US: FTC challenges merger of two hydrogen peroxide producers

The FTC issued an administrative complaint, and filed a request for a temporary restraining order and preliminary injunction in federal district court to maintain the status quo pending an administrative trial on the merits.

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Most hydrogen peroxide produced in North America is sold to pulp and paper customers for bleaching pulp and de-inking recycled paper, according to the complaint. Hydrogen peroxide is also used to sterilize food and beverage packaging, and in chemical synthesis, fracking, water treatment, and electronics. For most end uses, there are no effective substitutes, the complaint alleges. Because of high transportation costs, customers prefer nearby suppliers.

The complaint alleges that the acquisition would harm competition in at least two ways. It would increase the likelihood of coordination in a market “already vulnerable to coordination, functioning as an oligopoly, and with a long history of price-fixing.” Also, the market is highly concentrated, with significant transparency among rival firms, and long-term, stable customer-supplier relationships, low elasticity of demand, and a history of strong interdependent behavior, the complaint states.