High tech membrane maker Polypore International Inc. is appealing a Federal Trade Commission decision that would force the company to divest its 2008 acquisition of a rival battery separator manufacturer.
The FTC filed an administrative complaint in September 2008 alleging that Polypore’s acquisition of Microporous Products led to decreased competition and higher prices in several North American markets for battery separators, a key component in flooded lead-acid batteries. The FTC also alleged that Polypore’s 2001 noncompete agreement with another rival, Hollingsworth and Vose Co., violated antitrust laws.
The case is one in a recent series of FTC matters targeting consummated deals. Since the start of FY 2009, the FTC has challenged at least eight such mergers, compared to an average of one a year during the previous five years.
It’s not clear whether the $76 million Polypore deal was subject to pre-merger review under the Hart-Scott-Rodino Act. Transactions valued at $63.4 million or more undergo antitrust review prior to closing – a process designed to resolve antitrust concerns before rather than after companies merge - though some matters, like real estate deals, are not subject to pre-approval.
An FTC spokesman declined comment regarding whether the agency reviewed the deal in advance, saying the process is non-public. Polypore did not return a call seeking comment, nor did William Rikard Jr., a partner at Parker Poe Adams & Bernstein in Charlotte, N.C., who represented the company in the administrative case.
In March, Administrative Law Judge Michael Chappell sided with the FTC and found that the acquisition was anticompetitive and violated federal law in four battery separator markets.
Polypore appealed the decision to the five FTC commissioners, who upheld the ruling ordering Polypore to divest Microporous Products assets, including manufacturing facilities located in Piney Flats, Tenn., and Feistritz, Austria.
Polypore in a bare-bones press release on Monday announced it would appeal the decision to a federal circuit court.
In a brief filed with the FTC in May, however, the company laid out key arguments.
“The global battery separator market - over two years after the acquisition – remains intensely competitive, and this acquisition has not impaired and does not threaten to adversely affect that competition,” Rikard wrote. “Complaint counsel complain about monopoly and duopoly markets but must strain to do so by improperly defining the markets, and relying on speculative evidence, to produce such structural outcomes…. [T]heir case was devoid of sound, economic analysis and evidence. Instead, Complaint counsel rely on a patchwork of biased customer testimony, snippets from documents, conjecture and speculation.”