UNITED STATES OF AMERICA
COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and the Clayton Act, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission (“Commission”), having reason to believe that Global Industrial Technologies, Inc. ("Global"), hereinafter sometimes referred to as respondent, has agreed to acquire AP Green Industries, Inc. ("AP Green"), in violation of Section 5 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 45, and Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and it appearing to the Commission that a proceeding in respect thereof would be in the public interest, hereby issues its complaint, stating its charges as follows: I. RESPONDENT 1. Respondent Global Industrial Technologies, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of Delaware with its office and principal place of business located at 2121 San Jacinto Street, Suite 2500 Dallas, Texas, 75201. 2. Respondent manufactures and sells refractories, which are heat-resistant materials used to line furnaces in industries that involve the heating or containment of solids, liquids, or gases at high temperatures. 3. For purposes of this proceeding, respondent is, and at all times relevant herein has been, engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. § 12, and is a corporation whose business is in or affecting commerce as "commerce" is defined in Section 4 of the FTC Act, as amended, 15 U.S.C. § 44. II. THE ACQUIRED COMPANY 4. AP Green is a corporation organized, existing and doing business under and by virtue of the laws of Delaware with its office and principal place of business located at Green Boulevard, Mexico, Missouri, 65265. 5. AP Green also manufactures and sells refractories. 6. For purposes of this proceeding, AP Green is, and at all times relevant herein has been, engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. § 12, and is a corporation whose business is in or affecting commerce as "commerce" is defined in Section 4 of the FTC Act, as amended, 15 U.S.C. § 44. III. THE PROPOSED ACQUISITION 7. On or about March 3, 1998, Global and AP Green entered into an Agreement and Plan of Merger pursuant to which Global, through a subsidiary, agreed to acquire AP Green. 8. Global and AP Green are substantial direct competitors in the United States market for glass-furnace silica refractories. IV. THE RELEVANT MARKET 9. The relevant line of commerce in which to analyze the effects of the acquisition is the United States market for glass-furnace silica refractories, which are heat-resistant materials sold in the form of bricks, shapes, and mortar. Glass manufacturers, including producers of float glass (flat glass for homes, offices, and automobiles), container glass (for bottles and jars), and other types of glass (e.g., for video screens, light bulbs, lenses, and beakers), require glass- furnace silica refractories to build the roofs and several other areas of the glass-melting furnaces in which they melt raw materials—silica, soda ash, salt cake, and dolomite—into a homogenous mass of molten glass. 10. Glass-furnace silica refractories are used by glass manufacturers because they are resistant to acid slags, have a high melting temperature, resist fumes and dust, and do not spall (i.e., flake) at high temperatures. Glass manufacturers would not substitute other materials for glass-furnace silica refractories even in response to a significant increase in price. 11. Imports of glass-furnace silica refractories into the United States are small. The potential for significant imports is constrained by overseas production costs, and shipping and handling costs. Product availability and product quality issues also limit the competitiveness of most of the glass-furnace silica refractories produced overseas. In any event, customers in the United States would require extensive testing over several years before using glass-furnace silica refractories produced overseas. 12. Total annual sales of glass-furnace silica refractories in the United States are approximately $4 million. V. CONCENTRATION 13. Global and AP Green are the only two producers in the United States of glass- furnace silica refractories. Therefore, the United States glass-furnace silica refractories market is extremely concentrated as measured by the Herfindahl-Hirschman Index, and the acquisition would result in a monopoly. 14. It is likely that Global will obtain unilateral market power in the United States market for glass-furnace silica refractories. VI. ENTRY CONDITIONS 15. Entry into the glass-furnace silica refractories market would not be timely, likely or sufficient to deter or offset reductions in competition resulting from the acquisition. 16. Obtaining product qualification at glass producers, who require extensive life cycle testing before they will use glass-furnace silica refractories in their plants because these products are so critical to the manufacturing process, would require many years. The total time from initial entry to significant market impact likely would be many years. 17. Entry would also be unlikely because it would require a large sunk capital investment. Moreover, efficient production would require entry at a scale that would be relatively large compared to the total sales available in the glass-furnace silica refractories market, making entry more risky and unlikely. VII. EFFECTS OF THE ACQUISITION ON COMPETITION 18. The acquisition of AP Green by Global may substantially lessen competition and tend to create a monopoly in the United States market for glass-furnace silica refractories because, among other things:
VIII. VIOLATIONS CHARGED 19. The acquisition agreement between Global and AP Green described in paragraph 5 violates Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45. 20. The proposed acquisition of AP Green by Global would, if consummated, violate Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45. 21. The proposed acquisition of AP Green by Global, if consummated, would allow Global to monopolize the United States markets for glass-furnace silica refractories in violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45. WHEREFORE, the Federal Trade Commission on this _______ day of _____________, 1998, issues its complaint against said respondent. By the Commission. SEAL Donald S. Clark |