US antitrust regulator seeks injunction in Tronox, Cristal deal

10 July 2018 22:25 Source:ICIS News

HOUSTON (ICIS)--A US antitrust regulator has requested on Tuesday that a federal court issue a temporary restraining order and preliminary injunction to prevent Tronox from completing its pending acquisition of fellow pigment producer National Titanium Dioxide (Cristal).

The European Commission has already approved the deal, provided that the company divests its business that sells paper-laminate grades of titanium dioxide (TiO2).

Given this milestone, Tronox could consummate the deal as early as 16 July, the FTC said in its request to the court.

The antitrust regulator has already challenged the merger in an administrative complaint that it filed in December, alleging that the acquisition would reduce competition for chloride-based TiO2.

The trial for this case ended on 22 June, and the administrative law judge will issue a decision, the FTC said in its request. The antitrust regulator would then issue a final decision and order, which could be reviewed by the US Court of Appeals.

The temporary restraining order and the preliminary injunction would allow the administrative law judge to decide on the case and for the parties to appeal any decision, the FTC said in its request.

If it is determined that the deal would reduce competition, then the injunction would give the FTC enough time to propose steps that Tronox could take that would address these concerns, the antitrust regulator said in its request.

In justifying its request for the restraining order and injunction, the FTC alleged that the acquisition would increase the likelihood of coordination in a market that already has few producers.

The acquisition would double Tronox's market share in North America, the FTC alleged in its request. The regulator alleged that the merged company would have more incentive to restrict output to influence TiO2 supply and prices.

In the past, Tronox has disagreed with such allegations, alleging that the Cristal acquisition would allow it to produce even more TiO2. The result would make more pigment available to customers around the world.

Such a deal would actually benefit consumers, Tronox has said.

Tronox issued a news release on Tuesday, in which it welcomed the FTC's request for a restraining order and preliminary injunction.

The company had requested such a move back when the FTC filed its administrative complaint.

At the time, Tronox alleged that the FTC pursued such an administrative route because it was time consuming, allowing it to delay the deal until the purchase agreement expired.

Tronox made this and similar accusations in a lawsuit it filed against the FTC in January. In the lawsuit, it requested that the FTC seek an injunction, since it would be quicker than the administrative route being pursued by the regulator.

Tuesday's filing by the FTC means that Tronox got its wish.

"Tronox has made repeated attempts to prompt this action by the FTC, which allows for the legality of the proposed acquisition to be decided expeditiously on its merits," the company said in Tuesday's news release.

"We now look forward to our long-awaited day in court and the opportunity to demonstrate how this transaction will benefit customers throughout North America and around the world," Tronox CEO Jeffry Quinn said in the same news release.

The FTC did not immediately respond to a request for comment about the statements that Tronox made in Tuesday's news release or to the accusations that the company made in its January lawsuit.

The FTC had not filed an answer to Tronox's lawsuit, according to the docket sheet of the litigation.

Cristal did not immediately respond to a request for comment in regards to the FTC's desire for a preliminary injunction or to Tronox's news release.

Tronox announced the $2.4bn deal in February 2017. The combination would create the world's largest and most highly integrated producer of TiO2, the company said.

The FTC filed its request in US District Court for the District of Columbia. The case number is 18-cv-1622.

Tronox filed its lawsuit in US District Court, Northern Mississippi District. The case number is 18-cv-0010.

By Al Greenwood