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ANALYSIS OF PROPOSED AGREEMENT CONTAINING CONSENT ORDERS 

TO AID PUBLIC COMMENT 

In the Matter of Carpenter Technology Corporation and Latrobe Specialty Metals, Inc. 

File No. 111-0207 

I. Introduction 

The Federal Trade Commission (“Commission”) has accepted, subject to final approval, 

an Agreement Containing Consent Orders (“Consent Agreement”) with Carpenter Technology 

Corporation (“Carpenter”), Latrobe Specialty Metals, Inc. (“Latrobe”), and HHEP-Latrobe, L.P., 

which is designed to remedy the anticompetitive effects of Carpenter’s proposed acquisition of 

Latrobe. 

Pursuant to an Agreement and Plan of Merger dated June 20, 2011, Carpenter intends to 

acquire all of Latrobe’s voting securities for approximately $410 million. Carpenter and Latrobe 

compete in the sale of specialty alloys used in the aerospace, energy, and other industries. The 

proposed acquisition would result in a merger to monopoly in the market for two of these 

specialty alloys: (1) MP159 and (2) MP35N used in aerospace applications (“Aerospace 

MP35N,” and collectively, the “MP Alloys”). The Commission’s Complaint alleges that the 

proposed acquisition, if consummated, would violate Section 7 of the Clayton Act, as amended, 

15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 

45, in the markets for each of the MP Alloys. 

The proposed Consent Agreement remedies the alleged violations by replacing the lost 

competition in the relevant markets that would result from the acquisition. Under the terms of 

the Consent Agreement, Carpenter is required to divest assets related to the manufacture and sale 

of the MP Alloys to Eramet S.A. (“Eramet”). The Consent Agreement requires Carpenter to 

provide Eramet with all of the relevant equipment, licenses, and technical information necessary 

for Eramet to replace Latrobe as a competitor in the markets for the MP alloys. In addition, the 

Consent Agreement requires Carpenter to contract manufacture the MP Alloys for Eramet at cost 

until Eramet is able to produce and commercially sell these products on its own. 

The proposed Consent Agreement has been placed on the public record for thirty days, 

and comments from interested persons have been requested. Comments received during this 

period will become part of the public record. After thirty days, the Commission will again 

review the proposed Consent Agreement and the comments received, and will decide whether it 

should withdraw from the proposed Consent Agreement, modify it, or make final the 

accompanying Decision and Order. 

II. The Products and Structure of the Markets 

The MP Alloys have unique physical characteristics that make them well suited for use in 

aerospace applications, and especially in aerospace engine fasteners. Purchasers of the MP 

Alloys are generally willing to consider overseas suppliers, although to avoid the cost of dual 

inventories for commercial and military customers, they typically require that suppliers be 

located in countries approved by Congress to supply materials for military purposes. For these 
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reasons, the relevant markets in which to analyze the competitive effects of the proposed 

acquisition are the markets for MP159 and Aerospace MP35N manufactured in the United States 

and in foreign countries approved to supply materials for military purposes under the Defense 

Federal Acquisition Regulation System (“DFARS”). In these markets, Carpenter and Latrobe 

are the only options for U.S. consumers, and the proposed transaction would create a monopoly 

in both relevant markets. 

III. Entry 

 

Entry or expansion by other specialty alloy manufacturers is not likely to avert the 

anticompetitive impact of Carpenter’s acquisition of Latrobe. The time and cost required to 

obtain the physical assets, expertise, and qualifications necessary to produce the MP Alloys are 

substantial, and far outweigh the potential profits from entry into these small markets. 

IV. Effects of the Acquisition 

The proposed acquisition likely would result in significant anticompetitive harm in the 

highly-concentrated relevant markets for each of the MP Alloys. Carpenter and Latrobe are the 

only competitors in these highly-concentrated markets. The acquisition will eliminate actual, 

direct, and substantial competition between Carpenter and Latrobe, and likely result in higher 

prices for both of the MP Alloys. 

V. The Consent Agreement 

The proposed Consent Agreement remedies the competitive concerns raised by the 

transaction by requiring the parties to divest assets related to the manufacture of the MP Alloys 

to Eramet. The terms required by the Consent Agreement will enable Eramet to effectively 

replace the competition in the MP Alloys markets lost as a result of the proposed acquisition. 

Eramet is a global supplier of specialty alloys with an established sales and marketing 

network in the United States that will allow it to be immediately competitive in the relevant MP 

Alloys markets. Eramet is based in France, which is an approved foreign source country for U.S. 

military operations under DFARS. The proposed Consent Agreement requires Carpenter to 

provide Eramet with product licenses and the manufacturing technology necessary to 

manufacture the MP Alloys. This includes technical assistance from current Latrobe company 

designees, and confidential business information directly related to the manufacture of the MP 

Alloys. In addition, the Consent Agreement requires Carpenter to contract manufacture the MP 

Alloys for Eramet at cost until Eramet is able to produce and commercially sell these products on 

its own. The Commission has appointed James R. Bucci, who has over 35 years of experience in 

the specialty alloy industry, as the interim monitor to oversee the divestiture. 

If after the public comment period the Commission determines that Eramet is not an 

acceptable acquirer of the assets to be divested, or that the manner of the divestitures is not 

acceptable, Carpenter must unwind the divestiture and divest the assets within 180 days of the 

date the Order becomes final to another Commission-approved acquirer. If Carpenter fails to 
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divest the assets within the 180 days, the Commission may appoint a trustee to divest the 

relevant assets. 

 The purpose of this analysis is to facilitate public comment on the proposed Consent 

Agreement, and it is not intended to constitute an official interpretation of the proposed Consent 

Agreement or to modify its terms in any way.