see id. at 

261-62; id. at 291-94, 296 (Bacon, Dep.) (CB&I has patents on a "scaffoldless tank erection

method" that lowers the cost of erecting flat bottom tanks). A proper divestiture should license 

this technology and any other patented technology to New PDM. (See Order, ¶ II.E.).

Response to Finding No. 1364:

Respondents have no specific response except to state that CB&I does not have a 

cost advantage over other competitors. (See FOF 3.53-3.255, 4.16-4.54, 5.22-5.78).

1365. CB&I must also release its interest in, and transfer to New PDM the right to use, 

the PDM name. The CB&I and PDM names are critical to the viability of New PDM because of 

the goodwill and reputation associated with these names that has been built up over decades. 

(Cutts, Tr. 2389 ("the PDM name, like the CB&I name, could obviously break down a lot of

walls and barriers.")). In order to build a reputation similar to that of PDM, Mr. Cutts estimates 

that AT&V would have to spend over a million dollars in marketing alone for the next three

years. (Cutts, Tr. 2382).

Response to Finding No. 1365:

Complaint Counsel's proposed finding is incorrect and not supported by record

evidence. (See RFOF 1361). Complaint Counsel suggests that bestowing a divested entity with 

the PDM name will enable it to become competitive. There is no evidence to support the notion 

that customers will be fooled by a newly created company using the PDM name. As was

demonstrated during Mr. Cutts' testimony, simply calling a newly created company PDM will

not actually lead any customers to believe that the new company is in fact PDM. (Cutts, Tr.

2242). Since participants in the industry well know the history of this Acquisition (since most 

testified at this trial), they are certainly aware that PDM ceased to exist as a result of CB&I's

Acquisition of PDM. They will not be fooled by a simple name change. Complaint Counsel has 

failed to present any evidence that naming a divested company PDM would aid in the success of 

the company. As a result, Compliant Counsel's proposed finding is not supported by the

evidence.
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1366. Following complete divestiture, CB&I will nevertheless continue to benefit from

the trade secrets and other intellectual property it has absorbed from PDM. To assure that the

acquirer will be able to compete on an equal footing with CB&I, as PDM once did, Complaint 

Counsel's proposed Order mandates that the combined intellectual property of CB&I and PDM 

must be shared with New PDM. (Order, ¶ II.E.; see Simpson, Tr. 3609).

Response to Finding No. 1366:

This finding is entirely punitive and nonsensical. According to Complaint

Counsel, the idea is to create an entity like PDM was before the Acquisition, not to create an

entity which is far stronger and more powerful that PDM was before the acquisition. (FOF 9.35-

9.39).

8. Training and Technical Assistance

1367. CB&I will need to provide training to the personnel of New PDM. CB&I invests 

heavily in training its various construction crews, and its crews are specialized in specific

structures or tasks, such as tank erection, foundational work, field-erection, piping, electrical

work, or insulation. (CX 258, CB&I-H001794).

Response to Finding No. 1367:

Complaint Counsel's finding is irrelevant. If CB&I "invests heavily" in the

training of its employees, and new PDM is to be made up of all CB&I employees, they will not 

need to be trained because they will have already been trained by CB&I. (FOF 9.35-9.39).

1368. Training and technical assistance will allow New PDM to have access to the best 

practices implemented by CB&I after the acquisition. Since the acquisition, CB&I, has spent

"maybe thousands of man-hours looking into the cost basis, looking into the technical basis,

looking into what the actual procedures or equipment or whatever it is that's involved" in the

engineering, design, fabrication and erection of tanks sold by CB&I and PDM. Based on this

analysis, CB&I has adopted "best practices" for supplying tanks and operating its company. (CX 

1550 at 301-303 (Bacon Dep.)). Because these business exploits may lower the costs of

supplying the relevant products, the divestiture to Newco should include these "best practices." 

Response to Finding No. 1368:

If new PDM employees are CB&I employees, they will already have knowledge 

of the CB&I's best practices. (RFOF 1367; FOF 9.35-9.39).
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1369. Technical assistance alone would be insufficient to restore an effective

competitor. Mr. Gill testified that he has obtained technical assistance in the past, but that it has 

not increased his effectiveness as a competitor for TVCs. (Gill, Tr. 202 ("[I]t would take more 

than mentoring" for Howard Fabrication to be competitive)). Likewise, Mr. Patrick Neary of

TRW testified that technical assistance would be insufficient to make a thermal vacuum chamber 

provider as competitive as PDM EC and CB&I. (Neary, Tr. 1458).

Response to Finding No. 1369:

Complaint Counsel's proposed finding is incomplete, overbroad and contradicted 

by the manifest weight of the evidence. (See FOF 6.107-6.109, 6.116-6.121). Complaint

Counsel's proposition attempts to include all relevant product markets while only citing record

evidence from TVCs. Record evidence has demonstrated that in the LNG, LPG, and LIN/LOX 

market, there is ample competition and any competitive problems that may be found could be

remedied by CB&I providing technical assistance. (See FOF 3.53-3.255, 4.16-4.54, 5.22-5.78).

In the TVC market, customers have testified that it would benefit competition if

CB&I were to mentor an existing large tank construction company like Matrix, Nooter or Puget 

Sound Fabricators ("PSF") on CB&I's next field-erected TVC project by integrating that

company's engineering, fabrication and field-erection crews into the entire process. (Scully, Tr. 

1230-31; Higgins, Tr. 1275-76). In fact, the newly mentored company would possibly have

more current experience in constructing a field-erected TVC than CB&I. (Scully, Tr. 1231; see 

also FOF 6.107). Complaint Counsel cites to Mr. Gill in support of its claim that such technical 

assistance is not useful, however, technical assistance would not help Howard because it is too 

small of a company with less than two million dollars in sales. Customers have testified that

there are large companies in the marketplace that can build field-erected TVC's if they are given 

some training and instruction, such as Matrix, Nooter, and PSF. (Scully, Tr. 1229-30; see also

FOF 6.108). For example, Boeing has also testified that it would consider using a TVC supplier 

that had gained its experience by working as a joint venture partner with CB&I on each phase of
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the construction process of a future field-erected TVC project. (Proulx, 1756-57; see also FOF 

6.109).

1370. Because training and technical assistance are necessary in order to restore a viable 

competitor in the relevant markets, the Order requires CB&I to equip New PDM with the

knowledge base necessary to be a competitor. (Order, ¶¶ II.E, IV.).

Response to Finding No. 1370:

Complaint Counsel failed to provide any record citation to support its proposed

finding. Compliant Counsel has also failed to present record evidence to demonstrate that a

remedy is necessary or that its proposed remedy will be effective. (See RFOF 1282-1374; FOF 

9.1-9.39).

9. Additional Safeguards to Ensure that it is Enforced

1371. The divestiture will require the appointment of a monitor trustee to oversee its

effective implementation, as recognized by Respondents. (Simpson, Tr. 5715). The

appointment of a trustee is a normal part of the divestiture process. See Casey Triggs, "FTC

Divestiture Policy," 17 Antitrust 75, 76 (2002)).

Response to Finding No. 1371:

Complaint Counsel failed to present any evidence as to how a remedy in this case 

would be instituted. A monitor trustee is supposed to monitor, not create the very structure of

the divestiture which Complaint Counsel asks this Court to abdicate to a trustee. This Court

must know how its order will be implemented before turning it over to a trustee. (See FOF 9.1-

9.39). Further, Complaint Counsel cites to the cross-examination of Dr. Simpson. When

Respondents asked Dr. Simpson how a remedy would be implemented, he responded "I don't

know exactly how it would be implemented." (Simpson, Tr. 5715). Complaint Counsel also

attempts to cite to an article on divestitures in an effort to support their proposition. Respondents 

are at a loss to understand how Complaint Counsel can propose a finding of fact based upon an 

article that is not part of this trial record.
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1372. The monitor trustee would work with the Commission's Compliance Division, a

specialized division whose purpose is to oversee and implement Commission divestiture orders, 

to reestablish CB&I/PDM into two viable and competitive entities. (See Order, ¶ V).

Response to Finding No. 1372:

Complaint Counsel failed to support its finding with any evidence from the record 

regarding the remedy process during trial. (See FOF 9.1-9.39). Complaint Counsel proposes

that the Court should abdicate its role to a compliance division that is accountable to no one and 

from whom no appeal is possible.

1373. One customer, Mr. Jeffrey Sawchuk, testified that any concerns regarding relief

would depend on how the restored competitors are set up. (Sawchuk, Tr. 6066). Proper

monitoring of the divestiture would address Mr. Sawchuk's concern.

Response to Finding No. 1373:

Complaint Counsel never asked any customers if "proper monitoring of the

divestiture" would elevate their concerns regarding the Acquisition. As a result, Complaint 

Counsel's finding is not supported by the record. (See FOF 9.1-9.39). Mr. Sawchuk himself said 

that there were not enough engineers to split CB&I into two companies. (Sawchuck, Tr. 6077-

78; FOF 9.31). This is not a problem that can be solved by "proper monitoring." Again,

Complaint Counsel is overreaching and has not demonstrated the consequences of the action

they beseech this Court to order. Additionally, numerous customers expressed concerns not

merely with the divestiture process itself but with the very possibility of a divestiture. LNG

customers testified that they have "some real concerns" about Complaint Counsel's proposed

remedy and believe it would be a disadvantage to breakup CB&I. (Sawchuck, Tr. 6077; J. Kelly, 

Tr. 6265; Bryngelson, Tr. 6155; see also FOF 9.8- 9.31).

1374. The only effective remedy that will restore competition is the divestiture of the

PDM assets that CB&I acquired and the reestablishment of PDM as a independent, viable

competitor. In order to restore competition, CB&I must divest certain tangible and intangible

assets, such as fabrication facilities, personnel, and the PDM name. In addition, CB&I must
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provide the divested entity with technical assistance and assist the divested entity in building a

track record.

Response to Finding No. 1374:

Complaint Counsel's proposed finding fails to make even one citation to any

evidence contained within the record. Additionally, the proposed finding is incorrect because

Respondents have shown that no competitive harm has occurred and therefore there is no need 

for a remedy. (See RFOF 1282-1374; FOF 9.1-9.39). Further, there are other remedies

available. (See Opening Br. at section IX, p. 158-172; Reply Br. at section V). Complaint

Counsel has also failed to show that their proposed remedy will be effective in restoring any

competitive problems that this Court may find. Id. If a remedy is required, Complaint Counsel 

has not shown that a lesser alternative will not be more effective than the proposed remedy of

divestiture. Id. As a result, Complaint Counsel's proposed remedy lacks support from the record 

evidence.

COMPLAINT COUNSEL'S PROPOSED CONCLUSIONS OF LAW

1. The Federal Trade Commission has jurisdiction over the subject matter of this

proceeding, and over Respondents Chicago Bridge & Iron Company, N.V. ("CB&I), Chicago 

Bridge and Iron Company and Pitt-Des Moines, Inc. ("Pitt-Des Moines").

Response to Conclusion No. 1:

Respondents have no specific response to this conclusion of law.

2. The Commission has jurisdiction over the subject matter of this proceeding

pursuant to Section 7 of the Clayton Act, 15 U.S.C. 21, and Section 5 of the Federal Trade

Commission Act, 15 U.S.C. 45.

Response to Conclusion No. 2:

Respondents have no specific response to this conclusion of law.

3. At all relevant times herein, Respondents were engaged in commerce, as

"commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. § 12, and

affected commerce, as "commerce" is defined in Section 4 of the FTC Act, as amended, 15

U.S.C. § 44.
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Response to Conclusion No. 3:

Respondents have no specific response to this conclusion of law.

4. The FTC is vested with authority and responsibility for enforcing, inter alia, 

Section 7 of the Clayton Act. Clayton Act § 11(a), 15 U.S.C. § 21(a).

Response to Conclusion No. 4:

Respondents have no specific response to this conclusion of law.

5. On or about February 7, 2001, CB&I acquired Pitt-Des Moines' Water and

Engineered Construction Divisions ("PDM"). The acquisition is a transaction subject to Section 

7 of the Clayton Act, 15 U.S.C. § 18, and Section 5 of the FTC Act, 15 U.S.C. § 45.

Response to Conclusion No. 5:

Respondents have no specific response to this conclusion of law.

6. The FTC has jurisdiction pursuant to Section 11 of the Clayton Act, 15 U.S.C.

§ 21, to bring this administrative proceeding against the CB&I/PDM merger.

Response to Conclusion No. 6:

Respondents have no specific response to this conclusion of law.

7. Section 7 of the Clayton Act prohibits any acquisition of stock or assets "where in 

any line of commerce ... in any section of the country, the effect of such acquisition may be

substantially to lessen competition or to tend to create a monopoly." 15 U.S.C. § 18.

Response to Conclusion No. 7:

Respondents have no specific response to this conclusion of law.

8. Section 7 of the Clayton Act is intended to reach incipient monopolies and trade

restraints outside the scope of the Sherman Act.

Response to Conclusion No. 8:

Respondents have no specific response to this conclusion of law.

9. Section 7 of the Clayton Act uses the word "may" to indicate that the concern is 

with probabilities, not certainties. Section 7 does not require proof from Complaint Counsel that 

a merger has caused higher prices in the affected market. To satisfy Section 7, the FTC need 

only show a reasonable probability that the proposed transaction would substantially lessen

competition in the future. All that is necessary is that the merger create an appreciable danger of 

anticompetitive consequences in the future. A predictive judgment, necessarily probabilistic and 

judgmental rather than demonstrable, is called for.
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Response to Conclusion No. 9:

Complaint Counsel provides an incomplete statement of its legal burden. 

Complaint Counsel has the initial burden of proving a Section 7 violation, and the ultimate

burden of persuasion in a Section 7 case "remains with the government at all times." United 

States v. Baker Hughes Inc., 908 F.2d 981, 983 (D.C. Cir. 1990). See also United States v.

Connecticut Nat’l Bank, 418 U.S. 656, 669 (1974); New York v. Kraft Gen. Foods, Inc., 926 F. 

Supp. 321, 358-59 (S.D.N.Y. 1995). Complaint Counsel must show that the Acquisition is

reasonably likely to have “demonstrable and substantial anticompetitive effects.” Kraft Foods, 

926 F. Supp. at 359 (emphasis added). A "mere possibility" of anticompetitive effect is not

enough to win a Section 7 case; there must be a "reasonable probability" of such an effect. Id. 

(citing Fruehauf Corp. v. F.T.C., 603 F.2d 345, 351 (2d Cir. 1979)). A showing of "reasonable 

probability" is required because Section 7 “deals in ‘probability,’ not ‘ephemeral possibilities.’” 

Id. (quoting United States v. Marine Bancorporation, Inc., 418 U.S. 602, 622-23 (1974))

(emphasis added). Complaint Counsel must prove that the commerce affected by the Acquisition 

is substantial. United States v. Baker Hughes, Inc., 731 F. Supp. 3, 9 (D.D.C. 1990). A showing 

of a "substantial" anticompetitive effect is required of the government in a Section 7 case. Id. 

(citing United States v. Dupont & Co., 353 U.S. 586, 595 (1957). (See Respondents’ 

Conclusions of Law 1-3.)

10. Under Section 7 of the Clayton Act, the FTC makes out a prima facie case, and 

gives rise to a presumption of violation, by showing: (1) the "line of commerce" or product

market; (2) the "section of the country" or geographic market; and (3) the transaction's probable 

effect on concentration in the product and geographic markets.

Response to Conclusion No. 10:

Respondents have no specific response to this conclusion of law.

11. Field-erected liquefied natural gas storage tanks ("LNG") are an appropriate line 

of commerce for evaluating the likely competitive effects of the acquisition.
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Response to Conclusion No. 11:

Respondents' response to this proposed conclusion of law is set forth at RFOF 54-

66.

12. LNG import terminals are an appropriate line of commerce for evaluating the

likely competitive effects of the acquisition.

Response to Conclusion No. 12:

Respondents' response to this proposed conclusion of law is set forth at RFOF 54-

66.

13. LNG peak shaving plants are an appropriate line of commerce for evaluating the

likely competitive effects of the acquisition.

Response to Conclusion No. 13:

Respondents' response to this proposed conclusion of law is set forth at RFOF 54-

66.

14. Field-erected liquid nitrogen, oxygen and argon storage tanks ("LIN/LOX") are an 

appropriate line of commerce for evaluating the likely competitive effects of the acquisition.

Response to Conclusion No. 14:

Respondents' response to this proposed conclusion of law is set forth at RFOF 67-

75.

15. Field-erected liquid petroleum gas storage tanks ("LPG") are an appropriate line

of commerce for evaluating the likely competitive effects of the acquisition.

Response to Conclusion No. 15:

Respondents' response to this proposed conclusion of law is set forth at RFOF 76-

83.

16. Large (over 20 feet in diameter), field-erected thermal vacuum chambers ("TVC") 

are an appropriate line of commerce for evaluating the likely competitive effects of the

acquisition.

Response to Conclusion No. 16:
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Respondents' response to this proposed conclusion of law is set forth at RFOF 84-

94.

17. The United States is the appropriate geographic region for evaluating the likely

competitive effects of the acquisition in each of the above lines of commerce.

Response to Conclusion No. 17:

Respondents' response to this proposed conclusion of law is set forth at RFOF 95-

98.

18. The Parties are in agreement about the relevant product and geographic markets.

Response to Conclusion No. 18:

Respondents' response to this proposed conclusion of law is set forth at RFOF 54-

98.

19. The Herfindahl-Hirschman Index ("HHI") is an appropriate measure of market

concentration.

Response to Conclusion No. 19:

While the Herfindahl-Hirschman Index ("HHI") is a recognized method of

measuring market shares under the Merger Guidelines, HHI statistics are irrelevant in this

particular case. The Merger Guidelines require that the Complaint Counsel calculate market

shares “using the best indicator of firms' future competitive significance.” Merger Guidelines § 

1.41. Complaint Counsel has failed to calculate shares using the best indicator of firms’ future

competitive significance, thus the HHIs, as calculated by Complaint Counsel, are irrelevant in

this case. See Opening Br. § I, FOF 7.113-7.115, 7.119, 7.130, 7.235-7.237. Further, courts

have been skeptical of reliance on market share calculations, and have made clear that they are 

only a starting point for an analysis of competitive effects. The Supreme Court has instructed

lower courts to look beyond market share statistics, because "only a further examination of the

particular market -- its structure, history and probable future -- can provide the appropriate
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setting for judging the probable anticompetitive effect of the merger." United States v. General 

Dynamics Corp., 415 U.S. 486, 498 (1974) (internal citations and quote marks omitted). The

Court noted that such statistics "were not conclusive indicators of anticompetitive effect" and

that "[e]vidence of past production does not as a matter of logic, necessarily give a proper picture 

of a company's future ability to compete." Id. at 498. See also, e.g., United States v. Baker 

Hughes , 908 F.2d 981, 984 (D.C. Cir 1990); United States v. Syufy Enters., 903 F.2d 659, 665 

n.6 (9th Cir. 1990); United States v. Waste Mgmt., Inc., 743 F.2d 976, 982 (2d Cir. 1984)

(citations omitted).

20. The acquisition by CB&I of PDM significantly increased concentration in the

relevant product markets in the United States, and result in highly concentrated markets.

Response to Conclusion No. 20:

Complaint Counsel’s proposed conclusion is irrelevant for the reasons stated

above. (See RCOL 19; Opening Br. at Part II).

21. The market shares and HHI concentration levels that resulted from this merger in 

the relevant markets make the merger so inherently likely to lessen competition substantially that 

it is presumptively unlawful under Section 7 of the Clayton Act.

Response to Conclusion No. 21:

Complaint Counsel’s proposed conclusion is irrelevant for the reasons stated

above supra RCOL 19; Opening Br. at Part II)

22. Having established a prima facie case, the burden of producing evidence that the 

merger is not, in fact, anticompetitive shifts to Respondents. To meet their burden, Respondents 

must show that the market-share statistics give an inaccurate prediction of the acquisition's

probable effect on competition.

Response to Conclusion No. 22:

Respondents have no specific response to this conclusion of law.

23. Proof of ease of entry by other firms may rebut the presumption of

anticompetitive harm, but Respondents have failed to do so here.
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Response to Conclusion No. 23:

Complaint Counsel’s proposed conclusion of law is incomplete and incorrect

because: 1) ease of entry is one of many ways in which Respondents can rebut Complaint

Counsel’s prima facie case; and 2) contrary to Complaint Counsel's claim, Respondents have

successfully rebutted its prima facie case, assuming arguendo that it properly established its

prima facie case. (See Opening Br. at Part III-VI).

24. Entry must be timely, likely, and sufficient in its magnitude, character and scope

to deter or counteract the competitive effects of a merger. In order for entry to be sufficient to 

restore competition, it must be entry that replaces the competition that existed prior to the

acquisition and such entrants must be profitable at pre-merger prices. Even a showing of actual 

entry is insufficient to alleviate concern, unless that entry also indicates the likelihood of

sufficient growth by the entrant to deter or counteract the anticompetitive effects of the merger. 

Respondents have offered no evidence to satisfy these requirements, and specifically have

offered no evidence that any alleged entrant will enter the relevant product markets in the United 

States within two years, be profitable at pre-merger prices, and fully replace PDM as a

competitive force.

Response to Conclusion No. 24:

Complaint Counsel’s proposed conclusion is improper because the Merger

Guidelines do not establish a criteria for evaluating entry that is binding on the Court; instead the 

Merger Guidelines, if anything, are binding on Complaint Counsel and it is Complaint Counsel’s 

burden to show that it brought this proceeding in accordance with its own Guidelines. The

proper legal analysis under which entry should be analyzed is set forth in United States v. Baker 

Hughes, 908 F.2d 981, 987-88 (D.C. Cir. 1990), which makes clear that Complaint Counsel

cannot shift its burden by requiring Respondents to prove what Complaint Counsel suggests is

required. (See Opening Br. at Part I).

25. Due to entry barriers, entry by new suppliers or the expansion of fringe suppliers 

is not likely to avert the anticompetitive effects of the merger in the relevant markets.

Response to Conclusion No. 25:
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Complaint Counsel’s proposed conclusion is false because: 1) Respondents have 

shown that entry is easy; and 2) that entry has and will avert any potential anticompetitive effects 

resulting from the Acquisition. (See, e.g., FOF 7.58, 7.92-7.101, 7.118, 7.113, 3.68-3.227, 4.16-

4.54, 5.22-5.71, 5.79-5.184).

26. Respondents have not presented an efficiencies defense in support of the merger.

Response to Conclusion No. 26:

Respondents have no specific response to this conclusion.

27. Respondents have asserted an "exiting assets" defense. The antitrust laws, and

this Tribunal, do not recognize the existence of such a defense.

Response to Conclusion No. 27:

Complaint Counsel’s proposed conclusion of law contains the false assertion that 

there is no legal support for an exiting assets defense. This defense is recognized in In re Olin 

Corporation, 113 F.T.C. 400 (1990), and is a necessary part of the determination of whether the 

effects of the Acquisition are to lessen competition. If PDM would have ceased to exist but for 

the Acquisition, the competitive effect is the same as if there had been no Acquisition. (See 

Opening Br. at Part VIII.)

28. The antitrust laws recognize a "failing firm" or "failing division" defense. In

order to satisfy this defense, Respondents must demonstrate that: 1) PDM would be unable to 

meet its financial obligations in the near future; 2) PDM would not be able to reorganize

successfully under Chapter 11 of the Bankruptcy act; 3) PDM has made unsuccessful good-faith 

efforts to elicit reasonable alternative offers of acquisition of the assets of the failing firm that

would keep its tangible and intangible assets in the relevant markets and pose a less severe

danger to competition than does the proposed merger; and 4) absent the acquisition, the assets of 

PDM would exit the relevant markets. Respondents failed to prove each of these elements.

Response to Conclusion No. 28:

Complaint Counsel’s proposed conclusion of law is unnecessary and irrelevant for 

the reasons set forth in Part VIII of Respondents’ Opening Brief.
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29. Respondents have not produced any significant evidence rebutting the

presumption of violation of Section 7 of the Clayton Act and Section 5 of the FTC Act.

Response to Conclusion No. 29:

Complaint Counsel’s proposed conclusion of law is false. Complaint Counsel

has failed to establish a presumption of violation of Section 7 of the Clayton Act and Section 5 of 

the FTC Act. (See Opening Br. § I). Even if it had, Respondents have presented significant

evidence rebutting such a presumption. (See Opening Br. at Parts III-VI).

30. Had Respondents produced significant evidence sufficient to rebut the

presumption, the burden of producing further evidence of anticompetitive effect would have

shifted to Complaint Counsel.

Response to Conclusion No. 30:

Respondents have produced significant evidence sufficient to rebut any

presumption Complaint Counsel might have established; accordingly the burden of producing

further evidence of anticompetitive effect has shifted to Complaint Counsel in this case. 

(Opening Br. at Part I).

31. Although Complaint Counsel is not required to prove the existence of actual

anticompetitive effects resulting from the merger, such evidence, either in the form of unilateral 

post-merger price increases or coordinated interaction, negates any attempt to rebut the FTC's

prima facie case, and independently establishes a violation of Section 7 of the Clayton Act and 

Section 5 of the FTC Act.

Response to Conclusion No. 31:

Complaint Counsel’s proposed conclusion of law is not legally supported and is

irrelevant because Complaint Counsel has not shown any actual anticompetitive effects. (See

Opening Br. at Part VI; Reply Brief at Part III). See also United States v. Baker Hughes, 908 

F.2d 981 (D.C. Cir. 1990) (setting forth legal framework for analysis of Acquisition).

32. Because the merger would eliminate competition from PDM, CB&I's closest

competitor in the relevant markets, the merger is likely to increase CB&I's ability to raise prices 

unilaterally. Anticompetitive price increases are more likely in a merger involving the two firms 

that buyers consider to be their first and second choices. A merger involving the first and second 
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lowest-cost sellers could cause prices to rise to the constraining level of the next lowest-cost 

seller.

Response to Conclusion No. 32:

Complaint Counsel’s proposed conclusion of law is flawed in several ways. First, 

Complaint Counsel has not met its burden of showing that the Acquisition is likely to

substantially reduce competition in the relevant markets. (Opening Br. at Part II). Complaint 

Counsel failed to establish a prima facie case, and even if it did, Respondents have successfully 

rebutted its prima facie case. (Opening Br. at Parts III-VI; Reply Brief at Part II). Complaint 

Counsel's proposed finding ignores the impact of entry on a market involving "the first and

second lowest-cost sellers." The supposed “additional evidence” produced by Complaint

Counsel to meet its burden is wholly deficient. (See Reply Brief at Part III). Finally, a critical

flaw in Complaint Counsel’s proposed conclusion of law is that Complaint Counsel did no cost 

analysis whatsoever in support of its assertion that CB&I is the lowest cost competitor. (FOF

7.152-7.158).

33. The acquisition is likely to give rise to coordinated anticompetitive effects

through tacit or express collusion. Section 7 of the Clayton Act seeks to prohibit excessive

concentration, and the oligopolistic price coordination it portends. Where rivals are few, firms

will be able to coordinate their behavior, either by overt collusion or implicit understanding, in

order to restrict output and raise price.

Response to Conclusion No. 33:

The Acquisition is not likely to give rise to coordinated anticompetitive effects

through tacit or express collusion. Complaint Counsel has presented no valid evidence proving 

collusion is likely, and evidence indicates that in fact the nature of these industries prevents

collusion. (See Opening Br. at Part VI; Reply Brief at Part III).

34. Complaint Counsel need not show a likelihood of explicit collusion. A merger

violates Section 7 of the Clayton Act if the remaining firms will be more likely to engage in

conduct that is likely to result in higher prices, even if that conduct, in itself, would be entirely

lawful. Section 7 seeks to prevent a market structure that enhances the ability to engage in both 
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CHI:1176893.3

explicit and tacit collusion. The relative lack of competitors eases coordination of actions,

explicitly or implicitly, among the remaining few to approximate the performance of a

monopolist.

Response to Conclusion No. 34:

Complaint Counsel’s proposed conclusion of law is irrelevant since there is no

evidence of explicit collusion. (See Opening Br. at Part VI; Reply Brief at Part III).

35. Complaint Counsel has offered substantial evidence of anticompetitive effects

resulting from the merger, any of which would independently mandate a finding against

Respondents as a matter of law.

Response to Conclusion No. 35:

It is untrue that Complaint Counsel has offered substantial evidence of

anticompetitive effects resulting from the merger. (See Reply Brief at Part III).

36. CB&I's acquisition of PDM violates Section 7 of the Clayton Act because "the

effect of such acquisition may be substantially to lessen competition or to tend to create a

monopoly." 15 U.S.C. § 18. The acquisition also constitutes an unfair method of competition in 

or affecting commerce in violation of Section 5 of the FTC Act. 15 U.S.C. § 45.

Response to Conclusion No. 36:

Complaint Counsel has failed to meet its burden of proving that the Acquisition

has the effect of substantially lessening competition or tending to create a monopoly. (See

Opening Br., Parts I-VI; Reply Brief at Parts I-III).

37. The Order entered herein is appropriate to remedy the violation of law found to

exist, and to protect the public now and in the future.

Response to Conclusion No. 37:

Complaint Counsel’s proposed order is wholly inappropriate since 1) there is no 

violation of the Clayton Act, 2) even if there were a violation of the Clayton Act, Complaint 

Counsel’s proposed remedy is unsupported by evidence, and 3) record evidence establishes that 

the remedy proposed by Complaint Counsel would harm customers. (See Opening Br. at Part

XI; Reply Br. at Part V).
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CHI:1176893.3

Dated: April 16, 2003 Respectfully submitted,

 

______________________________

Duane M. Kelley

Jeffrey A. Leon

Greg J. Miarecki

Christopher B. Essig

Michael P. Mayer

Andrew D. Shapiro

Danielle A. R. Coffman

David E. Dahlquist

James F. Herbison

Lance W. Lange

Winston & Strawn

35 West Wacker Drive

Chicago, IL 60601-9703

(312) 558-5600 (voice)

(312) 558-5700 (fax)

dkelley@winston.com

jleon@winston.com

gmiareck@winston.com

cessig@winston.com

mmayer@winston.com

ashapiro@winston.com

dcoffman@winston.com

ddahlqui@winston.com

jherbiso@winston.com

llange@winston.com

Counsel for Respondents

Chicago Bridge & Iron Company N.V.

 and Pitt Des-Moines, Inc.
- 617 -

CHI:1176893.3

CERTIFICATE OF SERVICE

I, Greg J. Miarecki, hereby certify that on this 16th day of April, 2003, I served a 

true and correct copy of Respondents' Reply Findings of Fact & Conclusions of Law -- Public 

Version, by hand delivery upon:

The Honorable D. Michael Chappell

Administrative Law Judge

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

(two copies)

Rhett R. Krulla

Assistant Director

Bureau of Competition

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Room S-3602

Washington, D.C. 20580

Steven L. Wilensky

Federal Trade Commission

601 Pennsylvania Avenue, N.W.

Room S-3618

Washington, D.C. 20580

________________________