Quexco To Settle FTC Charges

Quexco Incorporated has agreed to settle Federal Trade Commission charges that its acquisition of Pacific Dunlop GNB Corporation would create a monopoly that could result in reduced competition and increased prices in the market for lead smelting, refining and recycling services in California. To settle the FTC charges, Quexco would divest a GNB secondary lead smelter in California to Gopher Resources, Inc., or another Commission-approved buyer.

Quexco is based in Dallas, Texas. GNB is a wholly-owned subsidiary of Australian-based Pacific Dunlop Limited. Quexco and GNB are the only two lead smelter operators and lead recyclers in California. Secondary lead smelters recycle products such as old lead-acid batteries rather than using ore to produce pure lead or lead alloys. For most uses, primary or secondary lead are interchangeable.

According to the FTC complaint detailing the charges, Quexco and GNB are the only two operators of lead smelters in California and the only two firms that perform lead recycling there. The GNB acquisition would give Quexco a monopoly and allow it to raise prices for lead smelting, refining and recycling in California. The FTC alleges that because of lead's toxicity and the difficulty in obtaining permits to operate a smelter operation, new entry into the California market would not be timely, likely or sufficient to deter Quexco from exercising market power.

The proposed settlement would require that Quexco divest GNB's secondary smelter to Gopher Resources, Inc., under the terms of a contract that currently exists between them, or to another Commission-approved buyer. The settlement allows Quexco to complete its acquisition during the 60 day public comment period but requires that it hold separate GNB's California smelter and sell it to Gopher within 10 days of the Commission Order being made final. If the sale to Gopher is not approved by the Commission, Quexco must divest the GNB smelter to another Commission-approved buyer within six months.

A summary of the proposed consent agreement will be published in the Federal Register shortly. It will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

The Commission vote to accept the proposed consent agreement was 4-0.

NOTE: 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 $11,000.

Copies of the complaint and proposed consent agreement are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. 981-0327)