ANALYSIS OF PROPOSED AGREEMENT CONTAINING CONSENT ORDER

TO AID PUBLIC COMMENT 

In the Matter of Keystone Holdings, LLC and Compagnie de Saint-Gobain

File No. 1010175

I. Introduction

The Federal Trade Commission (“Commission”) has accepted for public comment,

subject to final approval, an Agreement Containing Consent Order (“Consent Agreement”) from

Keystone Holdings LLC (“Keystone”) and Compagnie de Saint-Gobain (“Saint-Gobain”). The

purpose of the proposed Consent Agreement is to remedy the anticompetitive effects resulting

from Keystone’s proposed acquisition of certain Advanced Ceramics Business assets from SaintGobain (“proposed acquisition”). As originally structured, Keystone would have acquired SaintGobain’s worldwide assets and businesses relating to the manufacture and sale of alumina wear

tiles. To resolve the competitive concerns raised by the proposed acquisition, Keystone and

Saint-Gobain have re-structured the original transaction to exclude Saint-Gobain’s North

American alumina wear tile business operated out of a facility in Latrobe, Pennsylvania. 

Under the terms of the proposed Consent Agreement, Keystone is required for ten years

to obtain prior approval from the Commission for the direct or indirect acquisition of SaintGobain’s alumina wear tile business in Latrobe or certain other assets owned or controlled by

Saint-Gobain relating to the research, development, marketing, and sale anywhere in the world

of alumina wear tile produced or manufactured in North America. The proposed Consent

Agreement also requires that Saint-Gobain for five years provide advance written notice to the

Commission prior to leasing or selling the Latrobe, Pennsylvania facility or selling, assigning, or

otherwise conveying substantially all its interest in the Saint-Gobain alumina wear tile business. 

In addition, with limited exceptions, Saint-Gobain is obligated to provide advance written notice

to the Commission prior to closing the Latrobe, Pennsylvania facility or ceasing operation or

production of alumina wear tiles at the facility. 

The proposed Consent Agreement has been placed on the public record for thirty days for

receipt of comments by interested persons. Comments received during this period will become

part of the public record. After thirty days, the Commission will again review the proposed

Consent Agreement and the comments received, and will decide whether it should withdraw

from the proposed Consent Agreement, modify it, or make it final. 

On June 28, 2010, Keystone and Saint-Gobain entered into a merger agreement under

which Keystone proposed to acquire Saint-Gobain’s Advanced Ceramics Business, including

facilities in Europe, North America, South America, and Asia for a purchase price of $245

million. As originally structured, the assets acquired by Keystone would have included the

Latrobe facility and other assets relating to the manufacture and sale of alumina wear tiles. On

December 2, 2010, however, in an effort to resolve competitive concerns relating to the original

transaction, Keystone and Saint-Gobain amended their agreement to exclude from the sale SaintGobain’s North American alumina wear tile business. 
2

The Commission’s complaint alleges that the initial proposed acquisition, if

consummated, would violate Section 7 of the Clayton Act, as amended, 15. U.S.C. § 18, and

Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, by lessening

competition in the manufacture and sale of standard and pre-engineered alumina wear tile in

North America. Although Saint-Gobain now proposes to retain its North American alumina

wear tile business, a credible risk exists that the parties could re-negotiate the sale of SaintGobain’s alumina wear tile business in the future, or that Saint-Gobain could sell the business

upon terms that would reduce competition in the North American alumina wear tile markets. 

Therefore, the proposed Consent Agreement requires that Keystone obtain the Commission’s

prior approval in advance of any acquisition of Saint-Gobain’s alumina wear tile business or

related assets, and requires that Saint-Gobain provide written notice to the Commission prior to

selling or ceasing its alumina wear tile business or selling or leasing its Latrobe, Pennsylvania

facility. This remedy preserves competition in the North American markets for the manufacture

and sale of alumina wear tile. 

II. Parties

Keystone is the holding company of CoorsTek, Inc. (“CoorsTek”), which is a leading

technical ceramics manufacturer, supplying ceramics based products for use in defense, medical,

automotive, semiconductor, and power generation applications, among others. Keystone is

headquartered in Golden, Colorado with facilities in North America, Europe and Asia. Keystone

manufactures and sells alumina wear tile for use in high wear applications at its facilities in

Golden, Colorado. 

Saint-Gobain is a highly diversified, multinational company, headquartered in

Courbevoie, France. The Advanced Ceramics Business includes ceramic components such as

hot surface igniters, electro-ceramic parts for household appliances, ceramic balls for highperformance bearings, automobile water pump seals, special components for the semiconductor

industry, agricultural spray nozzles, and other dense alumina components, such as alumina wear

tile. Saint-Gobain manufactures and sells alumina wear tile out of its Latrobe, Pennsylvania

facility. In 2009, Saint-Gobain’s Advanced Ceramics Business achieved sales of 135 million

euros.

 

III. The Products and Structure of the Alumina Wear Tile Markets

The Commission’s complaint alleges that Keystone’s acquisition of Saint-Gobain’s

North American alumina wear tile assets poses substantial antitrust concerns in both the preengineered and standard alumina wear tile markets, or alternatively, an all alumina wear tile

market in North America. Alumina wear tile is used to line material-handling equipment to

protect against abrasion and premature wear caused by the materials that pass through the

equipment, extending the life of the equipment for years. Although other materials could be

used as a wear solution these materials are not viable substitutes for alumina wear tile, as they do

not have the unique price and wear attributes that are required in applications where alumina

wear tile is commonly used. 
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The Commission’s complaint alleges that the relevant markets within which to analyze

the transaction are standard and pre-engineered alumina wear tile, or alternatively, all alumina

wear tile. Standard alumina wear tile comes in a variety of predetermined sizes and shapes

whereas pre-engineered alumina wear tile is custom made-to-order to fit complex shapes that

standard tile sizes cannot accommodate. 

The Commission’s complaint alleges that the relevant geographic market in which to

assess the impact of the proposed acquisition is North America. Successful participation in the

market requires an established North American presence, most notably North American sales

support and facilities from which to inventory and distribute alumina wear tile. Alumina wear

tile companies that do not have an established presence in North America do not effectively

compete for the business of U.S. alumina wear tile purchasers. 

Keystone and Saint-Gobain are two of three significant suppliers of pre-engineered

alumina wear tile and two of four significant suppliers of standard alumina wear tile in North

America. In an all alumina wear tile market, Keystone and Saint-Gobain are two of four

significant suppliers in North America. The acquisition would increase concentration levels

substantially in markets that already are highly concentrated. 

IV. Effects of the Acquisition

The Commission’s complaint charges that the proposed acquisition would enhance the

likelihood of collusion or coordinated interaction among the remaining firms in the market.

Certain market conditions, including product homogeneity and the availability of detailed market

information about customers and transactions are conducive to the firms reaching terms of

coordination and detecting deviations from those terms. 

The Commission’s complaint also charges that Keystone’s acquisition of Saint-Gobain’s

North American alumina wear tile assets would eliminate actual, direct, and substantial

competition between CoorsTek and Saint-Gobain. By increasing CoorsTek’s market share

substantially, while at the same time eliminating the most significant competitor in the market,

an acquisition of Saint-Gobain’s North American alumina tile assets likely would allow

CoorsTek to unilaterally charge higher prices for alumina wear tile. 

The Commission’s complaint alleges that significant impediments to entry, expansion or

repositioning in the alumina wear tile markets make entry unlikely, untimely and likely

unprofitable. The size of the investment and the time needed to enter the relevant markets

relative to the size of the overall market is substantial. Entry is made more difficult due to

reputational hurdles, and there is uncertainty that an entrant could secure the sales to make the

investment profitable. As a result, new entry, expansion, or repositioning by other firms

sufficient to achieve a significant market impact is unlikely to ameliorate the harms posed by the

proposed transaction.
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V. The Proposed Consent Agreement

The proposed Consent Agreement addresses the competitive risks of a future sale of

Saint-Gobain’s North American alumina tile business to Keystone or others. By imposing

certain prior approval and prior notice conditions on Keystone and Saint-Gobain, the remedy

serves to ensure that the assets of Saint-Gobain’s North American alumina wear tile business

will remain, and continue to compete, in the North American alumina wear tile markets.

Pursuant to the proposed Consent Agreement, for a period of ten years Keystone must

obtain Commission approval prior to acquiring, directly or indirectly, Saint-Gobain’s alumina

wear tile assets. These assets primarily include the Latrobe facility, but also include assets of

Saint-Gobain’s alumina wear tile business or any interest in assets owned or controlled by SaintGobain relating to the research, development, marketing, and sale anywhere in the world of

alumina wear tile produced and manufactured in North America. 

Pursuant to the proposed Consent Agreement, for a period of five years Saint-Gobain

must provide advance written notification to the Commission before selling all or substantially

all of its North American alumina wear tile business to any person other than an affiliate. SaintGobain also must provide prior notice to the Commission before closing or ceasing operations at

the Latrobe facility, subject to certain exceptions for maintenance, construction of

improvements, and the like, and for involuntary closures due to force majeure, health and safety

emergencies, and other such events. 

As part of ensuring the continued viability of Saint-Gobain’s alumina wear tile business,

Keystone, pursuant to the proposed Consent Agreement, must comply with all terms of alumina

wear tile business agreements between Keystone and Saint-Gobain. One of these agreements is

a supply agreement for certain types of standard alumina tile produced at the Vinhedo, Brazil

facility (“Vinhedo tile”) that Keystone will acquire from Saint-Gobain. This supply agreement

gives Saint-Gobain access to the alumina wear tile from the Vinhedo facility for a limited

interim period, by which time Saint-Gobain will be required to find another source for the

Vinhedo tile or produce it internally. 

VI. Opportunity for Public Comment

The proposed Consent Agreement has been placed on the public record for thirty days for

receipt of comments by interested persons. Comments received during this period will become

part of the public record. After thirty days, the Commission will review the comments received,

and decide whether to withdraw from the proposed Consent Agreement, modify it, or make it

final. By accepting the proposed Consent Agreement subject to final approval, the Commission

anticipates that the competitive problems alleged in the complaint will be resolved. The purpose

of this analysis is to inform and invite public comment on the proposed Consent Agreement,

including the proposed remedy, and to aid the Commission in its determination of whether to

make the proposed Consent Agreement final. This analysis is not intended to constitute an

official interpretation of the proposed Consent Agreement, nor to modify the terms of the

proposed Consent Agreement in any way.