Richard Liebeskind*

Partner, Pillsbury Winthrop LLP, Washington, D.C,Competition, FTC.

Formerly Assistant Director, Bureau of

Introduction

As the antitrust agencies have increasingly in-sisted that consent decrees in merger casesprovide meaningful relief, merging partieshave increasingly threatened to "litigate thefix" -to tender to a district judge the suffi-ciency of the remedy they have proposed andthe agency has rejected (or is considering re-jecting). While the vast majority of antitrustagency concerns with mergers continue to beresolved by consent decree or other accommo-dation, there have been several instances in thepast few years in which the agency and themerging parties failed to reach agreement onan appropriate fix. In BP Amoco/ ARCO, theFTC proceeded to court, and the merging par-ties ultimately agreed to the FTC's demand 1;in General Mills/Pillsbyry the FTC deadlockedon the question whether to accept the com-mitments offered by the merging parties.2

In tWo recent cases, U.S. v. Franklin Electric~.3 and FTC v. Libbey. Inc.,4 the antitrustagency proceeded to district court, the mergingparties defended on the ground that their pro-posed fix should resolve the agency's con-cerns, and the court rejected the defendants'arguments and enjoined the merger. In bothcases the district court held the merging par-ties' proposed solution to a standard ofviabil-ity and competitiveness of the purportedlycompeting entry~, the divestiture acquirer),rather than examine the proposed solution as ifit were a merger to be evaluated under ClaytonAct § 7,5 ~, would the (revised) merger sub-stantially reduce competition? At the sametime, the district courts took it on themselvesto examine the viability of the merging parties'proposed fix, rather than defer entirely to theexpertise of the antitrust agencies. Indeed, thedistrict court's willingness to evaluate the vi-ability issues itself was at least as great aswhen a private plaintiff had made a similarclaim 20 years before.6 In the course of evalu-

* The author represented the Federal Trade Commission("FTC") in FTC v. Libbey, Inc. The views expresseddo not necessarily reflect the views of the FTC or itsCommissioners.1 "FTC Clears Merger of BP Amoco and Atlantic Rich-

field Company," April 13, 2000, available athttD:/ /www.ftc.!!ov/ooa/2000/04/bQamocol.htm.2 General Mills. Inc./Diageo Qlc/Pillsbyry Co., File No.

001-0213 (Statement of Commissioners Swindle andLeary) (Oct. 23, 2001), available at

http://www.ftc.gov/os/200 III 0/(!Instmtswin1e~ .htm.As a result, the merger proceeded without being subjectto any Commission order.

3130 F. Supp. 2d 1025 (W.D. Wis. 2000).

4211 F. Supp. 2d 34 (D.D.C. 2002) (hereinafter "kili:~").5 15 U.S.C. § 18.

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Vol. III, No.1

ating -and rejecting -the proposed fix in Lih:~, the district court rejected arguments byboth the FTC and the merging parties thatasked the court to give deference to one side orthe other, rather than evaluate the proposed fixon the merits for itself. At the end of the day,the district court took on the task of assessingwhether the defendants' changes to theirmerger agreement would remedy the anticom-petitive harms from the original merger. Con-cluding that defendants had not remedied theharm from the original merger, the districtcourt enjoined the merger -essentially apply-ing himself the standard the FTC claimed theagency would apply in its own proceedings.

ceded the product market issue for the purposeof the preliminary injunction proceeding.9Although the larger part of Anchor's glasswareproduction was household glassware, Anchorproduced a significant number of glasswareitems for the food service channel- largelycopies of Libbey glasses that could be pur-chased to replace broken Libbey glasses. 10

Background -Facts AndProcedural Posture

The FTC issued second requests, investigatedthe proposed merger, and on December 18,2001, voted unanimously to seek a preliminaryinjunction pending administrative adjudicationregarding the proposed merger .11 Prior to theFTC's vote, Libbey and Commission staffhadhad some discussions about resolving thematter without litigation, but were unable toreach agreement. After the Commission vote,Libbey and Newell told the FTC that theywould amend their merger agreement -

whether or not the FTC agreed -to providethat Newell would "retain" Anchor's food

On June 17, 2001, Libbey, Inc. and NewellRubbennaid Corp. entered into a stock pur-chase agreement whereby Libbey would ac-quire a Newell subsidiary, the Anchor Hock-ing Co., from Newell.7 Both Libbey and An-chor are U.S.-based manufacturers and sellersof soda lime glassware.8 Libbey is and formany years has been the nation's leadingmaker and seller of glassware for the foodservice industry. The FTC contended thatfood service (soda lime) glassware constituteda properly defined product market (distinctfrom household glassware, plastic, and crys-tal). While Libbey contested that propositionduring the FTC's investigation, Libbey con-

6 White Consolidated Indus.. Inc. v. WhirlQool Com.,

619 F. Supp. 1022 (N.D. Ohio 1985), !!tL.Q, 781 F. 2d1224 (6th Cir. 1986).

7211 F. Supp. 2d at 40.8 "Soda lime glassware" is distinct from lead crystal,

which cannot be made in the U.S., and borosilicateglassware, which is heat-resistant. Essentially "sodalime glass" is the same as "plain glass." ~ 211 F.Supp. 2d at 38 n.3.

9 211 F. Supp. 2d at 45 & n.23. The principal difference

between food service glassware and household glass-ware is that most food service glassware is sold to re-place broken, stolen or unusable items, and thereforefood service customers demand continuity of designs(and large numbers of sizes within designs) over manyyears; whereas retailers selling household glasswaredemand frequent changes in styles of glassware offeredin retail stores. FTC Preliminary Injunction Mem., p. 2,available athttP://www .ftc. gOY 1 os/2002/0 l/ftcvlibbevbriefuub. ~df.The FTC did not allege that the merger would reducecompetition in household glassware. 211 F. Supp. 2d at39 n.lO.10 The existence of substantial competition in "Libbey

knockoffs" had resulted in Libbey's suing another foodservice competitor, Oneida, for trade dress infringe-ment. Libbey Glass. Inc. v. Oneida Ltd, 61 F. Supp. 2d700 (N.D. Ohio 1999).11 h!!n:llwww.ftc.gov/o~a/200l/l2/libbey.htm. The

FTC's authority to seek a preliminary injunction isfound in Section l3(b) of the Federal Trade Commis-sion Act, 15 V.S.C. § 53(b).

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December 2002 Clayton Act Newsletter Vol. III, No

that it had found a supplier -Peldar S.A., asubsidiary of Owens- Illinois, Inc. (Libbey'sformer parent) in Buga, Colombia. Accordingto information submitted by Newell, its cost ofgoods in acquiring glassware from Peldarwould be only slightly higher than Anchor'scost of goods had been when it made foodservice glassware itself.

service business, and transfer that business toanother division of Newell (RubbermaidCommercial Products or "RCP"). Newellwould still plan to sell Anchor Hocking, andits two glassmaking factories, to Libbey.Newell claimed that it would obtain glasswarefrom a source that had not yet been determined(initially Newell intended to obtain glasswarefrom Libbey, and sell it in competition withLibbey). The FTC rejected that concept as afix for the competitive problems the Commis-sion had found with the merger, and on Janu-ary 14, 2002, filed its preliminary injunctionlawsuit. Libbey and Newell then proceeded toamend their merger agreement in the mannerthey had described, and defended the prelimi-nary injunction action on the basis that theirnew deal did not violate the antitrust laws.

At the time they amended the merger agree-ment, and purported to keep Newell in thefood service business, Newell had not identi-fied a manufacturer of glassware that wouldreplace the factories it intended to sell to Lib-bey. Newell maintained that pursuant to theamended merger agreement it would retain thekey assets -the glassware molds -needed tomake its food service glassware, and that itcould contract for the production of thatglassware from any number of producersaround the world. Newell made this conten-tion even though the FTC, in voting to chal-lenge the underlying merger, had rejected theproposition that foreign glassmakers couldcompete in the U.S. food service market. 12 On

the eve of oral argument, Newell announced

Early in the proceedings, the district judge,Reggie B. Walton, inquired whether the FTChad formally determined that the revisedmerger agreement violated the antitrust laws,or whether the FTC's complaint alleged thatthe revised agreement (which postdated thecomplaint) violated the antitrust laws. Thedistrict court perceived that a jurisdictionalquestion was presented by the change of themerger agreement, since it was unclear (in thecourt's view) whether the FTC had ever found"reason to believe" that the revised mergerwas likely to violate the antitrust laws. Sincethe FTC's vote preceded the defendants'amendment to the merger agreement, the dis-trict court believed it had identified a jurisdic-tional defect in the FTC's case, and on March29,2002 -after the FTC's preliminary injunc-tion motion had been argued -issued an orderdemanding that the FTC tell the court whetheror not the Commission had found reason tobelieve that the amended merger agreementviolated the antitrust laws. The Commissionpromptly obliged, voting unanimously to issuea statement that said unequivocally that itfound reason to believe the amended mergeragreement violated the antitrust laws. Basedon that statement, the district court concluded

12 The FTC argued, in its preliminary injunction brief,

that imports (other than by firms affiliated with u.s.incumbents) were not a significant factor in the market,and would face tariff and other barriers to competing.FTC PI Mem. 15-16. Thus, the FTC or the court wouldhave to reject the FTC's geographic market contentionin its original merger challenge in order to accept thepremise of the proposed fix.

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December 2002 Clayton Act Newsletter Vol. III, No.1,

that the ~urisdictional problem had been re-solved.I

.

White v. WhirlQool, where the districtcourt first rejected a proposed divesti-ture, having scrutinized the terms underwhich the acquirer of the divested as-sets would compete,15 and then (oncethose terms were modified to thecourt's satisfaction) accepted the di-vestiture of the "In-Sink-Erator" dish-washer line to Emerson Electric Co.The district court's acceptance of thedivestiture, and vacating of the injunc-tion against the merger, was upheld bythe Sixth Circuit.16

Prior CaseSi Of "Fix ItOurselves"

The LiQQ~ case was not the first case inwhich merging defendants tendered some typeof fix to the trial court over the government's(or plaintiffs) objections. Nonetheless theprecedents were few and far between. Neitherthe FTC nor defendants could identify a casein which the merging parties purported to "fix"an assertedly problematic merfer by retaining(rather than divesting) assets.! The prece-dents identified by the litigants were:

.

u.s. v. Atlantic Richfield Co., 297 F.Supp. 1061 (S.D.N.Y. 1969). WhenARCO agreed to sell the gasoline sta-tions that the Antitrust Division wantedsold, the district court refused to issuean injunction against the merger pend-ing the sale.

.

FTC v. Atl~tic Richfield Co., 549 F.2d 289 (4th Cir. 1977). ARCO'sagreement to divest was not satisfac-tory to the FTC (which was pursuing apotential competition theory), but wassatisfactory to the Court of Appeals,which wrote that "divestiture prior tomerger is an acceptable technique toavoid an antitrust violation." TheCourt of Appeals allowed fue mergerand divestiture on terms to which theFTC objected, including royalty andother interests. The court suggestedthat the divestiture meant that the FTChad failed to show a likelihood of suc-

13 211 F. Supp. 2d at 42 n.19. The FTC unanimously

stated, "in an effort to respond as specifically as possi-ble to the Court's Order and remove any doubt, theCommission hereby reaffirms that it has reason to be-lieve that defendants' amendment to their mergeragreement does not materially ameliorate the likely an-ticompetitive effects of Libbey's acquisition of AnchorHocking. Moreover, the Commission has reason tobelieve that consummation of the amended mergeragreement would violate the Clayton and FTC Acts."FTC Statement, April 2, 2002, available athtto://www.ftc.e:ov/os/2002/04/1ibbvstmnt.htm. In itsopinion granting the preliminary injunction, the districtcourt declared that it "construed Section 13(b) ...torequire the Commission's authorization before its staffcould file the amended complaint challenging theamended merger agreement." 211 F. Supp. 2d at 42n.19.14 The ~ court wrote that "the Court has not found,

and neither party has identified, any precedent that hasaddressed how an amended merger agreement impactsthe original agreement." 211 F. Supp. 2d at 46. Thatwas not correct; the cases listed in text were cited by theparties as examples of amended merger agreements.None of them involved the selling party retaining assets(as Newell proposed to do); most involved divestituresof assets or rights to third parties.

15 White Consolidated Indus.. Inc. v. WhirlQool Co., 612

F. Supp. 1009 (N.D. Ohio 1985).16 781 F. 2d 1224 (6dt Cir. 1986), ~ 619 F. Supp.

1022 (N.D. Ohio 1985). Emerson, however, doesn'tmake dishwashers anymore.

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cess on the merits, rather than that theequities tipped in favor of the transac-tion.I7

to show that their agreements with En-viron [the proposed licensee] changethe manner in which their joint ventureshould be viewed, that is, as anythingother than a merger to monopoly thatby definition will have an anticompeti-tive effect on the submersible turbinepump market." IQ. at 1035.

.

FTC v. Weverhaeuser Com.. 665 F. 2d254 (D.C. Cir. 1981), and FTC v. PPGIndus.. Inc., 798 F. 2d 1500 (D.C. Cir.1986), considered whether hold sepa-rate orders, rather than full-stop in-junctions, constituted sufficient reliefin FTC preliminary injunction actions.Weverhaeuser and ~ laid out strin-gent conditions for a court to acceptanything less than a full-stop injunctionin an FTC preliminary injunction ac-tion, specifically that significant equi-ties favored the transaction and that thealternative remedy would not preventinterim harm to competition and wouldassure the availability of ultimate relieffollowing plenary administrative adju-dication.

There were other cases where "ephemeral"proposals had been put before the COurtS.18But in those cases where concrete proposalshad been placed before district judges, thecourts typically considered whether the pro-posals would preserve competition that wouldhave been eliminated by the merger -includ-ing whether the acquirer was likely to be a vi-able, capable competitor, and would receivethe assets needed to compete. While thecourts' judgment might differ from the agen-cies', they tended to ask the same questions.

Arguments SeekingDeference

.

u.s. v. Franklin Electric Co., 130 F.Supp. 2d 1025 (W.D. Wis. 2000). Thedistrict court rejected an attempt topropose a "fix" to the district court thatthe Antitrust Division had rejected.Defendants proposed to license tech-nology to a new entrant, who purport-edly would become a competitor. "Oncloser inspection, however, the schemelooks more questionable." 14. at 1033.The district court questioned the licen-see's commitment to the business andits ability to compete, and on that basisconcluded that "defendants have failed

Both the FTC and the merging defendants ar-gued, in essence, that the court should not de-cide the fate of the amended merger agreementon the merits. Rather, each party urged thatthe court should defer to it. The FTC arguedthat the court should defer to the FTC as theexpert agency charged with ultimately resolv-ing the case; the merging parties argued thatthe court should defer to them, as businesspeople exercising business judgment. Thecourt rejected all of these arguments, prefer-ring to reach the merits.

17 549 F. 2d at 299. The FTC also contended that

ARCO, which was divesting, was a "most likely poten-tial entrant," and that ARCO's entry would be elimi-nated by the merger notwithstanding the divestiture.The Court of Appeals rejected that contention on themerits.

18 Consolidated Gold Fields v. Anl!lo American Com,

698 F. Stipp. 487, 502 (S.D.N.Y. 1988); ChemetronCom. v. Crane Co., 1977-2 Trade Cas. ~ 61,717 (N.D.Ill. 1977).

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December 2002 ~on Act Newsletter Vol. III, No.1

The court was presented with the followingdebate: Is the issue whether the "new" mergerviolates the antitrust laws, or whether changesin the proposed merger sufficiently remedy theanti competitive effects of the original merger?Is the question one of violation or remedy?The FTC argued that the issue was one ofremedy, and should be governed by Weyer-haeuser. The merging companies argued thatthe question is one of violation, and that therewas no Clayton Act violation where there wasno acquisition of the overlapping business(food service glassware); and alternativelywhere there was no proof of an increase inconcentration in food service glassware (be-cause there was no proof that Libbey wouldacquire any of Anchor's market share).

that divestitures in response to anticompetitivemergers result in "zero deltas," ~, no in-crease in concentration. If the first mergerwould "substantially" reduce competition, is itnecessary (from plaintiff's perspective) thatthe second merger also "substantially" reducecompetition (delta of 100), or is it sufficientthat the second merger fails to remedy the sub-stantial reduction of competition resultingfrom the first merger (zero delta)? Stating theissue from the defendants' perspective, is itsufficient that the second (revised) mergerwould not violate the Clayton Act if it hadbeen the first merger proposed, or must it fullyremedy the effects of the first (abandoned)

merger?

FTC ArgumentsThe issue can be conceived as which agree-ment is subject to the Clayton Act's "substan-tiality" standard? For example, the MergerGuidelines indicate that the agencies wouldtolerate some modest increase in concentrationbefore challenging a merger, 19 and in practice

they have allowed more significant reductionsin competition, especially when they are notpersuaded that a mer~er would result in an an-ticompetitive effect! However, on some oc-casions the antitrust agencies have demanded

The FTC's argument proceeded from the as-sumption that the merger submitted to theCommission was the merger under considera-tion, and that the merging parties' efforts tochange it should be viewed as proposed reme-dies, not as a "new" deal. The FTC argued,based primarily on Weyerhaeuser and~,that the court should grant a preliminary in-junction to allow the Commission to fully ad-judicate the matter and ultimately decide whatremedy is appropriate. In Weverhaeuser theFTC had argued that, once the FTC shows alikelihood of success on the merits, the courtmust grant the injunction. The Court of Ap-peals rejected that argument, following thestatutory language and concluding that a bal-ancing of the equities is still required.21Therefore, in Libbey the FTC embraced theWeyerhaeuser standard: The FTC argued thatthe amended merger agreement was in essence

19 U.S. Dep't of Justice and Federal Trade Comm'n,

Horizontal Merger Guidelines § 1.51(c). Mergers re-sulting in Hill increases of less than 50 points usuallyrequire no further inquiry; mergers resulting in HHIincreases of less than 100 points are not presumed toreduce competition.20 See. e.g.. Roxal Caribbean Cruises. Ltd./P&O Prin-

cess Cruises ~lc and Carnival Comoration/P&O Prin-cess Cruises ~lc (Oct. 4, 2002) ("these transactionswould not result in a merger to duopoly. ..there arenow four major firms and a 'fringe' of other competi-tors"); AmeriSource Health Comoration/Bergen Bruns-m (Aug. 24, 2001) ("this transaction will combine thethird- and fourth-ranked firms into a presumablystronger number three").

21655 F.2d at 1081 (rejecting FTC argument that proofof likely success on the merits of an antitrust violationmandates issuance of preliminary injunction, withoutfurther consideration of equities).

15

a proffered alternative remedy to a full-stopinjunction, and that it should be evaluated un-der the standards articulated in Weverhaeuser-in particular whether it would preserve anultimate remedy following administrative ad-judication.22 The FTC sought to persuade thedistrict court to remember that, ultimately, theCommission would determine the final rem-edy, and that one possible final remedy (a full-stop injunction) must be preserved for thatdetermination.

part of the stock. ..or any part of the assets"of Newell; and that the effect of the acquisitionwas what mattered under the Clayton Act.The court essentially agreed.24 At argument,defendants argued principally that the FTC andits economist had no business questioning thebusiness judgment of Newell, which had pur-portedly determined that having glasswaremade in Colombia was a reasonable thing todo; and that there was no showing of an in-crease in concentration in food service glass-ware, since Newell was keeping that business.

Defendants' Ar!~uments

Defendants initially argued that the transactionchallenged by the FTC had been abandoned,and that an entirely new merger was on thetable. Defendants contended that the newmerger did not involve a merger of the foodservice glassware businesses of Libbey andAnchor, and thus the "retention" of that busi-ness (and sale of the remainder of AnchorHocking) was not a transaction subject to Sec-tion 7 of the Clayton Act.23 The FTC pointedout that Libbey still proposed to acquire An-chor Hocking and its factories, and that there-fore there was plainly an acquisition of "any

22 The FTC argued that defendants' proposed remedy

would not preserve a remedy, because (among otherreasons) defendants intended to remove key assets fromthe United States and transport them to Colombia, andthe FTC and the district court would be powerless toretrieve them should that become necessary.23 Section 7 states that "no person engaged in commerce

or in any activity affecting commerce shall acquire, di-rectly or indirectly, the whole or any part of the stock orother share capital and no person subject to the jurisdic-tion of the Federal Trade Commission shall acquire thewhole or any part of the assets of another person en-gaged also in commerce or in any activity affectingcommerce, where in any line of commerce or in anyactivity affecting commerce in any section of the coun-try, the effect of such acquisition may be substantially tolessen competition, or to tend to create a monopoly:" 15U.S.C. § 18.

The district court ignored both sides' argu-ments for deference, and indeed did not dis-cuss any of the cases cited by the parties (in-cluding Circuit precedents Weverhaeuser andPfQ) on this issue. The court decided the caseon the merits for itself -which was preciselywhat prior district judges had done in White v.Whirl~ool and Franklin Electric. The courtalso held that it would evaluate the amendedmerger agreement, not the original mergeragreement. "Operating on what appears to bea clear slate, the Court concludes that partiesto a merger agreement that is being challengedby the government can abandon that agree-ment and propose a new one in an effort to ad-dress the government's concerns." 211 F.Supp. 2d at 46. Thus, the court rejected theFTC's attempt to draw the distinction that, inan FTC preliminary injunction action, the dis-trict court's role was different from its role asplenary decisionmaker, which had been thesituation in Franklin Electric and White v.

24 "Defendants argue that plaintiff's challenge to New-

ell's internal transfer of its service business cannot sup-port an injunction under Section 7 of the Clayton Actbecause internal reorganizations are not reportable un-der the HSR Act. Defendants' argument misses thepoint." 211 F. Supp. 2d at 45 n.25.

16

Whirl~ool. The court addressed that distinc-tion by evaluating the "amended merger" onthe merits, rather than as a remedy.

competition," ~, the court considered whetherNewell would be as effective a competitor asAnchor had been, without factories and at ap-parently higher costs. "These facts tend tosupport a finding that [Newell] would not be ina position to provide effective competitionagainst Libbey." M. at 46. Indeed, "the FTC'sevidence tends to establish that under theamended agreement [Newell] would not be aviable competitor in the food service glasswaremarket because [Newell's] cost to acquire itsglassware will be at least 4.3 percent higherthan Anchor's current costs." 211 F. Supp. 2dat 49. Therefore, "the effect of the amendedagreement could result in the elimination ofwhat is now Anchor as a competitor in thefood service glassware market." M. at 50.

However, the court was not willing to assumethat the amended merger agreement wouldhave no effect on competition, despite defen-dants' argument that, since the food servicebusiness would not be sold, there would be noincrease in concentration or effect on competi-tion.25 Rather, the court looked at "other evi-dence" that would bear on this question.26Since Anchor had in fact "provided effective

Having concluded that the amended agreementcould result in the elimination of Newell as theeffective competitor it had been, the court thenanalogized that effect to the effect of the origi-nal (purportedly abandoned) merger agree-ment. The original agreement would haveeliminated Anchor as a competitor in the foodservice glassware business, and the amendedagreement was likely to have the same effect(at least on the "likelihood of success" stan-dard applicable in a preliminary injunctionproceeding). lQ. Therefore, the court lookedat the original merger as a proxy for the effectof the amended merger. lQ.

As a result, defendants did not gain much (ifanything) from the court's holding that theparties were allowed to amend their mergerand have the court consider it. Even thoughthe court claimed to evaluate the "amended"agreement rather than the original agreement,it evaluated it by asking whether the survivingcompetitor would be as viable and competitiveas the firm that would have been eliminated inthe original merger. The court certainly didnot assume that Newell would remain as com-petitive as it had been -and in that regard in-troduced an element that would not have beenpresent in a "standard" merger analysis: the

25 The court wrote that "the FTC has not presented a

statistical analysis regarding the potential anti-competitive effects" of the amended merger agreement,211 F. Supp. 2d at 47, by which the court meant ananalysis showing an effect on market shares and con-centration (apart from the showing that the market wasalready highly concentrated and that the original mergerwould have significantly increased concentration, N. at39, 47).26 The court noted the FTC's citation of FTC v. Indiana

Fed'n of Dentists, 476 U.S. 447 (1986) (hereinafter"!ill"), and Toys 'R Us v. FTC, 221 F.3d 928 (7th Cir.2000), ''as support for its proposition that it can show asa substitute for the presentation of a market share analy-sis to determine the amended agreement's potential ef-fect on the market, the actual detrimental effect theamended agreement could have on the market." 211 F.Supp. 2d at 48-49. Since the FTC can challenge merg-ers under Section 5 of the FTC Act, 15 U.S.C. § 45, andfound that the Libbey/Anchor merger was likely to vio-late Section 5, that proposition is plainly correct as amatter of statutory construction, whether or not ClaytonAct § 7 requires a "showing" of an increase in concen-tration, as defendants argued.

The district court's opinion notes that !ill and Toys 'Rlli "are distinguishable" because they were appealsfrom fmal agency orders (following adjudication),whereas the ~ case was a preliminary injunctionhearing predicated on the FTC's finding "reason to be-lieve" that the Clayton and FTC Acts were being vio-lated. 211 F. Supp. 2d at 49. It is therefore unclearfrom the opinion whether the district court means toaccept or reject the application of !ill and Toys 'R Usto preliminary injunction cases (or to merger cases).

17

viability of the surviving firrn.27 In that re-gard, the court's approach ultimately did notdiffer from the approaches in Franklin Electricand White v. Whirl~ool.

In light of the court's decision, the Libbey caseshould not be taken as an invitation to urge ondistrict courts the divestiture proposals re-jected by the antitrust agencies. So long as theagencies are attempting to serve the public in-terest, they will evaluate divestiture proposalsby seeking to determine whether the proposalwill create a viable and effective competitor.If there is a reasonable basis to believe thatsuch a competitor will in fact be created, theagency is unlikely to litigate. If there is acompelling case that the divestiture will notsucceed, the agency is likely to press that casewith the district court; the district court islikely to evaluate it on the same standard asthe agency; and the outcome is likely to be thesame.

27 For example, if Newell had sold the food service

business to Peldar, and had not entered into any trans-action with Libbey, the antitrust agencies likely wouldnot have challenged the Newell-Peldar deal (eventhough it would have the same effect). The antitrustagencies have not generally challenged transfers ofbusinesses from one company to another on the groundthat the transfer would weaken the business (and there-fore reduce competition).

18