W. R. Grace & Co

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IN THE MATTER OF R. GRACE & CO, CONSENT ORDER , ETC., IN REGARD TO ALLEGED VIOLA non OF SEC. 7 OF THE CLAYTON ACT AND SEC. 5 01' THE FEDERAL TRADE COMMISSION ACT 14, 1980 Doket G--3002. Complaint, Jan. 14, 1980-Deci, Jan. This consent order requires, among other things, a New Yark City operator of thr home improvement store chains to divest the San Jose home improvement stores within one year from the effective date of the order. Should the firm reauire any or all of the stores as a result of the enforcement of a fonn of seurity interest, it is required to divest the reacquired assets within six months of the reacquisition.

Appearances For the Commission: Allee A, Rnmadhan and Gary D, Kenrwdy. For the respondent: James T, Halverson, ShRrrrum Sterling, New York City.

COMPLAINT The Federal Trade Commission, having reason to believe that W, Grace & Co, ("Grace ), a corporation subject to the jurisdiction of the ), aCommission, has acquired the stock of Daylin, Inc. ("Daylin corporation, in violation of Section 7 of the Clayton Act, as amended 15 D, C. 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 D, C. 45, and that a proceeding in respect thereof would be in the public interest, hereby issues its complaint, pursuant to Section 11 of the Clayton Act, 15 D, C. 21, and Section 5(b) of the ederal Trade Commission Act, 15 D, C. 45(b), stating its charges as follows:

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

retail establishment (a) "Home Improvement Store" means a primarily engaged in selling hardware and tools, wood and non-wood building materials, plumbing and electrieal equipment, paint and decorating materials, and lawn and garden tools and supplies in some significant respect to do-it-yourself customers for the building, mainte- , and apartments.nance, remodeling or decorating of gardens homes Complaint 95 F.

(b) "San Jose Area" means the San Jose, California Standard Metropolitan Statistical Area, as those terms are defined (and that area designated) by the U.S, Bureau of the Census, II. W,R. Grace & Co, 2. Grace is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Connecticut with its principal offices at Grace Plaza, 1114 A venue of the Americas, New York, New York.

3. Grace is an international chemical company with interests in: (a) natural resources, (b) industrial specialty chemicals, and (c) consumer operations.

4. As part of Grace s consumer operations, Grace operates three chains of home improvement stores: Channel Companies, Inc., a subsidiary operating such stores in New Jersey, New York, Connecticut, Delaware, and Pennsylvania; Handy City, a division operating such stores in the Southeastern United States; and Orchard Supply Building Co" a division operating such stores in the San Jose Area, 5, In the year ending December 31, 1977, Grace had total assets of 374 600 000 and sales and operating revenues of $3,976 233 000 which generated a net income of $140 480 000, In that year, Grace home improvement stores had estimated sales of $164 500 000, In the year ending December 31, 1978, Grace home improvement stores had estimated sales of $200 000 000.

III. Daylin, Inc.

6, Prior to March 21, 1979, Daylin was a corporation organized existing, and doing business under and by virtue of the laws of the State of Delaware with its principal offices at 10960 Wilshire Boulevard, Los Angeles, California, On March 21 , 1979, Grace acquired Daylin, and it is presently being operated as a subsidiary of Grace. 7. At the time of its acquisition, Daylin had interests in three areas: (a) health services and products, (b) apparel specialty shops, and (c) home improvement stores (operated by its Handy Dan subsidiary under the name "Handy Dan" or under the name " Angeles. 8, The Handy Dan subsidiary operated home improvement stores in the San Jose Area, 9, In the fiscal year ending September 3 , 1978, Daylin had total assets of $190 261 000 and net sales and operating revenues of $333 400 000, which gencrated a net income of $9 552 000, In that year Daylin home improvement stores had estimated sales of $190 000 000. R. GRACE & CO, Decision and Order IV, Jurisdiction 10, At all times relevant herein, Grace and Daylin have been engaged in the ownersr.p or operation of home improvement stores in or affecting commerce as "commerce" isdcfined in Section 1 of the Clayton Act, as amended, 15 U.S, C. 12, and the businesses of Grace and Daylin are in or affect commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U. C, 44. V. Tender Offer Notice 11. On January 4, 1979, Grace announced its intention to make a tender offer to purchase the outstanding common stock of Daylin at a total price of $129 067 620, The acquisition was consummated on March , 1979, VI. Trade and Commerce 12, The relevant line of commerce is retail store sales in the home improvement store business.

13, Prior to March, 1979, Grace and Daylin were actual competitors within certain local trade areas surrounding each Grace or Daylin home improvement store located within the San Jose Area, VII. Effects 14, The effects of the acquisition of Daylin by Grace may be substantially to lessen competition or tend to create a monopoly in violation of Section 7 of the Clayton Act, as amended, 15 U.S,C, 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U, , in the following ways, among others:

(a) actual competition between Grace and Daylin in the home improvement store business in the San Jose Area wil b. eliminated; (b) actual competition between competitors generally in the home improvement store business in the San Jose Area may he lessened; (c) concentration in the home improvement store busin ,in the San Jose Area may be increased and the possibilities for eventual dcconcentration may be diminished; and (d) mergers or acquisitions between other home improvement stores may be fostered, thus causing a further substantial lessening of competition in the home improvement store business. DECISION AND ORDER The Federal Trade Commission having initiated an investigation of Decision and Order 95 F, the acquisition of Daylin, Inc., a corporation, by respondent named in the caption hereof, and the respondent having been furnished thereafter with a copy of a draft complaint which the Bureau of Competition proposed to present to the Commission for its consideration and which if issued by the Commission, would charge respondent with violation of Section 7 of the Clayton Act, as amended, 15 U, C. 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U, C. 45; and The respondent, its attorney, 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 aforesaid draft complaint, a statement that the signing of said agreement is for settement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission s Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondent has violated the said Acts, and that a complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in Section 2,34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1, Respondent W, R. Grace & Co. is a corporation organized existing, and doing business under and by virtue of the laws of the State of Connecticut with its principal offices at Grace Plaza, 1114 Avenue of the Americas, 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 For the purposes of this Order the following definitions shall apply: 1. "Grace" means W.R. Grace & Co. , a corporation organized existing, and doing business under and by virtue of the laws of the State of Connecticut with its principal offiees at Grace Plaza, 1114 A venue of the Americas, New York, N ew York. 2. "Daylin" means Daylin, Inc., a corporation that prior to the time of its acquisition was organized, existing, and doing business under and by virtue of the laws of the State of Delaware with its principal offces at 10960 Wilshire Boulevard, Los Angeles, California, R. GRACE & CO, 97 I Decision and Order 3, "San Jose home improvement stores" mean the following home improvement stores that were owned by Day1in and acquired by Grace: (a) 1975 Story Road San Jose, California (b) 865 Blossom Hil Road San Jose, California (e) 761 E. El Camino Real Sunnyvale, California (d) 1750 S, Bascom Campbell, California 4. jjPerson" means any individual, corporation (including subsidiaries thereof), partnership, joint venture, trust, unincorporated association, or other business or legal entity, 5. "Home improvement store" means a retail establishment primarily engaged in selling hardware and tools, wood and non-wood building materials, plumbing and electrical equipment, paint and decorating materials, and lawn and garden tools and supplies in some significant respect to do-it-yourself customers for the building, maintenance, remodeling or decorating of gardens, homes, and apartments. 6, "Eligible person" means any person approved by the Commis- SIOn.

It is ordered and directed that within one (1) year of the effective date of this consent order, Grace shall divest itself of all assets, title interests, rights, and privileges, of whatever nature, tangible and intangible, including without limitation all buildings, equipment inventory, and other property of whatever description of the San Jose home improvement stores subject to the terms and provisions of this consent order, Divestiture may be aceomp1ished by offering the San Jose home improvement stores either separately or jointly, It is further ordered That divestiture shall he made only to an eligible person and shall be in a manner which preserves the assets and business of the San Jose home improvement stores as going concerns and fully effective competitors.

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Decision and Order subsidiaries or any other change in the corporation which may affect compliance with the obligations arising out of this consent order, Complaint 95 F.