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UNITED STATES OF AMERICA In the Matter of Docket No. C-3904 The Federal Trade Commission ("Commission"), having reason to believe that Respondent Precision Castparts Corp. ("PCC"), a corporation subject to the jurisdiction of the Commission, has agreed to acquire 100 percent of the voting securities of Respondent Wyman-Gordon Company ("Wyman-Gordon"), a company subject to the jurisdiction of the Commission, in violation of 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, 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. DEFINITIONS 1. "Aerospace Investment Cast Components" means dimensionally precise metal components manufactured using the investment casting process that are used primarily in aerospace jet engine and aerospace airframe applications. 2. "Titanium Aerospace Investment Cast Components" means Aerospace Investment Cast Components manufactured using titanium alloy. 3. "Large Stainless Steel Aerospace Investment Cast Components" means Aerospace Investment Cast Components with a diameter greater than 24 inches manufactured using stainless steel. 4. "Large Nickel-based Superalloy Aerospace Investment Cast Components" means Aerospace Investment Cast Components with a diameter greater than 24 inches manufactured using nickel-based superalloy. 5. "Merger Agreement" means the Agreement and Plan of Merger Among Precision Castparts Corp., WGC Acquisition Corp., and Wyman-Gordon Company, dated May 17, 1999. 6. "Respondents" means PCC and Wyman-Gordon. II. RESPONDENTS 7. Respondent PCC is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Oregon, with its office and principal place of business located at 4650 S.W. Macadam Avenue, Suite 440, Portland, Oregon 97201-4254. 8. Respondent Wyman-Gordon is a corporation organized, existing, and doing business under and by virtue of the laws of the Commonwealth of Massachusetts, with its office and principal place of business located at 244 Worcester Street, Grafton, Massachusetts 01536-8001. 9. Respondent Wyman-Gordon, through a joint venture with Titanium Metals Corporation, and Respondent PCC are engaged in, among other things, the development, manufacture, and sale of Titanium Aerospace Investment Cast Components. 10. Respondent Wyman-Gordon and Respondent PCC are engaged in, among other things, the development, manufacture, and sale of Large Stainless Steel and Large Nickel-based Superalloy Aerospace Investment Cast Components. 11. Respondents are, and at all times relevant herein have been, engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. § 12, and are corporations whose businesses are in or affect commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 44. III. THE ACQUISITION 12. On May 17, 1999, PCC and Wyman-Gordon entered into the Merger Agreement under which PCC is to acquire through a cash tender offer 100 percent of the voting securities of Wyman-Gordon valued at approximately $721 million ("Acquisition"). IV. THE RELEVANT MARKETS 13. For purposes of this Complaint, the relevant lines of commerce in which to analyze the effects of the Acquisition are:
14. For purposes of this Complaint, the world is the relevant geographic area in which to analyze the effects of the Acquisition in the relevant lines of commerce. V. STRUCTURE OF THE MARKETS 15. The market for the development, manufacture, and sale of Titanium Aerospace Investment Cast Components is highly concentrated as measured by the Herfindahl-Hirschman Index. PCC and Wyman-Gordon are two of four significant suppliers of Titanium Aerospace Investment Cast Components in the world. 16. The market for the development, manufacture, and sale of Large Stainless Steel Aerospace Investment Cast Components is highly concentrated as measured by the Herfindahl-Hirschman Index. PCC and Wyman-Gordon are two of six significant suppliers of Large Stainless Steel Aerospace Investment Cast Components in the world. 17. The market for the development, manufacture, and sale of Large Nickel-based Superalloy Aerospace Investment Cast Components is highly concentrated as measured by the Herfindahl-Hirschman Index. PCC and Wyman-Gordon are two of four significant suppliers of Large Nickel-based Superalloy Aerospace Investment Cast Components in the world. VI. BARRIERS TO ENTRY 18. Entry into each relevant market is difficult and would not occur in a timely manner to deter or counteract the adverse competitive effects described in Paragraph 19 because of the time required to acquire a manufacturing facility and the necessary specialized equipment, to develop the necessary engineering and process technology, and to obtain the customer-required certifications and approvals that are necessary to develop, manufacture, and sell Titanium, Large Stainless Steel, and Large Nickel-based Superalloy Aerospace Investment Cast Components. VII. EFFECTS OF THE ACQUISITION 19. The effects of the Acquisition, if consummated, may be substantially to lessen competition and to tend to create a monopoly in the relevant markets in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the FTC Act, as amended, 15 U.S.C. § 45, in the following ways, among others:
VIII. VIOLATIONS CHARGED 20. The Merger Agreement described in Paragraph 12 constitutes a violation of Section 5 of the FTC Act, as amended 15 U.S.C. § 45. 21. The Acquisition described in Paragraph 12, if consummated, would constitute a violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the FTC Act, as amended, 15 U.S.C. § 45. WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on this ninth day of November, 1999, issues its Complaint against said Respondents. By the Commission. |