Rhinechem Corp., et al.

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[6750-01-M j [16 CFR Port 13] [File No. 91161 RHINECHEM CORP., ET AL. Consent Agreement With Analysis To Aid Public Comment AGENCY: Federal Trade Commission. ACTION: Provisional consent agree­ ment.

SUMMARY: In settlement of alleged violations of federal law prohibiting unfair acts and practices and unfair methods of competition, this provi­ sionally accepted consent agreement, among other things, would require a New York City manufacturer and seller of organic pigments to terminate all agreements providing for the acqui­ sition of the Chemetron Corporation’s organic pigments business; return all confidential documents exchanged during the negotiations; and provide the Commission with evidence of its compliance with these requirements. Additionally, Rhinechem would be re­ quired, through December 31, 1981, to furnish the Commission with 90-days advance notice should it seek either to acquire Chemetron’s organic pigment business or sell its own to Chemetron or Chemetron’s corporate parent, Alle­ gheny Ludlum Industries, Inc. DATE: Comments must be received on or before May 29,1979.

ADDRESS: Comments should be di­ rected to: Office of the Secretary, Fed­ eral Trade Commission, 6th St. and Pennsylvania Ave., NW., Washington, D .C .20580.

FOR FURTHER INFORMATION CONTACT:

Paul W. Turley, Director, 3R, Chica­ go Regional Office, Federal Trade Commission, 55 East Monroe St., Suite 1437, Chicago, 111. 60603! (312) 353-4423.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Feder­ al Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and § 3.25(f) of the Com­ mission’s rules of practice (16 CFR 3.25(f)), notice is hereby given that the following consent agreement con­ taining a consent order to cease and desist and an explanation thereof, having been filed with and provisional­ ly accepted by the Commission, has been placed on the public record for a period of sixty (60) days. Public com­ ment is invited. Such comments or views will be considered by the Com­ mission and will be available for in­ spection and copying at its principal office in accordance with §4.9(bX14) of the Commission’s rules of practice <16 CFR 4.9(bX14)).

R hinechem C orp., et al. [Docket No. 9116] AGREEM ENT C O N T A IN IN G C ON SEN T ORDER T O CEASE AND D E SIST This agreement by and between Rhinechem Coporation, a corporation, by its duly authorized officer, and its attorneys, and counsel for the Federal Trade Commission, is entered into in accordance” with the Commission’s Rule governing consent order proce­ dure. In accordance therewith the par­ ties agree that:

1. Respondent Rhinechem Corpora­ tion (hereinafter Rhinechem) is a cor­ poration existing and doing business under and by virtue of the laws of the State of Delaware, with its principal place of business at 425 Park Avenue, New York, New York. Rhinechem is a wholly-owned subsidiary of Bayer In­ ternational Finance N.V., which in turn is a wholly-owned subsidiary of Bayer AG, a West German corpora­ tion with headquarters in Leverkusen, Federal Republic of Germany. 2. Rhinechem has been served with the complaint issued by the Federal Trade Commission on August 23, 1978, charging it with violation of Section 5 of the Federal Trade Commmission Act and Section 7 of the Clayton Act. 3. Rhinechem admits all jurisdiction­ al facts set forth in the Commission’s complaint in this proceeding. 4. Rhinechem waives:

(a) Any further procedural steps; (b) The requirement that the Com­ mission’s decision contain a statement of findings of fact and conclusions of law; and (c) All rights to seek judicial review or otherwise to challenge or contest the validity of the order entered pur­ suant to this agreement. FEDERAL REGISTER, V O L 44, NO. 63— FRIDAY, MARCH 30, 1979

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PROPOSED RULES 18991 5. This agreement shall not become a part of the public reeord of the pro­ ceeding unless and until its accepted by the Commission. If this agreement is accepted by the Commission, it, to­ gether with related materials pursuant to Rule 3.25(f), will be placed on the public record for a period of sixty (60) days and information in respect there­ to publicly released. The Commission thereafter may either withdraw its ac­ ceptance of this agreement and so notify Rhinechem, in which event it will take such action as it may consid­ er appropriate, or issue and serve its decision in disposition of the proceed­ ing. The Commission may at any time pending issuance of this order require hearings on the relief requirements provided by this order. 6. This agreement is for settlement purposes only and does not constitute an admission by Rhinechem that the law has been violated as alleged in the Commission's complaint in this pro­ ceeding.

7. This agreeement contemplates that, if it is accepted by the Commis­ sion, and if such acceptance is not sub­ sequently withdrawn by the Commis­ sion pursuant to the provisions of § 3.25(f) of the Commission's rules, the Commission may without further notice to Rhinechem (1) issue its deci­ sion containing the following order to cease and desist in disposition of the proceeding, and (2) make information public in resepect thereto. When so entered the order to cease and desist shall have the same force and effect and may be altered, modified or set aside in the same manner and within the same time provided by statute for other orders. The order shall become final upon service. Mailing of the deci­ sion containing the agreed-to order to Rhinechem’s address as stated in this agreement shall constitute service. Rhinechem waives any right it might have to any other manner of service. The complaint may be used in constru­ ing the terms of the order, and no agreement, understanding, representa­ tion or interpretation not contained in the order or in the agreement may be used to vary or contradict the terms of the order. * 8. Rhinechem has read the com­ plaint and the or*der contemplated hereby. It understands that once the order has been issued, it will be re­ quired to file a compliance report showing that it has fully complied with the order and that it may be liable for civil penalties in the amount provided by law for each violation of the order after it becomes final. O rder D E F IN IT IO N S For purposes of this order the fol­ lowing definition shall apply: “ Organic pigments” means insoluble color particles characterized by a chemical com­ position which includes carbon rings or chains as the basic part of their molecular structure and used to impart color to a vari­ ety of materials.

I.

It is ordered, That Rhinechem forth­ with terminate all agreements which provided for the acquisition of the or­ ganic pigments business of Chemetron Corporation by a subsidiary of Rhine­ chem and provide evidence that all such agreements have been terminat­ ed and that, all confidential documents provided to Rhinechem by Allegheny Ludlum Industries, Inc., and Cheme­ tron Corporation in connection with the merger agreement have been re­ turned or destroyed. Nothing herein contained shall relieve Rhinechem from any obligations of confidentiality imposed by agreement between the parties.

LL It is further ordered, That through December 31, 1981, Rhinechem, its successors or assigns, shall not acquire, either directly or indirectly, any or all of the organic pigments business of Chemetron Corporation nor shall it sell any or all of its organic pigments business to Allegheny Ludlum Indus­ tries, Inc., or Chemetron Corporation, whether represented by securities or assets, until ninety (90) days following receipt by the Director of the Bureau of Competition of the Federal Trade Commission of written notice of the proposed acquisition or merger, such written notice to be similar in form and content to the notice required under Section 7A o f the Clayton Act and the premerger notification rules promulgated thereunder and shall spe­ cifically refer to this order. (This pro­ vision shall not prohibit sales of or­ ganic pigments or other transactions between. Rhinechem and Chemetron Corporation in the ordinary course of business.) If within ninety (90) days of receipt by the Director of such notice the Commission issues an administra­ tive complaint challenging the pro­ posed acquisition or merger, such pro­ posed acquisition or merger shall not be consummated, nor shall any steps be taken to effectuate such proposed acquisition or merger until the admin­ istrative complaint issued by the Com­ mission is dismissed by the Commis­ sion, until a final order as defined in 15 U.S.C. Sections 21 and 45 is entered or until a consent order is entered and served upon Rhinechem in the admin­ istrative proceeding. If within the aforesaid ninety (90) days the Bureau of Competition receives any written position papers from Rhinechem and the Bureau recommends issuance of a complaint, the Bureau shall promptly forward to the Commission such papers together with the written notice submitted to the Bureau Direc­ tor. In the event that within ninety (90) days of the Director’s receipt of such notice the Commission issues an administrative complaint challenging the proposed acquisition or merger, the Bureau of Competition shall exert its best efforts to complete the admin­ istrative proceeding in an expedited manner.

'in .

It is further ordered, That Rhine­ chem shall notify the Commission at least thirty (30) days prior to any pro­ posed corporate change sueh as disso­ lution, assignment or sale, resulting in the emergence of a successor corpora­ tion, the creation or dissolution of sub­ sidiaries or any other change which may affect compliance obligations arising out of this order. IV.

It is further ordered, That Rhine­ chem shall within sixty (60) days after service upon it of this order file with the Commission a written report set­ ting forth in detail the manner and form in which it has complied with this order.

R hinechem Corp. ex al [Docket No. 91161 A N A L Y S IS O F PROPOSED CON SE N T ORDER T O A ID P U B L IC C OM M EN T The Federal Trade Commission has accepted an agreement to a proposed consent order from Rhinechem Corpo­ ration (hereinafter referred to as “re­ spondent” ).

The proposed consent order has been placed on the public record for sixty (60) days for reception of com­ ments by interested persons. Com­ ments 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 then will decide whether it should withdraw from the agreement or issue the agree­ ment’s proposed order.

On August 23, 1978, the Commission issued a complaint against Rhinechem Corporation (Rhinechem), Allegheny Ludlum Industries, Inc. (Allegheny) and Chemetron Corporation (Cheme­ tron) alleging that the proposed acqui­ sition of Chemetron’s pigment division by Rhinechem, if consummated, would violate Section 7 of the Clayton Act and Section 5 of the Federal Tiade Commission Act. Section 7 of the Clayton Act prohibits any acquisition which may have the effect of substan­ tially lessening competition or tending to create a monopoly in any line of commerce, and Section 5 of the Feder- FEDERAL REGISTER, V O L 44, NO. 63— FRIDAY, MARCH 30, 1979

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18992 PROPOSED RULES al Trade Commission Act prohibits unfair methods of competition as well as deceptive acts or practices in or af­ fecting commerce.

The Commission’s complaint alleged that Rhinechem (principally through its wholly owned subsidiary Harmon Colors) and Chemetron compete in the manufacture and sale of organic pigments. The complaint alleged fur­ ther that the merger agreement be­ tween Rhinechem and Allegheny was itself a violation of Section 5 of the Federal Trade Commission Act be­ cause, if the merger was consummat­ ed, it would lessen actual competition, eliminate Chemetron as a substantial independent competitor, and lead to other harmful results.

The Commission, on August 28, 1978, also filed an Application for a Preliminary Injunction and Tempo­ rary Restraining Order in the United States District Court for the Northern District of Illinois, Eastern Division. After a proceeding pursuant to 13(b) of the FTC Act, 15 U.S.C. Section 53(b), the Judge granted, on October 20, 1978, the FTC’s Application for the issuance of an injunction during the pendency of the administrative pro­ ceedings and any subsequent review. The proposed consent agreement in­ corporates into an administrative order certain key provisions that will be enforceable against respondent. This will avert the expenditure of re­ sources of an administrative trial, which otherwise would be necessary before the Commission could impose a remedial order, and assure a lasting effect of the Commission’s efforts in this action.

The proposed order has four (4) sec­ tions, the substance of which are decribed below.

In Paragraph I respondent is or­ dered to present evidence to the Com­ mission that the merger agreement has been terminated, and to return any confidential documents exchanged during negotiations.

Paragraph II requires the respond­ ent to provide the Director of the Bureau of Competition with ninety (90) days advance notice if it seeks to acquire any of the organic pigments business of Chemetron Corporation or seeks to sell any of its organic pig­ ments business to Allegheny Ludlum Industries, Inc. or Chemetron Corpo­ ration through December 31, 1981. This paragraph further provides that if the Commission within that ninety (90) day period issues an administra­ tive complaint challenging such trans­ action, the respondent will not go for­ ward with the transaction until the administrative proceeding has been completed and a final order or consent order has been entered. Thus, by issu­ ing an administrative complaint, the Commission can effectively enjoin the consummation of a proposed merger between Rhinechem and Allegheny concerning Chemetron’s pigment divi­ sion. If the Commission should issue such a complaint the Bureau of Com­ petition agrees to exert its best efforts to complete the administrative pro­ ceeding in an expedited manner. Paragraphs III and IV relate to com­ pliance. In the former, the respondent is required to notify the Commission of corporate changes which may affect its compliance obligations, while in the latter the respondent is required to file compliance reports sixty (60) days after service of the order. The purpose of this analysis is to fa­ cilitate public comment on the pro­ posed order; it is not intended to con­ stitute an official interpretation of the agreement and proposed order or to modify in any way their terms. vision, Office of the Chief Counsel, Internal Revenue Service, 1111 Con­ stitution Avenue, N.W., Washington, D.C. 20224, Attention: CC:LR:T:EE- 145-78, (202) 566-6271 (Not a tollfree number).

SUPPLEMENTARY INFORMATION: B ackground This document contains a proposed amendment to the Income Tax Regu­ lations (26 CFR Part 1) under section 501(c)(12) of the Internal Revenue Code of 1954. The amendment is pro­ posed to conform the regulations to section 1 of the Act of August 15, 1978, Pub. L. 95-345 (92 Stat. 481) and is to be issued under the authority con­ tained in section 7805 of the Internal Revenue Code of 1954 (68A Stat. 917; 26 U.S.C. 7805).

Carol M. T homas, Secretary.

[FR Doc. 79-9777 Filed 3-29-79; 8:45 am]