FTC Complaint Filed Over Irvine Tile Joint Venture

LaFarge SA and Boral Ltd., two large manufacturers of building materials, used a technical loophole to form a joint venture in Irvine that could lessen competition, reduce quality and lead to higher market prices for concrete roofing tiles, U.S. antitrust enforcers said Tuesday.

In a complaint filed against both companies, the Federal Trade Commission said Boral and Redland Plc, a company LaFarge bought earlier this year, were the two largest producers of this roofing material in the U.S. when they formed Monier Lifetile LLC.

By registering the company as a limited liability corporation, the companies weren’t required to obtain U.S. antitrust approval for the combination.

“They took advantage of an [antitrust] loophole and formed a joint venture that wasn’t reportable, which is why we’re in a situation of suing after the fact,” said William Baer, director of the FTC’s Bureau of Competition.

He added that the FTC and the Justice Department, which both enforce federal antitrust laws, are considering changing current rules to avoid a reoccurrence.

Sydney, Australia-based Boral won’t say if it will oppose the FTC’s allegations, said spokesman Mark Gell.

“We have been aware of the FTC concerns for some time, and we have been holding discussions with them over the past couple of months,” Gell said. “We don’t want to predict the outcome.”

Concrete roofing tiles are used predominantly in new homes built in Southern California, Nevada, Arizona and Florida.

The complaint will be heard by an FTC administrative law judge, who could force Monier to divest the assets of Boral or Redland or dissolve the joint venture, among other things.

Boral is the second largest maker of this building material. Its U.S. sales totaled about $3.6 billion in 1996.

Redland Plc, through its U.S. subsidiary, Monier Inc., was the biggest U.S. maker of the tile until Paris-based LaFarge acquired it.

According to the complaint, Boral and Redland formed Monier Lifetile in August 1997, contributing their respective manufacturing assets to the Irvine-based joint venture.

Monier not only neutralizes competition between these two companies but also does so in a market where there are few alternatives, the FTC alleges.