¡F.'o !'v~~ t~ Q rr\\ ~ ,£~ ~ ff~1 ,1.'1 -,,¡¡ ~ M 11"1""" r,i 4~~S¿~~::;:~~~~,;,\\ \::.;.F t ~ J ~~ ~ ~~M ;/dt :.t.mi 

( 't d L. '1 ¿¡ $!S"" " 'J:\
 

\ r;.'!t\~~ '1 G. lOT!; t
 \~ ~;:171-fl ,/ UNITED STATES OF AMERICA ''l~,

'~~~l~'0~~~~E;:~:;~~:::._.7.":___~_"'~'~"-O' / BEFORE THE FEDERAL TRADE COMMISSION 

COMMISSIONERS: John Liebewitz, chairman
 

Pamela Jones Harbour
 

Wiliam E. Kovacic
 

J. Thomas Rosch 

In the Matter of )
 PUBLIC

)


Polypore International, Inc., ) Docket No. 9327
 

a corporation.
 ) 

) 

COMPLAINT COUNSEL'S RESPONSE TO
 

RESPONDENT'S MOTION FOR EXTENSION OF TIME TO
 

FILE APPEAL BRIEF AND REQUEST FOR EXPEDITED TREATMENT
 

Respondent's motion should be denied. Judge Chappell found existing and 

ongoing consumer har as a result of the consumated acquisition of Microporous by 

Polypore.1 Initial Decision at 266 ("post-acquisition price increases add to the strong 

presumption that a merger to monopoly in three markets, and from three to two 

competitors in the SLI market, wil 
 lead to anticompetitive effects" (emphasis added)). 

Complaint Counsel is not appealing the ALl's decision dismissing the monopolization 

count (Count 3 of 
 the Complaint) and Respondent is not appealing the ALl's decision 

that its non-compete agreement with Hollngsworth & Vose is ilegal (Count 2 of the 

Complaint), so the case on appeal before the Commission boils down to a simple merger 

i Respondent's assertion that "(n)o par with an interest in this proceeding wil be prejudiced in any way 

by granting the requested relief' is ironic and blatantly contradicts Judge Chappell's opinion in this matter. 

See Respondent's Motion for Extension of Time to File Appeal Brief at ir 13. 
challenge.2 Respondent has not changed counsel for this appeal so its counsel is 

intimately familiar with the record in this matter. Due to delays in producing a public 

version of the initial opinion Respondent has already received more than two additional 

weeks of time to prepare its appeal brief. In view of the interim har to consumers and 

the simplicity of the case on appeal, Respondent is entirely capable of fiing its appeal in 

the time provided by law, paricularly in view of 
 the extra time it has already enjoyed. 

Respondent has collected more than two years of monopoly profits at the expense 

of its customers. Any fuher delay adds insult to injur. Accordingly, Complaint 

Counsel requests that the Commission expedite the hearing and appeal in thjs matter to 

the fullest extent possible under the law. 

BACKGROUND 

Judge Chappell found that Polypore's acquisition of Micro porous on Februar 29, 

2008 violated Section 7 of 
 the Clayton Act. InitialOpinion at 8. Prior to the acquisition, 

Polypore, though its Daramic business unit competed with Microporous in the 

manufactue and sale of separators for lead acid batteries. Battery separators are highly 

engineered and created through sophisticated manufactung processes. Battery 

separators are microporous sheets of polyethylene, rubber, or a combination of 

polyethylene and rubber that separate the lead plates in a battery. These separators 

prevent the positive and negative plates from touching and shorting out while allowing 

ions to flow between them. 

The ALJ held that the acquisition reduced competition in four North American 

markets: deep-cycle (often referred to as golf car batteries), motive (often referred to as 

2 Respondent's challenge of 
 "several specific findings" in the ALJ's analysis dismissing the Count 3 

monopolization claim adds no paricular complexity to this appeaL. 

2
 
forklift batteries), SLI (also called automotive batteries), and uninterrptible power 

supply ("UPS" or sometimes "reserve" power batteries). Each of 
 these markets is higWy 

concentrated. Indeed, in the deep-cycle, motive, and UPS markets Polypore and 

Microporous were the only competitors. In the SLI market, there is only one other 

competitor in North America, a company called Entek. 

Judge Chappell also found that Polypore's non-compete agreement with 

Hollingsworth & Vose, whereby each agreed not to enter the other's markets, was "an 

obvious restraint of trade likely to har consumers" with "no pro 
 competitive 

justification" that "violates Section 5 of the FTC Act." Initial Decision at 322. 

Respondent does not appeal the judge's opinion on this count. 

Finally, with respect to Count 3, Judge Chappell held that while Respondent 

possesses monopoly power or a dangerous probability of achieving monopoly power in 

the deep-cycle, motive and UPS battery separator markets, that the challenged conduct 

was not unlawfl exclusionar conduct. Complaint Counsel does not appeal the
 

dismissal of this count, though Respondent appeals the portions of the opinion discussing 

whether Respondent has monopoly power or a dangerous probability of achieving or 

maintaining monopoly power in the North American deep-cycle, motive and UPS battery 

separator markets. 

FACTS 

Judge Chappell found actual post-acquisition anticompetitive effects from the 

merger. See e.g. Initial Decision at 147 ("Daramic's acquisition of 
 Microporous led to 

price increases"), 262 ("Daramic has exerted unilateral market power"), 266. As a result 

of the acquisition of Microporous by Polypore consumers paid, and continue paying, 

3 
anticompetitive prices for battery separators each and every day. Judge Chappell 

specifically found that "Daramic' s acquisition of Microporous led to price increases" and 

"post-acquisition price increases add to the strong presumption that a merger to 

monopoly in three markets, and from three to two competitors in the SLI market, will 

lead to anticompetitive effects." Id. at 266 (emphasis added). Innovation in battery 

separators has also been eliminated as a result of 
 the merger. Id at 264. Respondent's 

own documents acknowledge the problem of ongoing har, pointing out as early as June 

2008 that "(i)t is sure getting difficult to convince our customers that we are not a 

monopoly." PX0803. Indeed, Polypore far exceeded its premerger predictions about the 

amount of price increases it would achieve as a result of the merger and the ALJ found 

that despite significant price increases Respondent has not lost a single customer in the 

deep-cycle and motive separator markets since the acquisition. Initial Decision at 263 

(no customers lost in deep-cycle), 264 (no customers lost in motive). 

Respondent already signficantly delayed the Par 3 proceedings before the ALJ, 

taking advantage of delay tactics available to respondents under the old Par 3 rules. The 

original trial in this matter was set for December 9, 2008. Respondent sought twice to 

delay the proceeding, and, over Complaint Counsel's objection, succ.eeded in pushing the 

trial back first to April, then to May 2009. On September 25,2009, more than three 

months after the close of trial, Respondent proffered additional evidence for a second 

hearng in this matter.3 Respondent then delayed the second hearng from November 4 to 

November 12,2009. With its multiple delays, and despite failing to prove any of its 

3 This delay was possible under the old Part 3 rules because under that standard the ALJ may reopen the 

record at any time before the initial decision to take additional evidence in the matter. October 15,2009, 

Order Granting Respondent's Second Motion to Reopen the Hearing Record and Setting Hearing Schedule 

at 4. 

4
 
proffers in the second hearng, Respondent has succeeded in delaying an ALJ ruling in 

this matter for almost a year. 

Respondent has already received more than two weeks of extra time to prepare its 

papers. The ALJ issued his initial decision on Februar 22, 2010. Couresy copies ofthe 

decision were provided to the paries that same day. Because of delays required to 

review and request additional redactions, the public decision was not served on Polypore 

until March 10, 2010 - two weeks and two days after Polypore' s counsel had already 

received a copy of the entire unedacted opinion. Indeed Polypore filed its notice of 

appeal on the same day that it received service o.f the opinion, belying its assertion that it 

needs additional time to review it. Accordingly, Polypore has 46 days to prepare its brief 

in this matter already, rather than the statutory 30 days. 

Polypore does not need the additional time to file its brief. Neither pary is 

appealing the judge's rulings on the monopolization counts. Respondent only takes issue 

with paricular findings in the ALl's dismissal of the monopolization claim in Count 3 of 

the Complaint. This adds no complexity to the appeal at all. Accordingly, two thirds of 

the issues drop away. Indeed there are no complex monopolization issues to deal with at 

all. Respondent's appeal is no more than a garden-variety merger challenge. The merger 

challenge is not complex. It is a merger to monopoly in three markets and a three to two 

in the fourh. The ALl's ruling rests on ordinar antitrust case law. 

The record on appeal is not paricularly large nor complex. There are fewer than 

6000 pages of 
 trial transcript, fewer than 1300 findings, and only 30 live witnesses.4 

Much of this evidence relates to the two unchallenged monopolization counts. Although 

4 Respondent fails to point out that the three witnesses who testified in the second evidentiar hearing were 

not new at all, but had testified in the first hearing already. 

5 
battery separators are highly engineered and require sophisticated manufacturing 

techniques, the subject is not extremely high-tech or difficult to understand - it is 

separators for lead-acid batteries. The issues are confned to a straightforward 

application of the antitrust laws to a merger. In the interest of the customers and 

consumers involved, it is time to move this case to a conclusion. 

LEGAL ANALYSIS 

The Commission has consistently held that the time periods provided in the 

Commission's Rules of 
 Practice afford paries sufficient time to fie pleadings and briefs 

of sufficient quality and detail to aid in the preparation of Commission opinions and 

orders. In the Matter of 
 Chicago Bridge and Iron company N v., Docket No. 9300, Order 

Granting Extensions of 
 Time to File Appeal and Answering Briefs (July 17,2003) at 1 

("CB&i,,).5 The Commission fuher recognzes that "in any litigation involving a 

consumated merger, unecessary delay at any step along the way to final resolution 

may increase the risk of ongoing injur to consumers and competition." Id. 

Indeed, in revising the Part 3 rules to address public concern about Par 3 delays, 

the Commission noted that "(t)he Commission understands the public concern about Par 

3 delay is not limited to the proceedings before the ALJ, but extends to the delay 

occasionally incured by the Commission resolution of appeals of initial decisions. The 

Commission intends to expedite all phases of Par 3 process." Federal Register, VoL. 73, 

No. 195, October 7, 2008 - Proposed Rules at 58834. Specifically, "(t)o accommodate 

those expedited deadlines, the Commission is reducing the time in which paries may file 

5 Like In the Matter of 

Ram bus, Inc., Docket No. 9302, Order Granting Extensions of Time to File 

Appellate Briefs and Increases in Word Count Limits (Mar. 18,2004) ("Rambus"), discussed in more detail 

below, complaint counsel joined in respondent's request for additional time in CB&I, and there was no 

finding of existing, interim harm. 

6
 
briefs from the initial decision." Federal Register, VoL. 74, No.8, Januar 13,2009­

Rules and Regulations at 1819. Accordingly, there 
 are strong policy reasons not to 

permit unwaranted delay in the briefing of straightforward merger challenges such as 

this. 

In its motion, Respondent relies exclusively on the Commission's decision in 

Rambus. This reliance is misplaced. First, in Polypore the ALJ found existing consumer 

har. There was no such finding in Rambus. Second, Complaint Counsel also sought
 

additional time in Rambus, and indeed, it was ajoint motion on which the Commission 

ruled, so prejudice was not at issue. Third, the Rambus trial transcript was twce as long 

as Polypore (over 11,800 pages vs. fewer than 6,000). Fourh, there were 59 testifying 

witness in Rambus (44 live, 15 via designated trans.) versus 35 here (30 live and 5
 

through designated transcripts). Fifth, there were more than 1650 findings in Rambus 

compared to fewer than 1300 in this case. Sixth, the complexity of the facts and their 

interpretation were significantly more challenging in Rambus given the high tech subject 

matter. Moreover, in Rambus the respondent had a total of 53 days from the filing of the 

initial decision on February 23,2004 until the agreed upon date ofthe appeal brief on 

April 16, 2004, whereas in Polypore, Respondent seeks an additional 21 days to file its 

brief, or a total of 67 days from the filing of the initial decision on Februar 22nd until 

their requested date of the appeal brief on April 
 30th. This request is excessive in view of 

the fact that Respondent already has 46 days to prepare its brief. 

The most important fact that compels the denial of Respondent's motion for an 

extension of time is the 
 existing and ongoing har to consumers as a result of the 

7
 
challenged acquisition. Any delay at all simply provides Polypore with monopoly profits 

at consumers' expense, is unwaranted, and should be denied. 

CONCLUSION 

For the reasons stated above, as is fully supported by the evidence both at the initial 

trial and the second hearng in this matter, Daramic's acquisition of 
 Microporous was 

ilegal and resulted in actual and ongoing har to consumers. The public deserves a 

complete and quick remedy to restore competition and prevent fuher har to
 

competition. Accordingly, Complaint Counsel requests that Respondent's Motion for 

Extension of 
 Time to File Appeal Briefbe denied, and that the appeal in this matter be 

expedited. 

Dated: March 16, 2010 Respectfully submitted, 

') / ~


.tdA'J//?l 

: / . ROBERT ROBERTSON 

~Federal Trade Commission 

Bureau of Competition 

600 Pennsylvana Ave., N.W. 

Washington, DC 20580 

Telephone: (202) 326-2008 

Fax:(202)326-2884 

Counsel Supporting the Complaint 

8 
CERTIFICATE OF SERVICE 

I hereby certify that on March 16, 2010, I filed via hand delivery an original, twelve 

copies and an electronic copy of the foregoing Complaint Counsel's Response to
 

Respondent's Motion for Extension of Time to File Appeal Brief and Request for Expedited 

Treatment with: 

Donald S. Clark, Secretar 

Offce of the Secretar 

Federal Trade Commission 

600 Pennsylvana Avenue, NW, Rm. H-159 

Washington, DC 20580 

secretary(fftc. gov 

I hereby certify that on March 16,2010, I filed via hand two copies and one copy via 

electronic mail delivery the foregoing Complaint Counsel's Response to Respondent's Motion 

for Extension of Time to File Appeal Brief and Request for Expedited Treatment with: 

The Honorable D. Michael Chappell 

Administrative Law Judge 

Federal Trade Commission 

600 Pennsylvana Avenue, NW 

Washington, DC 20580 

oali(fftc.gov 

I hereby certify that on March 16, 2010, I filed via electronic and first class mail 

delivery a copy of the foregoing Complaint Counsel's Response to Respondent's Motion for
 

Extension of Time to File Appeal Brief and Request for Expedited Treatment with: 

Wiliam L. Rikard, Jr., Esq. 

Eric D. Welsh, Esq. 

Parker, Poe, Adams & Bernstein, LLP 

401 South Tryon Street, Suite 3000 

Charlotte, North Carolina 28202 

willamikard(fparkerpoe.com 

ericwelsh(fparkerpoe.com