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0910068

UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

COMMISSIONERS: Jon Leibowitz, Chairman

Pamela Jones Harbour

William E. Kovacic

J. Thomas Rosch

_______________________________

In the Matter of )

 )

 Agrium Inc., ) Docket No. C-4277

 a foreign corporation. )

 )

_______________________________)

COMPLAINT

Pursuant to the Clayton Act and the Federal Trade Commission Act, and its authority

thereunder, the Federal Trade Commission (“Commission”), having reason to believe that

Respondent Agrium Inc. (“Agrium”), a corporation subject to the jurisdiction of the

Commission, has made an offer to acquire all of the voting securities of CF Industries Holdings,

Inc. (“CF”), a corporation subject to the jurisdiction of the Commission, in violation of Section 7

of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission

Act (“FTC Act”), as amended, 15 U.S.C. § 45, and it appearing to the Commission that a

proceeding in respect thereof would be in the public interest, hereby issues its Complaint, stating

its charges as follows:

I. RESPONDENT

1. Respondent Agrium is a Canadian corporation organized, existing, and doing

business under, and by virtue of, the laws of Canada, with its office and principal place of

business located at 13131 Lake Fraser Drive SE, Calgary, Alberta, Canada, T2J 7E8. In the

United States, Agrium operates its chemical and agricultural business through its subsidiary,

Agrium USA, headquartered at Suite 1700, 4582 South Ulster Street, Denver, Colorado, 80237. 

Agrium is a multinational fertilizer and farm products company that develops, manufactures, and

markets chemical and agricultural products and services, including nitrogen fertilizers, that it

distributes to customers in the Americas and elsewhere.
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2. CF is a corporation organized, existing, and doing business under, and by virtue

of, the laws of Illinois, with its office and principal place of business located at 4 Parkway North,

Suite 400, Deerfield, IL 60015-2590. CF is a fertilizer products company that develops,

manufactures, and distributes agricultural products, including nitrogen fertilizers, that it

distributes to customers in the Americas and elsewhere. 

II. JURISDICTION

3. Agrium and CF are, and at all times relevant herein have been, engaged in 

commerce as “commerce” is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C.

§ 12, and are corporations whose businesses are in or affect commerce as “commerce” is defined

in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 44.

III. THE PROPOSED TRANSACTION

4. On February 25, 2009, Agrium proposed to CF’s board of directors that Agrium

acquire all of the voting securities of CF for approximately $3.6 billion. CF rejected that offer. 

Since then, Agrium has proposed several revised offers, which have also been rejected by CF’s

board of directors. Most recently, on November 5, 2009, Agrium increased its offer to

approximately $4.5 billion. If CF accepts Agrium’s tender offer, Agrium will hold 100 percent

of the voting securities of CF, and CF will become a wholly owned subsidiary of Agrium.

IV. RELEVANT PRODUCT MARKET

5. The relevant line of commerce in which to analyze the effects of the proposed 

acquisition described herein is the distribution and sale of anhydrous ammonia (“AA”), a form of

nitrogen fertilizer, for agricultural application.

6. AA is one of several types of nitrogen fertilizer used in the agricultural sector. 

Nitrogen fertilizers come in many different chemical forms with varying nitrogen

concentrations. Among the different chemical forms, Agrium and CF both produce AA, urea,

and urea ammonium nitrate solution. Of these different forms of nitrogen fertilizer, AA has the

highest concentration of nitrogen per ton. Customers consider soil and topographical

characteristics, equipment, and weather when deciding which type of nitrogen fertilizer to use. 

7. AA is injected or knifed into the soil using specialized machinery. Many

customers who use AA have made significant investments to acquire the necessary infrastructure

and application equipment. Switching from AA to another nitrogen fertilizer would require

these customers to abandon the significant investments they have already made and to make

additional investments to obtain the proper infrastructure and equipment for application of the

other nitrogen products. 
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8. Because of the advantages of using AA for certain topographies and in certain

climate conditions, and the substantial capital invested in AA storage and application equipment,

most users of AA would not switch to alternative forms of nitrogen fertilizer in response to a

significant and sustained increase in price. 

V. RELEVANT GEOGRAPHIC MARKETS

9. There are three relevant geographic markets in which to analyze the effects of the

proposed acquisition: the Pacific Northwest (“PNW”); East Dubuque, Illinois; and Marseilles,

Illinois. 

10. In each relevant geographic market, the users of AA would not purchase from

terminals located more than approximately 140 miles from their location, even in response to a

significant and sustained increase in price. Transportation costs make it difficult for terminal

owners to be price competitive and to make profitable sales at distances over generally 140

miles. 

VI. MARKET STRUCTURE

11. Each relevant market is highly concentrated, and the proposed transaction will

further increase concentration levels. 

12. In the PNW, Agrium and CF are the only major distributors and sellers of AA.

As a result, the proposed acquisition would reduce the number of significant AA suppliers with

storage and distribution assets in the PNW from two to one. 

13. In both East Dubuque, Illinois, and Marseilles, Illinois, there are only three major

distributors and sellers of AA and the proposed acquisition would reduce the number of

significant AA suppliers with storage and distribution assets from three to two. 

VII. CONDITIONS OF ENTRY

14. New entry or fringe expansion into the relevant markets would not be timely,

likely, or sufficient to deter or counteract the anticompetitive effects of the acquisition. New

entry would require several years, including a lengthy process to obtain the regulatory approvals

to add new AA storage capacity in a local area. Further, a new entrant would need to build a

terminal large enough to benefit from economies of scale, and as a result, would face difficulty

in securing sufficient sales to make entry attractive. Together with the high sunk costs

associated with the addition of new AA terminal capacity, these difficulties make new entry

unlikely. 

VIII. EFFECTS OF THE ACQUISITION

15. In the areas identified in paragraphs 9 through 13, above, Agrium and CF

compete directly with each other in the distribution and sale of AA. Other competitors are not
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effective competitive constraints to Agrium or CF in each relevant geographic area, due to

factors such as the location of their manufacturing operations and their lack of storage facilities.

16. The effects of the merger, if consummated, may be to substantially lessen

competition or tend to create a monopoly in each of the relevant markets in violation of

Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the FTC Act, as

amended, 15 U.S.C. § 45. Specifically, the merger would:

a. eliminate actual, direct, and substantial competition between Agrium and CF in

the relevant markets;

b. increase Respondent’s ability to exercise market power unilaterally in the relevant

markets; and

c. substantially increase the level of concentration in the relevant markets, and

enhance the probability of coordination in East Dubuque, Illinois and Marseilles,

Illinois.

IX. VIOLATIONS CHARGED

17. The merger described in Paragraph 4, if consummated, would constitute a

violation of Section 5 of the FTC Act, as amended, 15 U.S.C. § 45, and Section 7 of the Clayton

Act, as amended, 15 U.S.C. § 18.

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on

this twenty-second day of December, 2009, issues its Complaint against said Respondent.

By the Commission.

Donald S. Clark

Secretary

SEAL