FTC INTERVENES IN DOW’S $18.8 MILLION ACQUISITION OF RIVAL ROHM & HAAS

On January 23, 2009, Dow Chemical Company (“Dow”) settled charges with the Federal Trade Commission (“FTC”) in order for its $18.8 million acquisition of rival Rohm & Haas Company (“R&H”) to proceed. Dow agreed to sell a range of assets to an FTC approved buyer and put in place mechanisms to ensure Dow will not have access to competitively sensitive non-public information regarding any businesses the new buyer acquires from Rohm & Haas.
According to the complaint, the proposed acquisition would reduce the competition in relevant markets or the research, development, manufacture, and sale of certain acrylic monomers – including glacial acrylic acid, butyl acrylate, and ethyl acrylate – as well as hollow sphere particles and acrylic latex polymers for traffic paint used to mark lines on streets and highways. Glacial acrylic acid is used in the production of super-absorbent polymers, which are used in personal care and hygiene products. Butyl acrylate and ethyl acrylate are acrylate esters used to make the latex polymers that are used in paints, architectural coatings, and pressure-sensitive adhesives.

The FTC believes that each of the relevant product markets is highly concentrated and that the proposed acquisition would lead to fewer competitors in each market. The combined firm would control more than 40 percent of sales in the market for glacial acrylic acid; 75 percent of sales in the market for butyl acrylate; and 90 percent of sales in the market for ethyl acrylate. Dow and Rohm & Haas currently are the only two suppliers of hollow sphere particles and acrylic latex polymer and in those markets the proposed acquisition would be a merger to monopoly.

Dow has agreed to sell the following assets to an FTC approved buyer: 1) its acrylic monomer production facility in Clear Lake, Texas; 2) its acrylic polymer production assets in St. Charles, Louisiana; 3) its acrylic polymer production facility in Alsip, Illinois; 4) its acrylic polymer production facility in Torrance, California; 5) its acrylic monomer research and development group in South Charleston, West Virginia; 6) its acrylic latex polymer research and development group in Cary, North Carolina; and 7) other assets related to these businesses. The consent order, however, requires Dow to provide the FTC approved acquirer with site services to the acrylic polymer production assets in St. Charles, Louisiana. If Dow does not sell these assets, it is required to divest these assets within 240 days of when the consent order is accepted for public comment or 240 days from the acquisition date, whichever is later.

The FTC’s vote to accept the complaint and consent order and place copies on the public record was 4-0.

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