Dean N. Razavi
The U.S. Court of Appeals for the Eleventh Circuit last week affirmed the Federal Trade Commission’s (FTC) decision that Polypore International Inc.’s 2008 acquisition of Microporous Products, both manufacturers of battery separators that are used to prevent short circuits and regulate the flow of electrical currents, was likely to substantially lessen competition. In doing so, the court expanded an antitrust presumption against horizontal mergers to two likely, but not actual, competitors. On appeal, Polypore argued that Microporous should not have been treated as an actual competitor in the battery separator market but as a potential competitor, since Microporous, a much smaller company, had not yet entered the market for particular separators at the time of the acquisition. The court determined that the FTC properly applied an anti-competitive presumption reserved for actual competitors, because the acquisition further protected Polypore’s high market concentration and eliminated any decrease in market share that could result from Microporous’s potential entry into that particular portion of the market. The court also rejected Polypore’s argument that the FTC ordered divestiture remedy was too extensive, determining that the FTC did not abuse its broad discretion when it required divestiture of a plant in Austria even though the market at issue was North America. The appellate court agreed with the FTC that since Microporous had used its foreign plant to supply the North American market and protect against shortfalls in supplies generally, divesting that plant, regardless of its geographic location, would restore competition in North America that had been eliminated by the acquisition.
Polypore International, Inc. v. Federal Trade Commission, No. 11-10375 (11th Cir. July 11, 2012).