[Federal Register Volume 73, Number 200 (Wednesday, October 15, 2008)]
[Notices]
[Pages 61130-61132]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-24429]


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FEDERAL TRADE COMMISSION

[File No. 071 0212]


Hexion LLC and Huntsman Corporation; Analysis of Proposed Consent 
Order to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint and the terms of the consent order--embodied in the consent 
agreement--that would settle these allegations.

DATES: Comments must be received on or before October 31, 2008.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Huntsman-Hexion, File No. 071 0212,'' to 
facilitate the organization of comments. A comment filed in paper form 
should include this reference both in the text and on the envelope, and 
should be mailed or delivered to the following address: Federal Trade 
Commission, Office of the Secretary, Room 135-H, 600 Pennsylvania 
Avenue, N.W., Washington, D.C. 20580. Comments containing confidential 
material must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with Commission Rule 4.9(c). 16 CFR 
4.9(c) (2005).\1\ The FTC is requesting that any comment filed in paper 
form be sent by courier or overnight service, if possible, because U.S. 
postal mail in the Washington area and at the Commission is subject to 
delay due to heightened security precautions. Comments that do not 
contain any nonpublic information may instead be filed in electronic 
form by following the instructions on the web-based form at (http://secure.commentworks.com/ftc-HuntsmanHexion). To ensure that the 
Commission considers an electronic comment, you must file it on that 
web-based form.
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    \1\The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See Commission Rule 4.9(c), 
16 CFR 4.9(c).
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    The Federal Trade Commission Act (``FTC Act'') and other laws the 
Commission administers permit the collection of public comments to 
consider and use in this proceeding as appropriate. The Commission will 
consider all timely and responsive public comments that it receives, 
whether filed in paper or electronic form. Comments received will be 
available to the public on the FTC website, to the extent practicable, 
at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of 
discretion, the Commission makes every effort to remove home contact 
information for individuals from the public comments it receives before 
placing those comments on the FTC website. More information, including 
routine uses permitted by the Privacy Act, may be found in the FTC's 
privacy policy, at (http://www.ftc.gov/ftc/privacy.shtm)

FOR FURTHER INFORMATION CONTACT: Wallace W. Esterling, FTC Bureau of 
Competition, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580, (202) 
326-2936.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 of 
the Commission Rules of Practice, 16 CFR 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 thirty (30) days. The following Analysis to Aid Public 
Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for October 2, 2008), on the World Wide Web, at (http://www.ftc.gov/os/2008/10/index.htm). A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW, Washington, 
D.C. 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. All comments should be filed as 
prescribed in the ADDRESSES section above, and must be

[[Page 61131]]

received on or before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order to Aid Public Comment

I. Introduction

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Order from Hexion 
LLC and Huntsman Corporation (``Respondents''). The Consent Agreement 
is intended to resolve anticompetitive effects stemming from Hexion 
LLC's (``Hexion'') proposed acquisition of Huntsman Corporation 
(``Huntsman''). The Consent Agreement includes a proposed Decision and 
Order that requires Respondent Hexion to divest its Specialty Epoxy 
Resin Product Business, which includes the research, development, 
manufacture, distribution, marketing, and sale of each Specialty Epoxy 
Resin Product; its Stuttgart (Germany) Assets; and other assets related 
to such business, including, but not limited to, Duisburg (Germany), 
parts of Norco (Louisiana), Bedford Park (Illinois), and Houston 
(Texas); among other things. The proposed Decision and Order also 
requires the licensing of all Hexion intellectual property related to 
the production of Specialty Epoxy Resins. The Decision and Order calls 
for divestiture of Hexion's Specialty Epoxy Business to Spolek Pro 
Chemickou A Hutni Vyrobu (``Spolek or Spolchemie''), or another 
Commission-approved buyer in the event that Spolek is determined not to 
be acceptable.
    Additionally, the Decision and Order requires Hexion to institute 
procedures to ensure that the methylene diphenyl diisocyanate (also 
referred to as diphenylmethane diisocyanate) (``MDI'') business it 
acquired from Huntsman not have access directly or indirectly to 
competitively sensitive non-public information obtained by its 
formaldehyde division.
    The proposed Consent Agreement and Decision and Order are designed 
to address competition concerns in the Specialty Epoxy Resin and MDI 
markets. The Consent Agreement, if finally accepted by the Commission, 
would settle charges that the proposed acquisition may substantially 
lessen competition in the various application specific end-use markets 
for Specialty Epoxy Resins and the market for MDI. The Commission has 
reason to believe that Respondent's proposed acquisition would violate 
Section 7 of the Clayton Act, as amended, 15 U.S.C. Sec.  18, and 
Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 
Sec.  45.

II. The Proposed Complaint

    According to the Commission's proposed complaint, the relevant 
product markets in which to analyze the effects of Huntsman's sale of 
assets to Hexion are the markets for the development, manufacture, and 
sale of Specialty Epoxy Resins, various application specific end-use 
markets in North America in which these resins are used, and the market 
for MDI.
    Specialty epoxy resins are value added high performance epoxy resin 
products, including, but not limited to, blends, formulations, advanced 
resins, and multifunctional resins. Specialty Epoxy Resins are used 
with curing agents, modifiers, and other ingredients and components 
necessary to the use of these resins. Specialty Epoxy Resins are used 
in demanding applications where enhanced performance is required, such 
as aerospace composites, wind turbine blades, and electric power 
generation applications. The relevant geographic market is North 
America. Additionally, Specialty Epoxy resins sold into each 
application segment constitute distinct application specific end-use 
product markets.
    MDI is a diisocyanate chemical used in various applications, 
including construction insulation, refrigeration, and composite wood 
products. Formaldehyde, a versatile chemical, is an essential 
ingredient used in the manufacture of MDI. It provides useful 
characteristics such as desirable insulating and mechanical properties, 
while avoiding many of the harmful characteristics associated with the 
use of pure formaldehyde, which is a carcinogen. The relevant 
geographic market is North America.
    The proposed complaint alleges that the various application 
specific end-use markets for Specialty Epoxy Resins in North America 
and the market for MDI are highly concentrated. Hexion and Huntsman 
have been the primary competitors in the market for Specialty Epoxy 
Resins for many years. According to the proposed complaint, Hexion and 
Huntsman account for between 90 and 60 percent of sales in the various 
application specific end-use markets in North America. They each had 
close to $1 billion in sales of Specialty Epoxy Resins in 2007. There 
are only four producers of MDI in the United States: Huntsman, Dow 
Chemical, BASF, and Bayer. MDI imports are minimal, and Hexion provides 
formaldehyde to all MDI producers in the U.S., except Dow. Hexion, as a 
supplier of formaldehyde to MDI producers, receives competitively 
sensitive non-public information from three of the four MDI producers. 
Such information includes MDI production forecasts, MDI demand 
forecasts and updates to these forecasts on a weekly basis, MDI 
projected long term forecasts, and schedules for periodic shutdowns of 
MDI production facilities supplied by Hexion. Thus, the market for MDI 
and the formaldehyde used in its production is highly concentrated. 
Total U.S. sales of MDI in 2007 were approximately $2 billion.
    The proposed complaint alleges that the proposed acquisition would 
reduce competition for Specialty Epoxy Resins in the various 
application specific end-use markets in North America by eliminating 
direct competition between these two companies, and by increasing the 
likelihood that unilateral market power will be exercised. As to MDI, 
the complaint alleges that the likelihood of coordinated interaction 
among competitors is increased as a result of the proposed acquisition.

III. Terms of the Proposed Order

    Under the proposed Decision and Order, Hexion will divest its 
Specialty Epoxy Resins Business, and related assets, to Spolek within 
ten (10) days after Hexion acquires Huntsman. Spolek, based in the 
Czech Republic, develops, manufactures, and markets a wide range of 
commodity or basic epoxy resins. The divestiture will allow Spolek to 
enter the Specialty Epoxy Resins market. Similar to Hexion, post-
divestiture Spolek will participate in both the commodity and Specialty 
Epoxy Resins markets, which will position Spolek to compete effectively 
in the market.
    The proposed Decision and Order requires Hexion to divest its 
Duisburg, Germany; Stuttgart, Germany; Norco, Louisiana; Bedford Park, 
Illinois; and Houston, Texas facilities and their related assets. This 
will provide Spolek all assets and know-how necessary for the research, 
development, production and sale of Specialty Epoxy Resins.
    In addition, the proposed Decision and Order requires Hexion to 
institute procedures to ensure that its acquired MDI business not have 
access directly, or indirectly, to competitively sensitive non-public 
information obtained by its formaldehyde division. The Decision and 
Order prohibits Hexion from using any competitively sensitive non-
public information obtained from its competitors in an anticompetitive 
manner.

IV. Opportunity for Public Comment

    The proposed Decision and Order has been placed on the public 
record for thirty (30) days to receive comments by interested persons. 
Comments received

[[Page 61132]]

during this period will become part of the public record. After thirty 
(30) days, the Commission will review the Consent Agreement and 
comments received and decide whether to withdraw its agreement or make 
final the Consent Agreement's proposed Order.
    The purpose of this analysis is to facilitate public comment on the 
proposed Decision and Order. This analysis is not intended to 
constitute an official interpretation of the Consent Agreement and the 
proposed Decision and Order.
    By direction of the Commission.

Donald S. Clark
Secretary
[FR Doc. E8-24429 Filed 10-14-08: 8:45 am]
BILLING CODE 6750-01-S