United States: Tronox Runs Into Procedural Quagmire With Challenges To Cristal Acquisition

Last Updated: April 20 2018
Article by Peter J. Love

In Short

The FTC Challenge: The FTC pursued an administrative challenge against Tronox's proposed acquisition of Cristal without also seeking a preliminary injunction. Following an HSR investigation, the FTC normally seeks a preliminary injunction in federal district court, and the future of the merger hinges on the outcome of the federal court action.

The Tactics: The FTC was able to depart from its standard procedure because the Tronox–Cristal deal cannot close until a European Commission deadline has passed. This allows the FTC the option of further delaying the transaction by filing for a preliminary injunction after the EC deadline.

In an unusual move, the Federal Trade Commission ("FTC") pursued only an administrative challenge against the merger of Tronox Corporation ("Tronox") in its acquisition of Cristal, a Saudi Arabia-based company that manufactures titanium dioxide ("TiO2"), without simultaneously seeking a federal preliminary injunction. In its equally unusual response, Tronox first sued the FTC in Mississippi federal district court, before extending its merger deadline by almost a year and withdrawing the complaint. Tronox's actions reflect the procedural perils that parties can face during merger reviews in multiple jurisdictions.

In February 2017, Tronox announced its acquisition of Cristal to create the world's largest producer of TiO2. Following an extended investigation under the Hart-Scott-Rodino ("HSR") Act, the FTC filed an administrative complaint in December 2017, alleging the $2.4 billion deal would harm competition for the supply of chloride-based TiO2. Because the transaction also faced an ongoing (and suspensory) parallel review at the European Commission ("EC"), the FTC did not follow its normal process of seeking a federal preliminary injunction simultaneously with the filing of its administrative complaint. In an effort to preserve the original timing for the transaction, Tronox initially tried to force the FTC into federal court through a declaratory judgment action. When that did not provide relief, Tronox ultimately had to extend the deadline of its merger agreement with Cristal by nearly a full year to 2019.


Curtailing 13(b) Deference. Putting aside the substantive arguments, this case is noteworthy—not because the FTC opposed the merger, but because the FTC departed from its usual practice in merger proceedings. The FTC typically deploys two simultaneous complaints at the conclusion of the HSR investigation: one for a trial-type proceeding before one of the FTC's own administrative law judges, and one filed in federal district court seeking a preliminary injunction under Section 13(b) of the FTC Act to prevent the transaction from closing pending the administrative trial.

As a practical matter, the federal court action usually is determinative. If the FTC wins a preliminary injunction from the district court, parties typically abandon their transaction, because they cannot keep the merger in suspense pending the outcome of an administrative trial, which can last more than a year. If the FTC loses the preliminary injunction, the parties are free to close (as far as U.S. law is concerned). The FTC then typically will dismiss the administrative proceeding, recognizing that an ultimate victory may be both unlikely and pyrrhic if it comes more than a year after the parties have merged. The administrative complaint acts as a placeholder.

But not so here. The FTC is treating the administrative process as a trial on the merits, with no prospect for a rapid resolution. Why? The EC's decision deadline is not until June 2018. And Tronox cannot close the transaction while the EU investigation is pending. In short, the FTC has not yet filed a federal court action seeking a preliminary injunction and might delay doing so before the EU deadline passes, meaning the parties would then face even further delay. This tactic is a complete reversal from other merger cases, where all involved agree to stay the administrative process while they focus on the real action over the preliminary injunction in federal court.

The FTC's new procedural course came as a surprise to Tronox. After the FTC filed an administrative complaint, Tronox took the unusual step of filing a request for injunctive relief and declaratory relief in the U.S. District Court for the Northern District of Mississippi. At the site of Tronox's biggest TiO2 plant, Tronox asked the court to compel agency action and force the FTC to launch a preliminary injunction, enter into a declaratory judgment, or, in the alternative, issue a judicial declaration to conclude that the FTC could not prevail under the FTC Act, and thus has no right to enjoin the transaction.

Tronox's judicial Hail Mary stemmed from a tight merger deadline. The original merger agreement end date was May 21, 2018. Tronox complained that the FTC's usual practice of seeking a simultaneous preliminary injunction would have given Tronox "ample time to litigate the merits of this case before a federal judge." Instead, by delaying its federal court filing, the FTC could have waited until Tronox finished the EU process and only then filed in federal court to stop the closing; this would have meant the transaction could not possibly close before the original end date.

The declaratory judgment effort was short-lived—Tronox recently extended the deadline into March 2019 and then withdrew its declaratory judgment action. Now, the extension gives the parties more than a year to resolve the case. Future litigants should heed Tronox's withdrawal; courts mostly take a dim view of parties using a declaratory judgment action as a tactical device, and the court here made no ruling.

Procedural Quagmire. Timing still is crucial. Tronox believes that the FTC is still attempting to block or delay the transaction without having to prove its case on the merits in court. Tronox may now be on track to get a resolution in the European Union by the end of June 2018, and the FTC administrative process does not prevent the parties from closing, but the FTC posture means that Tronox may risk closing the deal while the administrative process is still pending. More likely, the FTC will seek an injunction only when the EU process is concluded. Whether this results in an effective trial on the merits in federal court or an actual trial on the merits through the FTC's administrative litigation process, Tronox is likely to face several more months of delay before it can get any resolution. Thus, Tronox believes the FTC is attempting to "run out the clock" on the merger without ever having to carry its burden of proof in court.


A New Consideration in Multijurisdictional Reviews. Many transactions need to navigate the complexity of multijurisdictional reviews. Tronox expected the FTC would pursue a federal court action at the conclusion of the HSR review and concurrently with the EU review. Instead, Tronox faces the prospect of sequential review of its transaction by the European Union followed by litigation in the United States. Tronox did not have enough time to resolve both with the time it originally negotiated and found itself forced to extend the end date by nearly another year. Parties with transactions subject to multijurisdictional review will need to develop timing and strategies around the possibility that the FTC (or the DOJ) will not commence a preliminary injunction action until other suspensory reviews are finished.

SMARTER Act Implications. Whether Tronox prevails in federal district court or administrative proceedings, its case may bring renewed attention to the differences in process between the FTC and DOJ. Currently, the FTC can commence administrative litigation to keep the threat of enforcement action in a way that the DOJ cannot. After the HSR investigation, the DOJ can challenge transactions in federal court under the Clayton Act (15 U.S.C. § 25) only on the grounds that the transaction is likely to "substantially lessen competition." Without an administrative trial pending, the DOJ's review may be substantially shorter than the FTC's review.

These differences in timing, and potential outcome, between the antitrust agencies already have been a source of concern for Congress. In April 2017, the House Judiciary Committee voted in favor of the Standard Merger and Acquisition Reviews Through Equal Rules ("SMARTER") Act for the third straight legislative session. The SMARTER Act would require the FTC to litigate mergers in federal court, instead of relying on its usual administrative proceedings, and harmonize the standards between the DOJ and FTC to obtain a preliminary injunction. Now the U.S. Senate has taken a renewed interest in merging the standards. During confirmation hearings in February 2018, Senator Mike Lee (R-Utah) asked FTC commissioner nominees whether the DOJ and FTC should have different preliminary injunction standards. Joe Simons, up for FTC chairman, agreed an agency should get only "one bite at the apple. And if the agency loses [in federal court], they shouldn't be going to administrative trial."

With the support of a GOP-led Congress, and at least one commissioner's apparent willingness to harmonize the standard, the SMARTER Act may very well pass. The FTC will then lose the benefit of using administrative trials to challenge a transaction and be forced to adhere to the DOJ's higher evidentiary standard in federal court. Tronox's case highlights these differences between the FTC and the DOJ, and may renew interest and attention on harmonizing those differences.

The FTC administrative complaint in Tronox can be found on its website.

Read Tronox's federal district court complaint.

Three Key Takeaways

  1. Parties with transactions subject to multijurisdictional review will need to develop timing and strategies around the possibility that the FTC (or the DOJ) will not commence a preliminary injunction action until other suspensory reviews are finished.
  2. While DOJ's only option for blocking a merger is to challenge the transaction in federal court, the FTC also has the option of commencing administrative litigation. This can lead to a substantially short period of review for the DOJ than the FTC.
  3. If the proposed SMARTER Act passes, the FTC will also be limited to litigating mergers in federal court. The standards for obtaining a preliminary injunction may also be harmonized between the DOJ and FTC.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions