The Federal Trade Commission (FTC) said yesterday that it will require Praxair, Inc. and Linde AG to divest assets in nine industrial gases product markets in numerous geographic markets in the US, as part of a settlement that resolves charges that their proposed merger would likely be anticompetitive.

The assets will be sold to companies including Messer Group and MATHESON Tri-Gas.

The complaint alleges that the proposed merger would harm competition in markets for bulk liquid oxygen, bulk liquid nitrogen, bulk liquid argon, bulk liquid carbon dioxide, bulk liquid hydrogen, bulk refined helium, on-site hydrogen, on-site carbon monoxide, and excimer laser gases.

According to the complaint, the proposed merger would eliminate direct competition between Praxair and Linde in each of nine industrial gases product markets, leaving limited alternative sources of supply in these markets. The proposed merger would enable the merged firm to exercise market power unilaterally because, for many customers, the merging firms are their two best alternatives. As a result, purchasers of the industrial gases at issue would likely pay higher prices.

The proposed merger would also make collusion or coordinated action among the remaining firms more likely, because it would meaningfully reduce the number of firms that compete in these markets. Coordination or collusion among industrial gas suppliers would be facilitated by the homogenous nature of the products and the availability of detailed market information. In such conditions, it would be easier for the few remaining competitors to agree on a coordinated scheme and detect and punish deviations from it.

Settlement

The terms of the settlement require the following divestitures:

  • The parties will divest to Messer Group GmbH, or an alternative Commission-approved buyer, Linde’s U.S. bulk liquid oxygen, nitrogen, and argon business, including all thirty-two of its merchant air separation units, together with sixteen of Linde’s U.S. carbon dioxide facilities, source contracts equal to all of Praxair’s helium source contract volume (less the volumes ordered divested to other companies by the European Commission and China), Linde’s U.S. excimer laser gas business, and Linde’s North American liquid hydrogen production facility, along with all related equipment, intellectual property, contracts, and other assets. Messer will form a joint venture with CVC Capital Partners to finance its acquisition of the divested assets. Messer will maintain majority control of the joint venture.
  • The parties will divest to Matheson Tri-Gas, Inc., or an alternative Commission-approved buyer, five of Linde’s HyCO facilities outside the Gulf Coast region, along with Linde’s hydrogen pipeline in the Gulf Coast, intellectual property, customer contracts, and other assets.
  • The parties will also divest two of Linde’s HyCO plants back to their respective customers or to other Commission-approved buyers. The parties will divest Linde’s Clear Lake, Texas plant to Celanese Corporation and Linde’s La Porte, Texas plant to LyondellBasell Industries N.V., or to other Commission-approved buyers.

Praxair and Linde have agreed to divest the required facilities within four months of signing the Agreement Containing Consent Orders. Until the divestitures to Messer and Matheson are accomplished, Linde and Praxair are prohibited from integrating their operations anywhere in the world.