Lone Star Cement Corporation

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IN THE MATTER OF LONE STAR CEMENT CORPORATION CONSENT ORDER, ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT AND SEC. 7 OF THE CLAYTON ACT Docket C-1075. Cornpla,int, June 1966-Decision, June, 1966 Consent order forbidding a major portland cement manufacturing company with headquarters in New York City, to renew its tJ-year lease by which it acquired nine ready-mixed concrete sites, plants, and related equipment in the Dallas-Fort "\Vorth area and to cease using the acquired company trade name in its operations.

COMPLAINT The Federal Trade Commission, having reason to believe that the above-named respondent has violated the provisions of Section 7 of the Clayton Act, as amended, and Section 5 of the Federal Trade Commission Act, 15 U. C. 9 , 45, and that a proceeding in respect thereof would be in the public interest, issues this complaint, stating its charges as follows: Complaint 69 F.

DEFINITIONS 1. For the purpose of this complaint the following definitions shall apply:

(a) "Portland Cement" includes Types I through V of portland cement as designated by the American Society for Testing Materials. Neither masonry nor white cement is included. (b) "Ready-Mixed Concrete" includes a1l portland cement concrete manufactured and delivered to a purchaser in a plastic and unhardened state. Ready-mixed concrete includes central-mixed concrete, shrink-mixed concrete and transit-mixed concrete. (c) "The Dallas-Fort Worth Area" includes the Counties of Denton, Co1lin, Dallas, Tarrant, E1Is and Johnson in the State of Texas.

II. LONE STAR CEMENT CORPORA TION 2. Respondent Lone Star Cement Corporation, hereinafter referred to as "Lone Star " is a corporation organized and existing under the laws of the State of Maine, with its principal offce located at 100 Park Avenue, Kew York, New York. 3. Lone Star, the largest or second largest portland cement manufacturing company in the United States, operates fifteen portland cement manufacturing plants and thirteen distribution terminals located in thirteen different States. Through acquired subsidiaries, Lone Star is also engaged in the production and sale of ready-mixed concrete, concrete products and mineral aggregates. In 1964, Lone Star had sales of approximately $155 million, assets of about $217 milion and net income of about $14 million.

4. In the State of Texas, Lone Star operates cement manufacturing plants at Dallas, Houston and Maryneal, and distribution terminals at Amarillo, Corpus Christi and Orange. Portland cement manufactured by these plants, which have an annual capacity to manufacture about 10 milion barrels of portland cement, is marketed principal1ly in the State of Texas. The Dallas-Fort Worth area is an important metropolitan market for the output of these plants.

5. Lone Star is and for many years has been engaged in the shipment of portland cement across State lines. Lone Star is engaged in commerce, as "commerce" is defined in the Clayton Act and Federal Trade Commission Act.

LONE STAR CEMENT CORP. 929 927 Complaint III. WESCO MATERIALS CORPORATION AND WAMIX, INC. 6. Wesco Materials Corporation, hereinafter referred to as 'Vesco " is a corporation organized and existing under the laws of the State of Texas, with its principal offce and place of business at 1201 Main Street, Dallas, Texas. At the time of the acquisition, Wesco was engaged in the production and sale of mineral aggregates in N' orth Central Texas.

7. \Vamix, Inc., hereinafter referred to as " "'1"amix" is a corporation organized and existing under the laws of the State of Delaware, with its principal offce and place of business at 1201 Main Street, Dallas, Texas. Wamix was, at the time of the acquisition a wholly-owned subsidiary of Wesco.

8. At the time of the acquisition Wamix was principally engaged in the production and sale of ready-mixed concrete in the Dallas-Fort Worth Area. In 1964, the ready-mixed concrete prope;rties acquired by Lone Star from Wamix sold 495 000 cubic yards of ready-mixed concrete and consumed 607 000 barrels of portland cement.

9. Wesco and Wamix were, prior to the acquisitions, engaged in commerce, as "commerce" is defined in the Clayton and Federal Trade Commission Acts.

IV. THE ACQVISITIONS 10. On or about January 4, 1965, Lime Star acquired from Wesco its aggregate production facilties in North Central Texas as well as its interests in certain other aggregate production facilities and property in the same area. For these production facilities Rnd property interests Lone Star paid in excess of $3. 5 miJlion.

11. On or about January 4, 1965, Lone Star acquired from Wamix, by lease for a period of four years, nine ready-mixed concrete plants in the Dallas-Fort Worth Area. The total consideration for this lease amounts to 81.4 millon. 12. The Wesco and Wamix acquisitions by Lone Star were acts or practices in commerce within the meaning of the Federal Trade Commission Act.

V. THE NATURE OF TRADE AND COMMERCE 13. Portland cement is a material which in the presence of water, binds aggregates, such as sand and gravel, into concrete. Portland cement is an essential ingredient in the production of 930 FEDERAL TRADE COM MISSION DECISIONS Complaint 69 F.

ready-mixed concrete. There is no practical substitute for portland cement in the production of concrete.

14. The portland cement industry in the United States is substantial. In 1964, there were approximately 52 cement companies in the United States operating approximately 181 plants. Total shipments of portland cement in that year amounted to approximately 365 milion barrels, valued at about $1.1 bilion. 15. Cement manufacturers sell their portland cement to consumers such as ready-mixed concrete companies, concrete products companies, and to contractors and building materials dealers. However, on a national basis, approximately 57;10 of all portland cement is shipped to firms engaged in the production and sale of ready-mixed concrete.

16. In recent years, there has been a significant trend of mergers and acquisitions by which ready-mixed concrete companies in major metropolitan markets in various portions of the United States have become integrated with portland cement companies. Since 1959, there have been at least 35 such acquisitions. 17. In the Dallas-Fort Worth Area the trend toward vertical integration is well advanced. Additional vertical acquisitions have been made and a large ready-mixed concrete company is integrating backward by constructing its own cement plant. More than 40;10 of the market for portland cement in the Dallas-Fort Worth Area has been potentially foreclosed to competing cement manufacturers as the result of vertical integration. 18. Each vertical merger or acquisition which occurs in the portland cement industry potentially forecloses competing cement manufacturers from a segment of the market otherwise open to them and places great pressure on competing manufacturers likewise to acquire portland cement consumers in order to protect their markets. Thus, each such vertical acquisition may form an integral part of a chain reaction of such acquisitions-contributing both to the share of the market already foreclosed, and to the impetus for further such acquisitions.

V1. VIOLATIONS CHARGED 19. The effect of the acquisitions of Wesco and Wamix by Lone Star, as hereinbefore described, both in themselves and by aggravating the trend toward vertical integration between suppliers and consumers of portland cement, may be substantially to lessen competition or to tend to create a monopoly in the production and sale of portland cement and ready-mixed concrete in the United LONE STAR CEMENT CORP. 931 927 Decision and Order States as a whole and various parts thereof, including the State of Texas and the Dallas-Fort Worth Area, in the following ways among others:

a. Lone Star s competitors may have been and/or may be foreclosed from a substantial segment of the market for portland cement.

b. The abilty of Lone Star s non-integrated competitors effectively to compete in the sale of portland cement and ready-mixed concrete has been and/or may be substantially impaired. c. The entry of new portland cement and ready-mixed concrete competitors may have been and/or may be inhibited or prevented. d. The production and sale of ready-mixed concrete, now a decentralized, locally-controlled, small business industry, may become concentrated in the hands of a relatively few manufacturers of portland cement.

Now therefore, the acquisitions of Wesco and Wamix by Lone Star are in violation of Section 7 of the Clayton Act, as amended and constitute unfair acts or practicies in commerce in violation of Section 5 of the Federal Trade Commission Act. DECISION AND ORDER The Commission having heretofore determined to issue its complaint charging the respondent named in the caption hereof with violation of the Federal Trade Commission Act and Section 7 of the Clayton Act, as amended, and the respondent having been served 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 therean ad- after executed an agreement containing a consent order, mission 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 provisions as required by the Commission s rules; and The Commission, having considered the agreement, hereby accepts same, issues its complaint in the form contemplated by said agreement, makes the following jurisdictional findings, and enters the following order:

1. Respondent Lone Star Cement Corporation is a corporation organized, existing and doing business under the laws of the State Order 69 F. T.

of Maine, with its offce and principal place of business located at 100 Park Avenue, New York, New York.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDER It is ordered That respondent, Lone Star Cement Corporation (hereafter "Lone Star ), refrain from renewing any and all leases by which Lone Star acquired, on or about January 4, 1965 from \Vamix, Inc., nine ready-mixed concrete sites, plants and related equipment, including ready-mixed concrete mixer trucks, in the Dallas-Ft. Worth Area, said sites, plants and related equipment described generally as follows;

Wamix No. 2221 Irving Boulevard, Dallas, Texas. Wamix No. On W orcola Street in North Central Dallas. Wamix No. On Floyd Road in North Dallas. Wamix No. In Carrol1on, Dallas County, Texas. Wamix No. On Banning Street in Oak CJiff. Wamix No. On Park dale Street in Southeast Dallas. Wamix No. 21 On West Freeway in Fort Worth. Wamix No. 22 Near Euless, Tarrant County, Texas. Wamix No. 23 In 5200 Block of Hemphil Street in Fort Worth.

It is further ordered That on or before the expiration of such leases on January 4, 1969, Lone Star cease operation of said assets and cease using the name or word "\Vamix" in any of its operations.

It is ordered, That, within sixty (60) days after it has fw.ther fully complied with the provisions of this Order, Lone Star submit in writing to the Federal Trade Commission a report setting forth in detail the manner and form in which it has complied with this Order.

DOLLAR VITAMIN PLAN, INC., ET AL. 933 Complaint