Justice Department Seeks Appointment of Trustee to Sell Sparrows Point
08/07/2007 - The Department of Justice asks a federal judge to appoint a trustee to sell Mittal Steel's Sparrows Point facility, as Mittal has failed to complete a sale prior to the consent decree deadline of August 6, 2007.
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The Justice Dept.’s Antitrust Division filed a civil lawsuit in August 2006 to block Mittal’s acquisition of Arcelor SA, stating that the acquisition would lessen market competition for tin mill products in the eastern U.S.
At that time, the Justice Department also filed a consent decree resolving anti-competition concerns by requiring Mittal to divest one of its tin-mill-products producing facilities.
In Feb. 2007, The Justice Dept. notified Mittal that it must divest the Sparrows Point facility within 90 days, with extensions not to exceed 60 days. Beyond that period, Mittal obtained an additional extension until Aug. 6, 2007.
Although Mittal signed a contract on Aug. 1, 2007 to sell the Sparrows Point facility to a joint venture led by Esmark, the sale is subject to a number of conditions, and is not expected to be completed for at least two months—well beyond the Aug. 6 deadline.
The Antitrust Division’s consent decrees routinely include a provision for the appointment of a trustee in the event the divestiture is not completed within the allotted time period is a
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Mittal's deadline to divest the Sparrows Point facility was Monday, August 6, 2007, and the consent decree provides for appointment of a divestiture trustee once this deadline has passed.
"The prompt divestiture of Sparrows Point is important to preserve competition in the market for tin mill products in the eastern United States," said Thomas O. Barnett, Assistant Attorney General in charge of the Department's Antitrust Division.
The Department has also asked the court to instruct the trustee that it may carry out its responsibility to sell the facility by pursuing the Department's approval of the agreement that Mittal entered last week to sell the facility to Bethlehem Acquisition Co., a joint venture led by Esmark—and completing the sale under that agreement if it is approved.
"We are disappointed that Mittal has failed to complete a sale within the time prescribed by the consent decree,” said Barnett. “We are therefore asking the court to appoint a trustee under the decree to ensure that the sale of the facility is completed promptly."
According to the Justice Department, Prior to Mittal's acquisition of Arcelor, two large firms—Mittal and one other integrated steel producer—accounted for more than 74% of all tin mill product sales in the eastern United States. Prior to the merger, Arcelor—together with its subsidiary Dofasco, which operates a large integrated mill in Ontario—provided a significant competitive constraint on these two firms. By removing those constraints on anticompetitive pricing, the acquisition likely would have resulted in price increases of tin mill products to can manufacturers and other customers in the eastern United States.
