Dow to divest acrylics and other industrial chemical assets as per Commission Order pre Rohm & Haas acquisition

According to the FTC's Bureau of Competition, Dow and Rohm & Haas are direct and significant competitors in certain markets. Dow's proposed acquisition of Rohm & Haas would reduce competition in the North American markets for 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. As per the Commission, the acquisition would be anticompetitive and would violate federal law, and Dow is required to sell a range of assets to an FTC-approved acquirer, including its acrylic monomer, hollow sphere particle and acrylic latex polymer businesses to allow the transaction to proceed. Dow Chemical Company has settled charges by the Federal Trade Commission regarding it's proposed US$18.8 bln acquisition of rival chemical manufacturer Rohm & Haas Company. Dow also must put procedures in place to ensure it does not have access to competitively sensitive non-public information regarding any businesses it acquires from Rohm & Haas. Thus the FTC consent order will ensure that consumers continue to benefit from competition in the markets for these important products and will not face the prospect of higher prices as a result of the acquisition. The complaint alleges that the proposed acquisition would eliminate direct and substantial competition between Dow and Rohm & Haas in the relevant markets, reducing competition and increasing Dow's ability to exercise market power unilaterally. The complaint also alleges that the proposed transaction would increase the likelihood of coordinated interaction for glacial acrylic acid, butyl acrylate, and ethyl acrylate. New entry or fringe expansion in these markets is unlikely to counteract the alleged anticompetitive impact of the acquisition. The FTC's order is designed to remedy the anticompetitive impacts of the proposed transaction. It requires Dow to divest a single part of its acrylic monomer and polymer research and development and production assets to a Commission-approved buyer. These assets include: 1) Dow's 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 divestitures will include all of the technology related to these businesses, and the order also will require Dow to licence any intellectual property to the acquirer that is not directly related to, but is used in, those businesses. To ensure the successful transition of the acrylic monomer and polymer assets and the viability of the acquirer, the order requires Dow to provide certain input processes and transition services to the acquirer for a short time. The order also requires Dow to continue to provide the acquirer with site services related to the acrylic polymer production assets in St. Charles, Louisiana, where the acquirer will be operating a separate business on the grounds of a larger Dow facility. The consent order remedies the competitive impact in the markets for hollow sphere particles and acrylic latex polymer for traffic paint by requiring Dow to sell intellectual property primarily used to make these products and to license certain other intellectual property. Dow also must supply hollow sphere particles and acrylic latex polymer for traffic paint to the acquirer at its manufacturing cost, until the buyer can develop its own manufacturing processes. Next, the order requires Dow to put procedures in place to ensure that it does not have access to any competitively sensitive information obtained from the businesses and facilities to be divested or to use any information it already has in an anticompetitive matter. Further, the order will allow the FTC to appoint an interim monitor to ensure Dow complies with its obligations. If Dow does not sell the assets it is required to divest within 240 days of when the consent order is accepted for public comment or 240 days from the acquisition date, whichever is later, a Commission-appointed divestiture trustee may sell the assets on its behalf. The order also contains reporting and record keeping requirements to ensure Dow's compliance with its terms.