Tronox to fight US FTC lawsuit over Cristal merger

Tronox Limited on Tuesday said it plans to “vigorously fight” a lawsuit filed by the US Federal Trade Commission (FTC) that seeks to block its proposed acquisition of the titanium dioxide (TiO2) business of Cristal, which is 79 percent-owned by Saudi National Industrialization Co. (Tasnee).

The statement came after FTC issued an administrative complaint challenging the acquisition, saying it would significantly reduce competition in the North American market for chloride process titanium dioxide.

The white pigment is used in a wide variety of products including paint, industrial coatings, plastic, and paper.

According to the regulatory body, Tronox’s proposed acquisition of competitor Cristal would violate antitrust laws and “increase the risk of coordinated action among the remaining competitors”.

The acquisition also increases the risk of potential anti-competitive actions by Tronox, such as output reductions.

Meanawhile, Tronox said the FTC’s complaint is based on an “erroneous view of the global TiO2 market and a flawed analysis of the Tronox/Cristal transaction.”

"It is extremely disappointing that the FTC has taken this unmerited action to try to block a highly synergistic acquisition which will enhance competition in the TiO2 industry and benefit our customers around the world," said Tronox CEO Jeffry Quinn. 

The FTC’s case is based on a “narrow and flawed view” of the size of the TiO2 market, and does not take into account TiO2 produced by the sulfate process, or imports of the product from Europe and Asia.

As a result, the commission has overlooked nearly half the available product an dmiscalculated the market share of individual producers, Tronox said.

“The FTC has taken the position that the market operates as an oligopoly, and the post-merger Tronox/Cristal will coordinate to restrain production. In fact, the combined company will have powerful incentives to run its pigment plants at full capacity, regardless of the activities of competitors,” the statement added.

Tronox on Sunday said it intends to move forward with the acquisition of Cristal’s TiO2 operations, saying it had not received any action or communication from the FTC.

The Stamford, Connecticut-based company signed a definitive agreement in February to acquire the TiO2 business for $1.67 billion of cash and Class A ordinary shares representing 24 percent ownership in pro forma Tronox.