Dow Chemical Company

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IN THE MATTER OF THE DOW CHEMICAL COMPANY CONSENT ORDER, ETC, IN REGARD TO ALLEGED VIOLA non OF SEC 7 OF THE CLAYTON ACT AND SEC 5 OF THE FEDERAL TRADE COMMISSION ACT Docket 3785. Complaint, Feb. 20, 1998--Decision, Feb. 20, 1998 This consent order requires, among other things, the Michigan-based chemical company to divest, simultaneously with its acquisition ofSentrachem, Limited a South African chemical company, the Hampshire Chemical Company's chelant business to Akza Nobel N. , which imports small volumes of chelants into the United States.

Appearances For the Commission: Morris Bloom, Joseph Krauss, Howard Morse and Wiliam Baer.

For the respondent: Robert Schlossberg and Peter Halle, Morgan Lewis Bockius Washington, D. C. and Scott R. Pennock in-house counsel, Midland, ML COMPLAINT Pursuant to the provisions ofthe Federal Trade Commission Act and the Clayton Act, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having reason to believe that the Dow Chemical Company s proposed acquisition of the South African company, Sentrachem Limited ("Sentrachem ), including its U.S. subsidiary, Hampshire Chemical Corporation ("Hampshire would violate Section 5 of the Federal Trade Commission Act, as amended, 15 U. c. 45 , and would violate Section 7 of the Clayton Act, as amended, 15 U. c. 18, and it appearing to the Commission that a proceeding in respect thereof would be in the public interest hereby issues its complaint stating its charges as follows: I. THE RESPONDENT The Dow Chemical Company I. Respondent Dow is a corporation organized, existing and doing business under and by virtue ofthe laws of Delaware, with its offee Complaint 125 FTC. and principal place of business located at 2030 Dow Center, Midland Michigan. In 1996 Dow had worldwide sales of approximately $20 billion.

2. Dow produces chemicals, plastics, and agricultural and consumer products. Through its Chemical Division, it is the leading producer in the US. of aminopolycarboxylic chelating agents, also known as chelants.

3. At all times relevant herein, Dow has been, and is now, a corporation as "corporation" is defined in Section 4 of the Federal Trade Commission Act, 15 US.c. 44; and at all times relevant herein, Dow has been, and is now, engaged in commerce as commerce" is defined in Section 4 of the Federal Trade Commission Act, 15 U. c. 44, and Section I of the Clayton Act, 15 US. c. 12. II. THE ACQUIRED COMPANY 4. Sentrachem, a South African company, develops, manufactures, and markets a number of different commodity and specialty chemical products. In 1996 Sentrachem had worldwide sales of approximately $1 billion. Sentrachem competes in the US. chelant market through its US. subsidiary, Hampshire, a Delaware corporation, with its principal place of business in Lexington, Massachusetts. In 1996, Hampshire s sales were approximately $200 million. III. THE ACQUISITON 5. On or about August 5, 1997, Dow announced a eash tender offer to acquire all of the shares of Sentraehem for approximately $425 million.

IV. THE RELEVANT MARKET 6. One relevant line of commerce in which to analyze the proposed acquisition is the research, development, manufacture, and sale of chelants, which are chemicals used to inactivate iron, calcium copper, magnesium and other metal ions in water solutions. Chelants are used in cleaners, pulp and paper, water treatment, photography, agriculture, and food and pharmaceutical applications. Chelant customers use chelants because they are high quality metal ion control chemicals that are cost effective across a wide variety of applications. Chelants are an extremely small part of the customer overall product or processing costs. Because of the time and cost associated with researching and qualifying an alternative to chelants THE DOW CHEMICAL COMPANY 379 377 Complaint customers do not refommlate away from chelants. There are no economic substitutes for chelants to which customers would switch in response to a price increase in chelants. 7. The United States is onc relevant geographic area within which to analyze the likely effect of the proposed acquisition on competition in the chelant market. Chelants produced overseas are not economic substitutes for most chelants sold in the United States, paricularly those diluted in water, because shipping costs are high and there are too many uncertainties and delays inherent in long distance shipping. Imports of chelants are less than 4 percent of U.S. consumption. V. CON CENTRA TION 8. Based on 1996 dollar sales, Dow and Hampshire are the two leading of only three producers of chelants in the United States, with a combined market share of over 70 percent. The US. chelant market is highly concentrated as measured by the Herfindahl-Hirschmann Index ("HHI"). The proposed acquisition would increase the HHI by more than 2 800 points to more than 6, I 00 points. VI. ENTRY CONDITIONS 9. Entry into the chelant market would not be timely, likely, or suffcient to deter or offset the adverse effects of the proposed acquisition on competition. A new entrant would have to build both a chelant production plant and a plant to produce hydrogen cyanide HCN"), a key input in the production of chelants, which would take costs. Inover two years and entail large fixed, and mostly sunk, addition to the time to construct these facilities, a new firm must secure the environmental permits to produce HCN, a toxic substance. In order to recoup its investment, a new entrant would need to obtain a market share at least as large as that held by any of the current domestic producers, which would be diffcult because of the significant amount of chelant sales that are subject to long term supply agreements. All these factors make entry into the US. chelant market unlikely.

VII. EFFECT OF THE PROPOSED MERGER ON COMPETITION substantially lessen 10. The proposed acquisition would competition or tend to create a monopoly in the US. chelant market because, among other things:

Decision and Order 125 FTC. a. It inereases concentration substantially m highly concentrated market;

b. It eliminates actual, direct, and substantial, competition between Dow and Hampshire;

c. It facilitates the unilateral exercise of market power by the merged firm; and d. It will likely result in increased prices for chelants. VII VIOLATIONS CHARGED II. The proposed acquisition by Dow of all the shares of Sentrachem, described in paragraph five, would violate Section 5 of the Federal Trade Commission Act, as amended, 15 US. c. 45, and Section 7 of the Clayton Act, as amended, 15 U. c. 18. Commissioner Azcuenaga and Commissioner Thompson not participating.

DECISION AND ORDER The Federal Trade Commission ("the Commission ), having initiated an investigation of the proposed acquisition by The Dow Chemical Company ("Dow ), through its wholly-owned subsidiary, Dow South Africa Holdings (Pty) Ltd., of the entire issued share capital of Sentrachem Limited (" Sentrachem ), which in turn owns Hampshire Chemical Corporation ("Hampshire ), and having been furnished thereafter with a copy of a draft of complaint which the Bureau of Competition proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondent with a violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U. C. 45, and a violation of Section 7 of the Clayton Act, as amended, 15 US. c. 18; and The respondent, its attorneys, and counsel for the Commission having thereafter executed an agreement containing a consent order an admission by the respondent of a1l the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement puroses only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission s Rules; and THE DOW CHEMICAL COMPANY 381 377 Decision and Order The Commission, having thereafter considered the matter and having determined that it had reason to believe that the respondent has violated the said Acts, and that a complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in Section 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1. Respondent Dow is a corporation organized, existing and doing business under and by virtue of the laws of the state of Delaware with its offce and principal place of business located at 2030 Dow Center, Midland, Michigan.

The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDER It is ordered That, as used in this order, the following definitions shall app I y:

A. Commission means the Federal Trade Commission. B. Respondent or Dow means The Dow Chemical Company, its directors, officers, employees, agents and representatives, its predecessors, successors, and assigns; subsidiares, divisions, and groups and affliates controlled by Dow, and the respective directors offcers, employees, agents, representatives, successors and assigns of each.

C. Sentrachem means Sentrachem Limited, a South Afrcan company, with its principal place of business at 5 Protea Place Sandown 2196, 2146 Sandton, Republic of South Afrca. D. Hampshire means Hampshire Chemical Corporation, a wholly-owned subsidiary of Sentrachem Limited, with its principal place of business at 55 Hayden Avenue, Lexington, Massachusetts. E. Akzo means Akzo Nobel N. , a company located in The Netherlands, with its principal place of business at VelpefWeg 76 6800 SB Amem, The Netherlands, and its subsidiary Ako Nobel Chemicals Inc.

Decision and Order 125 FTC F. Acquisition means the acquisition by Dow, through its subsidiary, Dow South Amca Holdings (Pty) Ltd. , of the entire issued share capital of Sentrachem Limited. G. Chelating agents means chemicals used to react with metal ions to form ring structures incorporating the metal ion within the molecule.

H. Chelant products means ethanoldiglycine sodium ("EDG" and diethanolglycine sodium ("DEG") and aminopolycarboxylic acids and salts including, but not limited to ethylenediaminetetraacetic acid ("EDT A"), diethylenetriaminepentaacetic acid DTPA"), hydroxyethylenediaminetriacetic acid ("HEDTA"), nitrilotriacetic acid ("NT A"), ethylenediaminetriacetic ("ED3A"), and the salts and nitrile precursors of EDT A, DTP A, HEDT A, ED3A, and any other chelating agents, but excluding propylenediaminetetraacetic acid ("PDT A"

1. "Hampshire Chelant Products means all chelant products that have been, at any time in the two (2) years preceding the Acquisition researched, developed, manufactured, distributed or sold Hampshire in the United States or Canada, including, but not limited , all projects in research and development by Hampshire that relate to improving existing or developing new chelant products, or improving processes for manufacturing chelant products J. Hampshire Non-Chelant Products means any product other than Hampshire Chelant Products, that have been, at any time in the two (2) years preceding the Acquisition, researched, developed manufactured, distributed, or sold at the Lima Facility or Other Hampshire Facilities, including, but not limited to, all projects in research and development by Hampshire that relate to improving existing or developing new Hampshire Non-Chelant Products, or improving processes for manufacturing Hampshire Non-Chelant Products.

K. Hampshire Products means Hampshire Chelant Products and Hampshire Non- Chelant Products.

L. 'Lima Facility means Hampshire s Lima, Ohio manufacturing facility.

M. Other Hampshire Facilities means Hampshire s facilities located at Deer Park, Texas and Nashua, New Hampshire. N. Akzo Lima Expansion means such improvements, additions and expansions to the Lima Facility to produce no less than 175 million pounds per annum (on a solution pound basis) of chelant THE DOW CHEMICAL COMPANY 383 377 Decision and Order products and to provide sufficient hydrogen cyanide ("HCN"), nitrile and other raw material storage, chelant products warehouse space and related facilities, to enable the Hampshire Chelant Business to operate at sustained levels of output no less than 175 million pounds per annum (on a solution pound basis) of chelant products. O. Akzo Lima Expansion Milestones means: (i) the submission by Akzo of complete applications for any and all federal, state, and local governmental permits that may be required to complete the Akzo Lima Expansion, within twelve (12) months after the date this order becomes final; (ii) the receipt by Ako of all federal, state, or local governmental permits that are required to complete the Akzo Lima Expansion, within eighteen (18) months after the date this order becomes final; provided, however that if Akzo has not received approval or final disapproval of its permit application(s) within eighteen (18) months after the date this order becomes final, this second milestone shall be extended until Akzo receives approval or final disapproval for a period up to, but in no event longer than twelve (12) months; (iii) the completion by Akzo of the structural steel installation required for the Akzo Lima Expansion, within twelve (12) months after permitting.

P. Dow s Competing Chelant Business means al1 assets properties, business and goodwill, tangible and intangible of Dow relating to the research, development, manufacture, distribution or sale of chelant products, its employees, agents, representatives, and any other personnel assigned to such business, or to whom such persons report directly or indirectly.

Q. Dow s Contract Manufacturing Services means the Dow business unit engaged in the contract manufacture of chemical and polymer products and services for independcnt firms. R. Hampshire Chelant Business means all assets, properties business and goodwil, tangible and intangible, of Hampshire relating to the research, development and manufacture in the United States and the distribution and sale in North America, of Hampshire Chelant Products, including, but not limited to:

I. All rights, title and interest in and to owned or leased real property at the Lima Facility (including completion of the current nitrile expansion project underway), together with its appurtenances licenses and permits; but excluding real property at (i) the Other Hampshire Facilities; (ii) Hampshire s Lexington, Massachusetts facility; and (iii) Hampshire s Teeside, United Kingdom facility; Decision and Order 125 FTC. 2. All machinery, fixtures, equipment, vehicles, transportation facilities, furture, tools and other tangible personal propert located at the Lima Facility, but excluding machinery, fixtures, equipment transportation facilities located at (i) the Other Hampshire Facilities; (ii) Hampshire s Lexington, Massachusetts facility; and (iii) Hampshire s Teeside, United Kingdom facility; 3. All intangible assets associated with Hampshire Chelant Products, including, but not limited to, processes, process improvements projects, production projects, permits, supporting data and documents, patents, patent applications and other intellectual property relating to any Hampshire Chelant Product; 4. All intellectual property used by Hampshire at the Lima Facility and all intellectual property used for the research development, manufacture or sale of Hampshire Chelant Products including, but not limited to, trade secrets, test data, technology and know-how (including, but not limited to, manufacturing know-how and application know-how), and all patents, patent applications patent rights, licenses, registrations, submissions and approvals; 5. All books, records and fies, customer lists, customer records and files, vendor lists, catalogs, sales promotion literature, advertising materials, specifications, designs, drawings, and quality control data; 6. All right, title and interest in and to contracts and agreements entered into in the ordinary course of business with customers (together with associated bid and performance bonds), joint ventures suppliers, sales representatives, distributors, agents, personal property lessors, personal property lessees, licensors, licensees, consignors and consignees, including, but not limited to, Hampshire s existing contract with BP Chemicals Inc. for the supply of liquid hydrogen cyanide and the related service agreements and land lease; and all existing Hampshire contracts for railcars used in the transport of Hampshire Chelant Products;

7. All projects in research and development by Hampshire as of the date of the Acquisition that relate to improving existing chelant products, or developing chelant products, including, but not limited , all research materials, technical infonnation, inventions, trade secrets, intellectual property, patents, technology, know-how (including, but not limited to, manufacturing know-how and application know-how), specifications, designs, drawings, processes quality control data, and formulas, as well as licenses thereto, relating to all such projects in research and development; THE DOW CHEMICAL COMPANY 385 377 Decision and Order 8. All research materials and inventions and intellectual property used for research and development relating to Hampshire Chelant Products or processes, including, but not limited to, trade secrets, test data, technology and know-how, and all patents, patent applications patent rights, licenses, registrations, submissions and approvals; 9. All rights under waranties and guarantees, express or implied; 10. All rights, titles and interests in registrations or other governmental approvals for manufacture and sale of any Hampshire Chelant Products or research and development efforts for Hampshire Chelant Products; and 11. All Hampshire (including Hampshire UK) brand names and buttrademarks for Hampshire Chelant Products worldwide, excluding the Hampshire corporate name and any brand names or trademarks that include the full word "Hampshire. In addition, the "Hampshire Chelant Business" shan include all intellectual property used by Hampshire in the research, development and manufacture in the United States, and the distribution and sale worldwide ofPDTA.

S. Hampshire Business Unit means the Hampshire Chelant Business and all assets, properties, business and goodwill, tangible and intangible of Hampshire relating to the research, development and manufacture in the United States, and the distribution and sale in North America of Hampshire Products, including, but not limited to: 1. All right, title and interest in and to owned or leased real propert at the Lima Facility and Other Hampshire Facilities together with its appurtenances, licenses and permits; 2. All machinery, fixtures, equipment, vehicles, transportation facilities, furniture, tools and other tangible personal property located at the Lima Facility and Other Hampshire Facilities; 3. All inventory and storage capacity;

4. An intangible assets associated with Hampshire Products including, but not limited to, processes, process improvements projects, production projects, permits, supporting data and documents, patents, patent applications and other intellectual propert relating to any Hampshire Product;

5. All intellectual property used for the research, development manufacture or sale of Hampshire Products, including, but not limited , trade seerets, test data, technology and know-how (including, but not limited to, manufacturing know-how and application know-how), Decision and Order 125 F. and all patents, patent applications, patent rights, licenses registrations, submissions and approvals; 6. All books, records and files, customer lists, customer records and files, vendor lists, catalogs, sales promotion literature, advertising materials, specifications, designs, drawings, and quality control data; 7. All right, title and interest in and to contracts and agreements entered into in the ordinary course of business with customers (together with associated bid and performance bonds), joint ventures suppliers, sales representatives, distributors, agents, personal propert lessors, personal property lessees, licensors, licensees, consignors and consignees including, but not limited to, all existing contracts with BP Chemicals Inc. for the supply ofliquid hydrogen cyanide and the related service agreements and land lease; and all existing contracts for railcars used in the transport of Hampshire Products; 8. All projects in research and development as of the date of the divestiture required by this order pursuant to paragraph IV.B that relate to improving existing, or developing new, Hampshire Products including, but not limited to, all research materials, technical information, inventions, trade secrets, intellectual property, patents technology, know-how (including, but not limited to, manufacturing know-how and application know-how), specifications, designs drawings, processes, quality control data, and formulas, as well as licenses thereto, relating to all such projects in research and development;

9. All research materials and inventions and intellectual property used for research and development relating to Hampshire Products including, but not limited to, trade seerets, test data, technology and know-how, and all patents, patent applications, patent rights, licenses registrations, submissions and approvals; 10. All rights under warranties and guarantees, express or implied;

11. All items of prepaid expense;

12. All rights, titles and interests in registrations or other governmental approvals for manufacture and sale of any Hampshire Non-Chelant Products, or research and development efforts for Hampshire Non-Chelant Products; and 13. All Hampshire (including Hampshire UK) brand names and trademarks for Hampshire Products worldwide, including the Hampshire corporate name and any brand names or trademarks that include the full word "Hampshire.

THE DOW CHEMICAL COMPANY 387 377 Dccision and Order II.

It is further ordered That:

A. Respondent shall divest, absolutely and in good faith, as an ongoing business, simultaneously with consummation of the Acquisition, the Hampshire Chelant Business to Ako pursuant to the agreement between Dow and Akzo dated as of November 15 1997. Provided, however, that respondent may retain (i) a non-exclusive fully-paid and global license ITom Akzo to intangible assets and intellectual property used by the Hampshire Chelant Business in the research, development or manufacture of Hampshire Chelant Products to make, have made, use and sell Hampshire Non-Chelant Products; and (ii) a non-exclusive, fully-paid and global license relating to the manufacture ofED3A to make, have made, use and sell ED3A for use as a precursor for surfactants; and (iii) a non-exclusive fully-paid, and global license to intellectual property used in the manufacture of PDT A to make, have made, use and sell PDT A in any part of the world.

B. The purpose of the divestiture of the Hampshire Chelant Business is to ensure the continuation of the Hampshire Chelant Business as an ongoing, viable business engaged in the research development, manufacture, distribution and sale of chelant products independent ofDow, and in competition with Dow, and to remedy the lessening of competition resulting ITom the Acquisition as alleged in the Commission s complaint.

C. On reasonable notice to respondent, respondent shall provide technical assistance and know-how to Akzo with respect to the Hampshire Chelant Business. Such techncal assistance shall include without limitation, consultation with knowledgeable employees of Hampshire and training at the manufacturing facilities of Hampshire. Respondent may charge the reasonable costs incurred in providing such technical assistance, including reimbursement (commensurate with the salary and benefits of Hampshire personnel involved) for the time plus expenses of Hampshire personnel providing the technical assistance. Hampshire shall continue to provide such technical assistance until Akzo is satisfied that it is capable of producing, and of developing for production, commercially saleable chelant products utilizing the assets of the Hampshire Chelant Business; provided however, Hampshire shall not be required to continue providing such technical assistance and training after the earlier of (i) one (I) year Decision and Order 125 FTC. after the Ako Lima Expansion is fully operational and released to production; or (ii) three (3) years after the date this order becomes final.

It is further ordered That:

A. Respondent shall exclusively toll manufacture for Akzo Hampshire Chelant Products at the Other Hampshire Facilities, at no more than Hampshire s historical cost as provided for in the agreement between Dow and Ako dated as of November 15 , 1997 in order to provide Ako with sufficient time to accomplish the Akzo Lima Expansion for such period as Ako may request, but in no event to extend beyond the earlier of (i) the date the Akzo Lima Expansion is fully operational and released to production or (ii) four (4) years after the date this order becomes final. Upon the Akzo Lima Expansion being released to production, respondent shall not manufacture at the Other Hampshire Facilities any chelant products for a period of one (I) year.

B. Dow s Contract Manufacturing Services shall (i) oversee the production of Hampshire Chelant Products at the Other Hampshire Facilities for Ako, and (ii) administer and control the supply and allocation of HCN from Ako at Lima, Ohio to respondent. Dow Contract Manufacturing Services shall maintain any information arsing from its obligations under paragraph lILB as confidential and not disclose such information to Dow s Competing Chelant Business. Any Dow or Hampshire employees supervised by Dow s Contract Manufacturing Services in carring out the obligations of this paragraph m.B shall also maintain such information as confidential and not disclose such information to Dow s Competing Chelant Business.

C. Respondent shall use information relating to the Hampshire Chclant Business only to fulfill its obligations in paragraphs lI. C and lila, and shall not provide, disclose or otherwise make available to Dow s Competing Chelant Business, any information relating to Hampshire Chelant Products or the Hampshire Chelant Business including information obtained as a result of the Acquisition, or directly or indirectly from Dow s Contract Manufacturing Services or from respondent's operations of the Other Hampshire Facilities and Dow shall not use any such information in Dow s Competing THE DOW CHEMICAL COMPANY 389 377 Decision and Order Chelant Business, until respondent has fulfilled all obligations under paragraph IILA, above.

IV.

It is further ordered That:

A. In the event that any of the Akzo Lima Expansion Milestones is not achieved, respondent shall acquire back ITom Ako, within thirty (30) days, the Hampshire Chelant Business pursuant to the agreement between Dow and Akzo dated as of November 15 1997. B. Upon its acquisition of the Hampshire Chelant Business pursuant to paragraph IV. , above, respondent shall divest absolutely and in good faith, within sixty (60) days after respondent has obtained ITom Akzo all assets pursuant to paragraph IV.A the Hampshire Business Unit as a viable and competitive business. Provided, however, respondent may seek Commission approval to divest, in lieu of the divestitue of the Hampshire Business Unit, less than all assets of the Hampshire Business Unit and/or such other assets if such divestiture meets the purpose of paragraph IV. , below. Respondent shall divest the Hampshire Business Unit Of such other assets approved by the Commission only to an Acquiref that reeei ves the prior approval of the Commission and only in a manner that receives the prior approval of the Commission. C. The purose ofthe divestitue of the Hampshire Business Unit is to ensure the continuation ofthe Hampshire Chelant Business as an ongoing, viable enterprise engaged in the research, development manufacture, distrbution and sale of chelant products independent of Dow, and in competition with Dow, and to remedy the lessening of competition alleged in the Commission s complaint. D. Respondent shall take such actions as are necessary to maintain the viability and marketability of the Hampshire Business Unit and shall not cause or permit the destruction, removal, wasting, deterioration, or impairment of the Hampshire Business Unit, except in the ordinary course of business and except for ordinary wear and tear, until the Ako Lima Expansion Milestones are achieved, or until the divestiture required by paragraph IV. , above. Decision and Order 125 FTC. It is further ordered That:

A. In the event that any of the Akzo Lima Expansion Milestones is not achieved, and if respondent has not divested, absolutely and in good faith and with the Commission s prior approval, the Hampshire Business Unit or such other assets approved by the Commission pursuant to paragraph IV.B within the time required by paragraph IV ofthis order, then the Commission may appoint a trustee to divest the Hampshire Business Unit. The trustee shall have all rights and powers necessary to permit the trustee to effect the divestiture of the Hampshire Business Unit in order to assure the viability, competitiveness, and marketability of the Hampshire Business Unit so as to expeditiously accomplish the remedial purposes of this order. In the event the Commission or the Attorney General brings an action pursuant to Section 5(1) of the Federal Trade Commission Act, 15 c. 45(1), or any other statute enforced by the Commission respondent shall consent to the appointment of a trustee in such action. Neither the appointment of a trustee nor a decision not to appoint a trustee under this paragraph shall preclude the Commission or the Attorney General ftom seeking civil penalties or any other relief (including, but not limited to, a court-appointed trustee) pursuant to the Federal Trade Commission Act or any other statute for any failure by respondent to comply with this order. B. If a trustee is appointed by the Commission or a court pursuant to paragraph V.A of this order, respondent shall consent to the following terms and conditions regarding the trustee s powers, duties authority, and responsibilities:

The Commission shall select the trustee, subject to the consent of respondent, which consent shall not be unreasonably withheld. The trustee shall be a person with experience and expertise in acquisitions and divestitures. Ifrespondent has not opposed, in writing, including the reasons for opposing, the selection of any proposed trustee within ten (10) days after notice by the staff of the Commission to respondent of the identity of any proposed trustee, respondent shall be deemed to have consented to the selection of the proposed trustee. 2. Subject to the prior approval of the Commission, the trustee shall have the exclusive power and authority to divest the Hampshire Business Unit in order to accomplish the divestiture required by this order.

THE DOW CHEMICAL COMPANY 391 377 Decision and Order Within ten (10) days after appointment of the trustee respondent shall execute a trust agreement that, subject to the prior approval of the Commission (and, in the case of a court-appointed trustee, of the court), transfers to the trustee all rights and powers necessar to permit the trustee to effect the divestiture of the Hampshire Business Unit, and to divest such additional ancillary assets of Sentrachem and effect such additional arrangements, in order to assure the viability, competitiveness, and marketability ofthe Hampshire Business Unit so as to expeditiously accomplish the remedial purposes of this order.

The trustee shall have twelve (12) months to accomplish the divestitue required by this order, which shall be subject to the prior approval of the Commission. If, however, at the end of the twelve (12) month period, the trustee has submitted a plan of divestiture or believes that divestiture can be achieved within a reasonable time, the divestiture period may be extended by the Commission (or, in the case of a court-appointed trustee, by the court); provided, however the Commission may extend this period for no more than two (2) additional terms.

5. The trustee shall have full and complete access to the personnel, books, records, and facilities related to the Hampshire Business Unit, or to any other relevant information as the trustee may request. Respondent shall develop such financial or other information as such trustee may request and shall cooperate with the trustee. Respondent shall take no action to interfere with or impede the trstee s accomplishment of the divestiture. Any delays in divestiture caused by the respondent shall extend the time for divestiture under this paragraph V in an amount equal to the delay, as determined by the Commission (or, in the case of a court-appointed trustee, by the court).

6. The trustee shall use his or her best efforts to negotiate the most favorable price and terms available in each contract that is submitted to the Commission, subject to respondent' absolute and unconditional obligation to divest expeditiously at no minimum price. The divestiture shall be made in the manner, and to the acquirer or acquirers, as set out in paragraph IV of this ordcr; provided, however ifthe trustee receives bona fide offers from more than one acquiring entity, and if the Commission approves more than one such acquiring entity, then the trustee shall divest to the acquiring entity or entities Decision and Order 125F.TC. selected by respondent from among those approved by the Commission.

7. The trustee shall serve, without bond or other security, at the cost and expense of respondent, on such reasonable and customary terms and conditions as the Commission or a court may set. The trustee shall have authority to employ, at the cost and expense of respondent, such consultants, accountants, attorneys, investment bankers, business brokers, appraisers, and other representatives and assistants as are necessary to carr out the trustee s duties and responsibilities. The trstee shall account for all monies derived from the divestiture and all expenses incurred. After approval by the Commission (and, in the case of a court-appointed trustee, by the court) of the account of the trustee, including fees for his or her services, all remaining monies shall be paid at the direction of respondent and the trustee s power shall be terminated. The trustee compensation shall be based at least in significant part on a commission arrangement (based on sales price) contingent on the trustee s accomplishing the divestiture required by this order. 8. Respondent shall indemnify the trustee and hold the trustee harless against any losses, claims, damages, liabilities, or expenses arsing out of, or in connection with, the performance of the trustee duties, including all reasonable fees of counsel and other expenses incurred in connection with the preparation for, or defense of any claim, whether or not resulting in any liability, except to the extent that such liabilities, losses, damages, claims, or expenses result from misfeasance, gross negligence, recklessness, willful or wanton acts or bad faith by the trustee.

9. If the trustee ceases to act or fails to act diligently, a substitute trustee shall be appointed in the same maner as provided in paragraph V.A of this order.

10. The Commission (or, in the case of a court-appointed trustee the court) may on its own initiative or at the request of the trustee issue such additional orders or directions as may be necessary or appropriate to accomplish the divestiture required by this order. 11. The trustee shall have no obligation or authority to operate or maintain the Hampshire Business Unit.

12. The trustee shall report in writing to respondent and the Commission every thirty (30) days concerning the trustee s efforts to accomplish the divestiture.

THE DOW CHEMICAL COMPANY 393 377 Dccision and Order VI.

It is further ordered That within thirty (30) days after the date this order becomes final, and every ninety (90) days thereafter until respondent has fully complied with the provisions of paragraphs II and II of this order, respondent shall submit to the Commission verified wrtten reports setting forth in detail the manner and form in which respondent intends to comply, is complying, and has complied with paragraphs II and II of this order. Provided, however, that within ten (10) days of Akzo s failure to meet any of the Ako Lima Expansion Milestones, and every thirty (30) days thereafter until respondent has fully complied with the provisions of paragraphs IV and V of this order, respondent shall submit to the Commission verified wrtten reports setting forth in detail the manner and form in which respondent intends to comply, is complying, and has complied with paragraphs IV and V. Respondent shall include in its compliance reports, among other things that are required from time to time, a full description of the efforts being made to comply with paragraphs II , IV and V of the order, including a description of all substantive contacts or negotiations for any divestiture required under paragraph IV and the identity of all parties that have contacted respondent or that have been contacted by respondent. Respondent shall include in its compliance reports copies of all written communications to and from such parties, all internal memoranda, and all reports and recommendations concerning divestiture.

VII.

It is further ordered That respondent shall notify the Commission at least thirty (30) days prior to any proposed change in the corporate respondent, such as dissolution, assignent, sale resulting in the emergence of a successor corporation, or the creation or dissolution of subsidiaries or any other change in Dow that may affect compliance obligations arsing out of the order. VII It is further ordered That, for the purpose of determining or securing compliance with this order, respondent shall permit any duly authorized representatives of the Commission: A. Access, durng office hours and in the presence of counsel, to inspect and copy all books, ledgers, accounts, correspondence Decision and Order 125 FTC. memoranda and other records and documents in the possession or under the control of respondent relating to any matters contained in this order; and B. Upon five (5) days' notice to respondent, and without restraint or interference, the right to interview offcers, employees, or agents of respondent.

IX.

shall terminate on It is further ordered That this order February 20, 2008.

Commissioner Azcuenaga and Commissioner Thompson not paricipating.

SEARS, ROEBUCK Ajo1) CO. 395 395 Complaint