CRH plc.; Analysis To Aid Public Comment, 28647-28650 [2018-13190]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 83, Number 119 (Wednesday, June 20, 2018)]
[Notices]
[Pages 28647-28650]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-13190]


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FEDERAL TRADE COMMISSION

[File No. 171 0230]


CRH plc.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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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 July 16, 2018.

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: ``CRH plc; File No. 
1710230'' on your comment, and file your comment online at https://ftcpublic.commentworks.com/ftc/crhconsent by following the instructions 
on the web-based form. If you prefer to file your comment on paper, 
write ``CRH plc; File No. 1710230'' 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: Elyssa Wenzel (202-326-2417), 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 June 14, 2018), 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 July 16, 2018. 
Write ``CRH plc; File No. 1710230'' 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 website, 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/crhconsent by following the instructions on the web-based form. If 
this Notice appears at https://www.regulations.gov/#!home, you also may 
file a comment through that website.
    If you prefer to file your comment on paper, write ``CRH plc; File 
No. 1710230'' 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.
    Because your comment will be placed on the publicly accessible FTC 
website 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

[[Page 28648]]

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 website--as legally required by FTC Rule 
4.9(b)--we cannot redact or remove your comment from the FTC website, 
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 website at https://www.ftc.gov to read this Notice and 
the news release describing it. The FTC Act and other laws that the 
Commission administers permit the collection of public comments to 
consider and use in this proceeding, as appropriate. The Commission 
will consider all timely and responsive public comments that it 
receives on or before July 16, 2018. 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 Proposed Consent Orders To Aid Public Comment

    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 CRH plc's (``CRH'') proposed acquisition of Ash Grove Cement 
Company (``Ash Grove''). Under the terms of the proposed Consent 
Agreement, CRH is required to divest the Trident cement plant and 
quarry located in Three Forks, Montana to Grupo Cementos de Chihuahua 
SAB de CV (``GCC''). The Consent Agreement additionally requires CRH to 
divest two sand-and-gravel plants and one sand-and-gravel pit located 
in Omaha, Nebraska to Martin Marietta Materials, Inc. (``Martin 
Marietta''). Last, the Consent Agreement requires CRH to divest two 
limestone quarries and a hot-mix asphalt plant located in Olathe, 
Kansas, as well as an additional limestone quarry and hot-mix asphalt 
plant located in Louisburg, Kansas, to Summit Materials, Inc. 
(``Summit'').
    The Consent Agreement has been placed on the public record for 
thirty days to solicit comments from interested persons. Comments 
received during this period will become part of the public record. 
After thirty days, the Commission will again review the Consent 
Agreement and the comments received, and decide whether it should 
withdraw from the Consent Agreement, modify it, or make final the 
Decision and Order (``Order'').

The Transaction

    Pursuant to an Agreement and Plan of Merger dated September 20, 
2017, CRH proposes to acquire 100 percent of the existing voting 
securities of Ash Grove in a transaction valued at $3.5 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 
certain regional markets in the United States for the manufacture and 
sale of portland cement, sand and gravel, and crushed limestone. The 
proposed Consent Agreement will remedy the alleged violations by 
preserving the competition that would otherwise be eliminated by the 
proposed acquisition.

The Parties

    CRH is a multinational corporation headquartered in Dublin, Ireland 
that specializes in manufacturing construction products and materials. 
In North America, CRH operates under the name CRH Americas, Inc. (``CRH 
Americas'') (formerly Oldcastle, Inc.) in forty-four U.S. states and 
six Canadian provinces. CRH Americas operates three cement plants, one 
inland import terminal, and four inland terminals. In addition, CRH 
Americas operates 419 sand-and-gravel sites, 232 quarries, 315 ready-
mix concrete plants, 457 hot-mix asphalt plants, and 26 product 
packaging facilities. CRH Americas operates a cement plant in Three 
Forks, Montana, sand-and-gravel operations in Omaha, Nebraska under the 
subsidiary Mallard Sand & Gravel Co., and a crushed limestone business 
in Olathe, Kansas under the subsidiary APAC-Kansas.
    Ash Grove is a closely held corporation headquartered in Overland 
Park, Kansas, also specializing in the manufacture of construction 
products and materials. Ash Grove is the sixth-largest cement 
manufacturer in North America and the second-largest manufacturer west 
of the Mississippi River. Ash Grove owns eight cement plants, 23 cement 
terminals, 10 fly ash terminals, two deep-water import terminals, 52 
ready-mix concrete plants, 20 limestone quarries, 25 sand-and-gravel 
pits, and nine product packaging facilities. Ash Grove has a cement 
plant in Montana City, Montana, a sand-and-gravel business in Omaha, 
Nebraska operating under the subsidiary Lyman-Richey Corporation, and a 
crushed limestone business in Olathe, Kansas that operates under the 
subsidiary Johnson County Aggregates.

The Relevant Products and Structure of the Markets

    The transaction raises competition concerns in three relevant 
product markets: the manufacture and sale of portland cement, sand and 
gravel, and crushed limestone. In the United States, both parties 
manufacture and sell portland cement. Users mix portland cement with 
water and aggregates (crushed stone, sand, or gravel) to form concrete, 
a fundamental building material that is widely used in residential, 
commercial, and public infrastructure construction projects. Because 
portland cement has no close substitutes and the cost of cement usually 
represents a relatively small portion of a project's overall 
construction costs, few customers are likely to switch to other 
products in response to a small but significant increase in the price 
of portland cement.
    Both parties also supply construction-grade sand and gravel, which 
are alluvial deposits used in concrete, road base, asphalt, 
construction fill, and other construction products. Because sand and 
gravel have no close substitutes in the Omaha, Nebraska/Council Bluffs, 
Iowa market, it is appropriate to treat sand and gravel as a separate 
relevant market because Omaha customers are unlikely to switch

[[Page 28649]]

to other products when faced with a small but significant increase in 
the price of sand and gravel.
    Both parties also produce crushed limestone, which is used as an 
input in cement, concrete, asphalt, metal refining, construction base, 
and other construction products. Because there are no close substitutes 
for crushed limestone in the Johnson County, Kansas City market, it is 
appropriate to treat crushed limestone as a separate relevant market 
because Johnson County customers are unlikely to switch to other 
products in the event of a small but significant increase in the price 
of crushed limestone.
    The primary purchasers of portland cement are ready-mix concrete 
producers. The primary purchasers of sand and gravel and crushed 
limestone are producers of ready-mix concrete and hot-mix asphalt. 
Because these products are heavy and relatively inexpensive 
commodities, the distance over which they can be trucked economically 
is limited. As a result, cement and aggregates markets are local or 
regional in nature, though their precise scope depends on a number of 
factors, including the traffic density of the specific region and local 
transportation costs, and available rail lines. For the purposes of 
analyzing the effects of the proposed acquisition on the portland 
cement market, the relevant geographic market is the state of Montana. 
The geographic market in which to analyze the effects of the proposed 
transaction on sand and gravel is the Omaha, Nebraska/Council Bluffs, 
Iowa region. The geographic market in which to analyze the effects of 
the proposed transaction on crushed limestone is the Johnson County, 
Kansas region.
    These relevant markets are already highly concentrated. In Montana, 
the parties are two of only three suppliers of cement. In the Omaha/
Council Bluffs market, the parties are the two leading suppliers of 
sand and gravel. In the Johnson County, Kansas, the parties are the two 
largest suppliers of crushed limestone and are located across the 
street from each other in Olathe, Kansas.

Entry

    Entry into the relevant portland cement, sand and gravel, and 
crushed limestone markets would not be timely, likely, or sufficient in 
magnitude, character, and scope to deter or counteract the 
anticompetitive effects of the proposed transaction. Entry into the 
cement market is expensive and slow. The cost to construct a new 
portland cement plant of sufficient size to be competitive would likely 
cost over $500 million and take more than five years. Building a rail 
terminal, though less difficult and expensive than building a plant, 
can take more than two years and several million dollars, and is only 
an option for firms with cement plants in sufficiently close proximity 
to supply the terminal economically.
    New entry into the sand and gravel markets may take more than two 
years to complete. Sand-and-gravel entrants face significant hurdles 
because federal and local permits are required before they can commence 
operation, and the permitting process can exceed two years.
    Opening a new quarry to mine and process crushed limestone in 
Kansas City typically costs $3 to 4 million and takes approximately 
five years to accomplish. Additionally, Johnson County has not approved 
a new quarry site in more than twenty-five years due to municipal 
opposition.
    Given the difficulties of entry in these three relevant markets, 
entry would not be likely, timely, and sufficient to defeat the likely 
anticompetitive effects of the proposed transaction in the relevant 
markets.

Effects of the Acquisition

    Unless remedied, the proposed merger would likely result in 
competitive harm in each of the relevant portland cement, sand and 
gravel, and crushed limestone markets. The merger would eliminate head-
to-head competition between the parties in each of these markets and 
significantly increase market concentration. For many customers in 
these markets, the merger would combine their two closest competitors, 
leaving the merged entity with the power to increase prices to these 
customers unilaterally. The merger would produce a de facto monopoly in 
the supply of sand and gravel in Omaha, leave only two suppliers of 
cement in Montana, and consolidate the two largest suppliers of crushed 
limestone in Johnson County. Further, if consummated without a remedy, 
the Acquisition would enhance the possibility of higher prices in the 
Montana cement market through collusion or coordinated action between 
the remaining two competitors.

The Consent Agreement

    The proposed Consent Agreement eliminates the competitive concerns 
raised by CRH's proposed acquisition of Ash Grove by requiring the 
parties to divest assets in each relevant market. CRH is required to 
divest its cement plant in Three Forks, Montana to GCC. GCC is a 
Mexican multinational corporation and experienced producer of cement, 
aggregates, and downstream construction materials such as concrete. It 
owns seven cement plants in the United States, including one in nearby 
Rapid City, South Dakota, and 21 cement terminals. Because the CRH 
cement plant in Montana currently sells a significant amount of cement 
into Canada through two CRH terminals in Alberta, Canada, and GCC does 
not have a presence in Canada, GCC will have the option to use a 
portion of the throughput of those CRH terminals for a period of three 
years. Additionally, CRH has agreed to purchase, at GCC's option, 
cement produced at the plant for distribution in Canada for up to three 
years. CRH is required to divest two sand-and-gravel operations and one 
pit in Omaha, Nebraska to Martin Marietta. CRH is further required to 
divest a hot-mix asphalt plant and two limestone quarries in Olathe, 
Kansas, as well as another hot-mix asphalt plant and another limestone 
quarry in Louisburg, Kansas, to Summit. Each of the identified buyers 
possesses the experience and capability to replace one of the merging 
parties as a significant competitor in the relevant markets. The 
parties must accomplish the divestitures to these buyers within ten 
days after the proposed acquisition is accomplished.
    The Commission's goal in evaluating possible purchasers of divested 
assets is to maintain the competitive environment that existed prior to 
the proposed acquisition. If the Commission determines that any of the 
identified buyers is not an acceptable acquirer, the proposed Order 
requires the parties to divest the assets to a Commission-approved 
acquirer within 90 days of the Commission notifying the parties that 
the proposed acquirer is not acceptable. If the Commission determines 
that the manner in which any divestiture was accomplished is not 
acceptable, the Commission may direct the parties, or appoint a 
divestiture trustee, to effect such modifications as may be necessary 
to satisfy the requirements of the Order.
    To ensure compliance with the proposed Order, the Commission has 
agreed to appoint a Monitor to ensure that CRH and Ash Grove comply 
with all of their obligations pursuant to the Consent Agreement and to 
keep the Commission informed about the status of the transfer of the 
rights and assets to appropriate purchasers.
    The purpose of this analysis is to facilitate public comment on the 
Consent Agreement, and it is not intended to constitute an official 
interpretation of the proposed Order or to modify its terms in any way.


[[Page 28650]]


    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2018-13190 Filed 6-19-18; 8:45 am]
 BILLING CODE 6750-01-P