FTC Approves Agrium’s Purchase of CF

On December 23, 2009, Agrium Inc. agreed to sell a range of assets as part of an agreement with the FTC that will allow Agrium to move forward with its acquisition of competitor CF Industries Holdings, Inc. The proposed consent order settles allegations that the acquisition would have eliminated competition in the market for anhydrous ammonia fertilizer, a product that farmers rely on to grow their crops. According to the FTC’s complaint, Agrium’s acquisition of CF would have eliminated competition between the two companies in the distribution and sale of anhydrous ammonia in three markets: the Pacific Northwest; East Dubuque, Illinois; and Marseilles, Illinois. The FTC’s complaint alleges that each of these markets is highly concentrated and the proposed transaction would further increase concentration levels by reducing the number of significant competitors in the Pacific Northwest from two to one, and in the two areas in Illinois from three to two. The complaint further alleges that the proposed transaction likely would increase the prices for anhydrous ammonium fertilizer. To prevent these price increases, the FTC’s consent order replaces the competition that otherwise would have been lost because of the deal and requires Agrium to:

• Divest CF’s Ritzville anhydrous ammonia terminal in the Pacific Northwest;
• Divest its Marseilles anhydrous ammonia terminal in Northern Illinois; and
• Rescind its rights to market anhydrous ammonia produced by Rentech at Rentech’s East Dubuque manufacturing plant.

According to the consent order, Agrium must divest the Ritzville and Marseilles terminals to Terra Industries, Inc. or another Commission-approved purchaser if Terra is later found to be an unacceptable buyer. The consent order requires Agrium to maintain the assets to be divested and operate the Ritzville terminal independently until each of the divestitures is completed. The consent order also requires Agrium to provide necessary transition services to Terra or another Commission- approved acquirer. It also allows the FTC to appoint a trustee to divest any assets that Agrium does not sell in a timely manner and to seek civil penalties from Agrium if it fails to comply with the consent agreement. Finally, for 10 years, it requires Agrium to provide advance written notification to the Commission of any intent to acquire any interests or assets related to the distribution and sale of anhydrous ammonia. The Commission vote approving the proposed consent order was 4-0. Andre Barlow (202) 589-1834 abarlow@dbmlawgroup.com