American Air Liquide Holdings, Inc.; Analysis To Aid Public Comment, 31637-31641 [2016-11763]

Download as PDF mstockstill on DSK3G9T082PROD with NOTICES Federal Register / Vol. 81, No. 97 / Thursday, May 19, 2016 / Notices Reserve is authorized to use the FR 3067 by sections 2A and 12A of the FRA. Additionally, depending on the survey respondent, the information collection may be authorized under a more specific statute. These statutes are: • Expedited Funds Availability Act section 609 (12 U.S.C. 4008) • Electronic Fund Transfer Act section 920 (15 U.S.C. 1693o–2) • The Check Clearing for the 21st Century Act section 15 (12 U.S.C. 5014) • Federal Reserve Act section 11 (Examinations and reports, Supervision over Reserve Banks, and Federal Reserve Note provisions, 12 U.S.C. 248); section 11A (Pricing of Services, 12 U.S.C. 248a); section 13 (FRB deposits and collections, 12 U.S.C. 342); and section 16 (Issuance of Federal Reserve notes, par clearance, and FRB clearinghouse, 12 U.S.C. 248–1, 360, and 411). Under the appropriate authority, the Federal Reserve may make submission of survey information mandatory for entities such as financial institutions or payment card networks; submissions would otherwise be voluntary. The ability of the Federal Reserve to maintain the confidentiality of information provided by respondents to the FR 3067 surveys will be determined on a case-by-case basis depending on the type of information provided for a particular survey. For instance, in some circumstances, no issue of confidentiality will arise as the surveys may be conducted by private firms under contract with the Federal Reserve and names or other directly identifying information would not be provided to the Federal Reserve. In circumstances where identifying information is provided to the Federal Reserve, such information could possibly be protected under the Freedom of Information Act (FOIA), exemptions 4 and 6. If the survey is mandatory and is undertaken as part of the supervisory process, information could be protected under FOIA exemption 8, which protects information relating to the examination reports (5 U.S.C. 552(b)(8)). Abstract: This survey collects information, as needed, on specific and time sensitive issues, which may affect the Federal Reserve’s decision making. Respondents may comprise depository institutions, financial and nonfinancial businesses and related entities, individual consumers, households, and federal, state and local government agencies. This survey may be mandatory for a certain subset of entities and voluntary for all other respondents. The Federal Reserve uses this event-driven survey to obtain information specifically tailored to the Federal Reserve System’s VerDate Sep<11>2014 18:47 May 18, 2016 Jkt 238001 supervisory, regulatory, fiscal, and operational responsibilities. The Federal Reserve may conduct various versions of the survey, as needed, and may survey respondents up to four times per year. The frequency and content of the questions depends on changing economic, regulatory, supervisory, or legislative developments. Current Actions: The Federal Reserve proposes to add federal, state, and local government agencies as potential respondents to a survey. The Federal Reserve also proposes adjusting the burden by decreasing the estimated number of responses per year from four to two; decreasing the hours per response from 3 to 1.5; and by increasing the estimated number of respondents from 5,000 to 10,000. 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: PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 31637 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 http://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 http://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 E:\FR\FM\19MYN1.SGM 19MYN1 mstockstill on DSK3G9T082PROD with NOTICES 31638 Federal Register / Vol. 81, No. 97 / Thursday, May 19, 2016 / Notices 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 http:// 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 http://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). VerDate Sep<11>2014 18:47 May 18, 2016 Jkt 238001 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 http:// 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. PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 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 E:\FR\FM\19MYN1.SGM 19MYN1 mstockstill on DSK3G9T082PROD with NOTICES Federal Register / Vol. 81, No. 97 / Thursday, May 19, 2016 / Notices 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 VerDate Sep<11>2014 18:47 May 18, 2016 Jkt 238001 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- PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 31639 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. E:\FR\FM\19MYN1.SGM 19MYN1 31640 Federal Register / Vol. 81, No. 97 / Thursday, May 19, 2016 / Notices 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. mstockstill on DSK3G9T082PROD with NOTICES 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 VerDate Sep<11>2014 18:47 May 18, 2016 Jkt 238001 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, PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 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 E:\FR\FM\19MYN1.SGM 19MYN1 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 
http://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 http://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 http://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 http://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 http://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