1

This Decision and Order uses the following abbreviations for third-party companies

referenced herein: American Tank & Vessel, Inc. (“AT&V”), Aker Kvaerner (“Kvaerner”),

Bechtel Corporation (“Bechtel”), British Petroleum (“BP”), Cheniere Energy, Inc. (“Cheniere”),

CMS Energy (“CMS”), Dynegy, Inc. (“Dynegy”), El Paso Corp. (“El Paso”), Freeport LNG

1

UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

COMMISSIONERS: Deborah Platt Majoras, Chairman

Orson Swindle

Thomas B. Leary

Pamela Jones Harbour

Jon Leibowitz

___________________________________________

 )

In the Matter of )

 )

CHICAGO BRIDGE & IRON COMPANY N.V., )

a foreign corporation, )

 )

CHICAGO BRIDGE & IRON COMPANY, ) Docket No. 9300

a corporation, )

 )

PITT-DES MOINES, INC., )

a corporation. )

___________________________________________)

DECISION AND ORDER PARTIALLY DENYING RESPONDENTS’ PETITION FOR

RECONSIDERATION AND DIRECTING FURTHER BRIEFING 

ON SPECIFIC REMEDY ISSUES

I. Introduction

On December 21, 2004, we issued our final decision in this matter and found that the

acquisition by Chicago Bridge & Iron Company N.V. and Chicago Bridge & Iron Company

(“CB&I” or “Respondents”) of certain Pitt-Des Moines, Inc. (“PDM”) assets was likely to lessen

competition substantially in four relevant markets in the United States: (1) field-erected

liquefied natural gas (“LNG”) storage tanks; (2) field-erected liquefied petroleum gas (“LPG”)

storage tanks; (3) field-erected liquid nitrogen, oxygen, and argon (“LIN/LOX”) storage tanks;

and (4) thermal vacuum chambers (“TVCs”).1 Having concluded that the acquisition violated
Development LP (“Freeport LNG”), Ishikawa Heavy Industries (“IHI”), Matrix Service Co.

(“Matrix”), Memphis Light, Gas & Water (“MLGW”), Sempra Energy LNG (“Sempra”), S.N.

Technigaz (“Technigaz”), Skanska AB (“Skanska”), Toyo Kanetsu K.K. (“TKK”), TRW Space

& Electronics (“TRW”), Whessoe International (“Whessoe”), Yankee Gas Services Co.

(“Yankee Gas”), Zachry Construction Corporation (“Zachry”). All other company references

use the company’s full name or the only name referred to in the record.

2

Op. at 105

3

This Decision and Order also uses the following abbreviations for citations to the 

record:

Tr. – Transcript of testimony before the Administrative Law Judge

RAB – Respondents’ Appeal Brief

CCACAB – Answering and Cross-Appeal Brief of Counsel Supporting the 

 Complaint

RRCARB – Respondents’ Reply and Cross-Appeal Response Brief

OA – Transcript of the Oral Argument on Appeal held November 12, 2004

CX – Complaint Counsel’s Exhibit

Op. – Commission Opinion issued December 21, 2004 (in camera). 

4

Respondents’ Petition at 2.

5

Id. at 7-10.

6

Id. at 2. 

2

Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, and Section 7 of the Clayton

Act, 15 U.S.C. § 18, we ordered CB&I to reorganize its Industrial Division (and to the extent

necessary its Water Division) into two, separate stand-alone divisions and divest one of them.2

 

On February 1, 2005, pursuant to Rule 3.55 of the Commission’s Rules of Practice, 16

C.F.R. §3.55, CB&I filed a Petition to Reconsider the Opinion and Order in Light of Entry After

the Close of the Record and Overbreadth (“Respondents’ Petition”).3 The petition alleges that

demand in the LNG tank market has increased since the record’s close and that new entrants

have bid on and been awarded LNG tank jobs.4 Respondents identify awards associated with

four LNG projects as evidence of post-acquisition entry: (1) Dynegy’s award of an LNG tank

contract to Skanska; (2) Sempra’s award of an engineering, procurement, and construction

(“EPC”) contract to Kvaerner/IHI; (3) Freeport LNG’s award of an LNG tank contract to

Technigaz/Zachry; and (4) Cheniere’s award of an LNG tank contract to the MHI/Matrix team.5

Based on these awards, the petition argues that “the competitive landscape has . . . undergone a

sea-change, rendering inaccurate the Commission’s predictions” on the difficulty of entry.6

According to Respondents, these changed conditions necessitate that we reconsider our decision
7

Id. at 18.

8

Complaint Counsel’s Opposition to Respondents’ Petition to Reconsider, filed Feb. 11,

2005 (“Complaint Counsel’s Opposition”).

9

Complaint Counsel’s Opposition at 4 (citing 16 C.F.R § 3.55 (2005)).

10Id. at 6-9.

11Id. at 10-13.

12Id. at 12 (citing U.S. Dep’t of Justice & Fed. Trade Comm’n, Horizontal Merger

Guidelines § 3.0 (1992, as amended 1997), reprinted in 4 Trade Reg. Rep. (CCH) ¶ 13,104

(hereinafter Merger Guidelines)).

13Id. at 27.

3

and rescind our order of divestiture.7

 In addition, Respondents assert that our Order imposed

relief beyond that ordered by the Administrative Law Judge (“ALJ”) and requested by Complaint

Counsel in their cross-appeal. Respondents therefore argue that they did not have an opportunity

to address the appropriateness of the remedy. 

Complaint Counsel oppose Respondents’ Petition8

 and argue that Respondents do not

meet the standard for reopening the record, which limits a petition to new questions raised by a

decision or order of the Commission that the petitioner had no opportunity to argue.9

Specifically, Complaint Counsel assert that Respondents’ Petition does not present a new

question because, in this proceeding, Respondents have already raised the argument that postacquisition entry constrains CB&I.10 Complaint Counsel further argue that although

Respondents’ Petition contains new evidence, Respondents failed to timely raise this evidence,

because the events described in the petition occurred prior to oral argument and the issuance of

our decision.11 In addition, Complaint Counsel argue that the evidence presented by

Respondents does not show that the alleged new entry has restored the competition lost from the

acquisition.12 Finally, Complaint Counsel argue that the remedy raises no new questions under

Rule 3.55.13

In this Decision and Order, we examine the two issues that Respondents’ Petition raises –

the sufficiency of entry and the relief in our Final Order – under two separate standards. We first

discuss the requirements for granting reconsideration under Rule 3.55 and our reasons for

rejecting Respondents’ Petition under this standard. We then exercise our discretion under Rule

3.72(a) to consider the merits of Respondents’ Petition. We find that Respondents have not

shown that entry has restored the competition lost from the acquisition. We thus deny

Respondents’ Petition on the merits insofar as it raises issues concerning the effectiveness of

new entry. Finally, we address Respondents’ request that we modify our remedy, and we order

further briefing from the parties on specific remedy issues. 
1416 C.F.R. § 3.55. Respondents’ Petition addresses only the LNG tank market. In

addition, Respondents request that if we re-open the record, they be allowed to present evidence

of entry in the LPG and LIN/LOX markets. We presume that Respondents have presented their

strongest case for reopening the record. Indeed, Respondents state that the evidence of postacquisition entry in the LPG and LIN/LOX tank markets does not show “as dramatic a

transformation” as the LNG tank market. Respondents’ Petition at 2, n.3. Because we have

found Respondents’ Petition unpersuasive as to the LNG tank market, we conclude that we need

not take evidence on the LPG and LIN/LOX markets. 

15See, e.g., Donald Riggs v. Anthony Auto Sales Inc., No. Civ. A 97-0507, 1998 U.S. Dist.

LEXIS 21639, at *6 (W.D.La. Aug. 28, 1998) (applying this standard to a motion to reconsider

under Fed. R. Civ. P. 59(e)).

16See generally RAB at 34-40. 

17Id. at 35.

18OA at 6.

19Id. at 9-10.

4

II. Standard for Granting a Petition for Reconsideration under Rule 3.55

Rule 3.55 requires that a petition for reconsideration “be confined to new questions raised

by the decision or final order and upon which the petitioner had no opportunity to argue before

the Commission.”14 This standard recognizes that litigation must end at some point, and that

decision makers must render their judgment based on a finite body of evidence. We thus view

reconsideration of a fully-litigated opinion and order as an “extraordinary remedy which should

be used sparingly.”15 

A. Post-Acquisition Entry

Respondents’ main argument – that increased demand has triggered entry that constrains

CB&I post-acquisition – is not a new question raised by our decision. Rather, because the

acquisition resulted in near-monopoly or monopoly in each of the relevant markets, this case

turned on whether entry and expansion in the relevant markets could restore the competition lost

from the acquisition. During the administrative trial, Respondents argued at length that demand

in the LNG tank market had increased and spurred three new entrants with the ability to

constrain CBI – Skanska/Whessoe, TKK’s joint venture with AT&V, and Technigaz’s joint

venture with Zachry.16 As support for Respondents’ argument, they presented evidence that

Dynegy considered bids from these three new entrants and excluded CB&I from bidding on its

Hackberry import terminal.17 At oral argument, Respondents again highlighted the Dynegy

project and stated that this project was “dispositive”18 of the case and showed that “CB&I has no

ability to exercise market power.”19 Respondents also argued that the presence of the new
20RAB at 35-37; OA at 10-12.

21OA at 10-12.

22Op. at 90.

23 Cf. Chrysler Corp. v. FTC, 561 F.2d 357, 362-63 (D.C. Cir. 1977) (upholding the

FTC’s decision to allow admission of new evidence where inter alia the evidence was

unavailable at the time of trial). See also Riggs, 1998 U.S. Dist. LEXIS 21639, at *7 (stating that

one ground for reconsideration under Fed. R. Civ. P. 59(e) is to allow the moving party to

present “newly discovered evidence or previously unavailable evidence”). 

24Brake Guard Products, Inc. 125 F.T.C. 138, 248 n.38 (1998).

5

entrants constrained CB&I’s pricing for two sole-source contracts.20 For example, they asserted

that the customers could have terminated negotiations with CB&I and sought out another

supplier had they not been satisfied with CB&I’s price.21

Our Opinion specifically considered these assertions and rejected Respondents’ entry

argument. After an examination of the bidding history, entry conditions, and post-acquisition

bidding evidence in the relevant markets, we concluded that:

Respondents’ evidence of entry into the LNG tank market and expansion of smaller

incumbents in the LPG and LIN/LOX tank markets establishes neither that entry or

expansion into these markets is easy nor that it has actually occurred at a level that will

meaningfully constrain CB&I post-acquisition. Although some companies have shown

interest in these markets, we find that this mere interest and intention to compete does not

make them competitors sufficient to replace the competition lost from CB&I’s

acquisition of PDM.22

Respondents’ Petition merely seeks to provide additional factual support for a position that

Respondents have already argued. It thus does not meet the mandatory requirement of Rule 3.55

that the petition present only new questions raised by Commission decisions or orders. 

Previously unavailable new evidence can form a basis for reconsideration provided that it

meets Rule 3.55's requirements.23 To present such evidence, however, a petitioner also must

satisfy the standards for reopening the record and admitting new evidence. Among other things,

a petitioner must demonstrate that it acted with diligence to bring forth the new evidence in a

timely manner.24 Respondents’ Petition does not show that they have met this requirement. 

Rather, the evidence relied on by Respondents’ Petition is a mixture of events that occurred

before we issued our decision in December 2004 and events not accompanied by a date. For

example, Respondents’ Petition states that Dynegy sold its Hackberry facility to Sempra in
25Respondents’ Petition at 7.

26Id. at Ex. 2.

27A petition to reopen the record may be filed prior to the ALJ’s filing of his Initial

Decision, 16 C.F.R §3.51(e), or before oral argument. 16 C.F.R. 3.54(a). See also Rambus, Inc.,

Dkt. No. 9302 (Dec. 6, 2004) (Order Directing Redesignation of the Record); Brake Guard

Products, Inc. 125 F.T.C. at 248 n.38 (noting the standard for reopening the record in a pending

administrative litigation after trial has ended but before the Commission has issued its opinion). 

In addition, a petition may be filed before we issue our decision. 16 C.F.R. 3.54(a). See Chrysler

Corp., 87 F.T.C. at 750 n.38 (admitting materials three weeks after oral argument).

28See Novartis Corp., 1999 FTC LEXIS 212, at *1 (Jul. 2, 1999) (denying a petition for

reconsideration where respondent could have introduced evidence of the factual developments

that occurred after the record’s close at an earlier stage). See also Riggs, 1998 U.S. Dist. Lexis

21639, at *7 (a Rule 59(e) motion to reconsider may not be used to “present evidence that could

have been raised prior to the entry of judgment”). 

29Respondents’ Supplement to Petition to Reconsider the Opinion and Order in Light of

Entry After the Close of the Record and Overbreadth, filed February 14, 2005 (“Respondents’

Supplement”) states that Cheniere awarded an LNG tank to MHI/Matrix on February 4, 2005. 

Because our Rules do not contemplate such a filing, we treat Respondents’ Supplement as a

request for leave to file the supplement and accordingly grant that request and analyze it on its

merits. Unlike the other evidence presented in Respondents’ Petition, the event described in this

Supplement occurred after we issued our decision and was thus previously unavailable. For the

reasons we have already stated, however, we find that this evidence raises no new question and

thus fails to meet Rule 3.55's mandatory requirements. 

6

February 2003 and rebid the EPC contract shortly thereafter.25 Although it is unclear from

Respondents’ Petition at what point the EPC contract was awarded, it states that CB&I submitted

its bid in August 2004, approximately five months before we issued our decision. Similarly,

Respondents’ Petition states that Freeport LNG awarded the tank subcontract for its project in

June 2004.26 Our Rules provide Respondents with the opportunity to petition to reopen the

record at any time before we issue our decision.27 We thus conclude that Respondents have not

met their burden under our rules for either reopening the record or reconsideration of an issued

decision.28 We therefore deny this portion of Respondents’ Petition under Rule 3.55.29 As

discussed below, however, we will further address these matters under our discretionary

authority. 

B. Relief in Final Order

Respondents’ Petition also asserts that the remedy ordered by the Commission goes
30Respondents’ Petition at 13-14.

31Id. at 14-16. 

32Id. at 15-16 (quoting Final Order at 3-4). 

33Id. at 16.

34Op. at 101.

35Id. 

36CCACAB at 67-68. 

7

further than the relief ordered by the ALJ and that requested by Complaint Counsel and thus

raises a new question that Respondents had no opportunity to address.30 The crux of

Respondents’ argument is that our requirement that CB&I equally divide its current “Relevant

Business” and divest one of the units is virtually limitless on its face, goes beyond the assets

related to the Engineered Construction (“EC”) and Water Divisions, and inappropriately includes

some assets owned by CB&I pre-acquisition and others acquired by CB&I post-acquisition.31

Specifically, Respondents challenge the Order’s definition of “Relevant Business,” which

includes “all assets of every description . . . engaged, directly or indirectly, in all aspects of

engineering, designing, estimating, bidding, procuring, fabricating, erecting, rehabilitating or

selling any: water storage tank or system; industrial process system . . . ; flat bottom tank,

pressure vessel or sphere; low temperature or cryogenic tank system; vacuum chamber or

system; steel plate fabrication; and specialty structure, including the Relevant Products.”32 They

ask us to eliminate CB&I’s requirement to divest the “unrelated assets” and require the acquirer

to justify the divestiture of assets beyond those acquired from PDM.33

As we explained in our Opinion, however, the Notice of Contemplated Relief that

accompanied the Complaint in this matter stated that if the Commission determined that the

acquisition was anticompetitive, it might order “[r]eestablishment by CB&I of two distinct and

separate, viable, and competing businesses, one of which shall be divested by CB&I.”34 The

Notice further elaborated that a divestiture could include “such other businesses as necessary”

and “all intellectual property, knowhow, trademarks, trade names, research and development,

customer contracts, and personnel, including but not limited to management, sales, design,

engineering, estimation, fabrication, and construction personnel. . .”35 This language

contemplates the very type of relief that we subsequently ordered and put Respondents on notice

that the Commission might order the remedy they now challenge. 

 In addition, Complaint Counsel’s cross-appeal of the Initial Decision raised the specific

issues that Respondents’ Petition claims they had no opportunity to address. In their crossappeal, Complaint Counsel argued that the Commission would need to order divestiture not only

of the acquired assets but also of “assets necessary to reconstitute a competitor.”36 They further
37Id. at 70-77.

38Id. at App. A.

39RRCARB at 45-58.

40See Indiana Federation of Dentists, 101 F.T.C. 718 (1983) (“Since the language to

which respondent refers was contained in the draft order accompanying complaint counsel’s

answering brief, it is not a matter upon which respondent can claim to have had no previous

opportunity to argue.”).

8

argued that the Commission should assign a percentage of CB&I’s work in progress to the

potential buyer, require Respondents to take steps to encourage experienced employees to

transfer to the buyer, and appoint a monitor trustee.37 All three of these requests suggest relief

beyond divesting those assets acquired from PDM. Moreover, Complaint Counsel attached a

proposed order with language identical to our definition of “Relevant Business” to their crossappeal brief.38 Respondents’ Reply and Cross-Appeal Response brief acknowledged the

proposed order and argued at length that the three main requirements urged by Complaint

Counsel were unnecessary.39 Respondents therefore not only had ample opportunity to argue the

points raised in their petition40 but took advantage of that opportunity. Accordingly, we

conclude that Respondents’ Petition to reconsider the relief in the Order does not satisfy the

standards of Rule 3.55 and deny it. However, we consider the issues raised by CB&I about the

breadth of relief under our discretionary authority. 

III. The Commission’s Discretionary Authority to Consider a Petition

Section 5(b) of the FTC Act, 15 U.S.C.§ 45(b), provides that “the Commission may at

any time, upon such notice and in such manner as it shall deem proper, modify or set aside, in

whole or in part, any order made” under Section 5 of the Act. Section 3.72(a) of the

Commission’s Rules of Practice, 16 C.F.R.§ 3.72(a)(2005), provides us with discretion under

such circumstances to “enter a new decision modifying or setting aside the whole or any part of

the findings as to the facts, conclusions, . . . order or opinion issued by the Commission . . . .” 

Because the sufficiency of entry in the relevant markets was a particularly important issue in this

case, we exercise our discretion here and consider new evidence that might bear on the ability of

new entrants to restore competition sufficiently in the LNG tank market. In addition, although

Respondents should have raised their remedy concerns before now, we take seriously our

responsibility to protect markets and conclude that we should not disregard completely the

specific difficulties Respondents raise about the implementation of our Final Order. We

therefore have determined to exercise our discretion to consider Respondents’ Petition. 

A. Post-Acquisition Entry

Predicting future market behavior is never easy and is particularly difficult in markets
41United States v. General Dynamics Corp., 415 U.S. 486 (1974). 

42United States v. Syufy Enters., 903 F.2d 659, 665 (9th Cir. 1990) (finding a merger to

monopoly acceptable where a post-merger entrant took a significant share of the first-run film

market away from the incumbent firm).

43See F.M. Scherer & David Ross, INDUSTRIAL MARKET STRUCTURE AND ECONOMIC

PERFORMANCE 362 (3d ed. 1990) (“The higher prices are, the more rapidly potential entrants will

perceive the attractiveness of entry”). 

44See Complaint Counsel’s Opposition at Ex. C, Ex. E, Ex. F. 

9

characterized by changing conditions such as increased demand. Moreover, General Dynamics41

and its progeny instruct that our analysis be forward-looking, which means that we must

consider the most recent market realities. At the same time, evidence of past market behavior is

often a good predictor of future developments, especially in the absence of evidence that there

have been fundamental changes in market dynamics. Therefore, to evaluate Respondents’

arguments, we consider evidence related to the pre-acquisition dynamics of this market, postacquisition evidence adduced at trial, and new evidence presented by Respondents’ Petition. 

We agree in principle that a new supplier’s ability to bid on and win an award to build an

LNG tank is relevant to a showing that it has the capability to constrain CB&I sufficiently (and

thus to replace the competition lost from the acquisition).42 For a number of reasons, however,

we conclude that Respondents have not shown that the competition lost from CB&I’s acquisition

of the PDM assets has been restored. 

To begin, we find Respondents’ argument – that CB&I’s post-acquisition losses

conclusively demonstrate that CB&I is sufficiently constrained – unpersuasive. Entry might

signal that post-acquisition prices have increased to a level that makes the market attractive to

new firms. Whether those new entrants are able to compete at the price that prevailed before the

transaction is another matter.43 We thus view the evidence that CB&I has not won every postacquisition bid as inconclusive. In addition, the post-acquisition awards to a company other than

CB&I do not show that CB&I is constrained at the pre-acquisition level. Finally, although

Respondents did not present much evidence related to CB&I’s post-record wins, we glean from

the available material that CB&I has obtained at least three sole-source, turnkey contracts for

LNG projects since the record’s close.44 When those contracts are added to the five postacquisition projects CB&I had been awarded prior to the record’s close, it is clear that CB&I has

obtained many more contracts for LNG projects than it has lost. For these reasons, we conclude

that CB&I’s post-acquisition losses standing alone do not answer the ultimate question in this

case – whether competition has been restored to the pre-acquisition level. We therefore adhere

to our earlier conclusion that CB&I’s acquisition of the PDM assets substantially lessened

competition in the U.S. market for field-erected LNG tanks and thus violated the antitrust laws. 

1. Analysis of Respondents’ Evidence
45This error is commonly known as the cellophane fallacy, which derives from criticism

of the Supreme Court’s decision in United States v. E.I. du Pont de Nemours & Co., 351 U.S.

377 (1956). See United States v. Oracle, 331 F. Supp. 2d 1098, 1121 (N.D.Cal. 2004) (“The

error in the logic of Du Pont is that ‘the existence of significant substitution in the event of

further price increases or even at the current price does not tell us whether the defendant already

exercises significant market power.’” (citing Eastman Kodak Co. v. Image Technical Servs. Inc., 

504 U.S. 451, 471 (1992)). See also Steven C. Salop, The First Principles Approach to

Antitrust, Kodak, and Antitrust at the Millennium, 68 Antitrust L.J. 187, 197 (2000); William M.

Landes & Richard A. Posner, Market Power in Antitrust Cases, 94 Harv. L. Rev. 937, 960-63

(1981). 

46Generally speaking, the monopolist can set price without fear of losing sales to another

competitor in the market. Dennis W. Carlton & Jeffrey M. Perloff, MODERN INDUSTRIAL

ORGANIZATION 87 (3rd ed. 2000) (“A monopoly sets its price without fear that it will be undercut

by a rival firm”); Richard Posner, ANTITRUST LAW 11 (2d ed. 2001) (“The monopolist will never

be content to charge a price at which the demand for his product is inelastic, that is, a price at

which the proportional reduction in the quantity demanded as a result of raising price slightly

would be less than the proportional increase in price.”). Such monopolistic reaction may include

not only higher nominal price but also reductions in quality of service or responsiveness to

customer needs, such as CB&I’s evident unwillingness to engage in competitive bidding and

insistence on sole-source, turnkey contracts. See Nat’l Soc’y of Prof’l Engineers v. United

States, 435 U.S. 679, 695 (1978) (identifying quality, service, safety, and durability as important

elements to a bargain). 

47United States v. Eastman Kodak Co., 853 F. Supp. 1454, 1469 (1994) (quoting Landes

& Posner, supra note 45, at 961).

10

Despite Respondents’ assertions, we believe it is a mistake simply to accept that evidence

of post-acquisition LNG tank awards to suppliers other than CB&I necessarily means that CB&I 

is constrained at the pre-merger level. Such a viewpoint fails to account for the possibility that

post-acquisition prices have increased beyond the pre-acquisition level and also runs afoul of

basic economic principles.45 This point is especially salient when a firm acquires its closest

competitor and achieves a monopoly position in a market characterized by high entry barriers. 

Economic theory teaches us that under such circumstances, the merged firm has both the

incentive and ability to raise price.46 At a sufficiently high price, however, even a monopolist is

constrained by competition from distant substitutes47 and the possible entry of new suppliers. 

Respondents’ entry argument therefore misses a crucial point – the fact that actual or

potential entry constrains the monopolist’s ability to increase price without limit does not show

that competition lost from an acquisition has been replaced. For example, a new entrant may be

incapable of restoring competition to the pre-acquisition level because its costs do not allow it to

compete at the price that prevailed in the market prior to the acquisition. In such instances, entry

is a direct result of the monopolist’s pricing above the competitive level rather than a force that

will return the market to the status quo ante. 
48Posner, ANTITRUST LAW, supra note 46, at 73 n.31.

49See, e.g., Tr. at 4938 (Scorsone stating that CB&I’s refusal to bid on LNG tanks

separately from the EPC contract for the Dynegy project and Dynegy’s subsequent selection of

Skanska as the EPC means that it cannot “force” customers to select it as an EPC contractor). 

Cf. Id. at 4232-33 (Glenn predicting that Freeport LNG’s choice of Technip to perform

preliminary engineering work may translate into an EPC contract if the Freeport LNG is satisfied

with Technip’s work). 

50Carlton and Perloff, supra note 46 at 92.

51Eastman Kodak Co., 853 F. Supp at 1469. Cf. Oracle, 331 F. Supp. 2d at 1121

(“[B]ecause a monopolist exercises market power by increasing price until the cross-price

elasticity of demand is so high that a further price increase would be unprofitable, a high crossprice elasticity of demand at current prices, by itself, does not demonstrate that the seller lacks

market power”).

52See Tr. at 4568-71 (Dynegy wanted to bid the LNG tanks separately from the

engineering work to save costs); Tr. at 6974-76, 6978 (Freeport LNG wanted to bid the EPC

award for its project competitively and thus contacted other companies to assist with the

preliminary work after CB&I refused to do any work absent being awarded a sole-source,

turnkey contract for the facility); Tr. at 6069-71 (BP initially wanted to bid the LNG tanks for its

11

Where a new entrant has some ability to compete, but lacks the ability to restore the

competition lost from an acquisition, a monopolist will not necessarily lower its price to the level

that prevailed before the acquisition. To do so would mean foregoing monopoly profits.48 We

see this dynamic in the facts of this case. CB&I recognizes that its insistence on sole-source,

turnkey contracts might cause some customers to select other suppliers for preliminary work and

that those suppliers may, in turn, have an advantageous position for bidding on the LNG tanks in

question.49 This possibility of lost business, however, has not altered CB&I’s behavior. As a

result, we find that CB&I need not have won every post-acquisition contest to demonstrate that it

has obtained and exercised market power as a result of the acquisition.50 Rather, the exercise of

market power by CB&I may explain why other suppliers have entered and some customers have

switched to suppliers that lack CB&I’s cost advantages and experience. As numerous courts

have observed, “At a high enough price, even poor substitutes look good to the consumer.”51 

2. Post-Acquisition Projects

Respondents’ post-acquisition examples of entry also fail to demonstrate that CB&I is

constrained to the pricing that prevailed before the acquisition. For each of the post-acquisition

projects identified by Respondents, CB&I has insisted on sole-source, turnkey contracts, despite

the fact that many LNG customers have expressed a desire not to structure their LNG projects in

this way.52 This pattern shows a lack of competition as to “one of the elements of a bargain”53
three facilities competitively, but awarded CB&I sole-source, turnkey contracts for the facilities

after CB&I refused to do preliminary work absent such a commitment). We found that this

behavior suggested that CB&I did not view the new entrants as meaningful competition. Op. at

64-65. Respondents’ Petition suggests that CB&I has continued this policy despite customers’

preference to the contrary. For example, Mr. Blum’s declaration makes clear that CB&I

attempted to negotiate a sole-source, turnkey contract with Cheniere, which ultimately hired

another company solely to do the preliminary work. Respondents’ Petition at Ex. 5 ¶ 4. 

53Prof’l Engineers, 435 U.S. at 695. See also discussion supra note 46. 

54For example, at trial the head of CB&I’s Industrial Division identified two separate sets

of competitors for constructing LNG tanks and performing EPC duties. Compare Tr. at 4948

(identifying LNG tank competitors as Skanska/Whessoe, Technigaz/Zachry, TKK/ATV,

Daewoo/S&B and possibly MHI and IHI) with Tr. at 4935 (identifying EPC competitors as

Halliburton, KBR, Flour, Technigaz, Skanska Whessoe, Black & Veatch, Daewoo, Tractebel,

and Chiyoda JGC).

55Op. at 58-60.

12

important to customers and evidences an exercise of market power by CB&I. It is true that

Dynegy, Freeport LNG, and Cheniere, each of which did not want to grant sole-source, turnkey

contracts, awarded LNG tank contracts to other suppliers post-acquisition. However, given

CB&I’s refusal to undertake work on terms other than its own, we are not convinced that these

alternate suppliers sufficiently constrain CB&I. In addition, one of the awards identified by

Respondents (Sempra’s award to the Kvearner/IHI team) is an EPC contract for the entire

facility rather than an award for LNG tanks. Because winning an EPC contract for the entire

LNG project does not necessarily show an ability to compete for building an LNG tank,

Respondents have not shown that this award is probative of competition in the relevant market.54 

 

a. Dynegy’s Hackberry Terminal

Respondents first argue that after the record’s close, CB&I lost the LNG tank award for

Dynegy’s Hackberry facility to Skanska. While it is true that the LNG tank contract for this

project was awarded after the record closed, CB&I’s preclusion from bidding on this tank was

discussed at length during trial, argued on appeal, and addressed in our Opinion.55 At the time of

the Record’s close, the contest for this award was between Skanska/Whessoe and TKK/AT&V. 

That Skanska/Whessoe prevailed over TKK/AT&V when CB&I did not submit a bid is not

probative of Skanska’s ability to constrain CB&I sufficiently. We thus adhere to our previous

finding that this project does not support Respondents’ argument that post-acquisition entry

sufficiently constrains CB&I.

 

Respondents also argue that Dynegy could have accepted a late bid from CB&I if it were

not satisfied with the bids from the new entrants. This argument was also raised at trial by
56Tr. at 7349 (Dr. Harris testifying that Dynegy “had the opportunity to have CB&I bid

and turned them down”). Dr. Simpson, Complaint Counsel’s economic expert, addressed Dr.

Harris’ argument and stated that Dynegy might not violate its own bidding rules because

“Dynegy would do business with vendors in the future, and if it looks as if Dynegy is willing to

bend their rules in one case, that this could have adverse effects in their dealings with other

firms.” Tr. at 3338. See also Tr. at 3341-42 (“Another reason why a buyer would be – might be

reluctant to accept a late bid is that the late bidder hadn't complied with the way the buyer

wanted things done initially, and to the extent that the buyer thought that that might indicate that

the person submitting the late bid would not follow the buyer's instructions in other areas, then

the buyer – that would be a basis for why the buyer would be reluctant to purchase from that late

bidder.”).

57See generally Op. at 58-60, 83-88.

58Respondents did not submit this information until they filed the current petition. 

Instead, they argued in their appeal briefs and at oral argument that Skanska was a viable

competitor, because it had been named EPC contractor for Dynegy’s Hackberry facility. RAB at

15; OA at 6.

59Respondents’ Petition at 5, 8 n.15.

13

Respondents’ economic expert, Dr. Harris.56 Although our Opinion did not specifically address

this particular piece of evidence, it considered and rejected both Dr. Harris’ specific testimony

and assumptions related to the Dynegy project and Respondents’ general argument that the

Dynegy project showed sufficient post-acquisition entry.57 There is also no evidence in the

record to suggest that LNG tank customers accept late bids, and Respondents do not point to a

single example of such behavior in their petition. Therefore, we conclude that Respondents’

theoretical argument is not supported by the evidence and reject it. 

b. Sempra’s Hackberry Project

Prior to oral argument, Dynegy sold its Hackberry facility to Sempra. Rather than

keeping Skanska as the EPC, Sempra solicited new bids for an EPC contractor and ultimately

awarded the contract to the Kvaerner/IHI team.58 Respondents argue that because Kvaerner/IHI

was awarded this project, sufficient entry in the LNG tank market has occurred.59 Respondents’

argument, however, does not account for the fact that an EPC contract is different from an LNG

tank contract. An EPC contractor performs the engineering, procurement, and construction of

the LNG facility and is essentially a general contractor for the entire facility. Because EPC

contractors often subcontract the construction of an LNG tank, we find that an EPC award is not

necessarily probative of competition in the LNG tank market. 

With this distinction in mind, we find that the evidence presented by Respondents does 

not specifically address whether CB&I lost the LNG tank contract to Kvaerner/IHI. Rather,
60Although we give Respondents the benefit of the doubt and credit Mr. Miles’

declaration, so far as it goes, we note that CB&I cast some doubt on his credibility at trial. Mr.

Miles contacted and met with employees at Howard Fabrication, CB&I’s competitor, to propose

that CB&I and Howard Fabrication work together to give TRW a price for an upcoming TVC

bid. Tr. at 245. To explain why this possibly collusive conduct was not problematic under the

antitrust laws, Mr. Scorsone explained that “Mike Miles is a first-level salesperson for CB&I,”

who does not set contract prices on his own authority. Tr. at 5061-62. See also Complaint

Counsel’s Opposition at 17. 

61Respondents’ Petition at Ex. 2 ¶ 10.

62In testifying about another project of similar size, CB&I’s CEO, Gerald Glenn, stated

that CB&I was rejected as EPC contractor, because it did not have the bonding capability

necessary to handle the project. Tr. at 4151, 4939.

63Respondents’ Petition at Ex. 2 ¶ 6.

64Id.

65Id. at Ex. 2 ¶ 7.

14

Respondents present a declaration from Michael Miles, a CB&I employee,60 which states that

“CB&I lost the EPC contract for the Hackberry project to Aker Kvaerner/IHI. The tank

subcontract went with the EPC contract.”61 This statement, of course, does not tell us whether

Kvaerner/IHI might subcontract the LNG tank work to another company. 

Even if we assume that Kvaerner/IHI will build the LNG tank, the special circumstances

that surround this EPC award lead us to question whether this project demonstrates that the

competition lost from the merger has been restored. In particular, it does not appear that CB&I

had the bonding capacity necessary to win the EPC contract, which allegedly led to the LNG

tank subcontract.62 CB&I initially partnered with Bechtel to bid on this project.63 Bechtel

agreed to “perform the systems design work and procurement work” for the terminal (essentially

to be the EPC contractor), and CB&I planned to undertake the “tank design and construction on

a turnkey basis for Bechtel.”64 However, Bechtel withdrew at the last moment, and CB&I was

forced to bid alone for the entire project.65 Bechtel’s very late withdrawal likely had a negative

impact on CB&I’s chance of winning the EPC award for this project. Presumably, CB&I agreed

to submit a bid with Bechtel for this project because the Bechtel/CB&I combination presented

certain advantages over a bid from CB&I alone. 

 

c. Freeport LNG

At the time we issued our decision, Freeport LNG had awarded Technip the front-end

engineering and design (“FEED”) contract and hired S&B/Daewoo to help with the FERC
66Respondents argued on appeal that this project is evidence that competition had been

restored in the LNG tank market. RAB at 27. 

67Op. at 62.

68Technip pre-qualified Technigaz/Zachry, Skanska/Whessoe, TKK/AT&V,

S&B/Daewoo, and CB&I. Respondents’ Petition at 8. 

69Id. at 8-9.

70Id. at Ex. 2 ¶ 15. 

71Tr. at 7065-66, 7069-70. See also Complaint Counsel’s Opposition at 9-10 n.11.

15

drawings.66 However, because the EPC contractor had not yet been selected and possible tank

constructors had yet not been identified, we concluded that this project was at too early a stage to

be probative of competition in the LNG tank market.67 After the record’s close, Freeport LNG

awarded Technip the EPC contract for this project, and Technip subsequently sent out requests

for proposals (“RFPs”) to potential tank subcontractors.68 Respondents argue that because the

tank subcontract was ultimately awarded to Technigaz/Zachry, this project demonstrates that

competition has been restored post-acquisition.69

As with Sempra’s EPC award, the evidence that Respondents presented about the

Freeport LNG project raises serious questions about the probative value of this award. Mr.

Miles’ declaration states that “Technip had been working in association with Zachry in the

project’s FEED stage and . . . Zachry’s involvement in the FEED and EPC contract gave

Technigaz/Zachry the advantage in the tank bid.”70 Freeport LNG turned to Technigaz/Zachry

for the preliminary work on this project only after CB&I refused to do such work – absent a

commitment from Freeport LNG that CB&I be awarded a contract to build the entire facility on

a turnkey basis.71 CB&I’s refusal to perform this preliminary work thus appears to have resulted

in the LNG tank being awarded to Technigaz/Zachry. Consequently, this project is not good

evidence that Technigaz/Zachry sufficiently constrains CB&I or that a future entrant could

constrain CB&I. 

d. Cheniere’s Corpus Christi and Sabine Pass Projects

Respondents’ Petition finally argues that Cheniere’s selection of Black & Veatch to

provide FERC assistance and FEED and of Bechtel to act as the EPC contractor for both its

Corpus Christi and Sabine Pass projects shows that meaningful entry has occurred. These

awards, however, do not inform us about competition in the relevant market, LNG tanks. 

Neither Black & Veatch nor Bechtel builds LNG tanks and each will thus have to subcontract
72Tr. at 521, 4936-37. Respondents’ Petition recognizes this fact with respect to Bechtel

and states that “Bechtel subsequently asked CB&I and others to submit new bids for the LNG

tank construction on both projects.” Respondents’ Petition at 9.

73Respondents’ Supplement at 3, Ex.1.

74Id. at Ex. 1 ¶ 9.

75Respondents’ Petition at 9 (stating that “CB&I unsuccessfully attempted to negotiate a

sole-source contract for the EPC position.”). 

76Id. at 10-12.

77Tr. at 4936-37; Respondents’ Petition at Ex. 2 ¶ 16.

78Respondents’ Petition at 10.

16

that work.72 

In the supplement to their petition, Respondents state that Cheniere awarded its Sabine

Pass LNG tank contract to MHI/Matrix and argue that this award shows that new entrants have

been able to establish a presence in the U.S. market.73 We note that the sole evidence of

MHI/Matrix’s award comes from an amended declaration of Ronald Blum, which states that on

February 4, 2005 he “learned that the LNG tank subcontract [sic] for the Sabine Pass project

[had] been awarded to MHI/Matrix.”74 Even if we assume that Mr. Blum’s information is

correct, we doubt that this incident has sufficient predictive significance because CB&I insisted

that Cheniere grant CB&I a sole-source turnkey contract as a condition for performing any of the

preliminary work.75 

e. Early-Stage Projects

Respondents also assert that Kellogg, Brown & Root has been chosen to do the

preliminary engineering and FERC work for Mitsubishi’s Long Beach project and that this

award further evidences entry.76 We find Respondents’ argument flawed because Kellogg,

Brown & Root does not build LNG tanks – CB&I’s declaration from Mr. Miles even states that

he expects CB&I to bid for the tank work.77 Thus, Kellogg, Brown & Root’s award is irrelevant

to competition in LNG tank market. 

With respect to the LNG tank work, Respondents also assert that “[i]t strains credulity to

suggest that Mitsubishi would agree that its affiliate MHI is unqualified to build an LNG tank.”78

 Respondents may be correct – Mitsubishi may think that its subsidiary, MHI, is technically able

to build an LNG tank. However, as we stated in our Opinion, technical qualifications alone do
79Op. at 57 (“We do not suggest that the new entrants would be totally incapable of

building an LNG tank in the U.S.” “The fact that CB&I has cultivated these skills through

decades of experience means that it has some advantages compared to a supplier that has not yet

built a tank.”).

80Id. at 62-63.

81The post-acquisition projects comprise: (1) a terminal expansion for Dominion’s Cove

Point facility; (2) a terminal expansion for Trunkline LNG’s Lake Charles facility; and (3) a

peak-shaving plant for Yankee Gas in Waterbury, Connecticut. Complaint Counsel’s Opposition

at Ex. C, Ex. E, Ex. F. 

82At the close of the record, CB&I had negotiated (or was negotiating) sole-source

contracts for: (1) El Paso’s Elba Island facility; (2) British Petroleum’s three import terminals;

(3) CMS’ Lake Charles terminal; and (4) a facility for Poten & Partners. Op. at 60 n.356. While

these projects total six, we have not included the CMS project in our count, because it is the

same as the October 7, 2003 award to CB&I for the Lake Charles facility. See Complaint

Counsel’s Opposition at Ex. C. Panhandle Eastern Pipeline (a subsidiary of CMS) and its

subsidiary Trunkline were sold by CMS to Southern Union Company. CMS Energy Corp., SEC

Form 10-K Report at 14 (Mar. 12, 2004) (“In June 2003, CMS Gas Transmission sold Panhandle

to Southern Union Panhandle Corp., a newly formed entity owned by Southern Union”),

http://www.sec.gov/Archives/edgar/data/811156/000095012404000855/k82154e10vk.txt. 

Although this 10-K filing was not part of the record, we take official notice of it under 16 C.F.R.

17

not equate to a supplier’s ability to constrain CB&I at the pre-acquisition level.79 Furthermore,

even if we presume that MHI will be awarded the LNG tank because of its affiliation with the

customer, this project would tell us nothing about competition in the LNG tank market when the

tank builder is not affiliated with the customer. 

Respondents also point to two projects – Exxon/Mobil’s Sabine Pass and Corpus Christi

terminals and Washington Gas Co.’s peak-shaving plant – as demonstrating competition because

suppliers other than CB&I have been pre-qualified. As our Opinion explained at length, such

early stage projects are not sufficiently advanced to provide us with evidence about these

bidders’ ability to constrain CB&I.80 

3. CB&I’s Post-Acquisition Wins

Even if we credit the losses identified in Respondents’ Petition, we must consider those

losses relative to the post-acquisition work that CB&I has obtained to determine the extent of

competition in the LNG tank market. Although Respondents did not provide much evidence

related to the work CB&I has obtained, it appears that CB&I has successfully negotiated at least

three sole-source contracts since the record closed.81 In addition to these contracts, CB&I had

already obtained five sole-source commitments after the acquisition but before the record

closed.82 Thus, of the eleven LNG tank contracts that have been awarded post-acquisition,83
§ 3.43(d).

83We have excluded the Dynegy project from our analysis, because Dynegy sold the

Hackberry facility to Sempra, which re-bid the project and selected a new EPC. 

84The three projects that Respondents assert CB&I lost after the record’s close – the

Sempra, Freeport LNG, and Sabine Pass terminals – total eight tanks (three 160,000 cubic meter

full-containment tanks for the Hackberry terminal, two tanks for the Freeport LNG import

terminal, and three single containment tanks for the Sabine Pass project). Respondents’ Petition

at Ex. 2(B) ¶ 3, Ex. 5 ¶ 3. CB&I has negotiated contracts to build six LNG facilities, which

comprise at least nine LNG tanks and likely many more. The Cove Point terminal expansion

will contain two 160,000 cubic meter tanks. Complaint Counsel’s Opposition at Ex. F. The

Lake Charles terminal expansion involves a 140,000 cubic meter tank, and the Yankee Gas

facility will have a smaller full-containment tank. Id. at Ex. C, Ex. E. In addition, CB&I has

negotiated sole-source contracts with BP (for three separate import terminals), Poten & Partners,

and El Paso. Op. at 60 n.356. Because both the BP and El Paso projects will be import

facilities, they are likely to comprise more than one LNG tank (the import facility awards in the

record generally comprise more than one LNG tank). See, e.g., Tr. at 6961, 6968 (Freeport

LNG’s facility comprises two LNG tanks); Tr. at 4539-40 (Dynegy’s Hackberry Facility

comprised three LNG tanks). 

85Respondents made this identical argument at trial and on appeal, RAB at 35; see

generally Tr. at 4860-72, and we found the evidence in the record did not support it. Op. at 64-

65. 

18

CB&I has successfully negotiated eight on a sole-source basis. 

We are mindful that there is some variation in the value of the post-acquisition projects in

terms of both size and number of tanks, which complicates the ability to state CB&I’s precise

market share. However, even accounting for these differences, it appears that CB&I has

obtained sole-source contracts for the vast majority of the LNG tank work post-acquisition.84

We also do not suggest that CB&I’s ability to obtain the majority of the post-acquisition

work alone demonstrates market power. Respondents rightly point out that even those firms that

bid unsuccessfully can theoretically constrain CB&I.85 However, we are not convinced that the

alleged new entrants have the attributes necessary to replace the competition lost in the LNG

tank market as a result of CB&I’s acquisition of PDM. At trial, numerous customers testified

that an LNG tank supplier would need to have experience, a solid reputation, experienced

supervisors, access to local labor forces, and regulatory expertise to compete effectively in this

market. The bidding evidence further established that customers take into account each of these

elements when they analyze a bidder’s strength. Moreover, the history of this market has shown
86Lotepro teamed with Whessoe and Black & Veatch teamed with TKK to submit bids for

MLGW’s peak-shaving plant in Capleville, Tennessee, and their bids were well above that of

CB&I. Tr. at 560, 3196-98. 

87See, e.g., RAB at 1 (“Each firm owns or is allied with a U.S. constructor to form a

combination focused on competing for U.S. LNG projects”).

88See Tr. at 4860-72.

89Id. Some customers also testified that although they would have concerns about

contracting with foreign LNG tank suppliers, the new entrants’ U.S. presence largely alleviated

these concerns. See, e.g., Tr. at 1322 (stating that if a foreign company teamed up with an

experienced US tank construction firm, that action would alleviate Bechtel’s concern with

subcontracting the tank). 

90The Opinion also discussed at length Technigaz/Zachry’s lack of experience and why it

was not a sufficient entrant. See generally Op. at 52-57. Respondents have not presented

sufficient evidence to rebut these findings.

91Respondents also elicited testimony at trial that Kvaerner was not a good project

manager. Tr. at 5543. Respondents took this position in an attempt to refute Complaint

Counsel’s argument that Whessoe’s poor record in constructing LNG tanks outside of the United

States would affect its ability to gain a foothold in the U.S. LNG tank market. Respondents

accordingly argued that Kvaerner, which had previously owned Whessoe, mismanaged the

projects at issue and that Whessoe would be more viable under Skanska’s management.

19

that LNG tank suppliers without a U.S. presence have failed to compete effectively with CB&I.86

Respondents did not argue at trial or on appeal that the attributes we have identified as

necessary to compete were unnecessary. Rather, they asserted that three new entrants –

Skanska/Whessoe, TKK/AT&V, and Technigaz/Zachry – could restore competition because

their U.S. construction presence provided them with these attributes.87 Luke Scorsone, the head

of CB&I’s Industrial Division, testified at length that Skanska/Whessoe’s, TKK/AT&V’s and

Technigaz/Zachry’s U.S. construction presence differentiated them from suppliers that had no

U.S. presence and had bid unsuccessfully on previous projects.88 He also stated that this U.S.

presence made the new entrants very serious competitors.89 Respondents’ Petition does not put

forth any evidence to suggest that such experience (and the attributes that flow from it) is no

longer necessary for an LNG tank supplier to compete effectively. 

We find, however, that the new entrants Respondents’ Petition identifies lack experience

in the U.S. LNG tank market.90 For example, Kvaerner/IHI has no experience in building LNG

tanks in the United States and is not partnered with a U.S. construction firm.91 Similarly, MHI

does not have a U.S. presence and, while Matrix is a U.S. firm, it has never built an LNG tank. 
92Op. at 33-42. One of Respondents’ witnesses even testified that it would consider IHI

only if it were partnered with a U.S. construction firm. Tr. at 7017. 

93Tr. at 1604.

94See discussion supra note 52.

95Accounting for the value of the tanks, Dr. Simpson estimated that CB&I’s total sales

amounted to 45.3% and PDM’s total sales amounted to 54.7% of the U.S. LNG tank market Tr.

at 3055-58; CX 1645. 

96See Complaint Counsel’s Opposition at 8.

20

Without such experience, it is unlikely that these suppliers have the ability to manage the project

or attract and efficiently work with qualified field crews and local labor at the same level as

PDM.92 Indeed, Matrix testified at trial that it would not expect to win an LNG tank bid against

CB&I given its inexperience.93 The recent evidence of a Matrix win does not undercut this

evidence, because the circumstances that surround the award do not demonstrate Matrix’s ability

to compete. We thus find that these firms do not have the capability to constrain CB&I at the

pre-acquisition level. 

We do not suggest that the new entrants will never be in a position to compete effectively

with CB&I and thus constrain it. If the entrants that have been awarded LNG tank contracts

successfully complete the projects, they will have established a foothold in this market. 

However, the evidence at trial established that it takes more than the successful completion of

one LNG tank to be an effective competitor in this market. Thus, even if we were willing to

assume that a few entrants will gain experience through their recent LNG tank awards, CB&I has

not established facts sufficient to support a finding that such limited experience will allow those

suppliers to constrain CB&I at the level PDM once did. 

We also find evidence that the alleged new entrants’ are unable to constrain CB&I in

both CB&I’s own conduct and its customers’ responses. CB&I has adhered to an unwavering

policy of insisting on sole-source contracts post-acquisition with little regard for whether its

policy will cause some loss in sales.94 Nonetheless, CB&I’s market share appears to have

increased post-acquisition – a trend that stands in sharp contrast to the dynamic that existed

when CB&I competed with PDM. From 1990 to the acquisition, CB&I won five of nine of the

LNG tanks awarded, PDM won the other four, and the value of the tank sales was roughly

even.95 The fact that CB&I has effected such an increase in market share while insisting on solesource contracts suggests that CB&I obtained market power from the acquisition. Moreover,

post-acquisition statements from CB&I’s CEO suggest that CB&I views itself as unconstrained

by new entry. At a shareholder discussion, he stated that CB&I can “win the work every time” if

it chooses to do so.96 Having carefully considered all this evidence, we adhere to our previous

conclusion that the new entrants do not sufficiently constrain CB&I and that the competition lost
97Contrary to Respondents’ assertions, the evidence presented in their petition is also

manipulable and can thus be viewed skeptically. See General Dynamics Corp., 415 U.S. at 504-

05 (“If a demonstration that no anticompetitive effects had occurred at the time of trial . . .

constituted a permissible defense to a §7 divestiture suit, violators could stave off such actions

merely by refraining from aggressive or anticompetitive behavior.”); Hospital Corp. of America

v. FTC, 807 F.2d 1381, 1384 (7th Cir. 1986) (“Post-acquisition evidence that is subject to

manipulation by the party seeking to use it is entitled to little or no weight.”); B.F. Goodrich Co.,

110 F.T.C. 207, 341 (1988) (same). See also FTC v. Consolidated Foods Corp., 380 U.S. 592,

598 (1965) (finding that the court of appeals gave too much weight to post-acquisition evidence

that, among other things, showed a declining share).

Although Respondents do not control the bids made by other LNG tank suppliers

or which bidder a customer might select for a given project, CB&I does have control over its

own bid. It can thus bid high enough to ensure that another LNG tank supplier wins some share

of the post-acquisition market (and thereby point to these wins as evidence that meaningful entry

has occurred). Because we have found that the balance of evidence does not support

Respondents’ argument, we need not determine whether the post-acquisition projects pointed to

by Respondents deserve less weight than other evidence.

98This conclusion is based on Respondents’ new evidence as well as the post-acquisition

evidence discussed in our Opinion. See, e.g., Op. at 57-58, 81-82. See also Scherer & Ross,

supra note 43 at 354 (“[U]ncertainty creates a switching cost that slows substitution in

consumption. When the superiority of a product can be evaluated only after consuming or

‘experiencing’ the good, the substitution will depend upon the rate at which consumers sample

new products.”).

21

from the acquisition has not been replaced.97

 

 4. Conclusions on the Sufficiency of Entry

We recognize that markets evolve and that monopolists may eventually be forced to

adjust their behavior in light of new entry. However, the LNG tank market has historically been

characterized by difficult entry conditions and dominated by CB&I and PDM for decades. There

is inadequate evidence to suggest that the fundamental dynamics of this market have changed. 

Indeed, the evidence suggests that entry is extraordinarily slow in the LNG tank market and has

not yet occurred on a sufficient scale.98 

Four years have passed since the acquisition and, at most, we find that new entrants have

taken only the first steps toward meaningful entry. Moreover, at this juncture, we cannot predict

what impact, if any, the awards identified by Respondents will actually have on the LNG tank

market. The new entrants’ potential for meaningful entry is dependent on their successful

completion of the LNG tanks. Even if they successfully complete these projects, we strongly

doubt that they will be viewed as comparable to the former PDM in the future, because the

customers in this market have a preference for experienced tank suppliers that have completed
99It is worth noting that, as with the LIN/LOX tank market (which underwent a huge

growth spurt and then faced declining demand), Tr. at 1542, the LNG tank market will likely

flatten at some point in the future as the number of completed LNG tanks begins to meet

demand. The fact that gaining a reputation in these markets requires more than winning one job

is highly relevant to this point – even if those suppliers who have won a bid complete

successfully the LNG tank, it is unlikely that having completed one job will put these suppliers

in parity with CB&I once demand slows. 

100United States v. Microsoft Corp., 253 F.3d 34, 101 (D.C. Cir. 2001).

101Op. at 104.

102Id. at 103-04. The only evidence Respondents identified in their appeal was customer

testimony that, according to Respondents, demonstrated that a divestiture would harm

competition by reducing “the number of competitors that can bid on large LNG projects.” RAB

at 52. We explained in our Opinion, however, that when read in context, this testimony did not

support Respondents’ argument. Id. at 100.

103Respondents’ Petition at 15.

22

multiple projects in the United States.99 For all these reasons, we find that the evidence in

Respondents’ Petition does not demonstrate that new entry has restored the competition lost

from the acquisition. We therefore affirm the findings in our Opinion and conclude that CB&I’s

acquisition of the PDM assets violated Section 5 of the FTC Act and Section 7 of the Clayton

Act.

B. Remedy Issues

We are mindful that an evidentiary hearing on the scope of relief might be necessary

where the trial does not address the issue of appropriate relief or where there is a factual dispute

about the relief required to remedy an antitrust violation.100 As we stated in our Opinion,

however, Respondents did not proffer evidence at trial or on appeal to suggest that the provisions

Complaint Counsel requested (many of which we implemented) were unnecessary.101 Rather,

they argued that Complaint Counsel bore the burden of establishing that their Proposed Order

was efficacious and feasible.102 We rejected this argument as not grounded in the law and thus

concluded that we need not remand this case for an evidentiary hearing on relief. 

Respondents’ Petition similarly does not present any evidence to suggest that the remedy

we ordered is unnecessary. Rather, it argues that “the Commission assumed without evidence,

argument, or specific analysis that an equal division of the broadly defined ‘Relevant Business’

was necessary to achieve that goal.”103 They argue that, while we offered a rationale for our

conclusion that certain types of assets needed to be included in the remedy, we “made no

findings and cited no evidence supporting [our] conclusions as to the quantity of such additional
104Id. (emphasis in original).

105 Du Pont, 366 U.S. at 325.

106Final Order ¶ III.A.

107Id.

108Id. 

109Op. at 94.

23

relief.”104 Respondents’ argument is inconsistent with the law and misreads the Final Order. 

A remedy must bear a reasonable relationship to correcting the harm that flows from the

antitrust violation. This is, however, a guiding principle and does not require a finder of fact to

calibrate the relationship perfectly. The Opinion discusses at length the facts that CB&I and

PDM were roughly equal competitors prior to the acquisition, the acquisition eliminated this

competition, and entry does not constrain CB&I at the pre-acquisition level. One way to

replicate the competition lost from this acquisition under these circumstances is by a divestiture

creating two independent entities, each equally capable of competing in the relevant markets. 

We need not demonstrate – as Respondents suggest – that the particular quantity of assets

included in the divestiture perfectly remedies the harm from the acquisition. Rather, our remedy

need only “eliminate the tendency of the acquisition condemned by §7.”105 

Moreover, contrary to Respondents’ assertions, the Final Order does not require CB&I to

divide its “Relevant Business” equally. Rather, it requires CB&I to “reorganize the Relevant

Business into two independent, stand-alone operating divisions . . . each fully, equally, and

independently engaged in all aspects of the Relevant Business.”106 It further states that the

purpose of this provision is to “create two stand-alone business entities, each having

approximately equal shares of the markets for the relevant products, each fully capable of being

divested, and each fully (and to the extent practicable, equally) engaged in all aspects of the

Relevant Business.”107 That is, the Final Order requires CB&I to create two entities equally

capable of competing in the relevant markets. Instead of requiring CB&I to divide its “Relevant

Business” along specific lines, the Final Order also allows CB&I the flexibility to decide how

best to effectuate the Final Order’s requirement.108 As we stated in our Opinion, we took this

approach to “give CB&I, which is best positioned to know how to create two viable entities from

its current business, the opportunity to do so.”109 The provision is thus grounded in the evidence

and adaptable enough to ensure that the remedy restores the competition lost from the acquisition

in a way that will not impede the efficient operation of the relevant markets. We therefore reject

Respondents’ argument that the remedy is not reasonably related to the alleged violations. 

Respondents make two additional arguments with respect to the remedy. First, they

assert that the definition of “Relevant Business” is too broad and potentially encompasses every
110Respondents also request that we require the acquirer to justify the divestiture of assets

beyond those acquired from PDM. Respondents’ Petition at 16. We reject this request. Our

Opinion specifically discussed whether a divestiture of the assets acquired from PDM would

remedy the harm from the acquisition. Based on the evidence, we concluded that a divestiture of

solely those assets “leaves a substantial likelihood that the tendency towards monopoly of the

acquisition condemned by § 7 has not been satisfactorily eliminated.” Op. at 103 (citing

DuPont, 366 U.S. at 331-32). 

111For example, the evidence shows that employees that build the relevant products also

build other types of water tanks. Tr. at 4058-60. 

112Op. at 99.

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project CB&I constructs. They thus argue that we should eliminate the requirement that CB&I

divest these unrelated assets.110 Second, Respondents request that we modify the Final Order to

make clear that the relief does not include assets beyond CB&I’s domestic business and

contracts. Although Respondents should have raised these issues well before now, we have

decided to seek additional briefing on each of them. This approach should ensure that the

divestiture will include the assets necessary for an acquirer to compete effectively in the relevant

markets without imposing unnecessary requirements on CB&I and interrupting the efficient

operation of the market. 

Therefore, we direct Respondents to file a brief within 10 days of service of this Decision

and Order. The brief should specifically identify those assets in the “Relevant Business”

definition that are unnecessary to build the relevant products and the water tank products. To the

extent the brief identifies any assets, we direct Respondents to explain why the inclusion of such

assets is unnecessary, especially in light of the facts that: (1) the assets identified in the

“Relevant Business” definition match those identified in PDM’s offering memorandum to CB&I;

and (2) the assets defined as CB&I’s “Relevant Business” are integrated with the assets

necessary to build the relevant products.111 Respondents may include an alternative suggestion

for a divestiture package that is consistent with our findings that “the additional water tank

assets, allocation of customer contracts, and transfer of employees are necessary to ensure that

the divested entity can compete effectively in the relevant markets” and that the provision of

technical assistance and administrative services may also be needed.112 Respondents’ brief

should also address which assets outside of the United States the “Relevant Business” definition

encompasses and why the inclusion of such assets is unnecessary for an effective divestiture. 

Complaint Counsel may file a response within 10 days after service of Respondents’ brief on

these issues. 

Accordingly,

IT IS ORDERED THAT Respondents’ Petition, filed February 1, 2005, is DENIED to

the extent it seeks reconsideration pursuant to § 3.55 of the Commission’s Rules of Practice, 16

C.F.R. § 3.55; and
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IT IS FURTHER ORDERED THAT Respondents’ Petition is DENIED on its merits

under § 3.72(a) of the Commission’s Rules of Practice, 16 C.F.R. § 3.72(a), insofar as it raises

issues concerning the effectiveness of new entry; and

IT IS FURTHER ORDERED THAT Respondents file a brief within 10 days of service

of this Decision and Order, addressing the issues identified in Part III.B of this Decision and

Order; and

IT IS FURTHER ORDERED THAT Complaint Counsel respond to Respondents’ brief

on these issues within 10 days of service or, in the alternative, give the Commission notice

within that 10-day time period that no response will be filed. 

By the Commission.

Donald S. Clark

Secretary

ISSUED: May 10, 2005