determine the ability of these foreign companies to effectively compete in the U.S. is to obtain
evidence directiy from these foreign companies.

number of torcign companies that may have evidence relating to their ability to compete in the

Redacted Pursuant to

= Protective Order In reality, the oniy wey to

.S., ingluding:

Skanska‘Whessoe -- Skanska‘Whessoe is a company based in the United
Kingdom, It has built dozens of LNG tanks and other similar storage facilities
throughout the world. [¢ is aiso currently b:dding on LNG jobs in the United
States. such as an LNG facility near Hackberry, Louisiana being built by Dynegy.

TKK -- Tokyo Kanetsu K.K (TKK) 13 a company based in Japan. TKK has built
dozens of LNG tanks in Japan, and it has recently entered into a joint venture with
American Tank & Vessel (AT&V) to pursue LNG opportunities in the U.S. That
joint venture is currently bidding on the Dynegy project.

" Entrepose -- Entrepose is a French company that has built LNG tanks throughout

the world. Entrepose has made inquiries about LNG projects in the U.S.

Bouygues/Technigaz -- Technigaz is a major worldwide supplier of LNG tanks
and import terminals. Technigaz recently announced a joint venture with San
Antonio-hased H. B. Zachry to design and construct LNG jobs in the United
States. The Technigaz/Zachry venture is also currently bidding on the Dynegy
project.

Technip -- The Technip Group of France specializes in LNG facilities
Throughout the world. In recent weeks, the company has aired radio
advertisements in the Houston area to recruit LNG engineers and in the last month
was awarded a preliminary engincenng and design contract for an LNG import
terminal in Freeport, Louisiana being built by Cheniere Energy, Inc..

Daewoo -- Daewoo, a construction company based in South Korea, has been the
durninant contractor in the design and construction of LNG terminals and gas
‘nain trunklines in Korea over the past decade. Daewoo has announced a
partnership with S&B Engineers and Constructors, Ltd, -- a Houston firm -- to
jouit.¥ pursue LNG construction jobs in North America.

MUI -- Mitsubishi Heavy [ndustries (MHI) 1s another global player in the LNG
construction business. Recently, the company has competed for LNG jobs
intemationally, winning a major project in Qatar from a variety of other bidders,
including CB&L The company has also pursued LNG jobs in the Western
Hemisphere in Canada and the Bahamas.

Respondents have identified a significant


10. As this request for forcign cvidence satisfics Rule 3.36, Responduits -espect fuliy
ask this Court to grant its request to serve subpoenas on Skanska/Whessve, TKK, Entrepose.

Bouyzues/Technigaz, Dacwoo, MHI, THI, Techn:p, and BSL.

Dated; Washington, D.C. Respectfully submitted,
Apnil 10, 2002
LS LS

“Jeflrey A. Leon
Winston & Strawn
35 W. Wacker Drive
Chicago, IL 60601-9703
(312) 558-5600 (voice)
(312) 558-5700 (fax)
dkelley@winston.com
jleon@winston.com

Nada Sulaiman

Winston & Strawn

1400 1. Street, NW.
Washington, D.C. 200605
{202) 371-5700 {voice)
202) 216-8600 (fax)
nsulaima@:winston.com

Counsel for Respondents
Chicago Bndge & Iron Company N.Y.
and Pitt Des-Moines, LIne.


Court taat ihe subpoenas wouid sausivy Commission Rules of Practice 3.34 and 3.37. See FT.C
Rule 336. Specifically, Respondents must make a specific showing that: (a) the matenal is
reasonacle in scope; ;b) the material falls within the limits of Rule 3 31(cx{1): (c) the information
sought cannel be reasonably be obtained ay other means; (d) that there is a good faith basis ‘or
believing that the discovery or evidence requested would be permitted by treaty {€) any
additional srocedural requirements aave been or wiil be mel before the subpoena is served. See
id, Each of these requirements is met here.

(a) Parievianty -- Each subpoena would satisfy Ruie 3.34's prescription that 1
“specit¥ wth reasonable particularity the materials to be produced," as it would seek evidence on
a limited number of specitic topics, including those set forth in paragraph 6, supra. -

ib). Reasonableness of process -~ Each subpoena will also specify a “reasonabie me,
place, and manner of making the inspection and performing the related acts.” See F.T.C. Rul:
3.37. CB&I will work with each subpoenaed party to minimize the inconvenience associuted
with this process.

lc, Reasonableness in scope -- The material sought in each subpoena would be

reasonable in scope, as the requests for information would be limited to the categories set forth

Redacted Pursuas

wove. These categones of information are directly relevant to the assertions made in Protective Ord:

oy Complaint counsel.
tdi. Material sought 1s Aighly relevant -- As set forth in detail in Paragraphs |-6, tne
infermation sought by these subpoenas is highly relevant as it will estaolish the ability of foreign
tims to compete :n the relevant markets, and therefore the absence of competitive harm from the

Aecuisiion


1H] ~- Istiikawajima-Harnima Heavy industnes Co.. Ltd. (IH]), is a self-proclarmed
world leader im the consiruction of LNG receiving terminals and tanks.
Additionally, IHI is invoived in every kind of cryogenic material, including
tiquetied petroleum gas (LPG), Itquefied natural gas (LNG), liquefied ammonia,
“Iquetied oxygen (LOX), liquefied aitrogen (LN2) and liquefied hydrogen (LH2),
[t has previously sought business in the U.S.

BSL -- BSL Industries of France is one of the largest worldwide suppliers of
LIN. LOX tanks, BSL is current'y teamed with a U.S. tank constructor -- Bay
Tank -- and they are pursuing a LEN/LOX job for Air Liquide in the U'S.

Redacted Pursuant t : 58
6 Based on the Protective Order “CB&I will need to take evidence from these

foreign compames regard:ng at ‘east the following factual issues:

What are each of the foreign companies' plans for doing business in the relevant
product markets in the United States?

Why do the foreign companies believe they can compete effectively against
CB&I in the United States?

To what extent would foreign companies need to subcontract to U.S. companies
in building relevant storage tanks in the United States?

What expertise do the foreign companies have in working with the codes, statutes
and regulations that are applicable in the U.S.?

How will the foreign companies manage the field erection process and the
management ot local construction workers?

What cost advantages do the foreign companies have over CB&I?

To what extent are foreign companies familiar with U.S. design codes, and to
wat extent can foreign companies build storage tanks that meet these codes?

What are the sunk costs of pursuing jobs in the U.S.?

(HE FOREIGN EVIDENCE SOUGHT BY CB&I IS OBTAINABLE VIA THE
HAGUE CONVENTION, AND IS UNLIKELY TO BE OBTAINED FROM
OTHER SOURCES.

Respondents seek leave to serve each of the companies listed above with a

subpoena, seeking to obtain testimonial and documentary evidence on the issues set forth above.

{n order to obtain approval to issue subpoenas in a foreign country, Respondents must shaw this


sought. Spec.tical]y. the Hague Convention -- an international treaty -- governs efforts to secure

evidence for use in litigation. See Hague Convention, Nov. &5, 196S, art. 1 et seg, 20 U.S.1.

361 thereimatter "Hague Convention"). Mos: foreign jurisdictions do not recognize civil or
pretrial discos ery as -t exists in the Cnited States. Instead, foreign countries permit evidence to
be obtained ‘for use at trial." The companies CB&I seeks evidence from are located in countres
that have agreed tu aoide dy the terms of the Hague Convention. Specifically, the companies set
forth in paragraph 4 above either reside or have offices in France, Japan, Sweden, South Korea.
or the Ursted Kingdom, all of whom, have signed and are members to the Convention. Sez
Hayue Convention, at Aunex :o the Convention.

8. In general. for countries that have adopted the Hague Convention. she
international discovery process can be summanzed as the following government to government
transaction: a U.S, judicial proceeding {i.e., this Court) makes a request to the U.S. government.
who in turn makes a request to its foreign government counterpart, who likewise makes a request
to its judicial equivalent, who then decides whether or not to grant the request and order the
discovery on a particular entity or person. See Hague Convention, at art. 3-6.

9. The process of securing evidence via the Hague Convention can be costly acd
time-consuming. For that reason, Respondents have not yet prepared “letters of request” -- the
documents that would need to be signed by the Commission and sent to the appropriate foraign
authority. Shoutd the Court grant Respondents leave to obtain evidence from foreign companies,
Respondents will prepare the necessary papers in conjunction with local counsel in each of the

relevant countres. [n this way. Respondents can assure the Court that they in good faith believe

that the completed letters of request will be honored by each relevant foreign country.

way. reizted lo any plans by Bouyguez:

haigaz regarding the domestic cryogenic tank -narket,

a


UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

#8 1 6 202
In the Matter of SECREUS
CHICAGO BRIDGE & [RON COMPANY N.V., PUBLIC RECORD
a foreign corporation,

CHICAGO BRIDGE & IRON COMPANY,
a corporation. Docket No. 9300

and

PITT-DES-MOINES, INC.,

a corporation.

RESPONDENTS' MOTION FOR LEAVE TG SEEK FOREIGN EVIDENCE

Pursuant to Rule 3.36 of the Federal Trade Commission's Rules of Practice (FTC
Rules"), 16 C.F.R. § 3.36, Respondents Chicago Bridge & Iron Company N.V., Chicago Bridge
& [ron Company (collectively known as "CB&I"), and Pitt-Des Moines, Inc. (“PDM") hereby
move this Court for leave to seek foreign evidence. In support of this motion, Respondents state
as follows:
L FOREIGN EVIDENCE IS ESSENTIAL TO RESPONDENTS’ DEFENSE.

1 The Federal Trade Commission ("Complaint Counsel") has sued
Responcents on the theory that the merger between Chicago Bridge and Iron and Pitt-Des
Moines wiil have anticompetitive effects in six industrial storage tank markets in the United
Staces. The Complaint defines each type of tank at issue as 2 product market unto itself

(Complaint at QY 9-39), and defines the geographic market as the entire United States.



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, J Docket No. 9300
)
and )
)
PITT-DES-MOINES, INC., }
)
a corporation. )
)

PROPOSED ORDER

UPON CONSIDERATION of the Respondents! Motion for Leave to Seek Foreign
Evidence filed on Apnil 4, 2002, and any opposition thereto, and being fully advised in the
premises, it is hereby ordered that, because I find that Respondents’ have satisfied the
requirements under Rules 3.34, 3.37, and 3.36 of the FTC Rules of Practice, Respondents motion
is hereby GRANTED.

ORDERED:

James P. Timony
Administrative Law Judge

Dated: April. 2002

ISH92L


CERTIFICATE OF SERVICE

I, Nada $, Sulaiman. liereky certify that on this tenth day of April, 2002, I served
a true and correct copy of: Respondents’ Motion for Leave to Seek Foreign Evidence
(Confidential Subject to Protective Order}, by hand delivery upon:

The Honorable James P. Timony
Administrative ].aw fudge
Federal Trade Commission

600 Pennsylvania Avenue. N.W.
Washington. D.C. 20580

Richard Liebeskind

Assistant Director

Bureau of Competition

Federal Trade Commission

600 Pennsylvania Avenue. NW.
Room $-36(72

Washington. D.C. 20580

Steven (.. Wilensky

Federal Trade Commission

601 Pennsylvania Avenuc. N.W.
Room 8-3618

Washington, D.C. 20580

nor ae
a L Shy. hee ——

+. oe e.
Nada S Sulaiman ~
7

SS 4d72


leh Murernal sought is noe availble via other means -- The matenal sougat in these
foreism) subpoenas is not available via other mears. [nformation of the type sought by these
subpoenas :s certainiy not publicly available. nor is it likely to be available trom the files of
potential domestic empettars. While some of these foreign ‘trms do have US. subsidianes or

fOint venture partners’, wis not at alf clear that these subsidiaries or partners have any

involvement in efforts

to enter the fteld-erected cryogenic tank market in the United States.
Moreover, Responderits simply do not have the luxury of taking the time to determine whether
the :nformation in the possession of these subsidianes prior to serving discovery on their foreign
parents or joint venture partners. The deadline cor issuing subpoenas in this case is May 5, 2002
(See Scheduling Order at !.) Even if Respondents were to serve these U.S. subsidiaries:joint*
venture partners today. it is unlikely that-Respondents could receive a response from the
subpoenaed party, determine whether (based on that response) the foreign parent has relevant
information, request leave from this Court to seek foreign evidence, and work through the
laborious provisions of the Hague Convention to obtain that evidence by May 5. It is probably
not possible te even obtain the foreign discovery by June 7 given the cumbersome nature of the
Hague Convention procedures, The time pressures on Respondents are further increased by the
fact that fact discovery is set to clese on June 7. It is probably not possible to even obtain the

torc.:un discovery by June 7 given the cumbersome nature of the Hague Convention srocedures

if. Respondents helieve in good faith that the evidence sought is obtainable via
siternationad fuw -- Respondents have a good faith basis to believe that their proposed subpoenas

would be permitted by treaty, law, custom or practice in the country from which the evidence is

Fore: mple. CB&L beleves that Bouyguez: Techmygaz kas a U.S. subsidiary called Dons Eng:necong. and
‘wii certainly subpoena that catty as soon as possibie. However, CB&1 does not know whether this entity 1s. in any


Redacted Pursuant to
Protective Order

5, Complaint counsel apparentiy plans to rely primarily on these

Redacted Pursuant to : .
Protective Order for its argument that foreign companies cannot compete

ettectively in the domestic cryogenic storage tank market. However, these statements are little

more than speculation and conjecture.
Redacted Pursuant to

Protective Order


Redacted Pursuant to
Protective Order


(Complaint at" [2) CBéel in :ts Answer has denied these allegations and asserts the existence of
a international market.

2 [n addition to the Factual dispute over whether the market(s) at issue are
International tn scope. the partes also disagree as to the ability of foreign companies to enter the
United States and sel] the tanks at issue in this case. For example, the Complaint states that tac
acquisition of POM by CB&I will Jeave CB&I as the only seller of LNG tanks in the United
States. 1See Complaint at 23) However, CB&I believes that several foreign companies.
including Teckrigaz. Tecanip and Entrepose {all of France), Skanska/Whessoe (of the United
Kingdom and Sweden), TKK (of Japan) and Daewno {of South Korea) not only can sail LNG
tanks in tig United States, but that they are actively pursuung LNG tank jobs in this country.
CB&I marntains that this competitive activity, which has arisen since the consummation of this
acquisition on February 8. 2001, establishes the ease and effectiveness of entry under Section 3

of the 1992 Horizontal Merger Guidelines. Evidence concerning the various factors under which

entry is evaluated is thus a critical focus of discovery.

3. On March 14, 2002, Complaint Counsel disclosed its investigation file,
Redacted Pursuant to
Protective Order Based on these recently-

dssclosed matenats, i: has become apparent that Complaint Counsel will present

Redacted Pursuant ta oo
Protective Order suggesting that foreign companies cannot effectively compete

with CB& in the sale of these industrial storage tanks.
Redacted Pursuant to
4 Some af the Protective Order

make clear that this point will be a key tssue at ial. For example:

Redacted Pursuant to
Protective Order