Rhinechem Corporation

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF RHINECHEM CORPORATION, ET AL.

Doket 9116. Interlocutory Order, Feb. 12, 1979 ORDER DENYING RESPONDENTS' MOTION FOR DISMISSAL OF COMPLAINT Administrative Law Judge Ernest G. Barnes has certified to the Commission, without recommendation, a motion by two respondents Allegheny Ludlum Industries, Inc. ("ALl"), and Chemetron Corporation, to dismiss the complaint. We deny the motion, believing that the public interest would be better served by allowing this case to proceed.

Respondents' ground for dismissal is that the proposed acquisition by Rhinechem Corporation of the Pigments Division of Chemetron, a subsidiary of ALl, has been terminated. This acquisition, however was not abandoned until after a United States District Court, upon motion of the Commission, issued an injunction against respondents barring the acquisition during the pendency of a Commission administrative proceeding and any subsequent judicial review. In granting the injunction, the court found that the Commission, which had contended that the acquisition would violate Section 7 of the Clayton Act and Section 5 of the Federal Trade Commission Act, had demonstrated a suffcient likelihood of ultimate success on the merits.

It is conceded, and the Commission has so held see, e.g., British Oxygen Co. , Ltd., 86 F. C. 1241, 1334-35 (1975), rev d on other grounds, 557 F.2d 24 (2d Cir. 1977), that the prohibitions of Section 7 of the Clayton Act are directed against the acquiring company, rather than the company to be acquired. Nevertheless, it is also clear that the moving respondents may be properly charged with a violation of Section 5 of the Federal Trade Commission Act for entering into a merger agreement which, complaint counsel contend violates Section 7 of the Clayton Act. Dean Foods Co., 70 F. C. 1146 1288-92 (1966); British Oxygen Co. , Ltd., supra at 1334. Cf Grand Union v. FT 300 F.2d 92 (2d Cir. 1962). Thus, even though the Commission has withdrawn this matter from adjudication with respect to Rhinechem Corporation in order to consider a proferred consent agreement, the complaint nonetheless states a cause of action under Section 5 of the Federal Trade Commission Act against the moving respondents. In Section 5 cases, it is well established that the discontinuance or abandonment of a practice, especially where not entirely voluntary, does not preclude the issuance of an g., Interlocutory Order 93 F. appropriate cease and desist order. Com, Inc. v. FTC, 338 F. 149 (1st Cir. 1964), cert. denied. 380 U.s. 954 (1965). Accordingly, It is ordered, That respondents' motion for dismissal of the complaint, dated December 19, 1978, be, and it hereby is, denied. 235 Complaint