________________________________________________ 

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PUBLIC 

UNITED STATES OF AMERICA 

FEDERAL TRADE COMMISSION 

OFFICE OF ADMINISTRATIVE LAW JUDGES 

DOCKET NO. 9377 

In the Matter of 

TRONOX LIMITED 

a corporation, 

NATIONAL INDUSTRIALIZATION COMPANY 

(TASNEE) 

a corporation, 

NATIONAL TITANIUM DIOXIDE COMPANY 

LIMITED (CRISTAL) 

a corporation, and 

CRISTAL USA INC. 

a corporation, 

Respondents. 

INITIAL DECISION 

D. Michael Chappell 

Chief Administrative Law Judge 

Date: December 14, 2018 
TABLE OF CONTENTS 

I. INTRODUCTION ............................................................................................................ 1 

A. Summary of the Case ...............................................................................................1 

B. Summary of Evidence Presented .............................................................................3 

II. ANALYSIS ........................................................................................................................ 6 

A. Background ..............................................................................................................6 

1. TiO2 generally .............................................................................................6 

2. Respondents and the challenged transaction................................................7 

B. Applicable Legal Standards .....................................................................................8 

1. In general .....................................................................................................8 

2. Merger law ...................................................................................................8 

a. Statutory framework ...........................................................................8 

b. Burden shifting framework ...............................................................10 

C. Relevant Market.....................................................................................................11 

1. Product market ...........................................................................................11 

a. Legal standards .................................................................................11 

b. Distinct characteristics of chloride TiO2 and sulfate TiO2 ..............13 

c. Reasonable interchangeability ..........................................................16 

d. Price differential................................................................................18 

e. Respondents’ opposing arguments ...................................................20 

f. Summary...........................................................................................21 

2. Geographic market.....................................................................................21 

a. Legal standards .................................................................................21 

b. Regional pricing by TiO2 suppliers..................................................23 

c. North America region is the United States and Canada ...................24 

d. Higher prices in North America........................................................25 

e. Arbitrage ...........................................................................................26 

f. Respondents’ opposing arguments ...................................................28 

3. Economic evidence ....................................................................................29 

4. Conclusion .................................................................................................30 

D. Prima Facie Case....................................................................................................31 

1. Market shares and concentration ...............................................................31 

2. Reasonable probability of anticompetitive effects.....................................32 

a. Overview...........................................................................................32 

b. Likelihood of coordinated effects .....................................................33 

i. Legal principles....................................................................... 33 

ii. Analysis................................................................................... 34 

iii. Respondents’ opposing arguments ......................................... 41 

iv. Summary................................................................................. 43 

3. Conclusion .................................................................................................43 

i 
E. Rebuttal..................................................................................................................43 

1. Entry...........................................................................................................44 

a. Applicable legal standards ................................................................44 

b. Analysis.............................................................................................45 

c. Summary...........................................................................................50 

2. Efficiencies ................................................................................................51 

a. Applicable legal standards ................................................................51 

b. Analysis.............................................................................................52 

i. Output increasing synergies.................................................... 53 

(a) Vertical integration ........................................................ 53 

(b) Planned improvements to Jazan slagger 

and Yanbu plant ............................................................. 54 

(c) Summary........................................................................ 58 

ii. Cost savings ............................................................................ 59 

3. Conclusion .................................................................................................60 

F. Remedy ..................................................................................................................60 

III. FACTS ............................................................................................................................. 63 

A. Background ............................................................................................................63 

1. Titanium dioxide........................................................................................63 

2. The parties and the proposed acquisition...................................................64 

a. Tronox...............................................................................................64 

b. Cristal................................................................................................64 

c. Proposed acquisition .........................................................................65 

d. Key employees of Respondents ........................................................65 

i. Tronox..................................................................................... 65 

ii. Cristal...................................................................................... 67 

3. Other TiO2 manufacturers .........................................................................67 

4. TiO2 customers..........................................................................................67 

B. Relevant Market.....................................................................................................68 

1. Relevant product market ............................................................................68 

a. Differences in attributes of chloride TiO2 and 

sulfate TiO2 ......................................................................................68 

i. Brightness ............................................................................... 69 

ii. Durability ................................................................................ 70 

iii. Consistency for point of sale tinting ....................................... 70 

iv. Other performance attributes .................................................. 71 

v. Slurry....................................................................................... 72 

b. Unsuitability of sulfate TiO2 ............................................................73 

c. Reformulation of products to switch from chloride TiO2 

to sulfate TiO2 ..................................................................................75 

d. Price of chloride TiO2 compared to sulfate TiO2 ............................76 

2. Relevant geographic market ......................................................................78 

a. Regional pricing................................................................................78 

b. The North America region ................................................................80 

ii 
c. Price difference between North America and 

other regions......................................................................................81 

d. Delivery of chloride TiO2 to customers’ locations, with 

delivered pricing ...............................................................................82 

e. Costs and logistical considerations of importing TiO2.....................83 

f. Arbitrage ...........................................................................................85 

3. Hypothetical monopolist test .....................................................................86 

C. Prima Facie Case....................................................................................................88 

1. Market structure .........................................................................................88 

2. Coordinated effects ....................................................................................90 

a. Interdependence ................................................................................90 

b. Product homogeneity ........................................................................96 

c. Ability to learn competitors’ actions.................................................97 

i. Public statements .................................................................... 97 

ii. Customer-provided information............................................ 100 

d. Price elasticity.................................................................................102 

3. Views of industry participants and customers .........................................102 

D. Rebuttal................................................................................................................103 

1. Entry.........................................................................................................103 

2. Efficiencies ..............................................................................................109 

a. Feedstock ........................................................................................109 

b. Jazan slagger ...................................................................................110 

c. Yanbu plant.....................................................................................114 

d. Cost savings ....................................................................................118 

IV. SUMMARY OF CONCLUSIONS OF LAW............................................................. 120 

ORDER................................................................................................................................... 123 

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I. INTRODUCTION 

A. Summary of the Case 

This action, issued by the Federal Trade Commission (“FTC” or “Commission”)

on December 5, 2017, challenges a proposed acquisition by Respondent Tronox Limited 

(“Tronox”) of the titanium dioxide business of The National Titanium Dioxide Company 

Limited (“Cristal”)1 (the “Acquisition” or “Transaction”). In summary, the Complaint 

alleges that the Acquisition may substantially lessen competition in the market for the 

sale of chloride process titanium dioxide (“chloride TiO2”) in North America, in 

violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of 

the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 45. Respondents deny that 

the Acquisition will substantially lessen competition and further assert that the 

Acquisition will be procompetitive because it will result in substantial synergies and 

efficiencies that outweigh any anticompetitive effects. Answer of Tronox ¶ 3 and 

affirmative defense ¶¶ 9-13; Answer of TASNEE and Cristal ¶ 3 and affirmative defense 

¶ 10. 

The FTC did not file an ancillary action for a preliminary injunction against the 

Acquisition in federal district court under Section 13(b) of the FTC Act at the time the 

Complaint was filed, as is customary in unconsummated merger cases. The reason 

provided by Complaint Counsel for not filing for a preliminary injunction at that time 

was that Tronox and Cristal were not in a position to close the Transaction until they 

received approval from the European Commission. 

The evidentiary hearing in this matter, which commenced May 18, 2018, was 

conducted over 16 days and was completed on June 22, 2018. Thereafter, the parties 

1 Respondent The National Industrialization Company (“TASNEE”) is the majority owner of Respondent 

The National Titanium Dioxide Company and the ultimate parent of Respondent Cristal USA Inc. Both 

TASNEE and The National Titanium Dioxide Company are Saudi Arabian entities. Cristal USA Inc. is a 

Delaware corporation. Complaint ¶¶ 10-12; Answer of TASNEE and Cristal ¶¶ 10-12; Joint Stipulations of 

Jurisdiction, Law, and Fact ¶ 4. For ease of reference, the name “Cristal” is used herein to refer to the 

subject of the Acquisition, as well as to the three affiliated corporate entities, unless the context otherwise 

dictates. 
 

 

 

 

 

 

 

 

 

 

 

submitted post-trial briefs, proposed findings of fact, and replies to each other’s briefs 

and proposed findings of fact.

2 

The European Commission granted conditional approval of the Acquisition on 

July 4, 2018. See http://europa.eu/rapid/press-release_IP-18-4361_en.htm. On July 10, 

2018, after completion of the evidentiary hearing and more than seven months after the 

administrative complaint was filed, the FTC filed an action for a preliminary injunction in 

federal district court. That action was submitted for decision based on the administrative 

record in this matter and an abbreviated court hearing. On September 5, 2018, the district 

court entered a preliminary injunction against the Acquisition, pending final agency 

action and conclusion of any appeals, finding, inter alia, that the FTC demonstrated a 

likelihood that the proposed transaction will substantially lessen competition for the sale 

of chloride TiO2 in North America. FTC v. Tronox Ltd., 2018 U.S. Dist. LEXIS 155127, 

at *3-4 (D.D.C. Sept. 12, 2018) (“Preliminary Injunction Opinion”). 

Upon full consideration of the entire record, and as more fully explained below, 

the evidence in this proceeding proves a strong prima facie case that the Acquisition may 

substantially lessen competition in the relevant market for the sale of chloride TiO2 in 

North America, by creating a highly concentrated market and increasing the likelihood of 

coordinated effects. Respondents have failed to rebut this proof, including by failing to 

demonstrate that entry or expansion would be timely, likely, and sufficient to counteract 

the likely anticompetitive effects of the Acquisition, or to demonstrate cognizable 

synergies or efficiencies that might justify the likely anticompetitive effects of the 

Acquisition. Accordingly, the evidence proves that the Acquisition may substantially 

lessen competition. Therefore, pursuant to Section 7 of the Clayton Act and Section 5 of 

the FTC Act, the Acquisition will be enjoined. 

2 Rule 3.51(a) of the Commission’s Rules of Practice states that “[t]he Administrative Law Judge shall file 

an initial decision within 70 days after the filing of the last filed initial or reply proposed findings of fact, 

conclusions of law and order . . . .” 16 C.F.R. § 3.51(a). The last reply proposed findings and conclusions 

and briefs were filed on September 7, 2018. Seventy days from the last filed reply proposed findings and 

conclusions and briefs was November 19, 2018, and, absent an order pursuant to Rule 3.51, the Initial 

Decision was to be filed on or before November 19, 2018. Based on the voluminous and complex record in 

this matter, an Order was issued on November 9, 2018, finding good cause for extending the time period 

for filing the Initial Decision by 30 days. Accordingly, issuance of this Initial Decision by December 19, 

2018 is in compliance with Commission Rule 3.51(a). 

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B. Summary of Evidence Presented 

The record in this matter consists of the testimony of a total of 63 witnesses, 

presented live or by deposition. Over 3,690 exhibits were also admitted into evidence. 

Individuals referenced in this Initial Decision include current and/or former employees of 

Tronox and Cristal, competing TiO2 producers, and TiO2 customers. 

This Initial Decision is based on a consideration of the whole record relevant to 

the issues and addresses the material issues of fact and law. The briefs and proposed 

findings of fact and conclusions of law, and the replies thereto, submitted by the parties, 

and all contentions and arguments therein were thoroughly reviewed and considered. 

Proposed findings of fact submitted by the parties that were not accepted in this Initial 

Decision were rejected, either because they were not supported by the evidence or 

because they were not dispositive or material to the determination of the merits of the 

case. Similarly, legal contentions and arguments of the parties that are not addressed in 

this Initial Decision were rejected, because they lacked support in fact or law, were not 

material, or were otherwise lacking in merit.3 In addition, all expert opinion evidence 

submitted in this case has been fully reviewed and considered. Except as expressly relied 

on or adopted in this Initial Decision, such opinions have been rejected, as either 

unreliable, unsupported by the facts, or unnecessary to the findings and conclusions 

herein. 

3 Ruling upon a decision of the Interstate Commerce Commission, and interpreting language in the 

Administrative Procedure Act (“APA”) that is almost identical to language in Commission Rule 3.51(c)(1), 

the United States Supreme Court held that “[b]y the express terms of [that Act], the Commission is not 

required to make subordinate findings on every collateral contention advanced, but only upon those issues 

of fact, law, or discretion which are ‘material.’” Minneapolis & St. Louis Ry. Co. v. United States, 361 U.S. 

173, 193-94 (1959). Accord Stauffer Labs., Inc. v. FTC, 343 F.2d 75, 82 (9th Cir. 1965). See also Borek 

Motor Sales, Inc. v. NLRB, 425 F.2d 677, 681 (7th Cir. 1970) (holding that it is adequate for the Board to 

indicate that it had considered each of the company’s exceptions, even if only some of the exceptions were 

discussed, and stating that “[m]ore than that is not demanded by the [APA] and would place a severe 

burden upon the agency”). Furthermore, the Commission has held that Administrative Law Judges are not 

required to discuss the testimony of each witness or all exhibits that are presented during the administrative 

adjudication. In re Amrep Corp., 102 F.T.C. 1362, 1670, 1983 FTC LEXIS 17, at *566-67 (Nov. 2, 1983). 

3 
 

 

 

 

 

 

 

 

All findings of fact in this Initial Decision are supported by reliable, probative, 

and substantial evidence. Citations to specific numbered findings of fact in this Initial 

Decision are designated by “F.”4 

Pursuant to Commission Rule 3.45(b), several orders were issued in this case 

granting in camera treatment to material, after finding, in accordance with the Rule, that 

its public disclosure would likely result in a clearly defined, serious injury to the entity 

requesting in camera treatment or that the material constituted “sensitive personal 

information,” as that term is defined in Commission Rule 3.45(b). In addition, when the 

parties sought to elicit testimony at trial that revealed information that had been granted 

in camera treatment, the hearing went into an in camera session. Commission Rule 

3.45(a) allows the Administrative Law Judge (“ALJ”) “to grant in camera treatment for 

information at the time it is offered into evidence subject to a later determination by the 

[administrative] law judge or the Commission that public disclosure is required in the 

interests of facilitating public understanding of their subsequent decisions.” In re BristolMyers Co., 90 F.T.C. 455, 457, 1977 FTC LEXIS 25, at *6 (Nov. 11, 1977). As the 

Commission later reaffirmed in another leading case on in camera treatment, since “in 

some instances the ALJ or Commission cannot know that a certain piece of information 

may be critical to the public understanding of agency action until the Initial Decision or 

the Opinion of the Commission is issued, the Commission and the ALJs retain the power 

to reassess prior in camera rulings at the time of publication of decisions.” In re General 

Foods Corp., 95 F.T.C. 352, 356 n.7, 1980 FTC LEXIS 99, at *12 n.7 (March 10, 

4 References to the record are abbreviated as follows: 

PX – Complaint Counsel’s Exhibit

RX – Respondents’ Exhibit 

JX – Joint Exhibit 

Tr. – Transcript of testimony before the Administrative Law Judge 

Dep. – Transcript of Deposition 

IHT – Transcript of Investigational Hearing 

CCB – Complaint Counsel’s Post-Trial Brief 

CCRB – Complaint Counsel’s Post-Trial Reply Brief 

CCFF – Complaint Counsel’s Proposed Findings of Fact 

CCRRFF – Complaint Counsel’s Reply to Respondent’s Proposed Findings of Fact

RB – Respondents’ Post-Trial Brief 

RRB – Respondents’ Post-Trial Reply Brief 

RFF – Respondents’ Proposed Findings of Fact 

RRCCFF – Respondents’ Reply to Complaint Counsel’s Proposed Findings of Fact

4 
1980). Thus, in instances where a document or trial testimony had been given in camera 

treatment, but the portion of the material cited to in this Initial Decision does not in fact 

merit in camera treatment, such material is disclosed in the public version of this Initial 

Decision, pursuant to Commission Rule 3.45(a) (the ALJ “may disclose such in camera 

material to the extent necessary for the proper disposition of the proceeding”). Where in 

camera information is used in this Initial Decision, it is indicated in bold font and braces 

(“{ }”) in the in camera version and is redacted from the public version of the Initial 

Decision, in accordance with Commission Rule 3.45(e). 

5 
 

 

 

 

 

 

 

 

II. ANALYSIS 

A. Background 

1. TiO2 generally 

Titanium dioxide, or TiO2, is an industrial chemical used primarily as a pigment.5 

F. 1. TiO2 is used to add whiteness, brightness, opacity and durability to paints, 

industrial and automotive coatings, plastics, and other specialty products. As discussed 

in more detail below, there are five major TiO2 producers. These are, in addition to 

Tronox and Cristal, Kronos Worldwide, Inc. (“Kronos”), the Chemours Company

(“Chemours”), and Venator Materials PLC (“Venator”). F. 41-43, 192. 

TiO2 is produced by mining heavy materials that are concentrated in sand dunes, 

such as ilmenite, which is a combination of titanium oxide and iron oxide. F. 4, 338, 340. 

A smelting process separates the iron and converts the material into TiO2 “feedstock,” or 

“slag,” which is the raw material that gets transformed into TiO2 pigment. F. 4, 342. 

TiO2 can be manufactured from feedstock using either a chloride process (“chloride

TiO2”) or a sulfate process (“sulfate TiO2”). F. 4. In summary, the chloride process is a 

continuous process that uses chlorine gas, while in the sulfate process, feedstock is 

combined in batches with sulfuric acid. F. 4-5. 

The primary customers of TiO2 are paint and coatings manufacturers and plastic 

producers. F. 6. These include paint and coatings manufacturers The Sherwin-Williams 

Company (“Sherwin-Williams”), which also includes the Valspar brand of paint (F. 47); 

PPG Industries (“PPG”), which manufactures paint (F. 46); Masco Coatings Corporation 

(“Masco”), which includes the Behr and Kilz brands (F. 45); and True Value Company 

(“True Value”) (F. 48); and plastics manufacturer Deceuninck North America. F. 44. 

5 The terms “titanium dioxide” and “TiO2” are used interchangeably in this Initial Decision. Although 

TiO2 can have two different crystal structures – rutile and anatase – they have different characteristics and 

uses, and it is undisputed that anatase TiO2 is not in issue in this case. F. 2; RB at 4 n.1. Accordingly, 

references to titanium dioxide in this Initial Decision are intended to refer only to rutile TiO2. 

6 
 

 

 

 

 

 

 

 

 

Approximately 60% of TiO2 is used in coatings applications, 25% in plastics, 10% in 

paper, and 5% in other uses, including inks, foods,6 and pharmaceuticals. F. 6. 

2. Respondents and the challenged transaction 

Tronox is a corporation headquartered in Stamford, Connecticut. F. 8. Tronox 

owns and operates three chloride TiO2 plants, which are located in Hamilton, 

Mississippi; Botlek, Netherlands; and Kwinana, Australia. F. 12. In addition, Tronox 

owns and operates titanium feedstock mining and smelting assets in Australia and South 

Africa. F. 11. The only type of TiO2 that Tronox manufactures is chloride TiO2. F. 13. 

Cristal consists of three legal entities. Cristal USA Inc. is a Delaware corporation 

and an indirectly owned subsidiary of Saudi Arabian companies The National 

Industrialization Company (“TASNEE”) and The National Titanium Dioxide Company. 

F. 15. Cristal owns and operates a total of five chloride TiO2 plants, two of which are 

located in Ashtabula, Ohio; one in Yanbu, Saudi Arabia; one in Stallingborough, United 

Kingdom; and one in Bunbury, Australia. F. 19. Cristal also owns and operates three 

sulfate TiO2 plants, located in Thann, France; Bahia, Brazil; and Fuzhou, China. F. 18. 

While Cristal manufactures both chloride TiO2 and sulfate TiO2, Cristal’s plants in the 

United States manufacture only chloride TiO2. F. 19. 

Tronox began conversations with Cristal regarding a potential acquisition in 2015. 

F. 21. In October 2016, Tronox and Cristal agreed to a preliminary framework. F. 22. 

The following month, Tronox and Cristal agreed to a non-binding deal construct, and due 

diligence commenced. F. 23. On February 21, 2017, Tronox announced a definitive 

agreement to acquire Cristal’s TiO2 business. F. 24. 

The structure of the proposed Transaction is cash and shares, providing for $1.673 

billion in cash and 37.58 million Class A shares representing 24% of the combined entity. 

F. 25. Shareholders approved the transaction on October 2, 2017. F. 25. 

6 Chloride TiO2 cannot be used in products that are ingested. F. 6 n.23. Food-grade TiO2 can only be 

made from sulfate TiO2 or anatase TiO2, and can be an additive to toothpaste, powdered donuts, or cookie 

filling. F. 6 n.23. Food-grade TiO2 is also used to prevent spoilage and increase the shelf life of foods. 

See https://www foodsight.org/titanium-dioxide-fda-food-coloring-additive-ingredient-donuts. 

7 
 

 

 

 

B. Applicable Legal Standards 

1. In general 

Under Commission Rule 3.51(c)(1), “[a]n initial decision shall be based on a

consideration of the whole record relevant to the issues decided, and shall be supported 

by reliable and probative evidence.” 16 C.F.R. § 3.51(c)(1); see In re Chicago Bridge & 

Iron Co., 138 F.T.C. 1024, 2005 FTC LEXIS 215, at **3 n.4 (Jan. 6, 2005). Under the 

Administrative Procedure Act, an Administrative Law Judge may not issue an order 

“except on consideration of the whole record or those parts thereof cited by a party and 

supported by and in accordance with the reliable, probative, and substantial evidence.”

5 U.S.C. § 556(d). 

The parties’ burdens of proof are governed by Commission Rule 3.43(a), Section 

556(d) of the APA and case law. Pursuant to Commission Rule 3.43(a), “[c]ounsel 

representing the Commission . . . shall have the burden of proof, but the proponent of any 

factual proposition shall be required to sustain the burden of proof with respect thereto.”

16 C.F.R. § 3.43(a). Under the APA, “[e]xcept as otherwise provided by statute, the 

proponent of a rule or order has the burden of proof.” 5 U.S.C. § 556(d). The APA, 

“which is applicable to administrative adjudicatory proceedings unless otherwise 

provided by statute, establishes ‘. . . the traditional preponderance-of-the evidence 

standard.’” In re Rambus, Inc., 2006 FTC LEXIS 101, at *45 (Aug. 20, 2006) (quoting 

Steadman v. SEC, 450 U.S. 91, 95-102 (1981)), rev’d on other grounds, 522 F.3d 456 

(D.C. Cir. 2008). 

2. Merger law 

a. Statutory framework 

Section 7 of the Clayton Act prohibits mergers or acquisitions “the effect of 

[which] may be substantially to lessen competition, or to tend to create a monopoly” in 

“any line of commerce or . . . activity affecting commerce in any section of the country.”

8 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15 U.S.C. § 18.7 

“Congress used the words ‘may be substantially to lessen competition’ to indicate 

that its concern was with probabilities, not certainties.” Brown Shoe Co. v. United States, 

370 U.S. 294, 323 (1962); accord FTC v. CCC Holdings, Inc., 605 F. Supp. 2d 26, 35 

(D.D.C. 2009). “Congress enacted Section 7 to curtail anticompetitive harm in its 

incipiency.” In re Polypore Int’l Inc., 150 F.T.C. 586, 2010 WL 9549988 at *8 (2010), 

aff’d 686 F.3d 1208 (11th Cir. 2012). Thus, it is not necessary to demonstrate certainty 

that a proposed merger will produce anticompetitive effects, or even that such effects are 

highly probable, FTC v. Elders Grain, Inc., 868 F.2d 901, 906 (7th Cir. 1989), “but only 

that the loss of competition is a ‘sufficiently probable and imminent’ result of the merger 

or acquisition.” CCC Holdings, 605 F. Supp. 2d at 35 (quoting United States v. Marine 

Bancorp., 418 U.S. 602, 623 n.22 (1974)); accord In re Promedica Health Sys., Inc., 

2012 WL 1155392, at *12 (Mar. 28, 2012). See FTC v. Univ. Health, Inc., 938 F.2d 

1206, 1218 (11th Cir. 1991) (“[T]o satisfy section 7, the government must show a

reasonable probability that the proposed transaction would substantially lessen 

competition in the future.”). “Of course the word ‘may’ [in Section 7] should not be

taken literally, for if it were, every acquisition would be unlawful. But the statute 

requires a prediction, and doubts are to be resolved against the transaction.” Elders 

Grain, 868 F.2d at 906. 

The allegation that an acquisition is a Section 5 violation, as well as a Section 7 

violation, “does not require an independent analysis . . . .” In re Chicago Bridge, 2005 

FTC LEXIS 215, at **8 n.23, aff’d, Chicago Bridge & Iron Co. v. FTC, 534 F.3d 410, 

423 n.5 (5th Cir. 2008). Accord FTC v. PPG Indus., Inc., 798 F.2d 1500, 1501 n.2 (D.C. 

Cir. 1986) (stating that Section 5 of the FTC Act “may be assumed to be merely

repetitive of [Section] 7 of the Clayton Act”).

7 Section 11 of the Clayton Act vests jurisdiction in the FTC to determine the legality of a corporate 

acquisition under Section 7. 15 U.S.C. § 21(b); In re R.R. Donnelley & Sons Co., 1995 FTC LEXIS 450, at 

*11 (July 21, 1995). Corporations are included within the definition of “persons” that are subject to

jurisdiction under the Clayton Act, 15 U.S.C. § 12(a), and the FTC Act, 15 U.S.C. § 44. The parties have 

stipulated that both Tronox and Cristal USA Inc., are corporations and engage in activities in or affecting 

commerce, within the meaning of Section 4 of the FTC Act, 15 U.S.C. § 44, and Section 1 of the Clayton 

Act, 15 U.S.C. § 12. F. 14, 20. Thus, the Commission has jurisdiction over this matter pursuant to Section 

5 of the FTC Act, 15 U.S.C. § 45, and Sections 7 and 11 of the Clayton Act, 15 U.S.C. § 18, 21(b). 

9 
 

 

 

b. Burden shifting framework 

“Courts have traditionally analyzed Section 7 claims under a burden-shifting 

framework. See, e.g., FTC v. H.J. Heinz Co., 246 F.3d 708, 715 (D.C. Cir. 2001); United 

States v. Baker Hughes Inc., 908 F.2d 981, 982-83 (D.C. Cir. 1990).” Polypore, 2010 

WL 9549988, at *9. Under this framework, for its prima facie case, a plaintiff may 

establish a presumption of liability by defining a relevant product and geographic market, 

and showing that the transaction will lead to undue concentration in the relevant market. 

Id. (citing Baker Hughes, 908 F.2d at 982-83). 

The plaintiff can bolster a prima facie case based on a market concentration 

presumption by adducing evidence showing that anticompetitive unilateral or coordinated 

effects are likely. Polypore, 2010 WL 9549988, at *9 (citing Heinz, 246 F.3d at 717). In 

this regard, ordinary course business documents of the merging parties “are often highly

probative of both industry conditions and the likely competitive effects of a merger.”

Polypore, 2010 WL 9549988, at *9. See Chicago Bridge, 2005 FTC LEXIS 215, at **44 

(noting that qualitative evidence on pre-acquisition competition may support conclusions 

based on market structure and can provide an independent basis for a prima facie case 

under Section 7). “Evidence that sheds light on the strategic objectives of the merging

parties is also probative of likely competitive effects.” Polypore, 2010 WL 9549988, at 

*9 (citing FTC v. Whole Foods Market, Inc., 548 F.3d 1028, 1047 (D.C. Cir. 2008) 

(Tatel, J., concurring); 4A Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 964, 

at 18-19 (3d ed. 2009); 2010 U.S. Department of Justice and Federal Trade Commission 

Horizontal Merger Guidelines § 2.2.1) (hereinafter “Merger Guidelines § __”). 

If the plaintiff establishes a prima facie case, the burden shifts to the defendant to 

show that “traditional economic theories of the competitive effects of market 

concentration are not an accurate indicator of the merger’s probable effect on competition 

in these markets or that the procompetitive effects of the merger are likely to outweigh 

any potential anticompetitive effects.” CCC Holdings, 605 F. Supp. 2d at 46. See also 

FTC v. Penn State Hershey Med. Ctr., 838 F.3d 327, 347 (3d Cir. 2016) (stating that in 

order to rebut the prima facie case, defendants “must show either that the combination 

10 
 

 

 

 

 

would not have anticompetitive effects or that the anticompetitive effects of the merger 

will be offset by extraordinary efficiencies resulting from the merger”). Although the 

courts have not defined a precise standard that must be met to rebut a prima facie case, 

the courts advise that “[t]he more compelling the prima facie case, the more evidence the

defendant must present to rebut [the presumption] successfully.” Baker Hughes, 908 

F.2d at 991; Heinz, 246 F.3d at 725; Polypore, 2010 WL 9549988, at *9. 

The defendant “can rely on a variety of types of evidence to meet its burden on 

rebuttal, including evidence that casts doubt on the significance or accuracy of the 

plaintiff’s market share and concentration evidence, factors that indicate that collusion is 

improbable, and evidence of likely efficiencies.” Polypore, 2010 WL 9549988, at *9 

(citing Baker Hughes, 908 F.2d at 985). “If the defendant successfully rebuts the

presumption [of illegality], the burden of producing additional evidence of 

anticompetitive effect shifts to the government, and merges with the ultimate burden 

of persuasion, which remains with the government at all times.” Baker Hughes, 908 F.2d 

at 983; Heinz, 246 F.3d at 715; Polypore, 2010 WL 9549988, at *9. 

C. Relevant Market 

The first step in evaluating whether an acquisition may substantially lessen 

competition in any “line of commerce” in any “section of the country” is to determine the 

“line of commerce” and the “section of the country”; in other words, to determine the 

relevant product market and the relevant geographic market. United States v. Oracle 

Corp., 331 F. Supp. 2d 1098, 1110 (N. D. Cal. 2004). Complaint Counsel bears “the

burden of proving a relevant market within which anticompetitive effects are likely as a 

result of the acquisition.” In re R.R. Donnelley & Sons, 1995 FTC LEXIS 450, at *38. 

1. Product market 

a. Legal standards 

A relevant product market consists of “products that have reasonable

interchangeability for the purposes for which they are produced – price, use and qualities 

considered.” United States v. E.I. du Pont de Nemours Co., 351 U.S. 377, 404 (1956). 

11 
 

 

 

 

 

 

 

 

“The outer boundaries of a product market are determined by the reasonable 

interchangeability of use or the cross-elasticity of demand between the product itself and 

substitutes for it.” Brown Shoe, 370 U.S. at 325; see du Pont, 351 U.S. at 395 (1956). 

“Interchangeability of use and cross-elasticity of demand look to the availability of 

products that are similar in character or use to the product in question and the degree to 

which buyers are willing to substitute those similar products for the product.” FTC v. 

Swedish Match, 131 F. Supp. 2d 151, 157 (D.D.C. 2000) (citing du Pont, 351 U.S. at 

393). 

While the outer boundaries of a product market are determined by the reasonable 

interchangeability of use or the cross-elasticity of demand between the product itself and 

substitutes for it, “within [a] broad market, well-defined submarkets may exist which, in 

themselves, constitute product markets for antitrust purposes.” Brown Shoe, 370 U.S. at 

325 (citing United States v. E. I. du Pont de Nemours Co., 353 U.S. 586, 593-95 (1957)). 

“The boundaries of such a submarket may be determined by examining such practical 

indicia as industry or public recognition of the submarket as a separate economic entity, 

the product’s peculiar characteristics and uses, unique production facilities, distinct 

customers, distinct prices, sensitivity to price changes, and specialized vendors.” Id. 

“[E]vidence of industry or public recognition of the submarket as a separate economic

unit matters because we assume that economic actors usually have accurate perceptions 

of economic realities.” United States v. H&R Block, Inc., 833 F. Supp. 2d 36, 53 (D.D.C. 

2011). In addition, ordinary course of business documents reveal the contours of 

competition from the perspective of the parties, who may be presumed to “have accurate 

perceptions of economic realities.” Whole Foods, 548 F.3d at 1045 (concurring op.) 

(quoting Rothery Storage & Van Co. v. Atlas Van Lines, Inc., 792 F.2d 210, 218 n.4 

(D.C. Cir. 1986)). 

In the instant case, Complaint Counsel alleges that the relevant market is the sale 

of chloride TiO2 to North American customers. CCB at 10-26. Respondents contend 

that the relevant market is the sale of rutile TiO2 (both chloride process and sulfate 

process) in a global market. RB at 46-53. In this case, the analysis of the product market 

12 
 

 

and of the geographic market are dependent on each other. In section II.C.2. below, the 

geographic market is determined to be the North America region, consisting of the United 

States and Canada. In this section, which analyzes the product market, the focus is on the 

type of TiO2 sold to North American customers. As detailed in section III.B.1. and 

summarized below, the evidence proves that chloride TiO2 and sulfate TiO2 have distinct 

characteristics; that because of these distinct attributes, sulfate TiO2 is not suitable in the 

vast majority of coatings’ manufacturers’ products; and that North American customers 

are unwilling to substitute sulfate TiO2 for chloride TiO2, even when the price of 

chloride TiO2 has been significantly higher than sulfate TiO2. Therefore, chloride TiO2 

and sulfate TiO2 are not reasonably interchangeable. Accordingly, Complaint Counsel 

has met its burden of showing that the relevant product market is chloride TiO2. 

b. Distinct characteristics of chloride TiO2 and sulfate 

TiO2 

Chloride TiO2 and sulfate TiO2 have distinct characteristics. Manufacturers of 

TiO2 recognize that there are important differences between chloride TiO2 and sulfate 

TiO2. E.g., F. 52-57, 62-63. As acknowledged in Tronox’s business documents, 

chloride TiO2 is a higher quality product than sulfate TiO2. E.g., F. 52 (“Chloride

process uses higher-quality feedstocks and makes better quality TiO2.”). Kronos, a TiO2 

producer that sells both chloride TiO2 and sulfate TiO2 (F. 41), recognizes that chloride 

TiO2 is a superior product to sulfate TiO2 on many measures used to evaluate a grade of 

TiO2, including on the product’s optical properties, its color undertone, tinting strength, 

and durability. F. 53, 56, 62. 

Chloride TiO2 is a brighter pigment than sulfate TiO2 due to its bluer undertone. 

F. 54-61. As explained in one Tronox investor presentation, “[c]hloride technology 

yields consistently whiter, brighter pigment grades preferred for many of the largest enduse applications (e.g., paints and plastics) as compared to the sulfate process.” F. 54. As 

Kronos explained, the most noteworthy difference between chloride TiO2 and sulfate 

TiO2 is the general color and undertone of the product produced. F. 56. Chloride TiO2 

has a brighter white or a blueish undertone, whereas sulfate TiO2 has a yellowish 

13 
 

 

 

 

 

 

undertone. F. 56, 59. TiO2 producers, including Tronox, recognize that North American 

consumers prefer the blue tone of chloride TiO2 over the yellow tone of sulfate TiO2. 

F. 54-58. For example, one Tronox presentation notes, “US consumers have gotten used 

to a more blue tone and prefer it over the more yellow tone of white.” F. 55. 

At trial, North American paint manufacturers consistently testified that sulfate 

TiO2 is not a reasonable substitute for chloride TiO2 for most of the products they sell in 

North America because the pigment is not as bright, tends not to be as durable, and does 

not allow for point of sale tinting. E.g., F. 59-61, 64-65. Paint manufacturers use 

chloride TiO2 instead of sulfate TiO2 because it is brighter in appearance and allows 

manufacturers to produce crisp, clean colors and “bright whites.” F. 59-61. As George 

Young of Sherwin-Williams, the largest paint producer in North America, explained, 

sulfate TiO2 does not meet Sherwin-Williams’ standards for North America because it 

“tends to have a yellow undertone. Our market in North America requires clean colors, 

bright colors.” F. 61. As Mario Pschaidt of Masco, the manufacturer of the Behr paints 

sold through Home Depot, explained, sulfate TiO2 “gives you a yellowish undertone, and 

that doesn’t achieve that clean crisp look that you get from a chloride-produced TiO2, 

and therefore, we cannot use the sulfate-grade TiO2 for our main product lines.” F. 61. 

Coatings manufacturers use chloride TiO2 instead of sulfate TiO2 also because it 

tends to be more durable. F. 64-65. For example, Sherwin-Williams has found that its 

formulas with chloride TiO2 have better durability; True Value has found that sulfate 

TiO2 failed to meet its durability requirements in laboratory testing; and Mississippi 

Polymers, Inc. (“Mississippi Polymers”) has found that sulfate TiO2 “tends not to 

weather as well,” and “tends not to have the same longevity in an application as a TiO2 

that’s produced from the chloride process.” F. 64-65. 

Another reason paint manufacturers use chloride TiO2 and cannot substitute 

sulfate TiO2 is “point-of-sale tinting,” where a customer picks a color at a store and a can 

of paint is customized to that customer’s request. F. 66. In the North America market, 

almost all paint is tinted at the point of sale. F. 67. Paint manufacturers have found that 

they must use chloride TiO2 in order to get the color consistency that customers expect. 

14 
 

 

 

F. 68. As John Vanderpool of True Value explained, “the last thing we want to have is 

phone calls coming in to our customer service department, one after another, that color 57 

is no longer color 57; it’s really 28.” F. 69. Sulfate TiO2 does not provide the same 

consistent results as chloride TiO2 to allow for tinting at the point of sale. F. 68. A 

Tronox presentation acknowledges that “[t]he US also has point of sale tinting which 

requires a very consistent pigment base.” F. 68. 

Coatings manufacturers also described other attributes that prevent them from 

substituting sulfate TiO2 for chloride TiO2, including: sulfate TiO2 “didn’t meet all the

criteria that [True Values needs] in terms of scrubbability, durability, dry time, recoat 

time, sag [downward movement of paint], low odor, all those kinds of things, and 

compatibility with the other raw materials that we’re using in our formulas” (F. 71); 

sulfate TiO2 is inferior to chloride TiO2 in terms of 

(F. 72); and, sulfate 

TiO2 “is ill suited for 

. (F. 73). 

Respondents assert that the different properties of sulfate TiO2 and chloride TiO2 

can be controlled through the finishing process and that coatings produced with chloride 

TiO2 and sulfate TiO2 can look the same. RB at 52. This assertion, based on the 

testimony of Jeffrey Engle, Tronox’s vice president of marketing and sales, is contrary to 

Tronox documents touting its chloride technology, as compared to the sulfate process, for 

yielding the consistently whiter, brighter, pigment grades that are preferred for many of 

the largest end-use applications (e.g., paints and plastics). F. 54. See also F. 52 (internal 

Tronox email describing competitive advantages of the chloride process). Moreover, 

Respondents’ assertion is not consistent with the actions of manufacturers who purchase

chloride TiO2 instead of sulfate TiO2 because of the superior performance characteristics 

of chloride TiO2. Furthermore, even if the different properties could be controlled 

through the finishing process, manufacturers would need to reformulate their product 

lines to make such substitution, which, as addressed below, is a lengthy and expensive 

process. 

15 
 

 

 

 

c. Reasonable interchangeability 

Chloride TiO2 and sulfate TiO2 are not reasonably interchangeable. As shown 

above, end-use customers in the United States and Canada demand high quality, premium 

coatings products, are accustomed to the blueish tone of chloride TiO2, and almost 

exclusively purchase paint that is tinted at the point of sale. Because of the differences in 

the attributes of chloride TiO2 and sulfate TiO2 and the demands of North American 

customers, North American coatings companies and plastics manufacturers 

overwhelmingly buy chloride TiO2 and do not consider sulfate TiO2 to be a suitable 

substitute. Section III.B.1.b. 

Respondents argue that North American TiO2 customers use both sulfate and 

chloride process TiO2 in their products, asserting that True Value buys sulfate TiO2 from 

Lomon Billions Group (“Lomon Billions”), a Chinese supplier; Behr has switched from 

chloride TiO2 to sulfate TiO2 for its Kilz brand paint; and Masco has approved a sulfate 

process grade for use in some of its formulations. RB at 52. However, the evidence 

shows that North American paint companies do not use significant amounts of sulfate 

TiO2. In fact, sulfate TiO2 is used in less than 10% of their products and only in “very 

basic, entry level paints,” and low-end applications such as primers and ceiling paint, 

traffic marking paint, and some other select products. F. 84, 86, 88, 90. 

Mr. Vanderpool of True Value described sulfate TiO2 and chloride TiO2 as 

“apples and oranges,” and would not consider switching True Value from its current use 

of chloride TiO2 to sulfate TiO2 for the vast majority of its paints because the products 

are “not the same.” F. 85. Similarly, have tested 

sulfate TiO2 and would not switch to sulfate TiO2 because it does not result in consistent 

brightness of color or consistent whites and, thus, is not suitable for most of their 

applications. F. 89, 91. Greg Arrowood of Deceuninck North America, a vinyl 

manufacturer, believes chloride TiO2 is superior to sulfate TiO2 in purity and quality, 

and has never purchased sulfate TiO2. F. 93. 

16 
 

 

Brian Christian of Kronos testified that “the North American market commands 

CP [chloride process TiO2] products.” F. 94. Mr. Christian further testified that the 

“overwhelming preference” of Kronos’ North American coatings and plastics customers 

is for chloride TiO2, explaining, “A lot of these customers require [chloride TiO2] grades 

to hit the quality level that they need for their products, so while technically feasible that 

you could put a sulfate grade into those applications, it would significantly reduce the 

quality of their products, and that’s not acceptable for their business plan.” F. 95. 

In a conference call with investors, Tom Casey, then chairman and chief 

executive officer (“CEO”) of Tronox, recognized that coatings companies’ “ability to

substitute sulfate for chloride . . . is limited by their need to maintain the quality levels of 

their own products.” F. 96 (“I don’t see as much of a shift or a material shift from 

chloride-processed pigment to sulfate-processed pigment because the major customers of 

the pigment, whether it is chloride or sulfate, are coatings companies who have 

requirements in their own products [such] that the use of sulfate versus chloride will 

affect their . . . end product.”).

An additional attribute that prevents North American paint customers from 

switching from chloride TiO2 to sulfate TiO2 is the form in which the TiO2 is delivered. 

North American customers purchase TiO2 either in a bagged dry powder form or in 

liquid slurry form. F. 76. TiO2 slurry is made by dispersing TiO2 powder in water with 

other additives, is delivered to customers by rail cars or tank cars, and can be pumped 

directly into customers’ storage tanks. F. 77, 80. More than a third of the chloride TiO2 

sold in North America is in slurry form. F. 172. In North America, TiO2 slurry is only 

made from chloride TiO2. F. 82. 

Whether one product is reasonably interchangeable for another depends on the 

ease and speed with which customers can substitute it, the desirability of doing so, and 

the cost of substitution. Whole Foods, 548 F.3d at 1037 (citing United States v. Microsoft 

Corp., 253 F.3d 34, 53-54 (D.C. Cir. 2001) (en banc)). To substitute sulfate TiO2 for 

chloride TiO2 and maintain the quality levels of their products, coatings and plastics 

manufacturers would have to reformulate their product lines and complete extensive 

17 
 

 

testing, a process that would be costly and could take several years to complete. Section 

III.B.1.c. E.g., F. 101 (qualifying a new grade of TiO2 is a multi-step process that 

includes tests on outdoor weathering and subjective feedback from customers, and can 

take as long as three years); F. 101 (“It takes a minimum of to qualify a TiO2 

grade for use in one of our core architectural or industrial coatings products, and it may 

take as long as .”). For industrial coatings, qualification has additional 

steps. F. 102. Depending on the application, some industrial coatings require customer 

or regulatory approval. F. 102. When asked for his perspective of what a customer 

would need to do to reformulate a product from using chloride process TiO2 to sulfate 

process TiO2, Mr. Christian of Kronos testified, “I don’t have a lot of examples of that 

happening. That would be pretty rare, but it would entail a significant amount of work, a 

lot of trials, a complete reformulation of their product and grade . . . .” F. 98. 

. RB at 52. However, the evidence shows that 

Masco’s switch to sulfate TiO2 was limited to Kilz’ low-end primers. F. 100. 

Furthermore, the 

Respondents assert that Masco switched from chloride process TiO2 to sulfate 

process TiO2 for its Kilz brand and 

. F. 100. 

d. Price differential 

As shown below, the evidence proves that North American TiO2 customers do 

not, and would not, substitute sulfate TiO2 for chloride TiO2, despite the price 

differential. Complaint Counsel’s economic expert witness, Dr. Nicholas Hill, analyzed 

actual sales data obtained from customers and producers and found that, on average, 

chloride TiO2 was 21% more expensive than sulfate TiO2 for North American customers 

from 2012 through mid-2017 and that, despite this significant price disparity, the 

proportion of chloride TiO2 sales in North America has remained steady. F. 111-114. 

18 
 

 

 

 

 

 

 

 

 

 

 

 

Indeed, chloride TiO2 accounted for around 90% of TiO2 sales in North America from 

2012 through mid-2017, despite the price differential. F. 50, 112-113. See also F. 51 

(Tronox investor presentation (“The North American market is ~90% chloride.”). This 

evidence indicates that North American TiO2 customers do not substitute sulfate TiO2 

for chloride TiO2, even when the price of chloride TiO2 is significantly higher. 

Moreover, customers consistently testified that they have not switched, and would 

not switch, from chloride TiO2 to sulfate TiO2, even in the face of a significant price 

difference. For example, even when sulfate TiO2 was 40% cheaper than chloride TiO2, 

Sherwin-Williams did not switch its North American products from chloride TiO2 to 

sulfate TiO2 “because [of] the performance gap between the two materials.” F. 108. 

True Value and Masco testified that if the price of chloride TiO2 increased by at least 

10% compared to the price of sulfate TiO2, they would not switch to sulfate for their 

main product lines because they do not want to sacrifice the quality of their product lines. 

F. 107, 109. In 2011, when the price that Deceuninck North America paid for chloride 

TiO2 was very high, Deceuninck North America did not consider switching to sulfate 

TiO2, explaining, “the only way that Deceuninck would even consider sulfate TiO2 

would be if chloride TiO2 was unavailable.” F. 110. 

Tronox’s statements to investors affirm that North American customers purchase 

chloride TiO2 and do not substitute sulfate TiO2, notwithstanding higher pricing for 

chloride TiO2. In a 2014 Tronox earnings call, Mr. Casey reported, “In various markets, 

the customers have responded to what happened on pricing a year ago in different ways. 

For example in the North American market, it was 95% or 98%, or some very, very high 

number chloride[.] [I]t remains, essentially the same number market share for chloride. 

That was true when prices were over $4,000 a ton[8], it is true now [when chloride prices 

8 The word “ton” is a British and American measure. Common Mistakes in Business English, 

https://blog.harwardcommunications.com/2012/01/23/the-difference-between-ton-and-tonne/. In the 

United States and Canada, a ton is equal to 2,000 pounds. Documents and testimony in this case also refer 

to the metric measure, “tonne,” also known as “metric ton,” which is equal to 1,000 kilograms (2,205

lbs). Id.; https://www rapidtables.com/convert/weight/kg-to-pound.html. The term “metric ton” may also

be abbreviated as “MT.” https://englishplus.com/grammar/00000058.htm. In some instances, such as 

where a witness is being quoted, the Initial Decision cannot determine from the transcript of testimony 

whether or not the transcribed word “ton” was intended by the witness to refer to a metric ton.

19 
 

 

 

 

 

are lower].” F. 106. During a 2013 question and answer session with investors, Tronox 

acknowledged that sulfate TiO2 is not a meaningful substitute for chloride TiO2 in North 

America: 

Q. When TiO2 prices were going up last year some of your customers 

were pretty vocal about substituting to other less expensive products, 

how much of this do you think occurred and how much is ongoing? 

[Tronox CEO A.:] You’re right, there was significant commentary last 

year about substantial amounts of substitution. There has been some 

but limited effect from substitution. Some customers substituted 3-5% 

of sulfate-based pigment in an otherwise 100% chloride pigment 

gallon of paint. This was done primarily in industrial paint markets 

and in certain regions of the world. Very limited if any substitution 

was done by architectural coatings companies or here in North 

America. 

F. 106. Thus, as Tronox’s own CEO recognized, customers are not willing to substitute 

sulfate TiO2 for chloride TiO2 in the vast majority of their products, notwithstanding the 

price differential. 

e. Respondents’ opposing arguments 

Respondents argue that sulfate TiO2 and chloride TiO2 are substitutes, and 

therefore in the same product market, because it is possible for TiO2 customers to use 

either sulfate TiO2 or chloride TiO2 in approximately 80% of TiO2 end-use products, 

provided the quality is the same, and that only 10% of TiO2 end-use products must use 

chloride only. RB at 51; RX1503 at 0014. However, as shown above, customers do not 

find the quality to be the same. Even if it is possible, as a technical matter, for paint 

companies to make paint with either chloride TiO2 or sulfate TiO2, the fact is that they 

overwhelmingly choose not to do so. Furthermore, the proper antitrust inquiry, as set 

forth in the Merger Guidelines, is not whether it is theoretically possible for customers to 

substitute, but whether customers would reasonably substitute sulfate TiO2 for chloride 

TiO2 in sufficient volumes to render a small but significant non-transitory increase in 

price (“SSNIP”) (commonly 5%) unprofitable. Merger Guidelines §§ 4.1.1, 4.1.2 

(emphasis added). As addressed in more detail in section II.C.3. below, Dr. Hill 

20 
 

 

conducted an empirical analysis and found that a hypothetical monopolist of all chloride 

TiO2 sales to customers in North America would find it profitable to impose a SSNIP. 

Respondents further argue that sulfate and chloride are in the same product 

market because, according to Respondents’ proffered economic expert witness, Dr. 

Ramsey Shehadeh, “there is a long-term relationship between sulfate and chloride 

titanium dioxide prices” characterized by “statistically and economically significant comovement of prices.” RB at 53. This argument is unconvincing. Even if the prices are 

correlated, this does not show that the products are reasonably substitutable for each 

other, especially in light of the proof that TiO2 customers do not substitute. See also 

Preliminary Injunction Opinion, 2018 U.S. Dist. LEXIS 155127, at *21 (stating that “the 

mere fact that the prices of two goods move upward or downward together need not mean 

that they are substitutes”). As Dr. Hill explained, “[t]he prices of two goods may be

correlated, but they may not be in the same market. . . . One [example of this] would be, 

hamburger buns and hot dog buns are made from the same thing, and their demands 

highly correlated. Their prices will be correlated over time, but they are not close 

substitutes for one another.” Hill, Tr. 1707-08. 

f. Summary 

As shown above, North American coatings and plastic manufacturers demand 

particular characteristics that are provided by chloride TiO2, but which are not provided 

by sulfate TiO2. The two products are not reasonably interchangeable. Customers do not 

substitute, and would not substitute, sulfate TiO2 for the vast majority of their products, 

notwithstanding higher pricing for chloride TiO2. For all these reasons, the evidence 

proves that chloride TiO2 is a relevant product market. 

2. Geographic market 

a. Legal standards 

The boundaries of the relevant geographic market, like the boundaries of the 

relevant product market, depend on reasonable interchangeability and cross-elasticity of 

demand. Brown Shoe, 370 U.S. at 336. The relevant geographic market is the region “in 

21 
 

 

 

 

 

 

which the seller operates, and to which the purchaser can practicably turn for supplies.”

Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327 (1961); FTC v. Freeman 

Hosp., 69 F.3d 260, 268 (8th Cir. 1995). The “proper question” is “not where the parties 

to the merger do business or even where they compete, but where, within the area of 

competitive overlap, the effect of the merger on competition will be direct and 

immediate.” United States v. Philadelphia Nat'l Bank, 374 U.S. 321, 357 (1963). 

Where suppliers can set prices based on customer location, and customers cannot 

avoid targeted price increases through arbitrage (by purchasing at a lower price from a 

seller in one geographic area and then transporting the product to another geographic 

region), the relevant geographic market may be defined around the locations of 

customers. Polypore, 2010 WL 9549988 at *16 (applying Merger Guidelines § 4.2.2). 

Under the Merger Guidelines, “if price discrimination based on customer location is 

feasible as is often the case when delivered pricing is commonly used in the industry, the 

Agencies may define geographic markets based on the locations of customers. . . .”

Merger Guidelines § 4.2. 

Courts apply the “hypothetical monopolist test” to ask whether a “hypothetical 

profit-maximizing firm . . . that was the only present and future seller of [the relevant] 

products . . . likely would impose at least a small but significant and non-transitory 

increase in price (‘SSNIP’). . . .” FTC v. Sysco Corp., 113 F. Supp. 3d 1, 33 (D.D.C. 

2015) (quoting Merger Guidelines § 4.1.1). “If buyers would respond to the SSNIP by

shifting to products produced outside the proposed geographic market, and this shift were 

sufficient to render the SSNIP unprofitable, then the proposed geographic market would 

be too narrow.” FTC v. Arch Coal, Inc., 329 F. Supp. 2d 109, 123 (D.D.C. 2004). 

In the instant case, the Complaint alleges that the relevant geographic market is 

North America, which Complaint Counsel defines as the United States and Canada. 

Complaint ¶ 30; CCB at 20 n.19. Respondents contend that the geographic market is 

global. Answer of Tronox ¶ 30; RB at 47-50. As further explained below, the evidence 

shows that Respondents set prices on a regional basis; that the North America region 

includes the United States and Canada, but not Mexico; that chloride TiO2 manufacturers 

22 
 

 

 

deliver their product to their North American customers’ locations; and that North 

American customers could not defeat a price increase through arbitrage. Therefore, the 

relevant geographic market is North America, defined as the United States and Canada. 

b. Regional pricing by TiO2 suppliers 

Respondents’ documents and testimony confirm that they charge different prices 

to customers depending on the region in which the customer is located (“regional 

pricing”). F. 116-129. In a 2015 earnings call, Tronox’s then-CEO stated, “[A]re there

different prices in the regional markets in which we do business? The answer to that 

question is yes.” F. 121. Tronox has also informed customers that it does not have a 

global, single-price arrangement with any of its customers and that pricing is regional 

because it is based on the prevailing market price in individual countries. F. 123. For 

example, in a July 23, 2016 email to Sherwin-Williams, Ian Mouland, vice president of 

sales for the Americas at Tronox, wrote, “As always, regional pricing varies over time

and magnitude. Pricing in the four regions; U.S. [United States], LATAM [Latin 

America], EMEA [Europe, Middle East and Africa] and APAC [Asia Pacific] are not 

comparable. . . . There is no global price.” F. 119. In a March 2016 internal Tronox 

email, Mr. Mouland wrote, “What happens in the US is not connected to [Latin America], 

totally separate markets.” F. 120. John Romano, Tronox’s senior vice president and 

chief commercial officer, confirmed that “[c]ustomers in different regions, global 

customers, may pay different prices in different parts of the world.” F. 126. Arjen 

Duvekot, Tronox’s vice president of global sales for EMEA, APAC and the Americas, 

also confirmed that Tronox does not have a single global price for its customers; that 

Tronox’s pricing for customers is based on the prevailing market price in individual 

countries; and that, for Tronox’s multinational customers that buy TiO2 for delivery in 

multiple countries, individual regions are priced separately. F. 125. 

Cristal’s documents show that it also charges different prices for TiO2 in different 

regions and that “region” is the main driver of price variance for TiO2. See F. 127-128. 

Cristal’s vice president for TiO2, Jean-Yves Gigou, confirmed in testimony that Cristal 

sets regional price floors and price targets. F. 127. Similarly, TiO2 producer Kronos sets 

23 
 

 

 

 

 

different price levels by region to reflect the competitive conditions in each region. 

F. 137. 

Customers confirmed that they purchase chloride TiO2 separately for each 

geographic region and pay different prices in each region. F.130-133. For example, 

Sherwin-Williams has manufacturing facilities in North America, South America, 

Europe, and Asia, but maintains regional contracts with its TiO2 suppliers. F. 130. 

These contracts provide for regional pricing because supply and demand conditions may 

create different regional pricing environments. F. 130. Mr. Young of Sherwin-Williams 

explained, “There’s really not a universal global market” for TiO2. Rather, prices are 

“openly negotiated in each of the regions” because of “different market dynamics” and 

“different availability.” F. 130. 

Furthermore, the evidence shows that TiO2 suppliers know the locations of their 

customers, and deliver TiO2 to them, typically pricing on a delivered basis. See F. 152-

159. Geographic markets based on customer location “often apply when suppliers 

deliver their products or services to customers’ locations.” Merger Guidelines § 4.2.2. 

For Tronox’s North American customers, the cost of shipping is covered in the price paid 

to Tronox. F. 154. Nearly all of the TiO2 that Venator sells to its customers in North 

America is delivered to its customers’ locations and sold on a delivered pricing basis. 

F. 155. Paint manufacturers explained that the TiO2 they purchase is delivered to their 

facilities, typically in railcars or tank wagon trucks, and that the price they pay for 

chloride TiO2 includes the cost of delivery. F. 80, 156-159. 

c. North America region is the United States and Canada 

Although Tronox includes Mexico in its designated “NAFTA” region (North 

American Free Trade Agreement), along with the United States and Canada, (Mouland, 

Tr. 1248), its Latin American (“LATAM”) strategy for 2015 through 2017 defines “Latin 

America (LATAM) [as] Central & South America, Mexico, Caribbean,” and notes that 

Mexico’s “[p]ricing [is] consistent with Latin American pricing and not that of the USA.”

F. 135. Indeed, Mr. Mouland of Tronox admitted that, while prices ebb and flow, 

Tronox’s prices in Mexico generally fall in between the prices in the United States and 

24 
 

 

Latin America. F. 142. Additionally, Tronox has charged different prices to TiO2 

customers in Mexico compared to the United States. F. 141 (“We pointed out [to the

customer] that different regions have different prices and that Mexico had gravitated to 

LATAM price as opposed to U.S. price which it generally used to track.”). 

It is also significant that other TiO2 producers – Cristal, Kronos, Chemours, and 

Venator – define their North America region as United States and Canada, and place 

Mexico in their Latin American region. F. 136-138. In addition, a report prepared for 

Tronox by the consulting company TZ Minerals International (“TZMI”) titled, “TiO2 

Pigment Supply/Demand Q1 2016” (“TZMI report”), in analyzing demand for TiO2, 

excluded Mexico from the North America market and included Mexico in the Central and 

South America market. F. 139. 

d. Higher prices in North America 

From 2012 through 2016, chloride TiO2 prices in North America were higher 

than in other regions. Respondents’ documents consistently recognize this. F. 146 

(Tronox reporting in a 2016 earnings call that TiO2 prices in Europe and Asia were lower 

than prices in North America); F. 147 (June 2016 Tronox TiO2 Variance Analysis 

showing that the net sales price in North America was per metric ton 

higher than in the other regions for Q2 2016); F. 148 (Tronox reporting in 2015 earnings 

call that TiO2 prices in North America were higher than the TiO2 prices in the European, 

Asian, and Latin American markets); F. 149 (March 2015 Cristal analysis of TiO2 prices 

and revenues for the year March 2014 to March 2015 reporting that North American 

TiO2 prices were higher than in other regions). At trial, Mr. 

Romano of Tronox acknowledged that in 2015 and December 2014 the price for chloride 

TiO2 was higher in North America than in other regions and that in December 2013 there 

was a “significant price disparity” between North America and the rest of the world, with 

North American prices for chloride TiO2 being higher than prices in the rest of the world. 

F. 145. 

Economic analysis performed by both parties’ expert witnesses confirms that 

prices paid by Respondents’ North American customers were significantly higher than 

25 
 

prices paid by Respondents’ customers in other regions from 2012 through 2016. F. 150 

(Hill); F. 151 (Shehadeh). Complaint Counsel’s expert witness determined that the prices 

for chloride TiO2 charged by North American plants owned by Tronox and Cristal were 

at least 10% and often more ($250 to $525) per metric ton than the prices Tronox and 

Cristal charged its customers in the rest of the world from 2012 to 2017. F. 150. 

e. Arbitrage 

Under the Merger Guidelines, a region forms a relevant geographic market if a 

SSNIP would not be defeated by arbitrage, e.g., customers in the region travelling outside 

it to purchase the relevant product and transport it back. Merger Guidelines § 4.2.2. 

Arbitrage between customers at different geographic locations may be impractical due to 

transportation costs. Merger Guidelines § 3. The evidence in this case shows that North 

American customers have not engaged in arbitrage despite higher prices in the North 

America region and that they would not engage in arbitrage to defeat a SSNIP. 

The principle reason North American customers do not engage in arbitrage is the 

cost. As Tronox’s Mr. Duvekot explained, if a customer wanted to buy TiO2 in one 

region where it is less expensive and ship it to a different region where it is more 

expensive, the price difference would have to cover shipping costs, external handling 

costs (costs to pay the freight forwarder), internal handling costs (the customer’s internal 

costs for the logistics of exporting the product from one region to another), warehousing 

costs, and import duties. F. 161. Duties to import chloride TiO2 into North America 

vary, depending on the location from which it is shipped and when the orders are placed, 

but have been around 5.5%. F. 162. Kronos explained that it would be “cost prohibitive

due to the 6% import duty and the cost of transatlantic shipping” for Kronos to import 

non-specialty grades of TiO2 to the United States from Europe. F. 163. 

Furthermore, as Tronox acknowledges, “[a] large portion of the US market is 

satisfied by slurry shipment, which adds a logistical barrier to entry.” F. 176. As noted 

earlier, slurry is shipped by rail cars and pumped directly into customers’ storage tanks. 

F. 80. For those customers, switching from slurry to dry TiO2 would present logistical 

challenges and costs such as building new infrastructure and redesigning manufacturing 

26 
processes. F. 175. Shipping slurry internationally would be cost prohibitive because of 

the weight of the water in the slurry. F. 173. It is also impractical because the slurry 

would settle in transit, meaning that the pigment separates from the water. F. 174. In 

addition, the slurry could grow bacteria during transit, which would contaminate the 

shipment. F. 174. 

Another reason North American customers do not engage in arbitrage is because 

they want on-time delivery and do not want to incur long lead times, as both Tronox and 

Cristal have recognized. F. 169-171. North American customers consistently testified 

that they purchase chloride TiO2 from North American suppliers so that they do not have 

to incur long lead times from importing TiO2. F. 164-167. As Mr. Arrowood explained, 

Deceuninck North America has not purchased TiO2 from locations outside of North 

America because of potential problems with transportation resulting in extremely long 

lead times to get product to its factory. F. 164-165. If a TiO2 customer ships TiO2 from 

China to North America, it may take 12 weeks to arrive at the facility. F. 164. Because 

of long lead times when importing TiO2, a North American TiO2 customer would have 

to stock its own warehouse at least 12 weeks in advance. F. 165. In addition, North 

American customers could face shipping delays when importing TiO2. F. 167. 

Deliveries from North American suppliers are more reliable, which helps customers 

better manage their production cycle times. See F. 164-171. 

Customers explained why they did not engage in arbitrage. 

explained that it looked into possibly moving TiO2 from one of its European 

plants to a plant in Ohio, but decided against it because it is “very expensive to 

[transport] the titanium dioxide from Europe to the U.S., [and] the economics didn’t 

make sense for us to do that. . . .” F. 177. has evaluated arbitrage, 

but chose not to do so for TiO2 because after it “factor[ed in] all of the costs of securing 

the material in another geography, the transportation, the tariffs, the handling, all factors 

involved,” the “benefit was negligible or it didn’t justify the amount of effort.” F. 178. 

27 

does move TiO2 from one region to another in severe shortage situations, but 

explained that it does not undertake general arbitrage opportunities for two reasons: 
 

 

 

(1) its volumes are too high; and (2) when TiO2 suppliers give pricing to 

for its different regions, the suppliers clearly convey that the material is to be consumed 

in that region and not transferred for use in another region. F. 179. 

Expert opinion is consistent with the foregoing real-world proof that North 

American TiO2 customers do not, and would not, engage in arbitrage. Based on a 

quantitative analysis using invoice data produced by Tronox and Cristal, Complaint 

Counsel’s expert witness, Dr. Hill, concluded that even when there were “significant 

price differences” between the price for chloride TiO2 in North America and the price in 

the rest of the world, customers have not engaged in arbitrage to defeat higher prices in 

North America by buying TiO2 in a lower priced region and transporting it to North 

America. F. 181. 

Finally, North American customers do not buy TiO2 from regions outside North 

America because the amount of chloride TiO2 manufactured outside North America is 

limited. Imports account for only 3% of North American chloride TiO2 sales. F. 115. 

f. Respondents’ opposing arguments 

Respondents argue that North America is not the relevant geographic market 

because, according to Respondents, all rutile TiO2, whether produced by the chloride or 

the sulfate process, competes in a global market. RB at 47-48. But the antitrust market 

inquiry focuses not just on where the sellers compete, but the region to which the 

purchasers can practicably turn for supplies. Tampa Elec., 365 U.S. at 327. The 

evidence, detailed in section III.B.2. and summarized above, shows that North American 

TiO2 customers cannot practicably turn to other regions for chloride TiO2, which is the 

relevant product in this case. Respondents also assert that North American prices are 

“correlated” and “co-integrated” with global prices and that this shows that the market is 

global. RB at 48-49. Correlation and co-integration analyses look only at prices. They 

do not address the relevant antitrust question of whether customers change their 

purchases in response to relative price changes. “[T]he mere fact that the prices of two 

goods move upward or downward together need not mean that they are substitutes.”

Preliminary Injunction Opinion, 2018 U.S. Dist. LEXIS 155127, at *21. 

28 
 

 

 

 

 

 

 

 

 

 

 

 

 

3. Economic evidence 

As further support for finding a relevant market for the sale of chloride TiO2 in 

North America, Complaint Counsel relies on certain economic evidence developed by its 

economic expert witness, Dr. Hill. Dr. Hill conducted a “hypothetical monopolist test”

on the candidate market for chloride TiO2 in North America. The hypothetical 

monopolist test asks whether a hypothetical firm that is the only seller of the candidate 

product (chloride TiO2) to customers in the candidate geographic area (North America) 

could profitably impose a SSNIP. See Merger Guidelines §§ 4.1.1, 4.2.2. If this 

hypothetical monopolist can profit from imposing a SSNIP without losing a critical mass 

of customers, then the candidate market passes the hypothetical monopolist test and the 

relevant antitrust market is defined correctly. If, on the other hand, customers can defeat 

the price increase “by substitution away from the relevant product or by arbitrage,” the 

market definition must be broadened. Id. 

Dr. Hill conducted the hypothetical monopolist test several ways. Dr. Hill 

conducted a critical loss analysis9 using three different measures to determine whether it 

would be profitable for the hypothetical monopolist to increase the price by at least a 

SSNIP. F. 183-185. First, Dr. Hill used his estimate of North American customers’

willingness to switch from chloride TiO2 to sulfate TiO2 (the “price elasticity of 

demand” measure) to determine whether enough North American customers would 

switch to another product to defeat a SSNIP by the hypothetical monopolist. F. 186. 

That measure showed that demand for chloride TiO2 by North American customers was 

inelastic (-0.45). F. 186. As a result, switching to other products by North American 

customers would prove inadequate to defeat a SSNIP. F. 186. Second, Dr. Hill used a 

“substitution components” measure, using data from Respondents, to ascertain whether

9 Critical loss analysis is a standard tool used to implement the hypothetical monopolist test to determine 

whether a candidate market constitutes a relevant antitrust market. Merger Guidelines § 4.1.3. A critical 

loss analysis has two stages: (1) calculation of the critical loss, which means the percentage of sales a 

hypothetical monopolist would have to lose to keep its profit unchanged if it increased its price by a small 

amount; and (2) calculation of the predicted loss, which means the percentage of sales that the hypothetical 

monopolist would likely lose given a particular price increase and keep its profit unchanged. If the 

predicted loss is smaller than the critical loss, then the price increase will increase the hypothetical 

monopolist’s profit. F. 183. 

29 
 

increased imports or repatriated exports responding to a SSNIP, combined with lost sales, 

would render the SSNIP unprofitable for the hypothetical monopolist. F. 187. Using this 

approach and data, Dr. Hill found a SSNIP would be profitable. F. 187. Third, Dr. Hill 

relied on Tronox’s estimate of the maximum North American sulfate TiO2 demand to 

determine whether a sufficient number of North American customers would switch to 

sulfate TiO2 to defeat a SSNIP and found that they would not. F. 188. In each of his 

three critical loss analyses, Dr. Hill found that the predicted loss is lower than the critical 

loss, and thus opined that the market passes the hypothetical monopolist test. F. 186-188. 

In addition, Dr. Hill used the measure of price elasticity of demand for chloride 

TiO2 in North America to determine whether demand would remain inelastic if prices 

increased by a SSNIP. F. 189. Dr. Hill found that it would, and thus opined that the sale 

of chloride TiO2 to North American customers passes the hypothetical monopolist test. 

F. 189. Based on these calculations, Dr. Hill concluded that the relevant market consists 

of North American chloride TiO2 sales. F.190. 

Respondents, through their economic expert witness, Dr. Shehadeh, dispute Dr. 

Hill’s methodology and urge that Dr. Hill’s analyses in this regard be rejected. RB at 50; 

RX0170 (Shehadeh Expert Report at 0028-30 ¶¶ 35-41). However, even if Dr. Hill’s 

analyses as to the effect of a theoretical price increase are ignored, as urged by 

Respondents, the practical, real world evidence presented by the record, summarized 

above, is more than sufficient to conclude that customers have not substituted sulfate 

TiO2 for chloride TiO2 and have not engaged in arbitrage, despite the differences in 

price, and that they would not do so in the face of a price increase by a hypothetical 

monopolist. 

4. Conclusion 

For all the reasons set forth above, the relevant market is the sale of chloride TiO2 

to North American customers. 

30 
D. Prima Facie Case 

1. Market shares and concentration 

After determining the relevant product and geographic market, the next step is to 

“consider the likely effects of the proposed acquisition on competition within that 

market.” Swedish Match, 131 F. Supp. 2d at 166. The government can establish a 

presumption that the transaction will substantially lessen competition by showing that the 

acquisition would produce “‘a firm controlling an undue percentage share of the relevant 

market, and [would] result[ ] in a significant increase in the concentration of firms in that 

market.’” Heinz, 246 F.3d at 715 (quoting Philadelphia Nat’l Bank, 374 U.S. at 363); see 

also Baker Hughes, 908 F.2d at 982. 

“Market concentration . . . is often measured using the Herfindahl-Hirschmann 

Index (‘HHI’).” Heinz, 246 F.3d at 716; Swedish Match, 131 F. Supp. 2d at 166 n.11. As 

the court explained in Swedish Match: 

The HHI calculates market power [by] summing the squares of the 

individual market shares of all the firms in the market. The HHI takes into 

account the relative size and distribution of the firms in a market, 

increasing both as the number of firms in the market decreases and as the 

disparity in size among those firms increases. 

Id. Sufficiently high HHI figures establish a prima facie case of anticompetitiveness. 

H&R Block, 833 F. Supp. 2d at 71 (citing Heinz, 246 F.3d at 715 n.9). 

The Merger Guidelines consider markets with an HHI above 2500 to be “highly

concentrated,” and state that “[m]ergers resulting in highly concentrated markets that 

involve an increase in the HHI of more than 200 points will be presumed to be likely to 

enhance market power.” Merger Guidelines § 5.3; Heinz, 246 F.3d at 715 (citing Baker 

Hughes, 908 F.2d at 982) (noting that significant increase in market concentration 

“establishes a ‘presumption’ that the merger will substantially lessen competition.”).

The North American chloride TiO2 market is dominated by five major producers. 

Tronox, Cristal, Chemours, Kronos, and Venator account for over 99% of chloride TiO2 

sales in North America. F. 192-193. Based on producer invoice and other pricing data 

31 
 

analyzed by Dr. Hill, the market participants and their market shares in 2016 were as 

follows: Tronox , Cristal , Chemours , Kronos 

, and Venator . F. 194. Post-Acquisition, the combined firm would 

have a market share of [nearly 40%] of North American sales of chloride TiO2. 

F. 200. 

Dr. Hill also calculated HHIs, based on the market share data. F. 202-203. Dr. 

Hill’s calculations show that the Acquisition would increase the HHI by over 700 points, 

to a level of over 3000, which, under the Merger Guidelines, would render the postAcquisition North American chloride TiO2 market a “highly concentrated” market. 

F. 203. See Merger Guidelines § 5.3. These market share statistics demonstrate that the 

proposed Acquisition is presumptively anticompetitive. See FTC v. Staples, Inc., 190 

F. Supp. 3d 100, 128 (D.D.C. 2016); Sysco, 113 F. Supp. 3d at 52-53. 

Accordingly, based on the foregoing, Complaint Counsel has established a 

presumption that the effect of the Acquisition may be to substantially lessen competition. 

Under applicable authorities recited in section II.B.2., this presumption is sufficient to 

establish a prima facie case under Section 7 and shift the burden of rebuttal to 

Respondents. Moreover, in the instant case, the presumption is strengthened by 

additional evidence demonstrating a reasonable probability of anticompetitive effects, as 

discussed below. 

2. Reasonable probability of anticompetitive effects 

a. Overview 

As the court explained in ProMedica Health Systems v. FTC, anticompetitive 

effects of a merger can include coordinated effects and/or unilateral effects. 

[T]he idea behind coordinated effects is that, “where rivals are few, firms 

will be able to coordinate their behavior, either by overt collusion or 

implicit understanding in order to restrict output and achieve profits above 

competitive levels.” H&R Block, 833 F. Supp. 2d at 77. . . . Unilateraleffects theory, on the other hand, holds that “[t]he elimination of 

competition between two firms that results from their merger may alone 

32 
 

 

 

constitute a substantial lessening of competition.” Merger Guidelines § 6 

at 20. 

749 F.3d 559, 568-69 (6th Cir. 2014). In the instant case, to support the argument that 

the Acquisition is likely to have anticompetitive effects, Complaint Counsel asserts: (1) 

the Acquisition will facilitate coordination among competitors, in a highly concentrated 

market that is vulnerable to coordination (coordinated effects); and (2) the Acquisition 

will enable the combined entity to engage in strategic output withholding, in a market 

with incentives for and a history of such conduct (unilateral effects). See CCB section 

II.A., B. Respondents dispute that anticompetitive effects are likely, arguing that the 

evidence fails to show that coordination among competitors or unilateral strategic output 

withholding by the combined entity is likely. See RB section II.B., C. The question of 

likely coordinated effects is analyzed below. 

b. Likelihood of coordinated effects 

i. Legal principles 

“Tacit collusion, sometimes called oligopolistic price coordination or conscious 

parallelism, describes the process, not in itself unlawful, by which firms in a concentrated 

market might in effect share monopoly power, setting their prices at a profit-maximizing, 

supracompetitive level by recognizing their shared economic interests and their 

interdependence with respect to price and output decisions.” Brooke Group v. Brown & 

Williamson Tobacco Corp., 509 U.S. 209, 227 (1993). See also Merger Guidelines § 7 

(Coordinated interaction includes an implied understanding or parallel accommodating 

conduct not pursuant to a prior understanding.). 

Coordinated interaction involves conduct by multiple firms that is 

profitable for each of them only as a result of the accommodating 

reactions of the others. These reactions can blunt a firm’s incentive to 

offer customers better deals by undercutting the extent to which such a 

move would win business away from rivals. They also can enhance a 

firm’s incentive to raise prices, by assuaging the fear that such a move 

would lose customers to rivals. 

Merger Guidelines § 7. 

33 
“It is a central object of merger policy to obstruct the creation or reinforcement by 

merger” of market structures in which tacit coordination can occur. Heinz, 246 F.3d at 

725. “Tacit coordination is feared by antitrust policy even more than express collusion, 

for tacit coordination, even when observed, cannot easily be controlled directly by the 

antitrust laws.” Id. “[P]ermit[ting] mergers to be challenged prior to their occurrence

and thus before the harm from coordinated interaction has materialized . . . is particularly 

valuable in situations where coordinated interaction is difficult to detect and remedy 

directly under § 1 of the Sherman Act.” Herbert Hovenkamp, Prophylactic Merger 

Policy, HASTINGS L.J. (August 2018) at 12. 

It is not necessary to prove that tacit coordination has already occurred in order to 

demonstrate a reasonable probability of future coordination. See Arch Coal, 329 F. Supp. 

2d at 116 (“While proof of prior cooperative behavior is relevant, it is not a necessary 

element of likely future coordination in violation of Section 7.”). 

ii. Analysis 

Under the Merger Guidelines, a merger may substantially lessen competition if: 

(1) the merger would significantly increase concentration and lead to a moderately or 

highly concentrated market; (2) that market shows signs of vulnerability to coordinated 

conduct; and (3) the merger is likely to enhance that vulnerability. Merger Guidelines 

§ 7.1. As shown above, the evidence proves that the Acquisition in this case would 

significantly increase concentration in the relevant market and lead to a highly 

concentrated market. As discussed below, the evidence further proves that the North 

American chloride TiO2 market is vulnerable to coordinated conduct, and that this 

vulnerability will be enhanced by the Acquisition. See generally Merger Guidelines § 7.2 

(discussing factors evidencing vulnerability to coordination). 

First, with only five participants selling chloride TiO2 in North America (F. 192), 

the number of firms in the relevant market is small. “The fewer competitors there are in a 

market, the easier it is for them to coordinate their pricing without committing detectable 

violations of section 1 of the Sherman Act . . . .” Hosp. Corp. of Am. v. FTC, 807 F.2d 

1381, 1387 (7th Cir. 1986). In the instant case, the Acquisition will reduce the number of 

34 
 

 

firms to four, thereby making it easier for the remaining firms to coordinate on price or 

output. See Elders Grain, 868 F.2d. at 905 (holding that acquisition reducing firms 

from six to five would make it easier for leading members of the industry to collude 

on price and output); Univ. Health, 938 F.2d at 1219 (holding that four businesses 

remaining after merger could easily collude to raise price and decrease output without 

committing detectable violations of the Sherman Act). In particular, the Acquisition 

would not only simplify coordination by eliminating Cristal, a current competitor, but 

would also create a new firm of a similar size to Chemours, the current market leader. 

See F. 194, 196, 200. Indeed, the Acquisition will result in only two firms – Tronox and 

Chemours – in control of [nearly three-quarters] of North American sales, and 

over of North American capacity. F. 201. “With only two dominant firms left in 

the market, the incentives to preserve market shares would be even greater, and the costs 

of price cutting riskier, as an attempt by either firm to undercut the other may result in a 

debilitating race to the bottom.” CCC Holdings, 605 F. Supp. 2d at 67. 

Second, chloride TiO2 is a commodity product. F. 247-249. Markets for 

homogenous products are more susceptible to coordination. F. 250. One reason for this 

is that reactions by rivals to attempts to steal their business are likely to be strong, given 

that each firm’s product is largely interchangeable with its rivals’ products. F. 250. In 

this case, given the small number of market participants in the relevant market, and the 

commodity nature of chloride TiO2, the market is fairly characterized as an oligopoly. 

See Areeda ¶ 1429a at 221; Blomkest Fertilizer, Inc. v. Potash Corp. of Saskatchewan, 

Inc., 203 F.3d 1028, 1031 n.3 (8th Cir. 2000) (quoting Black’s Law Dictionary 1086 (6th 

ed. 1990)); see also Preliminary Injunction Opinion, 2018 U.S. Dist. LEXIS 155127, at 

*7 (“The titanium dioxide market has been described as an ‘oligopoly,’ as TiO2 is a 

‘commodity-like product with no substitutes, the market is dominated by a handful of 

firms, and there are substantial barriers to entry.’” (quoting Valspar Corp. v. E.I. Du Pont 

De Nemours & Co., 873 F.3d 185, 190 (3d Cir. 2017)). 

35 
 

 

Third, mutually recognized interdependence is indicative of a market that is 

vulnerable to coordination. In such a market,each [competitor] knows that his choice will 

affect the others, who are likely to respond, and that their responses will affect the 

profitability of his initial choice. Each knows that expanding his sales or lowering his 

price will reduce the sales of rivals, who will notice that fact, identify the cause, and 

probably respond with a matching price reduction. Unless he can somehow conceal his 

price reduction, or unless his own position is improved by a lower market price, he will 

hesitate to reduce prices at all. Areeda ¶ 1410b at 65 (emphasis and footnote omitted). 

Recognized interdependence is a distinct characteristic of an oligopolistic market. 

Areeda ¶ 404a; see also Rebel Oil Co. v. Atlantic Richfield Co., 51 F.3d 1421, 1443 (9th 

Cir. 1995) (“[b]y definition, oligopolists are interdependent . . .” (citation omitted); In re 

Flat Glass Antitrust Litig., 385 F.3d 350, 359 (3rd Cir. 2004) (explaining that a 

participant in an oligopoly market “‘must take into account the anticipated reaction of the 

other [] firms’”) (citation omitted)).

In the instant case, the evidence proves that the North American chloride TiO2 

market is characterized by mutually recognized interdependence. F. 204. As 

acknowledged in a November 2016 Tronox presentation, the “TiO2 market shows 

oligopoly pricing behavior (one supplier can drive price down, action of all suppliers 

needed to pull prices up).” F. 206. Indeed, the record is replete with testimony and 

documents from Tronox and Cristal demonstrating recognized interdependence among 

market participants. F. 205-246. E.g., F. 207 (Tronox’s Mr. Romano testifying that “it 

only takes one to make the price go down. The whole market has to go up. But any one 

competitor can make pricing go down.”); F. 212 (Tronox’s Mr. Romano testifying that 

success of a price increase “depends on what our competition is doing”); F. 213 

(Tronox’s Mr. Casey stating in an email: “[T]he success of this [Tronox December 2015 

price increase] initiative will be materially affected by how Huntsman [now Venator], 

Cristal and Kronos respond. Chemours announced an equivalent price increase yesterday 

. . . .”); F. 208 (Mr. Gigou of Cristal testifying that when considering whether to issue a 

price increase and for what amount, Cristal takes into account information from 

36 
 

 

customers regarding other TiO2 suppliers); F. 217 (Mark Stoll, general manager of 

mergers and acquisitions for Cristal, stating in a 2012 email: “In current market 

conditions of excessive inventory we cannot raise price and gain market share at the same 

time unless all suppliers support the price movement.”). 

In addition, the evidence shows mutual accommodating conduct by chloride TiO2 

producers in order to support market discipline and avoid triggering adverse competitor 

responses. F. 228-246. For example, in a July 2015 email discussing pricing for a 

customer, Mr. Duvekot of Tronox wrote: “Especially on a highly visible account like 

[this particular customer] any price move will be seen by the competitors, even more so if 

we use it to take a piece of the pie. That will cause a reaction from the competition, at 

this account or elsewhere in the market, which will just lead to more price erosion in the 

market. Tronox does not want to play this game (anymore).” F. 244. In a March 2016 

email, Tronox’s Mr. Mouland wrote to two salespeople: “We will have to pass on this 

opportunity as I do not want to undercut a competitor. The price increase is taking hold 

and any attempt to get volume at the expense of price could undermine our progress.”

F. 246. See also F. 231 (“The problem we face is that pricing is falling and if we take

action to go after market share, price will deteriorate further and we do not want [to] 

facilitate or fuel that process. Everyone is defending their business and matching offers 

from the competition to maintain their share as no one want[s] to loose [sic] business.”); 

F. 235 (Cristal email stating: “All of the large global TiO2 suppliers are still acting in a 

disciplined manner, respecting each other’s market positions and share and holding on to 

price. No volume stalking of any great consequence is taking place yet, which is very 

good news.”). 

Fourth, “[a] market typically is more vulnerable to coordinated conduct if each 

competitively important firm’s significant competitive initiatives can be promptly and 

confidently observed by that firm’s rivals. . . . Regular monitoring by suppliers of one 

another’s prices or customers can indicate that the terms offered to customers are

relatively transparent.” Merger Guidelines § 7.2. See also Oracle, 331 F. Supp. 2d at 

1166 (“Without homogeneity or transparency, the market conditions are not conducive to 

37 
 

 

 

coordinated effects, either tacit or express.”). The evidence in this case shows that TiO2 

suppliers monitor, and are able to observe, significant moves by their competitors, 

including as to price and output, from public statements by competitors and information 

obtained from customers. See section III.C.2.c. 

Tronox and Cristal monitor and analyze public statements by competitors such as 

quarterly earnings updates, presentations at industry conferences, and ratings agency 

meetings. F. 259. For example, Tronox’s Mr. Engle, vice president of marketing, listens 

to competitors’ earnings calls to learn about their production plans and other 

announcements, and to obtain competitive intelligence. F. 260. Indeed, these sources 

represent Tronox’s largest source of competitor intelligence. F. 260. Reports and 

analyses are provided to Tronox’s executives. F. 259, 264. Cristal also monitors TiO2 

competitors’ public calls and circulates detailed analyses to executives, highlighting 

information such as production curtailments, capacity utilization, and planned price 

increases. F. 265-266. 

The information provided in public earnings calls and similar public presentations 

can be specific. Tronox discusses in its quarterly results earnings calls such matters as 

changes in sales volume, changes in the selling prices by region, margin information, and 

operation related information such as relative plant utilization rate and inventory levels. 

F. 257, 267. Tronox publicly announced in a second quarter 2015 earnings call its 

decision to reduce production at two facilities, including Tronox’s Hamilton plant, and 

specifically noted that “these processing line curtailments represent approximately 15%

of total pigment production.” F. 268. In a first quarter 2016 conference call, Tronox 

described its plan to continue to be “disciplined” about production and not to bring back 

“full production” on the first sign of price recovery. F. 269. In a second quarter 2016 

earnings call, Chemours stated its prediction that for “the rest of the year, you’ll see a 

cadence up in our price as you look at third quarter . . . .” F. 262. At a basic materials 

conference sponsored by Goldman Sachs, the executive vice president of Huntsman (now 

Venator) stated: “Well, there’s the April 1 effective price increase. It was roughly $235 

a ton, nominated. And we have communicated and signaled that we would expect the 

38 
 

 

 

 

 

 

realization on that price would be on the upper end of what we’ve been realizing over the

last 3 or 4 quarters. That is closer to 2/3, 70% realization.” F. 263. 

Publically disclosing information in a market characterized by 

interdependence can serve as a signal to the market, enhancing predictability and the 

potential for tacit coordination. North American chloride TiO2 producers over the 

years have increased TiO2 prices typically in close proximity to each other in time. 

F. 219. For example, Chemours announced a price increase of $150 per metric ton on 

December 17, 2015. F. 221. Within about a half hour of learning this information, Mr. 

Casey of Tronox reacted by directing that “[w]e will put out a

global price increase announcement of our own before 9:30 tomorrow,” which Tronox

did. F. 221, 222. In an internal email, Tronox explained that, with its price increase, 

Tronox was “testing whether [the market] is ready for price increases or at least to stop 

declines.” F. 222. Cristal learned of the price increase by Tronox on the same day it was 

announced, and remarked in an internal email: “Tronox follows the trend. . . . 

Expectedly, other TiO2 manufacturer’s [sic] may follow the trend.” F. 215. Cristal 

characterized these announced pricing moves as “an initiative to taste the market 

readiness to accept this announced price increase.” F. 215. Later that day on December 

18, 2015, Cristal confirmed that both Chemours and Huntsman had also announced price 

increases. F. 215. From Cristal’s perspective, the December 2015 price increase 

announcements were “[n]ot based on supply/demand dynamics.” F. 223. 

In another example, shortly after Tronox publicly announced in its second quarter 

2015 earnings call its decision to reduce production at its Hamilton plant, Chemours 

closed its Edge Moor plant in Delaware, and shut down a production line at its 

Johnsonville, Tennessee plant, removing 150,000 metric tons of capacity. F. 225, 268. 

Tronox considered this “Good news!!” with then-CEO Mr. Casey responding that “[i]t’s 

good that [Chemours] can follow the leader!” F. 226. 

The Acquisition will increase the competitive information available to market 

participants through earnings calls and similar public presentations. Tronox, Chemours, 

39 
 

 

 

 

 

 

 

 

 

 

Kronos, and Venator are publically traded companies, F. 251, and therefore required to 

report earnings and similar business information to investors and others in the ordinary 

course of business. Presently, Cristal is a privately held company. F. 252. With the 

merger, all participants will be reporting as public companies. 

Chloride TiO2 producers also monitor competitive actions in the market 

through information obtained from their customers. F. 270-288. It is part of 

Tronox’s price increase implementation process to collect competitive intelligence on 

its competitors’ pricing in order to assess whether its competitors are “maintain[ing] a

disciplined approach” with respect to a price increase. F. 277. Customer-provided 

information is included in reports provided to senior management and is used to make 

pricing decisions. F. 271, F. 275. In many instances, this can include specific pricing 

information. E.g., F. 276 (“Per , Purchasing Mgr, Kronos and DuPont 

have moved their price by ”); F. 276 (“customer confirmed Kronos is taking them 

up ”; F. 276 (describing that Cristal is offering per pound lower than 

Tronox at ); F. 279 (Cristal email reporting that customer “indicated 

that Huntsman offered for volume . . . ”); F. 279 (internal 

Cristal email stating: “Our refusal to . . . meet price resulted in [a 

customer] moving 5 trucks per month away from us and over to . . .”). 

Competitor price information, once disclosed, gets further communicated within the 

market “from competitor to customer to other supplier.” F. 280.

10 

Fifth, the fact that the chloride TiO2 market has low demand elasticity makes 

coordination more profitable, which increases incentives to coordinate. Price elasticity of 

demand is how responsive demand is to changes in price. F. 289. Inelastic demand 

10 Respondents contend that customer-provided pricing information is not reliable because customers in a 

negotiation may not necessarily be truthful about competing offers. RRFF 476-85. However, the fact that 

suppliers report and rely on customer-provided competitor pricing information in making their own pricing 

decision is indicative of the information’s reliability. In addition, Cristal’s redbook, a data compilation, 

uses customer-provided sales information to track suppliers’ sales volumes, and market share data 

calculated from the data proved to be a close match to market shares calculated from actual data derived 

from suppliers’ invoices. F. 282-285. The totality of the evidence belies the notion that customers 

routinely provide false information as part of the negotiation process. 

40 
 

 

 

 

 

 

makes a market more susceptible to coordination because if prices of all firms were to 

rise, few sales would be lost, which makes the reward for coordinating greater. F. 289. 

Here, the price elasticity of demand for chloride TiO2 in North America is low. F. 189.

11 

iii. Respondents’ opposing arguments

Respondents argue that Complaint Counsel has failed to prove that coordinated 

effects are likely, citing United States v. Oracle Corporation, 331 F. Supp. 2d 1098 (N.D. 

Cal. 2004). RB at 57. Oracle does not support Respondents’ argument. In that case, the 

court denied a preliminary injunction under Section 7, finding, among other things, that 

“the products of Oracle and SAP are not homogeneous, but are differentiated products, 

and that the pricing of these products is not standardized or transparent.” 331 F. Supp. 2d 

at 1109. Indeed, the plaintiffs in Oracle did not contend that any of those conditions 

were present in the proposed merger. Id. at 1113. In the instant case, by contrast, the 

evidence proves that chloride TiO2 is a commodity product and suppliers are able to gain 

relatively detailed and specific information about competitors’ pricing. 

Respondents further assert that the evidence fails to show coordination has 

occurred in the past. RB at 59-62. However, as explained above, proof of prior tacit 

coordination is not necessary to demonstrate a reasonable probability of future 

coordination. See Arch Coal, 329 F. Supp. 2d at 116. Respondents additionally contend 

that coordination would be difficult to conceive, monitor, or enforce because announced 

prices are not necessarily the actual price paid by customers; rather, prices are 

individually negotiated with each customer. RB at 61. Respondents’ argument ignores 

the facts that suppliers obtain reliable information about actual prices being offered by 

the competition directly from customers, among other sources, and that such information 

spreads to other suppliers in the market. Moreover, knowledge of precise competitor 

pricing is not necessary to be able to coordinate price movements through parallel price 

11 It is also noteworthy that customers in the relevant market are concerned about the increased 

consolidation of suppliers post-Acquisition. F. 293 (Mr. Vanderpool of True Value testifying: “[We’re]

going from five major suppliers down to four major suppliers . . . . 

. So we see raw material prices continue to go up and tightening in the market 

from allocation, and that’s a very big concern of ours”); F. 294 (Ampacet email stating, “The acquisition of

Cristal by Tronox is cause for concern for Ampacet” noting the “20% reduction in [its] supply base”).

41 
 

 

 

 

 

 

 

 

 

 

 

 

 

increases, which are publicly disclosed. In any event, it is not necessary to demonstrate 

that market participants can form and enforce an agreement. Coordinated interaction 

includes a range of conduct, and can involve parallel conduct “in which each rival’s 

response to competitive moves made by others is individually rational, and not motivated 

by retaliation or deterrence but nevertheless emboldens price increases and weakens 

competitive incentives to reduce prices or offer customers better terms.” Merger 

Guidelines § 7. 

Respondents also argue that TiO2 sales are subject to “fierce competition.” RB at 

58-59. Respondents assert that most customer contracts do not set price but rather 

provide for prices to be negotiated; that contracts typically contain an option to switch 

suppliers if they find a better price (a “meet or release” clause), which can result in a 

lower price; and that buyers “pit” suppliers against each other to obtain a lower price. 

See, e.g., RB at 59; RFF 533. However, such evidence does not logically preclude a 

finding that the market is also vulnerable to coordination, particularly where, as here, the 

market is characterized by oligopolistic interdependence, exacerbated by relative 

transparency and product homogeneity.12 Furthermore, “[a]s the statutory language 

suggests, Congress enacted Section 7 to curtail anticompetitive harm in its incipiency.”

Polypore, 2010 WL 9549988 at *8 (citing Chicago Bridge, 534 F.3d at 423) (emphasis 

added). See also Merger Guidelines § 7.1 (“Pursuant to the Clayton Act’s incipiency

standard, the Agencies may challenge mergers that in their judgment pose a real danger 

of harm through coordinated effects, even without specific evidence showing precisely 

how the coordination likely would take place.”). 

12 According to the Merger Guidelines, “meet or release” clauses tend to increase the vulnerability of a 

market to coordinated interaction by increasing visibility of competitive initiatives. See Merger Guidelines 

§ 7.2 (“A market typically is more vulnerable to coordinated conduct if a firm’s prospective competitive 

reward from attracting customers away from its rivals will be significantly diminished by likely responses 

of those rivals. This is more likely to be the case, the stronger and faster are the responses the firm 

anticipates from its rivals. The firm is more likely to anticipate strong responses if there are few significant 

competitors, if products in the relevant market are relatively homogeneous, if customers find it relatively 

easy to switch between suppliers, or if suppliers use meeting-competition clauses.”).

42 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

iv. Summary 

Based on the foregoing, the evidence proves that the North American chloride 

TiO2 market is vulnerable to coordinated conduct, and that this vulnerability will be 

enhanced by the Acquisition. 

3. Conclusion 

As set forth above, market concentration evidence warrants the presumption that 

the Acquisition is likely to have anticompetitive effects in the relevant market. That 

presumption is bolstered by substantial evidence demonstrating that anticompetitive 

coordinated effects are in fact likely. The foregoing amply demonstrates a strong prima 

facie case that the Acquisition may substantially lessen competition.

13 

The analysis now turns to Respondents’ rebuttal evidence. 

E. Rebuttal 

As noted in section II.B.2. above, a defendant may rebut a prima facie showing of 

likely anticompetitive effects with evidence that anticompetitive effects are not likely to 

result from the merger, or that procompetitive benefits, such as efficiencies, outweigh any 

likely anticompetitive effects. See, e.g., Baker Hughes, 908 F.2d at 985; Polypore, 2010 

WL 9549988, at *9. “The more compelling the prima facie case, the more evidence the 

defendant must present” to successfully rebut that case. Baker Hughes, 908 F.2d at 991; 

Heinz, 246 F.3d at 725; Polypore, 2010 WL 9549988, at *9. Respondents have failed to 

meet this burden, as explained below. 

13 Complaint Counsel’s additional theory of likely anticompetitive effects, that the Acquisition will enable 

the combined entity to engage in strategic output withholding (unilateral effects), has been fully considered, 

together with the relevant evidence in the record. However, findings or conclusions as to the likelihood of 

anticompetitive unilateral effects are unnecessary because the presumption of anticompetitive effects, based 

on market concentration evidence, combined with the evidence of likely coordinated effects, is already 

sufficient to make a strong prima facie case of likely anticompetitive effects. Further determining the 

likelihood of unilateral effects would not affect this result. See Polypore, 2010 WL 9549988, at *9 (“A

plaintiff can bolster a prima facie case based on market structure with evidence showing that 

anticompetitive unilateral or coordinated effects are likely.”) (emphasis added). See also 5 U.S.C. 

§ 557(c)(3)(A) (Administrative Procedures Act); 16 C.F.R. § 3.51(c)(1) (Commission rule on Initial 

Decisions) (both requiring findings and conclusions only for “material” issues of fact and law). Issues of

fact or law that do not affect the result are not fairly deemed “material,” notwithstanding that there may be 

allegations or evidence presented on such issues. 

43 
 

 

1. Entry 

a. Applicable legal standards 

Even in highly concentrated markets, such as the relevant market in the instant 

case, “if there is sufficient ease of entry, enough firms can enter to compete with the

merging firms, undercutting any of the likely anti-competitive effects of the proposed 

mergers. In other words, entry is one way in which post-merger pricing practices can be 

forced back down to competitive levels.” FTC v. Cardinal Health, 12 F. Supp. 2d 34, 55 

(D.D.C. 1998). See also United States v. United Tote, Inc., 768 F. Supp. 1064, 1072 

(D. Del. 1991) (“[I]f alternative sources of supply could enter the market with relative 

ease, then no hypothetical monopolist or cartel could achieve or maintain supracompetitive pricing . . . .”); In re Echlin Mfg. Co., Inc., 105 F.T.C. 410, 1985 FTC LEXIS 

46, at *25 (June 28, 1985) (“An attempt to exercise market power in an industry without 

entry barriers would cause new competitors to enter the market. This additional supply 

would drive prices back to the competitive level.”).

Entry can be demonstrated either by new firms entering the relevant market or by 

expansion into the relevant market by existing firms. See Baker Hughes, 908 F.2d at 

988-89 (affirming finding of entry where evidence showed, among other things, that at 

least two companies had entered the United States market immediately prior to the 

challenged acquisition and that a number of firms competing in Canada and other 

countries were likely to do so). 

Determining whether there is ease of entry hinges upon an analysis of the barriers 

to new firms entering the market or to existing firms expanding into the relevant market. 

Cardinal Health, 12 F. Supp. 2d at 55 (citing Baker Hughes, 908 F.2d at 987). Entry 

barriers have been explained as follows: 

Expertise in the industry, a fair amount of capital, a positive reputation, 

and the need to have specialized equipment are all barriers to entry. 

Fruehauf Corp. v. FTC, 603 F.2d 345, 357 (2d Cir. 1979); Cardinal 

Health, F. Supp. 2d at 58; United States v. Blue Bell, Inc., 395 F. Supp. 

538, 549 (M.D. Tenn. 1975). . . . In some markets, “the need for

44 
 

 

 

reliability is so great and the consequences of new product failure so dire 

that, even if the competitive nature of the market deteriorated, consumers 

would still be reluctant to switch to new entrants.” Tote, 768 F. Supp. at 

1076 (finding proven ability to provide reliable systems and service an 

important factor in a racetrack’s selection of a totalisator supplier to 

preserve the track’s revenue and goodwill). The unwillingness of 

customers to use a company with an unproven track record is a barrier to 

entry. See Tote, 768 F. Supp. at 1078. 

In re Chicago Bridge & Iron Co., 138 F.T.C. 1024, 2003 FTC LEXIS 96, at **242-43 

(June 18, 2003), aff’d, 2005 FTC LEXIS 215 (Jan. 6, 2005), aff’d, 534 F.3d 410 (5th Cir. 

2008). 

A fundamental step in determining ease of entry is timeliness. Cardinal Health, 

12 F. Supp. 2d at 55 (“The first step in determining ease of entry is timeliness.”). In this 

regard, the Merger Guidelines state: “In order to deter the competitive effects of concern, 

entry must be rapid enough to make unprofitable overall the actions causing those effects and 

thus leading to entry, even though those actions would be profitable until entry takes effect.”

Merger Guidelines § 9.1. Entry must also be proven to be “likely, and sufficient in its 

magnitude, character and scope to deter or counteract the competitive effects of concern.”

Cardinal Health, 12 F. Supp. 2d at 55 (quoting Merger Guidelines (1992 ed.) § 3.0 

(emphasis added)). 

The burden of proving that entry will be timely, likely, and sufficient to deter or 

counteract anticompetitive effects is on Respondents. Staples, 190 F. Supp. 3d at 133; 

Sysco, 113 F. Supp. 3d at 80. As shown below, Respondents have failed to meet their 

burden. 

b. Analysis 

Respondents argue that Chinese suppliers are a current, and growing, competitive 

threat. Respondents rely in particular on an announced plan by Lomon Billions, 

discussed further below, to expand its chloride TiO2 capacity. Respondents further 

contend that Chinese suppliers benefit from low costs and a regulatory environment that 

facilitate entry. RB at 71-74. 

45 
 

Complaint Counsel argues that Chinese producers provide very little chloride 

TiO2 and that there are significant barriers to Chinese chloride TiO2 becoming a 

meaningful competitive presence in North America. CCB at 61-63. Whether Chinese 

producers will be able to overcome these barriers is highly uncertain, according to 

Complaint Counsel, and in any event they would be unlikely to do so in a timely and 

sufficient manner to counteract the competitive harm resulting from the Acquisition. 

CCB at 63-67. 

Respondents assert that China dominates the TiO2 export market, exporting a 

million tons a year. However, the vast majority of production in China is sulfate TiO2, 

which is not typically exported outside the Asia-Pacific region (F. 297, 298), and which, 

as shown in section II.C.1., is not a reasonable substitute for chloride TiO2 in North 

America. 

In fact, only a small amount of chloride TiO2 is sold by Chinese suppliers to the 

North American market. Chloride TiO2 sales by suppliers other than Tronox, Cristal, 

Kronos, Chemours, and Venator, accounted for a 0.5% share of the total 831,132 metric 

tons of chloride TiO2 sold in North America in 2016. F. 296. Lomon Billions, which is 

the fourth largest TiO2 producer globally by capacity, sold approximately 3,000 to 4,000 

metric tons of chloride TiO2 in the United States in 2017. F. 300, 303. Major paint 

manufacturers, such as , determined after 

testing that Chinese-produced chloride TiO2 did not meet their quality standards, F. 309, 

310, 312, which no doubt contributes to the relatively low sales volume in North 

America. See also F. 313 (Kronos does not see chloride TiO2 from China in the markets 

in which it competes, and has observed that such products are used for “lower quality

products”). Moreover, as explained in section II.C.2., import costs, lead times, and other

logistical and supply issues deter North American customers from purchasing chloride 

TiO2 from China. 

Industry participants do not expect easy or rapid entry by Chinese chloride TiO2 

producers, citing numerous barriers, including lack of technological know-how. The 

chloride process for TiO2 is technically more difficult than the sulfate process to master 

46 
 

 

 

 

 

and operate. F. 299. In 2016, Tronox observed that China “struggles” to commission 

chloride TiO2 plants, which “suffer[] from poor profitability, uptime, and quality.” 

F. 323. Tronox also noted in 2016 that it is “[s]till expected to take a while for 

appreciable profitable tonnes to start flowing,” and cited as reasons: “Legitimacy of base

technology [is] questionable,” “Chinese made adjustment to base technology,”

“Recommendation on equipment specs/sourcing ignored,” “Limited commissioning

support,” and lack of “know-how/experience of running CP [chloride process] plant.”

F. 322. Tronox further acknowledged in 2017 that “[i]t could take years before the 

Chinese chloride based TiO2 industry is mature and stable enough to bring the same 

quality and consistency as their international competitors.” F. 324; see also F. 321 

(Mr. Casey of Tronox stating in a 2015 email, “I think it is a very remote prospect that 

China will be producing chloride capacity of any magnitude in the next 3-5 years”). 

Similarly, in 2016, Cristal observed: “It’s been exceedingly difficult for the Chinese to 

acquire and successfully employ the proprietary chloride technology . . . [and it is] 

difficult to predict when, to what extent, and how fast this will occur. Very small inroads 

have been made to date.” F. 325. 

In addition, Venator stated in 2017 that the “Chinese struggle with quality control, 

consistency of production, no automation and too much manual interruption - ultimately 

the know-how of how to run plants.” F. 326. See also F. 327 (Venator citing 

“technology issues” as among the “headwinds” facing Chinese TiO2 producers). Kronos 

noted in a 2017 investor presentation that the Chinese threat was “manageable,” due to 

the “[s]uperior chloride process technology” being “closely guarded by Western 

producers” and “[q]uality and reliability concerns.” F. 315. Kronos believes that it is 

“highly unlikely” that Chinese chloride process TiO2 will constitute any threat to its 

business within the next two to three years. F. 319. Similarly, Chemours does not 

project that Chinese chloride TiO2 producers, to the extent they further develop their 

process and quality, will affect the North American market anytime within the next three 

to five years. F. 320. 

The evidence further shows that North American TiO2 customers do not view 

Chinese chloride producers as a reliable supply source for chloride TiO2 in the 

47 
 

 

 

 

foreseeable future. F. 336. Cited reasons include lower product quality and the time 

required to qualify a new product for use. F. 336. For example, True Value’s 

qualification process for chloride TiO2 products takes for interior paint 

products and for exterior paint products. F. 311. As noted above, past 

efforts to qualify Chinese chloride TiO2 have been unsuccessful. F. 312 ( found 

that the quality is “not yet satisfactory”); F. 310 (Lomon Billions’ chloride process TiO2 

did not pass ); F. 309 ( ). 

Furthermore, contrary to Respondents’ arguments, low labor costs and relaxed 

environmental standards that might exist in China are not cost advantages that are 

applicable to chloride TiO2 production. F. 328. This is because chloride TiO2 

production is much less labor intensive than sulfate TiO2 production. F. 328. In 

addition, the chloride process for TiO2 is environmentally cleaner than the sulfate 

process. F. 299. As Mr. Christian of Kronos testified: “[C]heap labor and relaxed 

environmental standards” are not applicable to chloride TiO2, as opposed to sulfate TiO2, 

“because [the latter is] much more labor-intensive and it generates a significant amount 

of waste or byproducts per ton of TiO2 . . . . So when you think about China as a 

potential competitor, a lot of their historic, perceived advantages over the western world 

just don’t exist or at least aren’t overly material in comparison to western producers.”

F. 328. In fact, chloride technology requires a highly skilled labor force and an 

uninterrupted power supply, which increase costs for producers. F. 315. Tronox 

acknowledged in a September 2017 presentation that the Chinese producers were facing 

“Inflationary Pressures” including “Higher Energy Prices” and “Wage Growth.” F. 332. 

Similarly, Chinese producers have the added cost of importing high-grade feedstock, 

which is a large part of the cost of producing chloride process TiO2. F. 330, 344. See 

also F. 327 (Venator describing “headwinds” facing Chinese TiO2 producers, including 

feedstock cost and availability, wage growth, and increase in energy prices, technology 

issues, and financing availability). For all these reasons, the assertion that Chinese 

chloride TiO2 producers necessarily benefit from a lower cost structure is unsupported by 

the evidence. 

48 
 

 

Respondents rely in particular on Lomon Billions’ announced expansion of 

chloride TiO2 production in China. According to a February 2018 press release, Lomon 

Billions plans to invest $285 million to construct two new chloride TiO2 manufacturing 

lines at its existing chloride production plant in Jiaozuo, China, with annual chloride 

TiO2 capacity of 200,000 tons, and to begin commercial production from the new lines 

“during 2019.” F. 306. Lomon Billions also plans “[f]uture additional 300,000 tonne[s 

of] chloride capacity . . . mostly likely at a new coastal location in China.” F. 306. 

Notwithstanding these announced plans, the numerous barriers to entry into the North 

American chloride TiO2 market that apply to Chinese producers generally, described 

above, also apply to Lomon Billions. For example, production from Lomon Billions’ 

existing chloride production plant has been operating considerably below capacity, 

indicating that Lomon Billions is “not successfully utilizing the chloride technology . . . 

[and is] struggling with the technology they have now.” F. 317. 

Tronox itself has expressed doubts regarding Lomon Billions’ expansion. In a

2017 fourth quarter earnings call, Mr. Romano described Lomon Billions’ plan to expand 

production by 200,000 tons in 2019 as “a bit aggressive on timeline.” F. 335. Mr. Casey

also stated in 2017 that the projections of expanded chloride 

capacity and production in China “seem[] aggressive since almost no commercial grade 

pigment is produced today” and that “the Chinese generally overstate their plant 

capacity.” F. 314. Kronos also doubts Lomon Billions can bring new production on line 

“inside a year or two, for 200, 250 million dollars” and produce 200,000 metric tons. 

F. 317. As Mr. Christian explained, “I think those numbers are . . . difficult to achieve. I 

think that is an extremely low cost per metric ton. . . .” F. 317. Indeed, based on TZMI’s 

2016 producer cost study, Lomon Billions’ Jinzhou plant in China has higher variable 

manufacturing costs than any plant in North America and is the highest cost chloride 

TiO2 plant in the world. F. 331. 

In addition, it is unlikely that construction of a new chloride plant in coastal 

China, as announced by Lomon Billions, will be sufficiently timely. The evidence shows 

that construction of a new TiO2 plant from scratch takes at least four and a half years, 

which Mr. Romano testified is an aggressive timeline that assumes everything proceeds 

49 
 

according to plan. F. 307. Mr. Christian of Kronos testified that, even with a fully 

constructed plant, it can take five to seven years to “figure out how to make a quality CP

[chloride process TiO2] grade.” F. 307. As a point of reference, Chemours announced 

an expansion into Mexico in 2011 but the plant did not begin production until 2018. 

F. 307. 

Moreover, it cannot be assumed that expanded chloride TiO2 production from 

China in the future, if it occurs, will result in additional supply to the North American 

market. In November 2016, Tronox predicted that Chinese producers would be limited in 

their ability to grow exports of TiO2 because Chinese demand growth is expected to 

exceed Chinese production growth. F. 333. As Mr. Casey stated in a 2016 third quarter 

earnings call: “As demand grows domestically [in China], more and more supply will go 

into the domestic market, which means less will be available for the export market. . . .” 

F. 334. See also F. 335 (Mr. Romano noting in a 2017 earnings call that supply and 

demand were “in balance” and Jeffry Quinn, chief executive officer of Tronox, adding 

that “all the incremental expansion over the next 18 to 24 months, will really kind of just

be soaked up by the incremental global growth.”).

c. Summary 

Even if it is accepted that Chinese producers are likely to emerge, at some point, 

as true competition in the North American chloride TiO2 market, the “pertinent question 

here is whether the emergence . . . can be ‘rapid enough to make unprofitable overall the 

[predicted] actions’ that otherwise lead to the Commission’s concerns about 

anticompetitive effects” from the Acquisition. Preliminary Injunction Opinion, 2018 

U.S. Dist. LEXIS 155127, at *56 (quoting Merger Guidelines § 9.1). For the reasons 

explained above, the evidence fails to show that entry or expansion by Chinese producers 

is likely, or that such entry will be timely or sufficient to counteract the likely 

anticompetitive effects of the Acquisition. See also Preliminary Injunction Opinion, 

2018 U.S. Dist. LEXIS 155127, at *60 (finding that “[t]he limited presence of Lomon 

Billions in the North American chloride market today, the substantial barriers to entry, 

and China’s internal TiO2 demand trends do not paint a picture of rapid entrants ready to 

50 
 

 

 

 

 

 

 

 

 

 

 

 

 

replace the loss of Cristal as a source of competition”).14 

2. Efficiencies 

a. Applicable legal standards 

“[A] defendant may rebut the government’s prima facie case with evidence 

showing that the intended merger would create significant efficiencies in the relevant 

market.” Univ. Health, 938 F.2d at 1222. An anticompetitive merger cannot be justified 

on the basis of asserted efficiencies outside the relevant market. Philadelphia Nat’l 

Bank, 374 U.S. at 370. 

Cognizable efficiencies are defined as “merger-specific efficiencies that have 

been verified and do not arise from anticompetitive reductions in output or service.”

H&R Block, 833 F. Supp. 2d at 89 (quoting Merger Guidelines § 10). A cognizable 

efficiency claim “must represent a type of cost saving that could not be achieved without 

the merger and the estimate of the predicted saving must be reasonably verifiable by an 

independent party.” Id. 

To be verifiable, the claimed efficiencies require “clear evidence showing that the 

merger will result in efficiencies that will offset the anticompetitive effects and ultimately 

benefit consumers.” Penn State Hershey Med. Ctr., 838 F.3d at 350. A merger specific 

efficiency is one that “cannot be achieved by either company alone because, if they can, 

the merger’s asserted benefits can be achieved without the concomitant loss of a

competitor.” Heinz, 246 F.3d at 722. 

The law requires “a rigorous analysis of the kinds of efficiencies being urged by 

the parties in order to ensure that those ‘efficiencies’ represent more than mere

14 Respondents argue that Chinese TiO2 producers should be deemed “rapid entrants” because they could

switch capacity to serve the North American market. RB at 72. See Merger Guidelines § 5.1 (stating that, 

in certain circumstances, “a supplier with efficient idle capacity, or readily available ‘swing’ capacity

currently used in adjacent markets that can easily and profitably be shifted to serve the relevant market, 

may be a rapid entrant”). In support of this argument, Respondents assert that, after a fire at a Venator 

plant in Pori, Finland, Chinese TiO2 producers expanded their imports into Europe. See RB at 73-74; RFF 

507. Given the logistical and cost barriers to importing chloride TiO2 from China to North America, 

among other barriers to entry described herein, Respondents’ argument that Chinese producers would be 

rapid entrants into the North American market based on swing capacity is without merit. 

51 
 

 

speculation and promises about post-merger behavior.” Heinz, 246 F.3d at 721. Accord 

H&R Block, 833 F. Supp. 2d at 89. As the court in H&R Block explained: 

Efficiencies are inherently “difficult to verify and quantify” and “it is 

incumbent upon the merging firms to substantiate efficiency claims” so 

that it is possible to “verify by reasonable means the likelihood and 

magnitude of each asserted efficiency, how and when each would be 

achieved (and any costs of doing so), how each would enhance the merged 

firm’s ability and incentive to compete, and why each would be mergerspecific.”

Id. (quoting Merger Guidelines § 10). 

In addition, where a merger will substantially increase market concentration and 

result in a highly concentrated market, there must be proof of “extraordinary”

efficiencies. See Heinz, 246 F.3d at 720-21 (quoting 4A Areeda, et al., Antitrust Law P 

971f, at 44 that extraordinary efficiencies are required where the “HHI is well above 

1800 and the HHI increase is well above 100”); Sysco, 113 F. Supp. 3d at 81. As found 

in section II.D.1. above, the Acquisition would increase the HHI by over 700 points, to 

over 3000, which, under the Merger Guidelines, is a highly concentrated market. In the 

instant case, therefore, proof of extraordinary efficiencies is required. 

To be able to offset a merger’s likely anticompetitive effects, purported synergies 

and efficiencies must “represent more than mere speculation and promises about postmerger behavior.” Heinz, 246 F.3d at 721. The burden of proving both that the asserted 

efficiencies are merger specific and that they are reasonably verified by an independent 

party is on Respondents. Staples, 190 F. Supp. 3d at 137 n.15. Respondents do not cite 

any case in which efficiencies alone have been deemed sufficient to defeat a showing of 

likely anticompetitive effects. See Sysco, 113 F. Supp. 3d at 82 (noting that courts have 

“rarely, if ever, denied a preliminary injunction solely based on the likely efficiencies”) 

(quoting CCC Holdings, 605 F. Supp. 2d. at 72). 

b. Analysis 

Respondents argue that the Acquisition will increase global output of TiO2 by: 

(1) using Tronox’s excess feedstock production to supply Cristal’s plants; (2) restarting a 

52 
 

 

 

presently non-operating feedstock producing facility in Saudi Arabia, referred to as the 

Jazan slagger; and (3) increasing production at Cristal’s pigment plant in Yanbu, Saudi 

Arabia. RB at 64-68. Such increased output is good for consumers, Respondents argue, 

and will also enable the merged firm to better compete with Chemours and Chinese 

producers such as Lomon Billions. Respondents further argue that efficiencies from the 

merger will result in significant savings in selling, general, and administrative costs 

(“SG&A”) and in costs related to procurement, supply chain, and logistics. RB at 68-69. 

Complaint Counsel responds that Respondents have failed to demonstrate that 

their purported efficiencies are legally cognizable. CCB at 72-78. Complaint Counsel 

asserts that Respondents have failed to provide independent verification of either their 

asserted output enhancing synergies or cost savings; have failed to show that the asserted 

output enhancing synergies or cost savings are merger-specific; and have failed to show 

that the asserted output enhancing synergies or cost savings would benefit competition or 

consumers in the relevant North American chloride TiO2 market. CCB at 72-80. 

As further explained below, Respondents have failed to demonstrate that their 

asserted efficiencies are cognizable. 

i. Output increasing synergies 

(a) Vertical integration 

Respondents argue that combining the two companies’ feedstock and TiO2-

producing capabilities will create greater vertical integration, which will lower costs and 

ultimately lead to expanded output and lower pricing. In support of this argument, 

Respondents assert that Tronox presently produces more TiO2 feedstock than its TiO2 

pigment plants can consume (i.e., Tronox is “long” on feedstock), while Cristal’s 

feedstock production is insufficient to meet Cristal’s TiO2 production requirements (i.e., 

Cristal is “short” on feedstock), which requires Cristal to purchase its additional 

requirements on the market. Respondents argue that the merger will eliminate middleman margins, because Tronox’s excess feedstock can “feed” Cristal’s plants, and lead to 

increased TiO2 production. RB at 64-66. 

53 
 

 

 

 

 

 

 

 

Respondents do not quantify any middle-man margins assertedly eliminated from 

vertical integration, and fail to demonstrate how increased vertical integration, or alleged 

savings therefrom, would lead to increased chloride TiO2 output or lower pricing for 

North American chloride TiO2 purchasers. See United States v. Aetna Inc., 240 F. Supp. 

3d. 1, 98 (D.D.C. 2017) (stating that where defendant “has not attributed the claimed 

efficiencies to the particular markets challenged in the complaint, the Court cannot be 

confident that the consumers who are likely to be harmed by the merger would also share 

in its benefits”).

Moreover, the weight of the evidence is inconsistent with Respondents’ assertions 

as to the combined entity’s post-Acquisition feedstock position. For a manufacturer to 

produce chloride TiO2, it needs access to high-grade feedstock.15 F. 344. Tronox is 

presently “long” in high-grade feedstock by about TiO2 kMT.16 F. 346. Tronox 

projected that after the Transaction, it would be “significantly short on high grade

feedstock,” with an estimated deficit in 2018 of TiO2 kMT. F. 347. Even if the 

Jazan slagger, which is currently not operating, were to begin operating at capacity, the 

combined entity would still be short of high-grade feedstock. F. 348, 352. This evidence 

indicates that the combined company would still need to purchase high-grade feedstock 

from third parties in order to meet chloride TiO2 demand, which undercuts the 

conclusion that integrating feedstock production will create efficiencies to the benefit of 

the North American chloride TiO2 market. 

(b) Planned improvements to Jazan slagger 

and Yanbu plant 

Respondents contend that the Acquisition will result in increased TiO2 production 

in two ways: (1) by increasing production at Cristal’s chloride TiO2 plant in Yanbu, 

Saudi Arabia (the “Yanbu plant”), which Respondents assert has been underperforming; 

15 The most common raw materials for feedstock are rutile and ilmenite. Natural rutile can be directly 

converted into TiO2 pigment and thus is a high-grade feedstock. Ilmenite must undergo further processing 

to be converted into TiO2. F. 338, 341. 

16 The abbreviation “kMT” is an acronym that “stands for kilo metric ton.” https://www.acronymfinder. 

com/Kilo-Metric-Ton-(measurement)-(KMT) html. 

54 
 

 

 

and, (2) by repairing and restarting a smelting facility in Jazan, Saudi Arabia (the “Jazan 

slagger”), which Respondents assert will result in increased feedstock production, and 

ultimately, increased TiO2 output. RB at 66-68. Respondents have failed to demonstrate 

that these purported efficiencies are cognizable, for the reasons discussed below. 

Respondents do not explain how, or point to evidence indicating that, 

improvements in performance and increased output from either the Yanbu plant or the 

Jazan slagger will benefit the relevant market for chloride TiO2 in North America. As 

Mr. Quinn, chief executive officer of Tronox, acknowledged in his testimony, the 

overwhelming majority of the asserted operating synergies are related to assets outside 

the United States, F. 431, and thus outside the relevant North America geographic 

market. Moreover, the customers served by Cristal’s chloride TiO2 plant in Yanbu are 

predominantly located in Saudi Arabia, and none of the TiO2 grades produced at the 

Yanbu plant are sold in North America. F. 384. Furthermore, as explained in section 

II.C.2., import costs, lead times, and other logistical and supply issues deter North 

American customers from importing chloride TiO2. Respondents emphasize that the 

asserted synergies will increase output of TiO2 on the global market. However, allegedly 

procompetitive effects outside the relevant market do not rebut a prima facie case of 

anticompetitive effects in the relevant market. See Philadelphia Nat’l Bank, 374 U.S. at 

370 (rejecting asserted justification for a merger that was based on procompetitive 

benefits outside the relevant market); see also United States v. Anthem Inc., 855 F.3d 

345, 363-64 (D.C. Cir. 2017) (rejecting claimed savings based on a broad market 

definition, and stating that the evidence was “unmoored from the actual market at issue”). 

Accordingly, Respondents fail to demonstrate that increased output from the Yanbu plant 

or the Jazan slagger will benefit the relevant market for chloride TiO2 in North America. 

For this reason alone, Respondents’ synergies claims based on planned improvements to 

the Yanbu plant and the Jazan slagger fail to rebut the prima facie proof of likely 

anticompetitive effects. See Univ. Health, 938 F.2d at 1222 (defendant may rebut prima 

facie case with evidence showing significant efficiencies in the relevant market) 

(emphasis added). 

55 
 

 

 

 

Furthermore, the conclusion that planned improvements to the Jazan slagger and 

the Yanbu plant will lead to increased TiO2 output is speculative. Although Tronox may 

be sincere in its plans to make output enhancing improvements to the Jazan slagger and 

the Yanbu plant, whether or not these efforts will succeed cannot be reasonably verified 

before they occur. This was also the conclusion of the district court, evaluating virtually 

the same record. Preliminary Injunction Opinion, 2018 U.S. Dist. LEXIS 155127, at *64. 

As Respondents acknowledged in the synergies white paper that they submitted to the 

FTC in August 2017, 

. F. 356. Dr. Fadi Trabzuni of TASNEE 

also admitted that 

. F. 357. Willem Van Niekerk, senior vice president of strategy at 

Tronox, further acknowledged that Tronox cannot even fully determine the impact of 

. F. 357. 

Respondents’ assertions as to the Jazan slagger are particularly speculative, given 

that the Acquisition at issue in this proceeding does not even include an acquisition of the 

Jazan slagger. F. 373. The Jazan slagger is not owned directly by Cristal, but is owned 

by another entity, AMIC, which is owned half by Cristal and half by TASNEE. F. 350. 

Approximately one year after the announcement of the Acquisition, Tronox signed an 

option agreement and technical services agreement with AMIC regarding the Jazan 

slagger. F. 374. Tronox chose to pursue an option agreement for the potential purchase 

of the Jazan slagger because the slagger’s current inoperable state makes its value 

uncertain and Tronox did not want to acquire an asset that has not been proven to work. 

F. 377. The option agreement obligates Tronox to purchase the Jazan slagger in the 

future only if the facility achieves certain production levels. F. 376. If these performance 

metrics are met, then any amounts provided by Tronox under the option agreement are 

credited to the $125 million purchase price; otherwise, such amounts must be repaid to 

Tronox. F. 376. This deal structure reflects Tronox’s own uncertainty that the planned 

improvements will succeed, by “remov[ing] the risk to Tronox if Jazan demonstrates 

unsurmountable weakness.” F. 378. Ultimately, there is no certainty that Tronox will 

56 
 

 

even purchase the Jazan slagger. F. 379. See also Preliminary Injunction Opinion, 2018 

U.S. Dist. LEXIS 155127, at *64-65 (characterizing the option agreement as a reflection 

of Tronox’s uncertainty as to whether the improvements and output enhancements at the 

Jazan slagger would be actualized). 

Respondents’ assertions as to the Yanbu plant are based on a two-page document 

titled, “Preliminary Yanbu Improvement Plan.” F. 386. This plan refers generally to 

implementing “best practices” and “operational excellence” techniques, and applying to 

Yanbu the “lessons learned” from Tronox’s Hamilton, Mississippi plant, which Tronox

asserts is “nearly identical in every material way” to Yanbu. F. 387; RB at 67. Even if 

Yanbu’s plant design is similar to Hamilton, however, there are particular challenges to 

Tronox’s successfully implementing planned changes at the Yanbu plant. F. 394-395. 

Richard Dean, vice president of global operations integration at Tronox, who provided 

the estimates contained in the Preliminary Yanbu Improvement Plan, identified 

organizational culture as “the biggest challenge [Tronox] face[s] at Yanbu.” F. 389, 395. 

Christian Gunther, head of Cristal’s titanium unit, explained the challenge of employee 

“accountability, meaning the challenge of making people in the plant at every level truly 

feel accountable for the success at the operations of the entire plant.” F. 395. This is not 

the case at the Hamilton plant which, according to Mr. Dean, has “a very engaged and 

interested workforce,” “interested in the success of not only Hamilton but Tronox as a 

whole.” F. 396. 

Respondents have also failed to provide independent verification for the planned 

improvements at either the Jazan slagger or the Yanbu plant, or for the projected impacts. 

For example, KPMG, which was hired to assist Tronox with Tronox’s synergies 

assessment, “assume[d] that the Jazan Slagger will reach the production levels projected 

by [Tronox]” and that “the operational and technical improvements identified by

[Tronox]” will enable Yanbu to exceed production forecasts. F. 381, F. 398 (emphasis 

added). Similarly, Respondents’ proffered experts based their opinions as to likely output

increases from improvements to the Jazan slagger and the Yanbu plant upon the 

assertions, judgments, and/or expectations of Respondents, without any apparent 

independent verification. F. 429. Respondents argue that this is sufficient verification, 

57 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

because of the knowledge and experience of the Tronox personnel involved, and that the 

Merger Guidelines do not require any particular method of verification. See RRB at 46-

49. As set forth in section II.E.2.a., however, Respondents have the burden of 

substantiating their efficiency claims, and to be cognizable, such claims must be 

reasonably verifiable by “an independent party.” H&R Block, 883 F. Supp. 2d at 89. As 

the court in H&R Block explained, while reliance on the estimation and judgment of 

experienced executives about costs may be perfectly sensible as a business matter, 

the lack of a verifiable method of factual analysis resulting in the [claimed 

efficiencies] renders them not cognizable . . . . If this were not so, then the 

efficiencies defense might well swallow the whole of Section 7 of the 

Clayton Act because management would be able to present large 

efficiencies based on its own judgment and the Court would be hard 

pressed to find otherwise. 

Id. at 91. 

(c) Summary 

Respondents have failed to demonstrate that their claimed output enhancing 

efficiencies will increase output in the relevant market. Moreover, Respondents have 

failed to substantiate their claims with independent verification. For these reasons, 

Respondents have failed to demonstrate that their claimed output enhancing efficiencies 

are cognizable.17 

17 Respondents’ claimed output enhancing efficiencies from planned improvements to the Jazan slagger 

and the Yanbu plant are also not cognizable because the evidence fails to show these efficiencies are 

merger-specific, i.e., that the Acquisition, and resulting removal of Cristal as a competitor in the relevant 

market, is necessary to achieve the claimed output enhancing efficiencies. Cristal has hired employees with 

expertise in the low-pressure technology used at the Yanbu plant and has implemented organizational and 

operational changes, which have led to improvements in production. F. 404-417. In addition, Mr. Dean, 

Tronox’s vice president of operations integration, acknowledged that Cristal probably does not need a 

merger with Tronox to develop such beneficial practices as shift handover protocols, workflow 

management protocols, meeting protocols, short interval control protocols, or operator checklists. F. 420. 

Furthermore, in recent years, Cristal has engaged outside engineers and consultants to address the issues 

with the Jazan slagger, and as of February 2017, Cristal had completed several modifications. F. 360-370. 

In June 2017, a TASNEE press release stated that “work is still ongoing to solve the technical problems” at 

the Jazan slagger, and projected a trial operation during the first half of 2018. F. 372. AMIC has invested 

over in the Jazan slagger and . F. 380. 

58 
 

ii. Cost savings 

Respondents argue that the Acquisition will lead to “sizable cost savings 

synergies” in “SG&A” (selling, general, and administrative costs), primarily from 

reduction in personnel and services costs; and in procurement, supply chain, and 

logistics, including volume discounts. RB at 68-69. Respondents further contend that the 

consulting firm KPMG has assessed and validated Tronox’s synergies estimates, noting

that KPMG had access to the entire data room related to the Acquisition. As discussed 

below, Respondents’ asserted cost savings efficiencies are not cognizable.

First, Respondents have failed to provide independent verification for their 

asserted cost savings. The objective of KPMG’s engagement was to assist in the

. F. 425. 

Moreover, as the district court in the preliminary injunction case also found, KPMG’s 

synergies’ conclusions were at least partially based upon estimates and assumptions 

provided by Respondents’ management. F. 426-428. See Preliminary Injunction 

Opinion, 2018 U.S. Dist. LEXIS 155127, at *65-66. For example, part of KPMG’s role 

was to build an Excel model which would track all of the synergies, including the 

synergies originally identified in the initial due diligence period and a revised estimate of 

synergies identified during the “sign-to-close diligence” period. F. 428. The revised 

estimates were provided by Tronox’s business people, and KPMG fed those estimates 

into the tracking model. F. 428. 

assessment of the potential synergies that Tronox anticipates in connection with the 

proposed Acquisition. F. 424. The procedures that KPMG agreed to perform 

Second, Respondents have failed to demonstrate that the cost savings are mergerspecific. KPMG does not purport to address whether cost savings could be achieved by 

either Tronox or Cristal alone. For this reason as well, Respondents’ asserted costs

savings efficiencies are not cognizable. See Sysco, 113 F. Supp. 3d at 83 (“Sysco did not

hire McKinsey to identify merger-specific savings for antitrust purposes. . . . McKinsey 

was not given instructions on identifying merger-specific savings . . . .”). See also 

Preliminary Injunction Opinion, 2018 U.S. Dist. LEXIS 155127, at *66 (noting that 

59 
 

 

 

 

KPMG was not hired “to identify ‘merger-specific’ cost savings for antitrust purposes, 

but to ‘provide consulting support’ for the ‘sign-to-close period’ of the deal.”). 

Finally, even if it is assumed that the Acquisition will reduce the combined 

entity’s general costs of doing business, Respondents have failed to show that such 

savings will benefit North American consumers of chloride TiO2, which is the relevant 

market in this case. See CCC Holdings, 605 F. Supp. 2d at 74 (rejecting asserted cost 

savings efficiencies, noting that there was “no evidence to suggest that a sufficient 

percentage of those savings will accrue to the benefit of the consumers to offset the 

potential for increased prices. . . . [T]hese advantages could show up in higher profits 

instead . . . .”). Indeed, Tronox has not evaluated how lowering its costs would affect 

TiO2 pricing, which is affected by many factors. Mr. Quinn acknowledged that lowering 

Tronox’s costs is unlikely to have an impact on TiO2 pricing. F. 430. 

Accordingly, for the reasons summarized above, Respondents have failed to 

demonstrate that their claimed cost savings are cognizable. 

3. Conclusion 

Respondents have failed to rebut the prima facie proof that the Acquisition is 

reasonably likely to have anticompetitive effects in the relevant market for the sale of 

chloride TiO2 in North America. Accordingly, the evidence proves that the planned 

Acquisition may substantially lessen competition in violation of Section 7 of the Clayton 

Act and Section 5 of the FTC Act. 

The analysis now addresses the appropriate remedy. 

F. Remedy 

For the remedy in this case, Complaint Counsel seeks an order prohibiting any 

acquisition of Cristal by Tronox. See CCB Exhibit A (hereinafter “Proposed Order”). 

The Proposed Order contains four substantive provisions,18 summarized as follows: 

18 Paragraph I of the Proposed Order is limited to definitions of the Respondents and the planned 

acquisition, all of which are consistent with the findings and conclusions of this Initial Decision. 

60 
 

 

 

 

 

Paragraph II.A., which requires Respondents to terminate the acquisition agreement and 

refrain from any actions to consummate the agreement; Paragraph II.B., which enjoins 

Tronox from acquiring Cristal, directly or indirectly, in whole or in part; Paragraph II.C., 

which requires Respondents to return all confidential information, and destroy all notes 

related thereto; and Paragraph II.D., which requires Respondents to submit written 

certification of their compliance with Paragraphs II.A. and II.C., together with supporting 

documentation, within 15 days of the Order becoming final. 

Complaint Counsel asserts that the Proposed Order is appropriate to prevent 

Respondents from entering into the Acquisition, thereby preserving competition in the 

relevant market. Complaint Counsel argues that the Commission has broad discretion to 

fashion a remedy, so long as the provisions are reasonably related to the violation found 

to exist. Respondents do not address the Proposed Order in their post-trial briefing.19 

The remedy for a violation of Section 7 of the Clayton Act is set forth in Section 

11(b) of that act, as follows: 

If upon such hearing the Commission . . . shall be of the opinion that any 

of the provisions of [Section 7] have been or are being violated, it shall . . . 

issue and cause to be served on such person an order requiring such person 

to cease and desist from such violations . . . . 

15 U.S.C. § 21(b). In addition, it is well established that the Commission has broad 

discretion in choice of remedy, so long as it bears a reasonable relation to the unlawful 

practice found to exist. FTC v. National Lead Co., 352 U.S. 419, 428 (1957); Jacob 

Siegel Co. v. FTC, 327 U.S. 608, 611-13 (1946). “The touchstone principle for . . . 

analyzing remedies is that a successful merger remedy must effectively preserve 

competition in the relevant market.” Sysco, 113 F. Supp. 3d at 73 (quoting Antitrust 

Div., U.S. Dep’t of Justice, Antitrust Division Policy Guide to Merger Remedies 1 (June

2011)). 

19 Respondents maintain that no remedy is appropriate because Complaint Counsel has failed to prove that 

the planned acquisition is unlawful. As held above, the planned acquisition is unlawful. Thus, a remedy is 

appropriate. 

61 
 

 

Based on the foregoing, the Proposed Order, submitted by Complaint Counsel, 

will be issued herewith as the Order in this case (hereinafter “Order”).20 It has been 

determined that the Acquisition is unlawful because the effect may be to substantially 

lessen competition in the relevant market for the sale of chloride TiO2 in North America. 

The Order accomplishes the remedial objectives of the Clayton Act and the FTC Act by 

enjoining the Acquisition and preserving competition in the relevant market. In addition, 

its provisions are reasonably related to the proven violation. 

20 The Order contains no substantive changes from the Proposed Order. 

62 
 

 

 

 

 

 

III. FACTS 

A. Background 

1. Titanium dioxide 

1. Titanium dioxide (“TiO2”) is an industrial chemical primarily used as a pigment. (Joint

Stipulations of Jurisdiction, Law, and Fact, JX0001-002 ¶¶ 12-13). TiO2 is an essential 

pigment used to add whiteness, brightness, opacity21 and durability to paints, industrial 

and automotive coatings, plastics, and other specialty products. (Young, Tr. 642; 

Pschaidt, Tr. 965; PX3011 at 012 (Kronos investor presentation); PX9020 at 006, 013, 

045, 083, 117 (Chemical Economics Handbook); PX1001 at 005 (Tronox investor 

presentation)). 

2. TiO2 can have two different crystal structures – rutile and anatase. (PX9020 at 013 

(Chemical Economics Handbook)). Rutile TiO2 and anatase TiO2 have different 

physical characteristics and applications and are not substitutes for any use relevant to 

this matter. (PX1424 at 010 (Tronox presentation); PX9022 at 120 (Venator SEC 

Filing)). 

3. The first step in developing TiO2 pigment starts by mining heavy materials that are 

concentrated in sand dunes. (Turgeon, Tr. 2585-87). 

4. TiO2 is produced from feedstock (titanium-containing ores)22 through one of two 

manufacturing processes that extract TiO2 from ore: (1) the chloride process that uses 

chlorine (“chloride TiO2”); and (2) the sulfate process that uses sulfuric acid (“sulfate 

TiO2”). (PX9020 at 021-23, 025-28 (Chemical Economics Handbook)). 

5. The chloride process is a continuous process that uses chlorine gas to create titanium 

tetrachloride, which is then oxidized to create TiO2. In the sulfate process, feedstock is 

combined with sulfuric acid in batches, to make a “black liquor” from which solid 

titanium hydroxide is extracted and treated to create TiO2. (Turgeon, Tr. 2613-17). 

6. The primary customers of TiO2 include paint and coatings manufacturers and plastic 

producers. Approximately 60% of TiO2 is used in coatings applications, 25% in plastics, 

10% in paper, and 5% in other uses, including inks, foods,23 and pharmaceuticals. 

(Mouland, Tr. 1211; PX9020 at 042 (Chemical Economics Handbook); Christian, Tr. 

775). 

21 Opacity is how well a paint covers the wall. (Engle, Tr. 2452). 

22 Feedstock is explained in more detail in F. 337-342. 

23 Chloride TiO2 cannot be used in products that are ingested. (Christian, Tr. 775). Food-grade TiO2 can only be 

made from sulfate TiO2 or anatase TiO2, and can be an additive to toothpaste, powdered donuts, or cookie filling. 

(Christian, Tr. 776, 782, 889). Food-grade TiO2 is also used to prevent spoilage and increase the shelf life of foods. 

See https://www foodinsight.org/titanium-dioxide-fda-food-coloring-additive-ingredient-donuts. 

63 
7. The term “coatings” encompasses architectural coatings, meaning paint, and industrialtype coatings, such as automotive coatings, marine coatings, packaging coatings, and 

other products that are for industrial application. (Malichky, Tr. 348; Young, Tr. 631; 

Christian, Tr. 773). 

2. The parties and the proposed acquisition 

a. Tronox 

8. Tronox is a for-profit corporation headquartered in Stamford, Connecticut. (Joint 

Stipulations of Jurisdiction, Law, and Fact, JX0001-001 ¶ 1). 

9. Tronox was spun off from the Kerr-McGee Corporation (“Kerr-McGee”) in 2005. 

(PX0001 at 004; Dean, Tr. 2920). 

10. Tronox went into chapter 11 bankruptcy in January 2009 and emerged from bankruptcy 

in February 2011. (Romano, Tr. 2209-10). 

11. Tronox owns and operates three mines: one on the west coast of Australia near Perth 

(Cooljarloo), one on the east coast of South Africa (KZN Sands), and one on the west 

coast of South Africa (Namakwa Sands). Tronox owns and operates smelters in South 

Africa to produce titanium feedstock. (Turgeon, Tr. 2590, 2597; PX9040 at 010 (Tronox 

investor presentation); Mei, Tr. 3150-51). 

12. Tronox owns and operates three chloride TiO2 plants, which are located in Hamilton, 

Mississippi; Botlek, Netherlands; and Kwinana, Australia. (PX9040 at 010 (Tronox 

investor presentation)). 

13. The only type of TiO2 that Tronox manufactures is chloride TiO2. (Romano, Tr. 2177; 

Quinn, Tr. 2413). 

14. Tronox engages in activities in or affecting “commerce” as defined in Section 4 of the 

FTC Act, 15 U.S.C. § 44 (2008), and Section 1 of the Clayton Act, 15 U.S.C. § 12 

(2008). (Joint Stipulations of Jurisdiction, Law, and Fact, JX0001-001 ¶ 3). 

b. Cristal 

15. Three legal entities collectively constitute “Cristal.” Cristal USA Inc. is a Delaware

corporation and an indirectly owned subsidiary of Saudi Arabian companies The National 

Industrialization Company (“TASNEE”) and The National Titanium Dioxide Company. 

(Joint Stipulations of Jurisdiction, Law, and Fact, JX0001-001 ¶ 4). For ease of 

reference, the name “Cristal” is used herein to refer to the subject of the Acquisition

(F. 25), as well as to the three affiliated corporate entities, unless the context otherwise 

dictates. 

64 
16. Cristal owns and operates titanium feedstock mining assets in Australia. (PX9040 at 010 

(Tronox investor presentation); PX7006 (Stoll, IHT at 42)). 

17. Cristal owns and operates a titanium feedstock mining asset in Paraiba, Brazil. (PX9040 

at 010 (Tronox investor presentation); PX0002 at 024 (Cristal’s Narrative Response to 

the Second Request)). 

18. Cristal owns and operates three sulfate TiO2 plants located in Thann, France; Bahia, 

Brazil; and Fuzhou, China. (PX9040 at 010 (Tronox investor presentation); PX7008 

(Hewson, IHT at 11-12)). 

19. Cristal owns and operates five chloride TiO2 plants, two of which are located in 

Ashtabula, Ohio; one in Yanbu, Saudi Arabia; one in Stallingborough, United Kingdom; 

and one in Bunbury, Australia. (PX9040 at 010 (Tronox investor presentation); PX7008 

(Hewson, IHT at 11)). 

20. Cristal USA engages in activities in or affecting “commerce” as defined in Section 4 of

the FTC Act, 15 U.S.C. § 44 (2008), and Section 1 of the Clayton Act, 15 U.S.C. § 12 

(2008). (Joint Stipulations of Jurisdiction, Law, and Fact, JX0001-002 ¶ 6). 

c. Proposed acquisition 

21. Tronox began conversations with Cristal regarding a potential combination in 2015. 

(Quinn, Tr. 2302; RX0236 at 0001). 

22. In October 2016, Tom Casey, then-CEO of Tronox, reported to the board of directors that 

Tronox and Cristal had reached a preliminary framework for an acquisition. (Quinn, Tr. 

2299-2300). 

23. On November 23, 2016, Tronox and Cristal agreed to a non-binding deal construct, and 

due diligence between the parties commenced. (PX9053 at 018). 

24. On February 21, 2017, Tronox announced a definitive agreement to acquire the titanium 

dioxide business of Cristal. (PX0009 at 001; PX0001 at 005). 

25. The transaction for Tronox to acquire the titanium dioxide business of Cristal (the 

“Acquisition”) is structured as a cash-and-shares transaction that includes $1.673 billion 

in cash and 37.58 million Class A shares representing 24% of the combined entity. 

(RX1257 at 0002). Shareholders approved the transaction on October 2, 2017. (PX9053 

at 18). 

d. Key employees of Respondents 

i. Tronox 

26. Brennan Arndt, Sr. is the senior vice president of investor relations at Tronox and has 

65 
worked at Tronox since May 2012. (Arndt, Tr. 1353; PX7011 (Arndt, Dep. at 8)). 

27. Tom Casey was the former chief executive officer (“CEO”) and chairman of the board at 

Tronox from May 2011 through May 2017. (Arndt, Tr. 1358, 1394; Mancini, Tr. 2740). 

28. Richard Dean is the vice president of global operations integration at Tronox. He has 

been with Tronox since 1996 and has been vice president of global operations integration 

since 2017. (Dean, Tr. 2911; PX7023 (Dean, Dep. at 7-8)). 

29. Arjen Duvekot is the vice president of sales for Europe, the Middle East, and Africa 

(EMEA) and the Asia Pacific region (APAC) at Tronox. He has been with Tronox since 

2012 and became vice president of sales for the above regions in 2016. (Duvekot, Tr. 

1290; PX7026 (Duvekot, Dep. at 14)). 

30. Jeffrey Engle is the vice president of marketing and product development at Tronox. He 

has been with Tronox since 2006 and has been vice president of marketing and product 

development since 2012. (Engle, Tr. 2433-36). 

31. Raoul Charles (“Chuck”) Mancini is the senior vice president of organizational 

effectiveness of Tronox. He has been with Tronox since 2012 and has been chief of staff 

at Tronox since March 2018. (Mancini, Tr. 2739). 

32. Rose Mei is director of sales and operation planning and global logistics at Tronox and 

has worked at Tronox for five years. (Mei, Tr. 3140). 

33. Ian Mouland is the vice president of sales for the Americas at Tronox. He has worked at 

Tronox since 1998. (Mouland, Tr. 1140-41; PX7002 (Mouland, IHT at 20)). 

34. John Romano is the senior vice president and chief commercial officer at Tronox. 

(Romano, Tr. 2135-36). He has worked at Tronox and its predecessor Kerr-McGee for 

30 years. (PX7046 (Romano, Dep. at 7, 20)). 

35. Jeffry Quinn is the chief executive officer at Tronox. (Quinn, Tr. 2292). Mr. Quinn 

started at Tronox as a member of the board of directors in 2011 after Tronox was 

emerging from bankruptcy. He became the chief executive officer in December 2017. 

(PX7014 (Quinn, Dep. at 19)). 

36. Jean-Francois Turgeon is the executive vice president and chief operating officer at 

Tronox. He has worked at Tronox since 2014. (Turgeon, Tr. 2579). 

37. Willem Van Niekerk is senior vice president of strategy at Tronox. He has worked at 

Tronox since 2012. (Van Niekerk, Tr. 3899, 3906; PX7007 (Van Niekerk, Dep. at 15-

16)). 

66 
 

 

 

ii. Cristal 

38. Graham Hewson is the vice president of integration operations at Cristal. Mr. Hewson’s 

responsibilities include developing the integration of Cristal and Tronox. (Hewson, Tr. 

1600). Mr. Hewson has worked at Cristal since 2012 and previously worked at Tronox 

for approximately 21 years. (Hewson, Tr. 1601-03). 

39. Jean-Yves Gigou is the vice president of the TiO2 business unit at Cristal International 

B.V. in Cologne. He has worked at Cristal for 15 years. (PX7043 (Gigou, Dep. at 8-9)). 

40. Mark Stoll is the general manager of mergers and acquisitions at Cristal USA. (Stoll, Tr. 

2062). Mr. Stoll has worked at Cristal for 33 years. (PX7006 (Stoll, Dep. at 7)). 

3. Other TiO2 manufacturers 

41. Kronos Worldwide, Inc. (“Kronos”) is a TiO2 manufacturer that sells both chloride TiO2 

and sulfate TiO2. (PX8002 (Christian, Decl. at 002 ¶ 6)). Brian Christian is an executive 

vice president of Kronos. (Christian, Tr. 744-45; PX7035 (Christian, Dep. at 16)). 

42. Venator Materials Corporation (“Venator”) is a TiO2 manufacturer that sells both 

chloride TiO2 and sulfate TiO2. (PX8005 (Maiter, Decl. at 001 ¶ 11)). Mahomed Maiter 

is the senior vice president for white pigments for Venator. (PX8005 (Maiter, Decl. at 

001 ¶1)). 

43. The Chemours Company (“Chemours”) is a TiO2 manufacturer that sells only chloride 

TiO2. (PX8004 (O’Sullivan, Decl. at 001 ¶ 3)). Peter O’Sullivan is a commercial 

transformation executive with Chemours. (PX8004 (O’Sullivan, Decl. at 001 ¶ 2)). 

4. TiO2 customers 

44. Deceuninck North America is a manufacturer of vinyl window and patio door frames that 

are sold into the building materials market. Greg Arrowood is a commodities manager 

for Deceuninck North America. He has worked at Deceuninck North America for 32 

years and has been a commodities manager for five years. (Arrowood, Tr. 1052, 1058). 

45. Masco Coatings Corporation (“Masco”) is a paint manufacturer. Its two brand names are

Behr paints, sold through Home Depot, and Kilz paints. Mario Pschaidt is the vice 

president of procurement at Masco, and has worked at Masco for four years. (Pschaidt, 

Tr. 963-66). 

46. PPG Industries (“PPG”) is a paint and coatings manufacturer. PPG sells paint to 

consumers under its main brand name paints of Glidden and Pittsburgh Paint and also 

sells industrial or non-consumer paint. Paul Malichky is the director of raw materials 

sourcing at PPG. He has held this position for almost five years. (Malichky, Tr. 267-69). 

67 
 

 

 

 

 

 

47. The Sherwin-Williams Company (“Sherwin-Williams”) is the largest paint and coatings 

manufacturer in North America. Some of Sherwin-Williams major brands include 

Valspar, which Sherwin-Williams acquired in 2017, and Dutch Boy. George Young is 

the senior vice president of global procurement and supply chain at Sherwin-Williams. 

(Young, Tr. 630-33; PX7020 (Young, Dep. at 121)). 

48. True Value Company (“True Value”) is a hardware cooperative that manufactures 

EasyCare brand paint and sells it through the True Value stores. (Vanderpool, Tr. 157, 

160). John Vanderpool is the divisional vice president of paint at True Value. He has 

held this position since 2015. (Vanderpool, Tr. 153; PX7044 (Vanderpool, Dep. at 10)). 

49. Four paint manufacturers, Sherwin-Williams, Valspar, PPG, and Masco, collectively 

account for 40% of all TiO2 purchases in North America in 2016. (PX5000 (Hill Expert 

Report at 047 n.204)). 

B. Relevant Market 

1. Relevant product market 

50. Between 2012 and mid-2017, chloride TiO2 accounted for around 90% of TiO2 sales in 

North America.

24 (Hill, Tr. 1684; PX5000 (Hill Expert Report at 047 Fig. 17)). 

51. Tronox recognizes that the North American market is predominantly chloride TiO2 –

“95% or 98% or some very, very high number.” (PX9012 at 008 (Q4 2013 Tronox 

Earnings Call); PX1322 at 003 (Tronox presentation) (“The North American market is 

~90% chloride.”)). 

a. Differences in attributes of chloride TiO2 and sulfate TiO2 

52. Chloride TiO2 is a higher quality product than sulfate TiO2. (PX1427 at 003 (internal 

Tronox email) (“Chloride process uses higher-quality feedstocks and makes betterquality TiO2.”); PX9015 at 011 (Q1 2013 Tronox Earnings Call) (“We are selling to 

customers that have demand for our higher-quality chloride product, and that cannot be 

met by Chinese manufacturers at this point, because they don’t have any [chloride

product].”); PX1324 at 001 (internal Tronox email) (“Consistency of quality is still an 

issue with the 2nd tier Sulfate producers”); PX2229 at 005 (Cristal email with 

attachment) (“Even the best performing Sulfate rutile requires 1.8X [times] more pigment 

to equal the performance of Tiona 595 [a chloride TiO2 grade]” in film thickness for

latex paint.)). 

53. Chloride TiO2 is a superior product to sulfate TiO2 on its optical properties, its color 

undertone, tinting strength, durability, and a whole host of different ways of evaluating a 

24 The product market and the geographic market are dependent on each other. In section III.B.2. infra, the 

geographic market is found to be the North America region, consisting of the United States and Canada. In this 

section, which finds the relevant product market, the focus is on the type of TiO2 sold to North American customers. 

68 
 

 

 

 

 

 

 

 

grade of TiO2. (Christian, Tr. 776-77, 960 (“[T]he market would say that our [chloride 

process] products are superior to our [sulfate process] products, and that is confirmed in a 

lot of instances based upon technical evaluations and lab work.”)). 

i. Brightness 

54. Chloride TiO2 is a brighter pigment than sulfate TiO2. (PX1346 at 013 (Tronox investor 

presentation) (“Chloride technology yields consistently whiter, brighter pigment grades 

preferred for many of the largest end-use applications (e.g., paints and plastics) as 

compared to the sulfate process[.]”)). 

55. Tronox is aware that North American customers prefer the blue tone of chloride TiO2 

over the yellow tone of sulfate TiO2. (PX1322 at 003 (Tronox presentation) (“US 

consumers have gotten used to a more blue tone and prefer it over the more yellow tone 

of white.”)). 

56. Chloride TiO2 is a brighter pigment than sulfate TiO2 due to its bluer undertone. 

(Christian, Tr. 773-74 (“[T]he most noteworthy [difference between chloride TiO2 and 

sulfate TiO2] is going to be in the general color and undertone of the product produced. 

An SP [sulfate process] product is going to produce what we would call a yellowish 

undertone, where the CP [chloride process] product is going to have a brighter white to it, 

or we call it a bluish undertone.”); PX8005 (Maiter, Decl. at 002 ¶7) (Chloride TiO2 

provides more whiteness than sulfate TiO2.)). 

57. Brighter colors and brilliant whites are “achievable only through chloride manufactured 

pigment.” (PX9121 at 007 (Chemours 2017 Form 10-K); PX7052 (O’Sullivan, Dep. at 

160-61) (chloride TiO2 has a higher fundamental whiteness than sulfate TiO2)). 

58. North American customers prefer chloride TiO2 over sulfate TiO2 because it is a brighter 

pigment. (PX8002 (Christian, Decl. at 004 ¶ 17) (“Chloride grades are preferable 

globally, and especially so in the U.S. The customer base in the U.S. prefers chloride 

grades because they are a more durable pigment and are a brighter pigment because of 

their bluish undertones.”); PX8004 (O’Sullivan, Decl. at 002 ¶ 7) (“North American 

customers prefer chloride process titanium dioxide with a blue undertone.”)).

59. Paint manufacturers use chloride TiO2 instead of sulfate TiO2 because it is brighter in 

appearance due to chloride TiO2’s bluer undertone compared to sulfate TiO2’s yellow 

undertone. (Vanderpool, Tr. 182-83 (chloride TiO2 is purer and brighter than sulfate 

TiO2, which is “dirtier” and has a yellow tint); Young, Tr. 643 (because sulfate TiO2 has 

an undertone, Sherwin-Williams has not been able to get consistent brightness of color 

and consistent whiteness with sulfate TiO2)). 

60. For Masco, the “ultra pure white” feature of its Behr paints and crisp, clean colors are 

“very, very important.” “That is how we differentiate ourselves in the marketplace, and 

that [is what] also . . . gives the quality of the paint that we want and we need.” The ultra 

pure white feature is created by “the TiO2 that [Masco] use[s], and in order to achieve 

69 
 

that [Masco] need[s] to use TiO2 produced [by] the chloride process.” (Pschaidt, Tr. 966, 

971, 973, 977). 

61. End-use consumers in North America demand crisp and brighter colors. (Young, Tr. 665 

(Sulfate TiO2 does not meet Sherwin-Williams’ standards for North America because it

“tends to have a yellow undertone. Our market in North America requires clean colors, 

bright colors . . .”); Pschaidt, Tr. 978 (“[Sulfate TiO2] gives you a yellowish undertone, 

and that doesn’t achieve that clean, crisp look that you get from a chloride-produced 

TiO2, and, therefore, we cannot use the sulfate-grade TiO2 for our main product lines.”)). 

ii. Durability 

62. Chloride TiO2 tends to provide more durability than sulfate TiO2. (PX8005 (Maiter, 

Decl. at 002 ¶ 7); Christian, Tr. 776-77; PX8002 (Christian, Decl. at 004 ¶ 17) (chloride 

TiO2 is a “more durable pigment” than sulfate TiO2); Quinn, Tr. 2414 (acknowledging

that some customers have a preference in certain applications for chloride TiO2 because 

it typically has greater durability)). 

63. Durability is important for all products, but especially for exterior products that are 

exposed to sunlight and various other weather elements. (Christian, Tr. 780-81). 

64. Paint manufacturers use chloride TiO2 instead of sulfate TiO2 because it provides more 

durability. (Young, Tr. 666-67 (“[I]n our formulas we’ve had better durability of our

chloride product.”); PX8003 (Young, Decl. at 003 ¶ 12) (“[T]he chemistry of sulfate 

TiO2 may result in . . . less durability than chloride TiO2 . . . .”); Malichky, Tr. 274-75, 

295-96 (sulfate carries iron with the product, and that decreases the durability in the final 

application); Vanderpool, Tr. 195 (sulfate TiO2 failed to meet True Value’s durability

requirements in laboratory testing)). 

65. Coatings manufacturers find chloride TiO2 tends to be more durable than sulfate TiO2. 

(PX7003 (DeCastro, IHT at 21) (RPM International (“RPM”), a coatings manufacturer of 

the Rust-Oleum brand, would not use sulfate TiO2 for exterior applications); PX7049, in 

camera 

, a manufacturer of plastic films, prefers not to use sulfate TiO2 because “it

tends not to weather as well, in part because of the molecule structure, the crystalline 

structure, and also in part because of the sulfate process by which it’s made. And so it . . 

. tends not to have the same longevity in an application as a TiO2 that’s produced from 

the chloride process.”)). 

iii. Consistency for point of sale tinting 

66. Point-of-sale tinting is where a customer picks a color at the retail store and a can of paint 

is customized to a customer’s request. (Young, Tr. 643-44 (Tinting is “a process by

which colorant is usually injected into a can of paint, it’s put on a shaker, and it achieves 

the color that a customer desires, so it’s basically customizing the product.”)). 

70 
 

 

 

 

67. In the North American market, almost all paint is tinted at the point of sale. (PX7020 

(Young, Dep. at 48); Pschaidt, Tr. 971-72 (the majority of paints Masco sells are tinted 

in-store); Malichky, Tr. 302-03 (only a small amount of paint in the United States is pretinted at manufacturing)). 

68. For paint to be tinted at the point of sale, manufacturers must use chloride TiO2 in order 

to get the color consistency and bright whites that customers expect. (Young, Tr. 643-47; 

PX7020 (Young, Dep. at 47-49); PX7025 (Malichky, Dep. at 117-18) (“[I]f it’s a tintable 

formula, we can’t use [sulfate TiO2]”)). Sulfate TiO2 does not provide the same 

consistent results as chloride TiO2 to allow for tinting at the point of sale. (Young, Tr. 

646, in camera 

; 

PX7020 (Young, Dep. at 47-49). See also PX1322 at 003 (Tronox presentation) (“The

US also has point of sale tinting which requires a very consistent pigment base.”)). 

69. Color fidelity is very important to paint manufacturers and they do not want to substitute 

raw materials that may jeopardize their color schemes. (Malichky, Tr. 296-97 (“So [if 

by] switching the TiO2 and you’re off a little bit in color, that’s unacceptable for the

consumer . . . .”); Vanderpool, Tr. 196 (“The last thing we want to have is phone calls 

coming in to our customer service department, one after another, that color 57 is no 

longer color 57; it’s really 28.”)).

70. Color fidelity is a challenge for the large paint companies, which can have tens of 

thousands of colors. (Malichky, Tr. 296-97; PX7025 (Malichky, Dep. at 124)). It is also 

a challenge for applications such as automotive coatings, which require color matching 

for all vehicles on the road today, including discontinued ones. (Malichky, Tr. 297). 

iv. Other performance attributes 

71. Sulfate TiO2 “didn’t meet all the criteria that [True Value needs] in terms of 

scrubbability, durability, dry time, recoat time, sag [downward movement of paint], low 

odor, all those kinds of things, and compatibility with the other raw materials that we’re

using in our formulas.” (Vanderpool, Tr. 195). 

72. Sulfate TiO2 is subject to 

. (Young, Tr. 643, 666; PX8003 

(Young, Decl. at 003 ¶ 12), in camera). 

73. 

. 

25 “Chalking is when the surface starts to degrade and basically a dry, chalky material . . . starts to come out of the 

film.” (Young, Tr. 666).

71 
 

74. RPM has found that chloride TiO2 produces better gloss in higher gloss paint products 

whereas sulfate TiO2 may not give you the gloss you are looking for in higher gloss paint 

products. (PX7016 (DeCastro, Dep. at 97)). 

75. Performance attributes that distinguish chloride TiO2 from sulfate TiO2 include paint 

manufacturers’ ability to make paint that can be scrubbed without it flaking off the 

substrate (“scrubbability”) and paint that can completely cover, from an optical 

standpoint, the color or coat of paint that was on the wall or substrate previously, to 

where you can’t see what the previous color was, without having to apply a primer or

more than one coat (“one-coat coverage”). (Christian, Tr. 774-76). 

v. Slurry 

76. North American customers purchase TiO2 either in: (1) a bagged dry powder form; or 

(2) a liquid slurry form. (PX9020 at 033 (Chemical Economics Handbook); Christian, 

Tr. 782). 

77. TiO2 slurry is made by dispersing TiO2 powder in water with other additives. (Christian, 

Tr. 783; Engle, Tr. 2451-52; PX7007 (Van Niekerk, Dep. at 44)). 

78. “A large portion of the US market is satisfied by slurry shipment . . . .” (PX1322 at 003 

(Tronox presentation)). 

79. Large paint and coatings manufacturers in North America purchase the majority of their 

TiO2 in a slurry form. (Young, Tr. 680-81, in camera (Sherwin-Williams purchases 

of its TiO2 in North America in slurry form); Malichky, Tr. 303, in camera (PPG 

of its TiO2 in North America in slurry form); PX8002 (Christian, 

Decl. at 003 ¶ 13) (A significant portion of TiO2 sold by Kronos in the United States is in 

slurry form); PX8004 (O’Sullivan, Decl. at 002 ¶ 7), in camera 

. 

80. TiO2 slurry is delivered to customers by rail cars or tank cars. (Christian, Tr. 782; 

Pschaidt, Tr. 981; Young, Tr. 648-49). Slurry TiO2 can be pumped directly into 

customers’ storage tanks, which simplifies handling and manufacturing. (PX9020 at 045 

(Chemical Economic Handbook); Young, Tr. 648-49; Pschaidt, Tr. 982; Engle, Tr. 2451-

52). 

81. Paint manufacturers use slurry TiO2 because it lowers their costs. (Young, Tr. 648-50; 

Malichky, Tr. 294; PX8006 (Pschaidt, Decl. at 002 ¶ 9)). Using TiO2 in slurry form 

allows Sherman-Williams to efficiently handle bulk deliveries of universal grades. 

(PX8003 (Young, Decl. at 002-03 ¶ 9)). 

82. In North America, TiO2 slurry is made only from chloride TiO2. (Pschaidt, Tr. 985-86; 

PX7016 (DeCastro, Dep. at 84)). 

purchases 

72 
 

b. Unsuitability of sulfate TiO2 

83. End-use customers in the United States and Canada demand high quality, premium 

coatings products. (Malichky, Tr. 294-95; Christian, Tr. 779-80 (“[M]ore developed 

economies and parts of the world . . . have higher standards for [paint] products . . . .”)). 

As Sherwin-Williams explained, sulfate TiO2 is not suitable for most paint formulations 

in North America, which require clean, bright colors and which has the highest quality 

standard in the world. (Young, Tr. 642-44, 664-65). 

84. True Value uses sulfate TiO2 in or less of its paints, which are its very basic, entrylevel paints. True Value has found that “there is definitely a difference” between paint

made with sulfate TiO2 and paint made with chloride TiO2. True Value paints made 

with sulfate TiO2 do not cover or hide as well as its paints made with chloride TiO2, are 

not light reflectant, cannot be tinted with many colors, and cannot withstand as many 

scrubs as its paints made with chloride TiO2. (Vanderpool, Tr. 192-93, in camera). 

85. True Value described sulfate TiO2 and chloride TiO2 as “apples and oranges,” and would 

not consider switching from its current use of chloride TiO2 to sulfate TiO2 for the vast 

majority of its paints because the products are “not the same.” (Vanderpool, Tr. 193-94 

(“[T]here’s no way” the sulfate TiO2 that True Value has tested could meet its 

benchmarking standards.)). 

86. Over of PPG’s North American TiO2 purchases cannot be switched from chloride 

TiO2 to sulfate TiO2. (Malichky, Tr. 298, in camera). Due to differences in durability 

and other performance properties, sulfate TiO2 cannot be used in place of chloride TiO2 

for many of PPG’s architectural or industrial coatings. (Malichky Tr. 294 (“Q.: Why 

does PPG use chloride rather than sulfate in the vast majority of its coatings in the United 

States and Canada? A.: The first reason is the durability piece of it. So for exterior 

applications, anything that needs durability, we have to use chloride, so that’s a large

percent of our applications, are in that space.”)). 

87. PPG has used sulfate TiO2 only in specific interior low-end applications such as primers 

and ceiling paint. (Malichky, Tr. 298-99, 302; PX8000 (Malichky, Decl. at 003-04 

¶ 16)). Sulfate TiO2 can be used for these applications because these products have 

lower durability requirements and no color matching requirements. (Malichky, Tr. 302-

03). 

88. Sherwin-Williams uses “predominantly” chloride TiO2 in North America. Chloride 

TiO2 accounts for a percentage in the of Sherwin-Williams’ use. (Young, Tr. 

643, 657, in camera). 

. (PX8003 (Young, Decl. at 003 ¶¶ 12-13), in 

camera; Young, Tr. 642-43, 715). 

89. 

. Sulfate TiO2 is unsuitable for most of 

73 
 

 

 

 

Sherwin-Williams’ applications in North America because it does not result in consistent 

brightness of color or consistent whites, and Sherwin-Williams has been “unwilling to 

compromise the quality of [its] goods” by using sulfate TiO2. In other regions of the 

world, where quality standards are different than in North America, Sherwin-Williams 

has found sulfate TiO2 suitable for use in its products. (Young, Tr. 642-43, 715, in 

camera; PX8003 (Young, Decl. at 003 ¶ 12), in camera). 

90. Of Masco’s purchases of TiO2, are sulfate TiO2 and are chloride TiO2. 

The proportion of sulfate TiO2 purchased by Masco has over time. 

(Pschaidt, Tr. 985, in camera). 

91. Masco uses sulfate TiO2 only for certain primer product lines, including the Kilz brand 

primer, and lower end contract paints. (Pschaidt, Tr. 966, 968, 983-84, 1043-44). Masco 

has tested sulfate TiO2 “over and over [and] found that [sulfate TiO2 grades] are not 

suitable for [its] main product lines.” (Pschaidt, Tr. 978). 

92. Ampacet Corporation (“Ampacet”), a multinational plastics manufacturer, purchases only 

chloride TiO2 for North America, but purchases sulfate TiO2 for other geographic 

regions. (PX7040 (Santoro, Dep. at 85)). 

93. Deceuninck North America, a vinyl manufacturer, has never purchased sulfate TiO2. 

Deceuninck North America believes chloride TiO2 is a much purer grade that is superior 

to sulfate in quality. (Arrowood, Tr. 1065-66). “[T]he only way that Deceuninck [North 

America] would even consider sulfate TiO2 would be if chloride TiO2 was unavailable.”

(Arrowood, Tr. 1093). 

94. In Kronos’ experience, “the North American market commands CP [chloride process 

TiO2] products.” (Christian, Tr. 813-14). North American customers have the lowest 

tolerance for sulfate TiO2 of any region in the world. (Christian, Tr. 778-79, 781-82; 

PX8002 (Christian, Decl. at 002 ¶ 6)). 

95. The “overwhelming preference” for Kronos’ North American coatings and plastics

customers is for chloride TiO2. (Christian, Tr. 778-79, 897 (explaining that the word 

“preference” of Kronos’ customers connotes “a larger threshold of requirement to make

the products that they’re in business to make. A lot of these customers require [chloride 

TiO2] grades to hit the quality level that they need for their products, so while technically 

feasible that you could put a sulfate grade into those applications, it would significantly 

reduce the quality of their products, and that’s not acceptable for their business plan”)).

96. Coatings companies’ “ability to substitute sulfate for chloride . . . is limited by their need 

to maintain the quality levels of their own products.” (PX9119 at 009 (2012 Tronox

investor conference call transcript) (“I don’t see as much of a shift or a material shift 

from chloride-processed pigment to sulfate-processed pigment because the major 

customers of the pigment, whether it is chloride or sulfate, are coatings companies who 

have requirements in their own products that the use of sulfate versus chloride will affect 

their . . . end product.”)).

74 
 

 

c. Reformulation of products to switch from chloride TiO2 to 

sulfate TiO2 

97. To switch from chloride TiO2 to sulfate TiO2, manufacturers would need to reformulate 

their products. (Mouland, Tr. 1225; Christian, Tr. 777; Malichky, Tr. 301). 

98. North American customers cannot readily switch their formulation of products from 

chloride TiO2 to sulfate TiO2 due to high costs and testing time. (Christian, Tr. 777-78 

(“Q.: . . . [I]n your experience, what would a customer need to do to reformulate a 

product from using chloride to sulfate? A: I don’t have a lot of examples of that 

happening. That would be pretty rare, but it would entail a significant amount of work, a 

lot of trials, a complete reformulation of their product and grade . . . .”); PX8002 

(Christian, Decl. at 004-05 ¶ 20) (“Even if a customer could change its formulations, that 

customer would face additional strategic challenges with its customers if the resulting 

product fundamentally changed.”)).

99. Before reformulating its products, Masco undertakes very extensive research. With 

respect to TiO2, Masco tests how it incorporates into its paint, what the titanium dioxide 

90, in camera). 

. Masco also 

tests the 

. (Pschaidt, Tr. 989-

100. For its Kilz’ low-end primer paints, Masco 

. (Christian, Tr. 941-42). 

101. For coatings manufacturers, qualifying a new grade of TiO2 is a multi-step process that 

includes tests on outdoor weathering and subjective feedback from customers and can 

take as long as three years. (Young, Tr. 652-54; PX8003 (Young, Decl. at 004 ¶ 17) (“It 

takes a minimum of one year to qualify a TiO2 grade for use in one of our core 

architectural or industrial coatings products, and it may take as long as three years.”); 

PX8006 (Pschaidt, Decl. at 002 ¶ 11) (“This [qualification] process can take up to 

for interior formulations and for exterior formulations.”)). Outdoor

testing is conducted in various climate zones in North America and multiple seasonal 

cycles. (Pschaidt, Tr. 990, in camera). 

102. For industrial coatings, qualification has additional steps. Depending on the application, 

“some industrial coatings require customer or regulatory approval.” (PX8003 (Young, 

Decl. at 004 ¶ 19)). In addition, the time needed for performance testing varies based on 

the industrial coating application. (PX8003 (Young, Decl. at 004 ¶ 19) (“Some industrial 

coatings, for instance, need to be tested in salt water for two years.”)). 

75 
 

 

 

 

 

 

 

 

 

103. For Deceuninck North America, switching to a sulfate TiO2 grade, “would require

extensive testing”; “a lot of time, a lot of money, a lot of effort”; and could take two years 

or longer. (Arrowood, Tr. 1088). Compared to qualifying a chloride TiO2 grade (which 

takes three to six months), it could take four times longer to qualify a sulfate TiO2 grade. 

(Arrowood, Tr. 1067, 1088). 

d. Price of chloride TiO2 compared to sulfate TiO2 

104. Sherwin-Williams found that from 2012 to 2017, the cost of chloride TiO2 was higher 

relative to the cost of sulfate TiO2; there was a wide range of the difference; and, the 

largest price difference was when sulfate TiO2 was 40% less expensive than chloride 

TiO2. (Young, Tr. 647-48). 

105. Cristal sets two separate price floors for chloride TiO2 versus sulfate TiO2. (PX2366 at 

003 (Cristal spreadsheet for Q4 2017) (showing different pricing floors for sulfate TiO2 

and chloride TiO2 in North America); PX2369 at 004 (Cristal spreadsheet for Q1 2018) 

(showing different pricing floors for sulfate TiO2 and chloride TiO2 in North America); 

PX7043 (Gigou, Dep. at 23) (explaining that Cristal has separate price floors for chloride 

TiO2 versus sulfate TiO2, because “[c]hloride brings a higher value to the market than 

sulfate.”)). 

106. North American customers purchase chloride TiO2 instead of sulfate TiO2 regardless of 

the difference in price between them. (PX9012 at 008 (Q4 2013 Tronox Earnings Call) 

(Mr. Casey, then-chairman and CEO stating: “In various markets, the customers have 

responded to what happened on pricing a year ago in different ways. For example in the 

North American market, it was 95% or 98%, or some very, very high number chloride[.] 

[I]t remains, essentially the same number market share for chloride. That was true when 

prices were over $4,000 a ton,[

26] it is true now [when chloride prices are lower].”); 

PX1399 at 004-05 (Sept. 2013 “Fireside Chat” Q&A with Tronox CEO) (“Q. When TiO2 

prices were going up last year some of your customers were pretty vocal about 

substituting to other less expensive products, how much of this do you think occurred and 

how much is ongoing? [Tronox CEO A.:] You’re right, there was significant 

commentary last year about substantial amounts of substitution. There has been some but 

limited effect from substitution. Some customers substituted 3 to 5% of sulfate-based 

pigment in an otherwise 100% chloride pigment gallon of paint. This was done primarily 

in industrial paint markets and in certain regions of the world. Very limited if any 

substitution was done by architectural coatings companies or here in North America.”)).

26 The word “ton” is a British and American measure. Common Mistakes in Business English, 

https://blog.harwardcommunications.com/2012/01/23/the-difference-between-ton-and-tonne/. In the United States 

and Canada, a ton is equal to 2,000 pounds. Documents and testimony in this case also refer to the metric measure, 

“tonne,” also known as “metric ton,” which is equal to 1,000 kilograms (2,205 lbs). Id.; https://.www rapidtables. 

com/convert/weight/kg-to-pound.html. The term “metric ton” may also be abbreviated as “MT”.

https://englishplus.com/grammar/00000058 htm. In some instances, such as where a witness is being quoted, the 

Initial Decision cannot determine from the transcript of testimony whether or not the transcribed word “ton” was 

intended by the witness to refer to a metric ton. 

76 
 

 

 

 

 

 

 

 

107. If the price of chloride TiO2 went up significantly compared to sulfate TiO2, True Value 

would not switch to use more sulfate TiO2. (Vanderpool, Tr. 197 (“[W]e can’t – in my 

opinion, these are apples and oranges. We can’t just substitute because the price went up. 

This is – we are a quality house [paint]. Again, we can’t – we can’t betray the consumer, 

and the consumers come to know these EasyCare products as high quality, and that’s 

what they’re getting.”)). 

108. Even when sulfate TiO2 was 40% cheaper than chloride TiO2, Sherwin-Williams did not 

switch its North American products from chloride TiO2 to sulfate TiO2 “because [of] the 

performance gap between the two materials.” (Young, Tr. 669-70). 

109. When the price of chloride TiO2 was increased by at least 10% compared to the price of 

sulfate TiO2, Masco was not willing to switch to sulfate TiO2 in its main product lines 

because Masco does not want to sacrifice the quality of its products. (Pschaidt, Tr. 979-

80, in camera (“[I]f we cannot achieve that ultra pure white, crisp look, and being able to 

have thousands of colors tinted to the colors that our consumers want and ask for, we will 

not sacrifice that. So, therefore, we cannot switch away from the chloride-produced TiO2 

for our product lines.”)). 

110. In 2011, when the price that Deceuninck North America paid for chloride TiO2 was very 

high, Deceuninck North America did not consider switching to sulfate TiO2. (Arrowood, 

Tr. 1088, 1093 (“Just – on the sulfate TiO2, just to be, you know, very candid, the only 

way that Deceuninck would even consider sulfate TiO2 would be if chloride TiO2 was 

unavailable.”)).

111. Based on data from customers and producers analyzed by Complaint Counsel’s economic

expert witness, Dr. Nicholas Hill, chloride TiO2 was, on average, 21% more expensive 

than sulfate TiO2 for North American customers between 2012 and mid-2017. (Hill, Tr. 

1683-85; PX5000 (Hill Expert Report at 046-47 ¶ 100 & Fig. 17)).27 

112. The price difference between chloride TiO2 and sulfate TiO2 varied significantly over 

the 2012 to mid-2017 time period, from a high of over $800 per metric ton to a low of 

just above $100 per metric ton, but there is very little change in the proportion of chloride 

TiO2 purchased. (Hill, Tr. 1683-85; PX5000 (Hill Expert Report at 047-48 ¶ 102 & Fig. 

18)). 

113. Regardless of the price difference between chloride TiO2 and sulfate TiO2 in North 

America, the proportion of sales between chloride TiO2 and sulfate TiO2 holds steady. 

(Hill, Tr. 1683-85; PX5000 (Hill Expert Report at 046-48 ¶¶ 100-02 & Figs. 17-18)). 

27 Dr. Hill derived the unit-weighted average price of sulfate TiO2 and chloride TiO2 using producer invoice data 

for North America sales, the price from the International Trade Commission, and the price from the United Nations 

Comtrade data for imports into Canada. (PX5000 (Hill Expert Report at 046 n.202)). Although Dr. Hill’s data set 

was missing data from Kronos from 2012 and 2013 and Chemours from 2017, the missing data does not affect these 

results because the relationship between the proportion of sales that are chloride TiO2 and sulfate TiO2 is consistent 

over time. (Hill, Tr. 1949-51, 2058). 

77 
 

 

114. The lack of correlation between the price of chloride TiO2 and sulfate TiO2 and the 

proportion of sales of chloride TiO2 is not what would be expected if North American 

customers were willing and able to substitute sulfate TiO2 for chloride TiO2 in response 

to a change in their relative prices. (Hill, Tr. 1683-85; PX5000 (Hill Expert Report at 

046 ¶100)). 

2. Relevant geographic market 

115. In 2016, 97% of chloride TiO2 sold in North America was manufactured in North 

America and 3% was imported from abroad. (Hill, Tr. 1725-26; PX5000 (Hill Expert 

Report at 032 ¶ 78)). 

a. Regional pricing 

116. Respondents charge different prices to customers depending on the region in which the 

customer is located (“regional pricing”). F. 117-129. 

117. In a March 2017 internal Tronox email, responding to questions raised by a customer, 

, about pricing in the United States compared to pricing in Japan, vice 

president of sales for the Americas, Mr. Mouland, wrote: “[He] will need to know that 

regional pricing is regional pricing. If they expect in the US then it will be byebye . (PX1682 at 001, in camera (Mouland email to Larson)). 

118. In a November 2016 TiO2 review, Tronox analyzed the TiO2 markets by region, 

including with charts evaluating “[r]egional TiO2 pricing” performance by region. 

(PX1006 at 010 (Tronox’s November 2016 TiO2 Review)). 

119. In a July 23, 2016 email to Sherwin-Williams, Mr. Mouland wrote: “As always, regional 

pricing varies over time and magnitude. Pricing in the four regions; U.S. [United States], 

LATAM [Latin America], EMEA [Europe, Middle East and Africa] and APAC [Asia 

Pacific] are not comparable. . . . There is no global price.” (RX0281; Mouland Tr. 1176-

78). 

120. The prices Tronox offers for its TiO2 in one region of the world are not connected to 

Tronox’s prices in other regions. (Mouland, Tr. 1281; PX1739 at 001 (Tronox March 

2016 email) (“What happens in the US is not connected to [Latin America], totally 

separate markets.”)). 

121. In a 2015 earnings call, Tronox reported that TiO2 prices in North America were higher 

than TiO2 prices in the European, Asian and Latin American markets. (PX9008 at 008 

(Tronox Q4 2014 Earnings Call) (Tronox then-CEO stating: “[A]re there different prices 

in the regional markets in which we do business? The answer to that question is yes.”)). 

122. Tronox does not offer a “one size” price to all regions. “Regional pricing . . . will vary.”

(PX1345 at 004 (August 2015 Mouland email to Duvekot)). 

78 
 

 

123. Tronox has informed customers that it does not have a global single-price arrangement 

with any of its customers, and that pricing is regional because it is based on the prevailing 

market price in individual countries. (PX1449 at 001 (February 2012 Tronox email)). 

124. In a September 2011 internal Tronox email, Mr. Mouland wrote: “Once again PPG 

need[s] to stop being concerned about regional price differences and accept that regions 

are different just like it is for their sales unless he is telling you that PPG sell[s] a can of 

paint in Mexico for the same price as in Germany?!” (PX1085 at 001 (Mouland email to 

Duvekot)). 

125. Tronox does not have a single global price for its customers. Tronox’s pricing for 

customers is based on the prevailing market price in individual countries. (Duvekot, Tr. 

1298-99; PX1454 at 001 (Duvekot email to Mouland); PX1451 at 001 (internal Tronox 

email) (“There is no global price to multinationals, we have regional pricing as you know 

with all of our customers. Therefore there is no reason for the Latin-American prices to 

influence the Asian prices.”). 

126. For Tronox’s multinational customers that buy TiO2 for delivery in multiple countries, 

individual regions are priced separately. (Romano, Tr. 2151-52 (“Customers in different 

regions, global customers, may pay different prices in different parts of the world.”); 

PX7001 (Romano, IHT at 145-46) (“[I]f we’re selling to a company like PPG who buys 

from us in multiple regions of the world, all the dynamics may be a bit different, and the 

pricing isn’t the same in every region.”); Mouland, Tr. 1172-73 (Sherwin-Williams and 

PPG do business in multiple regions, but pay different prices in different regions of the 

world for TiO2 from Tronox; each region is different; and there can be significant gaps in 

the price of TiO2 between different regions). 

127. Cristal sets regional price floors and price targets for TiO2. (PX7043 (Gigou, Dep. at 14-

15); PX7037 (Pickett, Dep. at 46) PX7000 (Snider, IHT at 24, 30-31)). 

128. Cristal charges different prices for TiO2 in different regions. (PX2025 at 008 (Cristal 

presentation breaking down sales by North America, Asia Pacific, Europe, Latin 

America, and MEAI [Middle East, Africa, and the Indian subcontinents]; PX2366 at 003 

and PX2367 at 004 (Cristal spreadsheets) (showing different pricing floors for different 

geographic regions)). 

129. For Cristal, “region” is the main driver of price variance for TiO2. (PX2116 at 013, 134 

(Cristal August 2016 email with marketing and sales presentation attached); PX2356 at 

009 (September 28, 2017 pricing discussion) (listing “geographical mix” as one of the

reasons why prices differ between Cristal and a competitor; stating, “Cristal sells 

relatively more to lower-priced markets (e.g., MEAf [sic], Latin America, AsiaPacific)”). 

130. Sherwin-Williams has manufacturing facilities in North and South America, Europe and 

Asia, but maintains regional contracts with its TiO2 suppliers. These contracts provide 

for regional pricing, since supply and demand conditions may create different regional 

79 
 

 

 

pricing environments. (PX8003 (Young, Decl. at 006 ¶ 28); Young, Tr. 672-73 (prices 

“are higher and lower in various regions, depending on supply-demand dynamics . . .”).

Sherwin-Williams has found that “[t]here’s really not a universal global market” for TiO2 

because prices are “openly negotiated in each of the regions” because of “different 

market dynamics” and “different availability.” (Young, Tr. 671-72). 

131. PPG does not pay one global price for TiO2 from its suppliers but instead pays different 

prices for the different regions. (Malichky, Tr. 311-12). 

132. AkzoNobel, a manufacturer of paints and performance coatings, uses TiO2 in multiple 

regions and pays regional prices when obtaining TiO2 from its suppliers. (PX7033 (Post, 

Dep. at 153-54) (TiO2 “markets are regional and considered regional by the industry”)). 

133. is negotiating an annual contract with that covers its chloride 

TiO2 purchases throughout the world, wherein the price terms vary by geographic 

regions. , in camera). 

b. The North America region 

134. The North America region is made up of the United States and Canada. The North 

America region does not include Mexico because market participants group Mexico in 

their Latin American markets (F. 135-140); and because of differences in pricing and 

other demand characteristics between Mexico and the United States and Canada. 

(F. 141-144). 

135. Tronox’s LATAM 2015-2017 Strategy document defines “Latin America (LATAM) [as] 

Central & South America, Mexico, Caribbean” noting Mexico’s “[p]ricing [as] consistent 

with Latin American pricing and not that of the USA.” (PX1327 at 005, 025 (Tronox

LATAM 2015-2017 Strategy)). 

136. Cristal’s North America sales region includes the United States and Canada. Cristal’s 

Latin American sales region includes Mexico. (PX7043 (Gigou, Dep. at 14-17); PX7000 

(Snider, IHT at 24) (Cristal sets prices by region and the North America region is the 

United States and Canada); PX7037 (Pickett, Dep. at 65) (the sales manager for North 

America is responsible for sales in the United States and Canada; the sales manager for 

Latin America is responsible for sales in Mexico)). 

137. Kronos organizes markets by geographic area and defines its North America market as 

Canada and the United States, and defines its Latin America market as Mexico, the 

Caribbean, South America, and Central America. (Christian, Tr. 778). Kronos sets 

different price levels by region to reflect competitive conditions in each region. (PX8002 

(Christian, Decl. at 004 ¶ 15)). 

138. Chemours and Venator view the North America market as United States and Canada. 

(PX8004 (O’Sullivan, Decl. at 002 ¶ 7) (Chemours organizes its chloride TiO2 

businesses into different regions based on customer locations: “North America (United 

80 
 

States and Canada); Europe, the Middle East, and Africa; Asia-Pacific, excluding China; 

China; and Latin America (including Mexico).”); PX8005 (Maiter, Decl. at 002 ¶ 8) 

(describing Venator’s North American customers as United States and Canada)). 

139. TZ Minerals International (“TZMI”), a consulting company, prepared a report for Tronox

titled, “TiO2 Pigment Supply/Demand Q1 2016.” In analyzing demand for TiO2, this 

TZMI report excluded Mexico from the North America market and included Mexico in 

the Central and South America market. (PX9077 at 034-35 (TZMI Presentation: TiO2 

Pigment Supply/Demand Q1 2016)). 

140. Sherwin-Williams and PPG consider the North America market for TiO2 to refer to the 

United States and Canada. (Young, Tr. 632-33; Malichky, Tr. 311-12, 388). 

141. Tronox charges different prices to TiO2 customers in Mexico compared to the United 

States. (PX1319 (October 26, 2015 internal Tronox email (“We pointed out [to the

customer] that different regions have different prices and that Mexico had gravitated to 

LATAM price as opposed to U.S. price[,] which it generally used to track.”); Mouland, 

Tr. 1181-83). 

142. Tronox’s prices in Mexico are generally lower than in the United States. While prices 

ebb and flow, Tronox’s prices in Mexico usually fall between the prices in United States 

and Latin America. Tronox does not sell very much TiO2 in Mexico in part because the 

pricing in Mexico is low. (PX7002 (Mouland, IHT at 155)). 

143. Based on producer invoice data for Cristal analyzed by Dr. Hill, Cristal’s prices for

North-American produced chloride TiO2 are similar when sold in the United States and 

Canada, but different when sold in Mexico. (PX5000 (Hill Expert Report at 025 ¶ 58 & 

Fig. 8)). 

144. PPG pays a different price for TiO2 purchased for use in the United States and Canada 

than it does for TiO2 purchased for use in Mexico. (Malichky, Tr. 311-12). “[E]ven 

though TiO2 is produced in the U.S. and shipped to Mexico, the suppliers sell it at two 

different prices, one price in the U.S. and one price in Mexico.” (Malichky, Tr. 610; 

PX1301 at 001-02 (November 14, 2014 Mouland email to Duvekot and Romano) (stating 

that Mr. Mouland “[r]eiterated [to PPG] that price should not spill over into US. [Pricing 

information provided was for] Mexico only, separate market.”)).

c. Price difference between North America and other regions 

145. Mr. Romano of Tronox acknowledged that in 2015 and December 2014 its prices for 

chloride TiO2 were higher in North America than in other regions and that in December 

2013 there was a “significant price disparity” between North America and the rest of the 

world, with North American prices for chloride TiO2 being higher than prices in the rest 

of the world. (Romano, Tr. 2177-81; PX1620 at 025; PX1111 at 002; PX1349 at 009 

(Tronox presentation) (noting that “[t]he significant price disparity between North 

81 
 

A March 2015 Cristal analysis of TiO2 prices and revenues for the year March 2014 to 

America and the rest of the world continues to be the focus of most of the price 

discussions with the large multinational accounts”)). 

146. In a 2016 earnings call, Tronox reported that TiO2 prices in Europe and Asia were lower 

than prices in North America. (PX9001 at 007 (Tronox Q3 2016 earnings call)). 

147. Based on a Tronox summary of its TiO2 revenue, as of June 2016, the net sales price in 

North America was per metric ton higher than those in the other regions 

for Q2 2016. (PX1008 at 011, in camera (Tronox TiO2 Variance Analysis)). 

148. In a 2015 earnings call, Tronox reported that TiO2 prices in North America were higher 

than the TiO2 prices in the European, Asian and Latin American markets. (PX9008 at 

008 (Tronox Q4 2014 earnings call)). 

149. 

March 2015 reported that North American TiO2 prices were 

higher than in other regions. (PX2050 at 005, in camera (Cristal email with report 

attached)). 

150. Based on invoice data from Tronox and Cristal analyzed by Dr. Hill, the prices for 

chloride TiO2 charged by North American plants owned by Tronox and Cristal were at 

least 10% higher and often more ($250 to $525 per metric ton) than the prices Tronox 

and Cristal charged customers in the rest of the world from 2012 to 2017. (Hill, Tr. 

1722-24; PX5000 (Hill Expert Report at 063-64 ¶ 144 & Fig. 24)). 

151. Based on the analysis conducted by Respondents’ economic expert witness, Dr. Ramsey

Shehadeh, the prices Tronox charged its North American customers for chloride TiO2 

were at least 10% higher than the prices Tronox charged in the next highest region 

between the first quarter of 2012 and the first quarter of 2016, with the exception of the 

third quarter of 2012. Cristal’s North American TiO2 customers paid the highest average

prices from the second quarter of 2012 through the first quarter of 2017. (Shehadeh, Tr. 

3627-33; RX0170 (Shehadeh Expert Report at 108-09 Figs. 53 & 54)). 

d. Delivery of chloride TiO2 to customers’ locations, with

delivered pricing 

152. Delivered pricing means that the price the TiO2 supplier charges to its customers 

includes the cost of shipping the product to the customer. (Duvekot, Tr. 1306-07). 

153. North American customers obtain nearly all their chloride TiO2 through deliveries by 

suppliers to their locations in North America, with delivered pricing. F. 154-159. 

154. For Tronox’s North American customers, the cost of shipping is covered in the price paid 

to Tronox when obtaining TiO2 from Tronox’s North American plants. (Duvekot, Tr. 

1307). 

82 
155. Nearly all of the TiO2 that Venator sells to its customers in North America is delivered to 

its customers’ locations and sold on a delivered pricing basis. (PX7015 (Maiter, Dep. at 

176)). 

156. Masco’s TiO2 suppliers deliver chloride TiO2 to Masco’s facilities and the price that 

Masco pays for chloride TiO2 includes the cost of delivery. (Pschaidt, Tr. 980). 

157. PPG pays a delivered price for its chloride TiO2 purchases for North America and the 

chloride TiO2 is delivered to PPG’s locations in railcars or tank wagon trucks.

(Malichky, Tr. 304-05; PX7025 (Malichky, Dep. at 208-09)). 

158. RPM, a multinational coatings manufacturer, buys chloride TiO2 from domestic 

manufacturers on a delivered basis. (PX7016 (DeCastro, Dep. at 87-88)). 

159. Ampacet, a multinational plastics manufacturer, pays delivered pricing for TiO2 

purchased from North American producers. (PX7040 (Santoro, Dep. at 12)). 

160. If a customer wanted to buy TiO2 in one region and ship it to another region, the 

customer would have to pay for the shipping. (Duvekot, Tr. 1303). 

e. Costs and logistical considerations of importing TiO2 

161. If a customer wanted to buy TiO2 in one region where it is less expensive and ship it to a 

different region where it is more expensive (“arbitrage”), the price difference would have

to cover shipping costs, external handling costs (costs to pay the freight forwarder), 

internal handling costs (internal to the customer to cover the costs of the logistics of 

exporting the product from one region to another), warehousing costs, and import duties. 

(Duvekot, Tr. 1304-05). 

162. Duties to import chloride TiO2 into North America vary, depending on the location from 

which it is shipped and when it is purchased, but have been around 5.5%. (PX0003 at 

038 (Tronox Second Request Narrative Response to Specification 16) (5 to 6%); PX7050 

(Mei, Dep. at 081-82, 112-13) (5.5%); PX8005 (Maiter, Decl. at 004 ¶ 20) (6%); PX8002 

(Christian, Decl. at 003 ¶ 14) (6%)). 

163. Costs to transport TiO2 pigment can add 5% to the cost of importing TiO2 to the United 

States. (PX0003 at 038 (Tronox September 2017 Narrative Responses). See also 

PX8005 (Maiter, Decl. at 004 ¶ 20), in camera (cost for Venator to import TiO2 to North 

America from Europe is approximately “ per tonne” for total freight and 

duty costs); PX8002 (Christian, Decl. at 003 ¶ 14) (for Kronos to import non-specialty 

grades of TiO2 to the United States from Europe is “cost prohibitive due to the 6%

import duty and the cost of transatlantic shipping.”); Malichky, Tr. 318 (PPG estimated 

that freight costs to import from China to the U.S. would add about 10% to the cost of the 

TiO2 that it purchases)). 

83 
164. North American customers purchase chloride TiO2 from North American suppliers so 

that they do not have to incur long lead times of importing TiO2. (Vanderpool, Tr. 199-

200; Arrowood, Tr. 1084 (Deceuninck North America has not purchased TiO2 from 

locations outside of North America because of the “problems that [one] can run into with 

transportation, with product taking an extremely long lead time to get to [Deceuninck 

North America’s] factory and just all the difficulties that you can face with transportation 

. . .”)). If a North American TiO2 customer ships TiO2 from China, it may take 12 weeks 

to arrive at the facility. (PX7033 (Post, Dep. at 162)). 

165. Because of long lead times when importing TiO2, a North American TiO2 customer 

would have to stock its own warehouse at least 12 weeks in advance. A TiO2 customer’s 

warehouses may not be big enough to stock these products ahead of time. (PX7033 

(Post, Dep. at 162)). 

166. If True Value chose to import TiO2 from outside of the United States, it would be less 

equipped to deal with a spike in demand since it could not get additional supply quickly. 

(Vanderpool, Tr. 199-200). 

167. North American customers purchase chloride TiO2 from North American suppliers so 

that they can avoid the risk of potential shipping delays. When TiO2 arrives from 

overseas, it can get stuck in the port or the ship can get delayed, creating timing issues. 

(Malichky, Tr. 310-11). Lomon Billions Group (“Lomon Billions”), 

a TiO2 manufacturer in China (F. 300), is “not a reliable supplier” because “[t]hey don’t 

ship on time.” . 

source TiO2 from the U.S. TiO2 manufacturers on a delivered basis, so the TiO2 

168. The logistics involved in obtaining chloride TiO2 from a North American supplier, i.e., 

the “planning and timing” of the procurement, are much easier. (Arrowood, Tr. 1084; 

Young, Tr. 670-71; (stating that it is easier to 

customer does not have to get involved with any of the logistics)). 

169. TiO2 customers in North America that order TiO2 from Tronox’s Hamilton plant will

have reduced lead time and shipping time and a cost advantage over TiO2 ordered from 

Tronox’s non-North American plants, based on differences in duty and shipping costs 

and warehousing. (PX7026 (Duvekot, Dep. at 84-85)). 

170. TiO2 customers value a direct relationship with large suppliers, product consistency, and 

on-time delivery. (PX7002 (Mouland, IHT at 69, 102-03) (“[Customers] want to know 

they can rely on us for on-time delivery in full.”); PX1000 at 005 (Tronox 2016 

presentation) (recognizing that U.S. “customers are looking for . . . reliability to 

deliver”)).

171. It is easier for Cristal’s customers to be supplied by a production facility that is close to 

them because of the shorter lead times for delivery. (PX7043 (Gigou, Dep. at 83); see 

also PX7000 (Snider, IHT at 34-35) (“[A] lot of North American customers are under 

84 
 

 

contract,” are more concerned with security of supply, and want just-in-time vendormanaged inventory)). 

172. Based on data analyzed by Dr. Hill, more than a third of the chloride TiO2 sold in North 

America is in slurry form. (PX5000 (Hill Expert Report at 017 ¶ 39); see F. 79). 

173. Shipping slurry internationally would be cost prohibitive because of the weight of the 

water in the slurry. (Christian, Tr. 783-84 (“When [you are] shipping an aqueous slurry, 

[you are] paying to basically ship water across the region where you are shipping it. So 

the freight is much more expensive.”); PX7016 (DeCastro, Dep. at 83-84)). 

174. Shipping slurry across the ocean is impractical because it would settle in transit, meaning 

that the pigment separates out of the water, and the slurry could grow bacteria during 

transit that would contaminate the shipment. (Malichky, Tr. 305; see also PX7041 

(Veazey, Dep. at 53-54) (Tronox cannot ship slurry across the ocean because “[t]he

product in transit settles.”)). 

175. Switching from slurry to dry TiO2 would present difficult logistical challenges and costs 

for the coatings customers that currently receive the majority of their chloride TiO2 in 

slurry form. (Malichky, Tr. 305-06 (Switching to dry TiO2 would require building new 

infrastructure at PPG’s plants and redesigning PPG’s manufacturing process.); Young, 

Tr. 682-83 (Switching to dry TiO2 would require a significant capital investment and it is 

not economical for Sherwin-Williams to make its own slurry.)). 

176. As Tronox acknowledges, “[a] large portion of the US market is satisfied by slurry 

shipment, which adds a logistical barrier to entry.” (PX1322 at 003 (Tronox

presentation)). 

f. Arbitrage 

177. When TiO2 prices in North America were higher than those in Europe, Deceuninck 

North America looked into possibly moving TiO2 from one of Deceuninck’s European 

plants to Deceuninck North America’s Monroe, Ohio plant, but decided not to do that 

because “the cost, transportation cost, is very expensive to get the titanium dioxide from 

Europe to the U.S., the economics didn’t make sense for us to do that . . . .” (Arrowood, 

Tr. 1089-90). 

178. 

. 

179. 

85 
 

 

 

 

. 

180. In a September 2011 email, Mr. Duvekot acknowledged that PPG could not purchase 

TiO2 in one region then ship it to another region for the price difference between Europe 

and the United States at the time. (Duvekot, Tr. 1302-03; PX1085 at 001 (September 

2011 Duvekot email to Mouland)). 

181. Based on a quantitative analysis of invoice data produced by Tronox and Cristal, 

conducted by Complaint Counsel’s economic expert witness, Dr. Hill, even when there

were “significant price differences” between the price for chloride TiO2 in North 

America and the price for chloride TiO2 in the rest of the world, customers have not 

engaged in arbitrage to defeat higher prices in North America by buying TiO2 in a lowerpriced region and transporting it to North America. (Hill, Tr. 1720-25; PX5000 (Hill 

Expert Report at 063-64 ¶ 144 & Fig. 24)). 

3. Hypothetical monopolist test 

182. The Horizontal Merger Guidelines provide a test, called the hypothetical monopolist test, 

for evaluating whether a product or group of products in a particular geographic area is a 

relevant market. In applying the test, the analysis focuses on whether it would be profit 

maximizing for a hypothetical monopolist of all sales of a specific product in a specific 

region to increase price by a small but significant non-transitory increase in price 

(“SSNIP”). If the hypothetical monopolist can successfully impose a SSNIP in the 

proposed market, the proposed market passes the hypothetical monopolist test and the 

relevant market is defined correctly. Critical loss analysis is a standard tool economists 

use to implement the hypothetical monopolist test. (Hill, Tr. 1668-70; PX5000 (Hill 

Expert Report at 049-50 ¶¶ 104, 07; PX9085 at 011-14 (Horizontal Merger Guidelines 

§§ 4.1.1, 4.1.2)). 

183. A critical loss analysis has two stages: (1) calculation of the critical loss, which means 

the percentage of sales a hypothetical monopolist would have to lose to keep its profit 

unchanged if it increased its price by a small amount, often 5 or 10 percent; and (2) 

calculation of the predicted loss, which means the percentage of sales that the 

hypothetical monopolist would likely lose given a particular price increase and keep its 

profit unchanged. If the predicted loss is smaller than the critical loss, then the price 

increase will increase the hypothetical monopolist’s profit. (PX5000 (Hill Expert Report 

at 049 ¶¶ 104-06)). 

184. To determine the critical loss, Dr. Hill divided the SSNIP to be tested by the sum of (1) 

the SSNIP of 10% and (2) the hypothetical monopolist’s margin on lost chloride TiO2 

86 
 

 

 

 

 

 

 

 

 

 

sales of 55%28 to calculate the critical loss percentage to be 15% (10 divided by 65). 

(Hill, Tr. 1668; PX5000 (Hill Expert Report at 050-51 ¶ 109 & Fig. 19)). 

185. Dr. Hill conducted three separate critical loss analyses using three different estimates of 

the predicted loss to test whether chloride TiO2 sold to North American customers is a 

relevant antitrust market. (PX5000 (Hill Expert Report at 050-56 ¶¶ 108-22 & Figs. 20-

22); Hill, Tr. 1690-92; F. 186-188). 

186. In the first critical loss analysis, Dr. Hill used his estimate of the price elasticity of 

demand, which measures North American customers’ willingness to switch from chloride 

TiO2 to sulfate TiO2, to determine whether enough North American customers would 

switch to an alternative product to defeat a SSNIP by the hypothetical monopolist. 

(PX5000 (Hill Expert Report at 051-52 ¶ 113)). Dr. Hill’s estimate of the price elasticity

of demand was -0.45, which means that a 10% increase in price is predicted to lower 

sales of chloride TiO2 in North American by 4.5%, which shows that the demand for 

chloride TiO2 by North American customers is inelastic. (PX5000 (Hill Expert Report at 

051-52 ¶ 113)). As a result, switching to other products by North American customers 

would prove inadequate to defeat a SSNIP, which shows that the sale of chloride TiO2 to 

North American customers passes the hypothetical monopolist test. (PX5000 (Hill 

Expert Report at 052 ¶ 114); Hill, Tr. at 1692-96)). Because the predicted loss of 4.5% is 

well below the critical loss of 15%, the market passes the hypothetical monopolist test 

(F. 182). (PX5000 (Hill Expert Report at 052 ¶ 114 & Fig. 20)). 

187. In his second critical loss analysis, Dr. Hill predicted substitution indirectly by using data 

from Tronox’s White Paper29 to ascertain whether increased imports or repatriated 

exports (“net imports”) (which is a supply response, rather than demand substitution), 

combined with lost sales, would render a SSNIP unprofitable for the hypothetical 

monopolist. (PX5000 (Hill Expert Report at 052-54 ¶¶ 115-20)). Using this data, Dr. 

Hill calculated that in response to a 10% increase in the price of chloride TiO2, increased 

imports and decreased exports would displace 9% of chloride TiO2 sales in North 

America and that the loss of sales of chloride TiO2 to reduced purchases of TiO2 of any 

type would be 3.6%. Combining this loss with the net imports estimate yields a predicted 

loss of 13%. Because the predicted loss of 13% is lower than the critical loss of 15%, the 

market passes the hypothetical monopolist test (F. 182). (PX5000 (Hill Expert Report at 

053-54 ¶¶ 117, 120 & Fig. 21)). 

188. In his third critical loss analysis, Dr. Hill used a Tronox document that estimated that the 

share of Chinese sulfate in North America could increase from 10% to 15% of 

applications.30 Assuming that a 10% SSNIP would reduce the share of chloride TiO2 by 

28 Dr. Hill calculated the hypothetical monopolist’s margin using the average variable margin for all chloride plants

currently operating in North America. (PX5000 (Hill Expert Report at 050 n.214)). 

29 On October 17, 2017, Tronox submitted a document to the FTC titled, “White Paper on Behalf of Tronox,” which

provided data on U.S. net imports and relative trade prices. (PX0016 at 047). 

30 PX1000 at 007 (2016 Tronox presentation). Based on data analyzed by Dr. Hill, currently, 10% of all rutile TiO2 

sales in North America are sulfate TiO2. (PX5000 (Hill Expert Report at 055 ¶ 121)). 

87 
 

 

 

 

 

5% and the purchases of TiO2 of any type by 3.6%, Dr. Hill calculated that the resulting 

loss of sales to the hypothetical monopolist would be 8.7%. Because the predicted loss of 

8.7% is lower than the critical loss of 15%, the market passes the hypothetical monopolist 

test (F. 182). (PX5000 (Hill Expert Report at 055-56 ¶¶ 121-22 & Fig. 22); Hill, Tr. at 

1696-97)). 

189. Dr. Hill additionally implemented the hypothetical monopolist test based on the price 

elasticity of demand for chloride TiO2 in North America. (PX5000 (Hill Expert Report 

at 056-58 ¶¶ 123-29 & Fig. 23); Hill, Tr. at 1692-96)). Dr. Hill found that the price 

elasticity of demand for chloride TiO2 after a 5% SSNIP is still inelastic, and therefore 

chloride TiO2 in North America passes the hypothetical monopolist test (F. 182) based 

on the price elasticity of demand. (PX5000 (Hill Expert Report at 056-58 ¶¶ 123-29 & 

Fig. 23); Hill, Tr. at 1692-96). 

190. The hypothetical monopolist test (F. 182), implemented in four different ways (F. 186-

-

189), indicates that demand for chloride TiO2 is strong and that North American 

customers will not substitute to sulfate TiO2 in significant amounts in the face of a 

SSNIP. (Hill, Tr. at 1698; PX5000 (Hill Expert Report at 050-58 ¶¶ 108-29 & Figs. 20

23)). 

C. Prima Facie Case 

1. Market structure 

191. All TiO2 produced in North America is chloride TiO2, with the exception of a small 

plant in Canada owned by Kronos that produces sulfate TiO2. (PX5000 (Hill Expert 

Report at 025-26 ¶ 59 & Fig. 9); Christian, Tr. 752). 

192. There are five major producers in the North American chloride TiO2 market: Tronox, 

Cristal, Chemours, Kronos, and Venator. (Christian, Tr. 817-18; Vanderpool, Tr. 185; 

PX1230 at 019 (Tronox presentation) (“Concentrated supplier base for high-quality TiO2 

(5 global players, few local champions.”)).

193. Tronox, Cristal, Chemours, Kronos, and Venator account for over 99% of chloride TiO2 

sales in North America and for 100% of North America chloride TiO2 production 

capacity.31 (PX5000 (Hill Expert Report at 010, 025-26, 067-68 ¶¶ 13, 59, 152 & Figs. 9, 

25)). 

194. In 2016, the shares of the chloride TiO2 market of the five major producers were: 

Tronox , Cristal , Chemours , Kronos , and 

Venator . (PX5000 (Hill Expert Report at 067-68 ¶ 152 & Fig. 25), in 

camera). 

31 Dr. Hill calculated market shares based on producer invoice data, as further explained in Appendix D.1 to his 

report. (PX5000 (Hill Expert Report at 068, 144, Fig. 25 & Appendix D.1)). 

88 
 

 

 

 

 

195. Chemours was spun off from E. I. du Pont de Nemours and Company (“DuPont”) in 

2015 and became its own publicly traded company. (PX7052 (O’Sullivan, Dep. at 13)). 

196. Chemours is currently the largest TiO2 producer in North America and globally. 

(PX9020 at 011 (Chemical Economics Handbook); PX9040 at 008 (Tronox investor 

presentation)). Chemours has four TiO2 plants: DeLisle, Mississippi; New Johnsonville, 

Tennessee; Altamira, Mexico; and Kuan Yin, Taiwan. (PX8004 (O’Sullivan, Decl. at 

001-02 ¶¶ 1, 6)). Chemours’ TiO2 plants produce only chloride TiO2. (PX8004 

(O’Sullivan, Decl. at 002 ¶ 3)). 

197. Kronos has one TiO2 plant in Quebec, Canada and four plants in Europe. Kronos’ 

Quebec facility consists of two plants, a chloride TiO2 plant and a small sulfate TiO2 

plant. (Christian, Tr. 752). Kronos’ sulfate plant in Quebec produces almost exclusively

anatase TiO2 for food, pharmaceutical, and other niche applications. Kronos and 

Venator own a 50-50 joint venture that operates a chloride TiO2 plant in Lake Charles, 

Louisiana, with each company entitled to half of the facility’s output. (PX8002 

(Christian, Decl. at 002 ¶ 7); Christian, Tr. 751-53). Of Kronos’ production of TiO2, 

75% is chloride TiO2 and 25% is sulfate TiO2. (PX8002 (Christian, Decl. at 002 ¶¶ 7-8); 

Christian, Tr. 751-52, 781-82). 

198. Venator was spun off from Huntsman Corporation in 2017 and became its own publicly 

traded company. (PX8005 (Maiter, Decl. at 001 ¶ 1)). 

199. Venator operates six TiO2 plants in Europe and one plant in Asia. (PX8005 (Maiter, 

Decl. at 001-02 ¶¶ 1, 9)). Venator and Kronos own a 50-50 joint venture that operates a 

chloride TiO2 plant in Lake Charles, Louisiana, with each company entitled to half of the 

facility’s output. (PX8005 (Maiter, Decl. at 002 ¶ 10)). Other than the Louisiana facility, 

only one of Venator’s plants makes chloride TiO2. (PX8005 (Maiter, Decl. at 002 ¶ 11)). 

Unlike the other four major North American producers, Venator does not have any TiO2 

slurry capacity in North America. (PX7015 (Maiter, Dep. at 53-54, 60)). 

200. Post-Acquisition, the combined Tronox/Cristal firm would have a market share of 

of sales of chloride TiO2 in North America. (PX5000 (Hill Expert Report at 067-68 

¶ 152 & Fig. 25), in camera). 

201. Post-Acquisition, the combined Tronox/Cristal firm and Chemours would have a market 

share of of North American chloride TiO2 sales and over of North 

American chloride TiO2 capacity. (PX5000 (Hill Expert Report at 067-68 ¶ 152 & Fig. 

25), in camera; PX5000 (Hill Expert Report at 25-26 ¶ 59 & Fig. 9), in camera). 

202. The federal antitrust agencies measure concentration using the Herfindahl-Hirschman 

Index (“HHI”). (PX9085 at 021-22 (Horizontal Merger Guidelines, § 5.3)). The HHI is 

calculated by totaling the squares of the market shares of each firm in the relevant 

market. (PX9085 at 021-22 (Horizontal Merger Guidelines, § 5.3)). 

89 
 

 

 

 

203. The proposed Acquisition would increase the HHI by over 700 points, to over 3000. 

(PX5000 (Hill Expert Report at 067-68 ¶¶ 152-53 & Fig. 25)). 

2. Coordinated effects 

a. Interdependence 

204. The North American chloride TiO2 market is characterized by mutually recognized 

interdependence. F. 205-264. 

205. Tronox’s five-year TiO2 strategy plan update from August 2016 states that, in the 

pigment industry, suppliers must “recognize that using price to grow faster than the 

market generally leads to no permanent market share gains but enduring revenue and 

margin losses.” (PX1004 at 015 (Tronox TiO2 Strategy and 5-Year Plan Update, August 

2016)). 

206. A November 2016 Tronox presentation stated that the “TiO2 market shows oligopoly

pricing behavior (one supplier can drive price down, action of all suppliers needed to pull 

prices up.”). (PX1030 at 013). 

207. Tronox recognizes that competitor pricing decisions impact their own pricing and sales 

volumes. (PX7001 (Romano, IHT at 214) (“[I]t only takes one to make the price go 

down. The whole market has to go up. But any one competitor can make pricing go 

down.”); PX7001 (Romano, IHT at 223) (“Any one competitor can drive price down . . . . 

I can make it go down, but I can’t make it go up by myself.”); Romano, Tr. 2156-57; 

PX7002 (Mouland, IHT at 77) (“[D]epending on how the customer plays it and has the 

negotiations with their other suppliers, if something changes from supplier or competitor 

activity, then it makes it difficult for me to get an increase.”); PX7026 (Duvekot, Dep. at 

52) (Tronox “take[s] note of the competitor’s price announcements or price actions”

when setting its pricing strategy.)). 

208. Cristal recognizes that competitor pricing decisions impact their own pricing and sales 

volumes. (PX7043 (Gigou, Dep. at 31-33) (When considering whether to issue a price 

increase and for what amount, Cristal takes into account information from customers 

regarding other TiO2 suppliers.)). 

209. In a 2016 board of directors presentation discussing Tronox’s price increase

implementation process, Mr. Romano, Tronox’s chief commercial officer, explained that 

“[t]he success of any increase will largely depend on the market conditions and the 

industries[’] ability to maintain a disciplined approach to the [price increase]

implementation process.” (PX1021 at 002 (Romano email to Turgeon); PX7001 

(Romano, IHT at 143) (“It was a summary that I put together to review with our board on

how we implemented price increases.”)). 

210. As part of Tronox’s price increase implementation efforts, Tronox collects “competitive 

intelligence on [Tronox’s] competitors’ actions” to assess whether the other TiO2 

90 
 

 

 

 

producers are “maintain[ing] a disciplined approach.” (PX1021 at 002 (Romano email to 

Turgeon)). 

211. With respect to Tronox’s implementing a price increase, “to the extent some other

competitor is not doing what we’re doing or they’re doing less of a magnitude or giving

more time, it has an impact on how we’re going to be able to increase and the extent of

what that increase would be.” (PX7001 (Romano, IHT at 158-59)). 

212. With respect to Tronox’s implementing a price increase, “it all depends on what our 

competition is doing from the standpoint of being competitive. . . . [W]hen we’re trying 

to implement a price increase and we’ve got other competitors that aren’t raising the 

price, it has an impact on our ability to either lose volume or increase the price.”

(PX7001 (Romano, IHT at 138)). 

213. In an email to Tronox’s board members following a December 2015 price increase 

announcement by Tronox, Mr. Casey explained: “[T]he success of this initiative will be

materially affected by how Huntsman [now Venator], Cristal and Kronos respond. 

Chemours announced an equivalent price increase yesterday . . . .” Mr. Nkosi, a Tronox

board member, responded: “Great move Sir. Let’s see whether they bite.” (PX1047 at 

001 (Casey email to Tronox board members)). 

214. Earnings calls and industry conference remarks of Tronox’s and Cristal’s competitors

refer to the need for “discipline” in their competitive behavior and in their responses to 

the behavior of others. (PX9075 at 004 (Huntsman [Venator] Q2 2016 Earnings Call) 

(“We continue to be disciplined with our sales volumes in an effort to maximize the 

effective capture of the announced TiO2 price increase.”); PX9075 at 014 (Huntsman 

[Venator] Q2 2016 Earnings Call) (“I see greater pricing discipline taking place in 

TiO2.”); PX9025 at 003 (Chemours at Goldman Sachs Basic Materials Conference 

Transcript) (“Now, reflecting on the dynamics of the past, we at Chemours conclude that 

our own response to market dynamics was a contributor to the volatility that we 

experienced in our business performance. And we’ve decided to take a more meaningful 

approach to the TiO2 market.”)). 

215. On December 18, 2015, the same day that Tronox announced a price increase (F. 222), 

the Tronox announcement was the subject of an internal Cristal email. A Cristal 

employee noted: “Tronox follows the trend. Tronox also[] announces global increase of 

US$150/tonne for all TiO2 grades, effective Jan. 1, 2016, or as contracts allow. 

Expectedly, other TiO2 manufacturer’s [sic] may follow the trend. We would be keen to 

observe market acceptance of these price increase announcements in Q1 2016. It’s an 

initiative to taste the market readiness to accept this announced price increase.” Minutes 

later, a Cristal executive replied that Huntsman (Venator) and Chemours had also 

announced price increases. (PX2035 at 001-02). 

216. A Tronox weekly regional sales report for the Americas from May 2016 reports: “We

are prepping customers for a full increase on July 1st given current market 

strength. Success will obviously depend on competitor behavior and the different 

91 
announcement levels." (PXl 163 at 001, in camera (Tronox Americas weekly repo1i); 

PX7002 (Mouland, IHT at 74-75), in camera). 

217. In an email to Cristal's chanman, Cristal's sales vice president at the time observed: "In 

cmTent market conditions of excessive inventory we cannot raise price and gain market 

share at the same time unless all suppliers support the price movement. If we see other 

such public price announcement info1mation for other suppliers in the coming days, we 

will then assess whether or not we want to also make a price announcement and if market 

dynamics can suppo1i such an initiative." (PX2087 at 002 (Stoll email to Al-Shan-)). 

218. In October 201 6, regarding an announced price increase by Huntsman, Mr. Gigou, 

Cristal's sales vice president, wrote to other Cristal senior executives: "This is good 

news as it seems that the momentum is getting more suppo1i. It is om plan to announce 

also a price increase before year end," to which Mr. Gunther, Cristal's head of TiO2 

business, responded: "Indeed, great news. How fast do we need to react?" (PX2007 at 

001 (Gigou email to Gunther)). 

219. No1ih American chloride TiO2 producers over the years have increased TiO2 prices 

typically in close proximity to each other in time. (PX1204 (December 201 6 Tronox 

Excel spreadsheets tracking competitors' price increases); Pschaidt, Tr. 975 ("Usually the 

TiO2 manufactmers announce price increases ve1y close to each other, so it nonnally is 

announced within a sho1i period oftime of each other."); Malichky, Tr. 328, 332 ("[I]f 

one announces a price increase of 150, you know, sho1i ly after that another one will 

announce 140 or 170, and so they're not exactly matching up, but you can see that they're 

making the trend out there that, yeah, they're all announcing price increases or, you 

know, fom out of five or three out of four are announcing siinilar increases at similar 

times."); PX8003 (Young, Deel. at 006 ,r 29); PX8001 (Zamec, Deel. at 003 ,r 17)). 

220. In a 2017 email, Mr. Mouland, a Tronox sales vice president, requested approval for a• - increase at some customers instead of the increase that Tronox had 

announced, because competitors were agreeing to--increases. (PX1093 (Mouland 

email to Romano), in camera; PX1201, in camera (Mouland email to Romano) ("Based 

on multiple US data points, feedback indicates om competitors are gravitating towards an 

increase of . I am requesting a floor of for this 

reason."); Mouland, Tr. 1156-58, in camera; see also PX1212 at 003, in camera (January 

2017 Price Approval Request regarding a plastics customer, ) ("Cristal 

repo1i ed they are taking the price up to then· customers based on Chemoms doing 

the same.")). 

221. When Chemoms announced a price increase of on 

December 17, 2015, Tronox learned about that increase when it came across the wire at 

around 4:45 that afternoon. Within about a halfhom, Mr. Casey, fo1merly chanman and 

CEO of Tronox, reacted to the Chemoms increase by directing' price 

increase announcement of om own before 9:30 tomon ow." (PX1046 at 002, in camera 

(Casey email to Romano and Grebey)). 

92 
 

 

 

 

 

 

 

 

 

222. In a December 18, 2015 email to Tronox’s board members, Mr. Casey wrote: “This 

morning, we announced a 

this morning.” Mr. Casey explained, “Given the importance of a 

continuing focus on cash generation in 2017, we are trying to see whether we can 

accelerate the recovery on TiO2 pricing, by testing whether it is ready for price increases 

or at least to stop declines.” (PX1047 at 001, in camera (Casey email to Tronox board 

members)). 

223. From Cristal’s perspective, the December 2015 price increase announcements (F. 221-

223) were “[n]ot based on supply/demand dynamics.” (PX2055 at 022 (Cristal 

presentation)). The purpose according to Cristal’s then-president was to “hopefully stop 

deterioration of price [and] increase purchasing.” (PX2216 at 001 (Nahas email to 

VanValkenburgh)). 

224. In Tronox’s 2015 third quarter earnings call, Mr. Casey disclosed that Tronox had idled a

portion of its TiO2 production, emphasizing the impact of this decision on pricing and 

that Tronox observed other TiO2 producers “acting in the same way.” Mr. Casey stated: 

“[T]he question is, when will [the prices] turn? We’re addressing that by managing our 

production so that inventories get reduced to normal or below normal levels. And when 

that happens, prices will rise. We – from what we see with Chemours and Huntsman and 

presumably the others as well, they’re doing the same thing. We see them acting in the

same way.” (PX9005 at 010 (Tronox Q3 2015 Earnings Call)). 

225. In 2015, shortly after Mr. Casey had publically stated that Tronox had idled part of its 

Hamilton plant (F. 268), Chemours closed its Edge Moor plant in Delaware, and shut 

down a production line at its Johnsonville, Tennessee plant, removing 150,000 metric 

tons of capacity. (Christian, Tr. 875-76; PX2055 at 024 (Cristal presentation)). 

226. In August 2015, when Tronox learned that Chemours closed its Edge Moor plant in 

Delaware, an internal email was circulated that characterized these developments as 

“Good news!!” Tronox’s then-CEO Mr. Casey replied, “[i]t’s good that [Chemours] can 

follow the leader!” (PX1325; see PX2055 at 024 (Cristal presentation) (noting that 

Chemours had closed its Edge Moor plant in Delaware and shut down a production line 

at its Johnsonville, Tennessee plant, removing 150,000 metric tons of capacity)). 

227. In a September 2011 email, Cristal’s Mr. Stoll noted that the “discipline of taking supply

off-line and allowing inventories to fall as demand improve[s] lead[s] to pricing 

discipline and pricing power over the following quarters.” (PX2083 at 001 (Stoll email 

to Najjar)). 

228. Tronox and Cristal documents demonstrate mutually accommodating conduct by chloride 

TiO2 producers in order to support market discipline and avoid triggering adverse 

competitor responses. (F. 229-246). 

93 
229. Mr. Casey of Tronox stated in a 2014 earnings call: “As you saw, we have not gained 

market share by trying to reduce price. We don’t think that’s the appropriate strategy

going forward . . . .” (PX9010 at 005 (Tronox Q2 2014 Earnings Call)).

230. In 2011, in response to an email from Mr. Casey regarding “softness” in current orders, 

Mr. Romano explained the soft demand at that time and further explained Tronox’s 

efforts to balance sales volume and pricing in that environment: “We have also been 

working very hard to maximize our price increase implementation in Q4. When 

customers have inventory to work with during the negotiation process, this can create 

pressure on the volumes as customers hold back on order placement on the expectation 

that this could create an opportunity for a smaller increase. . . . [I]n most cases, not all, 

the customer will want an incentive to take on additional inventory. If the customer is 

not willing to take on additional inventory[,] the volume could be taken from a 

competitor and that may lead to a competitive response[,] which could facilitate price 

erosion. We have to be selective on where we try to pick up additional volume because 

we do not want to facilitate a downward movement on price.” (PX1090 at 001 (Romano 

email to Casey)). 

231. In a July 2012 email, Mr. Romano wrote to Mr. Casey and to Mr. Greenwell, then-CFO 

of Tronox: “The problem we face is that pricing is falling and if we take action to go

after market share, price will deteriorate further and we do not want [to] facilitate or fuel 

that process. Everyone is defending their business and matching offers from the 

competition to maintain their share as no one want[s] to loose [sic] business.” (PX1015 

at 001 (Romano email to Casey and Greenwell); Romano, Tr. 2161-63). 

232. In the same email to Mr. Casey and Mr. Greenwell referenced in F. 231, Mr. Romano 

explained: “Using price to try to take market share in a soft market will create churn,

destroy value and will take much longer for us to recover when the market does pickup. 

Price is the most significant lever we have and we need to do everything we can to 

prevent it from falling further.” (PX1015 at 001 (Romano email to Casey and 

Greenwell); Romano, Tr. 2163-64). 

233. In 2011, Mr. Wayne Hinman, a member of the Tronox board of directors advised Mr. 

Casey in an email: “[W]e will be better off in the long run, by trying to maintain pricing

and where possible pass on higher raw material costs and give up sales volume in the 

short term, and take the short term margin/cost hit, rather than try and keep our plants 

loaded.” (PX1075 at 001 (Hinman email to Casey)).

234. An October 2011 presentation by Cristal’s Mr. Stoll to Cristal’s Steering Body stated: 

“The ‘Evil Sin’ would be to attempt to lower prices to take market share as markets 

weaken. We Must Hold Price!” (PX2242 at 017 (Cristal Steering Body Meeting 

Commercial Update) (italics in original); Stoll, Tr. 2086; PX7009 (Stoll, Dep. at 146-

47)). 

235. In December 2011, Mr. Stoll of Cristal sent an email to Mr. Nahas, Cristal’s thenpresident, informing him that despite lower customer demand, prices had remained 

94 
 

 

 

steady because “[a]ll of the large global TiO2 suppliers are still acting in a disciplined 

manner, respecting each other’s market positions and share and holding on to price. No 

volume stalking of any great consequence is taking place yet, which is very good news.”

(PX6000 at 003 (Stoll email to Nahas)). 

236. Mr. Stoll of Cristal explained the meaning of the email referenced in F. 235: “[E]ven 

though the market demand was slowing, we weren’t out starting to be the initiator to drop 

price to get more share because we realized that hanging on to price had a lot more 

impact on our profitability than to try and gain more share. Once you lower price to get 

more share, you might gain a couple thousand tons of volume, but you can bring down 

the price on all of the other tons that you’re selling all over the world and the financial 

consequence of that is extremely significant. It’s more significant than trying to get a 

larger share position.” (PX2247 (Stoll, Dep. at 154-56)). 

237. In a July 2011 email, responding to a sales manager’s request for a price to quote for a

prospective customer 

business at 

, Mr. Mouland of Tronox referenced the pricing of 

DuPont (now Chemours (F. 195)), stating: “At this point, we certainly don’t want to 

undercut DuPont & send the wrong message.” (PX1291 at 001, in camera (Mouland 

email to Larson)). 

238. In an August 2011 email, a Tronox sales manager reported to Mr. Mouland on his 

discussions at a paint company, : “Personally, I would like to have a

small portion of their business but we certainly cannot undercut DuPont [Chemours] to 

get it.” Mr. Mouland responded: “Just to close out on this officially. We are not 

interested in undercutting DuPont [Chemours] and bidding on business.” (PX1292 at 

001-02, in camera (email exchange between Mouland and Larson)). 

239. In May 2011, Cristal had a potential business opportunity at , which had 

been a “100% Tronox account for over 10 years.” A senior manager at Cristal wrote that 

he was “not sure [he] believe[s] this is a good time to take on new business at a 10 year 

100% account like this. I believe that Tronox would find out about it . . . .” Another 

manager agreed: “[I]t would be very visible to Tronox and would send a conflicting

signal to price ourselves aggressive[ly], there is little to gain and quite a bit to loose 

[sic].” Cristal decided to forgo the opportunity and told the potential customer that it was 

“very tight on supply.” (PX2021 at 001-02, in camera (email exchange between 

Herrmann, Jaquet, and others)). 

240. In a 2014 presentation regarding Tronox’s sales and marketing strategy, when 

considering a strategy to increase sales in higher priced regions such as North America 

and Europe, Tronox identified “[c]ompetitive response” as a risk. (PX1016 at 062 

(Tronox presentation)). 

241. In November 2014, an internal Tronox email discussed an opportunity to secure new 

, a siding and window profile manufacturer, replacing 

then-incumbent supplier DuPont (now Chemours). Mr. Romano stated that the price 

offer being contemplated by Tronox was “very low” and cautioned that Tronox should 

95 
 

 

any price move will be seen by 

not be “undercutting significantly.” (PX1086 at 002-03, in camera (Romano email to 

Duvekot, Mouland, and Doherty)). 

242. In May 2014, in an internal Tronox email regarding a sales and marketing presentation, 

Mr. Duvekot recommended the presentation include as an “action” item “[k]eep[ing]

pigment price as high as possible for the time being – don’t use discounts in high priced 

regions to attract additional sales, this will lead to market price destruction.” (PX1360 at 

001 (Duvekot email to Romano); PX7026 (Duvekot, Dep. at 111-12) (“[B]ack in those

days, in those circumstances, in 2014, if we were to start using discounts in those high 

priced regions to attract additional sales, all it would do is lead to market price 

destruction.”); see also PX1030 at 013 (Tronox presentation)). 

243. In April 2015, responding to an email seeking approval to reduce price to secure business 

at a prospective customer, Tronox’s Mr. Duvekot suggested a higher price offer and 

wrote: “Being aggressive leads to disaster unless we know where the competition is and 

know what aggressiveness means.” (PX1453 at 001 (Duvekot email to Mouland); see 

also PX1429 at 001, in camera (Duvekot email to Bruno) (“It doesn’t make sense to 

undercut the competition, [a customer] will use it to put pressure on the others.”)). 

244. In a July 2015 email discussing pricing for a customer, , Mr. Duvekot stated: 

“Especially on a highly visible account like 

the competitors, even more so if we use it to take a piece of the pie. That will cause a 

reaction from the competition, at this account or elsewhere in the market, which will just 

lead to more price erosion in the market. Tronox does not want to play this game 

(anymore).” (PX1432 at 001, in camera (Duvekot email to Hofman); PX7026 (Duvekot, 

Dep. at 125-27), in camera). 

245. In an August 2015 email approving a pricing request, Mr. Romano, Tronox’s chief 

commercial officer, directed: “[B]e sure we are not undercutting the Chemour[s] price. 

There is some other activity going on over in North America with Valspar and I want to 

be sure we are not not [sic] seen as facilitating further price erosion.” (PX1133 at 001 

(Romano email to Bradley)). 

246. In a March 2016 email, Tronox’s Mr. Mouland wrote to two salespeople: “We will have

to pass on this opportunity as I do not want to undercut a competitor. The price increase 

is taking hold and any attempt to get volume at the expense of price could undermine our 

progress.” (PX1305 at 001 (Mouland email); PX7022 (Mouland, Dep. at 70-71)). 

b. Product homogeneity 

247. Tronox documents and testimony describe chloride TiO2 as a commodity product. 

(PX1004 at 015 (Tronox presentation) (TiO2 industry characterized by “commodity

products”); PX0016 at 026 (Tronox White Paper); PX7014 (Quinn, Dep. at 38)). 

96 
248. Customers can switch between the chloride TiO2 produced by the five North American 

chloride TiO2 producers. (Young, Tr. 659-60; PX7030 (Arrowood, Dep. at 8-9); 

Vanderpool, Tr. 198; PX8000 (Malichky, Decl. at 002 ¶ 8)). 

249. Customers believe that the sale of chloride TiO2 is a commodity business. (PX7033 

(Post (AkzoNobel), Dep. at 79); see also id. at 97 (stating that “the behaviors of the 

industry [are] driven as a commodity”); Pschaidt, Tr. 1033; Arrowood, Tr. 1113-14). 

250. Markets for homogenous products are more susceptible to coordination. One reason for 

this is that reactions by rivals to attempts to steal their business are likely to be strong, 

given that each firm’s product is largely interchangeable with its rivals’ products. 

(PX5000 (Hill Expert Report at 096 ¶ 220)). 

c. Ability to learn competitors’ actions 

251. Tronox, Chemours, Kronos, and Venator are publicly traded companies. (Arndt, Tr. 

1354-55; PX7035 (Christian Dep. at 15); PX7052 (O’Sullivan, Dep. at 13); PX8005 

(Maiter, Decl. at 001 ¶ 1)). 

252. Cristal is a privately held company. (PX7006 (Stoll, IHT at 121). 

i. Public statements 

253. Prior to the spinoffs of Chemours from DuPont in 2015 (F. 195) and Venator from 

Huntsman in 2017 (F. 198), disaggregated information on TiO2 was typically not 

available in the financial reports of DuPont and Huntsman. (PX7006 (Stoll, IHT at 119-

21) (“[T]hey [DuPont] didn’t break out in detail their titanium dioxide business. . . . 

[Y]ou could really gain no insight into their financial performance or other metrics in the 

way that they released earnings. After Chemours spun off . . . [t]hey became that 

business. They spun it off as TiO2. So in public information that’s released, it’s much 

more transparent the financials associated with TiO2 directly. . . . And as [for] Venator, 

same thing.”)).

254. In 2015, Huntsman told investors during an investor conference that having more 

publically traded TiO2 companies will “[a]bsolutely” change the dynamics of the market. 

(PX9041 at 004 (Basic Materials Conference Transcript)). 

255. In a June 2017 investor presentation, Venator explained that it anticipated a “[s]ignificant 

recovery in TiO2 prices” because, in part, there would be “[g]reater accountability for

TiO2 stewardship by newly independent companies (Venator and Chemours).” (PX3000 

at 004 (Venator presentation)). 

256. In a 2017 Venator analyst day presentation, Venator referred to “Improved 

Fundamentals,” including “[s]ignificant and ongoing consolidation. . . .” and “[g]reater 

industry transparency as companies become independently managed and accountable to 

shareholders.” (PX3054 at 094 (Venator presentation)).

97 
 

 

 

 

257. Tronox discusses its quarterly results in earnings calls. When discussing its quarterly 

results, Tronox discusses changes in sales volume, changes in the selling prices by 

region, margin information, and operation related information such as relative plant 

utilization rate and inventory levels. (Arndt, Tr. 1360-61). 

258. Tronox’s public statements to investors, including earnings calls, are made on behalf of 

Tronox as a whole. Tronox uses its best efforts to ensure that its statements to investors 

are accurate, complete, and not misleading. (Arndt, Tr. 1359). 

259. Tronox and Cristal monitor and analyze public statements by competitors such as 

quarterly earnings updates, presentations at industry conferences, and ratings agency 

meetings. (PX7002 (Mouland, IHT at 33-34) (stating that market intelligence comes 

“primarily from the customers and then earnings calls” from competitors); PX1039 at 004 

(Merturi email to Staton and Arndt) (“Moody’s has put all rated TiO2 companies on 

review and at this stage Chemours and Huntsman have already discussed their price 

increase with them. Moody’s has a perspective on price from our peers[.] It will look 

suspect at best if we continue to say we don’t know yet.”); PX1052 at 001-02 (McGuire 

email to Tronox sales executives circulating notes from a November 2016 Chemours 

earnings call, including Chemours’ outlook of reduced inventories and stronger price

environment); PX1053 at 001-03 (Arndt email to Tronox senior executives attaching an 

August 2016 Chemours earnings call transcript, which projected continuing price 

increases through 2016 and discussed Chemours inventory situation); Romano, Tr. 2142-

44; PX1054 at 001-04 (Engle email to Romano, Duvekot, Mouland describing “tidbits”

from Huntsman transcript relating to inventories and utilization); PX2051 at 001 (Stoll 

email to Nahas stating: “It is interesting being here at the TZMI Conference this week in 

Hong Kong. There is much concern by all of the TiO2 producers about the price collapse 

and how much lower pricing will go.”)).

260. Tronox’s Mr. Engle, vice president of marketing, listens to competitors’ earnings calls to 

learn about their production plans and other announcements and obtain competitive 

intelligence. (Engle, Tr. 2540-41; Engle, Tr. 2482 (“So the biggest source [of 

competitive intelligence] would be trade data and public filings or public announcements, 

investor presentations, things like that.”)).

261. In a 2016 earnings call regarding Chemours’ fourth quarter 2015, Chemours CEO, Mark 

Vergnano, stated that the industry was “at a place that we really need to drive this price

increase” and that “what our driver is right now [is] to be able to get behind this price 

increase and move it through the industry.” (PX9048 at 008).

262. In a 2016 earnings call regarding Chemours’ second quarter 2016, Mr. Vergnano of 

Chemours stated his prediction that for “the rest of the year, you will see a cadence up 

in our price as you look at third quarter . . . . [S]o we feel good about where we are 

on the price side, and I think you will see continued movement because of the 

execution of these price increases for the rest of the year.” (PX9056 at 009). 

98 
 

263. At a basic materials conference sponsored by Goldman Sachs, Huntsman’s (now

Venator) executive vice president stated: “Well, there’s the April 1 effective price

increase. It was roughly $235 a ton, nominated. And we have communicated and 

signaled that we would expect the realization on that price would be on the upper end of 

what we’ve been realizing over the last 3 or 4 quarters. That is closer to 2/3, 70%

realization.” (PX9060 at 003 (Huntsman Corp. at Goldman Sachs Basic Materials 

Conference Transcript)). 

264. Mr. Arndt, Tronox’s head of investor relations, pointed out in a written summary

circulated to Tronox executives regarding Huntsman’s second quarter 2016 earnings call

that Huntsman stated it “continue[s] to be disciplined with [its] sales volumes in an effort 

to maximize the effective capture of the announced TiO2 price increase.” (PX1055 at 

001). 

265. Cristal monitors and analyzes public statements by competing firms, such as quarterly 

earnings updates, and regularly prepares detailed analyses. (PX2059 at 002-10 (Cristal 

competitor earnings call analysis, November 2016); PX2060 at 002-13 (Cristal 

competitor earnings call analysis, August 2016); PX2061 at 001-16 (Cristal competitor 

earnings call analysis, March 2017); PX2062 at 001-15 (Cristal competitor earnings call 

analysis, May 2017); PX2278 at 004-14 (Cristal competitor profitability analysis, March 

2013)). 

266. Cristal monitors TiO2 competitors’ public calls and circulates summaries among

executives. (PX2049 at 001-04 (Cristal email providing “takeaways” from Tronox’s and 

Chemours’ conference calls, including information on production curtailments, capacity

utilization, and planned price increases); PX2268 at 001 (Cristal email attaching Tronox’s 

and Chemours’ 2016 earnings calls presentations and setting forth “Key Messages”

relating to projected pricing, low inventories, and motivation for price increases during 

2017); PX2269 at 001 (Cristal email relating to competitor earnings reports describing, 

among other things, lower capacity utilization rates); PX2361 at 002-04 (Cristal email 

summarizing key comments from competitors’ earnings calls on price increase

announcements and implementation, inventory levels, plant utilization rates, and 

expectations for future pricing)). 

267. Tronox’s public disclosures include production-related information, such as information 

pertaining to plant utilization and inventories. (Arndt, Tr. 1361, 1369-70). 

268. Tronox publicly announced its decision to reduce production at two of its TiO2 pigment 

plants, Hamilton and Kwinana, in a second quarter 2015 earnings call. (PX9006 at 003 

(Tronox Q2 2015 earnings call) (“Production has been suspended at one of our six

processing lines in Hamilton and one of our four processing lines at Kwinana 

. . . . Together, these processing line curtailments represent approximately 15% of total 

pigment production.”)). 

269. In its first quarter 2016 earnings call, Mr. Casey of Tronox was asked whether, “given 

that volume has picked up quite a bit and prices are moving up,” Tronox planned to bring

99 
 

 

curtailed plants back to production. He answered: “We believe that a very disciplined 

approach to production, to managing supply relative to demand, is what has facilitated 

the recovery in our markets, and we intend to continue to be disciplined about that. So, 

we don’t intend to bring back the full production instantaneously simply because we see 

the very first signs of price recovery.” (PX9003 at 010 (Tronox Q1 2016 earnings call)). 

ii. Customer-provided information 

270. Tronox obtains intelligence regarding competitor actions from its customers. (PX7002 

(Mouland, IHT at 13-14) (“[M]arket intelligence comes from [Tronox’s] customer base, 

. . . the customers that [Tronox] ha[s], and then the prospective accounts that we’re

always looking at.”); PX7002 (Mouland, IHT at 84) (“[A]ll of it pretty much comes from 

the customer.”); PX7022 (Mouland, Dep. at 58) (“[I]t’s my job to know what’s going on 

out there, so what I expect from my [sales people] . . . is to make sure they have very 

good relationships with their accounts and we can solicit customer feedback across 

multiple data points.”)).

271. Customer-provided competitive pricing information is used to obtain pricing approvals 

from management, and such information is included in reports provided to senior 

management. (F. 272-288; Mouland, Tr. 1145-46; PX7001 (Romano, IHT at 155-56); 

see, e.g., PX2368 at 001-05 (Cristal North America weekly report)). 

272. Tronox learns from its customers whether its competitors have announced price 

increases. (Mouland, Tr. 1155-56). 

273. Tronox tries to “discern if [the customers are] telling the truth or if they’re giving 

[Tronox] accurate information.” (Romano, Tr. 2154).

274. Tronox does a “reasonably good” job of developing competitive intelligence. (PX7001 

(Romano, IHT at 171); PX7046 (Romano, Dep at 89-90)). 

275. Customer-provided competitive intelligence is used by Cristal and Tronox to make 

pricing decisions in customer negotiations. (PX2068 at 001 (Cristal email regarding 

approval for price response based on competitor pricing); PX2069 at 003 (Cristal Price 

Decision Form); PX1050 at 001 (Mouland email to Romano) (discussing Tronox’s 

response to pricing from Cristal and Huntsman to Benjamin Moore); PX2070 at 001-03, 

in camera (recommending response based on customer-provided competitor pricing, 

stating “[w]e are very confident of his communication that they are 

.”); PX1088 at 001, in 

below us 

. . . .”); PX7046 (Romano, Dep. at 89-90) (stating that during negotiations “we obtain 

information from customers on whether or not we’re competitive.”). 

276. In many instances, customers share specific competitor pricing information with Tronox 

sales representatives. (PX1048 at 001-02 (Duvekot email to Romano) (noting that a 

customer was “very open and showed many offers in writing”); Duvekot, Tr. 1311-13; 

PX1089, in camera (Doherty email to Mouland) (“Per , Purchasing 

Mgr, Kronos and DuPont have moved their price by 

100 
camera (Mouland email to Romano) (stating that a customer “is a straight shooter. When 

we do increase, she is requesting we get competitive with Chemours who are 

below us”); PX1211 at 003, in camera (price approval request stating that a “[c]ustomer 

confirmed Kronos is taking them up ); PX1741 at 001, in camera (Mouland email 

to Romano) (price approval request citing Cristal’s pricing of per pound, and 

further noting that “[w]e also get a lot of useful market intel from [the customer].”); 

PX1157 at 001 (Mouland email to Duvekot) (describing specific prices offered to a 

customer by Huntsman (now Venator) and DuPont (now Chemours)); PX1735 at 002, in 

camera (Tronox Americas Weekly Report) (describing that Cristal is offering per 

pound lower than Tronox at )). 

277. When implementing a price increase in the market, part of Tronox’s process is for the 

sales force to collect “competitive intelligence on [its] competitors’ actions so [Tronox]

can better evaluate the success rate of implementation. With that information,”

management will determine if any adjustment is needed. (PX1021 at 002 (“Price

Increase Implementation Process”); PX7046 (Romano, Dep. at 89-90, 102); see also 

F. 210 (As part of Tronox’s price increase implementation efforts, Tronox collects 

“competitive intelligence on [Tronox’s] competitors’ actions” to assess whether the other 

TiO2 producers are “maintain[ing] a disciplined approach.”).

278. An internal Tronox email from 2016 stated that: “put[ting Tronox’s] price in writing to 

the customer” serves as “a signal to competition.” (PX1434 at 001-02 (Bondt email)). 

279. Cristal obtains competitor pricing information from its customers. (PX2065 at 001, in 

camera (Florville email to Parks) (“I had a conversation with [a customer] this morning

to talk about his meeting with Huntsman last night. [He] indicated that Huntsman offered 

[per pound] for volume and that they would like him to respond to the 

offer ASAP.”); PX2068 at 001, in camera (Weeks email to Snider and Gigou) (“Our 

refusal to . . . meet [per pound] price resulted in [a customer] moving 5 

trucks per month away from us and over to (these were the five trucks we 

took from them last year).”)). 

280. Cristal is aware that price offers are communicated by customers to other competitors. In 

Mr. Stoll’s experience, “information goes from competitor to customer to other supplier.”

(PX7006 (Stoll, IHT at 188)). 

281. As an example of the communication referenced in F. 279, customers tell Cristal whether 

its price is higher than those from other suppliers and what the other suppliers’ prices are. 

This information in turn is included in Cristal’s weekly reports for North America. 

(PX7037 (Pickett, Dep. at 50, 93); PX7043 (Gigou, Dep. at 75-77)). 

282. Cristal’s redbook is a compilation of Cristal’s market intelligence that summarizes 

everything that Cristal knows about its customers, such as what it knows “about how 

much they use, what products they use, and what applications they use it in. Cristal’s 

redbook also includes Cristal’s “best assessment of . . . demand [in] particular regions 

around the world.” (PX7009 (Stoll, Dep. at 164)).

101 
 

283. The data in Cristal’s redbook is assembled by the Cristal sales and marketing teams. 

Cristal’s redbook data tracks all major suppliers’ sales volumes by customer and product. 

(PX7010 (Snider, Dep. at 33-34, 61-62, 66)). 

284. Much of the market intelligence included in Cristal’s redbook is derived from 

“conversations with [Cristal’s] customers.” (PX7009 (Stoll, Dep. at 165)).

285. Dr. Hill compared the data in Cristal’s redbook with the actual data derived from 

producers’ invoices. Dr. Hill found that market shares calculated from the redbook data 

were a “close match” to the actual market shares calculated from the invoice data. Dr. 

Hill concluded that the redbook data was “remarkably accurate . . . .” (Hill, Tr. 1833-35; 

PX5000 (Hill Expert Report at 098-99 ¶ 228 & Fig 36)). 

286. Kronos obtains competitive intelligence from customers and the information is a data 

point that Kronos considers when making business decisions. (Christian, Tr. 756-57). 

287. Kronos relies on its sales force to determine what customer-provided competitor 

information is legitimate information and what might be posturing for purposes of 

negotiation. (Christian, Tr. 928-29). 

288. Chemours gets information about its competitors as a “direct result of [Chemours’]

interaction with [its] customers.” (PX7052 (O’Sullivan, Dep. at 31-32)). 

d. Price elasticity 

289. Price elasticity of demand is how responsive demand is to changes in price. Inelastic 

demand makes a market more susceptible to coordination because if prices of all firms 

were to rise, few sales would be lost, which makes the reward of coordinating greater. 

(Hill, Tr. 1803-04). 

3. Views of industry participants and customers 

290. On February 21, 2017, the chairman of Huntsman sent an email to Tronox’s then-CEO 

Mr. Casey congratulating him on the agreement to acquire Cristal, which was announced 

that day (F. 24). Mr. Casey replied that the acquisition would be good for the merged 

firm and for its competitors as well. (PX1045 at 001 (stating, “I think it will be very 

good for our shareholders - and if today’s market reaction is an indication, for yours, and 

Chemours’ and Kronos’ too.”)).

291. Kronos, in a September 2017 public investor presentation, described higher concentration 

as part of the “[s]tructural improvements” in the industry that would lead to increased 

earnings. (PX3011 at 38 (Kronos presentation). 

292. A July 2017 presentation to analysts by Venator’s chairman, Peter Huntsman, and 

president, Simon Turner, described consolidation as a “key driver” of a “[m]ore 

102 
 

 

 

 

 

sustainable cycle.” (PX3054 at 14 (Venator presentation); see also id. at 19 (noting that 

consolidation of TiO2 producers, including Tronox/Cristal, will result in “[f]ewer, larger, 

more rational producers”)). 

293. True Value believes that the merger “does not bode well for True Value manufacturing.”

Mr. Vanderpool, division vice president of True Value, explained: “If you take capacity

out of the marketplace, it’s going to affect pricing in the marketplace. . . . [We’re] going

from five major suppliers down to four major suppliers, and we have a tough time 

figuring out how that benefits True Value manufacturing. . . . 

. So we see raw material prices continue to go up 

and tightening in the market from allocation, and that’s a very big concern of ours.”

(Vanderpool, Tr. 213-14). 

294. “The acquisition of Cristal by Tronox is cause for concern for Ampacet.” The merger 

causes “a 20% reduction in [its] supply base.” (PX4130 (Santoro email); PX7040 

(Santoro, Dep. at 122-23, 125-26)). 

295. RPM, the producer of Rust-Oleum coatings, is concerned about the merger because 

“when you have less producers, it’s not good for buyers.” (PX7016 (DeCastro, Dep. at 

127)). 

D. Rebuttal 

1. Entry 

296. Based on producer invoice data and a 2016 TZMI study analyzed by Dr. Hill, chloride 

TiO2 sales by suppliers other than Tronox, Cristal, Kronos, Chemours, and Venator, 

account for a 0.5% share of the total North American chloride TiO2 market sales volume 

of 831,182 metric tons. (PX5000 (Hill Expert Report at 067-68 ¶ 152 & Fig. 25)). 

297. The vast majority of TiO2 manufactured in China is sulfate TiO2. “[A]lmost no 

commercial grade chloride pigment is produced today” in China. (PX1036 at 006 

(Tronox presentation); PX1091 at 011 (Tronox presentation) (identifying expected 

Chinese sulfate TiO2 capacity in 2020 as roughly 10 times greater than China’s chloride

TiO2 capacity); PX1033 at 002, in camera (Tan email to Engle) (actual chloride TiO2 

production in China estimated to be 

compared to nameplate capacity32 of 

298. Chinese “exports have largely stayed within Asia-Pacific to serve low-grade sulfate 

pigment applications . . . .” (PX1395 at 008 (February 2017 Tronox “Q&A” for

investors)). 

32 “Nameplate capacity” refers to the amount of product that a plant is theoretically capable of producing, based on

its design, as opposed to the amount that is actually produced. (Christian, Tr. 827-28, 831; Stoll, Tr. 2112; 

Malichky, Tr. 416). 

as 

)). 

103 
 

 

 

299. The chloride process for TiO2 is environmentally cleaner than the sulfate process but 

technically more difficult to master and operate. (PX9020 at 027-30 (Chemical 

Economics Handbook)). 

300. Lomon Billions is a TiO2 producer in China and is the fourth largest TiO2 producer 

globally by capacity. (Young, Tr. 680; Stoll, Tr. 2106; Romano, Tr. 2243). 

301. Lomon Billions produces chloride TiO2 at a plant in Jiaozuo, China. The plant is 

designed for a nameplate capacity of 100,000 tonnes. (PX7054 (O’Malley Noe, Dep. at 

48-49, 51); Christian, Tr. 828-30). 

302. Lomon Billions’ chloride TiO2 plant has been producing below its nameplate capacity of 

100,000 tonnes. Lomon Billions produced a total of 60,000 tonnes of chloride TiO2 in 

2017. (Engle, Tr. 2492; RX1642 at 005; PX7054 (O’Malley Noe, Dep. at 124); Quinn, 

Tr. 2412 (“I know that Lomon has been running their plants below nameplate capacity.”); 

Turgeon, Tr. 2716 (“[T]hey are running below their nameplate capacity as of today.”)). 

303. Lomon Billions’ sales of chloride TiO2 in the United States in 2017 was approximately 

3,000 to 4,000 tonnes. (PX7054 (O’Malley Noe, Dep. at 102)). 

304. Lomon Billions has a very limited presence in North America, with only a few 

employees located within North America, and access to a single, third-party operated 

warehouse for inventory. (PX7054 (O’Malley Noe, Dep. at 101, 112, 127-128)). 

305. Lomon Billions does not offer technical service from North America. (PX7054 

(O’Malley Noe, Dep. at 65)). 

306. In February 2018, Lomon Billions announced in a press release that it had approved an 

investment of approximately $285 million to construct two new chloride TiO2 

manufacturing lines at its existing chloride production plant in Jiaozuo, China, to provide 

an additional annual chloride pigment capacity of around 200,000 metric tons. The press 

release further stated that Lomon Billions expected commercial production from the new 

lines “during 2019.” Lomon Billions also plans “[f]uture additional 300,000 tonne[s of]

chloride capacity . . . most likely at a new coastal location in China.” (RX0195; PX7054 

(O’Malley Noe, Dep. at 48-51); RX1642 at 016). 

307. Construction of a new TiO2 plant from scratch (“greenfield”) takes at least four and a

half years, which is an aggressive timeline that assumes everything proceeds according to 

plan. Chemours announced an expansion into Mexico in 2011, but the plant did not 

begin production until 2018. (Romano, Tr. 2139-41; PX1636; Christian, Tr. 793 (“[I]f 

you stumbled across a CP [chloride process] plant in the middle of a field and the 

owner’s manual was laying there and the keys were there, it would still take you five to 

seven years to figure out how to make a quality CP grade on that plant.”)).

308. Chemours does not view Chinese TiO2 production as directly competitive to its business 

in North America. “Most production in China is of low quality sulfate titanium dioxide, 

104 
 

 

 

which serves less demanding applications than the [chloride] product Chemours 

produces.” (PX8004 (O’Sullivan, Decl. at 002-03 ¶ 9)). 

309. Lomon Billions’ chloride TiO2 was unable to pass qualification 

testing. 

(Chinese manufactured chloride TiO2 “doesn’t meet the performance

[requirement] that we need for our finished product.”)). 

310. conducted laboratory testing of Lomon Billions’ chloride process TiO2 

and the product “did not pass, did not meet any of” standards. 

. 

311. qualification process for chloride TiO2 products takes 

. 

312. has been evaluating chloride TiO2 products from Chinese producers. It has 

found that the quality is not yet satisfactory for its needs. has further found that 

there is “no product availability. . . .” . 

313. Kronos does not see chloride TiO2 from China in the markets in which it competes, and 

has observed that such products are used for “lower quality products.” (Christian, Tr. 

797-98). 

314. In a strategy presentation prepared in November 2016, Tronox questioned 

that Chinese capacity utilization will reach 87% by 2019, which is almost 

20% better than historical performance, stating: “This seems technically impossible, as 

the Chinese generally overstate their plant capacity. . . . also assumes chloride 

capacity in China will expand by 

which also seems aggressive since almost no commercial grade pigment is 

produced today.” (PX1036 at 006, in camera). 

315. In a September 2017 investor presentation, Kronos noted the manageability of the threat 

of Chinese chloride TiO2 production, including as reasons: “[s]uperior chloride [process] 

technology [is] closely guarded by Western producers” and “[q]uality and reliability 

concerns.” Kronos further explained: “Benefits of production in China such as low labor 

and environmental costs [are] not applicable to chloride technology” which “[r]equires 

uninterrupted power supply” and a “highly skilled labor force.” (PX3011 at 019 (Kronos 

presentation)). 

316. 

Kronos came to the “very strong conclusion”

that Lomon Billions is “struggling with their technology. They have safety concerns with 

their technology, and they are looking to acquire technology.” (Christian, Tr. 805-06, in 

camera). 

105 
 

 

 

 

317. Based on published numbers showing utilization rates in Lomon Billions’ chloride plant 

in the 30 to 40% range, Kronos believes that Lomon Billions is not successfully utilizing 

the chloride technology. Kronos doubts Lomon Billions will achieve its announced plan 

to bring a new plant online “inside a year or two, for 200, 250 million dollars, and [to 

produce] 200,000” tonnes. As Mr. Christian explained, “I think those numbers 

are . . . difficult to achieve. I think that that is an extremely low cost per metric ton. . . . 

[B]ased upon what we know, they’re struggling with the technology they have now. So I 

don’t know why, if you have additional capacity in the [chloride TiO2] plant that you 

own today, why you would build another one, and I don’t think that that time frame is 

achievable or at that cost.” (Christian, Tr. 808-10). 

318. Kronos does “not foresee Lomon Billions being able to utilize the technology they have

licensed to make a chloride process TiO2 that can compete in the U.S. market in the next 

five years.” (PX8002 (Christian, Decl. at 006 ¶ 24)). 

319. Kronos believes it is “highly unlikely” that Chinese chloride process TiO2 will constitute 

any threat to its business within the next two or three years. (Christian, Tr. 814-15). 

320. Chemours does not project that Chinese chloride TiO2 producers, to the extent they 

further develop their process and quality, will affect the North American market anytime 

within the next three to five years. (PX7052 (O’Sullivan, Dep. at 043) (“[W]e do our

most rigorous planning in a three to five-year time horizon. Certainly outside of that 

horizon our anticipation would be the Chinese will be increasingly relevant in North 

America.”); PX8004 (O’Sullivan, Decl. at 002-03 ¶ 9) (Chemours anticipates that 

Chinese chloride process titanium dioxide “will not affect its business plans in North 

America for at least 3 years.”)). 

321. In a 2015 email, then-Tronox CEO Mr. Casey wrote, “I think it is a very remote prospect 

that China will be producing chloride capacity of any magnitude in the next 3-5 years.”

(PX1065 at 001). 

322. A 2016 Tronox strategy presentation, addressing the “China chloride outlook,” noted that 

it is “[s]till expected to take a while for appreciable profitable tonnes to start flowing,”

and questioned why “[n]ewly installed” Chinese chloride plants had less than 10%

utilization. The reasons Tronox identified included: “Legitimacy of base technology [is]

questionable,” “Chinese made adjustment to base technology,” “Recommendation on 

equipment specs/sourcing ignored,” “Limited commissioning support,” and lack of 

“know-how/experience of running CP [chloride process] plant.” (PX1000 at 018).

323. A Tronox TiO2 strategic plan presentation prepared in June 2016 observed that “China 

has built multiple chloride plants but struggles to commission them, suffering from poor 

profitability, uptime, and quality,” although it expects China to “master the technology

eventually.” (PX1062 at 009 (Tronox 2017 TiO2 Strategic Plan)). 

324. In a January 2017 update for the sales force regarding TiO2 market demand and supply 

developments, Tronox stated that “[i]t could take years before the Chinese chloride based 

106 
 

 

 

TiO2 industry is mature and stable enough to bring the same quality and consistency as 

their international competitors.” (PX1401 at 002).

325. In response to a German government request for information, Cristal stated: “It’s been 

exceedingly difficult for the Chinese to acquire and successfully employ the proprietary 

chloride technology. Over time, the Chinese are expected to gradually progress with this 

transformation, but it’s difficult to predict when, to what extent, and how fast this will 

occur. Very small inroads have been made to date.” (PX2073 at 012 (Cristal’s October 

2016 response to Germany’s competition authority questionnaire)). 

326. In July 2017, Venator, which has worked with Lomon Billions in connection with a 

licensing arrangement for a single grade of TiO2, stated in an investor presentation that 

the “Chinese struggle with quality control, consistency of production, no automation and 

too much manual interruption - ultimately the know-how of how to run plants.” Venator 

noted that it could work with a Chinese supplier for “2 years” and leave the plant with 

[the product] “being produced effectively,” but then “3 months later,” find the “process 

breaking down” and the product “more variable.” (PX3027 at 024 (Venator 

presentation)). 

327. Venator’s July 2017 analyst day presentation described an array of “headwinds” facing

Chinese TiO2 producers, including feedstock cost and availability and technology issues. 

(PX3035 at 020, 025 (Venator presentation)). 

328. Low labor costs and relaxed environmental standards are not advantages that are 

applicable to chloride TiO2 production. (PX3011 at 019 (Kronos presentation); 

Christian, Tr. 796 (“[C]heap labor and relaxed environmental standards” are not 

applicable to chloride TiO2 as opposed to sulfate TiO2 “because [the latter is] much more

labor-intensive and it generates a significant amount of waste or byproducts per ton of 

TiO2 . . . . So when you think about China as a potential competitor, a lot of their 

historic, perceived advantages over the western world just don’t exist or at least aren’t 

overly material in comparison to western producers.”)). 

329. A July 2017 Venator presentation noted: “Current prices for Chinese chloride slag

feedstock have increased by 40% since Chinese New Year 2017.” (PX3027 at 009).

330. The majority of the high-grade feedstock33 

-

that is used to run a chloride process TiO2 

plant successfully is sourced from Australia and Africa. To the extent China masters 

chloride process technology in the future, it will still have to import feedstock, which is a 

large part of the cost structure of producing chloride process TiO2. (Christian, Tr. 793

94; PX3011 at 019). 

331. Based on TZMI’s 2016 producer cost study, Lomon Billions’ Jinzhou plant in China has 

higher variable manufacturing costs than any plant in North America and is the highest 

33 High-grade feedstock is explained in more detail in F. 339. 

107 
 

 

cost chloride TiO2 plant in the world. (PX1663 at 133-53 (TZMI presentation) (detailing 

costs for North American chloride TiO2 plants and for the Jinzhou plant). 

332. In a presentation to its lenders in September 2017, Tronox highlighted with regard to 

Chinese market dynamics several “Inflationary Pressures” including “Increasing

feedstock cost”; “Wage growth”; and “Higher energy prices.” (PX1438 at 019 (Tronox 

presentation)). 

333. In November 2016, Tronox predicted that Chinese producers would be limited in their 

ability to grow exports of TiO2 because Chinese demand growth is expected to exceed 

Chinese production growth. (PX1006 at 015 (Tronox presentation) (“Chinese demand 

growth (5.3%) is expected to exceed Chinese production growth (4.2%)[,] which will 

limit their ability to grow exports.”)).

334. In a 2016 third quarter earnings call, Mr. Casey of Tronox stated: “As demand grows 

domestically [in China], more and more supply will go into the domestic market, which 

means less will be available for the export market [and the] Chinese share in the global 

market we think is going to decline over the next several years.” (PX9001 at 009 

(Tronox Q3 2016 earnings call)). 

335. In a 2017 fourth quarter earnings call, Mr. Romano of Tronox described Lomon Billions’ 

plan to expand production by 200,000 tonnes in 2019 as “a bit aggressive on timeline.”

Mr. Romano further stated that supply and demand were “in balance” and Tronox did not

“see that turning in 2019.” Mr. Quinn added that “all the incremental expansion over the

next 18 to 24 months, will really kind of just be soaked up by the incremental global 

growth. So we don’t see that, that incremental expansion will significantly change the 

current dynamics.” (PX9101 at 008 (Q4 2017 Tronox earnings call)). 

336. North American customers do not view Chinese chloride producers as a reliable supply 

source for chloride TiO2 in the foreseeable future. 

, in camera ( cannot “count 

on [Lomon Billions] for incremental quantities of chloride TiO2” and “do[es] not see . . . 

other Chinese producers as realistic supply options for U.S. plants”); 

, in camera ( has “no expectation 

that TiO2 from China will provide [it] with an economical competitive alternative to our 

domestic sources in the foreseeable future.”); 

, in camera (Given the lower 

quality of Chinese chloride TiO2, the one to three years needed to qualify a grade of 

TiO2, requirements for slurry TiO2, and the decreasing TiO2 capacity in 

China, “ does not expect Chinese TiO2 to be a viable alternative to North 

American supply for the foreseeable future”); , in 

camera. 

108 
 

 

2. Efficiencies 

a. Feedstock 

337. TiO2 “feedstock” refers to the raw material that gets transformed into TiO2 pigment. 

(Turgeon, Tr. 2580-81). 

338. TiO2 feedstock includes TiO2-containing mineral sands products, the most common of 

which are ilmenite and rutile. (Turgeon, Tr. 2585-86; RX1014-005; RX1196-108; see 

also RX0171 (Stern Expert Report at 0018-19)). 

339. Natural rutile is about 92 to 96% TiO2. Natural rutile is a high-value feedstock that can 

be directly converted into TiO2 pigment. (Turgeon, Tr. 2589-90, 2595). 

340. Ilmenite is titanium oxide and iron oxide combined together. (Turgeon, Tr. 2589-90). 

Ilmenite contains about 35 to 65% TiO2 and is lower in TiO2 than natural rutile. 

(Turgeon, Tr. 2589-90). 

341. Some ilmenite can be directly converted into TiO2 pigment. Other ilmenite must go 

through an intermediate step called an “upgraded process.” This intermediate step 

creates a TiO2 pigment plant “feedstock.” (Turgeon, Tr. 2596-97). 

342. One way to convert ilmenite into feedstock is through smelting. (Turgeon, Tr. 2596-97). 

Smelting is a process where ilmenite is melted at high-temperatures in a furnace with 

anthracite, and the iron in the material is separated from the titanium. (Turgeon, Tr. 

2596). The titanium product that results from smelting is referred to as “slag.” Slag is a 

feedstock that can be used in a TiO2 pigment plant. (Turgeon, Tr. 2596-97). 

343. Without further processing, ilmenite cannot be used to produce chloride TiO2. (Van 

Niekerk, Tr. 3913-14) (“[W]e need high-grade feedstock . . . , typically close to 90 

percent TiO2 is required for our chlorinators and downstream processing in the pigment 

plant to work well.”). 

344. For a manufacturer to produce chloride TiO2, it needs to have access to high-grade 

feedstock. (Christian, Tr. 791). 

345. Cristal does not presently produce enough feedstock to supply its TiO2 plants and 

purchases the additional feedstock its plants require. (Stoll, Tr. 2111). 

346. Tronox is slightly “long” on high-grade feedstock. By Tronox’s estimates, its supply of 

high-grade feedstock in 2018, as a “standalone” company, would exceed its demand by

approximately .

34 (PX0010 at 219 (Tronox February 2017 board of 

directors presentation draft 2.9.2017) (estimating 2018 demand for “CP slag/NR/ SR”

34 The abbreviation “kMT” is an acronym that “stands for kilo metric ton.” https://www.acronymfinder.com/KiloMetric-Ton-(measurement)-(KMT) html. 

109 
 

listed as and supply listed as resulting in 

excess high-grade feedstock in 2018). 

347. By Tronox’s estimates, a combined Tronox and Cristal entity would be “significantly

short on high grade feedstock,” with an estimated deficit in 2018 of 

(PX0010 at 219, in camera) (Tronox February 2017 board of directors presentation draft 

2.9.2017)). 

348. “[E]ven with [the] Jazan [slagger] [F. 349] operating at nameplate capacity, [the 

combined Tronox and Cristal entity] would still be short of feedstock.” (PX7038 (Van 

Niekerk. Dep. at 27-29)). 

b. Jazan slagger 

349. The Jazan slagger is an ilmenite smelting facility located in Jazan, Saudi Arabia. 

(Hewson, Tr. 1636; Van Niekerk, Tr. 3946-47). 

350. The Jazan slagger is owned by Advanced Metal Industries Cluster Company Limited 

(“AMIC”). AMIC is a joint venture that is owned 50% by Cristal and 50% by Cristal’s 

owner, TASNEE. (Hewson, Tr. 1636-37; Van Niekerk, Tr. 3899-3900). 

351. AMIC built the Jazan slagger in order to supply Cristal with a source of high-grade 

feedstock for Cristal’s chloride TiO2 production. (Hewson, Tr. 1637).

352. The Jazan slagger is not operational today. (Hewson, Tr. 1637). 

353. Cristal encountered significant problems with the furnaces when they attempted to 

commission the Jazan slagger in 2015. (Van Niekerk, Tr. 3900). 

. 

354. 

. 

355. 

. 

356. Respondents’ Synergies White Paper, submitted on August 15, 2017 in connection with 

the FTC’s investigation into the Acquisition, notes, 

. 

110 
 

 

357. Mr. Van Niekerk, senior vice president of strategy at Tronox, acknowledged that Tronox 

“cannot fully determine the impact of [the] design issues” with the Jazan slagger until it

has “started up the furnace and experience[d] those limitations.” (PX7038 (Van Niekerk, 

Dep. at 220-22)). See also PX1280 at 003 (Van Niekerk June 2, 2017 email attaching 

integration slides) 

. 

358. Tronox may face challenges in activating the Jazan slagger because of its proximity to the 

Yemen border, where there is ongoing armed conflict. The United States Department of 

State has issued warnings against United States citizens traveling within certain miles of 

the Yemen border. (PX7012 (Mancini, Dep. at 120-23); PX7008 (Hewson, IHT at 87-

88)). 

359. In September 2016, a Cristal presentation to the TASNEE board’s executive committee

(including the chairman of TASNEE, the vice-chairman, and the CEO of TASNEE) 

outlined 

. 

360. 

. 

361. Tronox’s Mr. Van Niekerk acknowledged in an email that the

. 

362. 

. 

363. 

. 

111 
364. 

 

. 

365. 

. 

366. 

. 

367. 

. 

368. In February 2017, AMIC held a workshop regarding the Jazan slagger. (PX2295 (AMIC 

Workshop, February 2017)). 

369. 

. 

370. By February 2017, Cristal had completed several modifications to the Jazan slagger. 

(PX2295 at 068 (AMIC Workshop, February 2017)). 

371. 

. 

372. In June 2017, a TASNEE press release stated that “work is still ongoing to solve the

technical problems” at the Jazan slagger, and projected a trial operation during the first 

half of 2018. (PX9029 (TASNEE Press Release on Jazan Slagger); PX7008 (Hewson, 

IHT at 101); PX7005 (Keegel, Dep. at 71)). 

373. Tronox’s February 21, 2017 agreement for the acquisition of Cristal (F. 24) does not 

include any provisions regarding a purchase of the Jazan slagger. Tronox has 

acknowledged that “[t]he Tronox-Cristal transaction does not include the Jazan Slagger.” 

(PX0005 at 027 (Synergies White Paper); PX0009). 

112 
 

 

 

 

374. Tronox entered into an option agreement with AMIC with regard to the Jazan slagger on 

May 20, 2018. On March 15, 2018, while still negotiating the option agreement, Tronox 

entered into a technical services agreement (“TSA”) with AMIC with respect to the Jazan 

slagger in order to help Cristal commission the slagger. (Van Niekerk, Tr. 3900-01, 

3951; RX1603; PX1745). 

375. Under the option agreement for the Jazan slagger (F. 374), Tronox has a five-year option 

to acquire the Jazan slagger. (Van Niekerk, Tr. 3901; RX1603 at 0052). 

376. Pursuant to the terms of the option agreement for the Jazan slagger (F. 374), Tronox has 

agreed to loan AMIC approximately $125 million toward the efforts to make the Jazan 

smelter facility operational. If the slagger achieves certain levels of operational 

performance in the future, then Tronox is obligated to purchase the slagger and the $125 

million would become part of the consideration paid by Tronox for Jazan. If the required 

performance levels are not met, then Cristal would pay back the loan to Tronox. 

(RX1603 at 0027-33, Section 5.14 (Option Agreement); PX7009 (Stoll, Dep. at 25-26); 

Van Niekerk, Tr. 4002; Quinn, Tr. 2374-75). 

377. Tronox chose to pursue an option agreement for the potential purchase of the Jazan 

slagger because the slagger’s current inoperable state makes its value uncertain, and 

Tronox did not want to acquire an asset that has not been proven to work. Also, Tronox’s

valuation of the facility was significantly less than Cristal’s valuation. The Tronox board 

would “never allow” the purchase of a “$500 million plant” that is “not working” and has 

no track record,” because “the risk would just be too high.” (PX7014 (Quinn, Dep. at 

075-76); PX7008 (Hewson, IHT at 75); PX7038 (Van Niekerk, Dep. at 74-75); Quinn, 

Tr. 2381). 

378. A Tronox August 2017 Update on the negotiations over the Jazan slagger identified as 

part of the supporting rationale for acquiring the Jazan slagger the fact that the “Call

Option removes risk to Tronox if Jazan demonstrates unsurmountable weaknesses.”

(PX1281 at 010). 

379. There is no certainty that a purchase of the Jazan slagger will take place. (Quinn, Tr. 

2375; PX1220 (option agreement)). 

380. 

. 

381. The KPMG Report (F. 427) identifies Tronox’s anticipated improvements to Jazan as an 

assumption underpinning the synergy estimate: “[Jazan-related synergies] assume that 

the Jazan Slagger will reach the production levels projected by [Tronox].” (PX0006 at 

005 (KPMG Report)). 

113 
 

c. Yanbu plant 

382. Cristal’s Yanbu plant is a chloride TiO2 plant in Saudi Arabia. (PX0005-015). 

383. Tronox does not operate any TiO2 plants, or plants of any kind, in Saudi Arabia. 

(PX7012 (Mancini, Dep. at 71)). 

384. The customers served by Cristal’s chloride TiO2 plant in Yanbu are predominantly 

located in Saudi Arabia. None of the TiO2 grades produced at Yanbu are sold in North 

America. (PX7000 (Snider, IHT at 69-70); Hewson, Tr. 1608). 

385. Respondents’ Synergies White Paper (F. 356) states that Tronox expects to leverage 

“greater know-how” to “quickly repair the [Yanbu] facility and increase production at

least to the plant’s nameplate capacity of metric tons,” yielding an incremental 

metric tons of additional chloride TiO2 production by Year 3 following the 

proposed acquisition. (PX0005 at 015, 018-19, in camera (Synergies White Paper)). 

386. Mr. Mancini, Tronox chief integration officer, and Dick Dean, Tronox vice president of 

operations integration, created a 2-page document in February 2017, titled “Tronox

Analysis of its Preliminary Yanbu Improvement Plan” (hereinafter, “Preliminary Yanbu 

Improvement Plan”). (PX1425 at 001-02)). 

387. The Preliminary Yanbu Improvement Plan references implementing “best practices,” and 

“operational excellence” principles, such as “The Tronox Way” (F. 388), to increase 

production, and contains estimates on the improvements Tronox expects in terms of 

output, quality, and costs. (PX1425 at 001-02 (Yanbu Improvement Plan)). 

388. The Tronox Way refers to a standard of best practices developed by Tronox and used 

across its facilities that is intended to maximize output and lower the company’s cost

position. (Turgeon, Tr. 2648; Dean, Tr. 2998). 

389. Although Mr. Mancini prepared the Yanbu Improvement Plan, Mr. Dean provided the 

estimates it contains. (PX7023 (Dean, Dep. at 18)). 

390. The Preliminary Yanbu Improvement Plan states in part: 

Tronox plans to drive improvements at Yanbu by applying lessons learned 

at its nearly identical plant in Hamilton, Mississippi, USA. Incremental 

EBITDA will be generated as production increases (resulting in not only 

more tons to sell but a lower fixed cost per ton), quality improves 

(resulting in fewer low quality tons sold at a discount) and manufacturing 

efficiency improves, lowering variable cost per ton as less ore, process 

chemicals and energy is required in each ton of production. 

Production increases will be realized by (1) increasing line rates (the 

amount in metric tons of TiO2 that can be produced per line per hour) and 

114 
(2) improving on stream time (the time that a line is operational and 

productive over the course of a year). 

(PX1425 at 001). 

391. When Mr. Dean took over managing Tronox’s Hamilton, Mississippi plant in 2004, “it 

was not a plant that required turning around. It was a pretty good performing plant.”

(PX7023 (Dean, Dep. at 159-61)). 

392. Mr. Dean’s line rate projections in Tronox’s Preliminary Yanbu Improvement Plan 

reflect what he believes Tronox will be capable of producing over a five year period, 

based on his technical knowledge and the projected improvements to be implemented at 

Yanbu. (PX7023 (Dean, Dep. at 22-23); Dean, Tr. 3109). 

393. Mr. Dean’s projected on-stream time improvements set forth in Tronox’s Preliminary

Yanbu Improvement Plan represent his judgment, based on his technical knowledge, of 

what Tronox will be able to achieve from one year to the next. (PX7023 (Dean, Dep. at 

73-75); Dean, Tr. 3109). 

394. Mr. Dean acknowledged there 

. 

395. 

. 

396. described the culture at Tronox’s plant in Hamilton as “one of a very

engaged and interested workforce,” adding “they’re interested in the success of not only

Hamilton but Tronox as a whole.” . 

397. A Tronox update on synergies, dated October 10, 2017, highlights 

. 

115 
 

 

 

 

 

398. 

. 

399. Yanbu was built using Kerr-McGee’s proprietary low pressure chloride TiO2 production 

technology.35 (Dean, Tr. 2930, 2979; Hewson, Tr. 1609). 

400. Tronox has experience with low-pressure chloride technology and employs low-pressure 

chloride technology at its plants in Mississippi and Australia. (Dean, Tr. 2930-31; Quinn, 

Tr. 2355). 

401. 

. 

402. Improving Yanbu is a priority for Cristal. (PX7042 (Gunther, Dep. at 30); PX7048 

(Strayer, Dep. at 218)). 

403. Cristal has the equipment it needs to run the Yanbu chloride TiO2 production plant at a 

capacity of metric tons per year. (Hewson, Tr. 1633, in camera). 

404. 

. 

405. Cristal identifies Mr. van Beek as a “[l]ow pressure expert.” (PX2379 at 005 (Strayer 

email attaching Yanbu organizational changes)). 

406. 

. 

407. Tony Blanchard, a Cristal employee, is working at Yanbu. Mr. Blanchard has 

operational experience from Cristal’s Stallingborough, United Kingdom plant, as well a 

35 The difference between high-pressure and low-pressure technology is that “the mode of force that drives the 

process [with low pressure technology] is gravity. We have tanks at the beginning of the oxidation process where 

. . . the titanium tetrachloride is actually elevated up in the air, and as it’s fed into the vaporization process, that

height determines the maximum pressure that’s going to be generated in the process. Other manufacturers actually 

pump the titanium tetrachloride in, and that can take it up to a much higher pressure.” (Dean, Tr. 2929-30). 

116 
“[s]trong background on operational systems/processes.” (PX2379 at 005 (Strayer email 

attaching Yanbu organizational changes)). 

408. 

. 

409. 

 

. 

410. 

. 

411. Cristal has been addressing issues at Yanbu and seeing improvement. The Yanbu TiO2 

plant has improved its production performance in the past year. (Hewson, Tr. at 1626-

28). 

 

412. As of the first quarter of 2015, Yanbu was operating at a production rate of about 

per year. (Hewson, Tr. 1620, in camera). 

413. During 2017, Cristal has had at Yanbu. 

Cristal’s production at Yanbu during December 2017 reached . 

(Hewson, Tr. 1627, 1636, in camera). 

414. Cristal produced approximately 130,000 metric tons at Yanbu in 2017. (Dean, Tr. 2979-

80). 

415. In the second quarter of 2017, Cristal noted “[s]olid overall quality performance with 

improvement at Yanbu . . . .” (PX2493 at 005 (Morten email attaching Cristal 

manufacturing update); PX7048 (Strayer, Dep. at 100)). 

416. A third quarter 2017 board update by Cristal noted “[i]mproving performance at Stall &

Yanbu.” (PX2471 at 004 (Gunther email attaching Cristal manufacturing update)).

417. Cristal acknowledges that Yanbu was on a positive trajectory in 2017. (PX7042 

(Gunther, Dep. at 124-26); PX7048 (Strayer, Dep. at 218); see also PX2374 at 001 

(Gunther email) (“the changes we have made in Yanbu are setting the plant on a positive 

trajectory already”)). 

117 
418. Cristal’s 2018 budget and strategic plan includes 

at the Yanbu plant. (PX2373 at 018, in camera (Box email attaching 2018 Budget and 

Strategic Plan); PX7042 (Gunther, Dep. at 35-36), in camera). 

419. Cristal’s 2018 budget and strategic plan anticipates an increase of

in Yanbu’s on-stream rate in 2018. (PX2373 at 006, in camera (Box email attaching 

2018 Budget and Strategic Plan); PX7042 (Gunther, Dep. at 23-24), in camera). 

420. Mr. Dean of Tronox acknowledged that Cristal probably does not need a merger to 

implement The Tronox Way practices such as shift handover protocols, workflow 

management protocols, meeting protocols, short interval control protocols, or operator 

checklists. Mr. Dean also acknowledged that loss accounting is a concept that is 

generally available and used by organizations other than Tronox. (Dean, Tr. 3102-06). 

421. If the Acquisition did not occur, Cristal would “try to improve” the performance of the

Yanbu plant, 

. (PX7042 (Gunther, Dep. at 149-53), in camera). 

422. If the Acquisition did not occur, Cristal would “still go down the track of the

[of output per year at Yanbu], and 

. 

d. Cost savings 

423. KPMG was hired to “provide consulting support” for the “sign-to-close period” of the 

Acquisition. (PX7045 (Nolan, Dep. at 43-44)). 

424. The objective of KPMG’s engagement was to assist Tronox with its assessment of the 

potential synergies Tronox anticipates in connection with the proposed acquisition of 

Cristal. (PX0006 at 003). 

425. 

. 

426. KPMG’s conclusions were derived from “analysis of data room materials” provided by

Tronox and Cristal, “as well as from [Tronox’s] management team and their knowledge 

of [Cristal’s] business from site visits.” (PX0006 at 003).

427. KPMG prepared a report for Tronox (the “KPMG Report”). The report includes a letter 

to Tronox management stating that 

 

. 

118 
 

 

428. 

. 

429. Respondents’ proffered expert witnesses based their opinions as to likely output increases 

from improvements to Jazan and Yanbu upon the assertions, judgments, and/or 

expectations of Respondents, without any apparent independent verification. (See, e.g., 

RX0170 (Shehadeh Expert Report at 0057-58); RX0171 (Stern Expert Report at 127-31); 

RX1258 (Imburgia Expert Report at 0016-17)). 

430. Tronox has not evaluated how lowering its costs would affect TiO2 pricing, which is 

affected by many factors. Mr. Quinn, chief executive officer at Tronox, acknowledged 

that lowering Tronox’s costs is unlikely to have an impact on TiO2 pricing. (Quinn, Tr. 

2406). 

431. “The synergies that are tied to a geographic location are the operational synergies . . . . 

[T]he overwhelming majority of those synergies are related to . . . non-U.S. assets.”

(Quinn, Tr. 2406-08). 

119 
IV. SUMMARY OF CONCLUSIONS OF LAW 

1. The Commission has jurisdiction over Respondents and the Acquisition pursuant to 

Section 5 of the FTC Act, 15 U.S.C. § 45, and Sections 7 and 11 of the Clayton Act. 

15 U.S.C. §§ 18, 21(b). 

2. Section 7 of the Clayton Act prohibits mergers or acquisitions “the effect of [which] may

be substantially to lessen competition, or to tend to create a monopoly” in “any line of 

commerce or . . . activity affecting commerce in any section of the country.” 15 U.S.C. 

§ 18. 

3. It is not necessary to demonstrate certainty that a proposed merger will produce 

anticompetitive effects, or even that such effects are highly probable, but only that the 

loss of competition is a sufficiently probable and imminent result of the merger or 

acquisition. 

4. Section 7 of the Clayton Act requires a prediction as to the likelihood of anticompetitive 

effects, and doubts are to be resolved against the transaction. 

5. Congress enacted Section 7 to curtail anticompetitive harm in its incipiency. 

6. To establish a prima facie case of a violation of Section 7, the plaintiff may rely on a 

presumption of anticompetitive effects by defining a relevant market, and showing that 

the transaction will lead to undue concentration in that market. 

7. The plaintiff may bolster a prima facie case based on a market concentration presumption 

by adducing evidence showing that anticompetitive unilateral or coordinated effects are 

likely. 

8. If the plaintiff establishes a prima facie case, the burden shifts to the defendant to show 

that traditional economic theories of the competitive effects of market concentration are 

not an accurate indicator of the merger’s probable effect on competition in the relevant 

market or that the procompetitive effects of the merger are likely to outweigh any 

potential anticompetitive effects. 

9. Although the courts have not defined a precise standard that must be met to rebut a prima 

facie case, the courts advise that the more compelling the prima facie case, the more 

evidence the defendant must present to rebut the presumption successfully. 

10. If the defendant successfully rebuts the presumption of a violation of Section 7, the 

burden of producing additional evidence of anticompetitive effect shifts to the plaintiff, 

and merges with the ultimate burden of persuasion, which remains with the plaintiff at all 

times. 

11. The relevant market in which to assess the likely effects of the Acquisition is the sale of 

chloride TiO2 to North American customers. 

120 
 

 

12. Under the Merger Guidelines, a merger may substantially lessen competition if: (1) the 

merger would significantly increase concentration and lead to a moderately or highly 

concentrated market; (2) that market shows signs of vulnerability to coordinated conduct; 

and (3) the merger is likely to enhance that vulnerability. 

13. Complaint Counsel met its prima facie case by establishing a presumption of liability, by 

showing that the Acquisition will lead to undue concentration in the relevant market. 

14. Complaint Counsel bolstered the presumption of anticompetitive effects with substantial 

evidence demonstrating that the North American chloride TiO2 market is vulnerable to 

coordinated conduct and that this vulnerability will be enhanced by the Acquisition. 

Therefore, the evidence demonstrates a likelihood of anticompetitive coordinated effects. 

15. It is a central object of merger policy to obstruct the creation or reinforcement by merger 

of market structures in which tacit coordination can occur. 

16. Tacit coordination, sometimes called oligopolistic price coordination or conscious 

parallelism, describes the process, not in itself unlawful, by which firms in a concentrated 

market might in effect share monopoly power, setting their prices at a profit-maximizing, 

supracompetitive level by recognizing their shared economic interests and their 

interdependence with respect to price and output decisions. 

17. Proof of prior tacit coordination is not necessary to demonstrate a reasonable probability 

of future coordination. 

18. It is not necessary to demonstrate that market participants can form and enforce an 

agreement. Under the Merger Guidelines, coordinated interaction includes a range of 

conduct, and can involve parallel conduct in which each rival’s response to competitive

moves made by others is individually rational, and not motivated by retaliation or 

deterrence, but nevertheless emboldens price increases and weakens competitive 

incentives to reduce prices or offer customers better terms. 

19. Issues of fact or law that do not affect the result in a case are not fairly deemed 

“material,” for purposes of Section 557(c)(3)(A) of the Administrative Procedures Act, 5 

U.S.C. § 557(c)(3)(A), or Rule 3.51(c)(1) of the Commission’s Rules of Practice, 16 

C.F.R. § 3.51(c)(1), notwithstanding that there may be allegations or evidence presented 

on such issues. 

20. Even in highly concentrated markets, if there is sufficient ease of entry, enough firms can 

enter to compete with the merging firms, undercutting any of the likely anticompetitive 

effects of the proposed mergers. 

21. Entry can be demonstrated either by new firms entering the relevant market or by 

expansion into the relevant market by existing firms. 

121 
 

22. Entry must also be proven to be likely, rapid enough, and sufficient in its magnitude, 

character and scope to deter or counteract the competitive effects of concern. 

23. The burden of proving that entry will be timely, likely, and sufficient to deter or 

counteract anticompetitive effects is on the defendant. 

24. The evidence fails to support Respondents’ argument that entry or expansion by Chinese

producers is likely, or that such entry will be timely or sufficient to counteract the likely 

anticompetitive effects of the Acquisition. 

25. Cognizable efficiencies are defined as merger-specific efficiencies that have been verified 

and do not arise from anticompetitive reductions in output or service. 

26. To be cognizable, an asserted efficiency must represent a type of cost saving that could 

not be achieved without the merger and the estimate of the predicted saving must be 

reasonably verifiable by an independent party. 

27. The law requires a rigorous analysis of the kinds of efficiencies being urged by the 

parties in order to ensure that those efficiencies represent more than mere speculation and 

promises about post-merger behavior. 

28. An anticompetitive merger cannot be justified on the basis of asserted efficiencies outside 

the relevant market. 

29. It is incumbent upon the merging firms to substantiate efficiency claims, so that it is 

possible to verify by reasonable means the likelihood and magnitude of each asserted 

efficiency, how and when each would be achieved (and any costs of doing so), how each 

would enhance the merged firm’s ability and incentive to compete, and why each would 

be merger-specific. 

30. Because the Acquisition would create a highly concentrated market, the law requires 

proof of extraordinary efficiencies. 

31. Claimed efficiencies must be reasonably verifiable by an independent party, and cannot 

be based solely on the judgment of business executives. Otherwise, the efficiencies 

defense might swallow the whole of Section 7 of the Clayton Act. 

32. Respondents failed to meet their burden of demonstrating cognizable efficiencies. 

33. The evidence proves that the planned Acquisition may substantially lessen competition in 

the relevant market for the sale of chloride TiO2 in North America in violation of Section 

7 of the Clayton Act and Section 5 of the FTC Act. 

34. Upon determining that a merger violates Section 7 of the Clayton Act, the appropriate 

remedy is to issue an order enjoining the merger. 15 U.S.C. § 21(b). 

122 
ORDER 

I. 

IT IS ORDERED that, as used in the Order, the following definitions shall apply: 

A. “Tronox” means Tronox Limited, its directors, officers, employees, agents, 

representatives, successors, and assigns; the joint ventures, subsidiaries, partnerships, 

divisions, groups, and affiliates controlled by Tronox Limited, and the respective 

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

B. “Cristal” means The National Titanium Dioxide Company Limited (Cristal), its directors, 

officers, employees, agents, representatives, successors, and assigns; the joint ventures, 

subsidiaries (including Cristal USA), partnerships, divisions, groups, and affiliates 

controlled by The National Titanium Dioxide Company Limited (Cristal), and the 

respective directors, officers, employees, agents, representatives, successors, and assigns 

of each. 

C. “Cristal USA” means Cristal USA Incorporated, its directors, officers, employees, agents, 

representatives, successors, and assigns; the joint ventures, subsidiaries, partnerships, 

divisions, groups, and affiliates controlled by Cristal USA Incorporated, and the 

respective directors, officers, employees, agents, representatives, successors, and assigns 

of each. 

D. “TASNEE” means The National Industrialization Company (TASNEE), its directors, 

officers, employees, agents, representatives, successors, and assigns; the joint ventures, 

subsidiaries (including Cristal), partnerships, divisions, groups, and affiliates controlled 

by The National Industrialization Company (TASNEE), and the respective directors, 

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

E. “Proposed Acquisition Agreement” means the “Transaction Agreement Dated as of 

February 21, 2017 between The National Titanium Dioxide Company Limited, Tronox 

Limited and, solely for the purposes of Articles I, II, VIII, IX and XIII, Cristal Inorganic 

Chemicals Netherlands Coöperatief W.A.”

II. 

IT IS FURTHER ORDERED that: 

A. Respondent Tronox and Respondents Cristal, TASNEE, and Cristal USA shall terminate 

the Proposed Acquisition Agreement, and cease and desist from taking any actions, 

directly or indirectly, to consummate the Proposed Acquisition Agreement. 

123 
B. Respondent Tronox shall cease and desist from acquiring Cristal, in whole or in part, 

including, but not limited to, any stock, assets, share capital, equity, or other interest in or 

related to Cristal, directly or indirectly, from Respondents Cristal, TASNEE, or Cristal 

USA. 

C. Respondents Tronox, Cristal, T ASNEE, and Cristal USA shall return all confidential 

information received, directly or indirectly, from one another and destroy all notes 

relating to such information. 

D. Respondents shall submit a verified written statement within 15 days of the Order 

becoming final certifying compliance with the requirements of Paragraphs II.A. and 11.C. 

relating to terminating the acquisition agreement and returning/destroying each other's 

confidential information, with sufficient detail and supporting documentation to allow the 

Commission to determine independently that Respondents are in compliance. 

ORDERED: 

D. MichaelCafu 

Chief Administrative Law Judge 

Date: December 14, 2018 

124