INDUSTRY NEWS
MEETINGS & PUBLICATIONS
ARCHIVES


February 24, 2004

INDUSTRY NEWS

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 order.

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 that approval.

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.

Although the 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 court.

NOTE: 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.

Copies 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 that restrain 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 Bureau 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: antitrust@ftc.gov; 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.

Back to Top

ANH Targets End of Year for Chapter 11 Exit

Editor’s 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.

"ANH 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.

"Our 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.

"As you 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.

"We must 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 workforce."
/s/
Viktor Fischer

Back to Top

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.

Brad Tucker’s 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 it up!

Back to Top


MEETINGS AND PUBLICATIONS

ALAFAR 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, 2004.
For further information, contact:

ALAFAR 2004
c/o Reto Schwegler
P.O. Box 6100
North Augusta, SC 29861
USA
Tel: 1-706-796-4383
Fax: 1-706-796-4266
E-mail: rschwegler@aol.com

UNITECR 2005

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.

Back to Top

The Refractories Institute
Suite 1160, 650 Smithfield Street, Pittsburgh, PA 15222
Phone: 412.281.6787, Fax: 412.281.6881,
Email: triassn@aol.com