Antitrust Lawyer Blog Commentary on Current Developments

Justice Department Seeks Appointment of Trustee to Sell Mittal Steel’s Sparrows Point Steel Mill

On August 6, 2006 the DOJ’s Antitrust Division requested a federal judge in Washington, D.C. to appoint a trustee to sell Mittal Steel Company N.V.’s Sparrow Point facility that’s located near Baltimore to resolve antitrust concerns related to Mittal’s proposed acquisition of Arcelor S.A.

The acquisition as originally proposed would substantially lessen competition in the market for tin mill products in the eastern United States. Tin mill products are finely rolled steel sheets normally coated with tin or chrome, and are used primarily in the manufacture of sanitary food cans and general line cans used for aerosols, paints and other products. The Department then filed a proposed consent decree, which resolved the competitive concerns. The court entered the consent decree on May 23, 2007, and required Mittal to divest a steel mill that supplied tin mill products to the eastern United States.
In February 2007, Mittal was notified that it was required to divest the Sparrows Point mill near Baltimore. Mittal was provided with 90 days to complete the divestiture, with possible extensions of time not to exceed 60 days. That period, including three separate extensions totaling 60 days, expired on July 20, 2007. Mittal then obtained a further extension from the court until Aug. 6, 2007. On Aug.1, 2007, Mittal signed a contract to sell Sparrows Point to a joint venture led by Esmark Corporation, but informed the Department that the sale could not be completed for at least two months. The sale remains subject to several conditions, including approval from the DOJ of the contract and proposed purchaser.

As a result of Mittal’s failure to complete the sale prior to the August 6, 2007 deadline imposed by the consent decree, the DOJ requested a federal judge in Washington, D.C. to appoint a trustee to sell Mittal Steel Company N.V.’s Sparrow Point facility that’s located near Baltimore. The DOJ requested the court to instruct the trustee that it may carry out its responsibility to sell the facility by pursuing the DOJ’s approval of the agreement that Mittal entered on August 1, 2007 to sell the facility to Bethlehem Acquisition Co., a joint venture led by Esmark Inc., and completing the sale under that agreement if it is approved.

The delays related to this sale demonstrate why the Federal Trade Commission requires up front buyers in many situations where divestitures are required to resolve antitrust concerns related to a proposed transaction. While the prompt divestiture of Sparrows Point is important to preserve competition in the market for tin mill products in the eastern United States, Mittal failed to complete a sale within the time prescribed by the consent decree without any significant penalty. Because the DOJ does not have any leverage in this situation, the DOJ must ask the court to appoint a trustee to ensure that the sale of the facility is completed.


Andre Barlow

(202) 589-1834
abarlow@dbmlawgroup.com