22. Prior to the Acquisition, CB&I and PDM were direct and actual competitors in the
design, engineering, construction and sale of LNG tanks and were the only significant producers
of LNG tanks in the United States. Respondents competed with each other on price, service, and

timeliness of project completion.
ANSWER: PDM admits that it competed with CBI in the design, enginccring, construction

and sale of LNG tanks in the United States. PDM denies that it and CBI were the only

significant producers of LNG tanks in the United States, and denies the remainder of the

allegations in paragraph 22.

23. The Acquisition combined ihe only significant producers of LNG tanks in the
United States. The Acquisition may create a monopoly in the United States in LNG tanks.

ANSWER: PDM denies the allegations of paragraph 23 of the complaint.
24. CBI bids for and sells LNG peak shaving planis, consisting of both the LNG
storage tank and the liquefaction unit. In bidding for the construction of new LNG peak shaving

plants, CB&i has declined to bid for the sale ofits LNG tanks separate from its LNG liquefaction
units, thereby disadvantaging competitors which supply LNG liquefaction units only.

ANSWER: PDM admits thai CBI has bid for and sold its services in designing, cngincering
and constructing LNG peak shaving plants, and that CBI has provided bids for the LNG storage

tank and liquefaction wait for such plans. PDM lacks sufficient information to admit or deny the

remainder of paragraph 24.

25. Prior to the Acquisition, PDM competed with CB&I in the design, engineering,
construction and sale of LNG peak shaving plants by bidding for the consiruction of the LNG
tank in partnership or coordination with a manufacturer of the LNG liquefaction unit, Typically,
PDM partnered with Air Products and Chemicals, Inc., which would submit a bid for the LNG
peak shaving plant based on an LNG tank to be constructed by PDM.

ANSWER: PDM admits that it competed with CBI for varions aspects of the design,
engineering, construction and sale of services associated with LNG peak shaving plants. PDM
further admits that it had partnered with Air Products and Chemicals, lnc. PDM denies the

remainder of paragraph 25.

26. CBI aud PDM/Air Products have built all of the LNG peak shaving plants
constructed in the United States since 1990. Prior to the Acquisition, CB&I management

7


UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

ta the Matter of
CHICAGO BRIDGE & TRON COMPANY N.V., a foreign corporation,
CHICAGO BRIDGE & IRON COMPANY, a corporation, and.
PITT-DES MOINES, INC., a corporation
Docket No. 9300
PUBLIC

PITT-DES MOINES, INC.'S ANSWER TO COMPLAINT.

Respondent, Pitt-Des Moines, Inc. ("PDM"), by and through its attorneys, Winston &
Strawn, hereby answers The Federal Trade Commission ("FTC"} Complaint as follows:
THE PARTIES

L Respondent Chicago Bridge & Lon Company N.V. is a forcign corporation
organized and existing under the laws of The Netherlands, with its principal place of business at
Polarisavenue 31, 2132 JH Hoofddorp, The Netherlands.

ANSWER: PDM is without sufficient information to admit or deny the facts set forth in

paragraph 1.

2. Respondent Chicago Bridge & Tron Company, a wholly owned subsidiary of
Chicago Bridge & Iron Company N.V., is a corporation organized and existing under the laws of
the State of Delaware, with its principal place of business at 150i North Division Street,

Plainfield, Illinois 60544,

ANSWER: PDM is without sufficient information to admit or deny the facts set forth in

paragraph 2.

3. CBI, headquartered in Amsterdam, is one of the world's leading global
engineering and construction companies, CB&I designs, engineers, fabricates, and repairs field-
erected storage facilities and stccl plate structures. In 2000, CBI had total revenue of $634

million.

ANSWER: PDM is without sufficient information to admit or deny the facts set forth in

paragraph 3.


ANSWER: PDM denies the allegations of paragraph 37 of the complaint exccpi fo state that if
lacks sufficient information to admit or deny whether the missing of a satellite delivery deadiine
can trigger costly liquidaied damages clauses. PDM further states that there is an already
existing over capacity of thermal vacuum chambers in the United States to facilitate the timcly
and economic delivery of satellites, and denies the remainder of the allegations of paragraph 37.
38. A new entrant would lack CB&fs and PDM's strong reputations for successful
and timely completion of the relevant products. Consequentiy, customers would likely pay a

premium for the services of the merged firm, and a new entrant would not effectively constrain
noncompetitive price increases in the relevant markets.

ANSWER: PDM denies the allegations of paragraph 38.

39. A new entrant likely would operate at a higher cost than either CB&I] or PDM.
Through completing multiple projects in the relevant markets over the years, CB&I and PDM
have developed customized construction equipment and procedures, which the companies
consider proprietary. A new entrant would lack documented and standardized construction
procedures and thus would likely have difficulty completing construction of the relevant
products as economically as CB&I or PDM, or with the same assurance of quality.

ANSWER: PDM denies that a new entrant would lack documented and standardized
construction procedures, as any company that makes welded steel plate slorage tank structures
would have their own documented and standardized construction procedures which may or may
not be superior to those utilized by PDM. PDM further denies that any company other than CBI
or PDM would have difficulty completing construction of the unk segments identified by the

FIC on an economical or quality assurance basis, and PDM further denies the remainder of

paragraph 39.
ANTICOMPETITIVE EFFECTS OF THE ACQUISITION

40. The Acquisition may substantially lessen competition in the following ways,
among others:

a. it eliminates actual, direct and substantial competition between CB&I and PDM;

b. it removes PDM, a low cost producer and bidder for the relevant products;

11


stored in liquid form in an LNG tank. The stored LNG can be heated, vaporized and put back
inio the supply stream io meet demand peaks.

ANSWER: CBI admits the allegations of paragraph 15 of the complaint, except CB1 denies
that LNG storage tanks and LNG liquefaction units are the two essential components of such a
facility.

16. LNG import terminals are complexes that are used to receive LNG from ocean
tankers and store the LNG. The stored LNG is typically converted to natural gas and then further
transported or distributed by pipeline. LNG tanks are an cssential component of LNG import

terminals.

ANSWER: CBI admiis the allegations of paragraph 16, except that CBI denies that LNG
import terminals are “complexes.”
GEOGRAPHIC MARKET

17. The relevant gcogtaphic market in which to assess the effects of the Acquisition
in each of the relevant lines of commerce is the United States as a whole.

ANSWER: CBI denics that the relevant geographic market in which to assess ihe effects of
the acquisition in ihe relevant line of commerce is the United States as a wholc, and instead
statics that the relevant geographic market in which to assess the effects of the acquisilion is
world-wide in scope, CBI denies the remainder of paragraph 17 of the complaint.

18. Foreign producers of the relevant products are at a cost disadvantage in
attempting to compete with CB&I and PDM in the supply of the relevant products in the United

States. Foreign producers of the relevant products cannot economically compete with CB&I and
PDM in the supply of the relevant products in the United States.

ANSWER: CRI denies that forcign producers af the relevant products ate at a cost
disadvantage in attempting to compete with CB? and PDM in providing services associated with
such relevant products in the Uniled States. CBi further denies that foreign producers of the
relevant products cannot economically compete in the supply of relevant products in the United

States and denies the remainder of paragraph 18 of the complaint.


concluded that by refraining from bidding separately for construction of an LNG tank, CB&E
would limit to only two competitive bidders, CB&I and PDM/Air Products, the competition for

construction of an LNG peak shaving plant,
ANSWER: PDM admits that it (and its alliance with Air Products) and CBI had built portions
of all of the smail number of LNG peak shaving plants constructed in the United States since

1990 that PDM is aware of. PDM is without sufficient information to admit or deny what CBI's

management concluded, and denies the remainder of paragraph 26.
27. By eliminaling PDM as a competing suppiier of LNG tanks, the Acquisition

eliminates CB&iI's only significant competition for the construction of LNG peak shaving plants
in the United States. The Acquisition may create a monopoly in the United States in LNG peak

shaving plants.
ANSWER: PDM denies the allegation in paragraph 27,
28. Prior to the Acquisition, CB&I and PDM competed in the design, engineering,

construction and sale of LNG import terminals, individually or by partnership or coordination
with others. Prior to the Acquisition, CB&I and PDM were the principal competitors in LNG

import terminals in the United States.

ANSWER: PDM admits that it and CBI competed in the design, engineering, construction
and sale of LNG import terminals, individually and sometinies through partnerships or alliances
with others. PDM denies that it and CBI were the principal competitors in LNG import
terminals in the United States prior to the Acquisition, and further denies the remainder of

paragraph 28.

29. The vast majority of LNG import terminals in the United States have been built
by CB&1 or by PPM, cither individually or by partnership or coordination with others.

ANSWER: PDM admits that it and CBI built many of the LNG import terminals in the
United States, but is without sufficicni information to admit or deny whether those two

companies had built the “vast majority” of such import terminals given the imprecision of that

term.


PROOF OF SERVICE

I Nada S. Sulaiman hereby certify that on this 4th day of February, 2002 I served
(1) Chicago Bridge & Iron N.V.'s Answer to Complaint and (2) Pitt-Des Moines, Inc.'s Answer

to Complaint, by hand delivery upon:

Steven L. Wilensky

Federal Trade Commission

600 Pennsylvania Avenue, N.W.
Room 8-3621

Washington, D.C, 20580

245993.1


34. The Acquisition combined the two largest producers of LIN/LOX/LAR tanks in
the United States. The Acquisition may create a dominant firm in the United States in

LIN/LOX/LAR tanks.
ANSWER: PDM denies the allegations of paragraph 34.

35. — Entry iuto the relevant product markets would not be timely, likely, or sufficient
in its magnitude, character, and scope to deter or counteract anticompetitive effects of the

Acquisition.

ANSWER: PDM denies the allegations of paragraph 35, and states that entry in the United
States for the sale and construction of services associated with all of the product types identified
by the FTC is not only likely but is actual, is currently timely, and is sufficient in its magnitude,
character and scope to deter and counteract the FTC's perceived anticompetitive effects of the
Acquisition. PDM denies the remainder of the allegations af paragraph 35.

36. | Reputation is a barrier in each of the relevant markets. Customers are reluctant to
engage the services of a new entrant for the construction of relevant products hecause of the
possibility of cconomic foss inherent ia product failure. LNG tanks, LPG tanks, and
LIN/LOX/LAR tanks hold large quantities of flammable or otherwise dangcrous liquid gases,
ANSWER: PDM denies that reputation is a barrier to entry in the manufacture of any of the
relevant tank types, and denies that such tank types constitute independent relevant markets.
PDM denies that customers are reluctant to engage the services of a new entrant, and notes that
there are many examples where customers have engaged ihe services of a new entrant for the
construction of these products. PDM denies that there is any significant possibility of economic
loss inherent in product failure, and while PDM admits that LNG tanks, LPG tanks and
LIN/LOX/LAR tanks can be constructed to hold large quantities of flammable or otherwise
dangerous liquid gases, dangers resulting from faulty construction of such materials by existing
or new firms are minimal. PDM denies the remainder of paragraph 36 of the complaint.

37. Satellite manufacturers depend on the timcly completion and reliable and
ecunomic operation of thermal vacuum chambers to facilitate timely and economic delivery of

satellites to their aerospace customers. Missing a satellite delivery deadline can trigger costly
liquidated damages clauses.

10


ANSWER: PDM admits that LPG tanks are used to store liquefied petroleum gas at low

temperatures of approximately -50° F. PDM denies that LPG tanks are always ficld-erected and

denies the remaining ailegations of paragraph 14.

15. LNG peak shaving plants are used to liquefy natural gas and store the natural gas
in liquid form for use during periods of peak demand. LNG peak shaving plants are field-erected
and consist of two essential components: LNG storage tanks, and LNG liquefaction units. In
LNG peak shaving plants, natural gas from a pipeline is refrigerated in the liquefaction unit and
stored in liquid form in an LNG tank. The stored LNG can be heated, vaporized and put back
into the supply stream to meet demand peaks.

ANSWER: PDM admits the allegations of paragraph 15 of the complaint, except PDM denies

that LNG storage tanks and LNG liquefaction units are the two essential components of such a

facility.

16. LNG umport tenminals are complexes that are used lo roceive LNG from ocean
tankers and store the LNG. The stored LNG is typically converted to natural gas and then further
transported or distributed by pipeline. LNG tanks are an essential component of LNG import

tenninals.
ANSWER: PDM admits the allegations of paragraph 16, except PDM denies that TING
import terminals are “complexes.”

GEOGRAPHIC MARKET

17. The relevant geographic market in which to assess the effects of the Acquisition
in each of the relevant lmes of commerce is the United States as a whole.

ANSWER: PDM denies that the relevant geographic market in which to assess the effects of
the acquisition in the relevant linc of commerce is the United Stalcs as 4 whole, and instead
states that the relevant geographic market in which to assess the effects of the acquisition is
world-wide in scope. PDM denies the remainder of paragraph 17 of the complaint.

18. Fareiga producers of the relevant products are at a cost disadvantage in
attempting to compete with CB&I and PDM in the supply of the relevant products in the United

States, Foreign producers of the relevant products cannot economically compete with CB&I] and
PDM in the supply of the relevant products in the United States.


35. Entry into the relevant product markets would not be timcly, likely, or sufficient

in ils magnitude, character, and scope to deler or counteract anticompetitive effects of the
Acquisition.
ANSWER: CBI denies the allegations of paragraph 35, and states that cntry into the United
States for the sale and constzuction of services associated with all of the product types identified
by the FTC is not only likely but is actaal, is currently timely, and is sufficient in its magnitude,
character and scope to deter and counteract the FTC's perceived anticompetitive effects of the
Acquisition. CB] denies the remainder of the allegations of paragraph 35.

36, Reputation is a bartier in cach of the relevant markets. Customers are reluctant to
engage the services of a new entrant for the construction of relevant products bocause of the
possibility of economic loss inherent in product failure. LNG tanks, LPG tanks, and
LIN/LOX/LAR tanks hold large quantities of flammable or otherwise dangerous liquid gascs.
ANSWER: CBI denies that reputation is a barrier to entry in the manufaciure of any of the
relevant tank types, and denies that such tank types constitute independent relevant markets. CBI
denies that customers are reluctant to cngage the services of a new entrant, and notes that there
are many examples where customers have cngayed the services of a new entrant for the
construction of these products. CBJ denies that there is any significant possibility of economic
loss inherent in product failure, and while CBI admits that LNG tanks, LPG tanks and
LIN/LOX/LAR tanks can be constructed to hold large quantities of flammable or othcrwise
dangerous liquid gases, dangers resulting from faulty construction of such materials by existing
or new firms are minimal, CBI denies the remainder of paragraph 36 of the complaint.

37. Satelhte mamuiacturers depend on the timely completion and reliable and

economic operation of thermal vacuum chambers to facilitate timely and ecouomic delivery of
satellites to their aerospace customers. Missing a satellite delivery deadline can trigger costly

liquidated damages clauses.

ANSWER:  CUBI denies the allegations of paragyaph 37 of the complaint except to state that it

lacks sufficient information to admit or deny whether the missing of a satcllite delivery deadline

10


significant producers of LNG tanks in the United States, and denies the remainder of the

allegations in paragraph 22.

23. The Acquisition combined the only significant producers of LNG tanks in the
United States. The Acquisition may create a monopoly in the United States in LNG tanks.

ANSWER: CBI denies the allegations of paragraph 23 of the complaint.
24. CBI bids for and sells LNG peak shaving plants, consisting of both the LNG
storage tank and the liquefaction unit. In bidding for the construction of new LNG peak shaving

plants, CB&z has declined to bid for the sale of its LNG tanks separate from its LNG liquefaction
units, thereby disadvantaging competitors which supply LNG liquefaction units only.

ANSWER: CBI admits that it bids for and sells its services to customers seeking to build
LNG peak shaving plants, and that CBI will usually bid to provide the LNG storage tank and
liquefaction umt for such plants. CBi further admits that there has been at icast one instance
where it has declined to bid the sale of LNG tanks separate from its liquefaction units. CBI

denies that this decision disadvantaged companics which supply LNG liquefaction units only,

and further denies the remainder of paragraph 24.

25. Prior to the Acquisition, PDM competed with CB&I in the design, engineering,
construction and sale of LNG peak shaving plants by bidding for the construction of the LNG
tank in partnership or coordination with a manufacturer of the LNG liquefaction unil. Typically,
PDM partnered with Air Products and Chemicais, Inc., which would submit a bid for the LNG
peak shaving plant based on an LNG tank to be constructed by PDM.

ANSWER; CBI admits that PDM compeied with CBI for various aspects of the design,
engincering, construction und sale of services associaled with LNG peak shaving plants. CBI
further admits that it was aware that PDM had partnered with Air Products and Chemicals, Inc,
for certain projecis. CBI denies the remainder of paragraph 25.

26. CBI and PDM/Air Products have built all of the LNG peak shaving plants
constructed in the United States since 1990. Prior to the Acquisition, CB&I management
concluded thal by refraining from bidding separately for construction of an LNG tank, CB&I

would limit to only two competitive bidders, CB&I and PDM/Air Preducts, the competition for
constuction of an LNG peak shaving plant.


MARKET STRUCTURE

19. Each of the relevant lines of commerce is highly concentrated in the United
States.

ANSWER: CBI denies that each of the relevant lines of commerce is highly concentrated in
the United States, and further denies that the United States is the geographic market in which the

concentration measure should be made. CBI denies the remaining allegations of paragraph 19 of

the complaint.

20. Prior to the Acquisition, CB&I and PDM were direct and actual competitors in the
construction and sale of thermal vacuum chambers in the United Stales. Defendants competed
with each other on price, service, and timeliness of project completion and competed through
innovation to enhance the efficiency, performance and reliability of thermal vacuwn chambers.
CB&I and PDM were the only significant producers of thermal vacuum chambers in the United

States.

ANSWER: CBI admits that it competed directly agaist PDM on onc thermal vacuum
chamber project in the United States prior to the acquisition -- the Spectrum Astro Project. CBI
denies thal it and PDM were the only significant producers of thermal vacuum chambers in the
United States, and states that PDM and others have made all the thermal vacuum chambers made

in the United States in the last 10 years. CBI denies the remaining allegations of paragraph 20 of

the complaint.

21. The Acquisition combined the only significant producers of thermal vacuum
chambers in the Uniled States. The Acquisition may create a monopoly in the United States in
thermal vacuum chambers.

ANSWER: CBI denies the allegations of paragraph 21.

22. ~~“ Prior to the Acquisition, CB&I and PDM were direct and actual competitors in the
design, enginecring, construction and sale of LNG tanks and were the only significant producers
of LNG tanks in the United States. Respondents competed with each other on price, service, and
timeliness of project compietion.

ANSWER: CBI adinits that it competed with PDM im the design, engineering, construction

and sale of LNG tanks in the United Statcs. CBi denies that it and PDM were the only


ANSWER: PDM denies that foreign producers of the relevant products are at a cost
disadvantage in allempting to compete with PDM or CBI in selling services associated with such
relevant products in the United States. PDM further denies that foreign producers of the relevant

products cannot cconomicaliy compete in the supply of relevant products in the United States

and denies the remainder of paragraph 18 of the complaint.
MARKET STRUCTURE

19. Each of the relevant lines of commerce is highly concentrated in the United
States.

ANSWER: PDM denies that each of the relevant lines of commerce is highly concentrated in
the Uniled States, and further denies that the United States is the geographic market in which the
concentration measure should be made. PDM denies the remaining allegations of paragraph 19

of the complaint.

20. Prior to the Acquisition, CB&I and PDM were direct and actual competitors ia the
construction and sale of therma! vacuum chambers in the United States. Defendants competed
with each other on price, service, and timeliness of project completion and competed through
innovation to enhance the efficiency, performance and reliability of thermal vacuum chambers,
CB&I and PDM were the only significant producers of (hermal vacuum chambers in the United

States.
_ANSWER: PDM admits that it competed directly against CBI on one thermal vacuum

chamber project in the United States prior to the acquisition -- the Spectrum Astro Project. PDM
denies that it and CBI werc the only significant producers of thermal vacuum chambers in the
United States, and siates that PDM and others have made all the thermal vacuum chambers made

in the United States in the last 10 years.

21. The Acquisition combined the only significant producers of thermal vacuum
chambers in the United States. The Acquisition may create a monopaly in the United States in

thermal vacuum chambers.

ANSWER: PDM denies the allegations of paragraph 21.


ANSWER: CBI denies the allegations of paragraph 30.

31. Prior to the Acquisition, CB&1 and PDM were direct and actual competitors in the
construction and sale of LPG tanks in the United States. Defendants competed with each other
on price, service, and timeliness of project completion. CB&I and PDM were the leading
competitors ameng only few producers of LPG tanks in the United States. CB&I and PDM built
most of the LPG tanks that were constructed in the United States since 1990.

ANSWER: CBI admits that it and PDM were direct and actual competitors for the
consiniction and sale of LPG tunks in ihe United Siates, and that CBI and PDM built many of the
relatively small number of LPG tanks constructed in the United States since 1990, CBI denies
that it and PDM were the "leading competitors among only few producers of 1.PG tanks in the

United States", and further denies the remainder of paragraph 31.

32. The Acquisition combined the two largest producers of LPG tanks in the United
States. The Acquisition may create a dominant firm in the United States in LPG tanks.

ANSWER: CBI denies the allevalions of paragraph 32.

33. Prior to the Acquisilion, CB&I and PDM were direct and actuat competitors in the
construction and sale of LIN/LOX/LAR tanks in the United States. Defendants competed with
each other on price, service, and timeliness of project completion. PDM and CB&I were leading
competilors among five producers of LIN/LOX/LAR tanks in the United States. The only other
leading producer exited the market prior to the Acquisition. CB&I and PDM built most of the
LIN/LOX/LAR tanks that were constructed in the United States since 1990.

ANSWER: CBI admits that it and PDM were direct and actual competitors in the construction
and sale of LIN/LOX/LAR tanks in the United States. CBI denies that il and PDM were the
leading competitors for the construction of such ianks in the United States, that there were only
five producers of such tanks in the United States, and that CBI and PDM built most of such tanks
that were constructed in the United States since 1990. CBI further denies the remaining

allegations of paragraph 33.

34, The Acquisition combined the two largest producers of LIN/LOX/LAR tanks in
the United States. The Acquisition may create a dominant firm in the United States in
LIN/LOX/LAR tanks.

ANSWER: CBI denics the allegations of paragraph 34.

9


C it increases the level of concentration in the relevant markets;

d. it eliminates innovation competition between CB&I and PDM and may lead to
reduced innovation competition in thermal vacuum chambers and in other

relevant producis;
e. it may lcad to increases in price for the relevant products;
f it may increase barriers to entry into the relevant markets;

g it may give CB&i market power in the relevant markets;

h. it may allow CB&I unilaterally to cxercise market power in the relevant markets,
through the combination of CB&I and PDM, which are the two closest
competitors by virtue of their long record of timely and successful compietion of
these specialty projects;

i it may eliminate one or more competitors of CB&I as suppliers of LNG peak
shaving plants; and

j- it may diminish pricing and innovation competition in the sale of LNG
liquefaction units for use in LNG peak shaving plants by foreclosing one or more
competitors to CB&I from selling LNG liquefaction units.

ANSWER: PDM denies the ailegations of paragraph 4U in its entirety and states that to the
contrary, the Acquisition has caused a repositioning which has given an incentive lo previously
dormant competitors to invest in this business to attempt to replace PDM as a bidder for these
storage tank types. PDM denies the remaining allegations of paragraph 40.

VIOLATIONS CHARGED

COUNT I~ ILLEGAL ACQUISITION

4i. — The allegations contained in Paragraphs 1-40 are repeated and reaileged as though
fully set forth here.

ANSWER: FDM repeats its response to the allegations contained in paragraphs 1 through 40
and realleges them as though fully set forth here,

42. The effect of the Acquisition may be substantially to lessen competition or tend to
create a monopoly in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18, and Sectian 5 of

the Federal Trade Commission Act, 15 U.S.C, § 45.

12


UNI'FED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

ss,

Jn the Matter of
CHICAGO BRIDGE & IRON COMPANY N.YV., a foreign corporation,
CHICAGO BRIDGE & IRON COMPANY, a corporation, and
PITT-DES MOINES, INC., a corporation
Docket No. 9300
PUBLIC

CHICAGO BRIDGE & IRON N.V.'S ANSWER TO COMPLAINT

Respondent, Chicago Bridge & iron N.V. ("CBI"), by and through its attorneys, Winston
& Strawn, hereby answers The Federal Trade Commission ("FTC") Complaint as follows:
THE PARTIES

1. Respondent Chicago Bridge & Iron Company N.Y. is a foreign corporation
organized and existing under the laws of The Netherlands, with its principal place of business at
Polarisavenue 31, 2132 JH Hoofddorp, The Netherlands.

ANSWER: CBI admits the iruth of the facts set forth in paragraph 1.

2. Respondent Chicago Bridge & Iron Company, a wholly owned subsidiary of
Chicayo Bridge & lron Company N.Y, is a corporation organized and existing under the laws of
the State of Delaware, with its principal place of business at 1501 North Division Street,

Plainfield, Illinois 60544.
ANSWER: CBI admits the facts set forth in paragraph 2.

3. CBI, headquartered in Amsterdam, is onc of the world’s leading global
engineering and construction companics. CB&I designs, engineers, fabricates, and repairs field-
erected storage facilities and steel plate structures. In 2000, CBI had total revenue of $634
miilion.

ANSWER: CBI admits the facts sct forth in paragraph 3.

4, Respondent Pitt-Des Moines, Inc. is a corporation organized and existing under
the laws of the State of Pennsylvania, with its principal place of business at 1450 Lake Robbins
Drive, Suite 400, The Woodlands, Texas 77380.


d. it eliminates innovation competition between CB&I and PDM and may lead to
reduced innovation competition in thermal yacuum chambers and in other

relevant products;
8, it may lead to increases in price for the relevant products;
ft it may increase barriers to entry into the relevant markets;
g it may give CB&I] market power in the relevant markets;
h it may allow CB&I unilaterally to exercise market powcr in the relevant markets,

through the combination of CB&I and PDM, which are the two closest
competitors by virtue of their fong record of timely and successful completion of
these speciaity projects;

i. it may eliminate one or more competitors of CB&I as suppliers of LNG peak
shaving plants; and

j. it may diminish pricing and innovation competition in the sale of LNG
liquefaction units for use in LNG peak shaving plants by foreclosing one or more
compctilors io CB&I from selling LNG liquefaction units.

ANSWER: CBI denies the allegations of paragraph 40 in its entirety and states that fo the
contrary, the Acquisition has caused a repositioning which has given an incentive to previously
dormant competitors to invest in this business to attempt to replace PDM as a bidder for these
storage tank types. CBI denies the remaining allegations of paragraph 40.
VIGLATIONS CHARGED
COUNT I — ILLEGAL ACQUISITION

41, The aliegations containéd in Paragraphs 1-40 are repeated and reaileged as though
fully set forth here.

ANSWER: CBI repeats its response to the allegations contained in paragraphs 1 through 40

and realleges them as though fully set forth here.

42. The effect of the Acquisition may be substantially to lessen competition or tend to
create a monopoly in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18, and Section 5 of
the Federal ‘rade Commission Act, 15 U.S.C. § 45.

ANSWER: CBI denies the allegations of paragraph 42, exccpt to state that the relevant

statutes contain proper legal citations.

12


can trigger costly liquidated damages clauses. CBI further states that there is an already existing
over capacity of thermal vacuum chambers in the United States to facilitate the timely and
econontic delivery of satellites, and denies the remainder of the allegations of paragraph 37.

38. A new entrant would lack CB&I’s and PDM's strong reputations fer successful
and timely completion of the relevant products. Consequently, customers would likely pay a

premium for the services of the merged firm, and a new entrant would not effectively constrain
noncompetitive price increases in the relevan| markets.

ANSWER: CBI denies the allegations of paragraph 38.

39. A new entrant likely would operate at a higher cost than either CB&1 or PDM.

Through complcting multiple projects in the relevant markets over the years, CB&I and PDM
have developed customized construction equipment and procedures, which the companies
consider proprietary. A mew entrant would lack documented and standardized construction
procedures and thus would likely have difficulty completing construction of the relevant
products as economically as CB&I or PDM, or with the same assurance of quality,
ANSWER: CBI denies the allegations of paragraph 39 cxeept that it admits thal it has
developed some relatively insignificant types of customized construction equipment and
procedures. CBI further denies that a new entrant would lack documented and standardized
construction procedures, as any company that makes welded steel plate siorage tank structures
would have their own documented and standardized construction procedures which may or may
not be superior to those utilized by CBI. CBI further denies that any company other than CB] or
PDM would have difficulty completing construction of the tank types identified by the FTC on
an cconomical or quality assurance basis, and CBI further denies the remainder of paragraph 39.

ANTICOMPETITIVE EFFECTS OF THE ACQUISITION

40. The Acquisition may substantially lessen competition in the following ways,
among others:

a. it eliminates actual, dircet and substantial compctition between CB&I and PDM;
vb. it removes PDM, a low cost producer and bidder for the relevant products;
c. it increases the level of concentration in the relevant markets;

11


ANSWER: CBI admits thal il and PDM (and PDM's alliance with Air Products) had built
portions of aJl of the small number of LNG peak shaving plants constructed in the United States
since 1990. CBI denies that its management concluded that by refraining from bidding
separately for construction of an LNG tank, CBI would limit the competition for peak shaving
plants to only two competitive bidders, and denies the remainder of paragraph 26.

27. By eliminating PDM as @ competing supplier of LNG tanks, the Acquisition

eliminates CB&I's only significant competition for the construction of LNG peak shaving plants
in the United States, The Acquisition may crcatc a monopoly in the United Statcs in LNG peak

shaving planis.
ANSWER: CBI denies the allegation in paragraph 27.

28. Prior to the Acquisition, CB&I and PDM competed in the design, engineering,
construction and sale of [.NG import terminals, individually or by partnership or coordination

with others. Prior to the Acquisition, CB&I and PDM were the principal competitors in LNG
import terminals in the United States.

ANSWER: CBI admits that it and PDM competed in the design, engineering, construction
and sale of LNG import terminals, individually and sometimes through partnerships or alliances
with others. CBI denies that it and PDM were the principal competitors in LNG import
terminals in the United States prior to the Acquisition, and further denies the remainder of
paragraph 28.

29, The vast majority of j.NG import terminals in the United States have been built
by CB&I or by PDM, cither individually or by partnership or coordination with others.

ANSWER: CBi admits that it and PDM built many of the LNG import terminals in the
United States, but is without suflicient information to admit or deny whether those two

companies had built the "vast majority" of such import terminals given the imprecision of that

term.

30. The Acquisition combined the two largest producers of LNG import terminals in
the United States. The Acquisition may create a monopoly in the United States in LNG import
terminals.


30. The Acquisition combined the two largest producers of LNG import terminals in
the United States. The Acquisition may create a monopoly in the United States in LNG import
terminals,

ANSWER: PDM denies the allegations of paragraph 30.

31. Prior to the Acquisition, CB&I and PDM were direct and actuai competitors in the
construction and sale of LPG tanks in the United States. Defendants competed with each other
on price, service, and timeliness of project completion. CB&I and PDM were the leading
competitors among only few producers of LPG tanks jn the United States. CB&I and PDM built
most of the LPG tanks that were constructed in the United States since 1990.

ANSWER: PDM admits that it and CBE were direct and actual competitors for the
construction and sale of LPG tanks in the United States, and that CBi and PDM built many of the
relatively small number of LPG \anks constructed in the United States since 1990. PDM denics
that it and CBI were the “leading competitors among only few producers of LPG tanks in the

United States", and further denies the remainder of paragraph 31.

32. The Acquisition combined the two largest produccrs of LPG tanks in the United
States. The Acquisition may create a dominant firm in the United States in LPG tanks.

ANSWER: PDM denies the allegations of paragraph 32.

33. Prior to the Acquisition, CB&I and PDM were direct and actual competitors in the
construction and sale of LIN/LOX/LAR tanks in the United States. Defendants competed with
cach other on price, service, and timeliness of project completion. PDM and CB&I were leading
competilors among five producers of LIN/LOX/LAR tanks in the United States. The only other
leading producer exited the market prior to the Acquisition. CB&I and PDM built most of the
LIN/LOX/LAR tanks that were constructed in the United States since 1990.

ANSWER: PDM admits that it and CBI were direct and actual competitors in the construction
and sale of LIN/LOX/LAR tanks in the United States. CBI denies that it and PDM were the
Jeading competitors for the construction of such tanks in the United States, that there were only
five producers of such tanks selling their services in the United States, and that CBI and PDM

built most of such tanks thai were constructed in the United States since 1990. CBI further

denies the remaining allegations of paragraph 33.


ANSWER: CBI admits the allegations of paragraph 11 but states that vacuum chambers
without the thermal shroud aiso simulate many of the aspects of the environment of outer space,
and are also uscd for testing satcllites and other acrospace and defense equipment.

12. LNG tanks are very large, field-erected tanks used to store liquefied natural gas
("LNG") at cryogenic (extremely low) temperatures of approximately -260° F,

ANSWER: CBI admits that LNG tanks store liquefied natural gas at cryogenic temperatures
of approximately -260° F. CBI further states that some LNG tanks are indced very large and

field-erected, but that LNG tanks need not necessarily be classified as large or field-erected. CB]

denies the remaining allegations of paragraph 12.

13. LIN/LOX/LAR tanks are large, field-erected tanks used to store liquid nitrogen,
liquid oxygen and hquid argon ("LIN/LOX/LAR"), at cryogenic temperatures ranging from
approximately -300° F to -320° F, and field-crceted spheres uscd to store liquid hydrogen and
liquid helium at cryogenic temperatures as low as ~450° F.

ANSWER: CBI admits that LIN/LOX/LAR tanks are used to store liquid nitrogen, liquid
oxygen and liquid argon at cryogenic temperatures ranging from approximately -300° F to -320°
T, and that field-crectcd spheres used to store liquid hydrogen and liquid helium would store

those products at cryogenic temperatures as low as -450° F. CBI stales that LIN/LOX/LAR
tanks are frequently but noi always large, and in fact are in many inslances shop-erected. CBI
denies the remaining allegations of paragraph 13.

14. LPG tanks are field-erected tanks that are used to store liquefied petroleum gas
("LPG") at low temperatures of approximately -50° F.

ANSWER: CBI admits that LPG tanks are used to store liquefied petrolcum yas at low

temperatures of approximately -50° l', CBI denics that LPG tanks are always field-erected and

denies the remaining allegations of paragraph 14.

15. LNG peak shaving plants are used to liquefy natural gas and store the natural gas
in liquid form for use during periods of peak demand. LNG peak shaving plants are field-erected
and consist of two essential components: LNG storage tanks, and LNG liquefaction units. in
LNG peak shaving plants, natural gas from a pipeline is refrigerated in the liquefaction unit and

4


4, Respondent Pitt-Des Moines, Inc. is a corporation organized. and existing under
the laws of the State of Pennsylvania, with its principal place of business at 1450 Lake Robbins
Drive, Suite 400, The Woodlands, Texas 77380.

ANSWER: PDM admits the facts set forth in paragraph 4 of the complaint.

5. Prior to the Acquisition, described in Paragraph 8, PDM was a diversified
engineering and construction company specializing in the engineering and design, procurement,
fabrication, erection and rehabilitation of stcel products, including liquid and cryogenic storage
and processing systems, waler slorage systems, bridges and buildings, principally in the Wester
Hemisphere. PDM was also engaged in the distribution of steel.

ANSWER: PDM admits that, prior to the acquisition, it engineered, designed, procured,
fabricated and erected steel products including liquid and cryogenic storage and processing
systerns and water storage systems, and that much of that work occurred in the Western
Hemisphere. POM also admits that it had many lines of business not subject to the

Conmmnission’s Complaint, and that its asset sale to CBI was part of a general plan by PDM to sell

off all of its assets and lines of business. PDM denies the remaining allegations of paragraph 5

of the complaint.

6. In 2060 PDM had total revenue of $667 million, of which $152 million was
eamed hy the Engineered Construction Division.

ANSWER: PDM admits that the Engineered Construction Division of PDM had gross

revenues of $152 million for fiscal year 2000, but states that it is without sufficient information
to admit or deny what PDM's total year 2000 revenues were,
JURISDICTION
7. Respondents CB&I and PDM are, and at all times relevant herein have been,
engaged in conmuerce, as "commerce” is defined in Section 1 of the Clayton Act, as amended, 15

U.S.C. § 12, and are corporations whose business is in or effects commerce as "commerce" is
defined in Section 4 of the FTC Act, as amended, 15 U.S.C. § 44.

ANSWER: PDM admits the allegations contained in paragraph 7.


always larger than similar structures manufactured in a shop and then transported to a customer's

site,

11. Thermal vacuum chambers are large, ficld-ervcted chambers that are used to
simulate the environment of outer space (high vacuum and extreme variations in temperature)
and arc used for testing satellites and other aerospace and defense equipment.

ANSWER: PDM admits the allegations of paragraph 11 but states that vacuum chambers
without the thermal shroud also simulate many of the aspects of the environment of outer space,
and are also used for testing satellites and other aerospace and defense equipment.

12. LNG tanks arc very large, field-erected tanks used to store liquefied natural gas
("ING") at cryogenic (extremely low) temperatures of approximately -260° F.

ANSWER: PDM admits that LNG tanks store liquefied natural gas at cryogenic temperatures
of approximately -260° F. PDM further states that some LNG tanks are indeed very large and
field-erected, but that LNG tanks need not necessarily be classified as large or field-erected.

PDM denies the remaining ailcgations of paragraph 12.

13.‘ LIN/LOX/LAR tanks are large, ficld-crected tanks used to store liquid nitrogen,
liquid oxygen and liquid argon ("LIN/LOX/LAR"), at cryogenic temperatures ranging from
approximately -300° F to -320° F, and ficld-erected spheres used to store liquid hydrogen and
liquid helium at cryogenic temperatures as low as -450° F.

ANSWER: PDM admits that LIN/LOX/LAR tanks are used lo store liquid nitrogen, liquid
oxygen and liquid argon al cryogenic temperatures ranging from approximately -300° F to -320°
F, and that field-erected spheres used to store liquid hydrogen and liquid helium would store
those products at cryogenic temperatures as low as -450° F. PDM states that LIN/LOX/LAR

tanks are frequently but not always large, and in fact are in many instances shop-erected. PDM

denies fhe remaining allegations of paragraph 13.

14, LPG tanks are field-erected tanks that are used to store liquefied petroleum gas
(“LPG") at low temperatures of approximately ~50° F.


admits that the purchase price agreed to on February 7, 2001 was approximatcly $84 million, but
stafes that that number has been reduced as a result of post closing adjustments. CBI denies that
it acquired the PDM Water Division and Engmeercd Construction Division of PDM, but rather

states that it purchased most of the assets and assumed most of the liabilities relating to those

divisions.
RELEVANT MARKETS
9. Relevant lines of commerce in which to asscss the effects of the Acquisition are:

a. thermal vacuum chambers;
db. LNG tanks;
G LNG peak shaving plants;
ad LNG import terminals;
2. LPG tanks; and
f. LIN/LOX/LAR tanks.
ANSWER: CBI denies the allegations in paragraph 9 of the FTC's complaint, and states that

the relevant Jines of commerce in which to assess the effects of the acquisition is the sale of

welded steel plate storage tank products.

10. Field-crected slructures are constructed on-site at a location specified by the
customer and are generally larger than similar siruciures that are manufactured at @ fabrication

facility and then transported to the customer's sitc.

ANSWER: CBI admits that field-erected structures are consiructed on site at a location
specified by the customer and further admits that field-crected structures arc usually but not
always larger than similar structures manufactured in a shop and then transported to a customer's

site.

11. Thermal vacuum chambers are large, field-erected chambers that arc used to
simulate the environment of outer space (high vacuum and extreme varialions in temperature)
and are used for testing satellites and other aerospace and defense equipment.


ANSWER: PDM denies the allegations of paragraph 42, excypl to slale that the relevant

statules contain proper legal citations.

COUNT I -- UNFAIR METHOD OF COMPETITION

43, The allegations contained in Paragraphs 1-40 are repeated and realleged as though
fully set forth here.

ANSWER: PDM repeats its response to the allegations contained in paragraphs 1 through 42
and realleges them as though fully set forth here.

44, CBI and PDM, through the Acquisition and the Acquisition agreement described
in Paragraph 8, have engaged in unfair methods of competition in or affecting commerce in
yiolation of Section 5 ef the Federal Trade Commission Act, 15 U.S.C, § 45,

ANSWER: PDM denies the allegations of paragraph 44, except to state that the relevant

statutes contain proper legal citations.

Date: February 4, 2002 (ALE
ie M. Kelley
Jeffrey A. Leon
Winslon & Strawn

35 West Wacker Drive
Chicago, IL 60601-9703
Tel: 312-558-5600

Nada Sulaiman

Winston & Strawn

1460 L Strect, NW.
Washington, D.C. 20005
Tel: 202-371-5700

COUNSEL FOR PDM

I9LEROA

13


ANSWER: CBI is without sufficient information to admit or deny the current corporate status

of PDM.

5. Pricr to the Acquisition, described im Paragraph 8, PDM was a diversified
engineering and construction company specializing in the engineering and design, procurement,
fabrication, erection and rehabilitation of steel products, including liquid and cryogenic storage
and processing systems, water storage systems, bridges and buildings, principally in the Western
Hemisphere, PDM was also engaged in the distribution of stecl.

ANSWER: CBI admits that PDM, prior to the acquisition, engineered, designed, procurcd,
fabricated and crected steel products including liquid and cryogenic storage and processing
systems and water storage systems, and that much of that work occurred in the Western
Hemisphere. CBI lacks sufficient information to admit or deny the remaining allegations of
paragraph 5 of the complaint.

6. In 2000 PDM had total revenue of $667 million, of which $152 million was
cared by the Engineered Construction Division.

ANSWER: CBI admits that the Engineered Construction Division of PDM had gross
revenues of $152 mijlion for fiscal year 2000, but states that it is without sufficient information
io admit or deny what PDM's total year 2060 revenues were.
JURISDICTION
7. Respondents CB&I and PDM are, and at all times telcvant 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 business is in or effects commerce as "commerce" is

defined in Section 4 of the FTC Act, as amended, 15 U.S.C. § 44.
ANSWER: CBI admits the allegations contained in paragraph 7.

THE ACQUISITION

8. On or about February 7, 2001, CB&I acquired, pursuant to agreement with PDM,
PDM's Water Division and Enginecred Construction Division for approximately $84 million

("the Acquisition").
ANSWER: CBI admits that on February 7, 2001, it completed its acquisition of certain of the

assets of PDM related to its Water Division and Engineered Construction Division. CBI further


COUNT I — UNFAIR METHOD OF COMPETITION

43. — The allegations contained in Paragraphs 1-42 are repeated and realleged as though
folly set forth here.

ANSWER:  CBi repeats its response to the allegations contained in paragraphs 1 through 42

and realleges them as though fully set forth here.

44. CBI and PDM, through the Acquisition and the Acquisition agrecment described
in Paragraph 8, have engaged in unfair methods of compelilion in or affecting commerce in
violation of Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45.

ANSWER: CBI denies the allegations of paragraph 44, except to state that the reievant
statutes contain proper legal citations.
Date: February 4, 2002 Respectfully spivmitted by:

Ce

Aine M. Kelley
effrey A. Leon
Winston & Strawn
35 West Wacker Drive
Chicago, LL 60601-9703
Tol: 312-558-5600

Nada Sulaiman

Winston & Strawn

1400 L Street, N.W.
Washington, D.C. 20005
Tel: 202-371-5700

COUNSEL FOR CLI

13


THE ACQUISITION

8. On or about February 7, 2001, CB&I acquired, pursuant to agreement with PDM,
PDM's Water Division and Engineered Construction Division for approximately $84 million

("the Acquisition").

ANSWER: PIM admits that on February 7, 2001, it completed the sale of certain assets to
CBI related to PDM's Water Division and Engineered Construction Division. PDM further
admits that the purchase price agreed to on February 7, 2001 was approximately $84 million, but
states that that number has been reduced as a result of post closing adjustments. PDM denies
that it sold the PDM Water Division and Engineered Construction Division of PDM, but rather

states that it soid most of the assets and liabilities relating to those divisions.

RELEVANT MARKETS
9. Relevant lines of commerce in which ta assess the effects of the Acquisition are:
a thermal vacuum chambers;

b. LNG tanks;
c LNG peuk shaving plants;
d. LNG import terminals;
c. LPG tanks; and ,
f. LIN/LOX/LAR tanks,
ANSWER: PDM denies the allegations in paragraph 9 of the FTC's complaint, and states that

the relevant lines of commerce in which io assess the effects of the acquisition is the sale of

welded steel plate storage tank products.

10.‘ Field-erected structures are constructed on-site at a location specified by the
customer and are generally larger than similar structures that are manufactured at a fabrication

facility and then transported to the customer's site.

ANSWER: PDM admits that ficld-erected structures are constructed on site at a location

specified by the customer and further admits that field-erected structures are usuully but not