Justice Department Requires Divestiture Following Historic Arbitration Win

The Department of Justice announced today that it has filed a proposed final judgment with the U.S. District Court for the Northern District of Ohio requiring Novelis Inc. to divest Aleris Corporation’s entire aluminum automotive body sheet operations in North America to satisfy the Department’s competitive concerns with Novelis’s acquisition of Aleris.

The proposed final judgment follows the United States’ March 9, 2020 arbitration win.  Prior to filing its civil antitrust lawsuit to block the merger, the Department’s Antitrust Division reached an agreement with Novelis and Aleris to refer the matter to binding arbitration if Novelis and Aleris were unable to resolve the United States’ competitive concerns with the transaction.  Under the arbitration terms, Novelis agreed to divest Aleris’s aluminum automotive body sheet operations in North America if the United States prevailed in arbitration.  The arbitrator ruled for the United States, holding that aluminum automotive body sheet constitutes a relevant antitrust product market.  Today, the Department filed a proposed final judgment that, if approved by the court, would fully resolve the competitive harm alleged in the lawsuit.

“Today’s proposed divestiture preserves competition in the market for aluminum automotive body sheet and protects automakers and American consumers by requiring the full divestiture of Aleris’s North American aluminum automotive body sheet operations,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.

Novelis is a Canadian corporation headquartered in Atlanta, Georgia.  It offers flat-rolled aluminum products in three segments: automotive, beverage can, and specialty products.  In the fiscal year ending March 31, 2019, Novelis’s revenues were approximately $12.3 billion.  Novelis is a wholly-owned subsidiary of Hindalco Industries Ltd., an Indian company headquartered in Mumbai, India.

Prior to its acquisition by Novelis, Aleris was a Delaware corporation headquartered in Cleveland, Ohio.  Aleris offers flat-rolled aluminum products to the automotive, aerospace, and building and construction industries, among others.  In 2018, Aleris’s revenues were approximately $3.4 billion.

As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Katrina Rouse, Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the U.S. District Court for the Northern District of Ohio may enter the final judgment upon finding it is in the public interest.

Related Materials:

The Administrative Dispute Resolution Act of 1996, 5 U.S.C. § 571 et seq.

Antitrust Division guidance on the appropriate use of binding arbitration, Fed. Reg. Vol. 61, No. 136 at 36896 et seq.

Assistant Attorney General Makan Delrahim Delivers Remarks at the 7th Bill Kovacic Antitrust Salon, September 9, 2019