| **Analysis of Proposed Consent        Order to Aid Public Comment**

The Federal Trade Commission ("Commission") has accepted,        subject to final approval, an Agreement Containing Consent Order        ("Agreement") from Quexco Incorporated ("Quexco")        relating to a proposed acquisition by Quexco of Pacific Dunlop GNB        Corporation ("GNB").

The proposed Consent Order has been placed on the public record for        sixty (60) days for reception of comments by interested persons.        Comments received during this period will become part of the public        record. After sixty (60) days, the Commission will again review the        Agreement and the comments received and will decide whether it should        withdraw from the Agreement or make final the Agreement's proposed        Order.

Both Quexco, a Delaware corporation, and GNB, also a Delaware        corporation, operate secondary lead smelters. Secondary lead smelters        are facilities that recycle products containing lead, such as old        lead-acid batteries and other lead bearing products, into pure lead or        lead alloys that can be used again by battery manufacturers and other        industries. The output of secondary smelters is called secondary lead.        Primary lead smelters use lead bearing ore to produce pure lead or lead        alloys. The output of primary smelters is called primary lead. For most        uses for lead, either primary or secondary lead can be used.

***The Proposed Complaint***

The proposed complaint alleges that the relevant geographic market        for evaluating the acquisition's effect in the relevant product markets        is California, and that the proposed acquisition may substantially        lessen competition in the smelting and refining of lead in California        and in providing lead recycling services in California.

The proposed complaint alleges that Quexco and GNB are the only two        operators of lead smelters in California and the only two firms that        perform lead recycling in California. The complaint further alleges that        the proposed transaction would create a monopoly and give Quexco the        ability to unilaterally exercise market power.

The proposed complaint alleges that entry into the alleged markets        would not be timely, likely, or sufficient to deter or offset the        adverse effects of the acquisition on competition in these markets. Lead        is a toxic substance. Construction of a new secondary lead smelter        requires extensive permits before construction on a smelter could begin.        Obtaining permits for a new smelter in California would take more than        two years. Because lead is a toxic substance, community opposition is        likely to any new smelters in California, and such community opposition        may prevent the opening of any new smelters in California.

The proposed Order would remedy the alleged violation by preserving        the competition that would otherwise be lost as a result of Quexco's        acquisition of GNB. The proposed Order requires Quexco to divest the GNB        secondary smelter in California to Gopher Resources, Inc.        ("Gopher"), under the terms of a contract for the sale of that        plant between Quexco and Gopher. The proposed Order allows Quexco to        complete its acquisition of GNB during the sixty (60) day comment        period, but requires that the GNB California smelter be held separate        until the Order becomes final and then requires the sale of the smelter        to Gopher within 10 days of the Order being made final by the        Commission.

The sale of the GNB smelter to Gopher is subject to the approval by        the Commission. If the sale to Gopher is not approved by the Commission,        then Quexco must rescind the transaction with Gopher and divest the GNB        smelter, within six (6) months after the date on which the Order becomes        final, to an acquirer and in a manner that receives the prior approval        of the Commission.

The purpose of this analysis is to        facilitate public comment on the proposed Order. This analysis is not        intended to constitute an official interpretation of the Agreement or        the proposed Order or in any way to modify the terms of the Agreement or        the proposed Order. |
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