Houghton International Agrees to Sell Aluminum Production Assets to Settle Charges that 2008 Acquisition of Stuart was Anticompetitive

Settling a complaint by the Federal Trade Commission, Houghton International, Inc., the leading North American provider of hot rolling oil used to process aluminum, has agreed to sell some of the assets it acquired in 2008 through its purchase of D.A. Stuart GmbH, a transaction that included multiple product markets.

The FTC’s investigation found that Houghton’s acquisition of D.A. Stuart GmbH combined the two largest suppliers of aluminum hot rolling oil (AHRO) in North America, giving the combined firm control of almost 75 percent of the North American market.

The FTC’s complaint alleges that, through its purchase of Stuart, Houghton could unilaterally raise AHRO prices to U.S. consumers. The complaint also alleges that the acquisition could decrease innovation for this vital input into aluminum manufacturing. Under the order settling the FTC’s charges, Houghton will sell Stuart’s AHRO business to Quaker Chemical Corporation.

AHRO is a critical input in an industrial process that ultimately produces many of the aluminum products manufactured in the United States, including automobile parts, beverage cans, aluminum aerospace and defense products, as well as building products like window frames and rain gutters. AHRO lubricates and cools metal as it is turned into coils or plates of finished aluminum stock. Formulating AHROs for specific mills is an extremely complex process, and Houghton and Stuart are two of a limited number of companies with the expertise to manufacture and sell these products.

The FTC order contains several provisions to ensure that the sale of the AHRO business to Quaker is successful and that Quaker will compete with Houghton as aggressively in the future as Stuart did in the past. First, it requires Houghton to provide transitional services to Quaker to ensure a smooth transfer of the AHRO assets. Second, it allows the FTC to appoint a trustee to oversee the assets’ sale if Houghton fails to complete the divestiture in the time required. Third, it requires Houghton to remove any impediments that might prevent former Stuart employees with AHRO experience from taking new jobs with Quaker. Finally, the order allows the FTC to appoint an interim monitor to oversee compliance with its terms.

The FTC vote approving the complaint and proposed settlement order was 5-0. The order will be subject to public comment for 30 days, until August 16, 2010, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. To submit a comment electronically, please click on: https://ftcpublic.commentworks.com/houghton.

NOTE: The Commission issues a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of a complaint is not a finding or ruling that the respondent has violated the law. A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

Copies of the complaint, consent order, and an analysis to aid in public comment can be found on the FTC’s website at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.