FTC Imposes Conditions in Joint Venture among Three Producers of PET Resin
Proposed order requires passive holdings and independent operation of under-construction PET production facility
Three PET resin producers have agreed to restructure their transaction and to accept certain other conditions to settle Federal Trade Commission charges that their proposed $1.1 billion joint acquisition out of bankruptcy of an under-construction PET production facility would violate federal antitrust law.
Polyethylene terephthalate resin, or PET, is a plastic polymer used primarily to make bottles and packaging for food and other products. The PET production facility has remained unfinished since its original manufacturer, M&G Chemicals S.A., filed for bankruptcy in 2017. Mexican company Alpek S.A.B de C.V., known as DAK, Thailand company Indorama Ventures Plc, and Taiwanese company Far Eastern New Century, or FENC, formed a joint venture company, Corpus Christi Polymers LLC, or CCP, to bid for M&G’s PET production facility out of the bankruptcy process. In March 2018, the bankruptcy court approved the sale to the three-way joint venture, which intends to complete construction of the PET production facility.
According to the FTC’s complaint, without a remedy, the proposed acquisition likely would substantially lessen competition in the highly concentrated market for PET resin products in North America. The terms of the proposed consent order seek to prevent DAK, Indorama, and FENC from using their joint ownership of the assets to act alone or in concert to exercise market power, or to transmit competitively sensitive information beyond what is necessary to accomplish the legitimate purposes of the joint venture.
When construction is finished, the Corpus Christi plant will produce not only PET, but also purified terephthalic acid, or PTA, a key input for PET production. Completion of this more efficient facility will significantly expand PET and PTA capacity and output in North America, benefiting consumers.
“The Commission’s order removes uncertainty about the future of the plant while mitigating the competitive risk created by its sale to the joint venture,” said Bruce Hoffman, Director of the Bureau of Competition. “This remedy ensures necessary support and funding for timely completion of what will be the country’s lowest-cost PET plant.”
Further details about the consent agreement, which allows the Commission to appoint a monitor, are set forth in the analysis to aid public comment for this matter.
The Commission vote to issue the complaint and accept the proposed consent order for public comment was 5-0. The FTC will publish the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through Jan. 22, 2019, after which the Commission will decide whether to make the proposed consent order final. Comments can be filed electronically or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.
NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $41,484.
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