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I just ask ChatGTP, take this with a grain of salt but it appears quite accurate and logical:
Question :
What is the threshold of proof the FTC has to overcome to obtain a PI on a merger?
Response:
The threshold of proof that the Federal Trade Commission (FTC) has to overcome to obtain a preliminary injunction (PI) on a merger is to demonstrate a likelihood of success on the merits of its case. In other words, the FTC needs to present sufficient evidence to convince the court that it is likely to succeed in proving that the merger violates antitrust laws and would harm competition.
To obtain a preliminary injunction, the FTC typically needs to establish the following:
Likelihood of success: The FTC must show a reasonable likelihood that it will succeed in proving that the merger violates antitrust laws, such as Section 7 of the Clayton Act, which prohibits mergers that may substantially lessen competition.
Irreparable harm: The FTC must demonstrate that if the merger is allowed to proceed, it would cause irreparable harm to competition or consumers. This harm should be significant and not easily compensable through monetary damages.
Balance of equities: The FTC needs to convince the court that the balance of equities tips in favor of granting the preliminary injunction. This means that the potential harm to competition or consumers outweighs any potential harm to the merging parties or other parties involved.
Public interest: The FTC must show that granting the preliminary injunction is in the public interest, considering factors such as preserving competition, protecting consumers, and promoting a fair marketplace.
Question:
In case the merger would result in the acquiring party being run as a separate entity within the buyer organization, meaning that a divesture would be easy to request and execute. Does it raise the threshold the FTC has to overcome to obtain the PI?
Response:
If the acquiring party in a merger is planned to be run as a separate entity within the buyer organization, and a potential divestiture would be feasible, it could impact the threshold that the Federal Trade Commission (FTC) needs to overcome to obtain a preliminary injunction (PI). In such cases, the FTC may need to present additional evidence and arguments to demonstrate that the proposed separate entity arrangement does not adequately address the antitrust concerns raised by the merger.
While the specifics would depend on the particular circumstances and facts of the case, the FTC would likely argue that the proposed separate entity arrangement is not sufficient to mitigate the potential anti-competitive effects of the merger. The FTC may contend that even with a separate entity, there could still be risks to competition, market concentration, or consumer welfare that warrant intervention and the granting of a preliminary injunction.
Ultimately, the threshold the FTC needs to overcome remains the same—demonstrating a likelihood of success on the merits, irreparable harm, balance of equities, and the public interest. However, in cases where a divestiture may seem easier due to the separate entity arrangement, the FTC may need to provide more compelling evidence and arguments to convince the court that the proposed arrangement does not adequately address the competitive concerns at hand.
