Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Supreme Court denies petition questioning standard for reviewing mergers of potential competitors, (Jun 24, 2013)

By Jeffrey May, J.D.

The U.S. Supreme Court will not review a decision of the U.S. Court of Appeals in Atlanta, upholding an FTC determination that the merger of two producers of battery separators for flooded lead-acid batteries was illegal in three North American markets. Thus, a Commission order requiring Polypore International Inc.’s divestiture of Microporous Products L.P. stands. The Supreme Court today denied Polypore's petition for certiorari (Polypore International, Inc. v. FTC, Dkt. 12-1016).

At issue was a decision of the Eleventh Circuit (686 F.3d 1208, 2012-1 Trade Cases ¶77,970). In its petition, Polypore argued that, with respect to the largest and most important market at issue, the Eleventh Circuit incorrectly treated the merging companies as current competitors at the time of the transaction, even though the acquired company had zero share of the relevant market before the acquisition, had no firm orders or contracts to supply the relevant product to any customers, and had neither determined nor formulated an approved business plan to enter the relevant market. After determining that the merging parties were competitors, the appellate court (like the FTC) relied on the burden-shifting presumption of liability established in U.S. v. Philadelphia National Bank (374 U.S. 321, 1963 Trade Cases ¶70,812).

Battery separators are membranes placed between the positively and negatively-charged plates in batteries to prevent electrical short circuits. In 2008, the FTC issued an administrative complaint, challenging the acquisition by Daramic, LLC, a division of Polypore, of the parent company of Microporous Products L.P. The Commission ultimately ruled that the consummated merger was likely to harm competition in three North American markets in violation of Sec. 7 of the Clayton Act and ordered divestiture.

Polypore had urged the Court to take up the case in light of “substantial confusion in the courts of appeals concerning how to distinguish mergers of current competitors,” which are subject to rules of presumptive illegality, from mergers of potential competitors, which “are subject to far more exacting legal standards.”

Attorneys: Steven G. Bradbury (Dechert LLP) for Polypore International, Inc. Donald B. Verrilli Jr., Department of Justice, for FTC.

Companies: Daramic, LLC; Microporous Products L.P.; Polypore International, Inc.

News: Antitrust FederalTradeCommissionNews