The Federal Trade Commission has approved the divestiture of a five-year old acquisition, signifying that neither complete consummation of a transaction nor the passage of time will dissuade the FTC from challenging mergers and acquisitions it perceives as anticompetitive. This development illustrates the importance of conducting an antitrust analysis of planned mergers and acquisitions, even if premerger notification to the FTC and U.S. Department of Justice (DOJ) is not required under the Hart-Scott-Rodino Act of 1976 (HSR Act).

In February 2008, Polypore International, Inc. acquired rival battery separator manufacturer Microporous Products, L.P. The parties did not report the acquisition to the FTC or the DOJ because it did not satisfy the thresholds of the HSR Act; the FTC learned of the acquisition after it closed. Seven months later, the FTC filed an administrative complaint, charging that the transaction led to decreased competition and higher prices in several North American markets for battery separators. Upon filing the complaint, the FTC announced, “The lawsuit. . . should send a clear message that consummation of a merger will not in any way slow or deter us from challenging transactions that raise serious antitrust issues.”

On February 22, 2010, an administrative law judge (ALJ) found that the consummated deal was anticompetitive and violated federal law. Polypore was ordered to divest all Microporous assets—including assets outside of the relevant geographic market—to an FTC-approved buyer. The FTC commissioners unanimously upheld the ALJ’s decision on November 5, 2010, and on July 11, 2012, the U.S. Court of Appeals for the Eleventh Circuit affirmed the FTC’s final decision and order. In June 2013, the U.S. Supreme Court declined to grant Polypore’s petition for a writ of certiorari.

The FTC approved Polypore’s application to divest Microporous to Seven Mile Capital Partners, an FTC-approved buyer, on December 17, 2013. In a related blog post, the FTC cautioned companies entering into non-reportable transactions: “Although premerger review has contributed to effective and efficient merger enforcement for more than 30 years, there will be times—typically for transactions that do not require premerger notice under the HSR Act—when the commission must act after-the-fact to restore competition and protect consumers in markets with proven anti-competitive effects from a consummated merger.” As one FTC commissioner put it in a speech last year, “The past is never dead.”

Polypore’s story demonstrates in particular that when transactions involve combinations of companies in the same industry, the parties should seek the advice of counsel to assess antitrust concerns and ways to avoid regulatory enforcement actions.