Markets Wired

Agricultural products supplier Agrium Inc. has agreed to sell a range of assets as part of an agreement with the Federal Trade Commission that will allow the company to move forward with its acquisition of competitor CF Industries Holdings, Inc. The proposed consent order settles charges that the acquisition would have eliminated competition in the market for anhydrous ammonia fertilizer, a product that farmers rely on to grow their crops.

Anhydrous ammonia, a type of nitrogen fertilizer that has advantages over other types of fertilizers in certain topographies and climate conditions, is widely used in the farming of corn, beans and other crops. According to the FTC’s complaint, Agrium’s acquisition of CF would have eliminated competition between the two companies in the distribution and sale of anhydrous ammonia in three markets: the Pacific Northwest; East Dubuque, Illinois; and Marseilles, Illinois.

The FTC’s complaint alleges that each of these markets is highly concentrated and the proposed transaction would further increase concentration levels by reducing the number of significant competitors in the Pacific Northwest from two to one, and in the two areas in Illinois from three to two. The complaint further alleges that the proposed transaction likely would increase the prices for anhydrous ammonium fertilizer.

To prevent these price increases, the FTC’s consent order replaces the competition that otherwise would have been lost because of the deal and requires Agrium to:

• divest CF’s Ritzville anhydrous ammonia terminal in the Pacific Northwest;
• divest its Marseilles anhydrous ammonia terminal in Northern Illinois; and
• rescind its rights to market anhydrous ammonia produced by Rentech at Rentech’s East Dubuque manufacturing plant.

According to the consent order, Agrium must divest the Ritzville and Marseilles terminals to Terra Industries, Inc. or another Commission-approved purchaser if Terra is later found to be an unacceptable buyer. The consent order also provides that Rentech will receive the rights to distribute and market the anhydrous ammonia produced at its own plant in East Dubuque, Illinois.

The consent order requires Agrium to maintain the assets to be divested and operate the Ritzville terminal independently until each of the divestitures is completed. The consent order also requires Agrium to provide necessary transition services to Terra or another Commission- approved acquirer. It also allows the FTC to appoint a trustee to divest any assets that Agrium does not sell in a timely manner and to seek civil penalties from Agrium if it fails to comply with the consent agreement. Finally, for 10 years, it requires Agrium to provide advance written notification to the Commission of any intent to acquire any interests or assets related to the distribution and sale of anhydrous ammonia.

The Commission vote approving the proposed consent order was 4-0. The order will be subject to public comment for 30 days, until January 22, 2009, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580. To submit a comment electronically, please click on: https://public.commentworks.com/ftc/agriumcf.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $16,000.

Copies of the complaint, consent order, and an analysis to aid in public comment can be found on 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. The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. 091-0068)
(Agrium.final.wpd)