The Federal Trade Commission filed an administrative complaint charging that a proposed merger of two significant titanium dioxide suppliers violates antitrust laws. As part of the complaint, the FTC authorized staff to seek a temporary restraining order and preliminary injunction to block the merger.

The transaction at issue is Connecticut-based Tronox Limited's ("Tronox") proposed acquisition of its competitor, Saudi Arabia-based Cristal. Tronox and Cristal are two of the three largest producers of chloride process titanium dioxide in the North American market. According to the FTC, if allowed to proceed, this acquisition "would increase the risk of coordinated action among the remaining competitors and increase the risk of future anticompetitive output reductions by Tronox." Although titanium dioxide can be produced through two different processes (chloride process and sulfate process), the FTC alleged that North American customers cannot viably and cost-efficiently transition to sulfate process titanium dioxide. The FTC previously investigated and challenged proposed transactions in this industry.

The complaint asserts that if the acquisition proceeds as proposed, the merged firm and the other top titanium dioxide supplier would control the vast majority of North American titanium dioxide sales. In addition, the FTC argued, significant barriers to entry into the titanium dioxide production market make the emergence of additional competitors unlikely.

Both FTC Commissioners voted in favor of issuing the administrative complaint. Administrative complaints are issued when the FTC believes that (i) a law has been or is being violated, and (ii) a proceeding is in the public interest.

Commentary / Bilal Sayyed

The Federal Trade Commission hears appeals from the decisions of its administrative law judges, so it may have another opportunity to review this case. At that juncture, however, the makeup of the Commission will be quite different. Both of the current FTC Commissioners are expected to leave the FTC in the near future. Two new Commissioners have been publicly identified. And there are indications that the President has identified replacements for the third open seat and for the two Commissioners likely to depart soon.

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