UNITED STATES OF AMERICA

BEFORE FEDERA TRAE COMMISSION

In the Matter of

CHICAGO BRIGE & IRON CaMP AN, N. PUBLIC

a foreign corporation

CHICAGO BRIGE & IRON COMPAN

a corporation, and

Docket No. 9300

PITT-DES MOINS, INC.,

a corporation.

To: Commssion

COMPLAINT COUNSEL'S RESPONSE TO CB&I'S

FURTHER BRIEFING ON COMPLAINT COUNSEL'

MOTION FOR CLARFICATION

Complaint Counsel submit this response to CB&I's March 28 2005 , Furher Briefing on

Complaint Counsel' s Motion for Clarfication ("CB&I Briefing ! which was filed in response

to the Commssion s order of March 15 2005. That order directs CB&I and Respondent PittDes Moines, Inc. ("PDM") each to submit a brief addressing the feasibility of granting a

transitional license to use their respective corporate names and marks to an Acquirer ofthe

Relevant Business to be divested pursuant to the Commission s Final Order.

Respondents Chicago Bridge & Iron Company N.V. and Chicago Bridge & Iron

Company are referred to herein collectively as "CB&I." 

On Februar 2 2005, Clifford A. Aronson and Charles W. Schwarz, Skadden

Ars, Slate, Meagher & Flom LLP, filed a notice of appearance as counsel representing

Respondent CB&I and Respondent Pitt-Des Moines, Inc. ("PDM"). Duane M. Kelley, Jeffrey A.

Leon et at. Winston & Strawn LLP, have withdrawn their appearance as counsel for

Respondents. On March 23 2005, Jennifer L. Gray, Brown Raysman, filed a notice of

appearance on behalfofRespondent PDM, now known as Ironbridge Corp. Respondent PDM'

successor is now represented by separate counsel and is expected to file a separate brief on the
I. The "Pitt-Des Moines" and "PDM" Corporate Names and Marks

In its brief, CB&Ireiterates that when it acquired PDM' s Engineered Construction

EC") and Water Divisions in 2001 , it acquired only a one-year, non-renewable, non-exclusive

transitional license to the use ofthe PDM marks, which expired on Februar 6 2002. CB&I

states that it therefore has no right or title in or to the PDM corporate names or marks that it

could transfer to an Acquirer. CB&I Briefmg at 1-2; see also Response to Complaint Counsel'

Petition for Reconsideration to Clarfy Respondents' Obligations as to the Pitt- Des Moines and

CB&I Corporate Names (FebDlar 11 , 2005).

Complaint Counsel recognze that CB&I does not curently own any rights to the "PittDes Moines" or "PDM" corporate names or marks, and thus is not curently in a position to grant

a license to an Acquirer for use of those names and marks. However, the Commission s Final

Order requirements, including the divestitue and asset maintenance obligations, apply to all

Respondents and therefore apply to Respondent PDM and its successors as well as to CB&I. See

Final Order 1. N. We understand that PDM has recently retained separate counsel in this

matter. CB&I states that it has conferred with PDM' s counsel and reports that it understands

that, in the event the Commission s divestiture order is upheld on appeal, and ifthe PDM name is

available, PDM would consider granting, on some commercially reasonable basis, a transitional

issue ofPDM' s obligations relating to the Pitt-Des Moines corporate names and marks under the

Commssion s Final Order. See CB&I Briefmg at 1 , n.

!. 

See Trademark Assignent and Trademark License Agreement" by and between

Pitt-Des Moines, Inc., as assignor and licensor, and Chicago Bridge & Iron Company N. and

CB&I Constrctors, Inc., as assignees and licensees, which was entered into in connection with

the Asset Purchase Agreement dated Februar 7 2001 , between PDM as seller and CB&I as

purchaser. See CX 328. 
license to use the PDM name to a purchaser of the divested assets. CB&I Briefing at 2. 

understand that PD wil inform the Commission of the current status of the PDM names and

marks, including whether and to what extent such names and marks may curently be licensed 

other firms for use outside the EC and Water Division businesses acquired by CB&I from PDM.

We anticipate that we may file a response to PDM' s brief to the Commission on this issue.

Complaint Counsel believe that, to the extent possible, the Acquirer should have the same

rights and ability to use the PDM name and marks in the operation of the Relevant Business, if it

chooses 4 that PDM had prior to the ilegal acquisition by CB&I, no matter which entity is

ultimately divested. For this reason, we fied the Motion for Clarfication and proposed

language that we believe would accomplish this result. See Proposed Order Modifyng Final

Order. Assuming the PDM names and marks are available and licensable by at least one of the

Respondents for use in connection with the Relevant Business to be divested pursuant to the

Commission s Final Order, Complaint Counsel believe that the PDM names and marks should be

divested and conveyed to anAcquirer on apermanent (i. not transitional) and exclusive basis

Given customer famliarty and the considerable goodwill associated with the PittDes Moines name prior to the Acquisition, it is conceivable that an Acquirer may wish to use that

name in connection with its marketing efforts to position itself as a reemerging strong competitor

to CB&I in the Relevant Business.

The Final Order curently requires CB&I to reorganize its "Relevant Business

including its corporate name and marks, into two new entities, nominated for puroses ofthe

Final Order "New PDM" and ' 'New CB&I " and then requires Respondents to divest the entity

techncally nominated "New PDM " or, under certain circumstances, the other entity. As set

fort in our Motion for Clarfication, Complaint Counsel believe that the Acquirer should in any

event acquire and possess, to the extent possible, all rights to the PDM name and marks on a

permanent and exclusive basis no matter which of the two entities is ultimately divested. We also

believe that CB&I should be allowed to retain all rights to its own name and marks on a

permanent basis except to the extent necessar to achieve the purose of, and to assure

compliance with, the Final Order, including as discussed herein.
for use withn whichever Relevant Business is divested. Respondents should understand that the

Final Order requires that the Relevant Business must be divested "at no minimum price." In

general, Complaint Counsel take no position on how the purchase price is allocated among the

Respondents or among the assets and business to be divested.

II A Transitional License to the CB&I Name and Marks

CB&I asserts that any use of its name, even on a transitional basis, would create the

potential for adverse consequences both in businesses that are subject to the Commission s Final

Order and in its businesses in other markets. CB&I Briefing at 2-3. Withno explanation other

than the asserted potential for har, CB&I claims it would not be feasible for it to grant even a

transitional license to the use ofthe CB&I name to an Acquirer. Id. at 2.

Complaint Counsel have not suggested that an Acquirer ofthe Relevant Business should

be able to hold itself out and conduct business as "CB&I." We do not dispute CB&I's point that

having two direct competitors operating in the United States under the CB&I name on a

permanent basis creates the potential for a variety of adverse consequences.6 For these reasons

Complaint Counsel sought clarfication ofthe Final Order s requirements to assure that CB&I

would not be required to divest all of its rights to the CB&I corporate name and marks to an

Acquirer. By seeking such clarfication, however, Complaint Counsel did not intend for the

Final Order s remedial purose to be undermined. CB&I's opposition to granting transitional

use of its name and marks has the potential to thwar the Order s contemplated divestitue relief

CB&I indicates that the Commission approved a consent agreement in In re

General Mils, Inc. FTC File No. 001-0213. CB&I Briefing at 3, n. 4. As a poin1 of

clarfication, the Commission took no action in that matter. See News Release (October 23

2001), htt://ww.ftc. gov/opa/2001/10/pilsbury.htm.
from the outset.

Since the Februar 7 2001 , Acquisition, CB&I has used and promoted the CB&I name in

connection with the combined business ofCB&I and PDM. In promotIng the merged company

busIness over the past four years, CB&I has attbuted to "CB&I" credit for, and reputation and

goodwill associated with, projects performed by PDM prior to the Acquisition. The divestiture

must assure transfer to the Acquirer of this reputation and goodwill as well as a share ofthe

reputation and goodwil developed by the merged firm over the past four years. Having absorbed

PDM' s reputation and goodwill into the CB&I name, CB&I canot thwar divestiture relief by

now claiming that the CB&I reputation and goodwil should remain the exclusive propert of

CB&I.

Moreover, it is foreseeable that a purchaser will need a transitional license to use CB&I's

name and marks in connection with the operation of the Relevant Business

g., 

the CB&I

letterhead or logo may appear on drawings, plans and other materials that would be transferred to

the Acquirer in connection with divestitue pursuant to the Final Order. It is therefore reasonable

to require CB&I to grant a transitional license to use its name and marks in connection with the

ordered divestitue. As a practical matter, the transfer of any business from a selling company to

a purchaser frequently requires some form of interim license to use the seller s name and marks

as needed in connection with the purchased assets and business. For this reason, transitional

licenses are not uncommon whenever a business or product line is sold.

We also believe it is feasible for CB&I to grant a transitional license that includes

appropriate limits and safeguards to address its legitimate concerns. CB&I's own transitional

license to the PDM corporate name and marks that it acquired in connection with its acquisition
ofPDM' s EC and Water Divisions ilustrates that there are numerous ways for a licensor to

protect its ownership rights and the goodwil associated with its name and marks durng any

transitional period of use by an unelated third-par purchas

Finally, following the Acquisition, CB&I induced PDM' s customers to assign their

contracts to CB&I. In order to restore competition to the relevant markets, CB&I must now take

such actions as are necessar, including, but not limited to, payment of incentives, to obtain the

assignent or other transfer of existing business and contracts to the Acquirer to accomplish the

divestitue required by the Commssion s Final Order. . CB&I argues that the existence of nonassignability and default clauses in its customer contracts are the primar factors inhbiting its

ability to transfer such contracts to an Acquirer, and that a transitional license to the CB&I name

would not address these issues. CB&I Briefing at 3-4. The Final Order requires CB&I to inter

alia accomplish all actions necessar to ensure that Customer Contracts are assigned in

connection with the ordered divestiture. See Final Order ~ m.B. Once CB&I has complied with

these preliminar requirements, a transitional license would likely be needed following a

successful assignent of Customer Contracts to the Acquirer for the reasons discussed herein.

CONCLUSION

For the reasons herein, Complaint Counsel believe that Respondents should be required

to divest and convey the PDM name and marks to an Acquirer on a pennanent and exclusive

basis. We fuher believe that CB&I should. be required to grant a license for the use of its name

and marks to an Acquirer to the extent necessary to achieve the purose of, and to assure

compliance with, the Final Order, including, if necessary, granting a license on a transitional

See note 3 supra.
basis to the purchaser of the divested business. Finally, we believe the language we have

proposed in the Proposed Order Modifyng Order would accomplish these objectives.

DATED: April 6, 2005

Respectfully submitted

;W7P

Rhett R. Krlla

Elizabeth A. Piotrowski

Naomi Licker

David von Nirschl

Counsel Supporting the Complaint

Bureau of Competition

Federal Trade Commission

Washington, D.C. 20580
CERTIFICATE OF SERVICE

I hereby certify that I today caused:

One original and twelve copies of COMPLAINT COUNSEL S RESPONSE TO CB&I's

FURTHER BRIEFING ON COMPLAINT COUNSEL S MOTION FOR CLARIFICATION to be

served by hand delivery and one copy to be served by electronic mail upon:

Offce of the Secretar

Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

One copy by facsimile and by first-class mail upon:

Jennifer L. Gray, Esq.

Robert M. Unger, Esq.

Brown Raysman Millstein Felder & Steiner LLP

900 Third Avenue

New York, New York 10022

Tel: (212) 895-2130

Fax: (212) 895-2900

Clifford H. Aronson, Esq.

Skadden, Ars, Slate, Meagher & Flom LLP

Four Times Square

New York, NY 10036

Tel: (212) 735-2644

Fax: (917) 777-2644

Counsel for Respondents

Rhett R. Krlla

Commission Counsel

Dated: April 6, 2005