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Analysis to Aid Public Comment

In the Matter of Charlotte Pipe and Foundry, File No. 111-0034

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

approval, an Agreement Containing Consent Order (“Consent Agreement”) from Charlotte Pipe 

and Foundry Company (hereinafter “CP&F”) and its wholly-owned subsidiary, Randolph 

Holding Company, L.L.C. (hereinafter “Randolph”) (hereinafter jointly referred to as “Charlotte 

Pipe” or “Respondents”). The purpose of the Consent Agreement is to address the 

anticompetitive effects resulting from Charlotte Pipe’s 2010 acquisition (the “Acquisition”) of 

the cast iron soil pipe (“CISP”) business of Star Pipe Products, Ltd. (“Star Pipe”). The parties to 

that transaction also entered a “Confidentiality and Non-Competition Agreement.” The 

Acquisition was not reportable under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, 

15 U.S.C. 18a (“HSR Act”). The administrative complaint (“Complaint”) alleges that the 

Acquisition violated Section 7 of the Clayton Act, 15 U.S.C. § 18, and Section 5 of the Federal 

Trade Commission Act, 15 U.S.C. § 45. 

Under the terms of the proposed Consent Agreement, Charlotte Pipe is: required to 

provide prior notification to the FTC, for a period of ten years, of an acquisition of any entity 

engaged in the manufacture and sale of CISP products in or into the United States; prohibited 

from enforcing the “Confidentiality and Non-Competition Agreement” against Star Pipe; and 

required to inform its customers and the public of the Acquisition and other transactions 

involving other CISP competitors. 

The proposed Consent Agreement has been placed on the public record for 30 days for 

receipt of comments from interested members of the public. Comments received during this 

period will become part of the public record. After 30 days, the Commission will review the 

Consent Agreement again and the comments received, and will decide whether it should 

withdraw from the Consent Agreement or make final the accompanying Decision and Order. 

The purpose of this Analysis to Aid Public Comment is to invite and facilitate public 

comment. It is not intended to constitute an official interpretation of the proposed Consent 

Agreement and the accompanying Decision and Order or in any way to modify their terms. 

 

The Consent Agreement is for settlement purposes only and does not constitute an 

admission by Charlotte Pipe that the law has been violated as alleged in the Complaint or that the 

facts alleged in the Complaint, other than jurisdictional facts, are true. 

I. The Complaint 

The Complaint makes the following allegations. 

A. The Respondents 

 CP&F is a privately-held corporation with its principal place of business located at 2109 

Randolph Road, Charlotte, NC 28207. CP&F is one of the largest producers and sellers of CISP 

products in the United States. 
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 Randolph is a wholly-owned subsidiary of CP&F. Randolph, acting on behalf of CP&F, 

executed both the Acquisition agreement as the “Buyer” of Star Pipe’s CISP business and the 

“Confidentiality and Non-Competition Agreement” referenced herein.

B. The Product and Structure of the Market 

CISP products are components of pipelines systems used in buildings to transport 

wastewater to the sewer system, to vent the plumbing system, and to transport rainwater to storm 

drains. The end-users of CISP products are construction firms, plumbers, or developers. 

 The relevant line of commerce within which to analyze the effects of the Acquisition is 

the market for the sale of CISP products for use in commercial, industrial, and multi-story 

residential buildings in the United States. Plastic products are not a viable substitute for CISP 

products because state and local building codes in the United States generally require the use of 

CISP products in commercial, industrial, and multi-story residential buildings. 

 The relevant geographic market within which to analyze the effects of the Acquisition is 

no broader than the United States, and may contain smaller geographic markets consisting of 

states, multi-state regions, or metropolitan areas. 

 The United States CISP products market is highly concentrated. At the time of the 

Acquisition, two firms, Charlotte Pipe and McWane Inc., sold in excess of ninety percent of the 

CISP products in the United States. Companies that sell imported CISP products, including Star 

Pipe, accounted for the remaining sales. 

C. Star Pipe and the Acquisition 

In 2007, Star Pipe entered the United States CISP products market. Between 2007 and 2010, 

Star Pipe expanded its sales base throughout the United States. In contested markets, Star Pipe 

acted as a disruptive force, competing on price and service to the benefit of consumers. 

In July 2010, Charlotte Pipe executed an Asset Purchase Agreement with Star Pipe to acquire 

the assets of Star Pipe’s CISP business for approximately $19 million. Pursuant to the 

agreement, Charlotte Pipe purchased, among other things, Star Pipe’s inventory, its production 

equipment located in China, and its business records and customer list. The parties to the 

agreement also executed a “Confidentiality and Non-Competition Agreement” that prohibited 

Star Pipe and certain Star Pipe employees from competing with Charlotte Pipe in the United 

States, Mexico, and Canada for a period of six years. In addition, Star Pipe agreed to keep the 

Acquisition confidential and to send to its customers a letter indicating that it had decided to the 

exit the CISP business. After the Acquisition, Charlotte Pipe destroyed the CISP production 

equipment that it acquired from Star Pipe.

D. Conditions of Entry 

Entry into the relevant markets would not be timely, likely, or sufficient in magnitude, 

character, and scope to deter or counteract the anticompetitive effects of the Acquisition. 
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E. Effects 

The effects of Charlotte Pipe’s acquisition of Star Pipe’s CISP business have been a 

substantial lessening of competition in the relevant markets. Specifically, the Acquisition has: 

eliminated actual, direct, and substantial competition between Charlotte Pipe and Star Pipe in the 

relevant markets; substantially increased the level of concentration in the relevant markets; 

eliminated a maverick firm; increased the ability of Charlotte Pipe unilaterally to exercise market 

power; and prevented Star Pipe and certain Star Pipe employees from re-entering the CISP 

products market for a period of six years. 

II. The Proposed Order 

Paragraph II of the Proposed Order requires Charlotte Pipe to provide prior notification to 

the Commission of an acquisition of any entity engaged in the manufacture and sale of CISP 

products in or into the United States. This paragraph also requires Charlotte Pipe to comply with 

premerger notification procedures and waiting periods similar to those found in the HSR Act. 

 This provision is necessary because Charlotte Pipe has previously acquired several firms 

in the CISP products market in non-reportable transactions. The Proposed Order affords the 

Commission an appropriate mechanism to review all proposed acquisitions by Charlotte Pipe in 

the CISP products market to guard against future anticompetitive transactions. 

Paragraph III of Proposed Order prevents Charlotte Pipe from enforcing the 

Confidentiality and Non-Competition Agreement. This frees Star Pipe, and its current and 

former employees, to enter and compete against Charlotte Pipe in the United States, Canada, or 

Mexico. 

Paragraphs IV-VII impose reporting and other compliance requirements. In particular, 

Charlotte Pipe is required to send a letter to its customers and to maintain a link on its website 

relating to the Acquisition and Charlotte Pipe’s other non-reportable transactions, including 

Matco-Norca in 2009, DWV Casting Company (“DWV”) in 2004, and Richmond Foundry, Inc. 

(“Richmond Foundry”) in 2002. This provision is appropriate because Charlotte Pipe’s 

confidential acquisitions are not widely known in the CISP industry and have given rise to a 

perception among distributors and end-users that importers of CISP products are transient and 

unreliable operations. The proposed order serves to inform market participants about Charlotte 

Pipe’s role in the exit of Star Pipe, Matco-Norca, DWV, and Richmond Foundry from the CISP 

industry. 

The Proposed Order will expire in 10 years. 

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