FTC Obtains $5.6 Million from German and Brazilian Piston Manufacturers for Failure To File for U.S. Antitrust Review; Civil Penalty is Largest Ever

Federal Trade Commission attorneys today filed a complaint in federal court charging Mahle GmbH, a German piston manufacturer, and Metal Leve S.A., a Brazilian competitor, with failing to notify federal officials of Mahle’s proposed acquisition of a controlling interest in Metal Leve. Mahle and Metal Leve have agreed to pay a record $5.6 million civil penalty to resolve the charges.

Both Mahle GmbH and Metal Leve S.A. manufacture diesel engine parts, including pistons, through U.S. subsidiaries -- Mahle, Inc., located in Morristown, Tennessee; and Metal Leve, Inc., based in Ann Arbor Michigan, respectively.

The complaint filed today charges that Mahle acquired 50.1 percent of the voting securities of Metal Leve for approximately $40 million on or before June 26, 1996, without Mahle and Metal Leve first filing notifications with the FTC and the Department of Justice as required by the Hart-Scott-Rodino Act, commonly known as the HSR Act, which requires companies to give federal antitrust officials notice of mergers and acquisitions.

The complaint alleges that both Mahle and Metal Leve knew that their deal posed serious antitrust problems and completed the transaction knowing that they were violating the HSR Act. The complaint specifically alleged that Mahle and Metal Leve "were aware of their obligation to make preacquisition filings under the HSR Act" and that each of the two firms "consulted with U.S. counsel or U.S. investment bankers and were apprised of the requirement under the HSR Act that they each file Notification and Report Forms with U.S. antitrust authorities." In fact, the complaint alleges that each firm had "considered ignoring the HSR reporting requirements" and treating the HSR reporting obligation "as a tradeoff between the costs of compliance with the Act and the potential risks of noncompliance with the Act." The complaint alleges, that both Mahle and Metal Leve were in continuous violation of the HSR Act each day from June 26, 1996 until at least March 20, 1997.

Companies in violation of the HSR Act can be subject to civil penalties of up to $11,000 per day.

The HSR Act applies to acquisitions between foreign firms as well as domestic firms, where the companies have substantial U.S. sales or assets.

The FTC previously announced that the Commission had reached two agreements with Mahle and Metal Leve. The first, the agreement filed with the complaint today, provides for civil penalties for violating the HSR Act. The second agreement, an administrative settlement, resolved FTC charges that the acquisition of Metal Leve by Mahle violated federal antitrust laws by substantially reducing competition in the markets for articulated and large-bore, two piece pistons used in diesel engines. The agreement required Mahle to divest Metal Leve’s U.S. piston business, as well as technology outside the U.S. which supports the business of manufacturing and selling pistons in the U.S. (See February 27, 1997 news release for more details.)

The agreement for civil penalties provided for the maximum allowed under law from both Mahle and Metal Leve from the date of the acquisition until the companies filed an application acceptable to the FTC for the divestiture required by the administrative agreement. On June 6, the FTC announced that Metal Leve’s application for approval of divestiture submitted on March 20 was approved. (See June 6, 1997 news release for more details; Docket No. C-3746.) Metal Leve has now divested the required businesses to T&N Industries, Inc., an Ann Arbor, Michigan based subsidiary of the British T&N plc.

The agreement for civil penalties was filed on behalf of the United States by FTC staff attorneys appointed as Special Attorneys to the U.S. Attorney General. The agreement was filed today in the U.S. District Court for the District of Columbia. The settlement is subject to approval by the court.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation.

Copies of the federal court complaint and stipulated settlement, the administrative complaint and order, and the previous press releases are available from the FTC’s web site at http://www.ftc.gov and also from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(Civil Action No. 1:97CV01404)
(FTC File No. 961-0085)