American Cement Corporation

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IN THE I\L\Tler OF AMERICAN CK\IEXT CORPORATION CONSE T ORDER, ETC. , IN REGARD TO Tile ALLEGED VIOLATION OF SEC. 7 OF THE CLAYTON ACT Docket C-681. CO-'nplaint, Jan. 20, 1964-Decision, Jan. 20 , 1964 Consent order requiring a portland cement manufacturer in Los Al1gclesone of the ten largest in the United States, operating sc,en cement manufacturing plants in Pennsylvania l\Iichigan, California, Arizona and IIn. wau, and a principal supplier in the :-ew York City area herein concerned to divest itself within 9 months of all the stock, assets and tangible and intangible properties, rights and pri,ileges acquired in its acquisitioll of a manufacturer operating four ready-mixed concrete plants in the :-e\"\ York City area, one of the five largest consumers of portland cement in that area.

CO:.IPLAINT The Federal Trade Commission has reason to believe that the above-named respondent has acquired the assets and stock of another corporation in violation of Section 7 of the Clayton Act (U. Title 15, See 18), as amended; and therefore, pursuant to Section 11 of said Act, it issues this complaint, stating its chaTges in that respect as follows:

PARAGRAPH 1. (A) American Cement Corporation (American), Tespondent herein, is a corporation organized and existing under the laws of the State of Delaware, with its principal offce located at :2404 'Vilshirc Boulevard, Los Angeles, California. A."IERICA CEMENT CORP. 317 310 Complaint (E) Americall is, and for many years has been, engaged ill the business of ma,nufacturing a,nd selling portland cement, one of the two lines of commerce relevant herein.

(C) Prior to and since January 29, 1960, in the course and conduct of its business, American has been engaged in commerce (as commerce" is defined in the Clayton Act, as amended), having sold and shipped portland ccment, or having caused it to be sold and shipped, from the State in which it was manufactured to purchasers located in other States.

PAR. 2. (A) For many years prior to and until about January , 1960 M. F. Hickey Company, Inc. (Hickey), was a corporation organized and existing under the Jaws of the State of New York with its principal offce located at 1301 Metropolitan Avenue Brooklyn, 1\ ew York.

(E) Hickey was engaged in the business of manufacturing and seIJing ready-mixed concrete, the other line of commerce relevant herein.

(0) In the regular course and conduct of its business, Hickey was engaged ill commerce (as "commerce" is defined in the Clayton Act as amended), having purchased and caused to be shipped into the State of Kew York portland cement manufactured in other States of the United States.

PAR. 3. On or about January 29, 1960, respondent acquired all of the outstanding capital stock of Hickey, by exchanging therefor 164 300 shares of American common stock, valued at approximately 615 400.

PAR. 4. (A) incty-five percent, more or less, of all cement produced in the Pnited States is portland cement. Portland cement is an essential ingredient ill the manufacture of ready-mixed concrete. (B) Rcady.mixed concrete is so called because it is delivered from a central plant by mixer trucks to the job site reauy to pour. Substantially all concrete sold for construction purposes is readymixed concrete. In the cw York City a.rea, ready-mixed concrete producers account for more than fifty percent of all portland cement used.

PAR. 5. (A) American is among the ten largest producers and sellers of portland cement in the United States. It has seven wholly owned cement. manufacturing plants, loca.ted in Pennsylvania Iichigan, Californii1 and Arizona, and has a partial interest in the I-Iawajian Cement Corporation, a Hawaiian cement producer 318 FEDERAL TRADE CO IMISSION DECISIONS Complaint 64 F.

(B) For calendar years 1957 throug-h 1962, the sales. net income and total assets of respondent stated ill millions of dollars, were ,approximately as follows:

Year Sales Income Assets *1962___ 882. 7 r $5, $112. *1 961- 74. 6 107. *1960___ 71. 1 ! 114. 1959____ 56. 6 8 i 93. 1958__ 51. 8 7 ' 88, 1957 - 55. 4 i 73. 81ncludes Hickey and other subsidiaries.

'R. 6. (A) Hickey's sales, net income and total assets for the fiscal years ending April 30, were approximately as follows: Year Sales Income Assets 1959______- $6, 912 480 $305. 445 , 937 442 1958___ , 696, 827 275 116 ! 510 863 1957 - - -- 581 951 248 206 I , 319 484 (B) Prior to and at the time it was acquired by respondent Hickey owned and operated four ready-mixed concrete plants; three vf w hichwel'c locat.ed in Brooklyn, X ew Yark and one in Flushing, Queens, New York.

PAR. 7. (A) For many years prior to its acquisition, Hickey sold substantially all of its ready-mixed concrete in the N ew York City area, the section of the country relevant herein, which consists of the boroughs of l\Ianhattan, Bronx, Brooklyn and Queens of the city of New York.

(B) Prior to, and at the time of the acquisition I-Ilckey was one of the fiye largest consumers of portla.nd cement in the K ew York City area.

Pall 8. For lllany years prior to and since J annary 29 , 1960 American, from its plant at Stockertown, Pennsylvania, in competition with other cement producers, has been a principal supplier of portland cement in the New York City area. At the time of the acquisition of Hickey, none of respondent' competitors in the sale of portland cement in the X ew York City area AMERICAN CEMENT CORP. 319 316 Complaint O\yned or contro1Jed in said area a significant consumer of portland cement, such as a ready-mixed concrete producer. PAR. 9. In the following ways, among others, thc effect of respondent's acquisition of Hickey may be substantially to lessen competition or tend to create a monopoly in either the manufacture and sale of portland cement or in the lnanufacture and sale of readymixed concrete, or in both of these lines of commerce, in the York City area:

(1) Present and future competitors of respondent, have been or may be precluded from selling portland cement to a substantial consumer to the det.riment of actual and potential competition; (2) Actual and potential competitors of respondent, have been or may be foreclosed from, and respondent has been assured of, a substantial share of the market for portland cement; (3) The entry of new sellers of portland cement has been or may be inhibited or prevented;

(4) The competitive position of respondent in the sale of portland cement has been or may be substantially enhanced; (5) Further integration of suppliers and consumers of portland cement may result, in that competitors of respondent in the manufacture and sale of portland cement have been or may be encouraged or feel a necessity to merge or otherwise become affliated with manufacturers of ready-mixed concrete; likewise, competitors of respondent. in the manufacture and sale of ready-mixed concrete have been or may be encouraged, or feel a necessity to merge or othenyise become affliated with manufacturers of portland cement; (6) As an integrated manufacturer and seller of portland cement and ready-mixed concrete, respondent has achieved or may achieve a decisive competitive advantage over its competitors engaged only in the manufacture and sale of ready-mixed concrete; and (7) The entry of new sellers of ready-mixed concrete has been or may be inhibited or prevented.

PAR. 10. Prior to its acquisition of Hickey, respondent had, it now has, and, after the divestiture of Hickey which is sought in this proceeding, will continue to have, such a significant competitive position in the sale of portland cement in the X ew York City area and in every other section of the country in which American is engaged in the sale of portland cement, that the effect of any acquisition by it of any of the stock or assets of any corporation engaged in commerce and engaged in t.he sale of ready-mixed concrete, in any of the sections of the country where respondent prodnces or sells portland cement or ready mixed concrete, may be substantially to lessen competition or tend to create a monopoly as alleged in Paragraph 9. 320 FEDERAL TRADE CO:MMISSION DECISIONS Order !\ F.

PAR. 11. The acquisition of Hickey constitutes a violation by respondent of Section 7 of the Clayton Act (G. C. Title 15 , Sec. 18), as amended.

DECISION AND ORDER The Commission having heretofore determined to issue its complaint charging the respondent named in the caption hereof "With violation of Section 7 of the Clayton Act, as amended, and the respondent ha,ving been ser1ed with notice of said determination and with a copy of the complaint the Commission intended to issue together with a proposed form of order; and The respondent and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondent of all the jurisdictional facts set forth in the complaint to issue herein, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as set forth in such complaint, and waivers and prOVlSlOllS as required by the Commission s rules; and The Commission, having considered the agreement, hereby accepts same, issues its complaint in the form contemp1atec1 by said agreement, makes the following jurisdictional fmdings and enters the following order:

1. Respondent American Cement Corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware with its offce and principal place of business located at 2404 'Wilshire Boulenrd, Los Angeles, California 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent. ORDER It is ol'dated That respondent, American Cement Corporation, a corporation, through its officers, directors, agents, representatives and employees shall "\Yithin nine months from the date of service l1))on it of this Order, divest itself, in good fa.ith, and in so far as reaSOllably possible as a unit, and to a purchaser, or purchasers approved by the Federal Tracie Commission, of all stock or of all rights, title and illterest in all assets, properties, rights and privileges, tangible and intangible, including but not limited to, all propert.ies, plants machinery, equipment, raw material reserves trade names, contract rights, trademarks and good will acquired by respondent as a result of its acquisition of the stock and assets of the )1. F. Hickey Company, Inc., together with all plalJts, machinery, buildings, land, ra'iY AMERICAN CEMENT CORP. 321 316 Order material reserves, improvements, equipment and other property of whatever description that have been added to or placed upon the premises of the former )1. 1'-'0 Hickey Company, Inc., as may be necessary to restore or continue the L F. I-lckey Company, Inc. insofar as reasonably possible, as a going concern and an effective competitor in the manufacture and sale of ready-mixed concrete. It is further ordered That, except in the ordinary course of business pending di"\-estiture, respondent shall not, without prior approval of the Federal Trade Commission, make any changes in any of the plants, machinery, buildings, equipment, or other property of whatever description of thc former 1\. F. Hickey Company, Inc., which shall impair its present capacity for the production, sale and distribution of ready-mixed concrete, or its market va.lue, unless such capacity or value is restored prior to divestiture. It ;8 further ordered That, without prior approval of the Federal Trade Commission, the aforesaid assets or stock required to be divested under this Order shall not be sold or transferred, directly or indirectly, to anyone "\\"ho, at the time of the divestiture, respondent knmys 01' has reason to know is a stockholder, offcer, director employee, or agent, or otherwise is directly or indirectly connected with or under the control of respondent or any of its subsidiaries or affliated companies, except that the current stockholdings of former owners, La"\"\Tence F. Trickey and family, shall not prevent divestiture to them with the approval of the Federal Trade Commission. Iti, further ordered That, without prior approval of the Federal Trade Commission, in said divestiture, respondent shall not sell or transfer, directly or indirectly, any of the aforesaid stock or assets to any corporation, or to anyone who, at the time of said divestiture respondent knows or has reason to know is an offcer, director employee or agent of a corporation, which at the time of such sale or transfer, is a manufacturer or substantial distributor of portland cement anywhere in the United States, or is engaged in the production or sale of ready-mixed concrete in the New York City are, , as dcfined in thc complaint.

It .i8 further ordered That respondent shall, within sixty (60) days after service upon it of this Ordcr, file with the Federal Trade Commission a report, in writing, setting forth in detail its plan for carrying out t.he provisions of this Order. In the event divestiture has not been accomplished within this sixty day period, respondent will thereafter report each sixty days its progress in carrying out the provisions of this Order.

By the Commission, Commissioner :\IacTntyre not concurring. 322 FEDERAL TRADE CD:fMISSION DECISIONS Complaint 64 F.