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1110207

UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

COMMISSIONERS: Jon Leibowitz, Chairman

J. Thomas Rosch

Edith Ramirez

Julie Brill

 

)

In the Matter of )

)

CARPENTER TECHNOLOGY CORPORATION ) Docket No. C-4349

a corporation; )

)

and )

)

LATROBE SPECIALTY METALS, INC. )

a corporation. )

 )

ORDER TO MAINTAIN ASSETS 

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

proposed acquisition by Respondent Carpenter Technology Corporation (“Carpenter”) of 100

percent of the outstanding voting securities of Respondent Latrobe Specialty Metals, Inc.

(“Latrobe”) from HHEP-Latrobe, L.P., and Respondents having been furnished thereafter with a

copy of a draft of Complaint that the Bureau of Competition proposed to present to the

Commission for its consideration and that, if issued by the Commission, would charge

Respondents with violations of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and

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

Respondents, their attorneys, and counsel for the Commission having thereafter executed

an Agreement Containing Consent Orders (“Consent Agreement”), containing an admission by

Respondents of all the jurisdictional facts set forth in the aforesaid draft of Complaint, a

statement that the signing of said Consent Agreement is for settlement purposes only and does

not constitute an admission by Respondents that the law has been violated as alleged in such

Complaint, or that the facts as alleged in such Complaint, other than jurisdictional facts, are true,

and waivers and other provisions as required by the Commission’s Rules; and
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The Commission having thereafter considered the matter and having determined to

accept the executed Consent Agreement and to place such Consent Agreement on the public

record for a period of thirty (30) days for the receipt and consideration of public comments, now

in further conformity with the procedure described in Commission Rule 2.34, 16 C.F.R. § 2.34,

the Commission hereby issues its Complaint, makes the following jurisdictional findings and

issues this Order to Maintain Assets:

1. Respondent Carpenter Technology Corporation is a corporation organized,

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

with its headquarters address located at 101 West Bern Street, Reading,

Pennsylvania 19601.

2. Respondent Latrobe Specialty Metals, Inc. is a corporation organized, existing

and doing business under and by virtue of the laws of the State of Delaware, with

its headquarters address at 2626 Ligonier Street, Latrobe, Pennsylvania 15650. 

HHEP-Latrobe, L.P., the ultimate parent entity of Latrobe Specialty Metals, Inc.,

has its headquarters address at 100 Crescent Court, Suite 1200, Dallas, Texas

75201. “Latrobe” also includes HHEP-Latrobe, L.P., the ultimate parent entity of

Latrobe Specialty Metals, Inc. 

3. The Commission has jurisdiction of the subject matter of this proceeding and of

Respondents, and the proceeding is in the public interest.

ORDER

I.

IT IS ORDERED that, as used in this Order to Maintain Assets, the following

definitions and the definitions used in the Consent Agreement and the proposed Decision and

Order (and when made final and effective, the Decision and Order), which are incorporated

herein by reference and made a part hereof, shall apply:

A. “Carpenter” means Carpenter Technology Corporation, its directors, officers, employees,

agents, representatives, successors, and assigns; and its joint ventures, subsidiaries,

divisions, groups and affiliates in each case controlled by Carpenter (including, but not

limited to, Hawke Acquisition Corp.) and the respective directors, officers, employees,

agents, representatives, successors, and assigns of each. After the Acquisition, Carpenter

shall include Latrobe.

B. “Latrobe” means Latrobe Specialty Metals, Inc., its directors, officers, employees, agents,

representatives, successors, and assigns; and its joint ventures, subsidiaries, divisions,

groups and affiliates in each case controlled by Latrobe, and the respective directors,

officers, employees, agents, representatives, successors, and assigns of each. 

C. “Respondents” mean Carpenter and Latrobe, individually and collectively.
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D. “Decision and Order” means the:

1. Proposed Decision and Order contained in the Consent Agreement in this matter until

the issuance of a final Decision and Order by the Commission; and

2. Final Decision and Order issued by the Commission following the issuance and service

of a final Decision and Order by the Commission.

E. “Interim Monitor” means any monitor appointed pursuant to Paragraph III of this Order to

Maintain Assets or Paragraph III of the Decision and Order.

F. “Orders” means the Decision and Order and this Order to Maintain Assets.

G. “Commission” means the Federal Trade Commission.

H. “Specialty Metals Product Business(es)” means Respondent Latrobe’s business throughout

the United States of America related to all of the Specialty Metals Products, including the

research, Development, manufacture, distribution, marketing, and sale of each Specialty

Metals Product and the assets related to such business, including, but not limited to, the

Specialty Metals Product Assets.

I. “Pre-Acquisition Marketing Plan” means any marketing or sales plan that was planned or

implemented within the period immediately prior to the Acquisition and without

consideration of the influence of the pending Acquisition for the Specialty Metals Product

Business. 

II.

IT IS FURTHER ORDERED that from the date this Order to Maintain Assets becomes

final and effective:

A. Until Respondents fully deliver the Specialty Metals Product Assets to the Acquirer,

Respondents shall take such actions as are necessary to maintain the full economic viability,

marketability and competitiveness of the Specialty Metals Product Business, to minimize

any risk of loss of competitive potential for the Specialty Metals Product Business, and to

prevent the destruction, removal, wasting, deterioration, or impairment of the Specialty

Metals Product Business except for ordinary wear and tear. Respondents shall not sell,

transfer, encumber or otherwise impair the Specialty Metals Product Assets (other than in

the manner prescribed in the Decision and Order) nor take any action that lessens the full

economic viability, marketability or competitiveness of the Specialty Metals Product

Business.

B. Prior to the Acquisition Date and as a condition precedent to the consummation of the

Acquisition, Respondents shall secure all consents and waivers from all Third Parties that
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are necessary to permit Respondents to divest the Specialty Metals Product Assets required

to be divested pursuant to the Decision and Order to the Acquirer, and/or to permit such

Acquirer to continue the research, Development, manufacture, sale, marketing or

distribution of the Specialty Metals Products;

provided, however, Respondents may satisfy this requirement by certifying that the

Acquirer has executed all such agreements directly with each of the relevant Third

Parties.

C. Until Respondents fully deliver the Specialty Metals Product Assets to the Acquirer,

Respondents shall maintain the operations of the Specialty Metals Product Business in the

regular and ordinary course of business and in accordance with past practice (including

regular repair and maintenance of the assets of such Business) and/or as may be necessary

to preserve the marketability, viability, and competitiveness of the Specialty Metals Product

Business and shall use their best efforts to preserve the existing relationships with the

following: suppliers; vendors and distributors, including, but not limited to, the High

Volume Accounts; customers; Agencies; employees; and others having business relations

with the Specialty Metals Product Business. Respondents’ responsibilities shall include, but

are not limited to, the following:

1. Respondents shall provide the Specialty Metals Product Business with sufficient

working capital to operate at least at current rates of operation, to meet all capital calls

with respect to such Business and to carry on, at least at their scheduled pace, all capital

projects, business plans and promotional activities for the Specialty Metals Product

Business;

2. Respondents shall continue, at least at their scheduled pace, any additional expenditures

for the Specialty Metals Product Business authorized prior to the date the Consent

Agreement was signed by Respondents including, but not limited to, all research,

Development, manufacture, distribution, marketing and sales expenditures;

3. Respondents shall provide such resources as may be necessary to respond to competition

against the Specialty Metals Products and/or to prevent any diminution in sales of the

Specialty Metals Products during and after the Acquisition process and prior to

divestiture of the related Specialty Metals Product Assets;

4. Respondents shall provide such resources as may be necessary to maintain the

competitive strength and positioning of the Specialty Metals Products at the High

Volume Accounts;

5. Respondents shall make available for use by the Specialty Metals Product Business

funds sufficient to perform all routine maintenance and all other maintenance as may be

necessary to, and all replacements of, the assets related to such business, including the

Specialty Metals Product Assets;
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6. Respondents shall provide the Specialty Metals Product Business with such funds as are

necessary to maintain the full economic viability, marketability and competitiveness of

the Specialty Metals Product Business; and

7. Respondents shall provide such support services to the Specialty Metals Product

Business as were being provided to these Business by Respondents as of the date the

Consent Agreement was signed by Respondents.

D. Until Respondents fully deliver the Specialty Metals Product Assets to the Acquirer,

Respondents shall maintain a work force at least as equivalent in size, training, and

expertise to what has been associated with the Specialty Metals Products for the relevant

Specialty Metals Product’s most recent Pre-Acquisition Marketing Plan.

E. Respondents shall, during the Specialty Metals Product Employee Access Period, not

interfere with the hiring or employing by the Acquirer of Specialty Metals Product Core

Employees, and shall remove any impediments within the control of Respondents that may

deter these employees from accepting employment with such Acquirer, including, but not

limited to, any non-compete or non-disclosure provisions of employment or other contracts

with Respondents that would affect the ability or incentive of those individuals to be

employed by such Acquirer. In addition, Respondents shall not make any counteroffer to a

Specialty Metals Product Core Employee who receives a written offer of employment from

the Acquirer;

provided, however, subject to the conditions of continued employment prescribed in this

Order, this Paragraph II.E. shall not prohibit Respondents from continuing to employ any

Specialty Metals Product Core Employee under the terms of such employee’s

employment with Respondents prior to the date of the written offer of employment from

the Acquirer to such employee.

F. Respondents shall adhere to and abide by the Remedial Agreements (which agreements

shall not limit or contradict, or be construed to limit or contradict, the terms of the Orders, it

being understood that nothing in the Orders shall be construed to reduce any obligations of

Respondents under such agreement(s)), which are incorporated by reference into this Order

to Maintain Assets and made a part hereof.

G. The purpose of this Order to Maintain Assets is to maintain the full economic viability,

marketability and competitiveness of the Specialty Metals Product Business through its full

and complete delivery to the Acquirer, to minimize any risk of loss of competitive potential

for the Specialty Metals Product Business, and to prevent the destruction, removal, wasting,

deterioration, or impairment of any of the Specialty Metals Product Assets except for

ordinary wear and tear.
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III.

IT IS FURTHER ORDERED that:

A. At any time after Respondents sign the Consent Agreement in this matter, the Commission

may appoint an Interim Monitor to assure that Respondents expeditiously comply with all of

their obligations and perform all of their responsibilities as required by the Orders and the

Remedial Agreements. The Commission may appoint one or more Interim Monitors to

assure Respondents’ compliance with the requirements of the Orders, and the related

Remedial Agreements.

B. The Commission shall select the Interim Monitor, subject to the consent of Respondent

Carpenter, which consent shall not be unreasonably withheld. If Respondent Carpenter has

not opposed, in writing, including the reasons for opposing, the selection of a proposed

Interim Monitor within ten (10) days after notice by the staff of the Commission to

Respondent Carpenter of the identity of any proposed Interim Monitor, Respondents shall

be deemed to have consented to the selection of the proposed Interim Monitor.

C. Not later than ten (10) days after the appointment of the Interim Monitor, Respondents shall

execute an agreement that, subject to the prior approval of the Commission, confers on the

Interim Monitor all the rights and powers necessary to permit the Interim Monitor to

monitor Respondents’ compliance with the relevant requirements of the Orders in a manner

consistent with the purposes of the Orders.

D. If one or more Interim Monitors are appointed pursuant to this Paragraph or pursuant to the

relevant provisions of the Decision and Order in this matter, Respondents shall consent to

the following terms and conditions regarding the powers, duties, authorities, and

responsibilities of each Interim Monitor:

1. The Interim Monitor shall have the power and authority to monitor Respondents’

compliance with the divestiture and asset maintenance obligations and related

requirements of the Orders, and shall exercise such power and authority and carry out

the duties and responsibilities of the Interim Monitor in a manner consistent with the

purposes of the Orders and in consultation with the Commission;

2. The Interim Monitor shall act in a fiduciary capacity for the benefit of the Commission;

and

3. The Interim Monitor shall serve until, the latter of:

a. the date of completion by Respondents of the divestiture of all Specialty Metal

Product Assets and the delivery of the Manufacturing Technology and Product

Intellectual Property in a manner that fully satisfies the requirements of this Order;

and 
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b. with respect to each Specialty Metal Product, the date the Acquirer has obtained or

achieved all Product Approvals and Specifications necessary to manufacture,

market, import, export, and sell such Specialty Metal Product for use for aerospace

applications and id able to manufacture such Specialty Metal Product in commercial

quantities independently of Respondents;

provided, however, that the Interim Monitor’s service shall not exceed five (5) years

from the date the Decision and Order is issued; 

provided further, that the Commission may shorten or extend this period as may be

necessary or appropriate to accomplish the purposes of the Orders. 

E. Subject to any demonstrated legally recognized privilege, the Interim Monitor shall have

full and complete access to Respondents’ personnel, books, documents, records kept in the

normal course of business, facilities and technical information, and such other relevant

information as the Interim Monitor may reasonably request, related to Respondents’

compliance with their obligations under the Orders, including, but not limited to, their

obligations related to the relevant assets. Respondents shall cooperate with any reasonable

request of the Interim Monitor and shall take no action to interfere with or impede the

Interim Monitor's ability to monitor Respondents’ compliance with the Orders.

F. The Interim Monitor shall serve, without bond or other security, at the expense of

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

may set. The Interim Monitor shall have authority to employ, at the expense of the

Respondents, such consultants, accountants, attorneys and other representatives and

assistants as are reasonably necessary to carry out the Interim Monitor’s duties and

responsibilities.

G. Respondents shall indemnify the Interim Monitor and hold the Interim Monitor harmless

against any losses, claims, damages, liabilities, or expenses arising out of, or in connection

with, the performance of the Interim Monitor’s duties, including all reasonable fees of

counsel and other reasonable expenses incurred in connection with the preparations for, or

defense of, any claim, whether or not resulting in any liability, except to the extent that such

losses, claims, damages, liabilities, or expenses result from gross negligence, willful or

wanton acts, or bad faith by the Interim Monitor.

H. Respondent shall report to the Interim Monitor in accordance with the requirements of this

Order to Maintain Assets and/or as otherwise provided in any agreement approved by the

Commission. The Interim Monitor shall evaluate the reports submitted to the Interim

Monitor by Respondent, and any reports submitted by the Acquirer with respect to the

performance of Respondent’s obligations under the Orders or the Remedial Agreement(s). 

Within thirty (30) days from the date the Interim Monitor receives these reports, the Interim

Monitor shall report in writing to the Commission concerning performance by Respondent

of its obligations under the Orders; provided, however, beginning ninety (90) days after

Respondent has filed its final report pursuant to Paragraph VI.B. of the Decision and Order,
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and every ninety (90) days thereafter, the Interim Monitor shall report in writing to the

Commission concerning progress by the Acquirer toward:

1. obtaining all of the relevant Product Approvals and Specifications necessary to

manufacture in commercial quantities, the Specialty Metals Products independently of

Respondents and;

2. to secure sources of supply of the raw materials, inputs and components for the

Specialty Metals Products from entities other than Respondents. 

I. Respondents may require the Interim Monitor and each of the Interim Monitor’s

consultants, accountants, attorneys and other representatives and assistants to sign a

customary confidentiality agreement;

provided, however, that such agreement shall not restrict the Interim Monitor from

providing any information to the Commission.

J. The Commission may, among other things, require the Interim Monitor and each of the

Interim Monitor’s consultants, accountants, attorneys and other representatives and

assistants to sign an appropriate confidentiality agreement related to Commission materials

and information received in connection with the performance of the Interim Monitor’s

duties.

K. If the Commission determines that the Interim Monitor has ceased to act or failed to act

diligently, the Commission may appoint a substitute Interim Monitor in the same manner as

provided in this Paragraph or the relevant provisions of the Decision and Order in this

matter.

L. The Commission may on its own initiative, or at the request of the Interim Monitor, issue

such additional orders or directions as may be necessary or appropriate to assure compliance

with the requirements of the Orders.

M. The Interim Monitor appointed pursuant to this Order to Maintain Assets or the relevant

provisions of the Decision and Order in this matter may be the same person appointed as a

Divestiture Trustee pursuant to the relevant provisions of the Decision and Order.

IV.

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

Maintain Assets is issued, and every thirty (30) days thereafter until Respondents have fully

complied with their obligations under Paragraphs II.A., II.B., II.C. II.D., II.E., II.F. and II.H. of

the Decision and Order, Respondents shall submit to the Commission a verified written report

setting forth in detail the manner and form in which they intend to comply, are complying, and

have complied with this Order to Maintain Assets and the Decision and Order; provided,
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however, that, after the Decision and Order becomes final and effective, the reports due under

this Order to Maintain Assets shall be consolidated with, and submitted to the Commission at the

same time as, the reports required to be submitted by Respondents pursuant to Paragraph V of

the Decision and Order.

V.

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

thirty (30) days prior to:

A. any proposed dissolution of any Respondent;

B. any proposed acquisition, merger or consolidation of any Respondent; or 

C. any other change in any Respondent including, but not limited to, assignment and the

creation or dissolution of subsidiaries, if such change might affect compliance obligations

arising out of this Order to Maintain Assets.

VI.

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

with this Order to Maintain Assets, and subject to any legally recognized privilege, and upon

written request and upon five (5) days notice to any Respondent made to its principal United

States offices, registered office of its United States subsidiary, or its headquarters address,

Respondent shall, without restraint or interference, permit any duly authorized representative of

the Commission:

A. access, during business office hours of such Respondent and in the presence of counsel, to

all facilities and access to inspect and copy all books, ledgers, accounts, correspondence,

memoranda and all other records and documents in the possession or under the control of

such Respondent related to compliance with this Order to Maintain Assets, which copying

services shall be provided by such Respondent at the request of the authorized

representative(s) of the Commission and at the expense of the Respondent; and

B. to interview officers, directors, or employees of such Respondent, who may have counsel

present, regarding such matters.
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VII.

IT IS FURTHER ORDERED that this Order to Maintain Assets shall terminate on the

earlier of:

A. Three (3) days after the Commission withdraws its acceptance of the Consent Agreement

pursuant to the provisions of Commission Rule 2.34, 16 C.F.R. § 2.34; or

B. The latter of:

1. the day after the divestiture of all of the Specialty Metals Product Assets, as required by

and described in the Decision and Order, has been completed and each Interim Monitor,

in consultation with Commission staff and the Acquirer, notifies the Commission that all

assignments, conveyances, deliveries, grants, licenses, transactions, transfers and other

transitions related to such divestitures are complete, or the Commission otherwise

directs that this Order to Maintain Assets is terminated; or

2. the day after the day the Decision and Order becomes final and effective.

By the Commission.

Donald S. Clark

Secretary

SEAL

ISSUED: February 28, 2012