Federal Register / Vol. 80, No. 94 / Friday, May 15, 2015 / Notices 27961 

24See Statement of Commissioner Joshua D. 

Wright 3–5, Holcim Ltd., FTC File No. 141–0129 

(May 8, 2015). 

25Analysis of Agreement Containing Consent 

Orders to Aid Public Comment 2, Actavis plc, FTC 

File No. 141–0098 (June 30, 2014) (‘‘In generic 

pharmaceutical product markets, price generally 

decreases as the number of generic competitors 

increases. Accordingly, the reduction in the number 

of suppliers within each relevant market would 

likely have a direct and substantial anticompetitive 

effect on pricing.’’). 

26Analysis of Agreement Containing Consent 

Orders to Aid Public Comment 3, Akorn 

Enterprises, Inc., FTC File No. 131–0221 (Apr. 14, 

2014) (‘‘In generic pharmaceuticals markets, price is 

heavily influenced by the number of participants 

with sufficient supply.’’). 

27See David Reiffen & Michael R. Ward, Generic 

Drug Industry Dynamics, 87 Rev. Econ. & Stat. 37 

(2005). As an aside, given that we are now ten years 

removed from the publication of this important 

study and over twenty years removed from the 

sample period, it might be worth revisiting this 

question with fresher data if the Commission 

intends to continue relying upon inferences of 

competitive harm from market structure in the 

generic pharmaceutical market. 

28See Statement of the Federal Trade 

Commission, supra note 9, at 3 n.7; see also 

Separate Statement of Commissioner Maureen K. 

Ohlhausen 1, ZF Friedrichshafen AG, FTC File No. 

141–0235 (May 8, 2015). 

29Separate Statement of Commissioner Maureen 

K. Ohlhausen, supra note 28, at 2. 

30Statement of the Federal Trade Commission, 

supra note 9, at 3 n.7. 

31That said, as I stated in Holcim Ltd., I am not 

suggesting the ‘‘reason to believe’’ standard 

‘‘requires access to every piece of relevant 

information and a full and complete economic 

analysis of a proposed transaction, regardless of 

whether the parties wish to propose divestitures 

before complying with a Second Request.’’ See 

Statement of Commissioner Joshua D. Wright, supra 

note 24, at 11. 

Rather concentration is but one aspect 

of the inquiry aimed at better 

understanding post-merger incentives to 

compete. The predictive power of 

market share and market concentration 

data is informed by economic theory 

and available empirical evidence. There 

is no empirical evidence sufficient to 

establish a generally applicable 

presumption that mergers that reduce 

the number of firms to three or two are 

likely to harm competition.24 Further, 

the Commission’s reliance upon such 

shorthand structural presumptions 

untethered from empirical evidence 

subsidize a shift away from the more 

rigorous and reliable economic tools 

embraced by the Merger Guidelines in 

favor of convenient but obsolete and 

less reliable economic analysis. 

This is not to say that evidence of 

changes in market structure cannot ever 

warrant such a presumption. It does 

when the evidence warrants as much. 

The Commission has in certain contexts 

found reason to believe competition 

would be substantially lessened based 

simply upon a reduction of firms in the 

relevant market. See Actavis plc-Forest 

Laboratories 25 and also Akorn-Hi-Tech 

Pharmacal,26 which both involve 

generic pharmaceutical markets. The 

Commission was able to draw 

conclusions about the relationship 

between price and the number of firms 

in generic pharmaceutical markets 

because substantial research has been 

done to establish that such a 

relationship exists.27 Indeed, the cases 

in the pharmaceutical industry are the 

exceptions that prove the rule that the 

Commission needs to do more than 

count the number of firms in a market 

to have reason to believe a substantial 

lessening of competition is likely. No 

such research has been done in this 

market. Accordingly, unlike in generic 

pharmaceutical markets, we have no 

evidence to conclude that a simple 

reduction in the number of firms in this 

market is likely to lead to higher prices 

and lower output. Simply assuming 

such a relationship exists in this market 

without any evidence to suggest that it 

does harkens back to the bad old days 

of the first half of the 20th century, 

when the structure-conductperformance paradigm was in vogue. 

To summarize, there are three-to-two 

mergers that give rise to unilateral 

effects, and three-to-two mergers that 

give rise to coordinated effects. It is our 

burden to show that this three-to-two 

merger is likely anticompetitive. The 

Commission must find sufficient 

evidence to support an inference of 

likely economic harm to consumers. 

The heavy degree of reliance upon a 

structural presumption in this case is 

not sufficient to do so. 

Finally, the Commission and 

Commissioner Ohlhausen each claim 

that the quantity, and presumably the 

quality, of the evidence is not the same 

for investigations truncated by remedy 

proposals compared to cases where a 

full phase investigation is completed or 

compared to a completed trial, 

respectively.28 While this observation is 

an accurate description of the pragmatic 

reality of conducting law enforcement 

investigations, I do not agree with the 

implication that the quantum and 

quality of evidence needed to satisfy the 

‘‘reason to believe’’ standard should 

turn on whether and when a remedy 

proposal is offered during an 

investigation. The idea is that we should 

‘‘take into account the need for 

predictability and fairness for merging 

parties in these circumstances’’ 29 and 

considerations whether it is 

‘‘appropriate to subject the parties to the 

added expense and delay of a full phase 

investigation.’’ 30 I fully support the 

agency identifying opportunities to 

lower the administrative costs of 

antitrust investigations and believe 

there to be ample opportunity to do so. 

But attempts to operate a more efficient 

law enforcement system must satisfy the 

constraint, required by law, that there is 

reason to believe a transaction violates 

Section 7 of the Clayton Act. That 

standard sets a relatively low bar for the 

minimum level of evidence required to 

substantiate a merger challenge. I reject 

the view that it should be a standard 

that should be relaxed because the 

merging parties offer a remedy.31 The 

Commission is primarily a law 

enforcement agency, albeit one that 

largely conducts it business by entering 

into consents with merging parties. 

Making the consent process more 

efficient and predictable is a laudable 

goal; but we must not allow pursuit of 

a more efficient consent process to 

distort our evaluation of the substantive 

merits. To do so, as in my view we have 

here, risks in the long run reducing the 

institutional capital of the agency in 

magnitudes far greater than any 

potential cost savings from truncating 

an investigation. 

For these reasons, I cannot join my 

colleagues in supporting the consent 

order because I do not have reason to 

believe the transaction violates Section 

7 of the Clayton Act nor that a consent 

ordering divestiture is in the public 

interest. 

[FR Doc. 2015–11721 Filed 5–14–15; 8:45 am] 

BILLING CODE 6750–01–P 

FEDERAL TRADE COMMISSION 

[File No. 141 0129 ] 

Holcim Ltd. and Lafarge S.A.; Analysis 

of Proposed Consent Orders To Aid 

Public Comment 

AGENCY: Federal Trade Commission. 

ACTION: Proposed consent agreement. 

SUMMARY: The consent agreement in this 

matter settles alleged violations of 

federal law prohibiting unfair methods 

of competition. The attached Analysis to 

Aid Public Comment describes both the 

allegations in the draft complaint and 

the terms of the consent orders— 

embodied in the consent agreement— 

that would settle these allegations. 

DATES: Comments must be received on 

or before June 4, 2015. 

ADDRESSES: Interested parties may file a 

comment at https://

ftcpublic.commentworks.com/ftc/

holcimlafargeconsent online or on 

paper, by following the instructions in 

the Request for Comment part of the 

SUPPLEMENTARY INFORMATION section 

below. Write ‘‘Holcim Ltd. and Lafarge 

mstockstill on DSK4VPTVN1PROD with NOTICES

27962 Federal Register / Vol. 80, No. 94 / Friday, May 15, 2015 / Notices 

1 In particular, the written request for confidential 

treatment that accompanies the comment must 

include the factual and legal basis for the request, 

and must identify the specific portions of the 

comment to be withheld from the public record. See 

FTC Rule 4.9(c), 16 CFR 4.9(c). 

SA—Consent Agreement; File No. 141– 

0129’’ on your comment and file your 

comment online at https://

ftcpublic.commentworks.com/ftc/

holcimlafargeconsent by following the 

instructions on the web-based form. If 

you prefer to file your comment on 

paper, write ‘‘Holcim Ltd. and Lafarge 

SA—Consent Agreement; File No. 141– 

0129’’ on your comment and on the 

envelope, and mail your comment to the 

following address: Federal Trade 

Commission, Office of the Secretary, 

600 Pennsylvania Avenue NW., Suite 

CC–5610 (Annex D), Washington, DC 

20580, or deliver your comment to the 

following address: Federal Trade 

Commission, Office of the Secretary, 

Constitution Center, 400 7th Street SW., 

5th Floor, Suite 5610 (Annex D), 

Washington, DC 20024. 

FOR FURTHER INFORMATION CONTACT: 

James Southworth, Bureau of 

Competition, (202–326–2822), 600 

Pennsylvania Avenue NW., Washington, 

DC 20580. 

SUPPLEMENTARY INFORMATION: Pursuant 

to Section 6(f) of the Federal Trade 

Commission Act, 15 U.S.C. 46(f), and 

FTC Rule 2.34, 16 CFR 2.34, notice is 

hereby given that the above-captioned 

consent agreement containing consent 

orders to cease and desist, having been 

filed with and accepted, subject to final 

approval, by the Commission, has been 

placed on the public record for a period 

of thirty (30) days. The following 

Analysis to Aid Public Comment 

describes the terms of the consent 

agreement, and the allegations in the 

complaint. An electronic copy of the 

full text of the consent agreement 

package can be obtained from the FTC 

Home Page (for May 4, 2015), on the 

World Wide Web, at http://www.ftc.gov/ 

os/actions.shtm. 

You can file a comment online or on 

paper. For the Commission to consider 

your comment, we must receive it on or 

before June 4, 2015. Write ‘‘Holcim Ltd. 

and Lafarge SA—Consent Agreement; 

File No. 141–0129’’ on your comment. 

Your comment—including your name 

and your state—will be placed on the 

public record of this proceeding, 

including, to the extent practicable, on 

the public Commission Web site, at 

http://www.ftc.gov/os/

publiccomments.shtm. As a matter of 

discretion, the Commission tries to 

remove individuals’ home contact 

information from comments before 

placing them on the Commission Web 

site. 

Because your comment will be made 

public, you are solely responsible for 

making sure that your comment does 

not include any sensitive personal 

information, like anyone’s Social 

Security number, date of birth, driver’s 

license number or other state 

identification number or foreign country 

equivalent, passport number, financial 

account number, or credit or debit card 

number. You are also solely responsible 

for making sure that your comment does 

not include any sensitive health 

information, like medical records or 

other individually identifiable health 

information. In addition, do not include 

any ‘‘[t]rade secret or any commercial or 

financial information which . . . is 

privileged or confidential,’’ as discussed 

in Section 6(f) of the FTC Act, 15 U.S.C. 

46(f), and FTC Rule 4.10(a)(2), 16 CFR 

4.10(a)(2). In particular, do not include 

competitively sensitive information 

such as costs, sales statistics, 

inventories, formulas, patterns, devices, 

manufacturing processes, or customer 

names. 

If you want the Commission to give 

your comment confidential treatment, 

you must file it in paper form, with a 

request for confidential treatment, and 

you have to follow the procedure 

explained in FTC Rule 4.9(c), 16 CFR 

4.9(c).1 Your comment will be kept 

confidential only if the FTC General 

Counsel, in his or her sole discretion, 

grants your request in accordance with 

the law and the public interest. 

Postal mail addressed to the 

Commission is subject to delay due to 

heightened security screening. As a 

result, we encourage you to submit your 

comments online. To make sure that the 

Commission considers your online 

comment, you must file it at https://

ftcpublic.commentworks.com/ftc/

holcimlafargeconsent by following the 

instructions on the web-based form. If 

this Notice appears at http://

www.regulations.gov/#!home, you also 

may file a comment through that Web 

site. 

If you file your comment on paper, 

write ‘‘Holcim Ltd. and Lafarge SA— 

Consent Agreement; File No. 141–0129’’ 

on your comment and on the envelope, 

and mail your comment to the following 

address: Federal Trade Commission, 

Office of the Secretary, 600 

Pennsylvania Avenue NW., Suite CC– 

5610 (Annex D), Washington, DC 20580, 

or deliver your comment to the 

following address: Federal Trade 

Commission, Office of the Secretary, 

Constitution Center, 400 7th Street SW., 

5th Floor, Suite 5610 (Annex D), 

Washington, DC 20024. If possible, 

submit your paper comment to the 

Commission by courier or overnight 

service. 

Visit the Commission Web site at 

http://www.ftc.gov to read this Notice 

and the news release describing it. The 

FTC Act and other laws that the 

Commission administers permit the 

collection of public comments to 

consider and use in this proceeding as 

appropriate. The Commission will 

consider all timely and responsive 

public comments that it receives on or 

before June 4, 2015. For information on 

the Commission’s privacy policy, 

including routine uses permitted by the 

Privacy Act, see http://www.ftc.gov/ftc/ 

privacy.htm. 

Analysis of Agreement Containing 

Consent Orders To Aid Public Comment 

The Federal Trade Commission 

(‘‘Commission’’) has accepted, subject to 

final approval, an Agreement 

Containing Consent Orders (‘‘Consent 

Agreement’’) designed to remedy the 

anticompetitive effects resulting from 

the proposed acquisition of Lafarge S.A 

(‘‘Lafarge’’) by Holcim Ltd. (‘‘Holcim’’). 

Under the terms of the proposed 

Consent Agreement, Lafarge is required 

to divest to Continental Cement 

Company (‘‘Continental’’) its Davenport 

cement plant and quarry located in 

Buffalo, Iowa along with cement 

terminals and associated distribution 

assets in Minneapolis and St. Paul, 

Minnesota; La Crosse, Wisconsin; 

Memphis, Tennessee; and Convent and 

New Orleans, Louisiana. The Consent 

Agreement also requires Holcim to 

divest its Skyway slag cement plant 

located in Chicago, Illinois to Eagle 

Materials Inc. (‘‘Eagle’’), its slag cement 

plant located in Camden, New Jersey 

and its terminal near Boston, 

Massachusetts to Essroc Cement 

Corporation (‘‘Essroc’’), and its cement 

terminals in Grandville and Elmira, 

Michigan and Rock Island, Illinois to 

Buzzi Unicem USA (‘‘Buzzi’’). Finally, 

the Consent Agreement requires Holcim 

to divest to a buyer or buyers approved 

by the Commission (1) Holcim’s 

Trident, Montana cement plant and two 

related terminals in Alberta, Canada, 

and (2) Holcim’s Mississauga cement 

plant located in Ontario, Canada and 

related cement terminals in Duluth, 

Minnesota; Detroit and Dundee, 

Michigan; Cleveland, Ohio; and Buffalo, 

New York. 

The Consent Agreement has been 

placed on the public record for 30 days 

to solicit comments from interested 

persons. Comments received during this 

period will become part of the public 

record. After 30 days, the Commission 

will again review the Consent 

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Federal Register / Vol. 80, No. 94 / Friday, May 15, 2015 / Notices 27963 

Agreement and the comments received, 

and decide whether it should withdraw 

from the Consent Agreement, modify it, 

or make final the Decision and Order 

(‘‘Order’’). 

The Transaction 

Pursuant to a Combination Agreement 

dated July 7, 2014, Holcim proposes to 

acquire 100 percent of the existing 

shares of Lafarge in a transaction valued 

at $24.95 billion at that time. The 

Commission’s Complaint alleges that 

the proposed acquisition, if 

consummated, would violate Section 7 

of the Clayton Act, as amended, 15 

U.S.C. 18, and Section 5 of the Federal 

Trade Commission Act, as amended, 15 

U.S.C. 45, by substantially lessening 

competition in certain regional markets 

in the United States for the manufacture 

and sale of portland cement and slag 

cement. The proposed Consent 

Agreement will remedy the alleged 

violations by preserving the competition 

that would otherwise be eliminated by 

the proposed acquisition. 

The Parties 

Holcim is a Swiss-based, vertically 

integrated global building materials 

company. The company’s products 

include cement, clinker, concrete, lime, 

and aggregates. In the United States, 

Holcim currently operates nine portland 

cement and three slag grinding plants, 

as well as a large network of distribution 

assets. 

Lafarge is a vertically-integrated 

global building materials company 

incorporated in France and 

headquartered in Paris. Lafarge 

primarily produces and sells cement, 

aggregates, and ready-mix concrete. In 

the United States, Lafarge currently 

operates six portland cement and three 

slag cement grinding plants as well as 

numerous distribution terminals. 

The Relevant Products and Structure of 

the Markets 

In the United States, both parties 

manufacture and sell portland cement. 

Portland cement is an essential 

ingredient in making concrete, a cheap 

and versatile building material. Because 

portland cement has no close substitute 

and the cost of cement usually 

represents a relatively small percentage 

of a project’s overall construction costs, 

few customers are likely to switch to 

other products in response to a small 

but significant increase in the price of 

portland cement. 

Both parties also manufacture and sell 

ground, granulated blast furnace slag 

(‘‘slag cement’’), a specialty cement 

product with unique characteristics that 

can serve as a partial substitute for 

portland cement. Customers add slag 

cement to portland cement to enhance 

the physical properties of a concrete 

mixture. It is appropriate to treat slag 

cement as a separate relevant product 

because an insufficient number of 

purchasers would switch to other 

products in response to a small but 

significant increase in the price of slag 

cement to render such a price increase 

unprofitable. 

The primary purchasers of portland 

and slag cement are ready-mix concrete 

firms and producers of concrete 

products. These customers usually pick 

up portland and slag cement from a 

cement company’s plant or terminal in 

trucks. Because portland and slag 

cement are heavy and relatively cheap 

commodities, transportation costs limit 

the distance customers can 

economically travel to pick up the 

products. The precise scope of the area 

that can be served by a particular plant 

or terminal depends on a number of 

factors, including the density of the 

specific region and local transportation 

costs. 

Due to transportation costs, cement 

markets are local or regional in nature. 

The relevant geographic markets in 

which to analyze the effects of the 

proposed acquisition on portland 

cement competition are (1) the 

Minneapolis-St. Paul, Minnesota area; 

(2) the Duluth, Minnesota area; (3) 

western Wisconsin; (4) eastern Iowa; (5) 

the Memphis, Tennessee area; (6) the 

Baton Rouge, Louisiana area; (7) the 

New Orleans, Louisiana area; (8) the 

Detroit, Michigan area; (9) northern 

Michigan; (10) the Grand Rapids, 

Michigan area; (11) western Montana; 

and (12) the Boston, Massachusetts/

Providence, Rhode Island area. The 

proper geographic markets in which to 

analyze the effects of the proposed 

transaction on slag cement are (1) the 

Mid-Atlantic region and (2) the western 

Great Lakes region. 

The relevant markets for portland 

cement and slag cement are already 

highly concentrated. For each of the 

relevant markets, the parties are either 

the only suppliers in the market, two of 

only three suppliers, or two of only four 

suppliers. 

Entry 

Entry into the relevant portland 

cement and slag cement markets would 

not be timely, likely, or sufficient in 

magnitude, character, and scope to deter 

or counteract the anticompetitive effects 

of the proposed transaction. The cost to 

construct a new portland cement plant 

of sufficient size to be competitive 

would likely cost over $300 million and 

take more than five years to permit, 

design, and construct while the 

expansion of an existing facility would 

likely cost hundreds of millions of 

dollars and take four or more years to 

complete. Building competitive cement 

distribution terminals is also difficult 

and time consuming. It can take more 

than two years to obtain the necessary 

permits and complete construction of a 

competitive terminal in the relevant 

markets. New entrants into slag cement 

markets face the additional hurdle of 

having to obtain a cost-effective source 

for the raw material. There are few 

domestic sources for granulated blast 

furnace slag because there are a limited 

number of active blast furnaces in the 

United States. Given the difficulties of 

entry, it is unlikely that any new entry 

could be accomplished in a timely 

manner in the relevant markets to defeat 

a likely price increase caused by the 

proposed acquisition. 

Effects of the Acquisition 

Unless remedied, the proposed 

merger would likely result in 

competitive harm in each of the relevant 

portland and slag cement markets. The 

merger would eliminate substantial 

head-to-head competition between the 

parties in each of these markets and 

significantly increase market 

concentration. For many customers in 

these markets, the merger would 

combine the two closest competitors for 

their business, leaving the merged entity 

with the power to increase prices to 

these customers unilaterally. Further, 

because the merger would reduce the 

number of significant competitors to, at 

most, two or three in the relevant 

markets, it would enhance the 

likelihood of collusion or coordinated 

action between the remaining 

competitors by reducing impediments to 

reaching common terms of coordination 

and making it easier to monitor and 

retaliate against potential deviation from 

a coordinated scheme. 

The Consent Agreement 

The proposed Consent Agreement 

eliminates the competitive concerns 

raised by Holcim’s proposed acquisition 

of Lafarge by requiring the parties to 

divest assets in each relevant market. 

Lafarge is required to divest a cement 

plant in Buffalo, Iowa and a network of 

distribution terminals along the 

Mississippi River in Louisiana, 

Tennessee, Wisconsin, and Minnesota 

to Continental. Continental, in turn, will 

sell its cement terminal located in 

Bettendorf, Iowa to Lafarge in order to 

eliminate the competitive overlap that 

would otherwise be created by its 

acquisition of Lafarge’s Davenport 

cement plant. Because Lafarge will be 

mstockstill on DSK4VPTVN1PROD with NOTICES

27964 Federal Register / Vol. 80, No. 94 / Friday, May 15, 2015 / Notices 

1Chairwoman Ramirez, Commissioner Brill, 

Commissioner Ohlhausen, and Commissioner 

McSweeny join in this statement. 

2See 2010 Horizontal Merger Guidelines § 5.3. 

The threshold at which a market is considered 

‘‘highly concentrated’’ under the Guidelines is 

2,500. 

3 Id. 

able to supply the Bettendorf terminal at 

a comparable or lower cost than 

Continental, the transactions 

contemplated in the Consent Agreement 

will maintain the competitive status quo 

in the eastern Iowa market. Holcim is 

required to divest distribution terminals 

in Illinois and Michigan to Buzzi. 

Holcim is further required to divest a 

terminal in Massachusetts and a slag 

plant in New Jersey to Essroc and a slag 

plant in Illinois to Eagle. Each of the 

identified buyers possesses the 

experience and capability to become 

significant competitors in the relevant 

markets. The parties must accomplish 

the divestitures to these buyers within 

ten days after the proposed acquisition 

is accomplished. 

The Commission’s goal in evaluating 

possible purchasers of divested assets is 

to maintain the competitive 

environment that existed prior to the 

proposed acquisition. If the Commission 

determines that any of the identified 

buyers is not an acceptable acquirer, the 

proposed Order requires the parties to 

divest the assets to a Commissionapproved acquirer within 90 days of the 

Commission notifying the parties that 

the proposed acquirer is not acceptable. 

If the Commission determines that the 

manner in which any divestiture was 

accomplished is not acceptable, the 

Commission may direct the parties, or 

appoint a divestiture trustee, to effect 

such modifications as may be necessary 

to satisfy the requirements of the Order. 

Finally, the proposed Consent 

Agreement requires Holcim to divest to 

a buyer or buyers approved by the 

Commission (1) a cement plant in 

Trident, Montana and two distribution 

terminals in Alberta, Canada (the 

‘‘Trident Assets’’), and (2) a cement 

plant in Mississauga, Ontario and 

cement terminals in Minnesota, 

Michigan, Ohio, and New York (the 

‘‘Great Lakes Assets’’). The divestiture 

of the Trident plant would eliminate the 

proposed merger’s potential 

anticompetitive impact on purchasers of 

portland cement located in western 

Montana. The two Alberta terminals 

distribute cement produced at the 

Trident plant and are included in the 

Consent Agreement in order to preserve 

the viability and marketability of the 

Trident Assets. Holcim’s Mississauga 

plant supplies portland cement into the 

United States both directly and via 

terminals located in Duluth; Detroit; 

Dundee, Michigan; Cleveland, Ohio; 

and Buffalo, New York. The divestiture 

of the Great Lakes Assets would remedy 

the proposed merger’s anticompetitive 

effects in the Duluth and Detroit areas. 

The Cleveland and Buffalo terminals are 

included in the Consent Agreement in 

order to preserve the viability and 

marketability of the Great Lakes Assets. 

The Trident Assets and Great Lakes 

Assets are also part of a larger group of 

Holcim assets located in Canada that the 

Respondents have agreed to divest in 

order to resolve competitive concerns 

raised by the Canadian Competition 

Bureau (‘‘CCB’’). Commission staff 

worked cooperatively with staff from 

the CCB to ensure that our respective 

proposed remedies would be consistent 

and effective. 

The proposed Order provides that 

Holcim must find a buyer (or buyers) for 

the Trident Assets and the Great Lakes 

Assets, at no minimum price, that is 

acceptable to the Commission, no later 

than 120 days from the date on which 

the parties consummate the proposed 

acquisition. The Consent Agreement 

also contains an Order to Hold Separate 

and Maintain Assets, which will serve 

to ensure that these assets are held 

separate and operated independently 

from the merged company and protect 

the viability, marketability, and 

competitiveness of the divestiture asset 

packages until the assets are divested to 

a buyer or buyers approved by the 

Commission. 

To ensure compliance with the 

proposed Order, the Commission has 

agreed to appoint an Interim Monitor to 

ensure that Holcim and Lafarge comply 

with all of their obligations pursuant to 

the Consent Agreement and to keep the 

Commission informed about the status 

of the transfer of the rights and assets to 

appropriate purchasers. 

The purpose of this analysis is to 

facilitate public comment on the 

Consent Agreement, and it is not 

intended to constitute an official 

interpretation of the proposed Decision 

and Order or to modify its terms in any 

way. 

By direction of the Commission, 

Commissioner Wright dissenting. 

Donald S. Clark, 

Secretary. 

Statement of the Federal Trade 

Commission in the Matter of Holcim 

Ltd. and Lafarge S.A. 

The Federal Trade Commission has 

voted to accept a settlement to resolve 

the likely anticompetitive effects of 

Holcim Ltd.’s (‘‘Holcim’’) proposed $25 

billion acquisition of Lafarge S.A. 

(‘‘Lafarge’’). We have reason to believe 

that, absent a remedy, the proposed 

acquisition is likely to substantially 

reduce competition in the manufacture 

and sale of portland cement and slag 

cement. As we explain below, we 

believe the proposed remedy, tailored to 

counteract the likely anticompetitive 

effects of the proposed acquisition 

without eliminating any efficiencies that 

might arise from the combination of the 

two companies, is in the public 

interest.1

Holcim is a Switzerland-based, 

vertically integrated global building 

materials company, with products that 

include cement, clinker, concrete, lime, 

and aggregates. Lafarge is a Francebased, vertically integrated global 

building materials company that 

primarily produces and sells cement, 

aggregates, and ready-mix concrete. 

The merged company will be the 

world’s largest cement manufacturer, 

with combined 2014 revenues of 

approximately $35 billion and 

operations in more than 90 countries. 

Our competitive concerns pertain to 

specific geographic markets in the 

United States where Holcim and Lafarge 

each make significant cement sales. The 

proposed merger would likely harm 

competition for the distribution and sale 

of portland cement, an essential 

ingredient in making concrete, in 12 

local or regional markets. It would also 

threaten to lessen competition for the 

distribution and sale of slag cement, a 

specialty cement product used in 

certain applications, in two other 

regional markets. 

The merger would create a merger to 

monopoly in some of the challenged 

relevant markets, while in others at 

most three competitors would remain 

post-merger. Absent a remedy, the 

Herfindahl-Hirschman Index (‘‘HHI’’) in 

each of these markets would exceed 

3,400, making every market highly 

concentrated according to the 2010 

Horizontal Merger Guidelines.2 The 

increase in HHI in each market would 

exceed 900, well above the 200-point 

change necessary to trigger the 

Guidelines’ presumption that the merger 

is ‘‘likely to enhance market power.’’ 3

There is no evidence rebutting this 

presumption. If anything, the evidence 

suggests that the estimates of market 

concentration understate our concerns. 

In each of the relevant markets at 

issue, there is evidence that unilateral 

anticompetitive effects are likely. 

Substantial evidence demonstrates that, 

for many customers in the relevant 

areas, the merging firms are their 

preferred suppliers and that customers 

have benefitted from substantial headto-head competition between the parties 

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Federal Register / Vol. 80, No. 94 / Friday, May 15, 2015 / Notices 27965 

4 Id. § 6.2. 

5For instance, ready-mix concrete producers are 

often unwilling to purchase cement from their 

rivals. 

6See, e.g., Press Release, European Commission, 

The Court of Justice Upholds in Substance the 

Judgment Delivered by the Court of First Instance 

in 2000 Concerning the Cement Cartel, Jan. 7, 2004, 

available at http://europa.eu/rapid/press-release_

CJE–04–2_en.htm (announcing fines of EUR 100 

million on cement suppliers for collusion); Press 

Release, German Federal Cartel Office, Highest fine 

in Bundeskartellamt History is Final, April 10, 

2013, available at http://www.bundeskartellamt.de/ 

SharedDocs/Meldung/EN/Pressemitteilungen/2013/

10_04_2013_BGH-Zement.html (announcing fines 

of EUR 380 million on Lafarge, Holcim, and others 

for collusion); Philip Blenkinsop, Belgian 

Competition Regulator Fines Cement Groups, Aug. 

31, 2013, available at http://www.reuters.com/

article/2013/08/31/belgium-cementidUSL6N0GW05U20130831 (reporting EUR 14.7 

million in fines levied by the Belgian Competition 

Council on Holcim and others for collusion); Press 

Release, Polish Office of Competition and 

Consumer Protection, UOKiK Breaks Cement Cartel, 

Dec. 12, 2013, available at https://uokik.gov.pl/

news.php?news_id=10754&news_page=1 

(announcing decision of Poland’s Court of 

Competition and Consumer Protection to impose 

fines of PLN 339 million (∼$93 million) on cement 

suppliers for collusion involving Lafarge and 

others); see generally Merger Guidelines § 7.2. 

7See Merger Guidelines § 7.1. 

8 Id. § 2.1.3 (‘‘Mergers that cause a significant 

increase in concentration and result in highly 

concentrated markets are presumed to be likely to 

enhance market power, but this presumption can be 

rebutted by persuasive evidence showing that the 

merger is unlikely to enhance market power.’’). See 

also Carl Shapiro, The 2010 Horizontal Merger 

Guidelines: From Hedgehog to Fox in Forty Years, 

77 Antitrust L.J. 701, 708 (2010) (explaining that the 

Guidelines’ flexible approach ‘‘certainly does not 

mean that they reject the use of market 

concentration to predict competitive effects, as can 

be seen in Sections 2.1.3 and 5,’’ that the Guidelines 

‘‘recognize that levels and changes in market 

concentration are more probative in some cases 

than others,’’ and that ‘‘the Agencies place 

considerable weight on HHI measures in cases 

involving coordinated effects’’) (emphasis in 

original). 

9See, e.g., Steven C. Salop, The Evolution and 

Vitality of Merger Presumptions: A DecisionTheoretic Approach 11 (Georgetown Law Faculty 

Publications and Other Works, Working Paper No. 

1304, 2014), available at http://scholarship.law.

georgetown.edu/facpub/1304 (‘‘[V]arious theories of 

oligopoly conduct—both static and dynamic models 

of firm interaction—are consistent with the view 

that competition with fewer significant firms on 

average is associated with higher prices. . . . 

Accordingly, a horizontal merger reducing the 

number of rivals from four to three, or three to two, 

would be more likely to raise competitive concerns 

than one reducing the number from ten to nine, 

ceteris paribus.’’); Steffen Huck, et al., Two Are Few 

and Four Are Many: Number Effects from 

Experimental Oligopolies, 53 J. Econ. Behavior & 

Org. 435, 443 (2004) (testing the frequency of 

collusive outcomes in Cournot oligopolies and 

finding ‘‘clear evidence that there is a qualitative 

difference between two and four or more firms’’); 

Timothy F. Bresnahan & Peter C. Reiss, Entry and 

Competition in Concentrated Markets, 99 J. Pol. 

Econ. 977, 1006 (1991) (finding, in a study of tire 

prices, that ‘‘[m]arkets with three or more dealers 

have lower prices than monopolists or duopolists,’’ 

and noting that, ‘‘while prices level off between 

three and five dealers, they are higher than 

unconcentrated market prices’’). 

10See Merger Guidelines § 2.1.3; Chicago Bridge 

& Iron Co. v. FTC, 534 F.3d 410, 423 (5th Cir. 2008) 

(‘‘Typically, the Government establishes a prima 

facie case by showing that the transaction in 

question will significantly increase market 

concentration, thereby creating a presumption that 

the transaction is likely to substantially lessen 

competition.’’); FTC v. H.J. Heinz Co., 246 F.3d 708, 

716 (D.C. Cir. 2001) (merger to duopoly creates a 

rebuttable presumption of anticompetitive harm 

through direct or tacit coordination). 

in negotiating prices for portland and 

slag cement. Customers in every single 

one of the affected markets expressed 

concern that their inability to play the 

merging parties off each other would 

diminish their ability to obtain better 

prices or other favorable terms. As the 

Guidelines note, a combination of two 

competing sellers ‘‘can significantly 

enhance the ability and incentive of the 

merged entity to obtain a result more 

favorable to it, and less favorable to the 

buyer, than the merging firms would 

have offered separately absent the 

merger.’’ 4 In addition, the evidence 

demonstrates that not all of the 

remaining suppliers in the relevant 

markets provide customers with 

practical alternatives to the merging 

parties for a variety of reasons, 

including capacity constraints, lack of 

distribution assets to supply new 

customers, and downstream vertical 

integration.5

The evidence also suggests that the 

proposed acquisition would increase the 

ability and incentives of the combined 

firm and other market participants to 

engage in coordinated behavior that 

would result in harm to consumers. The 

relevant markets have characteristics 

that make them susceptible to 

coordination. They are highly 

concentrated; the products are 

homogeneous; overall market elasticity 

is low; customer switching costs are 

low; and sales are relatively small, 

frequent, and usually not made 

pursuant to long-term contracts. There 

is also a high degree of transparency in 

these markets. Competitors are aware of 

each other’s production capacities, 

costs, sales volumes, prices, and 

customers. Our concern about the 

potential for coordinated effects in these 

markets is heightened by evidence that 

cement suppliers, including the same 

global firms that compete in these 

markets, have expressly colluded in 

other geographic markets with similar 

characteristics.6 By reducing the 

number of significant competitors to 

only two or three, the proposed merger 

would make it easier for the remaining 

firms to coordinate, monitor compliance 

with, and retaliate against potential 

deviation from, a coordinated scheme. 

We therefore have reason to believe that 

the merger may enhance the 

vulnerability to coordinated effects that 

already exists in the relevant markets.7

In his dissent, Commissioner Wright 

takes issue with our decision to seek a 

remedy in six markets, going to great 

lengths to argue that we are improperly 

relying solely on the increase in market 

concentration to justify our action, that 

we are creating new presumptions of 

harm, that we lack a ‘‘credible basis’’ on 

which to conclude that the merger may 

enhance the vulnerability of the relevant 

markets to coordination, and that our 

action is otherwise inconsistent with the 

Guidelines. We respectfully disagree 

with Commissioner Wright’s various 

characterizations of the Commission’s 

statement in this matter. The Guidelines 

make clear that a substantial increase in 

concentration caused by a merger 

continues to be a significant factor in 

merger analysis because highly 

concentrated markets with only two or 

three large firms are more likely to lead 

to anticompetitive outcomes.8 Economic 

theory and empirical research bear this 

out.9 As a result, we view the evidence 

in a merger that reduces the number of 

firms in a relevant market to two or 

three differently from a merger that only 

reduces the number of firms to six or 

seven. Where, as here, a proposed 

merger significantly increases 

concentration in an already highly 

concentrated market, a presumption of 

competitive harm is justified under both 

the Guidelines and well-established 

case law.10

Moreover, despite Commissioner 

Wright’s assertion to the contrary, our 

investigation went beyond 

consideration of market concentration 

and application of the Guidelines 

presumption of competitive harm and, 

as noted above, produced additional 

evidence supporting our belief that the 

effect of the proposed acquisition would 

be to substantially lessen competition 

and harm cement customers in the 

relevant markets. On coordinated 

effects, we found numerous 

characteristics of the market making it 

vulnerable to collusion. It is particularly 

troubling that existing cement suppliers 

have expressly colluded in other 

geographic markets with similar 

characteristics. We also examined 

whether other market factors, such as 

the possibility of entry or expansion, 

might alleviate our competitive 

concerns. The evidence demonstrates 

the presence of high barriers to entry for 

both portland cement and slag cement, 

including significant capital costs and 

regulatory requirements. Entry sufficient 

to deter or counteract the likely harm 

from the proposed transaction would 

thus be neither timely nor likely. 

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1As I explain below, I concur with the 

Commission as to the Twin Cities, Duluth, western 

Wisconsin, New Orleans, western Montana, Boston/ 

Providence, the Mid-Atlantic region, and the 

western Great Lakes region; I dissent with the 

Commission as to eastern Iowa, Memphis, Baton 

Rouge, Detroit, northern Michigan, and Grand 

Rapids. 

2See Analysis of Agreement Containing Consent 

Orders to Aid Public Comment 3, Holcim Ltd., FTC 

File No. 141–0129 (May 4, 2015) (‘‘For many 

customers in these markets, the merger would . . . 

leav[e] the merged entity with the power to increase 

prices . . . unilaterally. Further, . . . it would 

enhance the likelihood of collusion or coordinated 

action between the remaining competitors.’’). 

3 Id. at 3. 

4 Id. at 3 n.9. 

5Timothy F. Bresnahan & Peter C. Reiss, Entry 

and Competition in Concentrated Markets, 99 J. Pol. 

Econ. 977 (1991). While Bresnahan and Reiss is an 

important early contribution to the static entry 

literature, it cannot possibly bear the burden the 

Commission wishes to place upon it. Abstracting 

from the complexities of market definition was 

necessary for the researchers to isolate entry 

decisions. This is possible when studying the 

effects of entry by a second dentist in a town with 

a population of less than 1,000, but not in most realworld antitrust applications. The authors of the 

study make this point themselves, noting that 

‘‘whether this pattern appears in other industries 

remains an open question.’’ Id. at 1007. 

6 In earlier research using similar empirical 

techniques and data—namely, small rural 

markets—Bresnahan and Reiss plainly reject the 

notion that the findings should inform views of 

market structure and competition generally: ‘‘We do 

not believe that these markets ‘stand in’ for highly 

concentrated industries in the sectors of the 

economy where competition is national or global.’’ 

Timothy F. Bresnahan & Peter C. Reiss, Do Entry 

Conditions Vary Across Markets, 3 Brookings 

Papers Econ. Activity 833, 868 (1987). 

7Steffen Huck et al., Two Are Few and Four Are 

Many: Number Effects from Experimental 

Oligopolies, 53 J. Econ. Behavior & Org. 435 (2004). 

8 Id. at 436 (‘‘The number of firms is not the only 

factor affecting competition in experimental 

markets. This implies that there exists no unique 

number of firms that determines a definite 

borderline between non-cooperative and collusive 

markets irrespective of all institutional and 

structural details of the experimental markets.’’). 

9Steven C. Salop, The Evolution and Vitality of 

Merger Presumptions: A Decision-Theoretic 

Approach (Georgetown Law Faculty Publications 

and Other Works, Working Paper No. 1304, 2014), 

available at http://scholarship.law.georgetown.edu/ 

facpub/1304/. 

In the face of our competitive 

concerns, based on what we had learned 

about the nature and conditions of the 

relevant markets, the parties proposed 

divestitures to remedy our concerns in 

each of those markets. The parties did 

not comply with our Second Requests. 

While continued investigation may have 

produced more evidentiary support for 

our complaint, including those markets 

for which Commissioner Wright 

dissents, we do not think such a course 

would have been justified. We have 

ample evidence to support our 

allegations of anticompetitive harm and 

had no reason to burden the parties with 

the expense and delay of further inquiry 

for the sole purpose of obtaining 

additional, cumulative evidence. Nor 

would further inquiry have been a good 

use of Commission resources. 

Merger analysis is necessarily 

predictive. The evidence in this case 

provides us with sufficient reason to 

believe that the proposed acquisition is 

likely to substantially reduce 

competition, and there is no evidence of 

countervailing efficiencies that weigh 

against the remedy. We believe that the 

public interest is best served by 

remedying the competitive concerns as 

set forth in our proposed consent order. 

Statement of Commissioner Joshua D. 

Wright, Dissenting in Part and 

Concurring in Part In the Matter of 

Holcim Ltd. and Lafarge S.A. 

The Commission has voted to issue a 

Complaint and a Decision & Order 

against Holcim Ltd. (‘‘Holcim’’) and 

Lafarge S.A. (‘‘Lafarge’’) to remedy the 

allegedly anticompetitive effects of the 

proposed merger of the two companies. 

I dissent in part from and concur in part 

with the Commission’s decision because 

the evidence is insufficient to provide a 

reason to believe the proposed 

transaction is likely to substantially 

lessen competition, in violation of 

Section 7 of the Clayton Act, in several 

of the portland cement markets 

identified in the Complaint.1

The Commission articulates 

coordinated effects and unilateral effects 

theories of harm arising from the 

proposed transaction in all of the 

fourteen relevant geographic markets 

defined in the Complaint (the ‘‘Relevant 

Markets’’).2 Additionally, and 

untethered to these two theories of harm 

articulated in the 2010 Horizontal 

Merger Guidelines (‘‘Merger 

Guidelines’’), the Commission asserts 

that mergers, such as the proposed 

transaction, that reduce the number of 

competitors to three or fewer are likely 

to harm competition. The Commission’s 

structural presumption is economically 

unfounded and inappropriate in the vast 

majority of Relevant Markets. 

Furthermore, there is insufficient 

evidence to support a coordinated 

effects theory in any Relevant Market 

and insufficient evidence to support a 

unilateral effects theory in several of the 

Relevant Markets. 

In those markets in which I conclude 

the record evidence supports neither a 

coordinated nor a unilateral effects 

theory, the Commission relies upon 

little more than the change in market 

structure to support each of its 

allegations. Without particularized 

evidence substantiating a unilateral 

effects or coordinated effects theory of 

harm arising from the proposed 

transaction, a structural theory alone 

cannot provide a sufficient basis to 

establish reason to believe a transaction 

violates the Clayton Act. It follows, in 

my view, that the Commission should 

refrain from imposing a remedy in the 

markets for which the evidence is 

insufficient to support either a 

coordinated effects theory or a unilateral 

effects theory. 

I. The Commission’s Structural Theory 

and Presumption Are Unsupported by 

Economic Evidence 

The Commission argues mergers that 

reduce the number of competitors in a 

relevant market to three or two are 

unique in the sense that they warrant a 

presumption of competitive harm and 

illegality,3 but it cannot defend its 

structural presumption upon the basis 

of economic evidence or accumulated 

empirical knowledge. 

The Commission cites in support of 

its structural theory and presumption 

three academic articles written by 

economists.4 Only two offer economic 

evidence, and the proffered 

substantiation fails to support the claim. 

The first is an important early entrant 

into the static entry literature examining 

the relationship between market size 

and the number of entrants in a market, 

focusing upon isolated rural markets.5 It 

strains credulity to argue that Bresnahan 

and Reiss’s important analysis of the 

impact of entry in markets involving 

doctors, dentists, druggists, plumbers, 

and tire dealers in local and isolated 

areas, where they find the competitive 

benefits of a second competitor are 

especially important, apply with 

generality sufficient to support a widely 

applicable presumption of harm based 

upon the number of firms. Indeed, the 

authors warn against precisely this 

interpretation of their work.6

The second article is a laboratory 

experiment and does not involve the 

behavior of actual firms and certainly 

cannot provide sufficient economic 

evidence to support a presumption that 

four-to-three and three-to-two mergers 

in real-world markets will result in 

anticompetitive coordination.7 Once 

again, the authors warn against such an 

interpretation.8

Finally, the Commission cites a draft 

article, authored by Steve Salop, in 

support of its view that economic 

evidence supports a presumption that 

four-to-three and three-to-two mergers 

are competitively suspect.9 The article 

does not purport to study or provide 

new economic evidence on the 

relationship between market structure 

and competition. Thus, it cannot 

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10Nevertheless, to the extent Salop argues in 

favor of legal presumptions in merger analysis, he 

clarifies that they ‘‘obviously should be based on 

valid economic analysis, that is, proper economic 

presumptions,’’ which should be updated ‘‘based 

on new or additional economic factors besides 

market shares and concentration.’’ Id. at 37, 48. I 

agree. Additionally, Salop explains that 

‘‘[c]ontemporary economic learning suggests that 

concentration be considered when undertaking 

competitive effects analysis—in conjunction with 

other factors suggested by the competitive effects 

theory—but not treated as the sole determinant of 

post-merger pricing.’’ Id. at 13–14. Notably, Salop 

does not endorse a distinction between four-to-three 

mergers or three-to-two mergers and mergers in less 

concentrated markets that justifies a presumption 

that the former are anticompetitive; rather, he 

merely observes that empirical evidence and 

economic theory do not warrant ‘‘ignoring market 

shares and concentration in merger analysis.’’ Id. at 

12 (emphasis in original). 

11See Carl Shapiro, The 2010 Horizontal Merger 

Guidelines: From Hedgehog to Fox in Forty Years, 

77 Antitrust L.J. 701, 707–08 (2010) (acknowledging 

the role of market concentration in the analysis 

endorsed in the Merger Guidelines and observing 

that they place less weight upon market 

concentration and market shares, instead 

emphasizing the importance of direct evidence of 

changes in post-merger incentives to compete and 

competitive effects). To the extent the Commission 

relies upon Shapiro’s caveat that ‘‘changes in 

market concentration are more probative in some 

cases than others,’’ Statement of the Federal Trade 

Commission 3 n.8, Holcim Ltd., FTC File No. 141– 

0129 (May 8, 2015), they fail to explain why, nor 

have I been provided any evidence attempting to 

establish that, markets for portland or slag concrete 

fit within the subset of cases for which it has been 

established that there is a reliable a relationship 

between market structure and competition. I do not 

quarrel with the notion that such markets exist. We 

identify them over time using economic analysis, 

empirical evidence, and accumulated learning. For 

example, substantial research has identified 

empirical regularities in the relationship between 

structure and price in generic pharmaceutical 

markets. See David Reiffen & Michael R. Ward, 

Generic Drug Industry Dynamics, 87 Rev. Econ. & 

Stat. 37 (2005). 

12Comments of the ABA Section of Antitrust Law 

on the Horizontal Merger Guidelines Revision 

Project (June 4, 2010), available at https://

www.ftc.gov/sites/default/files/documents/public_

comments/horizontal-merger-guidelines-reviewproject-proposed-new-horizontal-merger-guidelines548050-00026/548050-00026.pdf (urging the 

agencies to ‘‘remove the presumption of illegality 

keyed to the level and increase in the HHI’’ because 

‘‘[t]he presumption does not reflect how the 

Agencies conduct investigations [and] is not 

theoretically warranted’’). 

13U.S. Dep’t of Justice & Fed. Trade Comm’n, 

Horizontal Merger Guidelines § 7.1 (2010) 

[hereinafter Merger Guidelines]. 

14 Id. §§ 4, 5.3. 

15Statement of the Federal Trade Commission, 

supra note 11, at 3 (citing Chicago Bridge & Iron 

Co. v. FTC, 534 F.3d 410, 423 (5th Cir. 2008) and 

FTC v. H.J. Heinz Co., 246 F.3d 708, 716 (D.C. Cir. 

2001)). 

16For example, well-established case law 

endorses the economic proposition that mergers 

that result in post-merger shares of greater than 

30% are likely to harm competition, United States 

v. Philadelphia Nat’l Bank, 374 U.S. 321, 364–65 

(1963), and that mergers resulting in post-merger 

shares of less than 10% harm competition when 

coupled with a trend toward concentration, United 

States v. Von’s Grocery Co., 384 U.S. 270 (1966); 

United States v. Pabst Brewing Co., 384 U.S. 546 

(1966). 

17Merger Guidelines, supra note 13, § 7.1; see 

also Dissenting Statement of Commissioner Joshua 

D. Wright 3, Fidelity National Financial, Inc., FTC 

File No. 131–0159 (Dec. 23, 2013) [hereinafter 

Wright, Fidelity Dissent]. 

18Merger Guidelines, supra note 13, § 7.1. 

support the Commission’s 

proposition.10

There is simply no empirical 

economic evidence sufficient to warrant 

a presumption that anticompetitive 

coordination is likely to result from 

four-to-three or three-to-two mergers. 

Indeed, such a presumption would be 

inconsistent with modern economic 

theory and the analysis endorsed by the 

Merger Guidelines, which deemphasize 

inferences of competitive harm arising 

from market structure in favor of greater 

reliance upon particularized evidence of 

changes in post-merger incentives to 

compete.11

To the contrary, this approach is 

inconsistent with Agency practice and 

the letter and spirit of the more 

economically sophisticated approach 

adopted in the Merger Guidelines.12

Section 2.1.3 of the Merger Guidelines 

does, as the Commission observes, state 

that ‘‘mergers that cause a significant 

increase in concentration and result in 

highly concentrated markets are 

presumed to be likely to enhance market 

power.’’ 13 The Merger Guidelines insure 

against reverting to naked structural 

analysis by making clear that the role of 

market shares and market concentration 

is ‘‘not an end in itself,’’ but rather ‘‘one 

useful indicator of likely 

anticompetitive effects,’’ and that 

market concentration is not to be used 

to ‘‘provide a rigid screen to separate 

competitively benign mergers from 

anticompetitive ones,’’ but rather to 

provide one way to distinguish 

competitively benign mergers from 

those that warrant closer scrutiny.14 To 

the extent these passages evince an 

ambiguity in the Merger Guidelines with 

respect to the minimum evidentiary 

burden that must be satisfied to support 

a merger challenge, the Commission 

should embrace the interpretation more 

consistent with a modern economic 

approach rather than with the obsolete 

and discredited structural analysis of a 

prior era. 

Rather than relying upon economic 

evidence to defend the Commission’s 

structural presumption, the Commission 

highlights case law supporting a 

presumption of illegality for mergers to 

duopoly or that substantially increase 

concentration.15 As a preliminary 

matter, case law that endorses a wholly 

structural approach to merger analysis— 

an approach clearly rejected by the 

Merger Guidelines—does not constitute 

relevant economic evidence. Judicial 

opinions adopting this approach are 

orthogonal to the proposition in need of 

economic substantiation: that mergers 

resulting in three- or two-firm markets 

are likely to result in coordination. 

Indeed, one can find a variety of 

economically dubious propositions 

adopted in antitrust case law blessed by 

no less a legal authority than the 

Supreme Court.16 But courts’ 

observations about the relationship 

between market structure and 

competition are not relevant to the 

Commission’s adoption of a structural 

presumption in this case. 

I therefore find any reliance upon 

structural changes alone to be 

economically untenable and insufficient 

to give me reason to believe the 

proposed transaction will violate 

Section 7 in the vast majority of 

Relevant Markets. 

II. Coordinated Effects Are Unlikely in 

Any Relevant Market 

The Merger Guidelines describe the 

conditions under which the antitrust 

agencies will challenge a proposed 

merger on the basis that it is likely to 

result in anticompetitive coordination. 

Specifically, the Merger Guidelines 

articulate three necessary conditions 

that must each be satisfied to support a 

coordinated effects theory: (1) A 

significant increase in concentration, 

leading to a moderately or highly 

concentrated market, (2) a market 

vulnerable to coordinated conduct, and 

(3) a credible basis for concluding the 

transaction will enhance that 

vulnerability.17 Thus, the Merger 

Guidelines establish clearly that a 

highly concentrated market that is 

already vulnerable to coordinated 

conduct is necessary but not sufficient 

to support a coordinated effects theory. 

Critically, the Commission must also 

have evidence sufficient to provide a 

credible basis to conclude the 

transaction will enhance the market’s 

vulnerability to coordinated conduct. 

Such evidence must evince a change in 

the post-merger competitive market 

dynamics and, in particular, postmerger incentives to engage in 

coordinated pricing. The Merger 

Guidelines provide the elimination of a 

maverick firm as an illustrative example 

of the type of evidence that would 

satisfy the third condition and warrant 

a presumption of adverse coordinated 

effects.18 Importantly, the Merger 

Guidelines explain evidence that a 

merger will eliminate a maverick is 

given weight precisely because it 

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19 Id. § 2.1.5. 

20See Analysis of Agreement Containing Consent 

Orders to Aid Public Comment, supra note 2, at 2. 

21See Statement of the Federal Trade 

Commission, supra note 11, at 2 (describing the 

characteristics of the Relevant Markets that render 

them vulnerable to coordination). 

22 Id. at 2. 

23Merger Guidelines, supra note 13, § 7.1. 

24See Statement of the Federal Trade 

Commission, supra note 11, at 2 (taking the view 

that a reduction of competitors to three or two firms 

in the relevant market justify a presumption of 

competitive harm). 

25 Id. at 2. 

26Wright, Fidelity Dissent, supra note 17, at 3. 

27 Janusz A. Ordover, Coordinated Effects, in 2 

Issues in Competition Law and Policy 1359, 1367 

(ABA Section of Antitrust Law 2008) (‘‘It is quite 

clear . . . that a reduction in the number of firms 

and concomitant increases in concentration do not 

necessarily make collusion inevitable or even more 

likely, stable, or complete.’’). 

28Merger Guidelines, supra note 13, § 6. 

29See Shapiro, supra note 11, Part III (explaining 

the Merger Guidelines’ unilateral effects analysis, 

the types of evidence that support such analysis, 

and the relative analytical weakness of inferences 

of competitive harm drawn from changes in market 

structure). 

changes post-merger incentives to 

coordinate.19

The first and second elements of the 

Merger Guidelines’ coordinated effects 

analysis are not at issue in this case. The 

Commission’s investigation revealed 

evidence supporting a conclusion that 

the Relevant Markets are already highly 

concentrated and the proposed 

transaction will increase 

concentration.20 Furthermore, the 

evidence supports a conclusion that the 

markets are vulnerable to coordinated 

conduct.21 Nevertheless, the 

investigation failed to uncover any 

evidence to suggest the proposed 

transaction will increase post-merger 

incentives to coordinate—that is, there 

is no record evidence to provide a 

credible basis to conclude the merger 

alters the competitive dynamic in any 

Relevant Market in a manner that 

enhances its vulnerability to 

coordinated conduct. 

The Commission asserts that the facts 

that the market is highly concentrated, 

that it is vulnerable to coordination, and 

that the merger reduces ‘‘the number of 

significant competitors to only two or 

three’’ 22 jointly satisfy the third 

necessary element that ‘‘the Agencies 

have a credible basis on which to 

conclude that the merger may enhance 

that vulnerability.’’23 The Commission’s 

analysis can be read in one of two ways. 

Each is tantamount to the application of 

a structural presumption for 

coordinated effects claims involving 

markets with three or two firms, each is 

problematic because it adopts an 

outdated and obsolete structural 

approach to coordinated effects, and 

each is in significant tension with the 

economic approach to coordinated 

effects embodied in the Merger 

Guidelines. 

The first interpretation is that the 

satisfaction of the first and second 

elements of the Merger Guidelines 

analysis—and particularly the 

demonstration that the merger 

significantly increases concentration in 

an already concentrated market—is 

sufficient to simultaneously satisfy the 

third element that the merger enhance 

post-merger incentives to coordinate. 

This interpretation renders the third 

element of Section 7.1 entirely 

superfluous. The more logical 

explanation of the third element is that 

a crucial, additional type of information 

is required to illuminate how the merger 

changes the merged firm’s incentives to 

coordinate. The Commission’s 

application completely overlooks the 

economic relevance of the third 

element. 

The second plausible interpretation of 

the Commission’s analysis is that the 

reduction in the number of competitors 

in a market is itself sufficient evidence 

to provide a credible basis that a merger 

will enhance a market’s vulnerability to 

coordination and thus satisfy the third 

element of the Merger Guidelines’ 

coordinated effects analysis. Under this 

reading, the Commission relies upon the 

fact that the proposed transaction 

reduces the number of competitors in 

each Relevant Market by one firm, either 

from four to three or from three to two.24

For example, the Majority Statement 

asserts that the proposed transaction 

might enhance the likelihood of 

coordination by ‘‘mak[ing] it easier for 

the remaining firms to coordinate, 

monitor compliance with, and retaliate 

against potential deviation from, a 

coordinated scheme.’’ 25 These are 

generic observations that are true of any 

merger that reduces the number of firms 

in a market; they are not particularized 

to the proposed transaction or to any 

Relevant Market nor do they establish a 

credible basis to conclude that postmerger incentives to coordinate will 

increase. The observation that a market 

with N firms will, after the merger, have 

N–1 firms is simply insufficient without 

more to establish the required credible 

basis. This is true even when a merger 

reduces the number of firms from four 

to three or from three to two. The 

Commission offers no explanation as to 

why the Merger Guidelines would go 

through the trouble of requiring a 

credible basis to believe a merger will 

change the market’s competitive 

dynamics that enhances the market’s 

vulnerability to coordinated conduct, in 

addition to an increase in market 

concentration, in order to substantiate a 

coordinated effects merger challenge if 

the latter were considered sufficient to 

satisfy both elements. 

As I have stated previously, ‘‘there is 

no basis in modern economics to 

conclude with any modicum of 

reliability that increased 

concentration—without more—will 

increase post-merger incentives to 

coordinate.’’ 26 Janusz Ordover, in a 

leading treatment of the economics of 

coordinated effects, similarly explains 

that ‘‘[i]t is now well understood that it 

is not sufficient when gauging the 

likelihood of coordinated effects from a 

merger to simply observe that because 

the merger reduces the number of firms, 

it automatically lessens the coordination 

problem facing the firms and enhances 

their incentives to engage in tacit 

collusion; far from it.’’27 Without 

particularized evidence that the 

proposed transaction will enhance 

incentives to coordinate post-merger, I 

am unable to conclude there is reason 

to believe it is likely to substantially 

lessen competition in violation of 

Section 7. 

III. Unilateral Effects Are Unlikely in 

Some of the Relevant Markets 

The Commission alleges the proposed 

transaction is likely to result in 

unilateral price effects in the Relevant 

Markets. Unilateral effects arise when 

the reduction in direct competition 

between merging firms is sufficient to 

create post-merger market power. The 

Merger Guidelines articulate a variety of 

potential unilateral effects theories, 

including merger to monopoly, merger 

of firms producing very close substitutes 

in a differentiated products market, 

merger of sellers competing in 

bargaining and auction markets, and 

mergers in homogeneous goods markets 

making post-merger output suppression 

strategies more profitable.28 The 

unifying theme of the unilateral effects 

analysis contemplated by the Merger 

Guidelines is that a particularized 

showing that post-merger competitive 

constraints are weakened or eliminated 

by the merger is superior to relying 

solely upon inferences of competitive 

effects drawn from changes in market 

structure.29

The potential unilateral effects 

theories in this case fall broadly within 

one of three categories. The first 

category involves straightforward 

merger-to-monopoly markets. In these 

markets, the theory of harm is that 

Holcim and Lafarge are the only two 

meaningful suppliers for all customers 

in the Relevant Market. The second 

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Federal Register / Vol. 80, No. 94 / Friday, May 15, 2015 / Notices 27969 

30Merger Guidelines, supra note 13, § 6. 

31See Statement of the Federal Trade 

Commission, supra note 11, at 2 n.5. 

32The role of ready-mix customers in the 

competitive analysis is again illustrative. In some 

Relevant Markets the available evidence indicates 

there are some ready-mix customers that purchase 

from rivals and others that do not, but the totality 

of the evidence fails to establish the existence of a 

significant set of customers that view vertically 

integrated suppliers as unacceptable or would 

continue to do so in the face of a post-merger 

unilateral price increase. 

33One other potentially plausible theory is that 

customers refuse to sole source their product, and 

therefore that two or more competitors are 

necessary to prevent post-merger unilateral effects. 

There is insufficient record evidence to indicate 

customers would be unwilling to switch from dualto single-sourced supply in the event of a postmerger price increase. 

category involves markets in which 

Holcim and Lafarge face some 

competition, but the proposed 

transaction will result in a merger to 

monopoly for a substantial subset of 

customers and will allow the merged 

entity to unilaterally increase market 

prices. The third category includes 

markets where the proposed transaction 

will reduce the number of competitors 

in the Relevant Market to three or two, 

and the remaining competitors will be 

unable or unwilling to compete for 

market share—for example, because of 

capacity constraints, leaving the merged 

entity with the ability to unilaterally 

raise prices. Each of these theories 

requires particularized evidence 

sufficient to establish reason to believe 

the proposed transaction violates 

Section 7 of the Clayton Act. I conclude 

the available evidence is sufficient to do 

so in some Relevant Markets and 

insufficient in others. 

Unilateral price effects are ‘‘most 

apparent in a merger to monopoly in a 

relevant market.’’ 30 Basic economic 

theory provides a robust and reliable 

inference that a merger to monopoly or 

near monopoly is likely to result in 

anticompetitive effects. A rational firm 

with little or no competitive constraints 

will set prices or choose output to 

maximize its profits; it can be expected 

that a rational firm acquiring such 

monopoly power will adjust prices and 

output accordingly. No further 

economic evidence is required to 

substantiate an enforcement action 

based upon likely unilateral price 

effects and to establish reason to believe 

a merger to monopoly or near monopoly 

is likely to violate Section 7 of the 

Clayton Act. This analysis applies to at 

least one of the Relevant Markets. 

The analysis is necessarily more 

nuanced for theories falling within the 

second category of theories of unilateral 

price effects. These theories involve 

Relevant Markets where the proposed 

transaction would reduce the number of 

competitors from four to three or three 

to two, and the market share for the 

merged entity would not be large 

enough to infer it would have the power 

to raise market prices unilaterally. In 

these markets, particularized evidence 

is required to establish reason to believe 

the merged firm will gain unilateral 

pricing power. In many Relevant 

Markets, staff was successful in 

uncovering the required evidence. For 

example, in some Relevant Markets, 

there was evidence of a significant 

subset of customers for whom a sole 

market participant would be the only 

remaining acceptable supplier, due 

either to physical proximity or to some 

other preference rendering alternatives 

an unacceptable source of portland or 

slag cement. The Commission’s example 

of ready-mix concrete producers,31 a 

relevant subset of customers, is an 

illustrative example here. In some 

Relevant Markets, the evidence supports 

a finding that such customers would 

continue to find their vertically 

integrated rivals to be an unacceptable 

source of portland cement, even if the 

sole remaining vertically unintegrated 

portland cement producer raised its 

prices after the merger. In the Relevant 

Markets for which credible evidence of 

this type is available, I find it sufficient 

to create reason to believe the merger is 

likely to result in competitive harm. 

Several other Relevant Markets fall into 

this category. 

In other Relevant Markets, the 

allegation that there will remain only 

one acceptable supplier for a significant 

subset of customers after the proposed 

transaction lacks evidentiary support. 

Specifically, in these markets, the 

record evidence does not indicate that a 

material number of customers view 

Holcim and Lafarge as closest supply 

alternatives or that they view other 

potential suppliers as unacceptable 

supply sources and would continue to 

do so in the face of a post-merger 

unilateral price increase.32

The final category of potential 

unilateral effects theories, like the 

second category, also involves Relevant 

Markets where the proposed transaction 

would reduce the number of 

competitors from four to three or three 

to two, but the post-merger market share 

would not be large enough to infer it 

would have the power to raise market 

prices unilaterally. However, unlike the 

second category, in these Relevant 

Markets, it is not customer preference 

that limits the number of available 

competitors to one. Rather, in these 

Relevant Markets, the proposed 

transaction is effectively a merger to 

monopoly or near monopoly because 

alternative suppliers would be 

unwilling or unable to compete with the 

merged entity in the face of a price 

increase. In some Relevant Markets, the 

investigation uncovered particularized 

evidence sufficient to establish a reason 

to believe such unilateral effects are 

likely, including evidence that other 

competitors are experiencing, or soon 

will experience, capacity constraints, 

rendering them unable or unwilling to 

compete for market share, or that other 

suppliers will not constrain the merged 

entity’s prices. Several Relevant Markets 

fall into this third category. 

Relevant Markets where the ‘‘reason 

to believe’’ standard is not satisfied 

lacked record evidence necessary to 

corroborate any of these three 

theories.33 Indeed, with respect to the 

Relevant Markets for which I dissent 

from the Commission’s decision, it is 

my view that the investigation failed to 

adduce particularized evidence to 

elevate the anticipated likelihood of 

competitive effects from ‘‘possible’’ to 

‘‘likely’’ under any of these theories. 

Without this necessary evidence, the 

only remaining factual basis upon 

which the Commission rests its decision 

is the fact that the merger will reduce 

the number of competitors from four to 

three or three to two. This is simply not 

enough evidence to support a reason to 

believe the proposed transaction will 

violate the Clayton Act in these 

Relevant Markets. 

IV. Conclusion 

Prior to entering into a consent 

agreement with the merging parties, the 

Commission must first find reason to 

believe that a merger likely will 

substantially lessen competition under 

Section 7 of the Clayton Act. A 

presumption that such reason to believe 

exists when a merger decreases in the 

number of competitors in a market to 

three or two is misguided. Additionally, 

when the Commission alleges 

coordinated or unilateral effects arising 

from a proposed transaction, this 

standard requires more than a mere 

counting of pre- and post-merger firms. 

In particular, reason to believe a 

proposed transaction is likely to result 

in coordinated effects requires 

evidence—absent from the record 

here—that the merger will enhance a 

market’s vulnerability to coordinated 

pricing, and not just that it takes place 

in a market that is already concentrated. 

In the absence of such a particularized 

showing, the Commission’s approach to 

coordinated effects here reduces to a 

strict structural presumption 

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27970 Federal Register / Vol. 80, No. 94 / Friday, May 15, 2015 / Notices 

unsupported by modern economics and 

at odds with the Merger Guidelines. 

Similarly, substantiating a unilateral 

effects theory requires particularized 

evidence—also absent from the record 

here in some Relevant Markets—that a 

merger will reduce or eliminate 

competitive constraints, permitting the 

merged entity to increase prices. 

Without such evidence, a unilateral 

effects theory reduces to little more than 

a complaint about market structure 

coupled with speculation about the 

circumstances under which unilateral 

effects might occur in a post-merger 

world. The Merger Guidelines 

contemplate a more rigorous analysis. 

This is not to suggest the ‘‘reason to 

believe’’ standard requires access to 

every piece of relevant information and 

a full and complete economic analysis 

of a proposed transaction, regardless of 

whether the parties wish to propose 

divestitures before complying with a 

Second Request. Rather, the standard 

requires only evidence sufficient to 

establish that competitive harm is 

likely. Such evidence, although quite 

minimal—indeed, a handful of facts in 

most instances—is indeed available in 

some Relevant Markets in this matter, 

and it is in those markets that I concur 

with the Commission’s decision. While 

I appreciate the practical complications 

of requesting additional information 

during the course of a merger 

investigation, as well as the desire to 

conduct efficient investigations, these 

important pragmatic considerations do 

not trump the Commission’s primary 

obligation to collect evidence sufficient 

to establish reason to believe the merger 

will harm competition before issuing a 

complaint and accepting a consent. 

For the reasons I explain above, I find 

reason to believe the proposed 

transaction is likely to result in 

unilateral price effects, and thus violate 

the Clayton Act, in the Twin Cities, 

Duluth, western Wisconsin, New 

Orleans, western Montana, Boston/

Providence, the Mid-Atlantic region, 

and the western Great Lakes region. I 

conclude there is no reason to believe 

the proposed transaction will violate 

Section 7 in eastern Iowa, Memphis, 

Baton Rouge, Detroit, northern 

Michigan, and Grand Rapids; it follows 

that I believe the Commission should 

refrain from imposing a remedy in these 

markets. 

[FR Doc. 2015–11724 Filed 5–14–15; 8:45 am] 

BILLING CODE 6750–01–P 

GENERAL SERVICES 

ADMINISTRATION 

[OMB Control No. 3090–0205; Docket 2015– 

0001; Sequence 12] 

General Services Administration 

Acquisition Regulation (GSAR; 

Information Collection; Environmental 

Conservation, Occupational Safety, 

and Drug-Free Workplace 

AGENCY: Office of Acquisition Policy, 

General Services Administration (GSA). 

ACTION: Notice of request for comments 

regarding the extension of a previously 

existing OMB clearance. 

SUMMARY: Under the provisions of the 

Paperwork Reduction Act, the General 

Services Administration will be 

submitting to the Office of Management 

and Budget (OMB) a request to review 

and approve an extension of a 

previously approved information 

collection requirement regarding 

Environmental Conservation, 

Occupational Safety, and Drug-Free 

Workplace. 

DATES: Submit comments on or before: 

July 14, 2015. 

ADDRESSES: Submit comments 

identified by Information Collection 

3090–02085 by any of the following 

methods: 

• Regulations.gov: http://

www.regulations.gov. 

Submit comments via the Federal 

eRulemaking portal by searching the 

OMB control number. Select the link 

‘‘Submit a Comment’’ that corresponds 

with ‘‘Information Collection 3090– 

0205, Environmental Conservation, 

Occupational Safety, and Drug-Free 

Workplace’’. Follow the instructions 

provided at the ‘‘Submit a Comment’’ 

screen. Please include your name, 

company name (if any), and 

‘‘Information Collection 3090–0205, 

Environmental Conservation, 

Occupational Safety, and Drug-Free 

Workplace’’ on your attached document. 

• Mail: General Services 

Administration, Regulatory Secretariat 

Division (MVCB), 1800 F Street NW., 

Washington, DC 20405. ATTN: Ms. 

Flowers/IC 3090–0205, Environmental 

Conservation, Occupational Safety, and 

Drug-Free Workplace. 

Instructions: Please submit comments 

only and cite Information Collection 

3090–0205, Environmental 

Conservation, Occupational Safety, and 

Drug-Free Workplace, in all 

correspondence related to this 

collection. All comments received will 

be posted without change to http://

www.regulations.gov, including any 

personal and/or business confidential 

information provided. 

FOR FURTHER INFORMATION CONTACT: 

Kevin Funk, Procurement Analyst, 

General Services Acquisition Policy 

Division, GSA, at telephone 215–446– 

4860 or via email to kevin.funk@gsa.gov. 

SUPPLEMENTARY INFORMATION: 

A. Purpose 

The Federal Hazardous Substance Act 

and Hazardous Material Transportation 

Act prescribe standards for packaging of 

hazardous substances. To meet the 

requirements of the Acts, the General 

Services Administration Regulation 

prescribes provision 552.223–72, 

Hazardous Material Information, to be 

inserted in solicitations and contracts 

that provides for delivery of hazardous 

materials on an f.o.b. origin basis. 

This information collection will be 

accomplished by means of the provision 

which requires the contractor to identify 

for each National Stock Number, the 

DOT Shipping Name, DOT Hazards 

Class, and whether the item requires a 

DOT label. Contracting Officers and 

technical personnel use the information 

to monitor and ensure contract 

requirements based on law and 

regulation. 

Properly identified and labeled items 

of hazardous material allows for 

appropriate handling of such items 

throughout GSA’s supply chain system. 

The information is used by GSA, stored 

in an NSN database and provided to 

GSA customers. Non-Collection and/or 

a less frequently conducted collection of 

the information resulting from provision 

552.223–72 would prevent the 

Government from being properly 

notified. Government activities may be 

hindered from apprising their 

employees of; (1) All hazards to which 

they may be exposed; (2) Relative 

symptoms and appropriate emergency 

treatment; and (3) Proper conditions and 

precautions for safe use and exposure. 

B. Annual Reporting Burden 

Respondents: 563. 

Responses per Respondent: 3. 

Total Responses: 1689. 

Hours per Response: .67. 

Total Burden Hours: 1132. 

C. Public Comments 

Public Comments are particularly 

invited on: Whether this collection of 

information is necessary and whether it 

will have practical utility; whether our 

estimate of the public burden of this 

collection of information is accurate and 

based on valid assumptions and 

methodology; and ways to enhance the 

quality, utility, and clarity of the 

information to be collected. 

Obtaining Copies of Proposals: 

Requesters may obtain a copy of the 

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