In the Matter of Rhodia, Donau Chemie AG, and

9910237

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

COMMISSIONERS:: Robert Pitofsky, Chairman; Sheila F. Anthony; Mozelle W. Thompson; Orson Swindle; Thomas B. Leary

In the Matter of
RHODIA, a corporation,
DONAU CHEMIE AG, a corporation, and
ALBRIGHT & WILSON PLC, a corporation.

Docket No. C-3930

DECISION AND ORDER

The Federal Trade Commission having initiated an investigation of the proposed acquisition by Respondent Rhodia of Albright & Wilson PLC ("Albright & Wilson") from Donau Chemie AG ("Donau"), and Respondents having been furnished thereafter with a copy of a draft of Complaint that the Bureau of Competition presented to the Commission for its consideration and which, if issued by the Commission, would charge Respondents with violations 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

Respondents, their attorneys, and counsel for the Commission having thereafter executed an Agreement Containing Consent Orders ("Consent Agreement"), containing an admission by Respondents of all the jurisdictional facts set forth in the aforesaid draft of Complaint, a statement that the signing of said Consent Agreement is for settlement purposes only and does not constitute an admission by Respondents that the law has been violated as alleged in such Complaint, or that the facts as alleged in such Complaint, other than jurisdictional facts, are true, and waivers and other provisions as required by the Commission's Rules; and

The Commission having thereafter considered the matter and having determined that it had reason to believe that Respondents have violated the said Acts, and that a Complaint should issue stating its charges in that respect, and having thereupon issued its Complaint and an Order to Maintain Assets, and having accepted the executed Consent Agreement and placed such Consent Agreement on the public record for a period of thirty (30) days for the receipt and consideration of public comments, now in further conformity with the procedure described in Commission Rule 2.34, 16 C.F.R. § 2.34, the Commission hereby makes the following jurisdictional findings and issues the following Order:

Rhodia is a corporation organized, existing and doing business under and by virtue of the laws of France, with its office and principal place of business located at 26, quai Alphonse Le Gallo, 92512 Boulogne-Billancourt Cédex, France.
Donau is a corporation organized, existing and doing business under and by virtue of the laws of Austria, with its office and principal place of business located at Am Heumarkt 10, A-1037, Vienna, Austria.
Albright & Wilson is a corporation organized, existing and doing business under and by virtue of the laws of the United Kingdom, with its office and principal place of business located at 210-222 Hagley Road West, Oldbury, West Midlands, B68 ONN, England.
The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of Respondents, and the proceeding is in the public interest.

ORDER

IT IS ORDERED that, as used in this Order, the following definitions shall apply:

A. "Rhodia" means Rhodia, its directors, officers, employees, agents, representatives, successors, and assigns; its subsidiaries, divisions, groups, and affiliates controlled by Rhodia, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

B. "Albright & Wilson" means Albright & Wilson PLC, its directors, officers, employees, agents, representatives, successors, and assigns; its subsidiaries, divisions, groups, and affiliates controlled by Albright & Wilson, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

C. "Donau" means Donau Chemie AG, its directors, officers, employees, agents, representatives, successors, and assigns; its subsidiaries, divisions, groups, and affiliates controlled by Donau, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

D. "Commission" means the Federal Trade Commission.

E. "Respondents" means Rhodia, Albright & Wilson, and Donau, respectively and collectively.

F. "Acquisition" means the Acquisition by Rhodia of Albright & Wilson as described in the March 30, 1999, Heads of Agreement and March 30, 1999, Call Option Agreement between Rhodia and Donau.

G. "PCS" means Potash Corporation of Saskatchewan Inc., its subsidiaries, divisions, groups, and affiliates controlled by PCS, including, but not limited to, PCS Phosphate Company, Inc.

H. "Purified Acid Joint Venture" or "Joint Venture" means the joint venture between Albright & Wilson and PCS, established pursuant to the July 29, 1988, General Partnership Agreement between Albright & Wilson Americas Inc. and Texasgulf, Inc., as amended.

I. "Aurora Plant" means the Joint Venture's plant in Aurora, North Carolina which manufactures Joint Venture Phosphoric Acid.

J. "Cincinnati Plant" means the Joint Venture's manufacturing plant in Cincinnati, Ohio.

K. "Joint Venture Phosphoric Acid" means the phosphoric acid that is produced at the Aurora Plant and sold by the Purified Acid Joint Venture, including all grades and types of phosphoric acid that are or have been produced and sold by the Joint Venture.

L. "Cincinnati Products" means the phosphoric acid blends and phosphate salts produced at the Cincinnati Plant.

M. "Albright & Wilson Phosphate Salts" means phosphate salts that currently are or have been manufactured and/or sold by the Joint Venture or Albright & Wilson.

N. "Joint Venture Products" means Joint Venture Phosphoric Acid and Cincinnati Products.

O. "Albright & Wilson Interest" means the interest in the Purified Acid Joint Venture that is owned or controlled by Albright & Wilson.

P. "PCS Divestiture Agreement" means the agreements between Rhodia, Albright & Wilson, PCS and the Joint Venture by which Albright & Wilson has agreed to sell and PCS has agreed to acquire the Assets To Be Divested.

Q. "Intellectual Property" means any form of intellectual property relating to the research, development, manufacture or sale of Joint Venture Products, including, but not limited to, trademarks, patents, trade secrets, research materials, technical information, management information systems, software, inventions, test data, technological know-how, licenses, registrations, submissions, approvals, technology, specifications, designs, drawings, processes, recipes, protocols, formulas, customer lists, vendor lists, catalogs, sales promotion literature, advertising materials, quality control data, books, records, and files.

R. "Assets To Be Divested" means the assets, properties, business and goodwill, tangible and intangible, of the Joint Venture or of Albright & Wilson that relate to Joint Venture Products, including, but not limited to:

1. the Albright &Wilson Interest;

2. the Aurora Plant and the Cincinnati Plant, including all machinery, furniture, fixtures, tools and other tangible personal property;

3. all other assets, properties, business and goodwill, tangible and intangible, owned, leased or possessed by Albright & Wilson relating to Joint Venture Phosphoric Acid, including, but not limited to:

a. royalty-free, non-exclusive license to all rights, title, and interest in and to Intellectual Property;

b. all rights, title, and interest in and to inventories of products, raw materials (to the extent requested by the acquirer), supplies and parts, including work-in-process and finished goods, relating to the research, design, development, manufacture, marketing or sale of Joint Venture Phosphoric Acid;

c. all rights, title, and interest in and to agreements, express or implied, relating to the research, design, development, manufacture, distribution, marketing or sale of Joint Venture Phosphoric Acid, regardless of whether such agreements relate exclusively to such purposes, including, but not limited to, warranties, guarantees, and contracts with joint venture partners, suppliers, sales representatives, distributors, agents, personal property lessors, personal property lessees, licensors, licensees, consignors, consignees, and customers; provided that, to the extent that any agreements relating to the sale of Joint Venture Phosphoric Acid also relate to the sale of phosphate salts, Respondents are not required to divest those portions of such agreements that relate to the sale of Albright & Wilson Phosphate Salts;

d. all rights, title and interest in and to permits and approvals relating to the research, design, development, manufacture, distribution, marketing or sale of Joint Venture Phosphoric Acid, regardless of whether such permits and approvals relate exclusively to such purposes, to the extent permitted by law;

e. all customer and vendor lists, catalogs, sales promotion literature and advertising materials relating to the research, design, development, manufacture, distribution, marketing, or sale of Joint Venture Phosphoric Acid;

f. all equipment, vehicles and transportation facilities related to Joint Venture Phosphoric Acid, except to the extent that such assets relate exclusively to the marketing or sale of Albright & Wilson Phosphate Salts;

g. all storage capacity related to Joint Venture Phosphoric Acid;

h. all rights, title and interest in and to owned or leased real property, together with appurtenances, licenses and permits related to Joint Venture Phosphoric Acid;

i. all rights under warranties and guarantees, express or implied, related to Joint Venture Phosphoric Acid;

j. all books, records, and files related to Joint Venture Phosphoric Acid; and

k. all items of prepaid expense related to Joint Venture Phosphoric Acid;

4. all other assets, properties, business and goodwill, tangible and intangible, owned, leased or possessed by Albright & Wilson relating to Cincinnati Products, including, but not limited to:

a. a royalty-free, non-exclusive license to all rights, title, and interest in and to Intellectual Property;

b. all rights, title, and interest in and to inventories of products, raw materials (to the extent requested by the acquirer), supplies and parts, including work-in-process and finished goods, relating to the research, design, development or manufacture of Cincinnati Products; provided, however, that Respondents are not required to divest inventories of finished and packaged Albright & Wilson Phosphate Salts;

c. all rights, title, and interest in and to agreements, express or implied, relating to the research, design, development or manufacture of Cincinnati Products, regardless of whether such agreements relate exclusively to such purposes, including, but not limited to, warranties, guarantees, and contracts with joint venture partners, suppliers, sales representatives, distributors, agents, personal property lessors, personal property lessees, licensors, licensees, consignors, consignees, and customers;

d. all rights, title and interest in and to permits and approvals relating to the research, design, development or manufacture of Cincinnati Products, regardless of whether such permits and approvals relate exclusively to such purposes, to the extent permitted by law;

e. all equipment, vehicles and transportation facilities related to Cincinnati Products, except to the extent that such assets relate exclusively to the marketing or sale of Albright & Wilson Phosphate Salts;

f. all storage capacity related to Cincinnati Products, except to the extent that such assets are used exclusively in the marketing or sale of Albright & Wilson Phosphate Salts;

g. all rights, titles and interests in and to owned or leased real property, together with appurtenances, licenses and permits related to Cincinnati Products, except to the extent that such assets are used exclusively in the marketing or sale of Albright & Wilson Phosphate Salts;

h. all rights under warranties and guarantees, express or implied, related to Cincinnati Products;

i. all books, records, and files related to Cincinnati Products, except to the extent that such assets are used exclusively in the marketing or sale of Albright & Wilson Phosphate Salts; and

j. all items of prepaid expense related to Cincinnati Products.

S. "Trustee" means a trustee appointed pursuant to Paragraph III.A. of this Order.

II.

IT IS FURTHER ORDERED that:

A. Respondents shall divest the Assets To Be Divested to PCS pursuant to the PCS Divestiture Agreement no later than ten (10) days after Rhodia's consummation of the Acquisition. The purpose of the divestiture is to ensure the continued use of the Assets To Be Divested in the same business in which they were engaged at the time of the Acquisition and to remedy the lessening of competition resulting from the Acquisition as alleged in the Commission's complaint. Failure by Respondents to perform the divestiture agreement shall also constitute a violation of this Order.

Provided, however, that, if at that time the Commission determines to issue the Order, the Commission notifies Respondents that PCS is not an acceptable acquirer or that the PCS Divestiture Agreement is not an acceptable manner of divestiture, the Respondents shall, within one-hundred and twenty (120) days from the date on which this Order is issued by the Commission, divest the Assets To Be Divested to an acquirer that is approved by the Commission, and in a manner approved by the Commission.

B. No later than the date on which a divestiture agreement is signed with the proposed acquirer, Respondents shall provide the proposed acquirer with a complete list of all non-clerical employees of Albright & Wilson who have been or were engaged in the research, development, manufacture or sale of Joint Venture Phosphoric Acid, or the research, development or manufacture of Cincinnati Products, at any time during the period from January 1, 1999, until the date of such divestiture agreement. Such list shall state each such individual's name, position, address, current or last known business telephone number and a description of the duties and work performed by the individual in connection with Joint Venture Products.

C. Respondents shall provide the proposed acquirer the opportunity to enter into employment contracts with the non-clerical employees described in Paragraph II.B.

D. Respondents shall provide the proposed acquirer with an opportunity to inspect the personnel files and other documentation relating to all non-clerical employees who have been engaged in the research, development, manufacture or sale of Joint Venture Phosphoric Acid or the research, development or manufacture of Cincinnati Products, to the extent permissible under applicable laws, at the request of the proposed acquirer no later than the date of the execution of the related divestiture agreement.

E. Respondents shall provide the individuals identified in Schedule A of this Order, hereto attached, with financial incentives to accept employment with the Commission-approved acquirer at the time of the divestiture. Such incentives shall include, but not be limited to:

1. a bonus equal to fifteen (15) percent of the employee's annual salary (including any other bonuses except for the portion of any bonus payable solely as a result of Albright & Wilson's guaranteed bonus program) as of the date this Order is issued by the Commission for any individual who agrees to accept an offer of employment from the Commission-approved acquirer, payable by Respondents, as follows: 1) a ten (10) percent bonus upon the beginning of the employee's employment with the Commission-approved acquirer; and 2) a five (5) percent bonus upon the employee's completion of one year of employment with the Commission-approved acquirer; and

2. the severance payment to which Albright & Wilson employees would be entitled upon termination if, less than twelve (12) months after the date on which such employee commences employment with the Commission-approved acquirer, the Commission-approved acquirer terminates the employment of such employee for reasons other than cause. The amount of such severance payment shall be equal to the payment that such employee would have received had he or she remained in the employ of Albright & Wilson and been terminated at such time, less any severance payment actually paid by the Commission-approved acquirer.

F. Respondents shall not make employment offers to any individual listed in Schedule A of this Order for a period of one (1) year after this Order has been issued if such individual has accepted an employment offer from the Commission-approved acquirer. Respondents may make employment offers fifteen (15) days after this Order has been issued to any individual listed in Schedule A who has not accepted an employment offer from the Commission-approved acquirer.

G. Respondents shall not interfere with the employment by the Commission-approved acquirer of the individuals listed in Schedule A; shall not offer any incentive to such employees to decline employment with the Commission-approved acquirer or to accept other employment with the Respondents; and shall remove any impediments that may deter such employees from accepting employment with the Commission-approved acquirer, including, but not limited to, any non-compete or confidentiality provisions of employment or other contracts with the Respondents that would affect the ability of those individuals to be employed by the Commission-approved acquirer. Provided, however, that any such waiver is limited to employment with the Commission-approved acquirer.

III.

IT IS FURTHER ORDERED that:

A. If Respondents have not divested, absolutely and in good faith and with the Commission's prior approval, the Assets To Be Divested in accordance with Paragraph II.A. of this Order, the Commission may appoint a trustee to divest the Assets To Be Divested. In the event that the Commission or the Attorney General brings an action pursuant to § 5(l) of the Federal Trade Commission Act, 15 U.S.C. § 45(l), or any other statute enforced by the Commission, Respondents shall consent to the appointment of a trustee in such action. Neither the appointment of a trustee nor a decision not to appoint a trustee under this Paragraph shall preclude the Commission or the Attorney General from seeking civil penalties or any other relief available to it, including a court-appointed trustee, pursuant to § 5(l) of the Federal Trade Commission Act, or any other statute enforced by the Commission, for any failure by the Respondents to comply with this Order.

B. If a trustee is appointed by the Commission or a court pursuant to Paragraph III.A. of this Order, Respondents shall consent to the following terms and conditions regarding the trustee's powers, duties, authority, and responsibilities:

1. The Commission shall select the trustee, subject to the consent of Respondents, which consent shall not be unreasonably withheld. The trustee shall be a person with experience and expertise in acquisitions and divestitures. If Respondents have not opposed, in writing, including the reasons for opposing, the selection of any proposed trustee within ten (10) days after notice by the staff of the Commission to Respondents of the identity of any proposed trustee, Respondents shall be deemed to have consented to the selection of the proposed trustee.

2. Subject to the prior approval of the Commission, the trustee shall have the exclusive power and authority to divest the Assets To Be Divested.

3. Within ten (10) days after appointment of the trustee, Respondents shall execute a trust agreement that, subject to the prior approval of the Commission and, in the case of a court-appointed trustee, of the court, transfers to the trustee all rights and powers necessary to permit the trustee to effect the divestiture required by this Order.

4. The trustee shall have twelve (12) months from the date the Commission approves the trust agreement described in Paragraph III.B.3. to accomplish the divestiture, which shall be subject to the prior approval of the Commission. If, however, at the end of the twelve-month period, the trustee has submitted a plan of divestiture or believes that divestiture can be achieved within a reasonable time, the divestiture period may be extended by the Commission, or, in the case of a court-appointed trustee, by the court; provided, however, the Commission may extend this period only two (2) times.

5. The trustee shall have full and complete access to the personnel, books, records and facilities related to the Assets To Be Divested or to any other relevant information, as the trustee may request. Respondents shall develop such financial or other information as such trustee may request and shall cooperate with the trustee. Respondents shall take no action to interfere with or impede the trustee's accomplishment of the divestiture. Any delays in divestiture caused by Respondents shall extend the time for divestiture under this Paragraph in an amount equal to the delay, as determined by the Commission or, for a court-appointed trustee, by the court.

6. The trustee shall use his or her best efforts to negotiate the most favorable price and terms available in each contract that is submitted to the Commission, subject to Respondents' absolute and unconditional obligation to divest expeditiously at no minimum price. The divestiture shall be made in the manner and to the acquirer as set out in Paragraph II. of this Order; provided, however, if the trustee receives bona fide offers from more than one acquiring entity, and if the Commission determines to approve more than one such acquiring entity, the trustee shall divest to the acquiring entity selected by Respondents from among those approved by the Commission; provided further, however, that Respondents shall select such entity within five (5) business days of receiving notification of the Commission's approval.

7. The trustee shall serve, without bond or other security, at the cost and expense of Respondents, on such reasonable and customary terms and conditions as the Commission or a court may set. The trustee shall have the authority to employ, at the cost and expense of Respondents, such consultants, accountants, attorneys, investment bankers, business brokers, appraisers, and other representatives and assistants as are necessary to carry out the trustee's duties and responsibilities. The trustee shall account for all monies derived from the divestiture and all expenses incurred. After approval by the Commission and, in the case of a court-appointed trustee, by the court, of the account of the trustee, including fees for his or her services, all remaining monies shall be paid at the direction of the Respondents, and the trustee's power shall be terminated. The trustee's compensation shall be based at least in significant part on a commission arrangement contingent on the trustee's divesting the Assets To Be Divested.

8. Respondents shall indemnify the trustee and hold the trustee harmless against any losses, claims, damages, liabilities, or expenses arising out of, or in connection with, the performance of the trustee's duties, including all reasonable fees of counsel and other expenses incurred in connection with the preparation for, or defense of, any claim, whether or not resulting in any liability, except to the extent that such losses, claims, damages, liabilities, or expenses result from misfeasance, gross negligence, willful or wanton acts, or bad faith by the trustee.

9. If the trustee ceases to act or fails to act diligently, a substitute trustee shall be appointed in the same manner as provided in Paragraph III.A. of this Order.

10. The Commission or, in the case of a court-appointed trustee, the court, may on its own initiative or at the request of the trustee issue such additional orders or directions as may be necessary or appropriate to accomplish the divestiture required by this Order.

11. The trustee shall have no obligation or authority to operate or maintain any assets relating to the research, development, manufacture or sale of Joint Venture Phosphoric Acid, or the research, development or manufacture of Cincinnati Products.

12. The trustee shall report in writing to Respondents and the Commission every sixty (60) days concerning the trustee's efforts to accomplish divestiture.

IV.

IT IS FURTHER ORDERED that within thirty (30) days of the date this Order is issued and every thirty (30) days thereafter until Respondents have fully complied with the provisions of Paragraphs II. or III. of this Order, Respondents shall submit to the Commission a verified written report setting forth in detail the manner and form in which they intend to comply, are complying, and have complied with Paragraphs II. and III. of this Order. Respondents shall include in their compliance reports, among other things that are required from time to time, a full description of the efforts being made to comply with Paragraphs II. and III. of this Order, including a description of all substantive contacts or negotiations for divestiture and the identity of all parties contacted. Respondents shall include in their compliance reports copies of all written communications to and from such parties, all internal memoranda, all reports and recommendations concerning divestiture, and all transition services required to be rendered pursuant to the agreement approved by the Commission.

IT IS FURTHER ORDERED that Respondents shall notify the Commission at least thirty (30) days prior to any proposed change in the corporate Respondents such as dissolution, assignment, or sale resulting in the emergence of a successor corporation, or the creation or dissolution of subsidiaries or any other change in the corporation that may affect compliance obligations arising out of this Order.

VI.

IT IS FURTHER ORDERED that for the purposes of determining or securing compliance with this Order, and subject to any legally recognized privilege, and upon written request with reasonable notice to Respondents made to their principal United States offices, Respondents shall permit any duly authorized representatives of the Commission:

A. Access, during office hours of Respondents and in the presence of counsel, to all facilities, and access to inspect and copy all books, ledgers, accounts, correspondence, memoranda, and all other records and documents in the possession or under the control of the Respondents relating to compliance with this Order; and

B. Upon five (5) days' notice to Respondents and without restraint or interference from Respondents, to interview officers, directors, or employees of Respondents, who may have counsel present, regarding such matters.

VII.

IT IS FURTHER ORDERED that this Order shall terminate after Respondents have complied with the requirements of Paragraphs II. and III. of this Order.

By the Commission.
Donald S. Clark
Secretary
SEAL
ISSUED:

[Confidential Schedule A Redacted From Public Version]