UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

File No. 961-0085

AGREEMENT CONTAINING CONSENT ORDER

The Federal Trade Commission (Commission), having initiated an investigation of the

acquisition by Mahle GmbH, the parent corporation of Mahle, Inc., of more than 50 percent of

the voting securities of Metal Leve, S.A., the parent corporation of Metal Leve, Inc., and it now

appearing that Mahle GmbH, Mahle, Inc., Metal Leve, S.A., and Metal Leve, Inc., hereinafter

sometimes referred to as the proposed respondents, are willing to enter into an agreement

containing an Order requiring the proposed respondents to divest certain assets and to cease and

desist from making certain acquisitions, as well as providing for other relief:

IT IS HEREBY AGREED by and between the proposed respondents, by their duly

authorized officers and attorney, and counsel for the Commission that:

1. Proposed respondent Mahle GmbH is a corporation organized, existing and doing

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

business located at Pragstrasse 26-46, D-70376 Stuttgart, Germany.

2. Proposed respondent Mahle, Inc. is a corporation organized, existing and doing

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

business located at 1 Mahle Drive, Morristown, Tennessee 37815-0798.

3. Proposed respondent Metal Leve, S.A. is a corporation organized, existing and doing

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

In the Matter of

MAHLE GMBH,

a corporation,

MAHLE, INC.,

a corporation,

METAL LEVE, S.A.,

a corporation, and

METAL LEVE, INC.,

a corporation.
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located at Rua Brasilio Luz 535, Sao Paulo, SP 04746-901, Brazil.

4. Proposed respondent Metal Leve, Inc. is a corporation organized, existing and doing

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

business located at 560 Avis Drive, Ann Arbor, Michigan 48108.

5. The proposed respondents admit all the jurisdictional facts set forth in the draft of

complaint here attached.

6. The proposed respondents waive:

a. any further procedural steps;

b. the requirement that the Commissions decision contain a statement of findings

of fact and conclusions of law;

c. all rights to seek judicial review or otherwise to challenge or contest the validity

of the Order entered pursuant to this agreement; and

d. any claim under the Equal Access to Justice Act.

7. This agreement shall not become part of the public record of the proceeding unless and

until it is accepted by the Commission. If this agreement is accepted by the Commission, it,

together with the draft of complaint contemplated thereby, will be placed on the public record for

a period of sixty (60) days and information with respect thereto will be publicly released. The

Commission thereafter may either withdraw its acceptance of this agreement and so notify the

proposed respondents, in which event it will take such action as it may consider appropriate, or

issue and serve its complaint (in such form as the circumstances may require) and decision, in

disposition of the proceeding.

8. Within ten (10) days after the date this agreement is signed by the proposed

respondents, and every thirty (30) days thereafter until the proposed respondents make their first

verified written reports pursuant to Paragraph V of the proposed Order, when and if entered, the

proposed respondents shall submit to the Commission initial reports pursuant to Commission Rule

2.33, 16 C.F.R. 2.33, setting forth in detail the manner and form in which the proposed

respondents are complying with the Agreement to Hold Separate signed by the proposed

respondents and accepted by the Commission on August 30, 1996, and in the manner described in

Paragraph V of the attached proposed Order, setting forth in detail the manner and form in which

the proposed respondents are attempting to satisfy the divestiture requirements described in

Paragraph II of the attached proposed Order.

9. This agreement is for settlement purposes only and does not constitute an admission

by the proposed respondents that the law has been violated as alleged in the draft of complaint
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here attached or that the facts as alleged in the draft complaint, other than jurisdictional facts, are

true.

10. This agreement contemplates that, if it is accepted by the Commission, and if such

acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of

Commission Rule 2.34, 16 C.F.R. 2.34, the Commission may, without further notice to the

proposed respondents, (1) issue its complaint, corresponding in form and substance with the

attached draft of complaint, and its decision containing the following Order to divest and to cease

and desist in disposition of the proceeding and (2) make information public with respect thereto. 

When so entered, the Order shall have the same force and effect, and may be altered, modified or

set aside in the same manner and within the same time as, provided by statute for other orders. 

The Order shall become final upon service. Delivery by U.S. Postal Service of the complaint and

decision containing the agreed-to Order to counsel for the proposed respondents or any other

person residing in the United States that the proposed respondents designate by notice in writing

to the Secretary, Federal Trade Commission, shall constitute service. Proposed respondents

waive any right they may have to any other manner of service. The complaint may be used in

construing the terms of the Order, and no agreement, understanding, representation, or

interpretation not contained in the Order or this agreement may be used to vary or contradict the

terms of the Order.

11. Proposed respondents have read the proposed complaint and Order contemplated

hereby. Proposed respondents understand that once the Order has been issued, they will be

required to file one or more compliance reports showing that they have fully complied with the

Order. Proposed respondents further understand that they may be liable for civil penalties in the

amount provided by law for each violation of the Order after it becomes final.

ORDER

I

IT IS ORDERED that, as used in this Order, the following definitions shall apply:

A. Commission means the Federal Trade Commission.

B. Respondents means Mahle GmbH, Mahle, Inc., Metal Leve, S.A., and Metal Leve,

Inc., their directors, officers, employees, agents and representatives, predecessors, successors and

assigns; their subsidiaries, divisions, and groups and affiliates controlled by Mahle GmbH, Mahle,

Inc., Metal Leve, S.A., and Metal Leve, Inc., and the respective directors, officers, employees,

agents, representatives, successors, and assigns of each.
4

C. Mahle GmbH means Mahle GmbH, its directors, officers, employees, agents and

representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups and

affiliates controlled by Mahle GmbH, and the respective directors, officers, employees, agents,

and representatives, successors, and assigns of each.

D. Mahle, Inc. means Mahle, Inc., its directors, officers, employees, agents and

representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups and

affiliates controlled by Mahle, Inc., and the respective directors, officers, employees, agents, and

representatives, successors, and assigns of each.

E. Metal Leve, S.A. means Metal Leve, S.A., its directors, officers, employees, agents

and representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups and

affiliates controlled by Metal Leve, S.A., and the respective directors, officers, employees, agents,

and representatives, successors, and assigns of each.

F. Metal Leve, Inc. means Metal Leve, Inc., its directors, officers, employees, agents

and representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups and

affiliates controlled by Metal Leve, Inc., and the respective directors, officers, employees, agents,

and representatives, successors, and assigns of each.

G. Articulated Piston means any two-piece piston consisting of a separate crown and

skirt, as well as each individual piece of an Articulated Piston, including, but not limited to,

forgings, castings, and finished pistons.

H. Other Diesel Piston means any type of diesel piston, other than an Articulated Piston,

including, but not limited to, forgings, castings and finished pistons.

I. Other Piston means any Other Diesel Piston or other type of piston, other than an

Articulated Piston, including, but not limited to, castings and finished pistons.

J. Metal Leve, Inc. Business means:

1. all assets, properties, business and goodwill, tangible and intangible, of Metal

Leve, Inc., including, but not limited to:

a. the manufacturing facilities located at Orangeburg and Sumter, South

Carolina,

b. the research and development facility and corporate offices located at Ann

Arbor, Michigan; and
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2. all assets, properties, business and goodwill, tangible and intangible, of Metal

Leve, S.A. worldwide relating to: (i) the research, development, manufacture, or sale of

Articulated Pistons or Other Pistons manufactured in the United States, (ii) the research,

development, manufacture, or sale of Articulated Pistons anywhere in the world, and (iii) the

research, development, manufacture or sale of Other Diesel Pistons sold in the United

States; including, without limitation, the following:

a. all machinery, fixtures, equipment, tools and other tangible personal

property, but excluding machinery, fixtures, and equipment located outside the United

States related to the manufacture of Other Diesel Pistons sold in the United States;

b. all rights, titles and interests in and to owned or leased real property

together with appurtenances, licenses and permits, but excluding real property located

outside the United States related to the manufacture of Other Diesel Pistons sold in the

United States or to the manufacture of Articulated Pistons sold in Brazil;

c. all inventory;

d. all customer lists, distribution agreements, vendor lists, catalogs, sales

promotion literature, and advertising materials;

e. all research materials, technical information, inventions, trade secrets,

intellectual property, patents, technology, know-how (including, but not limited to,

manufacturing know-how), specifications, designs, drawings, processes, quality

control data, and formulas, as well as licenses thereto, relating to the manufacture or

sale of Articulated Pistons;

f. all Metal Leve, S.A. research and development projects for Metal Leve,

Inc., including, but not limited to, all research materials, technical information,

inventions, trade secrets, intellectual property, patents, technology, know-how

(including, but not limited to, manufacturing know-how), specifications, designs,

drawings, processes, quality control data, and formulas, as well as licenses thereto,

relating to all such research and development projects, including, but not limited to,

the following: (i) lightweight articulated ppt, (ii) oxidation resistant steels, (iii) iron

aluminide, (iv) steel material evolution, (v) thermal barrier steel crown coatings, open

versus closed articulated gallery, (vi) analytical software development, (vii) rapid

solidification aluminum alloy, and (viii) bowl rim life prediction.

g. rights that are equal to the rights held by Metal Leve, S.A. to all research

materials, technical information, inventions, trade secrets, intellectual property,

patents, technology, know-how (including, but not limited to manufacturing knowhow), specifications, designs, drawings, processes, quality control data, and formulas,

as well as licenses thereto, relating to the manufacture or sale of Other Diesel Pistons
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sold in the United States or Other Pistons manufactured in the United States;

h. all rights, titles and interests in and to the contracts entered into in the

ordinary course of business with customers (together with associated bid and

performance bonds), suppliers, sales representatives, distributors, agents, personal

property lessors, personal property lessees, licensors, licensees, consignors and

consignees;

i. all rights under warranties and guarantees, express or implied;

j. all books, records, and files; and

k. all items of prepaid expense.

Provided, that this definition of the Metal Leve, Inc. Business does not include

research and development conducted after the divestiture required by this Order. 

K. Metal Leve, S.A. Piston Business means all assets, properties, business and goodwill,

tangible and intangible, relating to the manufacture or sale of Articulated Pistons and Other

Pistons by Metal Leve, S.A. or Metal Leve, Inc. anywhere in the world, including, without

limitation, the following:

1. the Metal Leve, Inc. Business, plus all Metal Leve S.A. assets anywhere in the

world relating to research, development, manufacture or sale of Articulated Pistons or Other

Pistons, including, but not limited to:

a. the manufacturing facilities located at Santo Amaro and Limeira in Brazil,

b. the research and development facility located at Santo Amaro in Brazil;

2. all trademarks;

3. all machinery, fixtures, equipment, vehicles, transportation facilities, furniture,

tools and other tangible personal property;

4. inventory and storage capacity;

5. all customer lists, distribution agreements, vendor lists, catalogs, sales promotion

literature, and advertising materials;

6. exclusive rights to all research materials, technical information, inventions, trade

secrets, intellectual property, patents, technology, know-how (including, but not limited to

manufacturing know-how), specifications, designs, drawings, processes, quality control
7

data, and formulas relating to the manufacture of Articulated Pistons or Other Pistons by

Metal Leve;

7. all rights, titles and interests in and to owned or leased real property, together

with appurtenances, licenses and permits;

8. all rights, titles and interests in and to the contracts entered i nto in the ordinary

course of business with customers (together with associated bid and performance bonds),

suppliers, sales representatives, distributors, agents, personal property lessors, personal

property lessees, licensors, licensees, consignors and consignees;

9. all rights under warranties and guarantees, express or implied;

10. all books, records, and files; and

11. all items of prepaid expense.

II

IT IS FURTHER ORDERED that:

A. Respondents shall divest, absolutely and in good faith, no later than ten (10) days after

the date on which this Order becomes final, the Metal Leve, Inc. Business as a fully viable and

competitive ongoing business. Provided, however, that Metal Leve S.A. may retain a nonexclusive licence from the acquirer of the Metal Leve, Inc. Business to intellectual property for

the sole purpose of producing for Volvo Brazil service part number P-2067 in Brazil, and may

retain the right to supply Volvo Brazil service part number P-2067 in Brazil. 

B. Respondents shall divest the Metal Leve, Inc. Business only to an acquirer or acquirers

that receive the prior approval of the Commission and only in a manner that receives the prior

approval of the Commission. The purpose of the divestiture of the Metal Leve, Inc. Business is to

ensure the continuation of the Metal Leve, Inc. Business as an ongoing, viable, and competitive

operation engaged in the same business of researching, developing, manufacturing, and selling

Articulated Pistons and Other Pistons, in which the Metal Leve, Inc. Business is engaged at the

time of the proposed divestiture, and to remedy the lessening of competition resulting from the

acquisition as alleged in the Commissions complaint.

C. A condition of approval by the Commission of the divestiture shall be the submission

by the acquirer to the Commission of an acceptable five -year business plan for the Metal Leve,

Inc. Business demonstrating that the acquirer will establish the Metal Leve, Inc. Business as a

viable and competitive business free of all continuing relationships with Respondents in the

research, development, manufacture or sale of Articulated Pistons and Other Pistons, except as

set forth in paragraph II.D., below.
8

D. On reasonable notice to Metal Leve, S.A. from an approved acquirer, Metal Leve,

S.A. shall provide technical assistance and know-how to the acquirer with respect to the Metal

Leve, Inc. Business. Such technical assistance shall include, without limitation, consultation with

knowledgeable employees of Metal Leve, S.A. and training at the manufacturing facilities of

Metal Leve, S.A. Metal Leve, S.A. may charge the reasonable costs incurred in providing such

technical assistance, including reimbursement (commensurate with the salary and benefits of Metal

Leve, S.A. personnel involved) for the time plus expenses of Metal Leve, S.A. personnel

providing the technical assistance. Metal Leve, S.A. shall continue to provide such technical

assistance until the acquirer of the Metal Leve, Inc. Business is satisfied that it is capable of

producing, and of developing for production, commercially saleable Articulated Pistons and Other

Pistons utilizing the assets of the Metal Leve, Inc. Business; provided, however, Metal Leve, S.A.

shall not be required to continue providing such technical assistance and training for more than

two (2) years after the date on which the divestiture required by this Order is made.

E. Pending divestiture of the Metal Leve, Inc. Business, Respondents shall take such

actions as are reasonably necessary to maintain the viability, competitiveness, and marketability of

the Metal Leve, Inc. Business and the Metal Leve, S.A. Piston Business and to prevent the

destruction, removal, wasting, deterioration, or impairment of the Metal Leve, Inc. Business and

the Metal Leve, S.A. Piston Business.

F. Respondents shall comply with all terms of the Agreement to Hold Separa te signed by

the Respondents and accepted by the Commission on August 30, 1996, which is attached to this

Order and made a part hereof, and which shall continue in effect until such time as Respondents

have accomplished the divestiture required by this Order.

III

IT IS FURTHER ORDERED that:

A. If Respondents have not divested, absolutely and in good faith and with the

Commissions prior approval, the Metal Leve, Inc. Business within ten (10) days of the date this

Order becomes final, then the Commission may appoint a trustee to divest the Metal Leve, Inc.

Business. The trustee shall have all rights and powers necessary to permit the trustee to effect the

divestiture of the Metal Leve, Inc. Business and to add to the Metal Leve, Inc. Business all or any

part of the Metal Leve, S.A. Piston Business in order to assure the viability, competitiveness, and

marketability of the Metal Leve, Inc. Business so as to expeditiously accomplish the remedial

purposes of this Order. In the event the Commission or the Attorney General brings an action

pursuant to Section 5(l) of the Federal Trade Commission Act, 15 U.S.C.45(l), or any other

statute enforced by the Commission, Respondents shall consent to the appointment of a trustee in

such action. Neither the appointment of a trustee nor a decision not to appoint a trustee under

this Paragraph shall preclude the Commission or the Attorney General from seeking civil penalties

or any other relief (including, but not limited to, a court -appointed trustee) pursuant to the

Federal Trade Commission Act or any other statute, for any failure by any of the Respondents to
9

comply with this Order.
10

B. If a trustee is appointed by the Commission or a court pursuant to Paragraph III.A. of

this Order, Respondents shall consent to the following terms and conditions regarding the

trustee s powers, duties, authority, and responsibilities:

1. The Commission shall select the trustee, subject to the consent of Respondents,

which consent shall not be unreasonably withheld. The trustee shall be a person with

experience and expertise in acquisitions and divestitures. If respondent has not opposed, in

writing, including the reasons for opposing, the selection of any proposed trustee within ten

(10) days after notice by the staff of the Commission to Respondents of the identity of any

proposed trustee, Respondents shall be deemed to have consented to the selection of the

proposed trustee.

2. Subject to the prior approval of the Commission, the trustee shall have the

exclusive power and authority to divest the Metal Leve, Inc. Business and shall have the

power to add to the Metal Leve, Inc. Business all or any part of the Metal Leve, S.A. Piston

Business in order to accomplish the divestiture required by this Order.

3. Within ten (10) days after appointment of the trustee, Respondents shall execute

a trust agreement that, subject to the prior approval of the Commission (and, in the case of a

court-appointed trustee, of the court), transfers to the trustee all rights and powers

necessary to permit the trustee to effect the divestiture of the Metal Leve, Inc. Business, to

add to the Metal Leve, Inc. Business all or any part of the Metal Leve, S.A. Piston Business,

and to divest such additional ancillary assets of Metal Leve S.A. and effect such additional

arrangements, in order to assure the viability, competitiveness, and marketability of the

Metal Leve, Inc. Business so as to expeditiously accomplish the remedial purposes of this

Order.

4. The trustee shall have twelve (12) months to accomplish the divestiture required

by this Order, which shall be subject to the prior approval of the Commission. If, however,

at the end of the twelve (12) month period, the trustee has submitted a plan of divestiture or

believes that divestiture can be achieved within a reasonable time, the divestiture period may

be extended by the Commission (or, in the case of a court -appointed trustee, by the court);

provided, however, the Commission may extend this period for no more than two (2)

additional terms of six (6) months each.

5. The trustee shall have full and complete access to the personnel, books, records,

and facilities related to the Metal Leve, Inc. Business or the Metal Leve, S.A. Piston

Business, or to any other relevant information, as the trustee may request. Respondents

shall develop such financial or other information as such trustee may request and shall

cooperate with the trustee. Respondents shall take no action to interfere with or impede the

trustee s accomplishment of the divestiture. Any delays in divestiture caused by the

respondent shall extend the time for divestiture under this Paragraph III in an amount equal

to the delay, as determined by the Commission (or, in the case of a court -appointed trustee,
11

by the court).

6. The trustee shall use his or her best efforts to negotiate the most favorable price

and terms available in each contract that is submitted to the Commission, subject to

Respondents absolute and unconditional obligation to divest at no minimum price. The

divestiture shall be made in the manner, and to the acquirer or acquirers, as set out in

Paragraph II of this Order; provided, however, if the trustee receives bona fide offers from

more than one acquiring entity, and if the Commission approves more than one such

acquiring entity, then the trustee shall divest to the acquiring entity or entities selected by

Respondents from among those approved by the Commission. 

7. The trustee shall serve, without bond or other security, at the cost and expense

of Respondents, on such reasonable and customary terms and conditions as the Commission

or a court may set. The trustee shall have authority to employ, at the cost and expense of

Respondents, such consultants, accountants, attorneys, investment bankers, business

brokers, appraisers, and other representatives and assistants as are necessary to carry out the

trustee s duties and responsibilities. The trustee shall account for all monies derived from

the divestiture and all expenses incurred. After approval by the Commission (and, in the

case of a court-appointed trustee, by the court), of the account of the trustee, including fees

for his or her services, all remaining monies shall be paid at the direction of Respondents and

the trustee s power shall be terminated. The trustees compensation shall be based at least in

significant part on a commission arrangement (based on sales price) contingent on the

trustee s accomplishing the divestiture required by this Order.

8. Respondents shall indemnify the trustee and hold the trustee harmless against any

losses, claims, damages, liabilities, or expenses arising out of, or in connection with, the

performance of the trustees duties, including all reasonable fees of counsel and other

expenses incurred in connection with the preparation for, or defense of any claim, whether

or not resulting in any liability, except to the extent that such liabilities, losses, damages,

claims, or expenses result from misfeasance, gross negligence, recklessness, willful or

wanton acts, or bad faith by the trustee.

9. If the trustee ceases to act or fails to act diligently, a substitute trustee shall be

appointed in the same manner as provided in Paragraph III.A. of this Order.

10. The Commission (or, in the case of a court-appointed trustee, the court) may on

its own initiative or at the request of the trustee issue such additional orders or directions as

may be necessary or appropriate to accomplish the divestiture required by this Order.

11. The trustee shall have no obligation or authority to operate or maintain the 

Metal Leve, Inc. Business or the Metal Leve, S.A. Piston Business.
12

12. The trustee shall report in writing to Respondents and the Commission every

thirty (30) days concerning the trustees efforts to accomplish the divestiture.

IV

IT IS FURTHER ORDERED that, for a period of ten (10) years from the date this Order

becomes final, Respondents shall not, without prior notification to the Commission, directly or

indirectly:

A. Acquire any stock, share capital, equity, or other interest in any concern ,

corporate or non-corporate, engaged in the sale of Articulated Pistons or Other Pistons in

the United States within the year preceding such acquisition; provided, however, an

acquisition of securities will be exempt from the requirements of this paragraph if, after such

acquisition of securities, Respondents will hold cumulatively no more than two (2) percent

of the outstanding shares of any class of securities of such person; or

B. Enter into any agreement or other arrangement to transfer direct or indirect

ownership, management, or control of any assets used for or previously used for (and still

suitable for use for) the manufacture or sale of Articulated Pistons or Other Pistons in the

United States; provided, however, prior notice shall not be necessary for: the acquisition of

assets in the ordinary course of business or the acquisition of assets valued at less than

$100,000 from the same person within any twelve (12) month period; or for transfers to or

from manufacturers of diesel engines.

The prior notifications required by this paragraph shall be given on the Notification and Report

Form set forth in the Appendix to Part 803 of Title 16 of the Code of Federal Regulations as

amended (hereinafter referred to as the Notification), and shall be prepared and transmitted in

accordance with the requirements of that part, except that: no filing fee will be required for any

such notification; notification shall be filed with the Secretary of the Commission and a copy shall

be delivered to the Bureau of Competition; notification need not be made to the United States

Department of Justice; and notification is required only of Respondents and not of any other party

to the transaction. Respondents shall provide the Notification to the Commission at least thirty

(30) days prior to the consummation of any such transaction (hereinafter referred to as the initial

phase of the waiting period). If, within the initial phase of the waiting period, the Commission or

its staff makes a written request for additional information and documentary material,

Respondents shall not consummate the transaction until at least twenty (20) days after complying

with such request for additional information and documentary material. Early termination of the

waiting periods in this paragraph may, where appropriate, be granted by letter from the Bureau of

Competition. Notwithstanding, prior notification shall not be required by this paragraph for a

transaction for which notification is required to be made, and has been made, pursuant to

Section 7A of the Clayton Act, 15 U.S.C. 18a, and prior notification shall not be required by

this paragraph for acquisitions by Respondents Mahle GmbH or Mahle, Inc. of Metal Leve, S.A.

stock or assets.
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V

IT IS FURTHER ORDERED that within thirty (30) days after the date this Order

becomes final, and every thirty (30) days thereafter until Respondents have fully complied with

the provisions of Paragraphs II and III of this Order, Respondents shall submit to the Commission

verified written reports setting forth in detail the manner and form in which Respondents intend to

comply, are complying, and have complied with Paragraphs II and III of this Order. Respondents

shall include in their compliance reports, among other things that are required from time to time, a

full description of the efforts being made to comply with Paragraphs II and III of the Order,

including a description of all substantive contacts or negotiations for the divestiture and the

identity of all parties that have contacted Respondents or that have been contacted by

Respondents. Respondents shall include in their compliance reports copies of all written

communications to and from such parties, all internal memoranda, and all reports and

recommendations concerning divestiture.

VI

IT IS FURTHER ORDERED that one (1) year from the date this Order becomes final,

annually for the next nine (9) years on the anniversary of the date this Order becomes final, and at

such other times as the Commission may require, Respondents shall file a verified written report

with the Commission setting forth in detail the manner and form in which they have complied and

are complying with Paragraph IV of this Order.

VII

IT IS FURTHER ORDERED that Respondents shall notify the Commission at least thirty

(30) days prior to any proposed change in the corporate Respondents, such as dissolution,

assignment, sale resulting in the emergence of a successor corporation, the creation or dissolution

of subsidiaries, or any other change in Mahle GmbH, Mahle, Inc., Metal Leve, S.A., or Metal

Leve, Inc. that may affect compliance obligations arising out of the Order.

VIII

IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance

with this Order, and Respondents shall permit any duly authorized representatives of the

Commission:

A. Access, during office hours and in the presence of counsel, to inspect and copy

all books, ledgers, accounts, correspondence, memoranda and other records and documents

in the possession or under the control of Respondents relating to any matters contained in

this Order; and
B. Upon five (5) days notice to Respondents, and without restraint or interference,

to interview officers, employees, or agents of Respondents.

Signed this ___ day of January, 1997.

FEDERAL TRADE COMMISSION

By:

_____________________________

Morris A. Bloom

Attorney

Bureau of Competition

By:

_____________________________

Robert N. Cook

Attorney

Bureau of Competition

Approved:

______________________________

M. Howard Morse

Assistant Director

Bureau of Competition

______________________________

George S. Cary

Deputy Director

Bureau of Competition

______________________________

William J. Baer

Director

Bureau of Competition

MAHLE GMBH, A CORPORATION

By:

______________________________

Heinz Junker

Managing Director

MAHLE, INC., A CORPORATION

By:

______________________________

Hans Jehle

President

METAL LEVE, S.A., A CORPORATION

By:

______________________________

Peter Grunow

President and Chief Executive Officer

METAL LEVE, INC., A CORPORATION

By:

______________________________

Duraid Mahrus

President

______________________________

Michael N. Sohn

Counsel for Mahle GmbH, Mahle, Inc., and

Metal Leve, S.A.

Arnold & Porter

555 Twelfth Street, N.W.

Washington, D.C. 20004-1202

_______________________________

Jay A. Herbst, Esq.

Counsel for Metal Leve, Inc.

Driggers, Schultz, Herbst & Patterson

2600 W. Big Beaver, Suite 550

Troy, MI 48084
2

UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

Docket No.

COMPLAINT

Pursuant to the provisions of the Federal Trade Commission Act and the Clayton Act, and

by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having reason

to believe that Mahle GmbH, the parent company of Mahle, Inc., has acquired more than

50 percent of the voting securities of Metal Leve, S.A., the parent company of Metal Leve, Inc.,

in violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45, and

in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, 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. THE RESPONDENTS

Mahle GmbH and Mahle, Inc.

1. Respondent Mahle GmbH is a corporation organized, existing and doing business

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

at Pragstrasse 26-46, D-70376 Stuttgart, Germany. Mahle GmbH has had annual worldwide sales

of approximately $1.7 billion.

2. Respondent Mahle, Inc., a majority-owned subsidiary of Mahle GmbH, is a

corporation organized, existing and doing business under and by virtue of the laws of Delaware,

with its office and principal place of business located at 1 Mahle Drive, Morristown, Tennessee

In the Matter of

MAHLE GMBH,

a corporation,

MAHLE, INC.,

a corporation,

METAL LEVE, S.A.,

a corporation, and

METAL LEVE, INC.,

a corporation.
3

37815-0798. Mahle, Inc. has had annual U.S. sales of approximately $135 million.

3. Mahle GmbH, which operates in the United States through Mahle, Inc., manufactures

and sells pistons for internal combustion engines and is a leading producer of articulated pistons

and large bore two-piece pistons. Mahle, Inc. produces pistons in the United States at plants

located in Tennessee.

4. At all times relevant herein, Mahle GmbH and Mahle, Inc. (collectively, Mahle ) have

been, and are now, corporations as corporation is defined in Section 4 of the Federal Trade

Commission Act, 15 U.S.C. 44; and at all times relevant herein, Mahle GmbH and Mahle, Inc.

have been, and are now, engaged in commerce as commerce is defined in Section 4 of the

Federal Trade Commission Act, 15 U.S.C. 44, and Section 1 of the Clayton Act, 15 U.S.C. 

12.

Metal Leve, S.A. and Metal Leve, Inc.

5. Respondent Metal Leve, S.A. is a corporation organized, existing and doing business

under and by virtue of the laws of Brazil, with its office and principal place of business located at

Rua Brasilio Luz 535, Sao Paolo SP 04746-901, Brazil. Metal Leve, S.A. has had annual

worldwide sales of approximately $315 million.

6. Respondent Metal Leve, Inc., a wholly-owned subsidiary of Metal Leve, S.A., is a

corporation organized, existing and doing business under and by virtue of the laws of Michigan,

with its office and principal place of business located at 560 Avis Drive, Ann Arbor, Michigan

48108. Metal Leve, Inc. has had annual U.S. sales of more than $60 million.

7. Metal Leve, S.A., which operates in the United St aes through Metal Leve, Inc.,

manufactures and sells pistons, pins, bearings, bushings, and thrust washers for internal

combustion engines and is a leading producer of articulated pistons and large bore two -piece

pistons. Metal Leve, Inc. produces pistons in the United States at two plants in South Carolina,

and conducts research and development at a facility in Michigan.

8. At all times relevant herein, Metal Leve, S.A. and Metal Leve, Inc. (collectively,

Metal Leve ) have been, and are now, corporations as corporation is defined in Section 4 of the

Federal Trade Commission Act, 15 U.S.C. 44; and at all times relevant herein, Mahle GmbH

and Mahle, Inc. have been, and are now, engaged in commerce as commerce is defined in

Section 4 of the Federal Trade Commission Act, 15 U.S.C. 44, and Section 1 of the Clayton

Act, 15 U.S.C. 12.
4

II. THE ACQUISITION

9. On or about June 26, 1996, Mahle GmbH acquired more than 50 percent of the voting

securities of Metal Leve, S.A. (the Acquisition), for approximately $40 million.

III. THE RELEVANT MARKETS

10. Research, development, design, production and sale of articulated pistons constitute

one relevant line of commerce within which to analyze the effect of the Acquisition on

competition. A piston is an engine component that fits snugly into the hollow of an engine

cylinder and moves back and forth under pressure generated by combustion within the cylinder. 

In a reciprocating engine, pistons are connected to piston rods which turn the crankshaft to

generate the power that makes the engine turn. Each engine cylinder contains a separate piston.

Articulated pistons are two-piece pistons with a crown made of steel and a skirt made of

aluminum, in which the crown and skirt are able to articulate; that is, to move independently of

each other. The crown and skirt are joined together by means of a piston pin. Articulated pistons

of up to 150 millimeter in diameter are used in engine applications, such as Class 8 diesel truck

engines, which require pistons that can withstand high temperatures and pressures to maintain

engine performance while meeting increasingly stringent government emissions requirements. 

There are no economic substitutes for these articulated pistons.

11. Research, development, design, production and sale of large bore two-piece pistons

constitute another relevant line of commerce within which to analyze the effect of the Acquisition

on competition. Large bore two-piece pistons are pistons with a crown made of steel and a skirt

made of aluminum in bore sizes ranging from 150 to 300 millimeters and higher. The crown and

skirt of a large bore two-piece piston may be separate pieces joined together by the piston pin, as

in an articulated piston, or may be permanently joined together, as in a composite piston. Large

bore two-piece pistons are used in high output diesel and natural gas engines, such as new

generation locomotive engines and stationary power generators as well as engines for various

marine and industrial applications. There are no economic substitutes for large bore two -piece

pistons.

12. The United States is one relevant geographic area within which to analyze the likely

effect of the Acquisition on competition in articulated pistons. Several factors limit the

competitive significance of foreign-made articulated pistons in the United States. Articulated

pistons are designed specifically for the U.S. market to meet technical requirements largely

attributable to pollution control regulations. In addition, relatively high manufacturing costs in

Europe make articulated pistons manufactured overseas uncompetitive in the United States. 

Moreover, engine manufacturers use of just-in-time inventory management practices creates a

preference for articulated piston suppliers located in the United States. As a result, articulated

pistons consumed in the United States are manufactured in the United States, with the exception

of a small quantity of specialized articulated pistons manufactured by Mahle outside the United

States.
5

13. The relevant geographic area within which to analyze the likely effect of the

Acquisition on competition in the large bore two-piece pistons may be worldwide. There are

significant imports of large bore two-piece pistons into the United States from Europe. Factors

that limit the competitive significance of imported articulated pistons in the United States do not

have a significant impact on large bore two-piece pistons imports, in part because large bore

two-piece pistons are used in engines that are produced in smaller quantities.

IV. CONCENTRATION

14. Prior to the acquisition, Mahle had more than a 50 percent share and Metal Leve had

nearly a 45 percent share of United States sales of articulated pistons, producing a combined

market share of more than 95 percent. The United States articulated piston market is highly

concentrated as measured by the Herfindahl-Hirschman Index (HHI ). The Acquisition increased

the HHI by more than 4,500 points to nearly 9,500 points. The only other firm currently selling

articulated pistons in the market is a weak competitor that has been losing business to Mahle and

Metal Leve.

15. The market for two-piece large bore pistons is also highly concentrated. There are

currently only four producers of two-piece large bore pistons in the world. Mahle and one other

firm dominate the worldwide large bore two-piece piston market, while Metal Leve has made

sales and is aggressively bidding in the market.

V. ENTRY CONDITIONS

16. Entry into the articulated piston or large bore two-piece piston markets would not be

timely, likely, or sufficient to deter or offset the adverse effects of the Acquisition on competition,

because an entrant would have to develop manufacturing expertise, satisfy time-consuming

customer qualification procedures, and acquire manufacturing equipment at a significant sunk

cost. Engine manufacturers tend to be risk averse in choosing piston suppliers, because the cost

of a piston tends to be small relative to the costs associated with poor piston performance or

piston failure.

VI. EFFECT OF THE PROPOSED MERGER ON COMPETITION

17. The Acquisition will substantially lessen competition or tend to create a monopoly in

the United States articulated piston market, because, among other things:

a. it increases concentration substantially in a highly concentrated market;

b. it eliminates actual, direct, substantial, and potentially increased competition

between Mahle and Metal Leve;
6

c. it creates a monopoly or near monopoly;

d. it eliminates competition between the two closest substitutes among

differentiated products in the articulated piston market;

e. it facilitates the unilateral exercise of market power by the merged firm;

f. it will likely result in increased prices for articulated pistons; and

g. it will likely result in reduced innovation as a result of delayed or reduced

product development.

18. The Acquisition will substantially lessen competition or tend to create a monopoly in

the United States large bore two-piece piston market, because, among other things:

a. it increases concentration substantially in a highly concentrated market;

b. it eliminates actual, direct, substantial, and potentially increased competition

between Mahle and Metal Leve;

c. it eliminates a maverick competitor which has introduced increased competition

in the market;

d. it facilitates coordinated interaction among sellers of large bore two-piece

pistons in the United States;

e. it will likely result in increased prices for large bore two-piece pistons and

f. it may allow the merged firm to reduce innovation by delaying or reducing

product development.

VII. VIOLATIONS CHARGED

19. The Acquisition by Mahle GmbH of more than 50 percent of the voting securities of

Metal Leve, S.A., described in paragraph 9, violates Section 5 of the Federal Trade Commission

Act, as amended, 15 U.S.C. 45, and Section 7 of the Clayton Act, as amended, 15 U.S.C. 18.
7

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on this

____________ day of ________________, 1997, issues its complaint against said respondents.

By the Commission.

Seal Donald S. Clark

Secretary
1

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 Mahle GmbH, Mahle, Inc., Metal

Leve, S.A., and Metal Leve, Inc. (Proposed Respondents).

The proposed 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.

Mahle GmbH, a German piston manufacturer, operates in the United States through its

wholly-owned subsidiary Mahle, Inc., while Metal Leve, S.A., a competing Brazilian piston

manufacturer, operates in the United States through its wholly-owned subsidiary Metal Leve, Inc.

 On June 26, 1996, Mahle GmbH acquired a controlling interest in Metal Leve, S.A. for

approximately $40 million without first filing notification and report forms with the Federal Trade

Commission or the Department of Justice Antitrust Division as required by the Hart-Scott-Rodino

Act, Section 7A of the Clayton Act, 15 U.S.C. 18a. The Commission has approved a

Stipulation providing for civil penalties under the Hart-Scott-Rodino Act for Mahle and Metal

Leve s failure to file the required notifications, and has accepted, subject to final approval, the

Agreement Containing Consent Order resolving administrative charges that the acquisition may

substantially lessen competition 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, as amended, 15 U.S.C.

 45.
2

The Stipulation provides for maximum civil penalties from both Mahle and Metal Leve from

the date of the acquisition until Proposed Respondents file an application for divestiture as

required by the proposed Order, which application is subsequently approved by the Commission

and which divestiture is thereafter accomplished. Mahle and Metal Leve will each pay civil

penalties of $10,000 per day from June 26, 1996, through November 20, 1996, and $11,000 per

day thereafter, pursuant to the Debt Collection Improvement Act of 1996, Pub. L. 104-134

 31001(s) and FTC Rule 1.98, 16 C.F.R. 1.98, 61 Fed. Reg. 54549 (Oct. 21, 1996). The

Stipulation, along with a complaint alleging a cause of action under Section 7A(g)(1) of Clayton

Act, 15 U.S.C. 18A (g)(1), will be filed, with the concurrence of the Department of Justice

Antitrust Division, by Commission attorneys acting as special attorneys to the Attorney General,

on behalf of the United States.

The proposed administrative complaint alleges that the acquisition may substantially lessen

competition in the research, development, manufacture, and sale of articulated pistons in the

United States and large bore two-piece pistons worldwide. The proposed complaint alleges a

market of articulated pistons up to 150 millimeter in diameter used in diesel engine applications,

such as Class 8 truck engines for buses and big highway rigs, which require pistons that can

withstand high temperatures and pressures to maintain engine performance while meeting

increasingly stringent government emissions requirements. The proposed complaint also alleges a

market of large bore two-piece pistons of more than 150 millimeters in diameter that are used in

high output diesel and natural gas engines, such as locomotive engines and stationary power

generators as well as engines for various marine and industrial applications. The proposed

complaint alleges that the relevant geographic market for evaluating the acquisition s effect on
3

articulated pistons is the United States, while the relevant geographic market for evaluating the

acquisitions effect on large bore two-piece pistons is worldwide.

The proposed complaint alleges that, prior to the acquisition, Mahle had more than a

50 percent share and Metal Leve had nearly a 45 percent share of the articulated piston market,

producing a combined market share of more than 95 percent. The only other firm in the market is

a weak competitor that has been losing business to Mahle and Metal Leve. Thus, the

Mahle/Metal Leve acquisition results in a monopoly or near monopoly in the articulated pistons

market.

The proposed complaint alleges that the market for two-piece large bore pistons is also

highly concentrated. There are only four producers of two-piece large bore pistons in the world. 

The proposed complaint alleges that Mahle and one other firm dominate the market, while Metal

Leve has gained sales and is aggressively bidding.

The proposed complaint alleges that entry into the relevant piston markets would not be

timely, likely, or sufficient to deter or offset the adverse effects of Mahle s acquisition of Metal

Leve on competition, because an entrant would have to develop manufacturing expertise, satisfy

time-consuming customer qualification requirements, and acquire manufacturing equipment at a

significant sunk cost. Entry would likely take three to five years or more.

The proposed complaint alleges that Mahles acquisition of Metal Leve substantially

lessened competition in both the articulated and large bore two-piece piston markets, by among

other things, eliminating Metal Leve as an independent competitor that has been a substantial,

direct, head-to-head competitor with Mahle and a maverick in the relevant markets. In the

articulated piston market, the acquisition has created a monopoly or near monopoly. The
4

proposed complaint alleges that the Mahle/Metal Leve acquisition substantially lessened

competition in the large bore two-piece piston market, by giving control of Metal Leve, an

aggressive and innovative competitor, to Mahle, one of only two firms that together have

dominated the market for large bore two-piece pistons.

The proposed Order would remedy the alleged violation by restoring the competition lost as

a result of Mahles acquisition. The proposed Order would require divestiture of Metal Leves

U.S. piston business, which is defined to include, among other things, assets used by Metal Leve

for the manufacture and sale of pistons in the United States, including plants in Orangeburg and

Sumter, South Carolina, and a research and development center in Ann Arbor, Michigan, as well

as technology outside the United States which supports that business. Metal Leve and Mahle will

cease to have any rights to what was formerly the Metal Leve articulated piston technology once

the divestiture required by the proposed Order has been accomplished.

The proposed Order requires that the divestiture be completed within ten days of the Order

becoming final. Thus, the Proposed Respondents must file an acceptable application for

divestiture well before the proposed Order is made final, so that the application can be placed on

the public record for thirty days, the Commission can determine whether to approve it, and

Respondents can complete the required divestiture within the time period set forth in the

proposed Order.

If the required divestiture is not accomplished within ten days of the Order being made final,

then a trustee may be appointed to divest the business. The trustee may add some or all of the

Metal Leve, S.A. piston business to accomplish the divestiture. This crown jewel provision

ensures that the required divestiture will be accomplished in a timely manner.
5

A Hold Separate Agreement accepted by the Commission on August 30, 1996 will continue

in effect until the divestiture required by the proposed Order is accomplished. The Hold Separate

requires Metal Leve to be operated independently of Mahle on a worldwide basis and requires

Metal Leve, Inc. to be maintained as a viable competitor in the business in which it was engaged

prior to Mahles acquisition of Metal Leve.

Finally, the proposed Order prohibits Mahle or Metal Leve from acquiring any interest in

any other company engaged in the manufacture or sale of articulated pistons in the United States,

without prior notice to the Commission, for a period of ten (10) years.

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.