The DOJ has announced that it reached an agreement with Chicago-based Amsted Industries, Inc. (Amsted) that will require the company to divest assets relating to its manufacture of end-of-car cushioning devices (EOCCs). EOCCs are hydraulic shock absorbers installed in railroad cars to protect sensitive cargo from disturbances during railcar coupling and transit. The DOJ opened an investigation of Amsted’s EOCC operations after receiving complaints about rising prices of EOCCs following Amsted’s December 2005 acquisition of rival FM Industries (FMI). According to the DOJ, prior to the transaction, Amsted and FMI were the only manufacturers of EOCCs, and were two of only three companies selling refurbished EOCCs. Despite the harm to competition posed by the Amsted-FMI transaction, the DOJ did not immediately intervene because the transaction was not reported to the FTC and DOJ under Section 7A of the Clayton Act. At the time it was consummated, the transaction did not meet the minimum value threshold for premerger notification.
On April 18, 2007, the DOJ filed a civil complaint in the US District Court for the District of Columbia alleging that Amsted’s acquisition of FMI harmed competition. At the same time, the DOJ filed a proposed consent decree. If approved by the district court, the consent decree will require Amsted to divest all tangible and intangible assets that it acquired from FMI that are used in producing new and refurbished EOCCs. This measure, according to the DOJ, would create an opportunity for new entry into the EOCC market. The proposed consent decree also would prohibit Amsted from acquiring any assets or interests relating to the development, production or sale of EOCCs without first notifying the DOJ, for a period of 10 years. The DOJ will accept public comments on the proposed consent decree for a period of 60 days, as provided under the Tunney Act. Upon expiration of the comment period, the district court will enter a final judgment approving the consent decree if it finds that it serves the public interest.