RHI AG to Pay $650,000 Civil Penalty and Perform Asbestos Cleanup
to Settle FTC Order Violation Charges (From a 2/19/04 FTC News Release)
The Federal Trade Commission announced on February 19, 2004, a
settlement with RHI AG (RHI) to resolve charges that RHI has violated
provisions of an FTC order issued in 2001. Under the terms of the
settlement, RHI has agreed to pay a civil penalty of at least $650,000
for the violations and to conduct asbestos remediation at a divested
plant, substantially beyond the remediation required in the original
The FTC's order was issued pursuant to a 1999 consent agreement
with RHI that followed the FTC's investigation of RHI's acquisition
of Global Industrial Technologies, Inc., and resolved concerns
that the acquisition would decrease competition in North American
markets for refractory bricks used to line steel making equipment.
The order, as drafted in 1999, required RHI to divest to Resco
Products, Inc. (Resco) two refractories plants and other assets
in Canada and the United States in a manner set out in contracts
between Resco and NARCO, an RHI subsidiary. However, before the
order became final, the FTC determined in 2000 that NARCO had failed
to divest all of the requisite assets to Resco. NARCO thereupon
entered into a settlement agreement with Resco that addressed the
FTC's concerns and was incorporated into the FTC's order, and the
final order was issued in March 2001. As part of that settlement
agreement, NARCO paid $5 million to Resco.
The FTC has investigated further RHI's compliance with the settlement
agreement that was made a part of the 2001 order. As detailed in
a complaint that will be filed in federal district court in connection
with the current settlement, NARCO failed to perform fully its
obligations under the settlement agreement, and NARCO was late
making payments to Resco under the settlement agreement. The complaint
also charges that NARCO manufactured refractory bricks in violation
of a patent license that was part of the order, and in violation
of specific order language. In addition, the complaint alleges
that NARCO breached its order obligation to pay the FTC's trustee
fees on time. Finally, although the order prohibited any modification
of the earlier settlement agreement with Resco, without FTC approval,
the complaint asserts that NARCO modified that agreement without
Pursuant to the settlement, RHI has stipulated that NARCO failed
to comply with the settlement agreement and order while it was
a wholly owned, indirect subsidiary of RHI. RHI also has agreed
to the entry of a consent judgment against RHI.
While the 2001 order was successful in preserving competition in
the markets affected by the acquisition and there is little evidence
of bad faith in RHI's violations of that order, the consent judgment
nonetheless will require RHI to pay a civil penalty of $650,000
within 30 days after entry of judgment by the court. In addition,
the consent judgment will require RHI to perform specified asbestos
remediation at a plant divested to Resco located in Marelan,
Quebec, Canada. Depending on the final cost of this remediation,
the consent judgment may require RHI to pay an additional civil
penalty equal to the amount by which the cost of remediation
is less than $350,000.
FTC order ultimately preserved competition as it was designed
to do, RHI's many violations of the order placed achieving
that remedy at risk," said Susan Creighton, Director of the
FTC's Bureau of Competition. "RHI has already refunded Resco
$5 million of the original divestiture price. The new obligations,
both to pay a civil penalty and to perform asbestos remediation
beyond the original divestiture contract's terms, should make clear
to RHI and all respondents that they will be held to comply fully
with all of their order obligations, regardless of the other challenges
that they may face."
The FTC expects to file the complaint, stipulation, and consent
judgment in the United States District Court for the District of
Columbia. The Commission vote to accept the settlement, and to
notify the Department of Justice of its intention to file the settlement,
was 5 0.
In addition to approving the settlement between the FTC and RHI,
the Commission also voted to grant RHI's petition to reopen and
modify the FTC's 2001 order. In the petition, RHI asked the Commission
to approve a second settlement agreement, signed in 2002 between
NARCO and Resco, and to incorporate it into the order. The Commission
vote to grant RHI's petition was 5 0.
NOTE: The Commission
files a complaint when it has "reason
to believe" that the law has been or is being violated, and
it appears to the Commission that a proceeding is in the public
interest. The complaint is not a finding or ruling that the defendant
has actually violated the law. The case will be decided by the
This stipulated final judgment and order is for settlement purposes
only and does not constitute an admission by the defendant
of a law violation, except as specifically stipulated.
of the documents mentioned in this release are or will be available
from the FTC's Web site at www.ftc.gov.
The FTC's Bureau of Competition seeks to prevent business practices
competition. The Bureau carries out its mission by investigating
alleged law violations and, when appropriate, recommending that
the Commission take formal enforcement action. To notify the
concerning particular business practices, call or write the Office
of Policy and Evaluation, Room 394, Bureau of Competition, Federal
Trade Commission, 600 Pennsylvania Ave, N.W., Washington, D.C.
20580, Electronic Mail: email@example.com;
Telephone (202) 326 3300. For more information on the laws that
the Bureau enforces,
the Commission has published "Promoting Competition, Protecting
Consumers: A Plain English Guide to Antitrust Laws," which
can be accessed at http://www.ftc.gov/bc/compguide/index.htm.
ANH Targets End of Year for Chapter 11 Exit
Note: In a letter date February 11, 2004, Viktor Fischer, ANH
Refractories Executive Vice President, Sales, sent
a letter to ANH customers which was widely circulated in the industry.
The following is the text of that letter.
" We would like to take this opportunity to brief you on our financial
achievements and update you on our significant progress in the
Chapter 11 process.
Refractories Company and its operating affiliates, A.P. Green,
NARCO, and Harbison-Walker continue full operations
while reorganizing pursuant to Chapter 11. In fact, 2003 was an
important year for us to implement preliminary plans to reorganize
our businesses and utilize the U.S. Bankruptcy Code to stem the
tide of asbestos litigation.
business units are stronger financially than they have been in
some time and on a consolidated basis, ANH Refractories
and its operating affiliates had sales in 2003 of US$350 million.
Moreover, we exceeded our goal for cash-flow and reached 93% of
our earnings goal. In these difficult economic times, where the
U.S. economy is finally beginning to emerge from recession, we
believe these financial results demonstrate our ability to compete
in the marketplace and to provide high quality value-driven refractories
to our customers.
know, our Chapter 11 is primarily related to the financial impact
of asbestos related litigation. Additionally,
this must be juxtaposed with the relationships we have with the
prior owners and affiliates of these businesses, Halliburton and
Honeywell. We have made excellent progress in preparing to exit
Chapter 11, however, as a result of the multitude of interests
involved in finalizing our plans of reorganization, additional
time is required to insure that the final plans will be approved
by all; the Bankruptcy Court, the asbestos and trade creditors,
the future asbestos claimants, Halliburton, and Honeywell. For
this reason, and the complexities involved, we now anticipate emerging
from Chapter 11 at the end of this year. This delay will better
serve all involved by establishing a stronger foundation for our
businesses going forward.
thank you, our customers, for your continued support which we
greatly appreciate. With your help, we continue to pursue
our vision to be the strongest most reliable U.S. based refractory
company driven by our customer focus and our energized and motivated
RESCO Names Tucker Director Emeritus
Resco Products president and CEO Bill Brown announced that Bradford
S. Tucker has been named Director Emeritus of the Resco Board effective
January 28, 2004.
career in refractories spans sixty five years. He began in the
industry in 1939 as a ceramic engineer with E.
J. Lavino Company. He served in the army during the Second World
War and was discharged in 1946 with the rank of major. He resumed
his career with Lavino and stayed with that company when it was
bought by International Minerals and Chemicals in 1966, and continued
as vice president of refractory sales until 1971.
In 1972, Mr. Tucker was named Executive Secretary of The Refractories
Institute. At that time, that was the senior paid staff position
at TRI. He headed TRI until his retirement in 1980.
TRI members join with Resco employees in congratulating Brad Tucker
for his achievements and in expressing our appreciation for his
many years of service to the refractories community.
TRI Fax Survey Shows Increased Strength, Continuing Concern
Two thirds of respondents to the TRI January Fax Survey reported
that sales were up slightly or up over five percent for the last
six months of 2003. The majority also reported that inventories
had decreased. The news was a little less optimistic when participants
were asked to describe in one word their opinion of the state of
the economy. Responses included: volatile, weak, C-, slow rise,
recovering, poor, hanging, horrible, unpredictable, shackled, sluggish,
distressed, improving, flat, good. Well, that certainly clears
2004 Call for Papers
The Organizing Committee for ALAFAR 2004 has issued a Call for
Papers. The 2004 Congress will be held November 7-10, in Antigua,
Guatemala. The conference topic is: Technological and Logistical
Leadership in a Global Environment. Abstracts are due by May 15,
For further information, contact:
c/o Reto Schwegler
P.O. Box 6100
North Augusta, SC 29861
The Organizing Committee of UNITECR 2005 has issued a preliminary
call for papers for the 9th Biennial Worldwide Congress on Refractories,
to be held in Orlando, Florida, November 8-11, 2005. The abstract
deadline is November 30, 2004. For information, visit www.unitecr.org.
AcerS Announces Premier of New Publication
The American Ceramic Society has announced the debut of the premier
issue of International Journal of Applied Ceramic Technology. The
new quarterly periodical provides the most recent information on
ceramic product development and commercialization for engineers,
manufacturers and research and development scientists. For more
information, go to www.ceramics.org/act, or contact the AcerS Customer
Service Department at 614-794-5890.
Materials Science and Technology 2005
ASM, TMS and
AcerS will jointly sponsor the subject meeting in Pittsburgh,
September 26-28, 2005. The meeting will feature the
ASM annual technical meeting and the TMS Fall Meeting. AcerS
will be participating in MS&T by cooperating on joint symposia
where ceramic expertise can add value for participants.