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From Antitrust Law Daily, July 11, 2018

FTC seeks preliminary injunction to stop Tronox’s acquisition of Cristal

By Nicole D. Prysby, J.D.

The FTC has filed a complaint for a temporary restraining order and preliminary injunction blocking Tronox Limited from consummating its proposed acquisition of competitor Cristal (The National Titanium Dioxide Company Ltd.). The FTC asserted that absent relief from the court, Tronox and Cristal would be free to complete the merger as soon as mid-July 2018, when the European Commission (EC) is expected to complete its approval process for the acquisition. Absent injunctive relief, the complaint asserts, Tronox would control the vast majority of chloride process titanium dioxide sales in North America and more than 80 percent of overall North American chloride process titanium dioxide manufacturing capacity, thus resulting in market concentration levels for the sale of chloride process titanium dioxide in North America that exceed levels likely to result in anticompetitive effects (FTC v. Tronox Limited, Case No. 1:18-cv-01622-TNM).

The FTC announced in December 2017 that it would issue an administrative complaint challenging the planned deal, alleging that the $1.67 billion takeover and Tronox’s 24 percent stake in the combined entity would violate federal antitrust laws by significantly reducing competition in the North American market for chloride process titanium dioxide. The administrative complaint was issued and a trial on the merits took place from May 18-June 22, 2018, but the Administrative Law Judge has not yet issued a decision.

According to the complaint requesting injunctive relief, the FTC is seeking the TRO and preliminary injunction to preserve the status quo and prevent interim harm to competition until a final decision on the merits can be issued by the FTC. The FTC argued it was likely to succeed on the merits, citing the potential anticompetitive effects of the acquisition, the difficulty of reestablishing the status quo of competition if the acquisition has occurred in the interim, and the public interest in protecting competition.

Tronox previously announced a lawsuit attempting to prevent the FTC from blocking the merger, because the FTC’s administrative process would not have concluded until after the initial deadline set for the merger. Two months before the trial took place, Tronox announced that it had agreed with Cristal to an extension of the parties’ agreement to acquire the titanium dioxide business of Cristal. The agreement end date was extended until March 31, 2019, if necessary, based on the status of regulatory reviews.

In July 2018, the EC approved the acquisition, subject to divestments of certain titanium dioxide pigment assets from Tronox. The acquisition is subject to the EC approving the proposed buyer of the assets.

The case is No. 1:18-cv-01622-TNM.

Attorneys: Dominic Vote for the FTC. Michael F. Williams (Kirkland & Ellis LLP) for Tronox Ltd.

Companies: Tronox Ltd.; National Industrialization Co.; National Titanium Dioxide Co. Ltd.

MainStory: TopStory AcquisitionsMergers Antitrust FederalTradeCommissionNews

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