Freshfields leads Evonik in litigated merger win against the FTC
Freshfields Bruckhaus Deringer LLP (‘Freshfields’) represented Evonik Industries AG (‘Evonik’) in its successful merger litigation against the Federal Trade Commission (‘FTC’). On January 24, 2020, following a two-week trial in November 2019, Judge Timothy J. Kelly of the U.S. District Court for the District of Columbia rejected the FTC’s preliminary injunction motion that would have blocked Evonik’s acquisition of Philadelphia-based chemical manufacturer PeroxyChem LLC (‘PeroxyChem’). This victory marks a rare loss for the FTC and breaks the agency’s seven-case winning streak in litigated merger challenges.
Evonik completed its acquisition of PeroxyChem on February 3, 2020. The merger combines two of five hydrogen peroxide suppliers in North America. Hydrogen peroxide is a versatile chemical that is tailored for use as a bleaching agent, disinfectant, oxidizer, and propulsion agent in a wide-range of applications. The deal attracted in-depth review in both the United States and Canada. On August 2, 2019, the FTC filed a complaint in federal district court alleging that the merger would substantially lessen hydrogen peroxide competition in two markets: the Pacific Northwest and the Southern and Central United States.
The case highlights the importance of merger litigation. The U.S. antitrust agencies cannot block a transaction without first persuading a judge that the transaction would likely harm competition substantially. The FTC last lost a litigated merger challenge in 2015. This case shows companies that they do not always have to bend to the will of the antitrust agencies, and that they can defend their transactions before an independent tribunal where they can achieve favorable results.
Freshfields advised Evonik from pre-signing negotiations, through the FTC review process, and ultimately to the successful litigation outcome. Freshfields also coordinated the merger control filings and clearance strategies in numerous jurisdictions around the world. In Canada, Freshfields helped facilitate a successful divestiture remedy to obtain clearance from the Canadian Competition Bureau.
The Freshfields trial team was led by partner Eric Mahr, who previously served as Director of Litigation for the Department of Justice’s Antitrust Division. The trial team also included partner Andy Ewalt, counsel Jan Rybnicek and Justin Stewart-Teitelbaum, and senior associates Laura Onken and Laura Collins. The global merger control filing process was coordinated by Thomas Wessely in Brussels and Paul Yde in Washington.
Commenting on the case, Eric Mahr said,
“We are extremely pleased with Judge Kelly’s ruling and the thorough opinion he wrote supporting his decision. Judge Kelly’s opinion shows that facts still matter in antitrust law. We and our client are deeply appreciative of the time and effort Judge Kelly put into understanding the hydrogen peroxide industry and its competitive dynamics. That understanding very much comes through in his opinion.
“Whether trying these cases for the government or for the defense, I have found that the key elements for success remain the same: hard work and preparation; mastery of the facts; and, most of all, credibility. When you are able to combine those elements with a great team, a supportive client, a top-notch expert, and a thoughtful and attentive court, you have a real chance to prevail at trial.”
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