Antitrust

S H E A R M A N & S T E R L I N G L L P | 4 3 In 2015, the FTC sought a preliminary injunction to prevent the acquisition of Synergy Health plc by Steris Corporation. The FTC's Complaint alleged that the merger would result in the "elimination of the likely future competition" in the U.S. market for gamma sterilization facilities — one of three methods of sterilizing health products in medical facilities. The two merging parties were the second- and third-largest sterilization companies in the world; however, Synergy Health had not yet entered the U.S. market for sterilization. This forced the FTC to lay out significant evidence showing Synergy Health's consideration and plans to build facilities and expand into the U.S. in the near future. A U.S. District Court in the Northern District of Ohio, however, rejected the FTC's evidence that Synergy Health "probably would have entered " the U.S. market finding that despite significant consideration of U.S. entry, Synergy Health had abandoned those plans and was unlikely to receive required U.S. approvals. While the FTC was unsuccessful in this instance, the case shows how aggressively the FTC will fight to protect a nascent or potential competitor to safeguard even the possibility of future competition. In March 2018, the FTC challenged CDK Global's proposed acquisition of Auto/ Mate, Inc., an acquisition in the Dealer Management System software market that provides integrated software for new car dealerships. CDK, one of two major players in the market, sought to acquire Auto/Mate — a nascent competitor in the market holding a market share in the mid- single digits. The FTC alleged that Auto/ Mate, despite currently being a marginal player in the industry from a market share perspective, was an upstart maverick that had already started to win contracts from the established players in the industry, and was poised to grow into a greater competitive threat to CDK through further innovation disruptive to the incumbent competitors such as CDK. The FTC was concerned that CDK's acquisition of a nascent competitor threatened that likely future competition. CDK abandoned the proposed acquisition in the face of the FTC challenge. The DOJ has also taken actions tailored to preserve future competition. In the blockbuster merger of Monsanto and Bayer AG, the DOJ secured the largest ever negotiated divestiture in the U.S., including assets totaling over US$9 billion. The divestitures focused on Bayer's directly competitive and overlapping business segments with Monsanto. However, the required divestitures — all sold to Germany's BASF — were notably broader than the assets related to the relevant products. The DOJ explained in its Competitive Impact Statement that in order to create a viable and innovative competitor capable of challenging the merged entity currently and in the future, the U.S. "is also requiring the divestiture of assets that are complementary to the competitive products or that use shared resources." In addition, to ensure "the future competitive significance of the divested businesses" the DOJ required T H E C A S E S H O W S H O W A G G R E S S I V E LY T H E F T C W I L L F I G H T T O P R O T E C T A N A S C E N T O R P O T E N T I A L C O M P E T I T O R T O S A F E G U A R D E V E N T H E P O S S I B I L I T Y O F F U T U R E C O M P E T I T I O N CONTINUED >

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