A federal judge yesterday temporarily blocked PPG Industries Inc.'s planned $41.8 million acquisition of Swedlow Inc., a California firm that is one of PPG's chief competitors in making windows for airplanes.
But U.S. District Judge Thomas Jackson gave the two companies 15 days to work out an agreement that would allow PPG to buy Swedlow, but would keep the two firms' operations separate while the Federal Trade Commission decides if the transaction violates federal antitrust laws.
Jackson's ruling came in a lawsuit filed by the FTC to block the planned merger because it "may . . . substantially . . . lessen competition. . . . "
PPG, based in Pittsburgh, is the world's largest manufacturers of glass airplane windows, and also produces some acrylic windows. Swedlow, founded in the 1930s by its 74-year-old president, is the largest producer of acrylic airplane windows, but does not work in glass.
Although the acrylic and glass airplane windows are not strictly interchangeable, PPG -- with 30 percent of the aircraft window market -- and Swedlow, with about a 23 percent market share -- often compete for the same aircraft contracts, according to court papers.
Jackson did not rule on the merits of the antitrust arguments, but pointed out that using "traditional rules," the FTC and the appeals court "may almost surely" find that the merger hurts competition in that market and block it permanently.
But PPG and Swedlow asked that they be allowed to enter into a "hold-separate agreement" that would allow PPG to buy the rival firm from founder David Swedlow -- who is in ill health, has no heir to take over the firm, and can no longer run it himself.
Under such an agreement, the two would have to continue to operate much as if they were still independent, in case the merger ultimately is blocked permanently. Jackson said that if a suitable agreement can be reached, he would lift the injunction against the merger.