83 FR 377 - Potash Corporation of Saskatchewan Inc. and Agrium Inc.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

Federal Register Volume 83, Issue 2 (January 3, 2018)

Page Range		377-380
FR Document		2017-28336

The consent agreement in this matter settles alleged violations of federal law prohibiting unfair methods of competition. The attached Analysis to Aid Public Comment describes both the allegations in the complaint and the terms of the consent orders-- embodied in the consent agreement--that would settle these allegations.

Federal Register, Volume 83 Issue 2 (Wednesday, January 3, 2018)

[Federal Register Volume 83, Number 2 (Wednesday, January 3, 2018)]
[Notices]
[Pages 377-380]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2017-28336]

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FEDERAL TRADE COMMISSION

[File No. 161 0232]

Potash Corporation of Saskatchewan Inc. and Agrium Inc.; Analysis
To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair methods of competition.
The attached Analysis to Aid Public Comment describes both the
allegations in the complaint and the terms of the consent orders--
embodied in the consent agreement--that would settle these allegations.

DATES: Comments must be received on or before January 29, 2018.

ADDRESSES: Interested parties may file a comment online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write ``In the Matter of
Potash Corporation of Saskatchewan Inc. et al., File No. 161-0232'' on
your comment, and file your comment online at https://ftcpublic.commentworks.com/ftc/potashcorpconsent by following the
instructions on the web-based form. If you prefer to file your comment
on paper, write ``In the Matter of Potash Corporation of Saskatchewan
Inc. et al., File No. 161-0232'' on your comment and on the envelope,
and mail your comment to the following address: Federal Trade
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite
CC-5610 (Annex D), Washington, DC 20580, or deliver your comment to the
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex
D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Kristian Rogers (202-326-3210), Bureau

[[Page 378]]

of Competition, 600 Pennsylvania Avenue NW, Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis to Aid Public Comment describes the terms of the
consent agreement, and the allegations in the complaint. An electronic
copy of the full text of the consent agreement package can be obtained
from the FTC Home Page (for December 27, 2017), on the World Wide Web,
at https://www.ftc.gov/news-events/commission-actions.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before January 29,
2018. Write ``In the Matter of Potash Corporation of Saskatchewan Inc.
et al., File No. 161-0232'' on your comment. Your comment--including
your name and your state--will be placed on the public record of this
proceeding, including, to the extent practicable, on the public
Commission website, at https://www.ftc.gov/policy/public-comments.
Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/potashcorpconsent by following the instructions on the web-based
form. If this Notice appears at http://www.regulations.gov/#!home, you
also may file a comment through that website.
If you prefer to file your comment on paper, write ``In the Matter
of Potash Corporation of Saskatchewan Inc. et al., File No. 161-0232''
on your comment and on the envelope, and mail your comment to the
following address: Federal Trade Commission, Office of the Secretary,
600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D), Washington, DC
20580, or deliver your comment to the following address: Federal Trade
Commission, Office of the Secretary, Constitution Center, 400 7th
Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC. 20024. If
possible, submit your paper comment to the Commission by courier or
overnight service.
Because your comment will be placed on the publicly accessible FTC
website at https://www.ftc.gov, you are solely responsible for making
sure that your comment does not include any sensitive or confidential
information. In particular, your comment should not include any
sensitive personal information, such as your or anyone else's Social
Security number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. You are also
solely responsible for making sure that your comment does not include
any sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``trade secret or any commercial or financial
information which . . . is privileged or confidential''--as provided by
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2),
16 CFR 4.10(a)(2)--including in particular competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request, and
must identify the specific portions of the comment to be withheld from
the public record. See FTC Rule 4.9(c). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted on the public FTC website--as legally required by FTC Rule
4.9(b)--we cannot redact or remove your comment from the FTC website,
unless you submit a confidentiality request that meets the requirements
for such treatment under FTC Rule 4.9(c), and the General Counsel
grants that request.
Visit the FTC website at http://www.ftc.gov to read this Notice and
the news release describing it. The FTC Act and other laws that the
Commission administers permit the collection of public comments to
consider and use in this proceeding, as appropriate. The Commission
will consider all timely and responsive public comments that it
receives on or before January 29, 2018. For information on the
Commission's privacy policy, including routine uses permitted by the
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

Analysis of Agreement Containing Consent Orders To Aid Public Comment

I. Introduction

The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an Agreement Containing Consent Order (``Consent
Agreement'') with Potash Corporation of Saskatchewan Inc.
(``PotashCorp''), Agrium Inc. (``Agrium''), and Nutrien Ltd.
(``Nutrien''). The proposed Consent Agreement is intended to remedy the
anticompetitive effects that would otherwise result from the proposed
merger of PotashCorp and Agrium. Under the Consent Agreement, the
merging parties must divest Agrium's Conda, Idaho facility and related
assets to Itafos or another buyer approved by the Commission and must
divest Agrium's North Bend, Ohio facility and related assets to Trammo,
Inc. (``Trammo'') or another buyer approved by the Commission. The
Consent Agreement provides the acquirers with the manufacturing plants
and other tangible and intangible assets needed to compete effectively
in the markets for the manufacture and sale of superphosphoric acid
(``SPA'') and 65%-67% concentration nitric acid.
On September 11, 2016, PotashCorp and Agrium agreed to a merger
(the ``Merger'') in which PotashCorp and Agrium shareholders will own
52% and 48% of the combined firm, respectively. The Commission's
Complaint alleges that the Merger, if consummated, would violate
Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5
of the Federal Trade Commission Act, as amended, 15 U.S.C. 45, by
substantially lessening competition in the markets for (1) SPA in North
America and (2) 65%-67% concentration nitric acid in the region near
and to the east of PotashCorp's Lima, Ohio and Agrium's North Bend,
Ohio nitric acid plants.
The Consent Agreement has been placed on the public record for 30
days to solicit comments from interested persons. Comments received
during this period will become a part of the public record. After 30
days, the Commission will again review the Consent Agreement, along
with the comments received, and will decide whether it should withdraw
the Consent Agreement, modify it, or make final the Decision and Order.

II. The Parties

PotashCorp, headquartered in Saskatoon, Saskatchewan, Canada, and

[[Page 379]]

Agrium, headquartered in Calgary, Alberta, Canada, are both large
producers of crop nutrients, including potash, phosphate, and nitrogen
products. PotashCorp and Agrium are two of only three firms in North
America that manufacturer SPA, a key input for liquid phosphate
fertilizers. PotashCorp and Agrium are also two of a small number of
firms that make 65%-67% concentration nitric acid, a nitrogen product
sold for industrial uses, in North America, and both PotashCorp and
Agrium own nitric acid plants in Ohio.

III. The Relevant Markets

A. Superphosphoric Acid
Phosphate is an essential plant nutrient that farmers apply to
crops on a seasonal basis. SPA, a highly concentrated form of
phosphoric acid, is used to produce the liquid phosphate fertilizer
known as ammonium polyphosphate (``APP''). SPA is purchased by
agricultural wholesalers and retailers, who convert it to APP and sell
APP to farmers.
The relevant product market does not include dry phosphate
fertilizers such as monoammonium phosphate (``MAP'') or diammonium
phosphate (``DAP''). Many farmers perceive advantages, including higher
crop yield and quality, to using liquid rather than dry phosphate
fertilizer, particularly in the early stages of crop development. In
addition, liquid phosphates can be applied more directly to the seed
than dry phosphates and can easily be combined with other nutrients.
Consistent with these perceived advantages, SPA typically garners a
premium price over dry phosphates. This premium has at times expanded
significantly without prompting customers to shift their purchases
substantially from liquid to dry phosphate fertilizers.
The relevant geographic market in which to analyze the effects of
the Merger for SPA is no broader than North America. SPA is caustic,
requires special handling and equipment, and is perishable outside
certain temperature ranges. As a result, importing offshore SPA is
logistically challenging and expensive, and imports of SPA are rare and
do not constrain the prices of SPA produced in North America.
Currently, three firms--PotashCorp, Agrium, and J.R. Simplot
Company (``Simplot'')--manufacture all the SPA produced in North
America. PotashCorp has two SPA plants, located in Aurora, North
Carolina and White Springs, Florida. Agrium's sole SPA plant is located
in Conda, Idaho. Simplot has SPA plants in Rock Springs, Wyoming and
Pocatello, Idaho. Absent the proposed remedy, the Merger would result
in the merged entity controlling more than 75% of SPA production
capacity in North America.
B. 65%-67% Concentration Nitric Acid
Nitric acid is a chemical compound produced through the interaction
of ammonia, water, and a catalyzing agent. Nitric acid is used as a
feedstock for nitrogen-based fertilizers and explosives and is also
sold for a variety of industrial uses, including the production of
stainless steel, metal-based specialty chemicals, and water-treatment
and cleaning products. Nitric acid is produced at different
concentration levels, which reflect the amount of water present
together with the pure nitric acid. Both PotashCorp's plant in Lima,
Ohio and Agrium's plant in North Bend, Ohio produce nitric acid at 65%-
67% concentration, which is the preferred concentration for most
industrial uses.
Customers could not quickly or easily switch from 65%-67%
concentration nitric acid to other nitric acid concentrations or other
chemical products. For most customers, there are no chemical
substitutes that are functionally equivalent to nitric acid. Purchasing
lower-concentration nitric acid and increasing its concentration is not
an economical alternative because customers would need to invest in
constructing an evaporation tower, which few if any nitric acid
customers have today. Additionally, buying lower-concentration nitric
acid requires customers to pay to ship and store more water to receive
the same amount of acid. Purchasing 98% concentration nitric acid and
diluting it down is also not an economical alternative due to the
significant environmental and safety hazards associated with
transporting and storing highly concentrated nitric acid. The relevant
product market is therefore limited to 65%-67% concentration nitric
acid.
The relevant geographic market in which to analyze the effects of
the Merger with respect to 65%-67% concentration nitric acid
encompasses customer locations near and to the east of PotashCorp's and
Agrium's nitric acid plants in Lima, Ohio and North Bend, Ohio,
respectively. The relevant geographic market includes customer
locations in Ohio, Kentucky, Pennsylvania, Maryland, West Virginia, and
New Jersey. These customers are vulnerable to a price increase on
nitric acid sold by the merged entity for several reasons. Nitric acid
is a corrosive chemical requiring special care in handling and storage.
As a result, the costs of transporting nitric acid are high, making the
relative locations of suppliers and customers critical to the total
delivered costs. Most nitric acid customers rely on truck delivery,
which further limits their ability to buy from more remote suppliers.
Other sellers of 65%-67% concentration nitric acid are far more distant
from customers in the relevant geographic market than North Bend and
Lima, and therefore these sellers are not viable alternative sources of
supply. Finally, the merging parties have the ability to price
discriminate on sales of nitric acid by customer location.
PotashCorp and Agrium are the primary suppliers of 65%-67%
concentration nitric acid to customer locations near and to the east of
PotashCorp's Lima, Ohio and Agrium's North Bend, Ohio nitric acid
plants. Other producers of 65%-67% concentration nitric acid, such as
Dyno Nobel, Inc. and LSB Industries Inc., have minimal sales into this
region. Absent the proposed remedy, the Merger would result in the
merged entity having more than 90% of sales of 65%-67% concentration
nitric acid into the relevant geographic market.

IV. Effects of the Acquisition

Absent the proposed remedy, the Merger would pose a significant
risk of harm to competition in the relevant markets. The Merger would
eliminate head-to-head competition between PotashCorp and Agrium on SPA
sales and would enhance the merged firm's ability and incentive to
raise market prices by reducing SPA output. The Merger would also
increase the likelihood of coordination in a market that is already
vulnerable to coordination, given that SPA is a commodity and SPA
pricing and output information is often disseminated through customers
and industry publications. For sales of 65%-67% concentration nitric
acid to customers in the relevant geographic market the Merger would
also eliminate the vigorous competition on pricing and service that
exists today between PotashCorp and Agrium.

V. Entry

Entry into the relevant markets would not be timely, likely, or
sufficient to deter or counteract the expected anticompetitive effects
of the Merger. New entry into SPA production, even of modest capacity,
would likely take years and cost at least $100 million. No entry has
occurred into North American SPA production in the past five years, nor
is any in progress or anticipated. Although

[[Page 380]]

two new nitric acid facilities have been constructed in recent years,
those facilities are outside the relevant geographic market and make
nitric acid for their internal use at a lower concentration. Existing
suppliers of 65%-67% concentration nitric acid are unlikely to expand
their sales footprint enough to defeat a price increase by the merged
entity in the relevant geographic market.

VI. The Consent Agreement

The proposed Consent Agreement remedies the competitive concerns
raised by the Merger by requiring the merging parties to divest
Agrium's Conda, Idaho facility to Itafos and Agrium's North Bend, Ohio
facility to Trammo. These divestitures will preserve the competition
that currently exists in the relevant markets.
Under the proposed Consent Agreement, Agrium's phosphate operations
at Conda, Idaho, as well as related phosphate mines, customer and
supplier contracts, and intellectual property, will be sold to Itafos.
Itafos is an integrated producer of phosphate-based fertilizers with a
phosphate mining and manufacturing operation located in Brazil. Itafos
also owns other phosphate mining properties, including a mine in Paris
Hills, Idaho, located 35 miles from Conda. Paris Hills is expected to
become operational in 2019 and will serve as a source of high-grade
phosphate ore for the Conda operations. As a new entrant into the sale
of SPA in North America, Itafos is well positioned to preserve the SPA
competition that would otherwise be lost through the Merger.
The proposed Consent Agreement further provides that Agrium's
nitric acid plant and related operations at North Bend, Ohio, as well
as customer and supplier contracts and intellectual property, will be
sold to Trammo. Trammo is a global trader, distributor, and transporter
of commodity chemicals, including anhydrous ammonia, the primary
feedstock for nitric acid production. Trammo owns three ammonia
terminals in Illinois as well as specialized refrigerated barges for
ammonia distribution. Through its trading and storage activities,
Trammo expects to realize efficiencies in the supply of anhydrous
ammonia to North Bend. Trammo will be a new entrant in the sale of 65%-
67% concentration nitric acid and will replace Agrium's position in the
market today.
The merged entity must complete the divestiture within ten days of
closing the Merger. If the Commission determines that Itafos or Trammo
is not an acceptable acquirer, the Decision and Order requires the
parties to unwind the sale and accomplish the divestiture to another
Commission-approved acquirer within 120 days of the date the Decision
and Order becomes final. If the merging parties fail to carry out the
divestiture in the manner prescribed by the Decision and Order, the
Commission may appoint a divestiture trustee to accomplish the
divestiture.
The Commission will appoint an interim monitor to ensure the
merging parties' compliance with the Decision and Order and to keep the
Commission informed about the status of the divestiture. The purpose of
this analysis is to facilitate public comment on the proposed Consent
Agreement, and it is not intended to constitute an official
interpretation of the proposed Decision and Order or to modify its
terms in any way.

By direction of the Commission.
April J. Tabor,
Acting Secretary.
[FR Doc. 2017-28336 Filed 1-2-18; 8:45 am]
BILLING CODE 6750-01-P

Federal Register / Vol. 83, No. 2 / Wednesday, January 3, 2018 / Notices 377

Filed Date: 12/27/17. Docket Numbers: ER18–546–000. FOR FURTHER INFORMATION CONTACT:
Accession Number: 20171227–5016. Applicants: NorthWestern Inquiries may be directed to Frances
Comments Due: 5 p.m. ET 1/17/18. Corporation. Eargle, Designated Federal Officer,
Docket Numbers: ER10–3254–003. Description: § 205(d) Rate Filing: SA LGAC, U.S. EPA, (Mail Code 1301A),
Applicants: Cooperative Energy 792 1st Rev—NITSA with Big Horn 1200 Pennsylvania Avenue NW,
Incorporated (An Electric Membership County Electric Cooperative, Inc. to be Washington, DC 20460; telephone
Corporation). effective 3/1/2018. number: (202) 564–3115; email:
Description: Updated Market Power Filed Date: 12/27/17. eargle.frances@epa.gov.
Analysis of Cooperative Energy Inc. (An Accession Number: 20171227–5043. Dated: November 6, 2017.
Electric Membership Corporation). Comments Due: 5 p.m. ET 1/17/18. Troy M. Lyons,
Filed Date: 12/22/17. The filings are accessible in the Associate Administrator, Office of
Accession Number: 20171222–5299. Commission’s eLibrary system by Congressional and Intergovernmental
Comments Due: 5 p.m. ET 2/20/18. clicking on the links or querying the Relations.
Docket Numbers: ER18–540–000. docket number. [FR Doc. 2017–28132 Filed 1–2–18; 8:45 am]
Applicants: Westwood Generation, Any person desiring to intervene or BILLING CODE 6560–50–P
LLC. protest in any of the above proceedings
Description: Compliance filing: must file in accordance with Rules 211
MBRA Tariff to be effective 2/28/2018. and 214 of the Commission’s
FEDERAL TRADE COMMISSION
Filed Date: 12/26/17. Regulations (18 CFR 385.211 and
Accession Number: 20171226–5080. 385.214) on or before 5:00 p.m. Eastern [File No. 161 0232]
Comments Due: 5 p.m. ET 1/16/18. time on the specified comment date.
Docket Numbers: ER18–541–000. Protests may be considered, but Potash Corporation of Saskatchewan
Applicants: Westwood Generation, intervention is necessary to become a Inc. and Agrium Inc.; Analysis To Aid
LLC. party to the proceeding. Public Comment
Description: Compliance filing: eFiling is encouraged. More detailed
AGENCY: Federal Trade Commission.
Reactive Tariff to be effective 2/28/2018. information relating to filing
requirements, interventions, protests, ACTION: Proposed consent agreement.
Filed Date: 12/27/17.
Accession Number: 20171227–5000. service, and qualifying facilities filings SUMMARY: The consent agreement in this
Comments Due: 5 p.m. ET 1/17/18. can be found at: http://www.ferc.gov/ matter settles alleged violations of
Docket Numbers: ER18–542–000. docs-filing/efiling/filing-req.pdf. For federal law prohibiting unfair methods
Applicants: NorthWestern other information, call (866) 208–3676 of competition. The attached Analysis to
Corporation. (toll free). For TTY, call (202) 502–8659. Aid Public Comment describes both the
Description: § 205(d) Rate Filing: SA Dated: December 27, 2017. allegations in the complaint and the
642 5th Rev—NITSA with General Mills Nathaniel J. Davis, Sr., terms of the consent orders—embodied
Operations LLC to be effective 3/1/2018. Deputy Secretary. in the consent agreement—that would
Filed Date: 12/27/17. [FR Doc. 2017–28343 Filed 1–2–18; 8:45 am] settle these allegations.
Accession Number: 20171227–5019. BILLING CODE 6717–01–P DATES: Comments must be received on
Comments Due: 5 p.m. ET 1/17/18. or before January 29, 2018.
Docket Numbers: ER18–543–000. ADDRESSES: Interested parties may file a
Applicants: NorthWestern ENVIRONMENTAL PROTECTION comment online or on paper, by
Corporation. AGENCY following the instructions in the
Description: § 205(d) Rate Filing: SA Request for Comment part of the
760 3rd Rev—NITSA with Beartooth [FRL–9972–70–OA] SUPPLEMENTARY INFORMATION section
Electric Cooperative to be effective below. Write ‘‘In the Matter of Potash
3/1/2018. Local Government Advisory Corporation of Saskatchewan Inc. et al.,
Filed Date: 12/27/17. Committee (LGAC); Notice of Charter File No. 161–0232’’ on your comment,
Accession Number: 20171227–5020. Renewal and file your comment online at https://
Comments Due: 5 p.m. ET 1/17/18. ftcpublic.commentworks.com/ftc/
AGENCY: Environmental Protection
Docket Numbers: ER18–544–000. Agency (EPA). potashcorpconsent by following the
Applicants: NorthWestern instructions on the web-based form. If
ACTION: Notice.
Corporation. you prefer to file your comment on
Description: § 205(d) Rate Filing: SA SUMMARY: Notice is hereby given that paper, write ‘‘In the Matter of Potash
666 5th Rev—NITSA with Suiza Dairy the Environmental Protection Agency Corporation of Saskatchewan Inc. et al.,
Group LLC to be effective 3/1/2018. (EPA) has determined that, in File No. 161–0232’’ on your comment
Filed Date: 12/27/17. accordance with the provisions of the and on the envelope, and mail your
Accession Number: 20171227–5021. Federal Advisory Committee Act comment to the following address:
Comments Due: 5 p.m. ET 1/17/18. (FACA), the Local Government Federal Trade Commission, Office of the
Docket Numbers: ER18–545–000. Advisory Committee (LGAC) is a Secretary, 600 Pennsylvania Avenue
Applicants: NorthWestern necessary committee which is in the NW, Suite CC–5610 (Annex D),
Corporation. public interest. Accordingly, LGAC will Washington, DC 20580, or deliver your
sradovich on DSK3GMQ082PROD with NOTICES

Description: § 205(d) Rate Filing: SA be renewed for an additional two-year comment to the following address:
767 4th Rev—NITSA with Basin Electric period. The purpose of LGAC is to Federal Trade Commission, Office of the
Power Cooperative, Inc. to be effective provide advice and recommendations to Secretary, Constitution Center, 400 7th
3/1/2018. EPA’s Administrator on ways to Street SW, 5th Floor, Suite 5610 (Annex
Filed Date: 12/27/17. improve its partnership with Local D), Washington, DC 20024.
Accession Number: 20171227–5030. Governments and provide more efficient FOR FURTHER INFORMATION CONTACT:
Comments Due: 5 p.m. ET 1/17/18. and effective environmental protection. Kristian Rogers (202–326–3210), Bureau

VerDate Sep<11>2014 16:13 Jan 02, 2018 Jkt 244001 PO 00000 Frm 00036 Fmt 4703 Sfmt 4703 E:\FR\FM\03JAN1.SGM 03JAN1

Federal Register / Vol. 83, No. 2 / Wednesday, January 3, 2018 / Notices 379

Agrium, headquartered in Calgary, SPA plants in Rock Springs, Wyoming care in handling and storage. As a
Alberta, Canada, are both large and Pocatello, Idaho. Absent the result, the costs of transporting nitric
producers of crop nutrients, including proposed remedy, the Merger would acid are high, making the relative
potash, phosphate, and nitrogen result in the merged entity controlling locations of suppliers and customers
products. PotashCorp and Agrium are more than 75% of SPA production critical to the total delivered costs. Most
two of only three firms in North capacity in North America. nitric acid customers rely on truck
America that manufacturer SPA, a key delivery, which further limits their
B. 65%–67% Concentration Nitric Acid
input for liquid phosphate fertilizers. ability to buy from more remote
PotashCorp and Agrium are also two of Nitric acid is a chemical compound suppliers. Other sellers of 65%–67%
a small number of firms that make 65%– produced through the interaction of concentration nitric acid are far more
67% concentration nitric acid, a ammonia, water, and a catalyzing agent. distant from customers in the relevant
nitrogen product sold for industrial Nitric acid is used as a feedstock for geographic market than North Bend and
uses, in North America, and both nitrogen-based fertilizers and explosives Lima, and therefore these sellers are not
PotashCorp and Agrium own nitric acid and is also sold for a variety of viable alternative sources of supply.
plants in Ohio. industrial uses, including the Finally, the merging parties have the
production of stainless steel, metal- ability to price discriminate on sales of
III. The Relevant Markets based specialty chemicals, and water- nitric acid by customer location.
A. Superphosphoric Acid treatment and cleaning products. Nitric PotashCorp and Agrium are the
acid is produced at different primary suppliers of 65%–67%
Phosphate is an essential plant concentration levels, which reflect the concentration nitric acid to customer
nutrient that farmers apply to crops on amount of water present together with locations near and to the east of
a seasonal basis. SPA, a highly the pure nitric acid. Both PotashCorp’s PotashCorp’s Lima, Ohio and Agrium’s
concentrated form of phosphoric acid, is plant in Lima, Ohio and Agrium’s plant North Bend, Ohio nitric acid plants.
used to produce the liquid phosphate in North Bend, Ohio produce nitric acid Other producers of 65%–67%
fertilizer known as ammonium at 65%–67% concentration, which is concentration nitric acid, such as Dyno
polyphosphate (‘‘APP’’). SPA is the preferred concentration for most Nobel, Inc. and LSB Industries Inc.,
purchased by agricultural wholesalers industrial uses. have minimal sales into this region.
and retailers, who convert it to APP and Customers could not quickly or easily Absent the proposed remedy, the
sell APP to farmers. switch from 65%–67% concentration Merger would result in the merged
The relevant product market does not nitric acid to other nitric acid entity having more than 90% of sales of
include dry phosphate fertilizers such concentrations or other chemical 65%–67% concentration nitric acid into
as monoammonium phosphate (‘‘MAP’’) products. For most customers, there are the relevant geographic market.
or diammonium phosphate (‘‘DAP’’). no chemical substitutes that are
Many farmers perceive advantages, functionally equivalent to nitric acid. IV. Effects of the Acquisition
including higher crop yield and quality, Purchasing lower-concentration nitric Absent the proposed remedy, the
to using liquid rather than dry acid and increasing its concentration is Merger would pose a significant risk of
phosphate fertilizer, particularly in the not an economical alternative because harm to competition in the relevant
early stages of crop development. In customers would need to invest in markets. The Merger would eliminate
addition, liquid phosphates can be constructing an evaporation tower, head-to-head competition between
applied more directly to the seed than which few if any nitric acid customers PotashCorp and Agrium on SPA sales
dry phosphates and can easily be have today. Additionally, buying lower- and would enhance the merged firm’s
combined with other nutrients. concentration nitric acid requires ability and incentive to raise market
Consistent with these perceived customers to pay to ship and store more prices by reducing SPA output. The
advantages, SPA typically garners a water to receive the same amount of Merger would also increase the
premium price over dry phosphates. acid. Purchasing 98% concentration likelihood of coordination in a market
This premium has at times expanded nitric acid and diluting it down is also that is already vulnerable to
significantly without prompting not an economical alternative due to the coordination, given that SPA is a
customers to shift their purchases significant environmental and safety commodity and SPA pricing and output
substantially from liquid to dry hazards associated with transporting information is often disseminated
phosphate fertilizers. and storing highly concentrated nitric through customers and industry
The relevant geographic market in acid. The relevant product market is publications. For sales of 65%–67%
which to analyze the effects of the therefore limited to 65%–67% concentration nitric acid to customers in
Merger for SPA is no broader than North concentration nitric acid. the relevant geographic market the
America. SPA is caustic, requires The relevant geographic market in Merger would also eliminate the
special handling and equipment, and is which to analyze the effects of the vigorous competition on pricing and
perishable outside certain temperature Merger with respect to 65%–67% service that exists today between
ranges. As a result, importing offshore concentration nitric acid encompasses PotashCorp and Agrium.
SPA is logistically challenging and customer locations near and to the east
expensive, and imports of SPA are rare of PotashCorp’s and Agrium’s nitric acid V. Entry
and do not constrain the prices of SPA plants in Lima, Ohio and North Bend, Entry into the relevant markets would
produced in North America. Ohio, respectively. The relevant not be timely, likely, or sufficient to
Currently, three firms—PotashCorp, geographic market includes customer deter or counteract the expected
sradovich on DSK3GMQ082PROD with NOTICES

Agrium, and J.R. Simplot Company locations in Ohio, Kentucky, anticompetitive effects of the Merger.
(‘‘Simplot’’)—manufacture all the SPA Pennsylvania, Maryland, West Virginia, New entry into SPA production, even of
produced in North America. PotashCorp and New Jersey. These customers are modest capacity, would likely take years
has two SPA plants, located in Aurora, vulnerable to a price increase on nitric and cost at least $100 million. No entry
North Carolina and White Springs, acid sold by the merged entity for has occurred into North American SPA
Florida. Agrium’s sole SPA plant is several reasons. Nitric acid is a production in the past five years, nor is
located in Conda, Idaho. Simplot has corrosive chemical requiring special any in progress or anticipated. Although

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Document Created: 2018-10-26 09:28:25
Document Modified: 2018-10-26 09:28:25

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Proposed consent agreement.
Dates		Comments must be received on or before January 29, 2018.
Contact		Kristian Rogers (202-326-3210), Bureau of Competition, 600 Pennsylvania Avenue NW, Washington, DC 20580.
FR Citation		83 FR 377