332 F. Supp. 3d 187
D.C. Cir.2018Background
- Tronox agreed to acquire Cristal’s titanium dioxide (TiO2) business, prompting an FTC administrative complaint alleging the merger would violate Section 7 of the Clayton Act.
- Chloride-process TiO2 (predominant in U.S./Canada) and sulfate-process TiO2 differ in quality and customer use; North American TiO2 is ~99% chloride by 2016.
- Five firms (Chemours, Cristal, Tronox, Kronos, Venator) account for ~99.5% of North American chloride TiO2; the merger would make the combined Tronox-Cristal plus Chemours control ~73% of capacity.
- FTC sought a preliminary injunction under Section 13(b) after administrative proceedings and an ALJ trial; some foreign regulators (EU, China, Saudi Arabia) had already conditionally approved the transaction.
- Economic and documentary evidence (industry and customer testimony, pricing data, expert analyses) supported FTC’s proposed relevant market: chloride-process TiO2 in the United States and Canada, and showed likely post-merger increased concentration and incentives to withhold output.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Relevant product market | FTC: limited to chloride-process TiO2 because of distinct quality, customer preference, and low substitution to sulfate | Defs: chloride and sulfate are interchangeable in most uses; market should include both | Court: market is chloride-process TiO2 (North America); evidence and elasticity analyses support submarket |
| Geographic market | FTC: United States and Canada form distinct North American market (regional pricing, slurry preference, import frictions) | Defs: TiO2 is globally traded; imports/repatriation would neutralize local price increases | Court: North America is the relevant geography; SSNIP/critical-loss and documentary evidence support it |
| Likely anticompetitive effects (concentration, HHI) | FTC: merger would raise HHI substantially (from moderately concentrated to highly concentrated), creating presumption of harm and facilitation of coordinated withholding | Defs: market remains competitive; Chinese entrants and efficiencies will discipline prices | Court: Merger would raise HHI >200 points to a highly concentrated market and likely increase incentives for strategic output withholding; presumption stands |
| Rebuttal (entry, efficiencies) | FTC: Chinese expansion is too slow/uncertain; efficiencies unverified and not merger-specific | Defs: Chinese producers (e.g., Lomon) will expand; merger-specific synergies and cost savings will increase output and lower costs | Court: Defs’ evidence insufficient to rebut; Chinese entry faces technology, capex, and demand constraints; claimed efficiencies are speculative/unverifiable |
Key Cases Cited
- Valspar Corp. v. E.I. Du Pont De Nemours & Co., 873 F.3d 185 (3d Cir. 2017) (industry concentration and prior litigation in TiO2 context)
- F.T.C. v. H.J. Heinz Co., 246 F.3d 708 (D.C. Cir. 2001) (Section 13(b) public-interest preliminary injunction standard)
- United States v. Baker Hughes, Inc., 908 F.2d 981 (D.C. Cir. 1990) (Baker Hughes burden-shifting framework for merger review)
- Brown Shoe Co. v. United States, 370 U.S. 294 (U.S. 1962) (defining product submarkets and market boundaries)
- F.T.C. v. Sysco Corp., 113 F. Supp. 3d 1 (D.D.C. 2015) (public-interest analysis and ‘‘questions going to the merits’’ standard for preliminary injunctions)
- F.T.C. v. Staples, Inc., 190 F. Supp. 3d 100 (D.D.C. 2016) (rejecting speculative future competition as a sufficient rebuttal)