U.S. to fight sale of semiconductor supply company

December 29, 1990|By Los Angeles Times

WASHINGTON -- The Department of Justice said yesterday that it will sue to block the purchase of a major U.S. semiconductor supply company by a Japanese corporation, despite President Bush's previous decision to allow the acquisition on grounds that it did not threaten national security.

Assistant Attorney General James F. Rill said the planned takeover of Semi-Gas Systems of San Jose, Calif., by Nippon Sanso K. K. of Tokyo would eliminate "substantial direct competition" between the two companies and "would harm consumers nationwide."

The acquisition would combine the world's two leading producers of gas-delivery systems and substantially increase Semi-Gas systems' dominant position in the U.S. market, according to the Department of Justice's antitrust division. Gas-delivery systems play a critical role in the computer-chip manufacturing process.

Last July, Mr. Bush decided not to block Nippon Sanso's purchase of Semi-Gas from Hercules, Inc., a Wilmington, Del., chemical concern, after the interagency Committee on Foreign Investment in the United States found no national security problems with the combination.

Mr. Bush gave his approval despite objections from several Democratic lawmakers and from Sematech, the government-supported microchip technology consortium. Sematech contended the acquisition would hand over an important high-technology venture to a Japanese competitor.

Mr. Rill said his decision to file a civil antitrust suit was based on a "thorough, independent analysis of this acquisition under the [Department of Justice's] merger guidelines."

Proponents of the acquisition characterized the challenge as "political" and not based on economic fundamentals.

Asked if the suit signaled a possible wave of challenges to Japanese acquisitions of U.S. companies, Mr. Rill said additional legal actions are certainly possible. But he emphasized that antitrust enforcers would be examining acquisitions on a case-by-case basis to assess their effect on consumers.

Mr. Rill said the Semi-Gas acquisition would violate Section 7 of the Clayton Act "because it may substantially lessen competition in the production and sale of gas cabinets in the United States." He noted that Nippon Sanso recently obtained 100 percent control of Matheson Gas Products, another company in the field.

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