American Air Liquide Holdings, Inc.; Analysis To Aid Public Comment, 31637-31641 [2016-11763]
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Board of Governors of the Federal Reserve
System, May 12, 2016.
Michael Lewandowski,
Associate Secretary of the Board.
[FR Doc. 2016–11781 Filed 5–18–16; 8:45 am]
BILLING CODE 6210–01–P
FEDERAL TRADE COMMISSION
[File No. 161 0045]
American Air Liquide Holdings, Inc.;
Analysis To Aid Public Comment
Federal Trade Commission.
Proposed consent agreement.
AGENCY:
ACTION:
The consent agreement in this
matter settles alleged violations of
federal law prohibiting unfair methods
of competition. The attached Analysis to
Aid Public Comment describes both the
allegations in the complaint and the
terms of the consent orders—embodied
in the consent agreement—that would
settle these allegations.
DATES: Comments must be received on
or before June 14, 2016.
ADDRESSES: Interested parties may file a
comment at https://ftcpublic.comment
works.com/ftc/airliquideairgasconsent
online or on paper, by following the
instructions in the Request for Comment
part of the SUPPLEMENTARY INFORMATION
section below. Write ‘‘In the Matter of
American Air Liquide Holdings, Inc.,—
Consent Agreement; File No. 161–0045’’
on your comment and file your
comment online at https://ftcpublic.
commentworks.com/ftc/airliquideairgas
consent by following the instructions on
the web-based form. If you prefer to file
your comment on paper, write ‘‘In the
Matter of American Air Liquide
Holdings, Inc.,—Consent Agreement;
File No. 161–0045’’ on your comment
and on the envelope, and mail your
comment to the following address:
SUMMARY:
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Federal Trade Commission, Office of the
Secretary, 600 Pennsylvania Avenue
NW., Suite CC–5610 (Annex D),
Washington, DC 20580, or deliver your
comment to the following address:
Federal Trade Commission, Office of the
Secretary, Constitution Center, 400 7th
Street SW., 5th Floor, Suite 5610
(Annex D), Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT:
Christine Tasso (202–326–2232), Bureau
of Competition, 600 Pennsylvania
Avenue NW., Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant
to Section 6(f) of the Federal Trade
Commission Act, 15 U.S.C. 46(f), and
FTC Rule 2.34, 16 CFR 2.34, notice is
hereby given that the above-captioned
consent agreement containing consent
orders to cease and desist, having been
filed with and accepted, subject to final
approval, by the Commission, has been
placed on the public record for a period
of thirty (30) days. The following
Analysis to Aid Public Comment
describes the terms of the consent
agreement, and the allegations in the
complaint. An electronic copy of the
full text of the consent agreement
package can be obtained from the FTC
Home Page (for May 13, 2016), on the
World Wide Web, at https://www.ftc.gov/
os/actions.shtm.
You can file a comment online or on
paper. For the Commission to consider
your comment, we must receive it on or
before June 14, 2016. Write ‘‘In the
Matter of American Air Liquide
Holdings, Inc.,—Consent Agreement;
File No. 161–0045’’ on your comment.
Your comment—including your name
and your state—will be placed on the
public record of this proceeding,
including, to the extent practicable, on
the public Commission Web site, at
https://www.ftc.gov/os/public
comments.shtm. As a matter of
discretion, the Commission tries to
remove individuals’ home contact
information from comments before
placing them on the Commission Web
site.
Because your comment will be made
public, you are solely responsible for
making sure that your comment does
not include any sensitive personal
information, like anyone’s Social
Security number, date of birth, driver’s
license number or other state
identification number or foreign country
equivalent, passport number, financial
account number, or credit or debit card
number. You are also solely responsible
for making sure that your comment does
not include any sensitive health
information, like medical records or
other individually identifiable health
information. In addition, do not include
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any ‘‘[t]rade secret or any commercial or
financial information which . . . is
privileged or confidential,’’ as discussed
in Section 6(f) of the FTC Act, 15 U.S.C.
46(f), and FTC Rule 4.10(a)(2), 16 CFR
4.10(a)(2). In particular, do not include
competitively sensitive information
such as costs, sales statistics,
inventories, formulas, patterns, devices,
manufacturing processes, or customer
names.
If you want the Commission to give
your comment confidential treatment,
you must file it in paper form, with a
request for confidential treatment, and
you have to follow the procedure
explained in FTC Rule 4.9(c), 16 CFR
4.9(c).1 Your comment will be kept
confidential only if the FTC General
Counsel, in his or her sole discretion,
grants your request in accordance with
the law and the public interest.
Postal mail addressed to the
Commission is subject to delay due to
heightened security screening. As a
result, we encourage you to submit your
comments online. To make sure that the
Commission considers your online
comment, you must file it at https://
ftcpublic.commentworks.com/ftc/
airliquideairgasconsent by following the
instructions on the web-based form. If
this Notice appears at https://
www.regulations.gov/#!home, you also
may file a comment through that Web
site.
If you file your comment on paper,
write ‘‘In the Matter of American Air
Liquide Holdings, Inc.,—Consent
Agreement; File No. 161–0045’’ on your
comment and on the envelope, and mail
your comment to the following address:
Federal Trade Commission, Office of the
Secretary, 600 Pennsylvania Avenue
NW., Suite CC–5610 (Annex D),
Washington, DC 20580, or deliver your
comment to the following address:
Federal Trade Commission, Office of the
Secretary, Constitution Center, 400 7th
Street SW., 5th Floor, Suite 5610
(Annex D), Washington, DC 20024. If
possible, submit your paper comment to
the Commission by courier or overnight
service.
Visit the Commission Web site at
https://www.ftc.gov to read this Notice
and the news release describing it. The
FTC Act and other laws that the
Commission administers permit the
collection of public comments to
consider and use in this proceeding as
appropriate. The Commission will
consider all timely and responsive
1 In particular, the written request for confidential
treatment that accompanies the comment must
include the factual and legal basis for the request,
and must identify the specific portions of the
comment to be withheld from the public record. See
FTC Rule 4.9(c), 16 CFR 4.9(c).
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public comments that it receives on or
before June 14, 2016. You can find more
information, including routine uses
permitted by the Privacy Act, in the
Commission’s privacy policy, at https://
www.ftc.gov/ftc/privacy.htm.
Analysis of Agreement Containing
Consent Orders To Aid Public Comment
I. Introduction
The Federal Trade Commission
(‘‘Commission’’) has accepted, subject to
final approval, an Agreement
Containing Consent Orders (‘‘Consent
Agreement’’) designed to remedy the
anticompetitive effects resulting from
the proposed acquisition of Airgas, Inc.
(‘‘Airgas’’) by American Air Liquide
Holdings, Inc. (‘‘Air Liquide’’). Pursuant
to the Consent Agreement, Air Liquide
will divest sixteen air separation units
(‘‘ASUs’’), four vertically integrated dry
ice and liquid carbon dioxide plants,
two separate liquid carbon dioxide
plants, two nitrous oxide plants, and
three retail packaged welding gas and
hardgoods stores. Air Liquide has
agreed to divest the required facilities to
one or more Commission-approved
buyers within four months of
consummating its transaction with
Airgas. The divestiture of these facilities
and related assets will preserve the
competition between Air Liquide and
Airgas that the proposed acquisition
would otherwise eliminate.
The proposed Consent Agreement has
been placed on the public record for
thirty days for receipt of comments by
interested persons. Comments received
during this period will become part of
the public record. After thirty days, the
Commission will again review the
proposed Consent Agreement and the
comments received, and will decide
whether it should withdraw from the
proposed Consent Agreement, modify it,
or make final the accompanying
Decision and Order (‘‘Order’’).
II. The Transaction
Pursuant to an Agreement and Plan of
Merger dated November 17, 2015, a
wholly owned subsidiary of Air Liquide
will merge with and into Airgas in a
transaction valued at approximately
$13.4 billion. The Commission’s
Complaint alleges that the proposed
acquisition, if consummated, would
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, by substantially
lessening competition in various
geographic markets for bulk oxygen,
bulk nitrogen, bulk argon, bulk nitrous
oxide, bulk liquid carbon dioxide, dry
ice, and retail packaged welding gases.
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III. The Parties
Air Liquide is an international
company specializing in industrial gases
and related services. Air Liquide is the
fourth-largest atmospheric gas producer
in the United States, operating fortynine liquid ASUs spread throughout the
country. In the United States, Air
Liquide also operates two nitrous oxide
production facilities and eleven liquid
carbon dioxide production facilities, six
of which also produce dry ice. Air
Liquide has largely exited its retail
packaged gas and hardgoods business in
the United States, but still operates five
branch locations in Alaska. In 2015, Air
Liquide’s revenue totaled Ö16.4 billion,
with Ö3.9 billion coming from the
United States.
Airgas, headquartered in Radnor,
Pennsylvania, is the leading U.S.
distributor of packaged industrial,
medical, and specialty gases and
hardgoods, such as welding equipment
and supplies. Airgas is the fifth-largest
atmospheric gas producer in the United
States, operating seventeen liquid ASUs,
most of which are concentrated in the
eastern half of the country. Airgas also
operates a number of other industrial
gas production plants, including three
nitrous oxide production facilities,
eleven liquid carbon dioxide production
facilities, and fourteen dry ice
production facilities. Airgas operates a
network of approximately nine hundred
retail branches where it sells hardgoods
and packaged gas. For the fiscal year
ending March 31, 2015, Airgas’s
consolidated net sales were
approximately $5.3 billion, with over
98% of those revenues coming from the
United States.
IV. The Relevant Markets for Bulk
Oxygen, Bulk Nitrogen, and Bulk Argon
Atmospheric gases are gases that are
present in the Earth’s atmosphere.
Industrial gas suppliers like Airgas and
Air Liquide produce atmospheric gases
for use in a wide range of applications,
including oil and gas, steelmaking,
health care, and food manufacturing.
Liquid oxygen, nitrogen, and argon are
three of the most widely used
atmospheric industrial gases, and each
has specific properties that make it
uniquely suited for the applications for
which it is used. For most of these
applications, there is no substitute for
the use of oxygen, nitrogen, or argon.
Atmospheric gases are distributed to
customers in different forms and
methods depending on the volume of
gas the customer requires. Customers
who require large volumes are supplied
either by on-site ASUs that are located
at the customer’s facility or by a
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pipeline connecting a plant to that
customer. Bulk customers are those who
have significant volume requirements,
but are not large enough to justify onsite or pipeline gas delivery. Bulk
customers typically are supplied with
bulk oxygen, bulk nitrogen, or bulk
argon in cryogenic trailers carrying the
gas in liquid form. The liquid form is
more condensed than the gaseous form
and therefore easier to transport and
store in large quantities. The bulk liquid
gases are then stored in tanks located at
the customer site. From there, customers
can either use the product in its liquid
form or convert it back to gas. Smallvolume customers purchase nitrogen,
oxygen, or argon in cylinders containing
the product in gaseous form. These
smaller customers are usually served by
distributors, who receive their product
from industrial gas suppliers in bulk
liquid form. It is not feasible for bulk
oxygen, bulk nitrogen, or bulk argon
customers to switch distribution
methods because their demand is too
great for cylinder delivery and too small
for on-site, or pipeline delivery.
For atmospheric gases, the ratio of the
product’s value to its transportation
costs largely determines the relevant
geographic market. Due to the relatively
low sales price of bulk oxygen and
nitrogen and the significant freight costs
associated with transporting them, these
gases can generally only be shipped
economically a maximum distance of
approximately 100 to 250 miles from the
ASU that produces the gas. Therefore, it
is appropriate to analyze the
competitive effects of the proposed
acquisition in regional geographic
markets for bulk oxygen and bulk
nitrogen. The relevant geographic
markets in which to analyze the effects
of the proposed acquisition are: (1) The
Northeast; (2) the Mid-Atlantic; (3) the
Southeast; (4) Atlanta and surrounding
areas; (5) Arkansas and surrounding
areas; (6) Oklahoma and surrounding
areas; (7) Western Kentucky and
surrounding areas; (8) Chicago,
Milwaukee, and surrounding areas; (9)
Western Ohio and surrounding areas;
and (10) Pittsburgh, Cleveland, and
surrounding areas. Because bulk argon
is a rarer and more expensive product
than bulk oxygen and bulk nitrogen, it
may be economically transported over
greater distances. Therefore, the relevant
geographic area in which to analyze the
effects of the proposed acquisition on
the bulk argon market is the United
States.
The proposed acquisition would harm
competition in the relevant markets for
bulk oxygen and bulk nitrogen. Each
market includes areas in which both Air
Liquide and Airgas have plants that are
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particularly well situated to
economically serve a large set of
customers. The proposed acquisition
would eliminate an important source of
competition for those customers, would
increase concentration in the relevant
markets, and would cause prices to rise.
For bulk argon, there are six significant
suppliers in the United States, the
largest of which is Air Liquide. The
proposed acquisition would
substantially increase concentration in
bulk argon, creating a highly
concentrated market.
V. The Relevant Market for Bulk
Nitrous Oxide
Nitrous oxide is a clear, odorless gas
that is produced by heating and
purifying ammonium nitrate.
Commonly known as ‘‘laughing gas,’’
nitrous oxide is mainly used by dentists
as an analgesic or a weak anesthetic.
Other uses for nitrous oxide include
augmenting combustion in automotive
products, oxidizing rocket fuel, and
manufacturing whipped cream and
semiconductors. Customers who
purchase nitrous oxide in bulk form are
typically distributors who repackage the
gas in smaller quantities. Most sales for
end-use are made in cylinders to dental
offices. Because of the unique properties
of nitrous oxide, other gases are not
considered substitutes. Consequently,
customers would not switch to another
gas or product even if the price of bulk
nitrous oxide increased by five to ten
percent.
Currently only five nitrous oxide
production facilities service the entire
United States and Canada. Bulk nitrous
oxide is typically transported in tanker
trucks. When purchasing bulk nitrous
oxide, customers are not concerned with
finding the closest production facility
when choosing a supplier. Therefore,
the relevant geographic area in which to
analyze the effects of the proposed
acquisition on the bulk nitrous oxide
market is the United States and Canada.
Air Liquide and Airgas are the only
two producers of nitrous oxide in the
United States and Canada. Airgas is the
largest producer of nitrous oxide in
North America and maintains three
separate facilities located Cantonment,
Florida, Yazoo City, Mississippi, and
Maitland, Ontario. Air Liquide operates
two North American nitrous oxide
plants in Donora, Pennsylvania and
Richmond, California. The proposed
acquisition would produce a monopoly
in the market for bulk nitrous oxide.
VI. The Relevant Markets for Bulk
Liquid Carbon Dioxide
Carbon dioxide is a ‘‘process gas,’’
meaning that it is captured as a by-
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product of other manufacturing
processes, such as ethanol, ammonia,
and hydrogen. It is also captured from
natural sources such as natural gas
wells. The carbon dioxide is then put in
liquid form through a cryogenic process
in plants typically located adjacent to
carbon dioxide gas sources. The most
common application for liquid carbon
dioxide is food and beverage
production, where it is used to
carbonate beverages, chill and freeze
food, and stun animals before they are
slaughtered. For the vast majority of
applications, there are no viable
substitutes for liquid carbon dioxide.
Suppliers deliver liquid carbon
dioxide to customers in bulk trailers or
rail cars. Most customers store liquid
carbon dioxide in tanks located at their
manufacturing facilities until it is used.
Customers would not switch to microbulk or cylinder delivery because bulk
delivery is far cheaper and they would
have to contend with managing
significantly more deliveries to meet
their needs. In addition, customers
would not consider self-sourcing liquid
carbon dioxide unless the cost increased
significantly more than ten percent
because extracting carbon dioxide
requires expensive infrastructure and
the supply of carbon dioxide is
shrinking.
Significant freight costs associated
with transporting liquid carbon dioxide
relative to its sales price make it
economical to ship liquid carbon
dioxide no more than 250 miles by
truck. In areas with few or no carbon
dioxide sources, liquid carbon dioxide
is shipped as much as 750 miles by rail.
Therefore, it is appropriate to analyze
the competitive effects of the proposed
acquisition in regional geographic
markets for bulk liquid carbon dioxide.
For bulk liquid carbon dioxide, the
relevant geographic markets in which to
analyze the effects of the proposed
acquisition are: (1) Indiana, Kentucky,
and surrounding areas; (2) Mississippi
and surrounding areas; and (3) the
Texas Panhandle and surrounding areas.
Two of the three relevant markets for
bulk liquid carbon dioxide are highly
concentrated and the proposed
acquisition would substantially increase
concentration. While the Indiana,
Kentucky and surrounding areas market
is moderately concentrated, the
proposed acquisition would produce a
significant increase in concentration
and would leave the combined entity as
the leading supplier. In addition, for
some customers in that region, the
merging firms are the closest
competitors.
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VII. The Relevant Markets for Dry Ice
In the United States, both parties
produce and sell dry ice. Dry ice is the
solid form of carbon dioxide, and a
significant portion of the carbon dioxide
market. It is produced when liquid
carbon dioxide is injected into an
atmospheric chamber, which causes
some of the liquid carbon dioxide to
vaporize into a gas, while reducing the
temperature of the remaining liquid.
The remaining liquid solidifies into a
snow-like consistency. This snow is
then collected and pressed into dry ice
blocks or pellets, and distributed to
customers in standard or bulk pellet
bags, or in blocks, slices, or sticks. Dry
ice has many applications, including
shipping of frozen food and medical
supplies, cooling of materials during
production, and industrial blast
cleaning. It is used in a variety of
industries such as food processing,
transportation, and biotechnology.
Suppliers of dry ice either sell directly
to end users, or wholesale to
distributors or resellers. For the vast
majority of applications, there are no
viable substitutes for dry ice.
Dry ice begins to dissipate as soon as
it is produced. As a result, dry ice is not
typically transported more than 150
miles to a customer, although where
local supply is insufficient, customers
are willing to have dry ice shipped up
to 350 miles. Therefore, it is appropriate
to analyze the competitive effects of the
proposed acquisition in regional
geographic markets for dry ice. The
relevant geographic markets in which to
analyze the effects of the proposed
acquisition are: (1) The San Francisco
Bay Area; (2) Iowa and surrounding
areas; and (3) the Texas Panhandle and
surrounding areas.
Air Liquide and Airgas are the only
two producers of dry ice in the San
Francisco Bay Area. Consequently, the
proposed acquisition, without remedy,
would lead to Air Liquide holding a
monopoly. In the two remaining dry ice
markets, the proposed acquisition
would substantially decrease
competition in an already highly
concentrated market, and would leave
the combined entity as the leading
supplier.
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VIII. The Relevant Markets for Retail
Packaged Welding Gases
Air Liquide and Airgas operate retail
packaged gas stores in close proximity
to each other in Anchorage, Fairbanks,
and Kenai, Alaska. Packaged welding
gas and hardgoods stores are outlets
where customers can purchase cylinders
of various gases and related hardgoods
used for welding, such as safety gear
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and other physical goods. While
customers may choose to purchase both
their packaged welding gases and
hardgoods at the same retail location,
they are also willing to purchase
packaged welding gas from one store
and hardgoods from another. Customers
cannot turn to alternatives for their
packaged welding gases, such as bulk
delivery from ASUs or filling their own
cylinders because their purchasing
volumes are too low to justify large
quantity purchases. Additionally, for
the vast majority of applications, there
are no viable substitutes for packaged
welding gases.
Generally, purchasers of packaged
welding gases travel approximately
twenty-five miles to make purchases at
retail outlets. Even in Alaska, where
there are fewer retail stores and
customers may be willing to travel
further, it is unlikely that customers
would travel over fifty miles to a retail
location to purchase packaged welding
gases. Therefore, it is appropriate to
analyze the competitive effects of the
proposed acquisition in local geographic
markets for retail packaged welding gas.
Accordingly, the relevant geographic
markets at issue in this case are the local
areas of: (1) Anchorage, Alaska; (2)
Fairbanks, Alaska; and (3) Kenai,
Alaska. The proposed acquisition would
reduce the number of competitors from
two to one in each of these markets.
VIIII. Effects of the Acquisition
The proposed acquisition would
eliminate direct and substantial
competition between Air Liquide and
Airgas in each of the relevant markets,
provide Air Liquide with a larger base
of sales on which to enjoy the benefit of
a unilateral price increase, and
eliminate a competitor to which
customers otherwise could have
diverted their sales in markets where
alternative sources of supply are
limited. The proposed acquisition,
therefore, likely would allow Air
Liquide to exercise market power
unilaterally, increasing the likelihood
that purchasers of bulk oxygen, bulk
nitrogen, bulk argon, bulk nitrous oxide,
bulk liquid carbon dioxide, dry ice, or
retail packaged welding gas would be
forced to pay higher prices in the
relevant areas.
The proposed acquisition would also
enhance the likelihood of collusion or
coordinated action between or among
the remaining firms in the relevant
markets for bulk oxygen, bulk nitrogen,
bulk argon, bulk liquid carbon dioxide,
and dry ice because a significant
competitor would be eliminated, and
only a small number of viable
competitors would remain. In addition,
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certain conditions prevalent in these
relevant markets, including the relative
homogeneity of the firms and products
involved and availability of detailed
market information, are conducive to
collusion or coordinated action.
X. Entry
New entry into the relevant markets
would not occur in a timely manner
sufficient to deter or counteract the
likely adverse competitive effects of the
proposed acquisition.
Entry into the bulk oxygen, nitrogen,
and argon markets is costly, difficult,
and unlikely because of, among other
things, the time and cost required to
construct the ASUs that produce these
products. Constructing an ASU at a
scale sufficient to be viable in the
market would cost at least $30 to $100
million, most of which are sunk costs.
Moreover, it is not economically
justifiable to build an ASU unless a
significant amount of the plant’s
capacity has been pre-sold prior to
construction, either to an on-site
customer or to customers with
commitments under contract. Such presale opportunities occur infrequently
and unpredictably and can take several
years to secure.
Entry into the bulk nitrous oxide
market is costly, difficult, and unlikely
because of, among other things, the time
and cost required to construct a plant
capable of producing nitrous oxide.
Constructing such a plant would cost at
least $5 to $10 million, and the demand
for nitrous oxide is generally
insufficient to justify the investment in
building a nitrous oxide plant. In
addition, there are regulatory barriers to
overcome due to the hazardous nature
of producing nitrous oxide.
Entry into the bulk liquid carbon
dioxide and dry ice markets would also
not be timely, likely, or sufficient to
deter or counteract the adverse
competitive effects of the proposed
acquisition. Constructing a plant
capable of producing bulk liquid carbon
dioxide would cost at least $10 to $30
million. In addition, successful entry
into the bulk liquid carbon dioxide
market requires access to raw carbon
dioxide supply sources, which are
typically unavailable due to long-term
contracts with incumbent liquid carbon
dioxide suppliers. For dry ice
production, there are similar entry
barriers. Because liquid carbon dioxide
is the primary input in dry ice
production, the most significant barrier
to entering the market for dry ice is
obtaining a liquid carbon dioxide
source. The entrant would also have to
build a dry ice facility, but sales
opportunities would likely be too small
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Federal Register / Vol. 81, No. 97 / Thursday, May 19, 2016 / Notices
mstockstill on DSK3G9T082PROD with NOTICES
to justify the sunk costs associated with
the required investment.
Entry into the retail packaged welding
gases market would also not be timely,
likely or sufficient to deter or counteract
the likely adverse competitive effects of
the proposed acquisition. Currently, Air
Liquide is the only entity capable of
filling packaged gases in the relevant
geographic markets for retail packaged
welding gas, all of which are in Alaska.
A new entrant would be required either
to purchase bulk gases and construct a
fill plant to put the gases in packaged
form or to establish a supply network to
transport packaged gases from a fill
plant outside of Alaska to the relevant
geographic markets. Because of these
obstacles, new entry into the relevant
markets is unlikely to occur.
XI. The Consent Agreement
The proposed Consent Agreement is
designed to eliminate the competitive
concerns raised by Air Liquide’s
proposed acquisition of Airgas in each
relevant market. Under the terms of the
proposed Consent Agreement, Air
Liquide is required to divest sixteen
ASUs, twelve of which are currently
owned and operated by Air Liquide and
four of which are currently owned and
operated by Airgas. The Air Liquideoperated ASUs are located in: (1)
Burlington, Wisconsin; (2) Chattanooga,
Tennessee; (3) Feura Bush, New York;
(4) Holland, Ohio; (5) Mapleton, Illinois;
(6) Middletown, Ohio; (7) Mount
Vernon, Indiana; (8) Pittsboro, Indiana;
(9) St. Marys, Pennsylvania; (10)
Spartanburg, South Carolina; (11) Wake
Forest, North Carolina; and (12) West
Point, Virginia. The Airgas-operated
ASUs are located in: (1) Carrollton,
Kentucky; (2) Gaston, South Carolina;
(3) Lawton, Oklahoma; and (4)
Mulberry, Arkansas. Air Liquide is also
required to divest both of its nitrous
oxide plants, one located in Denora,
Pennsylvania and the other in
Richmond, California. Air Liquide must
also divest four co-located liquid carbon
dioxide and dry ice facilities, which
comprise its entire dry ice business,
located in: (1) Borger, Texas; (2) Galva,
Iowa; (3) Sioux City, Iowa; (4) and
Martinez, California.
Additionally, Air Liquide will divest
two liquid carbon dioxide-only facilities
in Madison, Mississippi and
Washington, Indiana along with the
associated rail depot located in Fort
Meade, Florida. Lastly, Air Liquide will
divest Airgas’s retail packaged welding
gas and hardgoods stores located in
Anchorage, Fairbanks, and Kenai,
Alaska. Additionally, with regard to the
ASU assets, although the
anticompetitive effects of Air Liquide’s
VerDate Sep<11>2014
18:47 May 18, 2016
Jkt 238001
acquisition of Airgas are related to the
bulk liquid oxygen, nitrogen, and argon
markets, the pipeline oxygen and
nitrogen businesses and contracts
located at the ASUs are also being
divested because they are critical to the
viability, efficiency, and
competitiveness of each plant. Air
Liquide has agreed to divest the
required facilities, together with all
related equipment, customer and supply
contracts, technology, and goodwill, to
one or more Commission-approved
buyers within four months of
consummating its transaction with
Airgas.
Any acquirer of the divested assets
must receive the prior approval of the
Commission. The Commission’s goal in
evaluating possible purchasers of
divested assets is to maintain the
competitive environment that existed
prior to the acquisition. A proposed
acquirer of divested assets must not
itself present competitive problems.
There are a number of parties interested
in purchasing the assets to be divested
that have the expertise, experience, and
financial viability to successfully
purchase and manage these assets and
retain the current level of competition
in the relevant markets. The
Commission is therefore satisfied that
sufficient potential buyers for the
divested assets in each relevant market
currently exist.
The proposed Consent Agreement
incorporates a proposed Order to
Maintain Assets to ensure the continued
operations of the divestiture assets
while a sale is conducted, and for a brief
transition period once the Commission
approves a buyer for the assets. The
proposed Order to Maintain Assets also
allows the Commission to appoint an
interim monitor to oversee compliance
with all the obligations and
responsibilities under the proposed
Order and requires Air Liquide to
execute an agreement conferring upon
the interim monitor all of the rights,
powers, and authorities necessary to
permit the monitor to ensure the
continued health and competitiveness
of the divested businesses.
The purpose of this analysis is to
facilitate public comment on the
proposed Consent Agreement, and it is
not intended to constitute an official
interpretation of the proposed Consent
Agreement or to modify its terms in any
way.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016–11763 Filed 5–18–16; 8:45 am]
BILLING CODE 6750–01–P
PO 00000
Frm 00056
Fmt 4703
Sfmt 4703
31641
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Administration for Children and
Families
Submission for OMB Review;
Comment Request
Title: Tribal Maternal, Infant, and
Early Childhood Home Visiting Program
Implementation Plan Guidance and
Form 1: Demographic and Service
Utilization Data.
OMB No.: 0970–0389.
Description: Social Security Act, Title
V, Section 511 (42 U.S.C. 711), as
amended by the Medicare Access and
Children’s Health Insurance Program
(CHIP) Reauthorization Act of 2015
(Pub. L. 114–10), created the Maternal,
Infant, and Early Childhood Home
Visiting Program (MIECHV) and
authorized the Secretary of HHS (in
Section 511(h)(2)(A)) to award grants to
Indian tribes (or a consortium of Indian
tribes), tribal organizations, or urban
Indian organizations to conduct an early
childhood home visiting program. The
legislation set aside 3 percent of the
total MIECHV program appropriation
(authorized in Section 511(j)) for grants
to tribal entities. Tribal MIECHV grants,
to the greatest extent practicable, are to
be consistent with the requirements of
the MIECHV grants to states and
jurisdictions (authorized in Section
511(c)), and include conducting a needs
assessment and establishing
quantifiable, measurable benchmarks.
The Administration for Children and
Families, Office of Child Care and Office
of the Deputy Assistant Secretary for
Early Childhood Development, in
collaboration with the Health Resources
and Services Administration, Maternal
and Child Health Bureau, awarded
grants for the Tribal MIECHV Program.
The Tribal MIECHV grant awards
support 5-year cooperative agreements
to conduct community needs and
readiness assessments, plan for and
implement high-quality, culturallyrelevant, evidence-based home visiting
programs in at-risk Tribal communities,
and engage in rigorous evaluation
activities to build the knowledge base
on home visiting among American
Indian and Alaska Native populations.
In Year 1 of the cooperative
agreement, grantees must (1) conduct a
comprehensive community needs and
readiness assessment and (2) develop a
plan to respond to identified needs.
Grantees will be required to conduct or
update a needs and readiness
assessment and develop an
implementation plan to respond to
those needs, including a plan for
E:\FR\FM\19MYN1.SGM
19MYN1
]]>Agencies
[Federal Register Volume 81, Number 97 (Thursday, May 19, 2016)]
[Notices]
[Pages 31637-31641]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11763]
=======================================================================
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
[File No. 161 0045]
American Air Liquide Holdings, Inc.; Analysis To Aid Public
Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
-----------------------------------------------------------------------
SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair methods of competition.
The attached Analysis to Aid Public Comment describes both the
allegations in the complaint and the terms of the consent orders--
embodied in the consent agreement--that would settle these allegations.
DATES: Comments must be received on or before June 14, 2016.
ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/airliquideairgasconsent online or on
paper, by following the instructions in the Request for Comment part of
the SUPPLEMENTARY INFORMATION section below. Write ``In the Matter of
American Air Liquide Holdings, Inc.,--Consent Agreement; File No. 161-
0045'' on your comment and file your comment online at https://ftcpublic.commentworks.com/ftc/airliquideairgasconsent by following the
instructions on the web-based form. If you prefer to file your comment
on paper, write ``In the Matter of American Air Liquide Holdings,
Inc.,--Consent Agreement; File No. 161-0045'' on your comment and on
the envelope, and mail your comment to the following address: Federal
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW.,
Suite CC-5610 (Annex D), Washington, DC 20580, or deliver your comment
to the following address: Federal Trade Commission, Office of the
Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite
5610 (Annex D), Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT: Christine Tasso (202-326-2232), Bureau
of Competition, 600 Pennsylvania Avenue NW., Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing consent orders to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis to Aid Public Comment describes the terms of the
consent agreement, and the allegations in the complaint. An electronic
copy of the full text of the consent agreement package can be obtained
from the FTC Home Page (for May 13, 2016), on the World Wide Web, at
https://www.ftc.gov/os/actions.shtm.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before June 14, 2016.
Write ``In the Matter of American Air Liquide Holdings, Inc.,--Consent
Agreement; File No. 161-0045'' on your comment. Your comment--including
your name and your state--will be placed on the public record of this
proceeding, including, to the extent practicable, on the public
Commission Web site, at https://www.ftc.gov/os/publiccomments.shtm. As a
matter of discretion, the Commission tries to remove individuals' home
contact information from comments before placing them on the Commission
Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment does not include any
sensitive health information, like medical records or other
individually identifiable health information. In addition, do not
include
[[Page 31638]]
any ``[t]rade secret or any commercial or financial information which .
. . is privileged or confidential,'' as discussed in Section 6(f) of
the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR
4.10(a)(2). In particular, do not include competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept
confidential only if the FTC General Counsel, in his or her sole
discretion, grants your request in accordance with the law and the
public interest.
---------------------------------------------------------------------------
\1\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
---------------------------------------------------------------------------
Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/airliquideairgasconsent by following the instructions on the web-
based form. If this Notice appears at https://www.regulations.gov/#!home, you also may file a comment through that Web site.
If you file your comment on paper, write ``In the Matter of
American Air Liquide Holdings, Inc.,--Consent Agreement; File No. 161-
0045'' on your comment and on the envelope, and mail your comment to
the following address: Federal Trade Commission, Office of the
Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 (Annex D),
Washington, DC 20580, or deliver your comment to the following address:
Federal Trade Commission, Office of the Secretary, Constitution Center,
400 7th Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC
20024. If possible, submit your paper comment to the Commission by
courier or overnight service.
Visit the Commission Web site at https://www.ftc.gov to read this
Notice and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before June 14, 2016. You can find more information,
including routine uses permitted by the Privacy Act, in the
Commission's privacy policy, at https://www.ftc.gov/ftc/privacy.htm.
Analysis of Agreement Containing Consent Orders To Aid Public Comment
I. Introduction
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an Agreement Containing Consent Orders (``Consent
Agreement'') designed to remedy the anticompetitive effects resulting
from the proposed acquisition of Airgas, Inc. (``Airgas'') by American
Air Liquide Holdings, Inc. (``Air Liquide''). Pursuant to the Consent
Agreement, Air Liquide will divest sixteen air separation units
(``ASUs''), four vertically integrated dry ice and liquid carbon
dioxide plants, two separate liquid carbon dioxide plants, two nitrous
oxide plants, and three retail packaged welding gas and hardgoods
stores. Air Liquide has agreed to divest the required facilities to one
or more Commission-approved buyers within four months of consummating
its transaction with Airgas. The divestiture of these facilities and
related assets will preserve the competition between Air Liquide and
Airgas that the proposed acquisition would otherwise eliminate.
The proposed Consent Agreement has been placed on the public record
for thirty days for receipt of comments by interested persons. Comments
received during this period will become part of the public record.
After thirty days, the Commission will again review the proposed
Consent Agreement and the comments received, and will decide whether it
should withdraw from the proposed Consent Agreement, modify it, or make
final the accompanying Decision and Order (``Order'').
II. The Transaction
Pursuant to an Agreement and Plan of Merger dated November 17,
2015, a wholly owned subsidiary of Air Liquide will merge with and into
Airgas in a transaction valued at approximately $13.4 billion. The
Commission's Complaint alleges that the proposed acquisition, if
consummated, would 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, by substantially lessening competition in
various geographic markets for bulk oxygen, bulk nitrogen, bulk argon,
bulk nitrous oxide, bulk liquid carbon dioxide, dry ice, and retail
packaged welding gases.
III. The Parties
Air Liquide is an international company specializing in industrial
gases and related services. Air Liquide is the fourth-largest
atmospheric gas producer in the United States, operating forty-nine
liquid ASUs spread throughout the country. In the United States, Air
Liquide also operates two nitrous oxide production facilities and
eleven liquid carbon dioxide production facilities, six of which also
produce dry ice. Air Liquide has largely exited its retail packaged gas
and hardgoods business in the United States, but still operates five
branch locations in Alaska. In 2015, Air Liquide's revenue totaled
[euro]16.4 billion, with [euro]3.9 billion coming from the United
States.
Airgas, headquartered in Radnor, Pennsylvania, is the leading U.S.
distributor of packaged industrial, medical, and specialty gases and
hardgoods, such as welding equipment and supplies. Airgas is the fifth-
largest atmospheric gas producer in the United States, operating
seventeen liquid ASUs, most of which are concentrated in the eastern
half of the country. Airgas also operates a number of other industrial
gas production plants, including three nitrous oxide production
facilities, eleven liquid carbon dioxide production facilities, and
fourteen dry ice production facilities. Airgas operates a network of
approximately nine hundred retail branches where it sells hardgoods and
packaged gas. For the fiscal year ending March 31, 2015, Airgas's
consolidated net sales were approximately $5.3 billion, with over 98%
of those revenues coming from the United States.
IV. The Relevant Markets for Bulk Oxygen, Bulk Nitrogen, and Bulk Argon
Atmospheric gases are gases that are present in the Earth's
atmosphere. Industrial gas suppliers like Airgas and Air Liquide
produce atmospheric gases for use in a wide range of applications,
including oil and gas, steelmaking, health care, and food
manufacturing. Liquid oxygen, nitrogen, and argon are three of the most
widely used atmospheric industrial gases, and each has specific
properties that make it uniquely suited for the applications for which
it is used. For most of these applications, there is no substitute for
the use of oxygen, nitrogen, or argon.
Atmospheric gases are distributed to customers in different forms
and methods depending on the volume of gas the customer requires.
Customers who require large volumes are supplied either by on-site ASUs
that are located at the customer's facility or by a
[[Page 31639]]
pipeline connecting a plant to that customer. Bulk customers are those
who have significant volume requirements, but are not large enough to
justify on-site or pipeline gas delivery. Bulk customers typically are
supplied with bulk oxygen, bulk nitrogen, or bulk argon in cryogenic
trailers carrying the gas in liquid form. The liquid form is more
condensed than the gaseous form and therefore easier to transport and
store in large quantities. The bulk liquid gases are then stored in
tanks located at the customer site. From there, customers can either
use the product in its liquid form or convert it back to gas. Small-
volume customers purchase nitrogen, oxygen, or argon in cylinders
containing the product in gaseous form. These smaller customers are
usually served by distributors, who receive their product from
industrial gas suppliers in bulk liquid form. It is not feasible for
bulk oxygen, bulk nitrogen, or bulk argon customers to switch
distribution methods because their demand is too great for cylinder
delivery and too small for on-site, or pipeline delivery.
For atmospheric gases, the ratio of the product's value to its
transportation costs largely determines the relevant geographic market.
Due to the relatively low sales price of bulk oxygen and nitrogen and
the significant freight costs associated with transporting them, these
gases can generally only be shipped economically a maximum distance of
approximately 100 to 250 miles from the ASU that produces the gas.
Therefore, it is appropriate to analyze the competitive effects of the
proposed acquisition in regional geographic markets for bulk oxygen and
bulk nitrogen. The relevant geographic markets in which to analyze the
effects of the proposed acquisition are: (1) The Northeast; (2) the
Mid-Atlantic; (3) the Southeast; (4) Atlanta and surrounding areas; (5)
Arkansas and surrounding areas; (6) Oklahoma and surrounding areas; (7)
Western Kentucky and surrounding areas; (8) Chicago, Milwaukee, and
surrounding areas; (9) Western Ohio and surrounding areas; and (10)
Pittsburgh, Cleveland, and surrounding areas. Because bulk argon is a
rarer and more expensive product than bulk oxygen and bulk nitrogen, it
may be economically transported over greater distances. Therefore, the
relevant geographic area in which to analyze the effects of the
proposed acquisition on the bulk argon market is the United States.
The proposed acquisition would harm competition in the relevant
markets for bulk oxygen and bulk nitrogen. Each market includes areas
in which both Air Liquide and Airgas have plants that are particularly
well situated to economically serve a large set of customers. The
proposed acquisition would eliminate an important source of competition
for those customers, would increase concentration in the relevant
markets, and would cause prices to rise. For bulk argon, there are six
significant suppliers in the United States, the largest of which is Air
Liquide. The proposed acquisition would substantially increase
concentration in bulk argon, creating a highly concentrated market.
V. The Relevant Market for Bulk Nitrous Oxide
Nitrous oxide is a clear, odorless gas that is produced by heating
and purifying ammonium nitrate. Commonly known as ``laughing gas,''
nitrous oxide is mainly used by dentists as an analgesic or a weak
anesthetic. Other uses for nitrous oxide include augmenting combustion
in automotive products, oxidizing rocket fuel, and manufacturing
whipped cream and semiconductors. Customers who purchase nitrous oxide
in bulk form are typically distributors who repackage the gas in
smaller quantities. Most sales for end-use are made in cylinders to
dental offices. Because of the unique properties of nitrous oxide,
other gases are not considered substitutes. Consequently, customers
would not switch to another gas or product even if the price of bulk
nitrous oxide increased by five to ten percent.
Currently only five nitrous oxide production facilities service the
entire United States and Canada. Bulk nitrous oxide is typically
transported in tanker trucks. When purchasing bulk nitrous oxide,
customers are not concerned with finding the closest production
facility when choosing a supplier. Therefore, the relevant geographic
area in which to analyze the effects of the proposed acquisition on the
bulk nitrous oxide market is the United States and Canada.
Air Liquide and Airgas are the only two producers of nitrous oxide
in the United States and Canada. Airgas is the largest producer of
nitrous oxide in North America and maintains three separate facilities
located Cantonment, Florida, Yazoo City, Mississippi, and Maitland,
Ontario. Air Liquide operates two North American nitrous oxide plants
in Donora, Pennsylvania and Richmond, California. The proposed
acquisition would produce a monopoly in the market for bulk nitrous
oxide.
VI. The Relevant Markets for Bulk Liquid Carbon Dioxide
Carbon dioxide is a ``process gas,'' meaning that it is captured as
a by-product of other manufacturing processes, such as ethanol,
ammonia, and hydrogen. It is also captured from natural sources such as
natural gas wells. The carbon dioxide is then put in liquid form
through a cryogenic process in plants typically located adjacent to
carbon dioxide gas sources. The most common application for liquid
carbon dioxide is food and beverage production, where it is used to
carbonate beverages, chill and freeze food, and stun animals before
they are slaughtered. For the vast majority of applications, there are
no viable substitutes for liquid carbon dioxide.
Suppliers deliver liquid carbon dioxide to customers in bulk
trailers or rail cars. Most customers store liquid carbon dioxide in
tanks located at their manufacturing facilities until it is used.
Customers would not switch to micro-bulk or cylinder delivery because
bulk delivery is far cheaper and they would have to contend with
managing significantly more deliveries to meet their needs. In
addition, customers would not consider self-sourcing liquid carbon
dioxide unless the cost increased significantly more than ten percent
because extracting carbon dioxide requires expensive infrastructure and
the supply of carbon dioxide is shrinking.
Significant freight costs associated with transporting liquid
carbon dioxide relative to its sales price make it economical to ship
liquid carbon dioxide no more than 250 miles by truck. In areas with
few or no carbon dioxide sources, liquid carbon dioxide is shipped as
much as 750 miles by rail. Therefore, it is appropriate to analyze the
competitive effects of the proposed acquisition in regional geographic
markets for bulk liquid carbon dioxide. For bulk liquid carbon dioxide,
the relevant geographic markets in which to analyze the effects of the
proposed acquisition are: (1) Indiana, Kentucky, and surrounding areas;
(2) Mississippi and surrounding areas; and (3) the Texas Panhandle and
surrounding areas.
Two of the three relevant markets for bulk liquid carbon dioxide
are highly concentrated and the proposed acquisition would
substantially increase concentration. While the Indiana, Kentucky and
surrounding areas market is moderately concentrated, the proposed
acquisition would produce a significant increase in concentration and
would leave the combined entity as the leading supplier. In addition,
for some customers in that region, the merging firms are the closest
competitors.
[[Page 31640]]
VII. The Relevant Markets for Dry Ice
In the United States, both parties produce and sell dry ice. Dry
ice is the solid form of carbon dioxide, and a significant portion of
the carbon dioxide market. It is produced when liquid carbon dioxide is
injected into an atmospheric chamber, which causes some of the liquid
carbon dioxide to vaporize into a gas, while reducing the temperature
of the remaining liquid. The remaining liquid solidifies into a snow-
like consistency. This snow is then collected and pressed into dry ice
blocks or pellets, and distributed to customers in standard or bulk
pellet bags, or in blocks, slices, or sticks. Dry ice has many
applications, including shipping of frozen food and medical supplies,
cooling of materials during production, and industrial blast cleaning.
It is used in a variety of industries such as food processing,
transportation, and biotechnology. Suppliers of dry ice either sell
directly to end users, or wholesale to distributors or resellers. For
the vast majority of applications, there are no viable substitutes for
dry ice.
Dry ice begins to dissipate as soon as it is produced. As a result,
dry ice is not typically transported more than 150 miles to a customer,
although where local supply is insufficient, customers are willing to
have dry ice shipped up to 350 miles. Therefore, it is appropriate to
analyze the competitive effects of the proposed acquisition in regional
geographic markets for dry ice. The relevant geographic markets in
which to analyze the effects of the proposed acquisition are: (1) The
San Francisco Bay Area; (2) Iowa and surrounding areas; and (3) the
Texas Panhandle and surrounding areas.
Air Liquide and Airgas are the only two producers of dry ice in the
San Francisco Bay Area. Consequently, the proposed acquisition, without
remedy, would lead to Air Liquide holding a monopoly. In the two
remaining dry ice markets, the proposed acquisition would substantially
decrease competition in an already highly concentrated market, and
would leave the combined entity as the leading supplier.
VIII. The Relevant Markets for Retail Packaged Welding Gases
Air Liquide and Airgas operate retail packaged gas stores in close
proximity to each other in Anchorage, Fairbanks, and Kenai, Alaska.
Packaged welding gas and hardgoods stores are outlets where customers
can purchase cylinders of various gases and related hardgoods used for
welding, such as safety gear and other physical goods. While customers
may choose to purchase both their packaged welding gases and hardgoods
at the same retail location, they are also willing to purchase packaged
welding gas from one store and hardgoods from another. Customers cannot
turn to alternatives for their packaged welding gases, such as bulk
delivery from ASUs or filling their own cylinders because their
purchasing volumes are too low to justify large quantity purchases.
Additionally, for the vast majority of applications, there are no
viable substitutes for packaged welding gases.
Generally, purchasers of packaged welding gases travel
approximately twenty-five miles to make purchases at retail outlets.
Even in Alaska, where there are fewer retail stores and customers may
be willing to travel further, it is unlikely that customers would
travel over fifty miles to a retail location to purchase packaged
welding gases. Therefore, it is appropriate to analyze the competitive
effects of the proposed acquisition in local geographic markets for
retail packaged welding gas. Accordingly, the relevant geographic
markets at issue in this case are the local areas of: (1) Anchorage,
Alaska; (2) Fairbanks, Alaska; and (3) Kenai, Alaska. The proposed
acquisition would reduce the number of competitors from two to one in
each of these markets.
VIIII. Effects of the Acquisition
The proposed acquisition would eliminate direct and substantial
competition between Air Liquide and Airgas in each of the relevant
markets, provide Air Liquide with a larger base of sales on which to
enjoy the benefit of a unilateral price increase, and eliminate a
competitor to which customers otherwise could have diverted their sales
in markets where alternative sources of supply are limited. The
proposed acquisition, therefore, likely would allow Air Liquide to
exercise market power unilaterally, increasing the likelihood that
purchasers of bulk oxygen, bulk nitrogen, bulk argon, bulk nitrous
oxide, bulk liquid carbon dioxide, dry ice, or retail packaged welding
gas would be forced to pay higher prices in the relevant areas.
The proposed acquisition would also enhance the likelihood of
collusion or coordinated action between or among the remaining firms in
the relevant markets for bulk oxygen, bulk nitrogen, bulk argon, bulk
liquid carbon dioxide, and dry ice because a significant competitor
would be eliminated, and only a small number of viable competitors
would remain. In addition, certain conditions prevalent in these
relevant markets, including the relative homogeneity of the firms and
products involved and availability of detailed market information, are
conducive to collusion or coordinated action.
X. Entry
New entry into the relevant markets would not occur in a timely
manner sufficient to deter or counteract the likely adverse competitive
effects of the proposed acquisition.
Entry into the bulk oxygen, nitrogen, and argon markets is costly,
difficult, and unlikely because of, among other things, the time and
cost required to construct the ASUs that produce these products.
Constructing an ASU at a scale sufficient to be viable in the market
would cost at least $30 to $100 million, most of which are sunk costs.
Moreover, it is not economically justifiable to build an ASU unless a
significant amount of the plant's capacity has been pre-sold prior to
construction, either to an on-site customer or to customers with
commitments under contract. Such pre-sale opportunities occur
infrequently and unpredictably and can take several years to secure.
Entry into the bulk nitrous oxide market is costly, difficult, and
unlikely because of, among other things, the time and cost required to
construct a plant capable of producing nitrous oxide. Constructing such
a plant would cost at least $5 to $10 million, and the demand for
nitrous oxide is generally insufficient to justify the investment in
building a nitrous oxide plant. In addition, there are regulatory
barriers to overcome due to the hazardous nature of producing nitrous
oxide.
Entry into the bulk liquid carbon dioxide and dry ice markets would
also not be timely, likely, or sufficient to deter or counteract the
adverse competitive effects of the proposed acquisition. Constructing a
plant capable of producing bulk liquid carbon dioxide would cost at
least $10 to $30 million. In addition, successful entry into the bulk
liquid carbon dioxide market requires access to raw carbon dioxide
supply sources, which are typically unavailable due to long-term
contracts with incumbent liquid carbon dioxide suppliers. For dry ice
production, there are similar entry barriers. Because liquid carbon
dioxide is the primary input in dry ice production, the most
significant barrier to entering the market for dry ice is obtaining a
liquid carbon dioxide source. The entrant would also have to build a
dry ice facility, but sales opportunities would likely be too small
[[Page 31641]]
to justify the sunk costs associated with the required investment.
Entry into the retail packaged welding gases market would also not
be timely, likely or sufficient to deter or counteract the likely
adverse competitive effects of the proposed acquisition. Currently, Air
Liquide is the only entity capable of filling packaged gases in the
relevant geographic markets for retail packaged welding gas, all of
which are in Alaska. A new entrant would be required either to purchase
bulk gases and construct a fill plant to put the gases in packaged form
or to establish a supply network to transport packaged gases from a
fill plant outside of Alaska to the relevant geographic markets.
Because of these obstacles, new entry into the relevant markets is
unlikely to occur.
XI. The Consent Agreement
The proposed Consent Agreement is designed to eliminate the
competitive concerns raised by Air Liquide's proposed acquisition of
Airgas in each relevant market. Under the terms of the proposed Consent
Agreement, Air Liquide is required to divest sixteen ASUs, twelve of
which are currently owned and operated by Air Liquide and four of which
are currently owned and operated by Airgas. The Air Liquide-operated
ASUs are located in: (1) Burlington, Wisconsin; (2) Chattanooga,
Tennessee; (3) Feura Bush, New York; (4) Holland, Ohio; (5) Mapleton,
Illinois; (6) Middletown, Ohio; (7) Mount Vernon, Indiana; (8)
Pittsboro, Indiana; (9) St. Marys, Pennsylvania; (10) Spartanburg,
South Carolina; (11) Wake Forest, North Carolina; and (12) West Point,
Virginia. The Airgas-operated ASUs are located in: (1) Carrollton,
Kentucky; (2) Gaston, South Carolina; (3) Lawton, Oklahoma; and (4)
Mulberry, Arkansas. Air Liquide is also required to divest both of its
nitrous oxide plants, one located in Denora, Pennsylvania and the other
in Richmond, California. Air Liquide must also divest four co-located
liquid carbon dioxide and dry ice facilities, which comprise its entire
dry ice business, located in: (1) Borger, Texas; (2) Galva, Iowa; (3)
Sioux City, Iowa; (4) and Martinez, California.
Additionally, Air Liquide will divest two liquid carbon dioxide-
only facilities in Madison, Mississippi and Washington, Indiana along
with the associated rail depot located in Fort Meade, Florida. Lastly,
Air Liquide will divest Airgas's retail packaged welding gas and
hardgoods stores located in Anchorage, Fairbanks, and Kenai, Alaska.
Additionally, with regard to the ASU assets, although the
anticompetitive effects of Air Liquide's acquisition of Airgas are
related to the bulk liquid oxygen, nitrogen, and argon markets, the
pipeline oxygen and nitrogen businesses and contracts located at the
ASUs are also being divested because they are critical to the
viability, efficiency, and competitiveness of each plant. Air Liquide
has agreed to divest the required facilities, together with all related
equipment, customer and supply contracts, technology, and goodwill, to
one or more Commission-approved buyers within four months of
consummating its transaction with Airgas.
Any acquirer of the divested assets must receive the prior approval
of the Commission. The Commission's goal in evaluating possible
purchasers of divested assets is to maintain the competitive
environment that existed prior to the acquisition. A proposed acquirer
of divested assets must not itself present competitive problems. There
are a number of parties interested in purchasing the assets to be
divested that have the expertise, experience, and financial viability
to successfully purchase and manage these assets and retain the current
level of competition in the relevant markets. The Commission is
therefore satisfied that sufficient potential buyers for the divested
assets in each relevant market currently exist.
The proposed Consent Agreement incorporates a proposed Order to
Maintain Assets to ensure the continued operations of the divestiture
assets while a sale is conducted, and for a brief transition period
once the Commission approves a buyer for the assets. The proposed Order
to Maintain Assets also allows the Commission to appoint an interim
monitor to oversee compliance with all the obligations and
responsibilities under the proposed Order and requires Air Liquide to
execute an agreement conferring upon the interim monitor all of the
rights, powers, and authorities necessary to permit the monitor to
ensure the continued health and competitiveness of the divested
businesses.
The purpose of this analysis is to facilitate public comment on the
proposed Consent Agreement, and it is not intended to constitute an
official interpretation of the proposed Consent Agreement or to modify
its terms in any way.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016-11763 Filed 5-18-16; 8:45 am]
BILLING CODE 6750-01-P
