[Federal Register Volume 75, Number 149 (Wednesday, August 4, 2010)]
[Notices]
[Pages 46940-46942]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-19079]
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FEDERAL TRADE COMMISSION
[File No. 081 0130]
Nufarm Limited; Analysis of Agreement Containing 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 August 30, 2010.
ADDRESSES: Interested parties are invited to submit written comments
electronically or in paper form. Comments should refer to ``Nufarm,
File No. 081 0130'' to facilitate the organization of comments. Please
note that your comment -- including your name and your state -- will be
placed on the public record of this proceeding, including on the
publicly accessible FTC website, at (http://www.ftc.gov/os/publiccomments.shtm).
Because comments will be made public, they should not include any
sensitive personal information, such as an individual's Social Security
Number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. Comments also
should not include any sensitive health information, such as medical
records or other individually identifiable health information. In
addition, comments should not include any ``[t]rade secret or any
commercial or financial information which is obtained from any person
and which is privileged or confidential. . . .,'' as provided in
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and Commission Rule
4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing material for which
confidential treatment is requested must be filed in paper form, must
be clearly labeled ``Confidential,'' and must comply with FTC Rule
4.9(c), 16 CFR 4.9(c).\1\
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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 FTC Rule 4.9(c), 16 CFR
4.9(c).
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Because paper mail addressed to the FTC is subject to delay due to
heightened security screening, please consider submitting your comments
in electronic form. Comments filed in electronic form should be
submitted by using the following weblink: (https://ftcpublic.commentworks.com/ftc/nufarm/) and following the instructions
on the web-based form. To ensure that the Commission considers an
electronic comment, you must file it on the web-based form at the
weblink: (https://ftcpublic.commentworks.com/ftc/nufarm/). If this
Notice appears at (http://www.regulations.gov/search/index.jsp), you
may also file an electronic comment through that website. The
Commission will consider all comments that regulations.gov forwards to
it. You may also visit the FTC website at (http://www.ftc.gov/) to read
the Notice and the news release describing it.
A comment filed in paper form should include the ``Nufarm, File No.
081 0130'' 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 H-135 (Annex D), 600
Pennsylvania Avenue, NW, Washington, DC 20580. 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.
The Federal Trade Commission Act (``FTC Act'') and other laws the
Commission administers permit the collection of public comments to
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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: Leonard L. Gordon (212-607-2801) or
Jonathan W. Platt (212-607-2819), FTC Northeast Regional Office, 600
Pennsylvania Avenue, NW, Washington, D.C. 20580.
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 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 July 28, 2010), on the World Wide Web, at (http://www.ftc.gov/os/actions.shtm). 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 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 (``Consent
Agreement'') from Nufarm Limited (``Nufarm'' or ``Respondent'') to
remedy the anticompetitive effects stemming from Nufarm's acquisition
of A.H. Marks Holding Limited (``A. H. Marks''). Under the terms of the
Consent Agreement, Nufarm is required to divest to Commission-approved
buyers certain A. H. Marks assets, including regulatory permits and
intellectual property, and take certain additional measures to restore
competition in the markets for three phenoxy herbicide products: MCPA,
MCPP-p, and 2,4DB.
On March 5, 2008, Nufarm acquired A. H. Marks. Both parties held,
or had access to, regulatory approvals from the United States
Environmental Protection Agency (``EPA'') to sell MCPA, MCPP-p, and
2,4DB in the United States. The Commission's complaint alleges that the
acquisition and acquisition agreement violated Section 7 of the Clayton
Act, as amended, 15 U.S.C. Sec. 18, and Section 5 of the Federal Trade
Commission Act (``FTC Act''), as amended, 15 U.S.C. Sec. 45, by
lessening competition in the United States markets for the sale of the
phenoxy herbicides: MCPA, MCPP-P, and 2,4DB.
The Consent Agreement has been placed on the public record for
thirty (30) days for receipt of comments by interested persons.
Comments received 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 from the
proposed Consent Agreement, modify it, or make final the Consent
Agreement's proposed Decision and Order.
II. The Products and Structure of the Markets
With its acquisition of A.H. Marks, Nufarm obtained monopoly
positions in the United States markets for two phenoxy herbicide
markets (MCPA and MCPP-p) and reduced a third phenoxy herbicide market
(2,4DB) to a duopoly. Phenoxy herbicides are post-emergent selective
broadleaf herbicides which are designed to act on full or partially
grown weeds without damaging surrounding plants. They are used widely
in the turf, lawn care, and agriculture industries to eliminate
existing broadleaf weeds safely and cheaply. Nufarm and A.H. Marks sold
these herbicides to agricultural and turf and lawn care formulators in
their raw form as ``technical'' ingredients for their formulated
herbicide products. Agricultural formulators generally purchase MCPA
for use on cereal crops, such as wheat and barley, and 2,4DB for peanut
and alfalfa crops. Turf and lawn care formulators purchase MCPP-p for
turf care products used by landscape professionals or consumers. Each
of the three herbicides is a highly cost-effective herbicide for its
intended use with no equivalent substitutes. More expensive herbicides
are generally used as complements and combined with phenoxy herbicides
such as MCPA, MCPP-p, or 2,4DB, to increase the effectiveness of
formulated herbicide products.
III. Entry
Entry into the markets for MCPA, MCPP-p and 2,4DB would not be
timely, likely, or sufficient to deter or counteract the
anticompetitive effects of the acquisition. In order to obtain approval
to sell herbicides for use on crops, turf, or lawns in the United
States, the Environmental Protection Agency (``EPA'') requires
manufacturers to submit extensive environmental and toxicology testing
data. Herbicide manufacturers often generate such data by forming
industry task forces to share the costs of testing. Later entrants are
often required to compensate members of the task force to obtain
intellectual property rights to existing testing data by either
purchasing the rights to the data or obtaining a seat on the task
force. The costs associated with obtaining either the testing data or a
task force seat to enter the markets for MCPA, MCPP-p, and 2,4DB are
high compared to the limited potential sales revenues available to an
entrant in each of these markets. Additionally, obtaining EPA approval
for the manufacture and sale of each of the relevant products can take
several years due to the presence of regulatory barriers. As a result,
entry into each relevant market would require substantial sunk costs
that would make entry unattractive. In addition, prior to the
acquisition, Nufarm had entered into contracts with several of its task
force members which posed barriers to entry by these firms. Therefore,
the prospect of entry into the relevant markets is very limited and
does not alleviate the concerns about the adverse competitive effects
of the acquisition.
IV. Effects of the Acquisition
The acquisition is likely to cause significant competitive harm to
consumers in the relevant U.S. markets for MCPA, MCPP-p, and 2,4DB by
eliminating the direct and substantial competition between Nufarm and
A.H. Marks. There is evidence that Nufarm acquired A.H. Marks with the
expectation that it would be able to increase prices as a result of the
merger. In addition, the evidence indicated that in some instances
Nufarm may have increased its prices for the three
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herbicides following the merger. As a result, the transaction increased
the likelihood that Nufarm could unilaterally exercise market power and
raise prices in each of the relevant markets.
V. Terms of the Proposed Decision and Order
The Consent Agreement preserves competition in each of the relevant
markets alleged in the complaint by requiring that Nufarm divest
certain A.H. Marks assets to new entrants and take additional measures
to restore competition in the markets for MCPA, MCPP-p, and 2,4DB.
Specifically, Nufarm has agreed to sell A.H. Marks' EPA registration
and task force seat for MCPA to Albaugh Inc., and A.H. Marks' EPA
registration and task force seat for MCPP-p to PBI Gordon Corp. Nufarm
has also agreed to modify its contractual agreements with Dow and Aceto
relating to MCPA and 2.4-DB, which restricted these firms' competitive
activities in the markets for MCPA and 2,4-DB. Staff has evaluated the
proposed divestitures and modifications and concluded that these
measures are sufficient to remedy the anticompetitive effects resulting
from the transaction.
For both MCPA and MCPP-p, the purchase of a task force seat and EPA
registration will permit each divestiture purchaser to enter and
compete in these markets. By acquiring A.H. Mark's task force seat and
EPA registration, the divestiture purchasers will obtain EPA approval
to distribute the herbicide in the United States and certify additional
manufacturing sources of the herbicides. In addition to the task force
seat and EPA registration, Nufarm is required to enter into supply
agreements with each divestiture purchaser to permit these purchasers
to compete with Nufarm as wholesale suppliers of the herbicides while
new manufacturing sources are developed.
With respect to MCPA, Nufarm would divest AH Mark's MCPA Task Force
Seat and EPA registrations relating to MCPA to Albaugh. Albaugh is a
qualified divestiture candidate that is uniquely situated to use the
A.H. Marks assets and supply contract to compete with Nufarm in the
market for MCPA. Albaugh is the largest privately-owned formulator of
crop protection products. Albaugh is headquartered in Ankeny, Iowa and
sells exclusively in the United States. Within the crop protection
industry, Albaugh has extensive relationships with firms at every level
of distribution. Given Albaugh's position, commitment, and experience
in the MCPA market, staff believes that divestiture of A.H. Marks' MCPA
assets will enable Albaugh to restore the competition lost as a result
of the transaction.
With respect to MCPP-p, Nufarm would divest A.H. Mark's MCPP-p Task
Force Seat and EPA registrations relating to MCPP-p to PBI Gordon and
enter a three-year supply arrangement. PBI Gordon, headquartered in
Kansas City, Missouri, is a privately held company founded in 1947. PBI
Gordon is a long-standing player in the turf care industry. Its primary
business is the development, manufacture, and marketing of herbicides,
pest management, and related products to the lawn, garden, professional
turf, and specialty agricultural markets. It has an extensive
distribution network and a wide customer base. PBI Gordon's presence in
the market, combined with its expertise with herbicides, will ensure it
will use the assets to compete with Nufarm in the market for MCPP-p.
The Consent Agreement also addresses concerns regarding Nufarm's
agreements with Dow and Aceto by preventing Nufarm from enforcing
agreements which may limit or restrict competitive entry in the MCPA
and 2,4DB markets. Pursuant to Section V of the proposed Decision and
Order, Nufarm agreed not to enforce any provision, or otherwise take
any future action, restricting competition in the manufacture or sale
of MCPA, 2,4DB or MCPP-p. Nufarm's compliance with these provisions
will enable Dow and Aceto to enter these respective markets, as
manufacturers and/or wholesalers, and compete with Nufarm for sales.
Equally important, Dow and Aceto will be able to use their task force
seats and registrations to sponsor new entrants to the United States
markets for these herbicides. The resulting entry, or threat of entry,
is likely to serve as an additional competitive constraint in both the
MCPA and 2,4DB markets. Lastly the Consent Agreement contains several
other significant provisions. Section IV of the proposed Order permits
Nufarm's customers to terminate their contracts with Nufarm with
respect to the products. Section VII requires Nufarm to notify the
Commission if it: (a) acquires any task force seat or registration with
respect to the products or (b) enters into any agreements with task
force members or registrants that contain non-compete, joint-marketing
or other provisions restricting competition. Section VIII requires
Nufarm to divest the MCPA and MCPP-p assets to a trustee in the event
Nufarm fails to comply with the divestiture obligations for these
assets in the 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, Commissioner Ramirez recused.
Donald S. Clark
Secretary.
[FR Doc. 2010-19079 Filed 8-3-10; 7:33 am]
BILLING CODE 6750-01-S