Wednesday, October 4, 2023
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Steel-Making Merger Looks Likely

WASHINGTON (CN) - The buying partner in a merger of companies that control 95 percent of certain U.S. steel-making instruments will have to divest parts of the company it acquired, the Justice Department said in a settled complaint.

The United States sued Heraeus Electro-Nite Co., of Langhorne, Pa., in Federal Court.

Heraeus once controlled 85 percent of the U.S. market for "single-use sensors and instruments used to measure and monitor the temperature and chemical composition of molten steel," Justice said in the 16-page lawsuit.

But in 2012, it found that its control had sunk to 60 percent, while its closest competitor, Midwest Instrument Co., or Minco, had claimed 35 percent.

"Consequently, Heraeus decided to restore its "market leadership" in the United States by acquiring Minco and thereby eliminating Minco's production capacity. The acquisition removed significant head-to-head competition between Minco and Heraeus on price, innovation and service, and created a near-monopoly in the supply of S&I in the United States. Accordingly, Heraeus' acquisition of Minco's assets was unlawful and violated Section 7 of the Clayton Act," according to the complaint.

The United States produced nearly 100 million tons of steel in 2012, all of which must be measured and monitored during production.

Once the world leader in steel, the United States has sunk to fourth place, behind China, the European Union and Japan. China's steel production that year was nearly twice that of the other three.

Under the proposed settlement, Heraeus must sell "a package of assets to an identified purchaser, Keystone," the Justice Department said in a statement announcing the settlement.

Heraeus also must waive noncompete provisions for some former employees, so Keystone can hire people with expertise in the business.

The proposed settlement will be published in the Federal Register. After a 60-day comment period, the court may approve it.

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