FTC CHALLENGES PROPOSED ACQUISITION OF INEOS’S SODIUM SILICATE BUSINESSES BY CARLYLE PARTNERS

On June 30, 2008, the Federal Trade Commission (“FTC”), in a 4-0 vote, issued a complaint against the proposed acquisition of INEOS Group Limited (“INEOS”) by Carlyle Partners IV (“Carlyle”). INEOS is the third largest sodium silicate producer and seller in the highly concentrated Midwest region of the United States. PQ Corporation (“PQ”), owned by Carlyle Partners IV, is the largest sodium silicate producer.

According to the FTC, the proposed transaction is anticompetitive and in violation of antitrust laws. In the complaint, the FTC contends that PQ has 50 percent of the sodium silicate market while INEOS has 12 percent. Because there is not a close substitute of sodium silicate, which has high transportation costs, other products will not constrain pricing.
The companies have entered into a consent order which requires Carlyle to divest PQ’s sodium silicate plant in Utica, Illinois, to Oak Hill Acquisition Company, LLC (Oak Hill), or another FTC-approved buyer if Oak Hill is later found to be an unacceptable acquirer, within five days of acquiring INEOS. There are other stipulations in the consent order that require the companies to license all of the intellectual property related to sodium silicate product at the Utica plant to enable it to successfully operate the Utica plant for two years after its sale. The FTC will appoint an interim monitor to ensure that the companies comply with their obligations following the divestiture, as well as a divestiture trustee if PQ fails to comply fully with the terms of the order.

Finally, the order requires the companies to notify the FTC of any change in their corporate structures that may affect compliance with its terms. The order will expire in 10 years.

Robert Doyle
(202) 589-1834
rdoyle@dbmlawgroup.com