On March 8, 2010, the Federal Trade Commission (FTC) released a decision by its Chief Administrative Law Judge (ALJ) D. Michael Chappell, ordering Polypore International Inc. to divest the entire business of Microporous L.P.
Polypore had acquired Microporous, a manufacturer of battery separators and a former competitor of Polypore, for approximately $76 million in February 2008. The ALJ held that the acquisition substantially lessened competition in certain battery separator markets in North America, violating both Section 5 of the FTC Act and Section 7 of the Clayton Act.1 The ALJ based his decision on, among other things, evidence of high market shares and concentration levels in each of the relevant markets, as well as evidence that Polypore acquired Microporous to eliminate Polypore’s strongest competitor. The decision, which is subject to appeal to the full Commission, demonstrates the continued trend of the federal antitrust agencies to investigate and challenge consummated mergers (even relatively small deals like Polypore’s).
Post-consummation challenges have increased significantly under the Obama administration. Since 2008, the FTC and the Antitrust Division of the Department of Justice challenged at least 10 consummated transactions, including three in fiscal year 2010. Compare that to the approximately 12 consummated transactions that were challenged during the previous seven-year period under the Bush administration. Indeed, it is expected that the current administration will continue to increase its vigilance in this area as part of its aggressive antitrust enforcement policies.