The Sherwin-Williams Company and The Valspar Corporation; Analysis To Aid Public Comment, 26485-26487 [2017-11733]

Download as PDF Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than June 19, 2017. A. Federal Reserve Bank of Minneapolis (Jacquelyn K. Brunmeier, Assistant Vice President) 90 Hennepin Avenue, Minneapolis, Minnesota 55480–0291: 1. Thomas William Geiger, Maple Plain, Minnesota; to acquire 10 percent or more of the voting shares of Heritage Bancshares Group, Inc., and thereby indirectly gain shares of Heritage Bank, National Association, both of Spicer, Minnesota. Board of Governors of the Federal Reserve System, June 1, 2017. Yao-Chin Chao, Assistant Secretary of the Board. [FR Doc. 2017–11717 Filed 6–6–17; 8:45 am] Marceline, Missouri; to acquire voting shares of Citizens Bancshares Co., Kansas City, Missouri, and thereby indirectly acquire Citizens Bank and Trust Company, Kansas City, Missouri. Board of Governors of the Federal Reserve System, June 2, 2017. Yao-Chin Chao, Assistant Secretary of the Board. [FR Doc. 2017–11808 Filed 6–6–17; 8:45 am] BILLING CODE 6210–01–P FEDERAL TRADE COMMISSION [File No. 161–0116] The Sherwin-Williams Company and The Valspar Corporation; Analysis To Aid Public Comment ACTION: BILLING CODE 6210–01–P Federal Trade Commission. Proposed consent agreement. AGENCY: 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 order—embodied in the consent agreement—that would settle these allegations. DATES: Comments must be received on or before June 27, 2017. ADDRESSES: Interested parties may file a comment 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 The Sherwin-Williams Company and The Valspar Corporation; File No. 161– 0116’’ on your comment, and file your comment online at https:// ftcpublic.commentworks.com/ftc/ swvalsparconsent by following the instructions on the web-based form. If you prefer to file your comment on paper, write ‘‘In the Matter of The Sherwin-Williams Company and The Valspar Corporation; File No. 161– 0116’’ 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: James Abell (202–326–2289), Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC 20580. SUMMARY: FEDERAL RESERVE SYSTEM sradovich on DSK3GMQ082PROD with NOTICES Change in Bank Control Notices; Acquisitions of Shares of a Bank or Bank Holding Company The notificants listed below have applied under the Change in Bank Control Act (12 U.S.C. 1817(j)) and § 225.41 of the Board’s Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)). The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than June 21, 2017. A. Federal Reserve Bank of Atlanta (Chapelle Davis, Assistant Vice President) 1000 Peachtree Street NE., Atlanta, Georgia 30309. Comments can also be sent electronically to Applications.Comments@atl.frb.org: 1. Kenneth Ray Lehman, Arlington, Virginia; to acquire voting shares of CCF Holding Company, and thereby indirectly acquire voting shares of Heritage Bank, both of Jonesboro, Georgia. B. Federal Reserve Bank of Kansas City (Dennis Denney, Assistant Vice President) 1 Memorial Drive, Kansas City, Missouri 64198–0001: 1. Don O. Walsworth, Sr., individually and as trustee of various family trusts, VerDate Sep<11>2014 16:37 Jun 06, 2017 Jkt 241001 PO 00000 Frm 00063 Fmt 4703 Sfmt 4703 26485 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 a consent order 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 26, 2017), on the World Wide Web, at https:// www.ftc.gov/news-events/commissionactions. You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before June 27, 2017. Write ‘‘In the Matter of The Sherwin-Williams Company and The Valspar Corporation; File No. 161–0116’’ 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/policy/publiccomments. 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/ swvalsparconsent 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 prefer to file your comment on paper, write ‘‘In the Matter of The Sherwin-Williams Company and The Valspar Corporation; File No. 161– 0116’’ 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. SUPPLEMENTARY INFORMATION: E:\FR\FM\07JNN1.SGM 07JNN1 sradovich on DSK3GMQ082PROD with NOTICES 26486 Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices Because your comment will be placed on the publicly accessible FTC Web site at https://www.ftc.gov, you are solely responsible for making sure that your comment does not include any sensitive or confidential information. In particular, your comment should not include any sensitive personal information, such as your or anyone else’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, such as medical records or other individually identifiable health information. In addition, your comment should not include any ‘‘trade secret or any commercial or financial information which . . . is privileged or confidential’’—as provided by 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)— including in particular competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names. Comments containing material for which confidential treatment is requested must be filed in paper form, must be clearly labeled ‘‘Confidential,’’ and must comply with FTC Rule 4.9(c). 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). Your comment will be kept confidential only if the General Counsel grants your request in accordance with the law and the public interest. Once your comment has been posted on the public FTC Web site—as legally required by FTC Rule 4.9(b)—we cannot redact or remove your comment from the FTC Web site, unless you submit a confidentiality request that meets the requirements for such treatment under FTC Rule 4.9(c), and the General Counsel grants that request. Visit the FTC Web site 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 27, 2017. For information on the Commission’s privacy policy, including routine uses permitted by the VerDate Sep<11>2014 16:37 Jun 06, 2017 Jkt 241001 Privacy Act, see https://www.ftc.gov/ site-information/privacy-policy. Analysis of Agreement Containing Consent Order To Aid Public Comment I. Introduction The Federal Trade Commission (‘‘Commission’’) has accepted, subject to final approval, an Agreement Containing Consent Order (‘‘Consent Agreement’’) with The SherwinWilliams Company (‘‘SherwinWilliams’’). The purpose of the Consent Agreement is to remedy the anticompetitive effects that would result from Sherwin-Williams’s proposed acquisition of The Valspar Corporation (‘‘Valspar’’). Under the terms of the Consent Agreement, Sherwin-Williams must divest Valspar’s North America Industrial Wood Coatings Business to Axalta Coating Systems Ltd. (‘‘Axalta’’) or another buyer approved by the Commission. The Consent Agreement provides the acquirer with the manufacturing plants and other tangible and intangible assets it needs to effectively compete in the market for the manufacture and sale of industrial wood coatings in North America. SherwinWilliams must complete the divestiture within ten days of the closing of the acquisition. On March 19, 2016, SherwinWilliams agreed to acquire Valspar for approximately $11.3 billion, including the assumption of debt. This acquisition would concentrate most of the nearly $1 billion North American industrial wood coatings industry in two major competitors—the combined SherwinWilliams/Valspar and Akzo Nobel N.V. (‘‘Akzo Nobel’’). On May 26, 2017, the Commission issued an administrative complaint alleging that the acquisition, if consummated, may substantially lessen competition in the market for the manufacture and sale of industrial wood coatings in North America in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45. The Consent Agreement has been placed on the public record for 30 days to solicit comments from interested persons. Comments received during this period will become a part of the public record. After 30 days, the Commission will review the Consent Agreement and comments received, and decide whether it should withdraw, modify, or make the Consent Agreement final. II. The Parties Sherwin-Williams, headquartered in Cleveland, Ohio, is one of the top three manufacturers of industrial wood PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 coatings in North America. SherwinWilliams supplies industrial wood coatings to a wide variety of customers, including manufacturers of kitchen cabinets, building products, and furniture (‘‘wood products manufacturers’’). Sherwin-Williams operates three dedicated industrial wood coatings plants in North America. Valspar is one of the top three manufactuers of industrial wood coatings in North America. Like Sherwin-Williams, Valspar supplies industrial wood coatings to some of the largest wood product manufacturers. Valspar operates two dedicated industrial wood coatings plants located in North America. III. The Manufacture and Sale of Industrial Wood Coatings in North America Absent the remedy, SherwinWilliams’s acquisition would harm competition in the manufacture and sale of industrial wood coatings in North America. Industrial wood coatings consist of a broad category of stains, topcoats, and sealants used during the manufacture of wood products such as kitchen cabinets, furniture, and building products. The relevant product market does not include off-the-shelf interior and exterior wood stains sold to retail consumers or other substrates such as laminates, decorative foils, films, or veneers. Industrial wood coatings are designed for application on high-speed manufacturing lines in a factory setting and are tailored to meet wood products manufacturers’ specifications. These specifications are demanding; wood product manufacturers require industrial wood coatings that perform well along a variety of dimensions, such as resistance to abrasion and moisture. Wood coatings sold to retail consumers are not formulated to meet these specifications and are thus not economically viable substitutes. Since wood product manufacturers rely on finished wood for its appearance and to meet the demand and preferences of their own customers, they likewise cannot easily or quickly substitute other finishing materials or technologies for their finished wood products. Attempting to do so would result in a high risk of significant sales losses for these manufacturers. North America is the appropriate geographic market in which to evaluate the likely competitive effects of the proposed acquisition. Sherwin-Williams and Valspar sell industrial wood coatings to customers throughout North America. The relevant geographic market is no broader than North E:\FR\FM\07JNN1.SGM 07JNN1 Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices America because freight costs and logistical challenges limit wood product manufacturers’ ability to purchase significant volumes of industrial wood coatings from overseas. Currently, three firms—SherwinWilliams, Valspar, and Akzo Nobel— manufacture and sell most industrial wood coatings in North America. Collectively, these three firms control over 70 percent of the North American market for industrial wood coatings. The Commission often calculates the Herfindahl-Hirschman Index (‘‘HHI’’) to assess market concentration. Under the Federal Trade Commission and Department of Justice Horizontal Merger Guidelines, markets with an HHI above 2,500 are generally classified as ‘‘highly concentrated,’’ and acquisitions ‘‘resulting in highly concentrated markets that involve an increase in the HHI of more than 200 points will be presumed to be likely to enhance market power.’’ Absent the proposed remedy, the acquisition would increase the HHI by at least 900 points to over 2,700 for industrial wood coatings, resulting in a highly concentrated market. IV. Effects of the Acquisition Absent relief, the acquisition would combine two of the three leading industrial wood coatings suppliers and pose a significant risk of competitive harm. The industrial wood coatings industry is a mature, stable industry, with relatively low growth rates and high barriers to entry. The acquisition would eliminate substantial direct competition between Sherwin-Williams and Valspar. The acquisition also would increase the ease and likelihood of anticompetitive coordination between the only two remaining major suppliers. Thus, the acquisition likely would result in higher prices and a reduction in services and innovation to customers. sradovich on DSK3GMQ082PROD with NOTICES V. Entry Entry into the market for the manufacture and sale of industrial wood coatings would not be timely, likely, or sufficient in magnitude, character, and scope to deter or counteract the likely competitive harm from the acquisition. The industrial wood coatings industry in North America enjoys significant barriers to entry and expansion including the high cost of building industrial wood coatings plants, the need for substantial technological and manufacturing expertise, and the significant on-site technical support requirements of large customers. For these reasons, entry by a new market participant or expansion by an existing one, would not deter the likely VerDate Sep<11>2014 16:37 Jun 06, 2017 Jkt 241001 anticompetitive effects from the acquisition. VI. The Consent Agreement The proposed Consent Agreement remedies the competitive concerns raised by the acquisition by requiring Sherwin-Williams to divest Valspar’s North America Industrial Wood Coatings Business to Axalta or another buyer approved by the Commission. In addition, the Consent Agreement requires Sherwin-Williams to transfer the customer contracts currently serviced by Valspar’s Industrial Wood Coatings Business to the buyer. Under the proposed Consent Agreement, Sherwin-Williams will divest Valspar’s industrial wood coatings plants located at High Point, North Carolina and Cornwall, Ontario. In addition, Sherwin-Williams will divest the research and development facilities, warehouses, and testing facilities of Valspar’s Industrial Wood Coatings Business. Sherwin-Williams will also divest intellectual property, inventory, accounts receivable, government licenses and permits, and business records. The Consent Agreement limits Sherwin-Williams’s use of, and access to, confidential business information pertaining to the divestiture assets. Axalta is one of the leading suppliers of industrial coatings to large OEMs in the automotive and general industrial markets and is well positioned to operate these assets as an effective competitor. Through the proposed Consent Agreement, Axalta will become one of the leading North American manufacturers of industrial wood coatings. With the divested assets, Axalta will be able to replicate Valspar’s position in the market today. It will own plants capable of manufacturing a broad range of industrial wood coatings as well as the other assets necessary to compete successfully in this market. Axalta’s presence will preserve the three-way competition that currently exists in the relevant markets and moderate the potential for unilateral or coordinated effects. Sherwin-Williams must complete the divestiture within ten days of the closing of the acquisition. A Monitor will monitor Sherwin-Williams’ compliance with the obligations set forth in the Order. If Sherwin-Williams does not fully comply with the divestiture and requirements of the Order, the Commission may appoint a Divestiture Trustee to divest Valspar’s North America Industrial Wood Coatings Business and perform Sherwin-Williams’ other obligations consistent with the Order. PO 00000 Frm 00065 Fmt 4703 Sfmt 9990 26487 The purpose of this analysis is to facilitate public comment on the proposed Consent Agreement, and is not intended to constitute an official interpretation of the proposed Decision and Order or to modify its terms in any way. By direction of the Commission. Donald S. Clark, Secretary. [FR Doc. 2017–11733 Filed 6–6–17; 8:45 am] BILLING CODE 6750–01–P DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Disease Control and Prevention Disease, Disability, and Injury Prevention and Control Special Emphasis Panel (SEP): Secondary Review This is to announce the cancelation of a meeting, Research Using Linked Data to Understand Motor Vehicle Injury Among Older Adults, (FOA), CE17–001, and Development and Evaluation of Sports Concussion Prevention Strategies (FOA) CE17–002, secondary review. SUMMARY: This meeting was announced in the Federal Register on May 15, 2017, Volume 82, Number 92, pages 22335 and 22336. This meeting is canceled in its entirety. CONTACT PERSON FOR MORE INFORMATION: Gwendolyn H. Cattledge, Ph.D., M.S.E.H., Deputy Associate Director for Science, National Center for Injury Prevention and Control, CDC, 4770 Buford Highway, NE., Mailstop F–63, Atlanta, Georgia 30341, Telephone (770) 488–1430. The Director, Management Analysis and Services Office, has been delegated the authority to sign Federal Register notices pertaining to announcements of meetings and other committee management activities, for both the Centers for Disease Control and Prevention and the Agency for Toxic Substances and Disease Registry. Claudette Grant, Acting Director, Management Analysis and Services Office, Centers for Disease Control and Prevention. [FR Doc. 2017–11814 Filed 6–6–17; 8:45 am] BILLING CODE 4163–18–P E:\FR\FM\07JNN1.SGM 07JNN1

Agencies

[Federal Register Volume 82, Number 108 (Wednesday, June 7, 2017)]
[Notices]
[Pages 26485-26487]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-11733]


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FEDERAL TRADE COMMISSION

[File No. 161-0116]


The Sherwin-Williams Company and The Valspar Corporation; 
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 order--
embodied in the consent agreement--that would settle these allegations.

DATES: Comments must be received on or before June 27, 2017.

ADDRESSES: Interested parties may file a comment 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 The 
Sherwin-Williams Company and The Valspar Corporation; File No. 161-
0116'' on your comment, and file your comment online at https://ftcpublic.commentworks.com/ftc/swvalsparconsent by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, write ``In the Matter of The Sherwin-Williams Company and The 
Valspar Corporation; File No. 161-0116'' 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: James Abell (202-326-2289), 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 a consent order 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 26, 2017), on the World Wide Web, at 
https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before June 27, 2017. 
Write ``In the Matter of The Sherwin-Williams Company and The Valspar 
Corporation; File No. 161-0116'' 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/policy/public-comments.
    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/swvalsparconsent 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 prefer to file your comment on paper, write ``In the Matter 
of The Sherwin-Williams Company and The Valspar Corporation; File No. 
161-0116'' 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.

[[Page 26486]]

    Because your comment will be placed on the publicly accessible FTC 
Web site at https://www.ftc.gov, you are solely responsible for making 
sure that your comment does not include any sensitive or confidential 
information. In particular, your comment should not include any 
sensitive personal information, such as your or anyone else'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, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
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)--including in particular competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). 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). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted on the public FTC Web site--as legally required by FTC Rule 
4.9(b)--we cannot redact or remove your comment from the FTC Web site, 
unless you submit a confidentiality request that meets the requirements 
for such treatment under FTC Rule 4.9(c), and the General Counsel 
grants that request.
    Visit the FTC Web site 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 27, 2017. For information on the Commission's privacy policy, 
including routine uses permitted by the Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

Analysis of Agreement Containing Consent Order To Aid Public Comment

I. Introduction

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Order (``Consent 
Agreement'') with The Sherwin-Williams Company (``Sherwin-Williams''). 
The purpose of the Consent Agreement is to remedy the anticompetitive 
effects that would result from Sherwin-Williams's proposed acquisition 
of The Valspar Corporation (``Valspar''). Under the terms of the 
Consent Agreement, Sherwin-Williams must divest Valspar's North America 
Industrial Wood Coatings Business to Axalta Coating Systems Ltd. 
(``Axalta'') or another buyer approved by the Commission. The Consent 
Agreement provides the acquirer with the manufacturing plants and other 
tangible and intangible assets it needs to effectively compete in the 
market for the manufacture and sale of industrial wood coatings in 
North America. Sherwin-Williams must complete the divestiture within 
ten days of the closing of the acquisition.
    On March 19, 2016, Sherwin-Williams agreed to acquire Valspar for 
approximately $11.3 billion, including the assumption of debt. This 
acquisition would concentrate most of the nearly $1 billion North 
American industrial wood coatings industry in two major competitors--
the combined Sherwin-Williams/Valspar and Akzo Nobel N.V. (``Akzo 
Nobel''). On May 26, 2017, the Commission issued an administrative 
complaint alleging that the acquisition, if consummated, may 
substantially lessen competition in the market for the manufacture and 
sale of industrial wood coatings in North America in violation of 
Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and section 5 
of the Federal Trade Commission Act, as amended, 15 U.S.C. 45.
    The Consent Agreement has been placed on the public record for 30 
days to solicit comments from interested persons. Comments received 
during this period will become a part of the public record. After 30 
days, the Commission will review the Consent Agreement and comments 
received, and decide whether it should withdraw, modify, or make the 
Consent Agreement final.

II. The Parties

    Sherwin-Williams, headquartered in Cleveland, Ohio, is one of the 
top three manufacturers of industrial wood coatings in North America. 
Sherwin-Williams supplies industrial wood coatings to a wide variety of 
customers, including manufacturers of kitchen cabinets, building 
products, and furniture (``wood products manufacturers''). Sherwin-
Williams operates three dedicated industrial wood coatings plants in 
North America.
    Valspar is one of the top three manufactuers of industrial wood 
coatings in North America. Like Sherwin-Williams, Valspar supplies 
industrial wood coatings to some of the largest wood product 
manufacturers. Valspar operates two dedicated industrial wood coatings 
plants located in North America.

III. The Manufacture and Sale of Industrial Wood Coatings in North 
America

    Absent the remedy, Sherwin-Williams's acquisition would harm 
competition in the manufacture and sale of industrial wood coatings in 
North America. Industrial wood coatings consist of a broad category of 
stains, topcoats, and sealants used during the manufacture of wood 
products such as kitchen cabinets, furniture, and building products.
    The relevant product market does not include off-the-shelf interior 
and exterior wood stains sold to retail consumers or other substrates 
such as laminates, decorative foils, films, or veneers. Industrial wood 
coatings are designed for application on high-speed manufacturing lines 
in a factory setting and are tailored to meet wood products 
manufacturers' specifications. These specifications are demanding; wood 
product manufacturers require industrial wood coatings that perform 
well along a variety of dimensions, such as resistance to abrasion and 
moisture. Wood coatings sold to retail consumers are not formulated to 
meet these specifications and are thus not economically viable 
substitutes. Since wood product manufacturers rely on finished wood for 
its appearance and to meet the demand and preferences of their own 
customers, they likewise cannot easily or quickly substitute other 
finishing materials or technologies for their finished wood products. 
Attempting to do so would result in a high risk of significant sales 
losses for these manufacturers.
    North America is the appropriate geographic market in which to 
evaluate the likely competitive effects of the proposed acquisition. 
Sherwin-Williams and Valspar sell industrial wood coatings to customers 
throughout North America. The relevant geographic market is no broader 
than North

[[Page 26487]]

America because freight costs and logistical challenges limit wood 
product manufacturers' ability to purchase significant volumes of 
industrial wood coatings from overseas.
    Currently, three firms--Sherwin-Williams, Valspar, and Akzo Nobel--
manufacture and sell most industrial wood coatings in North America. 
Collectively, these three firms control over 70 percent of the North 
American market for industrial wood coatings. The Commission often 
calculates the Herfindahl-Hirschman Index (``HHI'') to assess market 
concentration. Under the Federal Trade Commission and Department of 
Justice Horizontal Merger Guidelines, markets with an HHI above 2,500 
are generally classified as ``highly concentrated,'' and acquisitions 
``resulting in highly concentrated markets that involve an increase in 
the HHI of more than 200 points will be presumed to be likely to 
enhance market power.'' Absent the proposed remedy, the acquisition 
would increase the HHI by at least 900 points to over 2,700 for 
industrial wood coatings, resulting in a highly concentrated market.

IV. Effects of the Acquisition

    Absent relief, the acquisition would combine two of the three 
leading industrial wood coatings suppliers and pose a significant risk 
of competitive harm. The industrial wood coatings industry is a mature, 
stable industry, with relatively low growth rates and high barriers to 
entry. The acquisition would eliminate substantial direct competition 
between Sherwin-Williams and Valspar. The acquisition also would 
increase the ease and likelihood of anticompetitive coordination 
between the only two remaining major suppliers. Thus, the acquisition 
likely would result in higher prices and a reduction in services and 
innovation to customers.

V. Entry

    Entry into the market for the manufacture and sale of industrial 
wood coatings would not be timely, likely, or sufficient in magnitude, 
character, and scope to deter or counteract the likely competitive harm 
from the acquisition. The industrial wood coatings industry in North 
America enjoys significant barriers to entry and expansion including 
the high cost of building industrial wood coatings plants, the need for 
substantial technological and manufacturing expertise, and the 
significant on-site technical support requirements of large customers. 
For these reasons, entry by a new market participant or expansion by an 
existing one, would not deter the likely anticompetitive effects from 
the acquisition.

VI. The Consent Agreement

    The proposed Consent Agreement remedies the competitive concerns 
raised by the acquisition by requiring Sherwin-Williams to divest 
Valspar's North America Industrial Wood Coatings Business to Axalta or 
another buyer approved by the Commission. In addition, the Consent 
Agreement requires Sherwin-Williams to transfer the customer contracts 
currently serviced by Valspar's Industrial Wood Coatings Business to 
the buyer.
    Under the proposed Consent Agreement, Sherwin-Williams will divest 
Valspar's industrial wood coatings plants located at High Point, North 
Carolina and Cornwall, Ontario. In addition, Sherwin-Williams will 
divest the research and development facilities, warehouses, and testing 
facilities of Valspar's Industrial Wood Coatings Business. Sherwin-
Williams will also divest intellectual property, inventory, accounts 
receivable, government licenses and permits, and business records. The 
Consent Agreement limits Sherwin-Williams's use of, and access to, 
confidential business information pertaining to the divestiture assets.
    Axalta is one of the leading suppliers of industrial coatings to 
large OEMs in the automotive and general industrial markets and is well 
positioned to operate these assets as an effective competitor. Through 
the proposed Consent Agreement, Axalta will become one of the leading 
North American manufacturers of industrial wood coatings. With the 
divested assets, Axalta will be able to replicate Valspar's position in 
the market today. It will own plants capable of manufacturing a broad 
range of industrial wood coatings as well as the other assets necessary 
to compete successfully in this market. Axalta's presence will preserve 
the three-way competition that currently exists in the relevant markets 
and moderate the potential for unilateral or coordinated effects.
    Sherwin-Williams must complete the divestiture within ten days of 
the closing of the acquisition. A Monitor will monitor Sherwin-
Williams' compliance with the obligations set forth in the Order. If 
Sherwin-Williams does not fully comply with the divestiture and 
requirements of the Order, the Commission may appoint a Divestiture 
Trustee to divest Valspar's North America Industrial Wood Coatings 
Business and perform Sherwin-Williams' other obligations consistent 
with the Order.
    The purpose of this analysis is to facilitate public comment on the 
proposed Consent Agreement, and is not intended to constitute an 
official interpretation of the proposed Decision and Order or to modify 
its terms in any way.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2017-11733 Filed 6-6-17; 8:45 am]
BILLING CODE 6750-01-P