The Federal Trade Commission on Thursday won a temporary restraining order blocking Occidental Petroleum's proposed $70-million acquisition of Tenneco's polyvinyl chloride business.
The commission concluded at a meeting Thursday morning that "it had reason to believe that the proposed acquisition could substantially reduce competition" in three PVC resin product markets. The three markets are mass and suspension PVC, suspension PVC copolymer and dispersion PVC.
PVC is an industrial plastic used to make such products as pipe, wire insulation and floor and wall coverings.
The agency's staff went to court Thursday afternoon in Washington seeking a preliminary injunction blocking the acquisition by Occidental Chemical, a subsidiary of Occidental Petroleum, of the PVC manufacturing assets of Tenneco Polymers Inc., a subsidiary of Tenneco Inc.
U.S. District Judge Harold Greene granted a 10-day restraining order, saying that he considered the commission's case strong enough to warrant a hearing for a preliminary injunction, an FTC spokeswoman said. The commission's staff can apply for another restraining order after the current order lapses, and the judge can set a hearing date on an injunction anytime during the temporary restraining orders, she said.
An Occidental spokesman said the company believes that the acquisition doesn't violate antitrust laws. The spokesman cited a ruling last September by a Federal Trade Commission administrative law judge that B. F. Goodrich's acquisition of Diamond Shamrock's PVC business was lawful because of intense competition in the PVC industry.
Foreign Competition Cited
"We believe our acquisition is even more lawful because of recently increasing foreign competition in the PVC industry in the United States," the Occidental spokesman said.
The Federal Trade Commission is seeking to halt the acquisition until administrative hearings determine whether the purchase is legal--a process that could take several months.
Tenneco's PVC business had revenue of about $250 million last year. The proposed acquisition, which was announced in mid-December, would nearly double Occidental's annual PVC resin production capacity.
The FTC described Occidental and Tenneco as "substantial producers" of PVC resins.