Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC Challenges Consummated Merger-to-Monopoly Acquisition in Market for Photoengraving Plates, (Oct 15, 2012)

By Jeffrey May, J.D.

The FTC will require Magnesium Elektron North America, Inc.—a leader in the production of magnesium plates used for photoengraving—to divest intellectual property and technical know-how used to manufacture magnesium plates for photoengraving to resolve a challenge to the company’s 2007 acquisition of rival Revere Graphics Worldwide, Inc. The divestitures are intended to replace competition that was eliminated as a result of the acquisition.

The FTC’s proposed complaint and consent order (In the Matter of Magnesium Elektron North America, Inc.) were announced on October 12.

In September 2007, Magnesium Elektron acquired the worldwide assets of Revere for approximately $15 million. At the time of the acquisition, both companies manufactured magnesium plates for photoengraving. While Revere also manufactured and sold zinc, copper, and brass plates for photoengraving, prior to its acquisition of Revere, Magnesium Elektron sold only magnesium plates for photoengraving applications. Prior to the transaction, the companies were the only suppliers of magnesium plates for photoengraving in the world. Thus, the acquisition resulted in a merger-to-monopoly in the worldwide market for magnesium plates for photoengraving, the FTC alleged.

Under the terms of the proposed consent order, Magnesium Elektron would be required to provide Universal Engraving, Inc. with the intellectual property and know-how used to roll and coat magnesium plates for photoengraving applications. Universal Engraving, based in Overland Park, Kansas, is a global leader in the manufacture and sale of products used in the photoengraving process, including brass and copper plates for photoengraving applications. In addition, Magnesium Elektron would be required to provide Universal Engraving with magnesium plates for photoengraving until Universal Engraving was able to produce and sell these products on its own.

Finally, Magnesium Elektron would be required to enter into a supply agreement with Universal Engraving for chemicals used in the magnesium photoengraving process, which Universal Engraving would be able to sell in conjunction with its magnesium plates.

The FTC File No. is 091-0094.

Peter Guryan (Fried, Frank, Harris, Shriver & Jacobson LLP) for Magnesium Elecktron North America, Inc. and Luxfer Holdings Plc.

News: Antitrust