[Federal Register Volume 62, Number 45 (Friday, March 7, 1997)]
[Notices]
[Pages 10566-10568]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5708]


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FEDERAL TRADE COMMISSION
[File No. 961-0085]


Mahle GmbH; Mahle, Inc.; Metal Leve S.A.; Metal Leve, Inc.; 
Analysis To Aid Public Comment

agency: Federal Trade Commission.

action: Proposed consent agreement.

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summary: In settlement of alleged violations of federal law prohibiting 
unfair or deceptive acts or practices and unfair methods of 
competition, this consent agreement, accepted subject to final 
Commission approval, would require, among other things, Mahle, Inc., 
the Morristown, Tennessee-based subsidiary of a German company, and 
Metal Leve, Inc., the Ann Arbor, Michigan-based subsidiary of a 
Brazilian firm, to divest Metal Leve's United States piston business. 
The complaint accompanying the consent agreement alleges that, by 
acquiring Metal Leve, Mahle would become a monopolist in the research, 
development, manufacture, and sale of (1) articulated pistons in the 
United States, and (2) large bore two-piece pistons worldwide. Pursuant 
to a separate federal court stipulation, Mahle and Metal Leve will pay 
in excess of $5 million for failing to give antitrust enforcers advance 
notice of Mahle's acquisition of a controlling interest in Metal Leve.

dates: Comments must be received on or before May 6, 1997.

addresses: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

for further information contact:

William J. Baer, Federal Trade Commission, H-374, 6th St. and Pa. Ave., 
NW., Washington, DC 20580, (202) 326-2932.
George S. Cary, Federal Trade Commission, H-374, 6th St. and Pa. Ave., 
NW., Washington, DC 20580, (202) 326-3741.
Howard Morse, Federal Trade Commission, S-3627, 6th St. and Pa. Ave., 
NW., Washington, DC 20580, (202) 326-2949.

supplementary information: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46, and Section 2.34 of 
the Commission's Rules of Practice (16 CFR

[[Page 10567]]

2.34), notice is hereby given that the above-captioned consent 
agreement containing a consent order to cease and desist, having been 
filed with and accepted, subject to final approval, by the Commission, 
has been placed on the public record for a period of sixty (60) days. 
The following Analysis to Aid Public Comment describes the terms of the 
consent agreement, and the allegations in the accompanying complaint. 
An electronic copy of the full text of the consent agreement package 
can be obtained from the Commission Actions section of the FTC Home 
Page (for February 27, 1997), on the World Wide Web, at ``<a href="http://
www.ftc.gov/os/actions/htm">http://
www.ftc.gov/os/actions/htm</a>.'' A paper copy can be obtained from the FTC 
Public Reference Room, Room H-130, Sixth Street and Pennsylvania 
Avenue, N.W., Washington, DC 20580, either in person or by calling 
(202) 326-3627. Public comment is invited. Such comments or views will 
be considered by the Commission and will be available for inspection 
and copying at its principal office in accordance with Section 
4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR 
4.9(b)(6)(ii)).

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Order 
(``Agreement'') from Mahle GmbH, Mahle, Inc., Metal Leve, S.A., and 
Metal Leve, Inc. (``Proposed Respondents'').
    The proposed Order has been placed on the public record for sixty 
(60) days for reception of comments by interested persons. Comments 
received during this period will become part of the public record. 
After sixty (60) days, the Commission will again review the Agreement 
and the comments received and will decide whether it should withdraw 
from the Agreement or make final the Agreement's proposed Order.
    Mahle GmbH, a German piston manufacturer, operates in the United 
States through its wholly-owned subsidiary Mahle, Inc., while Metal 
Leve, S.A., a competing Brazilian piston manufacturer, operates in the 
United States through its wholly-owned subsidiary Metal Leve, Inc. On 
June 26, 1996, Mahle GmbH acquired a controlling interest in Metal 
Leve, S.A. for approximately $40 million without first filing 
notification and report forms with the Federal Trade Commission or the 
Department of Justice Antitrust Division as required by the Hart-Scott-
Rodino Act, Section 7A of the Clayton Act, 15 U.S.C. Sec. 18a. The 
Commission has approved a Stipulation providing for civil penalties 
under the Hart-Scott-Rodino Act for Mahle and Metal Leve's failure to 
file the required notifications, and has accepted, subject to final 
approval, the Agreement Containing Consent Order resolving 
administrative charges that the acquisition may substantially lessen 
competition in violation of Section 7 of the Clayton Act, as amended, 
15 U.S.C. 18, Section 5 of the Federal Trade Commission Act, as 
amended, 15 U.S.C. 45.
    The Stipulation provides for maximum civil penalties from both 
Mahle and Metal Leve from the date of the acquisition until Proposed 
Respondents file an application for divestiture as required by the 
proposed Order, which application is subsequently approved by the 
Commission and which divestiture is thereafter accomplished. Mahle and 
Metal Leve will each pay civil penalties of $10,000 per day from June 
26, 1996, through November 20, 1996, and $11,000 per day thereafter, 
pursuant to the Debt Collection Improvement Act of 1996, Pub. L. 104-
134 Sec. 31001(s) and FTC Rule 1.98, 16 CFR 1.98, 61 FR 54549 (Oct. 21, 
1996). The Stipulation, along with a complaint alleging a cause of 
action under Section 7A(g)(1) of Clayton Act, 15 U.S.C. 18A(g)(1), will 
be filed, with the concurrence of the Department of Justice Antitrust 
Division, by Commission attorneys acting as special attorneys to the 
Attorney General, on behalf of the United States.
    The proposed administrative complaint alleges that the acquisition 
may substantially lessen competition in the research, development, 
manufacture, and sale of articulated pistons in the United States and 
large bore two-piece pistons worldwide. The proposed complaint alleges 
a market of articulated pistons up to 150 millimeter in diameter used 
in diesel engine applications, such as Class 8 truck engines for buses 
and big highway rigs, which require pistons that can withstand high 
temperatures and pressures to maintain engine performance while meeting 
increasingly stringent government emissions requirements. The proposed 
complaint also alleges a market of large bore two-piece pistons of more 
than 150 millimeters in diameter that are used in high output diesel 
and natural gas engines, such as locomotive engines and stationary 
power generators as well as engines for various marine and industrial 
applications. The proposed complaint alleges that the relevant 
geographic market for evaluating the acquisition's effect on 
articulated pistons is the United States, while the relevant geographic 
market for evaluating the acquisition's effect on large bore two-piece 
pistons is worldwide.
    The proposed complaint alleges that, prior to the acquisition, 
Mahle had more than a 50 percent share and Metal Leve had nearly a 45 
percent share of the articulated piston market, producing a combined 
market share of more than 95 percent. The only other firm in the market 
is a weak competitor that has been losing business to Mahle and Metal 
Leve. Thus, the Mahle/Metal Leve acquisition results in a monopoly or 
near monopoly in the articulated pistons market.
    The proposed complaint alleges that the market for two-piece large 
bore pistons is also highly concentrated. There are only four producers 
of two-piece large bore pistons in the world. The proposed complaint 
alleges that Mahle and one other firm dominate the market, while Metal 
Leve has gained sales and is aggressively bidding.
    The proposed complaint alleges that entry into the relevant piston 
markets would not be timely, likely, or sufficient to deter or offset 
the adverse effects of Mahle's acquisition of Metal Leve on 
competition, because an entrant would have to develop manufacturing 
expertise, satisfy time-consuming customer qualification requirements, 
and acquire manufacturing equipment at a significant sunk cost. Entry 
would likely take three to five years or more.
    The proposed complaint alleges that Mahle's acquisition of Metal 
Leve substantially lessened competition in both the articulated and 
large bore two-piece piston markets, by among other things, eliminating 
Metal Leve as an independent competitor that has been a substantial, 
direct, head-to-head competitor with Mahle and a maverick in the 
relevant markets. In the articulated piston market, the acquisition has 
created a monopoly or near monopoly. The proposed complaint alleges 
that the Mahle/Metal Leve acquisition substantially lessened 
competition in the large bore two-piece piston market, by giving 
control of Metal Leve, an aggressive and innovative competitor, to 
Mahle, one of only two firms that together have dominated the market 
for large bore two-piece pistons.
    The proposed Order would remedy the alleged violation by restoring 
the competition lost as a result of Mahle's acquisition. The proposed 
Order would require divestiture of Metal Leve's U.S. piston business, 
which is defined to include, among other things, assets used by Metal 
Leve for the manufacture and sale of pistons in the United States,

[[Page 10568]]

including plants in Orangeburg and Sumter, South Carolina, and a 
research and development center in Ann Arbor, Michigan, as well as 
technology outside the United States which supports that business. 
Metal Leve and Mahle will cease to have any rights to what was formerly 
the Metal Leve articulated piston technology once the divestiture 
required by the proposed Order has been accomplished.
    The proposed Order requires that the divestiture be completed 
within ten days of the Order becoming final. Thus, the Proposed 
Respondents must file an acceptable application for divestiture well 
before the proposed Order is made final, so that the application can be 
placed on the public record for thirty days, the Commission can 
determine whether to approve it, and Respondents can complete the 
required divestiture within the time period set forth in the proposed 
Order.
    If the required divestiture is not accomplished within ten days of 
the Order being made final, then a trustee may be appointed to divest 
the business. The trustee may add some or all of the Metal Leve, S.A. 
piston business to accomplish the divestiture. This crown jewel 
provision ensures that the required divestiture will be accomplished in 
a timely manner.
    A Hold Separate Agreement accepted by the Commission on August 30, 
1996, will continue in effect until the divestiture required by the 
proposed Order is accomplished. The Hold Separate requires Metal Leve 
to be operated independently of Mahle on a worldwide basis and requires 
Metal Leve, Inc. to be maintained as a viable competitor in the 
business in which it was engaged prior to Mahle's acquisition of Metal 
Leve.
    Finally, the proposed Order prohibits Mahle or Metal Leve from 
acquiring any interest in any other company engaged in the manufacture 
or sale of articulated pistons in the United States, without prior 
notice to the Commission, for a period of ten (10) years.
    The purpose of this analysis is to facilitate public comment on the 
proposed Order. This analysis is not intended to constitute an official 
interpretation of the Agreement or the proposed Order or in any way to 
modify the terms of the Agreement or the proposed Order.
Donald S. Clark,
Secretary.
[FR Doc. 97-5708 Filed 3-6-97; 8:45 am]
BILLING CODE 6750-01-M