Last month Sasol North America, a chemical manufacturer, asked the FTC to reopen and dismiss a consent order Sasol’s predecessor agreed to in 1991. That agreement required Sasol, then Vista Chemical, to actually create a new competitor. Vista was being acquired by a German manufacturer, and the FTC believed the combination would reduce competition in the market for “high performance alumina,” an industrial compound. The FTC forced Vista’s acquirer to license intellectual property and other “corporate know-how” to a firm called Discovery Aluminas. The FTC told Discovery to open a new alumina production plant in Louisiana, thereby restoring the competition lost by Vista’s acquisition.
Well, things didn’t turn out the way the FTC planned. Discovery did build a plant in Louisiana, but they never entered the market. The EPA and the Justice Department shut down the plant for violating environmental regulations. The plant has since been resold, but the resale effectively ended Sasol’s obligations under the 1991 FTC agreement.
But all was not lost. While Discovery was screwing up, three new firms, all Sasol customers, entered the alumina market on their own initiative. The high performance alumina market is now more competitive then ever, no thanks to the FTC’s Discovery plan. This may come as a shock to those people who believe antitrust is the bedrock of our economy, but as this case demonstrates, a market run by businessmen always outperforms a market run by antitrust lawyers. Hopefully the FTC is contrite enough in this case to grant Sasol’s petition and put an end to a totally useless case.