Federal Trade Commission
Protecting America's Consumers
Announced Actions
Commission approval of proposed divestiture: The Commission has approved an application for proposed divestiture from Cytec Industries, Inc., related to Cytec’s recent acquisition of the Surface Specialties Division of UCB S.A. Under the terms of a consent order with the FTC, Cytec was required to divest certain assets related to its purchase of UCB. Through its application, which can be found as a link to this press release on the FTC’s Web site, Cytec requested Commission approval to divest the UCB Amino Resins Business and the Fechenheim Additives Business, as those terms are defined in the order, to wholly owned subsidiaries of INEOS Group Limited and affiliates of INEOS Capital Limited. Through this action, the FTC has approved Cytec’s application. In addition, the FTC has extended the time in which the divestiture must be completed to September 1, 2005.
The Commission vote approving the divestiture and extending the deadline for its completion was 4-0. (FTC File No. 041-0203, Docket No. C-4132; the staff contact is Roberta S. Baruch, Bureau of Competition, 202-326-2861; see press releases dated March 1 and June 21, 2005.)
Commission authorization of the filing of staff comments: The Commission has authorized the staffs of the Bureaus of Economics and Competition and the Office of Policy Planning to send a letter to California Sate Senator Wesley Chebro analyzing the Proposed Franchise Act, which would govern the contractual relationships between beer manufacturers and wholesalers in the state in several ways. According to the staff, the Proposed Franchise Act, which currently is under consideration by the legislature, is likely to increase costs and reduce competition in a variety of ways.
According to the staff, the Proposed Franchise Act would prohibit a brewer from terminating, refusing to renew, or refusing to enter into an agreement with a beer wholesaler “except for good cause and in good faith.” The Proposed Act then defines “good cause,” and expressly states that “good cause shall not include . . . a beer wholesaler’s failure to meet a sales goal or quota that is not commercially reasonable under prevailing market conditions” or a brewer’s “national or regional policy of consolidation.”
In the comments, the staff concludes that, “By making it more difficult for a brewer to enforce contractual arrangements designed to reduce wholesale prices and to increase wholesaler incentives to provide demand-enhancing services, the Proposed Franchise Act is likely to raise brewers’ costs of distribution and to injure competition among both wholesalers and brewers.”
Concluding its comments, the staff writes that the Proposed Franchise Act “is likely to reduce wholesalers’ incentives to provide important demand-enhancing services and is likely to reduce competition among wholesalers to carry brewers’ brands.” In addition, the Act could disproportionately increase distribution costs of small brewers, potentially reducing competition among certain brands of beer. Accordingly, the staff states that if the Proposed Act were to be enacted, California consumers would likely pay higher prices for beer and may enjoy less variety, and urged the State Legislature to take these factors into consideration during its deliberations.
The Commission vote authorizing the staff to file the comments was 4-0. The comments are available now as a link to this press release on the FTC’s Web site. (FTC File No. V050018; the staff contact is James C. Cooper, Office of Policy Planning, 202-326-3367.)
Commission approval of final consent orders: Following a public comment period, the FTC has approved the issuance of a final consent order in the matter concerning Tropicana Products, Inc. The Commission vote approving the final consent order and authorizing the staff to send a response to the public comment received was 4-0. (FTC File No. 042-3154; the staff contact is Michelle Rusk, Bureau of Consumer Protection, 202-326-3148; see press release dated June 2, 2005.)
Following a public comment period, the FTC has approved the issuance of a final consent order in the matter concerning Cytodyne, LLC; Evergood Products Corp.; and Melvin L. Rich. The Commission vote approving the final consent order was 4-0. (FTC File No. 032-3144; the staff contact is Michael Ostheimer, Bureau of Consumer Protection, 202-326-2699; see press release dated July 13, 2005.)
Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.
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