Markets Wired

Following a public comment period, the Federal Trade Commission has approved a modified final order requiring industrial gas suppliers Praxair, Inc. and Linde AG to sell assets in nine industrial gases product markets in numerous U.S. geographic markets to four divestiture buyers. The nine product markets in which the Commission alleged harm in its October 2018 complaint are bulk liquid oxygen, bulk liquid nitrogen, bulk liquid argon, bulk liquid carbon dioxide, bulk liquid hydrogen, bulk refined helium, on-site hydrogen, on-site carbon monoxide, and excimer laser gases.

According to the complaint, the merger, as originally proposed, would have eliminated direct competition between Praxair and Linde in each of the nine product markets, and would have enabled the merged firm to exercise market power unilaterally by raising prices in those markets. Without the required divestitures, the proposed merger also would have made collusion or coordinated action among the remaining firms in the nine product markets more likely.

The Commission made two material modifications to the proposed order issued in October 2018. The first modification specifies the scope of the intellectual property that the newly merged Linde must divest. The second modification concerns the joint venture between Messer Group GmbH (“Messer”) and CVC Capital Partners (“CVC”) that is acquiring some of the divested assets. The modified final order gives the Commission the right of prior approval if Messer’s stake in the joint venture falls below 50 percent or if Messer and CVC decide to sell their combined interest in the joint venture to a third party.

The Commission has also approved an application from the parties to divest five on-site hydrogen and carbon monoxide production facilities outside the Gulf Coast region, a hydrogen pipeline in the Gulf Coast region, intellectual property, customer contracts, and other related assets to Matheson Tri-Gas, Inc. In addition, the Commission has approved an application from the parties to divest facilities that produce liquid atmospheric gases, liquid carbon dioxide, liquid hydrogen, laser gases, and liquid helium to the Messer/CVC joint venture.  Thus, the Commission has approved applications for all the divestitures required by the Commission’s final order in this case.

Prior to the merger, Praxair was the world’s third-largest industrial gas supplier by revenue, and Linde was the second-largest global industrial gas supplier. The merger creates the largest industrial gas company in the world.

The Commission vote to approve the modified final order in this matter was 4-1. Commissioner Rohit Chopra dissented. The Commission votes to approve the parties’ applications to divest assets to Matheson Tri-Gas, Inc., and the Messer/CVC joint venture were both 4-0-1, with Commissioner Rohit Chopra abstaining.

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