FTC draws line in sand for CB&I.

Byline: Donna Block in Washington

In a case with important ramifications for merger enforcement, the Federal Trade Commission on Thursday, Jan. 6, upheld its ruling that Chicago Bridge & Iron Co. NV's 2001 acquisition of a unit owned by Pitt-Des Moines Inc. violated antitrust law.

The FTC affirmed a 2003 ruling by an administrative law judge on the agency's challenge to the deal, under which CB&I bought the engineered construction division for $84 million.

To restore competition as it existed before the merger, the commission ordered CB&I to take what antitrust experts said is a highly unusual step. The Woodlands, Texas-based company must create two separate, standalone companies from its industrial segment and to divest one of those entities within six months.

"This is a very important aspect of the decision because there is relatively little precedent as to what to do to remedy a consummated merger," said David Balto, a partner at law firm Robins, Kaplan, Miller & Ciresi LLP in Washington.

CB&I spokesman Bruce Steimle declined to comment on the FTC's decision. But in a statement the company said it believes the order and opinion are inconsistent with the law and that it intends to appeal the ruling to the U.S. Circuit Court of Appeals. CB&I said it does not expect a decision until next year. The company is not required to divest any assets until all appeals are exhausted, which could include taking the case to the U.S. Supreme Court. That would represent the first merger-related case the justices have heard in more than two decades.

Antitrust experts said CB&I has nothing to lose by appealing the decision because the company has already integrated the disputed ...