Titanium Dioxide

The duPont Titanium. D;oX~ e Case °d .L. In April of 1978, E. I. duPont de Nemours and Company was charged with violation of section 2 of the Sherman Act and l section 5 of the FTC act. The complaint charged duPont with attempting to monopolize the production of titanium dioxide pigment. The pigment is used in paper and paint to increase There’ are no close substitutes for the degree of whiteness. the product, although fillers can be used in some applications to decrease the amount used. In August of 1979, Administrative Law Judge Brown found duPont did not violate the antitrust statutes and that they had achieved th. eir market position as “‘the result of business fore sight, intelligent planning • ,. , [and] the taking of economic risk. ,,3 The Federal Trade Commission upheld the ALJ’s decision on November 20, 1980. The commission relied primarily on the rationale stated in the Alcoa case that a monopolist may have had monopoly “‘thrust upon it:'” “persons may unwittingly find themselves in possession of a monopoly, automatically so to say. , .. hey may become monopolists by force of accident, A single producer may be the survivor out of a group of active competitors, merely by virtue of his superior skill, foresight and industry. In such cases a strong argument can be made that, although the result may expose lIn re E. I, duPont de Nemours and Company, Dkt. No. 9l08, F. T. C:, 4/10/78. 2Ibid . , ALJ Decision. 3 Ibid . the public to the evils of monopoly, the Act does not mean to condemn the resultant of those very farces which it is its prime object to foster. “4 (emphasis added) The geographic ~arke;l in this case is the nation. From 1972 to 1977 DuPont “s market share increased from 30% to 42%. , DuPont projects a 55% market share by 1985. 6 DuPont has a distinct technological advantage over its competitors, There are three processes that can be used to The least efficient is the sulfate manufacture Ti02. process: Since 1960, this process has been replaced by a DuPont, however, has developed Prior to 1970, the costs of technique that uses rutile ore. a technique using ilmenite ore. manufacturing Ti02using the last two processes. were roughly equal. In 1970, soaring rutile. ore prices gave DuPont a substantial cost advantage C16? lh. for duPont versus 2l? /lb. :, DuPont i. s the only company with the technological capability to use the ilmenite process. 7 Complaint counsel did not charge duPont with anyone specific practice. Rather, they charged that duPont’s action for its competitors}, 4 . U. S. v. Aluminum Co. of America 148 F. 2d 415 (CA2 1945). 5 In F. T. C. , duPont de Nemours and Com an , Dkt. No. 9108, . .c ommission decision. – 2 – i t its entirety violated antitrust law. In Four specific v practices were charged, each one in itself legal, that combined were meant to show an attempt to monopolize: 1.

Expansion of capacity was premature and designed to exclude competitors from expansion. 2. The expansion was designed to capture all the projected growth in demand, foreclosing any opportunities for competitors. 3. Exploitation of its cost advantage to keep prices low so competitors 4. couldn~t expand. ~ Refusal to license its technol? gy, By relying on the overall effects of duPont’s actions, Complaint Counsel was attempting to expand the circumstances in which an attempt to’monopolize charge will be successful. In Bergans Farms 8 an attempt to monopolize was found from an overall course of conduct.

However, Bergan’s employed many clearly illegal tactics including price discrimination and Other cases lacking such clear-cut evidence have not been successful. 9 8Bergans Farms Dairy Co. v. Sanitary Milk Producers, 241 F. supp. 476 (E. D. Mo. 1965) ,affFd 360 F. 2d 679 (8th Cir. 1966). 9See Hiland Dairy, Inc. V. Kroger Co” 402 F. 2d 968 (8th Cir. 1968), cert. denied, 395 U. S. 961 (1969); Buffalo Courier Express, Inc. V. Buffalo Evening News_,. ‘, Inc .. ; 601 F: 2d. 48 (2d’Cir. 1979); Structure Prape, . Inc, V. Franklin:lnst:itute, 450 F. Supp. 272, 1288 (E . D.. Pa. 1978),’aff’d memo 595 F. 2d·.. · 12l4 (g,d Cir. 1979). – 3 – price-fixing. DuPont admits that they attempted to capture all increases in future demand. However, duPont claims to have based their decision not as an attempt to monopolize but because: a) the economy was recovering from the 1972 recession; b) a tariff on imports; c) !. scale economies attributable to increased capacity; qnd d) a decrease in capacity on the part of the industry using the sulfate and rutile processes. DuPont further contends that the allega, – ,