UNITED STATES OF AMERICA
 

BEFORE THE FEDERAL TRAE COMMISSION
 

In the Matter of )
 

)
 

Polypore International, Inc., )
 

a corporation. )
 

) 

PUBLIC
 

Docket No. 9327
 

COMPLAINT COUNSEL'S POST-TRIAL BRIEF
 

RICHARD A. FEINSTEIN 

Director 

NORMAN ARSTRONG 

Acting Deputy Director 

Bureau of Competition 

CATHARI MOSCATELLI
 

Assistant Director 

MORRS BLOOM 

Deputy Assistant Director 

Bureau of Competition 

Mergers II 

1. ROBERT ROBERTSON 

STEVEN DAHM 

BENJAMIN GRIS 

JOEL CHRISTIE 

STEPHEN ANTONIO 

CHRISTIAN WOOLLEY 

PRIY A VISW ANATH 

Federal Trade Commission 

Bureau of Competition 

600 Pennsylvania Ave., N.W. 

Washington, DC 20580 

Telephone: (202) 326-2008 

Fax: (202) 326-2884 

Counsel Supporting the Complaint 

JULY 17,2009
 
TABLE OF CONTENTS
 

TABLE OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IÎi
 

INTRODUCTION ....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
 

I. Factual Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
 

II. Daramic' s Ilegal Acquisition of Microporous . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
 

A. The Relevant Product Markets are Deep-Cycle, Motive, SLI, and UPS Battery 

Separators for Flooded Batteries ........................................... 12
 

1. Deep-Cycle Battery Separators are a Product Market . . . . . . . . . . . . . . . . . . . 13
 

2. Motive Separators are a Relevant Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
 

3. UPS Separators are a Product Market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
 

4. Starting, Lighting, Ignition ("SLI") Battery Separators ................. 25
 

B. The Relevant Geographic Market is North America .........................28
 

C. Respondent Cannot Rebut Complaint Counsel's Prima Facie Case. . . . . . . . . . . . . . 33
 

1. Respondent Cannot Demonstrate that Entr Into the Relevant
 

Markets Would be Timely, Likely or Sufficient. . . . . . . . . . . . . . . . . . . . . . . . .34
 

a. Entr Would Not Be Timely ................................37
 

b. Respondent Cannot Demonstrate that Entr Into the
 

Relevant Market is Likely. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
 

c. Respondent Cannot Demonstrate that Entry Would be Sufficient to 

Overcome Anticompetitive Effects ............................. 39
 

2. Respondent's Claim of 
 No Anticompetitive Effects is Contrary 

To The Evidence .................................................41
 

a. Daramic's Intent To Raise Prices Post-Acquisition. . . . . . . . . . . . . . .42
 

b. Post-acquisition, Daramic Has Exerted Unilateral Market
 

Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
 

-1­
c. In a Three-to- Two Merger in SLI, Coordinated Effects
 

are Likely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
 

3. Respondent's Claimed Effciencies Defense Fails .....................48
 

III. Daramic Monopolized and Attempted to Monopolize the Relevant Markets and Entered into 

Agreements that Unlawfully Restrained Trade ....................... . . . . . . . . . . . . . . . 49
 

A. Count III: Monopolization and Attempted Monopolization . . . . . . . . . . . . . . . . . . . . 50
 

1. Legal Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
 

2. Monopoly Power/Dangerous Probability of Maintaining

Monopoly Power ..................................... . . . . . . . . . . . . 51
 

3. Exclusionary Conduct. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
 

4. Specific Intent ................................................. 62
 

5. No Legitimate Justification for Daramic's Monopoly Conduct ...........62
 

B. Count II: Umeasonab1e Restraint of Trade ................................63
 

1. Legal Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
 

2. The DaramiclH&V Market Division Agreement Umeasonab1y
 

Restrains Competition ............ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
 

IV. Complete Divestitue and a Cease and Desist Order Are Necessary to Restore and Protect
 

Competition ............................... . . . . . . . . . t,:. . . . . . . . . . . . . . . . . . . . . . . . 68
 

A. Complete Divestitue Restores the Entity That Would Have Existed But For the 

Merger and Allows it to Compete on an Equal Footing with Daramic . . . . . . . . . . . . . .70
 

1. Divestitue of the Piney Flats, F eistritz and Microporous 

Facilities and Production Line is Necessary to Restore Competition .........71
 

2. The Remaining Provisions of Paragraph II of 
 the Proposed
 

Order Wil Further the Creation of a Viable Competitor. . . . . . . . . . . . . . . . . . . 75
 

3. A Cease and Desist Order is Necessary to Prevent Respondent's
 

Furer Anticompetitive Behavior. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76
 

V. Conclusion ............................................................... 78
 

-11­
TABLE OF AUTHORITIES
 

CASES: 

A.I. Root Co. v. Computer/Dynamics, Inc., 806 F.2d 673 (6th Cir. 1986). ............ . . . . . 19
 

Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985). ................53
 

Brown Shoe Co. v. United States, 370 U.S. 294 (1962). ........................ 11, 12,42
 

California Dental Assn. v. FTC, 526 U.S. 756 (1999) ................................49
 

Capital Imaging Assoc. v. Mohawk Valley Medial Assoc., 996 F.2d 537 (2d Cir. 1993) . . . . . . 66
 

Chicago Bridge & Iron Co., N. v., et al. v. FTC, 534 F.3d 410 (5th Cir. 2008) .............34
 

Confederated Tribes of 
 Siletz Indians v. Weyerhaeuser Co., 411 F.3d 1030 (9th Cir. 2005) . . . 62
 

Conwood Co. v. United States Tobacco Co., 290 F.3d 768 (6th Cir. 2002) .............51,60
 

Engine Specialtes, Inc. v. Bombardier Ltd., 605 F.2d 1 (1st Cir. 1979) . . . . . . . . . . . . . . . . . . .67
 

Fashion Originators' Guildv. FTC, 312 U.S. 457 (1941) .............................49
 

Fineman v. Armstrong World Indus. Inc., 980 F.2d 171 (3d Cir. 1992) . . . . . . . . . . . . . . . . . . . 52
 

Ford Motor Co. v. United States, 405 U.S. 562, 573 (1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
 

FTC v. Cardinal Health, 12 F. Supp. 2d 34 (D.D.C. 1998) . . . . . . . . . . . . . . . . . . . . . . . 12,29,35
 

FTC v. CCC Holdings, et al., 605 F. Supp. 2d 26 (D.D.C. 2009) . . . . . . . . . . . . . . . . 4, 13,46,47 

FTC v. Cement Inst., 333 U.S. 683 (1948) .........................................49
 

FTC v. HJ Heinz Co., 246 F.3d 708 (D.C. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim 

FTC v. Indiana Federation of 
 Dentists, 476 U.S. 447 (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . .66
 

FTC v. Motion Picture Advertising Servo Co., 344 U.S. 392 (1953) . . . . . . . . . . . . . . . . . . . . . . . 1
 

FTCv. Natl Lead Co., 352 U.S. 419 (1957) . . . . . . . . . . . . . .. .. . .. . . . . . . . .. . . . . . . . . . . .69
 

FTC v. Proctor & Gamble Co, 386 U.S. 568 (1967) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
 

-1l­
FTC v. Staples, Inc., 970 F. Supp. 1066 (D. D.C. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,29 

FTC v. Univ. Health, Inc., 938 F.2d 1206 (1Ith Cir. 1991) ............................46
 

FTC v. Whole Foods Mkt., Inc., 548 F.3d 1028 (D.C. Cir. 2008) . . . . . . . . . . . . . . . . . . . . . . . . 12
 

Grumman Corporation v. The LTV Corporation, 665 F.2d 10 (2d Cir. 1981) ..............28
 

Hack v. The Presidents and Fellows of 
 Yale College, 237 F.3d 81 (2d Cir. 2000) . . . . . . . . . . . 19
 

Hospital Corp. of America v. FTC, 807 F.2d 1381 (7th Cir. 1986) . . . . . . . . . . . . . . . . . . . . 77, 78
 

Image Technical Servs. v. Eastman Kodak Co., 125 F.3d 1195 (9th Cir. 1997) . . . . . . . . . . . . . 52
 

In re Chicago Bridge & Iron Co., N. v., et at., 2003 WL 21525006, Dkt. No. 9300 (Initial
 

Decision 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,5,34 

In re Chicago Bridge & Iron Co., N. v., et al., 2003 WL 22217293 (F.T.C. Sep. 10,2003) .2,34 

In re B.F. Goodrich Co., 110 F.T.C. 207 (1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68, 70
 

In re North Texas Specialty Physicians, 2005 WL 3366980 (F.T.C. Dec. 1,2005) ...... . . . .77
 

In re RSR Corp., 88 F.T.C. 800 (1976) .........................................68, 70
 

Jacob Siegel Co. v. FTC, 327 u.s. 608 (1946) ......................................68
 

LePage's Inc. v. 3A1 324 F.3d 141, 164 (3d Cir. 2003) ...............................68
 

Lorain Journal Co. v. United States, 342 U.S. 143 (1951) . . . . . . . . . . . . . . . . . . . . . . . . . . 51, 55
 

Masimo Corp. v. Tyco Health Care Group, L.P., 2006 U.S. Dist. LEXIS 29977 (C.D. CaL. March 

22, 2006) ................................................................... 61
 

Morgenstern v. Wilson, 29 F.3d 1291 (8th Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
 

Nynex Corp. v. Discon, Inc., 525 U.S. 128, 134 (1998) ................... .'. . . . . . .. . . .66
 

Oahu Gas Serv., Inc. v. Pac. Res., Inc., 838 F.2d 360 (9th Cir. 1988) .. .r. . . . . . . . . . . .. . . . . 51
 

Palmer v. BRG of Georgia ,Inc., 498 U.S. 46 (1990) .................................67
 

PolyGram Holding, Inc. v. FTC, 416 F.3d 29,36 (D.C. Cir. 2005) ......................64
 

-lV­
RDK Truck Sales and Service Inc. v. Mack Trucks, Inc., 2009 u.s. Dist LEXIS 43245 (E.D. Pa. 

May 19, 2009) ............................................................... 66
 

Rebel Oil Co. v. Auto Flite Oil Co., 51 F.3d 1421 (9th Cir. 1995) .......................51
 

R.J Reynolds Tobacco Co. v. Philip Morris, Inc., 199 F. Supp. 2d 362 (M.D.N.C. 2002), aj'd,
 

67 Fed. Appx. 810 (4th Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
 

Rothery Storage & Van Co. v. Atlas Van Lines, 792 F.2d 210 (D.C. Cir. 1986) ............ 13
 

SPAHR v. Leegin Creative Leather Products, 2008 WL 3914461 (E.D. Tenn. Aug. 20,2008) . 19 

Spectrum Sports v. McQuilan, 506 U.S. 447 (1993) .................................62
 

Spirit Airlines v. Northwest Airlines, 431 F.3d 917 (6th Cir. 2005) ...................51,62
 

Tampa Elec. Co. v. Nashvile Coal Co., 365 u.s. 320 (1961) ..........................28
 

Tops Mkts., Inc. v. Quality Mks., Inc., 142 F.3d 90 (2d Cir. 1998) ......................62
 

United States v. Baker Hughes, Inc., 908 F.2d 981 (D.C. Cir. 1990). ................. 11, 12
 

United States v. Citizens & s. Natl Bank, 422 U.S. 86 (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . 12
 

United States v. Dentsply Intl Inc., 399 F.3d 181 (3d Cir. 2005) . . . . . . . . . . . . . . . . . . . . passim
 

United States v. E.I du Pont de Nemours & Co., 366 U.S. 316 (1961). ............ 11, 12,68
 

United States v. El Paso Natural Gas Co., et al., 376 U.S. 651 (1964). ..................26
 

United States v. Gen. Dynamics Corp., 415 U.S. 486 (1974). ................. 11, 19,28,45
 

United States v. Grinnell Corp., 384 U.S. 563 (1966) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
 

United States v. Marine Bancorp., Inc., 418 U.S. 602 (1974) . . . . . . . . . . . . . . . . . . . . . . . . . . .27
 

United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . passim
 

United States v. Philadelphia Natl Bank, 374 U.S. 321 (1963). ..................... .2,33
 

United States v. Visa Us.A., Inc., 344 F.3d 229 (2d Cir. 2003) ........................ 65
 

-v­
STATUTES: 

15 U.S.C. § 18 .......................................................... 2, 11, 76
 

15 U.S.C. § 21 ............................................................... 69
 

15 U.S.C. § 45 ............................................................ 49, 77
 

OTHER AUTHORITIES
 

2A Areeda, et aI., Antitrust Law ............................................. passim
 

1992 Horizontal Merger Guidelines (Merger Guidelines) ......................... passim
 

Jonathan M. Jacobson & Scott A. Sher, "No Economic Sense" Makes No Sense For Exclusive
 

Dealing, 73 Antitrst L. 1. 779 (2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
 

Steven C. Salop & R. Craig Romaine, Preserving Monopoly: Economic Analysis, Legal 

Standards, and Microsoft, 7 Geo. Mason L. Rev. 617, 627 (1999) . . . . . . . . . . . . . . . . . . . . . . .54
 

-V1­
UNITED STATES OF AMERICA
 

BEFORE THE FEDERAL TRADE COMMSSION
 - o ~~

(; ~ l? (' ~ -; c::i ~ ~

~ )	 i- In the Matter of	 ri i­ )	 ~ 7J

-,t - ~


) Docket No. 9327 C1 f" Polyp ore International, Inc. ) PUBLIC	 -'0'7 -. g a corporation.	 )	 CJ 

("' :: Z ... )	 . ,

(.n r: ~
 (j-- o q: ~_.

¿:~ t'-' ~ REVISED ERRATA SHEET	 .;;? 

This Revised ErrataSheet to Complaint 
 Counsel's Post-Trial Brief corrects the page and 

line number references in the brief. 

Page No. Line	 Correctìons 

75 21	 change from "(Paragraph II.FA)". to "(Paragraph II.F.3)". 

77 5	 change from "Paragraph VI" to "Paragraph VII" 

77 8	 change from "alternative suppliers. These provisions..." 

to "alternative suppliers (Paragraph VII). These provisions..." 

77 15	 change from "Paragraph VII" to "Paragraph VI" 

78 7	 change from "Paragraph VIII" to "Paragraph IX" 

Dated: July 16, 2009	 Respectfully Submitted 

-_._..-_....~' .. 

Steven A. Dahm 

J. Robert Robertson 

Complaint Counsel
 

Federal Trade Commission 

Bureau of Competition 

600 Pennsylvania A venue, Nw 

Washington, DC 20580 

Telephone: (202) 326-2192 

Telephone: (202) 326-2008 
INTRODUCTION
 

Po1ypore International Inc. ("Daramic") acquired Microporous, its closest and only 

competitor in the deep-cycle, motive and UPS battery-separator markets. This is a merger to 

monopoly. The acquisition also eliminated a third competitor in the market for automotive 

battery separators ("SLI"), leaving only the dominant supplier, Daramic, and Entek in North 

America. Daramic and Entek rarely competed aggressively in the past, and the acquisition of 

Microporous has retued the SLI separator market to a duopoly, which no court has ever 

approved in a Sectiön 7 case.l Daramic's other conduct goes beyond the pale. Daramic: (i) sued 

Microporous to keep it from competing; (ii) bought Microporous to keep it from competing; 

(iii) eliminated other competition; (iv) held back products from customers to force them into 

contracts; (v) raised prices immediately after the acquisition of Microporous; (vi) sued one 

customer for not agreeing to the higher prices; and (viii) threatened another customer with a 

lawsuit if it did not agree to higher prices. In short, Daramic' s unestrained exertion of market 

power is shocking. 

As Douglas Gilespie of Exide testified: 

"(S)ome things are right in the world and some things are wrong. ... (I)t's just 

wrong for (Daramic) to be able to restrict or prevent. . . others from being able to 

compete or others to grow in the marketplace. And the only agency that we knew 

about that we're supposed to go to is the FTC to be able to deal with these issues. 

. . . (T)hat's why you're here. ... It's something that we needed a higher
 

authority to be able to inject their opinion and help us to . . . convince others that 

it's just wrong at the end of the day." (Gilespie, Tr. 2980-2981).
 

Mr., Gilespie is right. Congress created the FTC and our administrative process to deal 

with issues just like these.2 He is right that Daramic's conduct is "just wrong." It is also a clear 

1 FTC v. HJ Heinz Co., 246 F.3d 708, 716 (D.C. Cir. 2001).
 

2 FTC v. Motion Picture Advertising Servo Co., 344 U.S. 392, 394-95 (1953) ("It is also clear that
 

the Federal Trade Commission Act was designated to supplement and bolster the Sherman Act 

1 
violation of 
 the law. Indeed, the facts at tral revealed an acquisition and other conduct that have 

gone far beyond what the law proscribes. For example, as your Honor has explained, to prove a 

Section 7 violation, Complaint Counsel needs to prove far less than what is alleged in this case. 

Complaint Counsel needs to show only that "'the effect of (the) acquisition may be substantially 

to lessen competition, or tend to create a monopoly.",3 To show that competition "may be 

substantially" lessened, all that Complaint Counsel must show is that the acquisition would 

produce '''a firm controllng an undue percentage share of the relevant market, and would result 

in a significant increase in the concentration of the firms in that market.'" CB&I Initial Decision, 

at 88 (citations omitted). Complaint Counsel did so, and Daramic failed to rebut that case. 

The evidence in Complaint Counsel's prima facie case is overwhelming. Before the 

acquisition, Microporous had been the maverick. It was the largest supplier of deep-cycle 

separators and was rapidly expanding in the other markets. The elimination of Microporous, a 

strong, worldwide competitor in all of these markets, significantly lessened competition.
 

Concentration levels confirm this. Daramic's market share in Nort America for deep-cycle, 

motive and UPS battery separators is now 100% -- a monopoly. For SLI, it is about 50%, with 

only one remaining supplier, Entek, which supplies mainly one customer, JCI. Even if the
 

relevant geographic markets were worldwide, these market shares are essentially the same.4 The 

HHI's are simply off 
 the charts: 10000, post-merger, for deep-cycle, motive and UPS, and over 

and the Clayton Act - to stop in their incipiency acts and practices which, when full-blown, 

would violate those Acts"). 3 In re Chicago Bridge & Iron Co., N. v., et aI., 2003 WL 21525006, Dkt. No. 9300 (Initial 

Decision, June 18, 2003) (hereinafter, "CB&I Initial Decision") at 84-85, ajf'd, 2003 WL 

22217293 (F.T.C. Sep. 10,2003), ajf'd Chicago Bridge & Iron Co., N. v., et at. v. FTC, 534 F.3d 

410 (5th Cir. 2008), (citing 15 U.S.C. § 18 and United States v. Philadelphia Natl Bank, 374 

U.S. 321, 355 (1963)). 4 No other producers compete in deep-cycle or UPS anywhere in the world. One small producer 

sells PVC motive separators in Europe but not in Nort America. The Asian producers of SLI 

collectively have a single digit market share both in Asia and in the world and have never entered 

Nort America.
 

2
 
5000 for SLI. Even Dr. Kahwaty, Daramic's expert, calculated a post-merger HHI for his PE 

market that are far above the level required to show a presumption that the acquisition is "likely 

to create or enhance market power or facilitate its exercise." Merger Guidelines, § 1.51(c) (using 

a threshold of 1,800 HHI and a change of 100). 

Daramic claimed only three defenses to this strong prima facie case: entry, efficiencies, 

and that no anticompetitive effects had occured. None of these got out of the staring gate. 

First, Daramic did nothing to prove that entr was anything more than a rumor, much less than it 

would be timely, likely, or sufficient. There are no entrants anywhere in the world for deepcycle, motive, or UPS battery separators. In SLI, there are none entering in North America. The 

evidence is undisputed that foreign suppliers cannot enter at Daramic's higher-than-market
 

prices, much less pre-acquisition prices. Even Po1ypore's CEO, Bob Toth admitted that Asian 

firms have not entered because they cannot make enough money in the market here. 

Second, Daramic' s effciencies defense died at traL Not even their expert was wiling to 

support it. 

Finally, although Complaint Counsel has no obligation to prove effects, the evidence at 

tral demonstrated anti 
 competitive effects in spades. That Daramic has the ability to exert 

market power unilaterally is obvious from its monopoly position in deep-cycle, motive, and UPS 

separator markets and its dominance in SLI. Yet, there is more: Daramic has actually raised 

prices above competitive levels after the acquisition. A simple comparison is that just in the last 

year, Daramic's only competitor in SLI, Entek, anounced a l while
 

Daramic anounced increases for as much as II. Daramic also raised prices higher for 

customers 

l. This was Daramic's intent from the beginning. It knew that it if failed to 

3 
acquire Microporous, 

. (PX0203 at 084, in camera). Moreover, in the SLI 

separator market, in which Entek and Daramic remain, it is axiomatic that these two remaining 

competitors are more likely to coordinate - and thereby reduce competition - than if there were 

three. Heinz, 246 F.3d at 716; FTC v. CCC Holdings Inc., et at., 605 F. Supp. 2d 26, 66-67 (D. 

D.C. 2009). Daramic failed to offer any evidence of any "strctual barrers" to such potential 

coordination, as required under the law. Heinz, F.3d at 724-25. 

Bearing in mind that the full remedy in this case is warranted if the evidence shows a 

mere likelihood that the acquisition lessens competition substantially in anyone of these four 

markets, additional evidence showing Daramic' s undisputed, brazen conduct has taken us far 

beyond what it required by the law, and is essentially umebutted. For example, Daramic failed 

to offer any evidence to counter Complaint Counsel's evidence of 
 monopoly, except to say that it 

simply raised prices to recover cost increases and forced customers into exclusionary contracts 

for planning puroses. Yet, no other competitor has ever been able to raise prices to the levels 

Daramic was able to impose on its customers. 

(Seibert, Tr. 4278, in camera). Thus, cost cannot be the real 

basis for the amount of increases. 

Signally, Daramic's General Manager, Pierre Hauswalds mantra of "no mercy" to its 

customers if they considered any competitive supplier, and even to his own staff if they failed to 

raise prices, is a reflection of Daramic's unabashed sense of entitlement to monopoly profits.s 

S Daramic's hard-ball tactics are simply astounding. See e.g., PX1793 at 001, in camera 

(Hauswald: Make _ sign the contract or "no product today," show them "no mercy");

Hauswa1d Tr. 743-74 132-1133, in camera 

Bregman, Tr. 2901-2903,2906; PX1050, in camera (Hauswa d tol 

4
 
Daramic's analysis that it could raise 

and its hard-fought pursuit of this deal over two years to eliminate 

competition also reveal its intent to maintain its monopoly power. In addition, numerous 

customers testified that Daramic repeatedly threatened to shut them down if they refused to sign 

contracts and pay higher prices. First, the supposed force majeure against Enersys is a prime 

example - a claimed force majeure event in 2006 that never affected North America, did not 

affect Microporous or any Daramic customers who were not negotiating for a new contract, and 

disappeared as soon as Enersys signed an exclusive contract with Daramic. (Trevathan, Tr. 3655; 

Gilespie, Tr. 2985; Craig, Tr. 2556). Daramic admitted that its force majeure in North America 

for Enersys was simply a I"fabricated situation . . . perfectly timed with the renewal of the 

contract with Enersys.'1 (Gilchrst, Tr. 414-415, in camera, 611, 621). What Daramic did,
 

quite simply, was "wrong" and "unethicaL" (Craig, Tr. 2596). Second, Daramic's exclusionary 

contracts forced customers to pay high penalties if they used any other vendor. Third,
 

Daramic's agreements with H& V and Jungfer were for the admitted purose of excluding
 

competition. And, finally, when Daramic's "MP Plan" (i.e., Microporous Plan) was insufficient 

to keep Microporous out completely, the acquisition became the final, knockout blow. 

The evidence at tral demonstrated that this acquisition and Daramic's conduct have 

harmed competition significantly and that only a full divestitue and a cease and desist order wil 

eliminate the anti 
 competitive effects caused by Daramic. A full remedy must restore competition 

by reestablishing Microporous as the maverick and third largest battery separator company in the 

5 
world. The goal here is to restore competition, the fabric of America, because as Larr Burkert 

ofEnersys said, 

* * *
 

In sum, the facts at trial demonstrated that Daramic' s conduct and acquisition of
 

Microporous systematically lessened competition. The law demands a quick and complete 

remedy. 

I. Factual Background
 

As a result of Daramic's acquisition of 
 Microporous on February 29,2008, there is only 

one manufactuer of deep-cycle, motive, and UPS separators in Nort America today, and only 

two manufactuers of SLI separators. The merger is a final step in a long history of exclusionary 

conduct by Daramic intended either to monopolize or to protect its existing monopoly power in 

flooded battery separator markets. 

Daramic's exclusionary behavior began almost 10 years ago, soon after Microporous 

acquired its polyethylene ("PE") battery separator technology from a company called Jungfer. 

Jungfer built the PE separator line located in Piney Flats, Tennessee for Microporous in 2001. 

Daramic acquired Jungfer almost immediately thereafter and shut it down 

L and then sued Microporous to prevent it from selling 

SLI in Europe. (PX2124 at 002, in camera; PX2241, in camera); see also CCFOF irir 657-659). 

While much of the exclusionary conduct at issue in this case revolves around 

Respondent's efforts to prevent Microporous from expanding its presence in Daramic's PE 

6
 
markets, Daramic also entered into ilegal market division agreements. When Daramic learned 

that an Absorptive Glass Mat ("AGM") separator manufactuer, Hollingsworth & V ose 

("H& V"), might enter one or more of the markets for PE separators, it entered into an agreement 

with H&V, 

l. (PX0169 at 001; PX0035 at 005). This market division 

agreement took effect March 23, 2001, 

l. (PX0094, in camera; PX0158, in camera).
 

This agreement is an umeasonab1e, horizontal restraint of trade and is ilegaL 

Daramic's actions had the intended consequences of eliminating the possibility of futue 

competition, but only by acquiring Microporous did Daramic fully succeed in its efforts. 

Daramic documents demonstrate that as early as 2003 Daramic understood that Microporous was 

planning to expand. tSee PX0758 at 017, in camera 

l. Shortly thereafter,
 

Daramic began a campaign of exclusionary conduct. After Daramic learned in 2003 that 

Microporous 

_l (PX0744 at 001). The President of Daramic then put an acquisition of
 

Microporous at the top of his list of possible acquisitions, describing the benefit to Daramic 

simply as (PX0932).
 

In 2005, when Daramic leared that Microporous planned to build a line to support 

L business, it concluded that Microporous 

7
 
_ (PX0168 at 002). Daramic decided that it should fight this threat because_ 

(PX0694 at 001). _II 

L (Id. at 001; PX1211 at 001, in camera; PX0456 at 

001-002). 

When Daramic learned that another customer, 

(See CCFOF ~~ 1069-1071). Because of capacity 

restraints at Microporous and Entek, Daramic knew its capacity was essential to _l and its
 

response prevented _l from switching any of its business to Microporous. (See CCFOF ~~
 

1072-1076). 

The last steps taken by Daramic to exclude Microporous occured in 2007, just prior to 

the merger. In 2007, Daramic devised the "MP Plan." (PX0258; PX0255; Roe, Tr. 1285-1286, 

1289-1290, 1292-1294, 1350-1354). Pursuant to this plan, Daramic entered into long-term, 

exclusionar contracts with key customers to prevent Microporous from contracting with them.
 

(See CCFOF ~ 725). Daramic believed that by contracting with these customers, Microporous's 

expansion could be slowed. (See CCFOF ~~ 726-727, 735). Daramic's conduct prevented
 

Microporous from acquirig sales opportities needed for its expansion. Despite Daramic's
 

continued efforts, Microporous finally managed to build a new facility in Feistrtz, Austra in 

2008. Daramic bought Microporous just weeks before the new factory was set to begin full 

commercial production. Microporous' s European expansion would have freed up significant 

8 
capacity for the North American markets, and Microporous had marketed this capacity in North 

America for months before it was acquired and had even agreed to supply Exide with SLI 

separators. (See CCFOF irir 618,678-679,681). 

Daramic thus believed that it needed to 

(PX0168 at 002; PX0694 at 001). Daramic believed an acquisition would 

6 

. (PX0932). Daramic finally acquired Microporous on February 29, 2008. 

Daramic's documents analyzing the 2008 acquisition of Microporous demonstrate its 

anti competitive intent. Presentations to Daramic' s Board highlight that: 

PX0203 at 088 (Hauswald, Tr. 776-781). Indeed, Daramic 

management asserted to the Daramic Board that 

(PX0203 at 089, in camera; 

Hauswa1d, Tr. 781, in camera). All of 
 the financial projections that were done at Daramic and 

presented to the Daramic Board of Directors incorporate expectations and assumptions that the 

merger would The 

management of the former Microporous conveyed similar analyses to their board, asserting that 

as a result of the acquisition,
 

Daramic wil have complete control of 100% of the deep-cycle markets . .. ).97% of the 

Industral markets for motive power . . . 100% of the industral flooded reserve power 

6 Although valued at $76 milion the transaction 

PX 54 at 

006). On receiving several customer complaints s ortly after the acquisition was announced, the 

FTC staff requested that Daramic hold the former Microporous separate durg the FTC 

proceedings. (PX0290; PX0291). (PX0955 at 005). 

9
 
markets (and) Daramic wil dissolve the theat of (Microporous) in automotive SLI as no 

new competitor wil be introduced into the market with a secured position. 

(PX1 109 at 003). 

These predictions proved to be prescient. The acquisition reduced or completely
 

eliminated competition in four markets for flooded battery separators: (1) deep-cycle separators; 

(2) motive separators; (3) UPS separators; and (4) SLI separators. There are no effective 

substitutes for the Microporous and Daramic products in the first three markets, and only one 

competitor in SLI separators for North America. As a result, Daramic has gained significant 

market power. Since the acquisition, it has forced customers to pay substantially higher prices. 

(See CCFOF ~~ 422-424,467,465).
 

In SLI separators, Daramic classified Microporous as an emerging competitive threat 

whose presence had already had a significant competitive impact. The only other competitor to 

Daramic in this product market is Entek. (See CCFOF ~ 547). Microporous had targeted an 

~xpansion into this business for years, and had competed to supply 

SLI separator customers: L (See CCFOF ~~ 554-555, 

604-605,607). It was only because of Daramic's efforts to ward off 
 the Microporous threat that 

Microporous had not secured commercial sales. Yet, Microporous' s efforts to obtain business 

with SLI customers had already led to lower SLI separator pricing. 

The acquisition also eliminated Microporous as a uniquely positioned entrant into the 

UPS market. Prior to the acquisition Daramic had a monopoly in the North American market for 

UPS separators for flooded batteries. (See CCFOF ~ 507). Microporous, however, had 

developed a PE separator for the UPS market that competed with Daramic' s product and had an 

agreement to sell it to Enersys, which would have given Microporous more than half the market. 

(See CCFOF ~~ 503-504, 520). 

10 
There is no evidence of timely, likely, or sufficient entr from any other competitor that 

would counter such anti 
 competitive effects. Indeed, no other competitor has entered the Nort 

American market despite Daramic' s achievement of monopoly in three of the four markets at 

issue and its anti 
 competitive conduct, including increased prices and its litigation and threatened 

litigation against customers who will not accept these monopolistic price increases. Nor is there 

any evidence of efficiencies that benefit competition or customers. (See CCFOF irir 1051-1056). 

II. Daramic's Ilegal Acquisition of Microporous 

Section 7 of the Clayton Act prohibits acquisitions "in any line of commerce or in any 

activity affecting commerce. . . (if) the effect of such acquisition may be substantially to lessen 

competition, or to tend to create a monopoly." 15 U.S.C. § 18; see Heinz, 246 F.3d at 713. The 

Supreme Court has explained that Section 7 uses the word "may," because it "deals in 

'probabilities, not certainties.'" United States v. Gen. Dynamics Corp., 415 U.S. 486, 505, 

(1974) (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 323 (1962)). Indeed, the 

language of Section 7 is "designed to arrest in its incipiency" acquisitions that may violate the 

Act. United States v. E.!. du Pont de Nemours & Co., 353 U.S. 586, 589 (1957). 

Complaint Counsel may demonstrate its prima facie case by showing that the acquisition 

would lead to "undue concentration in the market for a paricular product in a particular 

geographic area." United States v. Baker Hughes, Inc., 908 F.2d 981, 982 (D.C. Cir. 1990). 

This evidence creates a '''presumption' that the transaction wil substantially lessen 

competition." Id. Upon such a showing, the burden shifts to Respondent to rebut the 

presumption with evidence that '''shows that the market-share statistics (give) an inaccurate 

account of the (merger's) probable effects on competition' in the relevant market." Heinz, 246 

11 
F.3d at 715 (quoting United States v. Citizens & s. Natl Bank, 422 U.S. 86, 120 (1975)); FTC v. 

Staples, Inc., 970 F. Supp. 1066, 1072 (D.D.C. 1997). Respondent cannot do so here. 

A. The Relevant Product Markets are Deep-Cycle, Motive, SLI, and UPS Battery 

Separators for Flooded Batteries 

A prima facie Section 7 case typically "rests on defining a market and showing undue 

concentration in that market." FTC v. Whole Foods Mk., Inc., 548 F.3d 1028, 1036 (D.C. Cir. 

2008) (Brown, J.) (citing Baker Hughes, 908 F.2d at 982-83).7 In determining relevant product 

markets, cours have traditionally considered two factors: (1) "the reasonable interchangeability 

of use (and (2)) the cross-elasticity of demand between the product itself and substitutes for it." 

Brown Shoe, 370 U.S. at 325. In other words, the issue is "whether two products can be used 

for the same purose, and if so, whether and to what extent purchasers are wiling to substitute 

one for the other." Staples, 970 F. Supp. at 1074 (internal quotations omitted). Cross-elasticity 

of demand refers to the "responsiveness of the sales of one product to price changes of the 

other." United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 400 (1956) (finding 

cellophane in same market as other wrapping products even though the prices were very 

different); See 2B Philip Areeda et aI., Antitrst Law ir 562a, at 371 (3d ed. 2007) ("(A)ctua1 

shifts between two products in response to - or even without - changes in their relative prices 

indicate a single market."). 

the relevant market in the end is 'a matter of
 "(T)he determination of business reality - of
 

how the market is perceived by those who strve for profit in it.'" FTC v. Cardinal Health, 12 F. 

Supp. 2d 34, 46 (D.D.C. 1998) (citations omitted). Indeed, the Merger Guidelines, ir 1.0, 

explains that market definition must focus "solely on demand substitution factors," which is why 

"possible customer responses" are critical here. Thus, '''industr or public recognition of the 

7 But see Whole Foods, 548 F.3d at 1036 (Brown, 1. (noting that "this analytical strctue does
 

not exhaust the possible ways to prove a § 7 violation"). 

12 
(market) as a separate economic' unit matters because we assume that economic actors usually 

have accurate perceptions of economic realities." Rothery Storage & Van Co. v. Atlas Van 

Lines, 792 F.2d 210, 219 (D.C. Cir. 1986). "Cours generally wil include fuctionally 

interchangeable products in the same product market unless factors other than use indicate that 

they are not actually par of 
 the same market." CCC Holdings, 605 F. Supp. 2d at 38). 

In this case, there are four relevant markets in which to properly assess the
 

anticompetitive impact of Daramic's acquisition of Microporous: 1) separators for deep-cycle 

batteries; 2) separators for motive power batteries; 3) separators for UPS batteries; and 

4) separators for SLI batteries.8 In each case, the evidence demonstrates that the products in each 

relevant market are substitutes for each other, that competition from these products have had 

price effects upon the other products within each relevant market, and that the industr 

recognizes these market distinctions. 

1. Deep-Cycle Battery Separators are a Product Market 

The deep-cycle separator market is composed of separators used for batteries in golf cart, 

scrubbers, and scissor lifts. (See CCFOF irir 65-66, 97). Deep-cycle batteries contain an
 

antimony additive that facilitates the deep-cycling process. (PX1791 at 001; see also CCFOF irir 

72-74). The deposition of antimony onto the negative plate, sometimes called "antimony
 

poisoning" drastically reduces the cycle life of 
 the battery. (See, e.g., PX1791 at 001; PX1124 at 

001; see also CCFOF irir 75-78). Deep-cycle batteries require separators containing rubber (or 

latex, which is liquid, natual rubber) to suppress antimony poisoning. (See, e.g., PX1791 at 001; 

PX0072 at 020; PX0798; see also CCFOF ir 81). Microporous's F1ex-Si1 and Ce1IForce and 

Daramic's HD are designed for deep-cycle applications. (PX1791). Pure PE does not 

8 But even if Daramic is right that there is some kind of world-wide PE separator market, the 

HHI's are still staggering: post-acquisition of 1. (Kahwaty, Tr. 5290 

(derived from PX0522 at 015, in camera)). 

13 
sufficiently suppress the transfer of antimony in a deep-cycle battery. (PXl124; see also CCFOF 

irir 85-91). 

Before the acquisition, both Microporous and Daramic were the sole competitors for 

deep-cycle separators. (See CCFOF ir 260). Microporous's Flex-Si1 is a natual rubber separator 

used in deep-cycle batteries. (See CCFOF ir 79). Microporous's CellForce is a PE separator that 

includes ground rubber (Ace-Si1 dust) and is also used in deep-cycle batteries. (See PX0798 at 

003 at 004; see CCFOF ir 82).). In 2005, Daramic introduced into the deep-cycle market HD, a 

competing PE separator that includes latex rubbe/ The evidence at tral showed that all these 

three products competed for deep-cycle battery business. (See, e.g., PX1791; PX1744 at 004, in 

camera; PX0222 at 001, in camera; PX0033 at 040, in camera; see also, PX0736 at 002 

(forecasting greater HD sales); PX0316 at 002). Yet, Daramic attempted, without any evidence, 

to argue that these products do not compete with each other. 

In his opening statement, Daramic's counsel stated bluntly: "The FTC contends that 

Flex-Sil competes with Daramic HD. It does not, Your Honor." The Judge specifically asked 

counsel whether the customers would say that "HD is not substitutable," and counsel responded, 

"That's correct. Absolutely." (Opening, Tr. 95-96). Counsel even set the stage that Trojan and 

u.s. Battery would testify on this point. They did - but totally contrar to what counsel
 

promised. (See generally CCFOF irir 375-379,384). 

Indeed, the very first witness, Richard Godber, the CEO and president of Trojan, the 

largest deep-cycle battery manufactuer, testified that HD is in fact a substitute for Flex-Sil, as 

is Ce1IForce, but that he would not use any other separators but these three. (Godber, Tr. 151­

14 
152). When asked whether "HD compete(s) with F1ex-Sil for use in deep-cycle applications," 

Mr. Godber was clear: "It does." (Godber, Tr. 152-153). He then explained that HD, F1ex-Si1,
 

and CellForce all compete, and that prior to the acquisition, "Daramic and Microporous" were 

the only "competitors for sale of separators in deep-cycle applications," not just in North
 

America, but in the world. (Godber, Tr. 153-154). Not only was HD a substitute for F1ex-Si1, 

prior to the acquisition, Trojan used Daramic's HD as "leverage" to get a lower price on F1ex-SiL 

(Godber, Tr. 183-215,292-295; PX1655 at 001; PX1659 at 001; PX1660 at 003-004; PX1663 at 

001; PX0428 at 003; PX1664; IGodber, Tr. 2St; Gilchrst, Tr. 371-372, 406, 407-408 

(agreeing); see also CCFOF ilil 405-421). Yet, after the acquisition, Trojan has no "options 

anywhere in the world. . . for separators for its deep-cycle batteries." (Godber, Tr. 229). 

Indeed, it has now 

_1. (Godber, Tr. 241-242). Mr. Godber put it well: "Obviously, with the acquisition,
 

that left us with no alternatives" for deep-cycle battery separators: "We definitely had only one 

place we could go to buy 
 a separator for our product." (Godber, Tr. 291). 

U.S. Battery also did not testify as Daramic's counsel promised. For U.S. Battery, F1exSil performs no better than HD and is "identical in performance." (Wallace, Tr. 1971-1972; see 

Qureshi, Tr. 2004, 2063 (F1ex-Sil, HD, and CelIForce are fuctional substitutes); see also 

CCFOF il 383). That is why U.S. Battery buys both Flex-Si1 and HD for their deep-cycle 

batteries - sometimes even for use in the same battery. (Wallace, Tr. 1931, 1946). They even 

use HD in original equipment ("OE"), deep-cycle batteries and have quoted HD for other OE 

sales. (Wallace, Tr. 1934-1935, 1939). In the past, u.s. Battery, the second largest deep-cycle 

battery manufactuer, has purchased separators only from Microporous and Daramic. (Wallace, 

Tr. 1938, 1942-1944 (Entek showed no interest)) u.s. Battery knows of no one "else in the 

15 
world that make battery separators for deep-cycle batteries." (Wallace, Tr. 1945; Qureshi, Tr. 

2011). Prior to the acquisition, competition from Daramic's HD caused Microporous to lower its 

prices to u.s. Battery on Microporous's Flex-Sii. (Wallace, Tr. 1946). (See CCFOF ~ 397). 

But after the acquisition, u.s. Battery has "nowhere to go but to the single source" - "Daramic," 

which can "control the pricing." (Wallace, Tr. 1951) At this point, u.s. Battery would like to 

use HD to replace up to 50% of their Flex-Si1 purchases, but Daramic will not allow it. 

(Wallace, Tr. 1977-1979; Qureshi, Tr. 2043-2044, 2089-2090; see also CCFOF ~ 390). 

Exide, the third major supplier of golf cart batteries, also contradicted Daramic's
 

argument. Exide regards "F1ex-Sil and HD to be substitutes for each other." (Gilespie, Tr. 

2933) Indeed, Exide uses both F1ex-Sil and HD in the same battery, which is its best selling 

battery at 80% of their sales. (Gilespie, Tr. 2941-2944; Demonstratives PX1400 and PX1402 

(batteries)). There is no difference in price, waranty, or anything else between batteries with 

Flex-Sil and those with HD. (Gilespie, Tr. 2944). There is also no question that HD was 

competing aggressively against F1ex-Si1 at Exide. Indeed, Microporous repeatedly gave Exide 

price concessions on all of their F1ex-Si1 purchases due to competition from Daramic's HD. 

(Gilespie, Tr. 2947-2950 (price decreases) 2951-2953 (no price increases due to competition); 

(see also CCFOF ~ 398-399, 401-405).10 But when Daramic bought Microporous, Exide lost the 

leverage it had to get a competitive price because there is "only one provider" of deep-cycle 

separators "today." (Gilespie, Tr. 2953-2954). 

The merging paries also regarded deep-cycle as a separate market - from the demand 

side - with Flex-Sil, CelIForce and HD as the only competitors. For example, Mr. Gilchrst, the 

former CEO of Microporous described the deep-cycle market as "predominantly golf car" and 

10 Crown is testing HD as a replacement for Flex-Sit (Balcerzak, Tr. 4137-4138). Crown asked 

Entek if it would make deep-cycle separators but has never even received any samples. (!d. 

4 139). 

16 
"sweeper/scrubber" batteries. (Gilchrst, Tr. 305). Just prior to the acquisition, Microporous
 

analyzed the deep-cycle separator market and found that only Microporous and Daramic 

competed in that market. (PX0078 at 007, in camera; Gilchrst, Tr. 305, 343, 363, 366-367)). 

Gilchrst testified that "Daramic HD" competed against both "F1ex-Si1 and CelIForce" and that 

they lost "business to HD." (Gilchrst, Tr. 343, 368; McDonald, Tr. 3949 (lost sales from F1exSi1 to HD), 3955 (Microporous "worred" that they would lose sales to Daramic); PX0319 at 007 

(2006 Daramic HD strategy update noting no competitive threat to HD in deep-cycle other than 

Microporous)). There is simply no question that F1ex-Sil, CellForce, and HD competed in the 

deep-cycle market. (Id. Hauswa1d, Tr. 662 ("not surrised" that Daramic claims that HD,
 

CellForce and Flex-Si1 are the three products used in golf cart batteries in PX1791; PX0171 at 

008), McDonald, Tr. 3911, 3944 (Daramic's HD and Microporous competed), 3948 ("no other 

competitor" other than Daramic in deep-cycle); Seibert, Dep. at 58 

. Daramic's head of sales, 

Tucker Roe, had no problem identifying "deep-cycle as golf cart and floor scrubber(s)." (Roe, 

Tr. 1196-1197) Roe was clear that Daramic' s HD was designed for the deep-cycle "market" to 

compete against "F1ex-SiL" (Roe, Tr. 1200, 1209; PX0316 at 002)). Indeed, in Roe's words, 

Daramic was "aggressively pursuing this market," and he believed he could convert all of
 

Exide's F1ex-Si1 purchases to HD. (Roe, Tr. 1211, 1789, in camera; PX1071 at 002). 

Daramic's HD was far more than just a fuctional substitute for Microporous's F1ex-Sii. 

It had a substantial economic force over the pricing of F1ex-Sii. For example, over 90% of the 

"total market" for deep-cycle batteries (i.e., Exide, U.S. Battery, and Trojan) all used Daramic 

HD as a competitive threat to Microporous's deep-cycle separators. (Gilchrst, Tr. 379-380) 

Daramic even positioned HD as a competitor in the deep-cycle market. (Id. at 381) 

17 
Microporous's CEO knew 

(Gilchrst, Tr. 467-468, in
 

camera). Prior to the acquisition, Daramic even recognized the price elasticity between HD and 

Ce1IForce. (Hauswald, Tr. 746-747; PX0749) 

(Gilchrst, Tr. 526, in camera; see also CCFOF ~ 392). 

In short, any way one analyzes separators for deep-cycle batteries, it is clear that this is a 

distinct market within which only F1ex-Sil, CellForce, and HD compete. No one else, including 

Asian producers, makes a deep-cycle separator. (Roe, Tr. 1216-1217). Dr. Simpson, the FTC's 

economic expert, also confirmed that deep-cycle battery separators constitute a separate market 

for antitrust puroses. (See CCFOF ~ 62). He evaluated the critical loss and determined that 

even if there were a 5% increase in price, 

l. (PX0033 at 006, 

012, in camera; Simpson, Tr. 3169-3172; Gilespie, Tr. 2933 (Switching to PE would not "make 

any sense")). As described above, customers have uniformly considered F1ex-Si1, CellForce, and
 

HD to compete against each other for deep-cycle products. For years, all the shifts of sales from 

Flex-Si1 have been to HD and CellForce and nowhere else. As the Areeda treatise explains, "A 

single market is suggested where (1) many buyers shifted their purchases fromXto Y durg the 

specified period," 2B Areeda, Antitrst Law, ~ 534e at 272. Even Dr. Kahwaty, Respondent's 

expert, 

(Kahwaty, Tr. 5328-5329, in camera). 

Daramic has argued, however, that Flex-Sil is unique and that this somehow makes it a 

product market in itself. This argument ignores the commercial realities of competition and the 

law. F1ex-Si1 may, like all the other products in this case, have some unique attbutes. Indeed, 

18 
Microporous's CEO reminded Daramic' s counsel that Ce1lF orce was "unique" as well. 

(Gilchrst, Tr. 519, in camera). Yet, F1ex-Sil and HD 

(Whear, Tr. 4839, in camera). Indeed, 

. (See Whear, Tr. 4783).
 

Under the law, mere uniqueness of a product, however, does not result in a distinct product 

market if it competes against substitutes. See, e.g., Hack v. The Presidents and Fellows of Yale 

College, 237 F.3d 81, 86 (2d Cir. 2000) (an admittedly unique product, a Yale education, is not 

its own product market); A.J Root Co. v. Computer/Dynamics, Inc., 806 F.2d 673, 675 (6th Cir. 

1986) (small business computers was the relevant market, not just those that would ru on BOSS 

softare); see also SPAHR v. Leegin Creative Leather Products, 2008 WL 3914461, at *11 

(E.D. Tenn. Aug. 20, 2008) (For a single product to constitute its own market, it must be "so 

unique that there are no substitutes reasonably interchangeable with them in the market.").
 

F1ex-Si1, CellForce and HD may each have unique properties, but all compete against each other 

for the use in deep-cycle batteries, which is thus a market with just these three competitive 

pro ucts. d 11

The change in HHI for the deep-cycle separator market is _1 with a resulting
 

HHI of 10,000. (Simpson, Tr. 3184-3185). Such a dramatic change is far above the change that 

the Heinz cour said "create 
 ( d), by a wide margin, a presumption that the merger w( ou1d) lessen 

11 Daramic also argued that deep-cycle separators (HD and CellForce) are in the same market as 

SLI separators because two examples of these products overlapped in backweb thicknesses. That 

arguent ignores the other aspects of these separators, such as rubber content, flexibility, cost 

and other factors that make the products competitive for their puroses. No one testified that he 

or she would use an SLI separator in a deep-cycle battery. Moreover, DaramIc's claimed overlap 

in backweb thicknesses is misleading, because over 99% of SLI separators are less than 10 mils, 

and no deep-cycle separators are less than 12 mils. (Roe, Tr. 1312-1315; Hauswa1d, Tr. 678­

679). 

19 
competition." Heinz, 246 F.3d at 716; see Merger Guidelines, ir 1.51(c) (any change above 100, 

when the resulting HHI is 1800, creates a presumption of competitive harm). 

2. Motive Separators are a Relevant Market
 

The motive power battery separator market is composed primarily of separators for 

forklift batteries. (See, e.g., PX0922 at 010 (Roe, Dep. at 58, in camera); PX0185 at 006; 

PX1786 at 113 ("Motive power or so-called traction batteries are used for the propulsion of 

electrc vehicles, primarily forklift trcks.")). These batteries serve as counterweights in the 

design of industral vehicles and are among the largest batteries made. (See PX2110 at 035). 

These batteries require separators that are much thicker and larger than other separators. (See 

CCFOF irir 111-113). In Nort America, motive separators are made of PE or PE-rubber and 

have very different properties than separators used in other products. (PX1790 at 001). (See 

CCFOF irir 114-115). 

Evidence of a separate motive separator market is found in Respondent's documents.
 

Microporous's former owners wrote that "Ce11F orce product is being quickly adopted (109% 

CAGR since 2001) by the motive power market." (PX1124 at 002; see also, e.g., PX0072 at 

020; PXO 185 at 006; CCFOF irir 117-118). Daramic' s documents also describe a separate motive 

market. A Daramic marketing flyer describes the motive market as follows: 

the requirements for traction batteries in respect of mechanical-properties and chemical 

stability are considerably higher than for starter battery separators. (A) fork lift battery is 

tyically operated for about 40,000-50,000 hours in charge - discharge service whereas a
 

staer battery only for 2000 hours. The requirements as to electrcal resistance are lower 

because of the tyically low curent densities for traction batteries. These diferences are 

reflected in the design of the modern traction battery separator material. 

PX1790 at 001 (emphasis added). 

As Dr. Simpson evaluated, customers would not switch to other tyes of separators with a 

5% (SSNIP) increase in price. (PX0033 at 014; see also CCFOF irir 126-129). Enersys, one of 

20
 
the largest manufactuers of motive batteries, had bought their separators only from Microporous 

and Daramic - and now, only Daramic. (See CCFOF irir 461-465). No one else makes the 

product. (Axt, Tr. 2100-2101) Respondents' own executives agree with the lack of competitors 

for the product. For example, just before the acquisition, Microporous analyzed the market for 

motive battery separators and found that only Microporous and Daramic competed in this market 

in North America.12 (Gilchrst, Tr. 342) Just after the acquisition, Daramic analyzed the market 

(PX395 at 025, in camera; Gilchrst, Tr. 463-464, in camera (No other 

competitors for motive)) Daramic even lowered its prices on motive separators to respond to 

lower prices from Microporous. (Roe, Tr. 1255-1257, 1261 (C&D), 1263 (East Penn); PX0836; 

PX0409). 

In short, there is no question that in the motive market, Microporous and Daramic were 

each other's closest competitors, and that the only competitor that Daramic had lowered its 

prices to meet was Microporous. (Roe, Tr. 1265-1266). Daramic's head sales executive, Roe, 

admitted that HD competed against CellForce in the "motive power traction market." (Roe, Tr. 

1202; PX0316 at 002; PX0598; (Hauswa1d, Tr. 848-849, 853 

); PX0023 at 002). 

Roe was so concerned about Microporous that he recommended that Daramic buy Microporous, 

because, if it failed to do so, prices in motive power separators would continue to falL (Roe, Tr. 

1270-1273; PX0433 at 003). 

Indeed, due to heavy competition from Microporous, Daramic had previously reduced its 

motive-separator prices and price increases to Enersys. (Axt, Tr. 2122,2125,2138; 2161-2166, 

2176, in camera; RX00209, in camera). From this experience, it was clear to Enersys that 

21
 
having two strong suppliers was essential to their having a "competitive edge." (Axt, Tr. 2131; 

see also CCFOF ir 468). But after the acquisition, "(t)here's no other source" except Daramic, 

and its prices have increased substantially. (Gagge, Tr. 2611; Gilespie, Tr. 3041, 3047-3048); 

Leister, Tr. 4028 (Entek not supplying motive separators); Douglas, Tr. 4082 (not aware of 

others; no reason to go overseas to find another source, even with a 5% price increase). 

Bulldog's Benjamin also testified about obtaining lower prices from Microporous due to steep 

competition from Daramic in motive separators. (Benjamin, Tr. 3516-3517). But postacquisition, Daramic gave Bulldog a 10% price increase, which it canot fight. (See CCFOF irir 

470-471; Benjamin, Tr. 3522 (Daramic is the "sole supplier. That's it. Take it or leave it."), 

13 3526 ("there is no other supplier, so you're kind of stuck")). 


Daramic's own documents reflect that the company understood that it was competing 

against Microporous in motive, and . (See 

PX0247, in camera; PX0153 at 002 

l; PX0243, in camera; PX0085; PX0023 at 004). Where 

Daramic did not face competition from Microporous, it recognized that it could raise prices. 

(See PX0843 at 001 

l; PX0254, in camera 

13 The fact that in 2006 Daramic was able to use its market power to force_ into a new 

contract would only make sense if motive products were a separate market. (See discussion infra 

at pages 55-56) Otherwise,_ would have just switched to SLI or some other separator for 

motive batteries. 

22
 
There are no other competitors in this market. Entek does not make motive separators 

today. 

_ (Weerts, Tr. 4507, 4509, in camera
 

L (Weerts, Tr. 4520, in camera; PX1823, in 

camera; see also Simpson, Tr. 3461-3462, in camera 

DAgain, the HHI's are very high. Without including the latest contract that_ and 

Microporous had executed for motive separators, the change in HHI would be . and the
 

resulting HHI would be 10,000 (Simpson, Tr. 3185-3186; see CCFOF iiii 280, 288). But this 

does not tell the entire story, based on what Microporous had already contracted to sell to 

, which would have raised Microporous' s market share to over half the market, the 

change in HHI would be. and the resulting HHI would be 10000. (Simpson, Tr. 3185-3186; 

see CCFOF ii 282). This also creates a strong presumption of a significant lessening of 

competition. Heinz, 246 F.3d at 716. 

3. UPS Separators are a Product Market
 

Battery separators used in UPS batteries are a relevant product market. (See CCFOF ii 

133). The UPS battery market comprises mainly batteries used to provide temporary back-up 

power supply in the event of an unplanned outage to critical data centers and buildings. (See 

CCFOF ii 135). UPS batteries are designed to sit idle for extended periods of time then, when 

needed, provide a quick burst of sustained curent for a few minutes until a generator is engaged 

or an orderly shutdown is made. (Bri1myer, Tr. 1833, in camera). 

23
 
The market for flooded UPS battery separators consists of separators made from 

Daramic's PE or Darak or Microporous's CellForce. (See CCFOF -i-i 145-146). Microporous 

recognized that there were only two competitors for UPS battery separators - Daramic and 

Microporous. (Gilchrst, Tr. 306, 343; see also CCFOF -i-i 134, 501). Microporous had made 

some sales of UPS separators for over a "year and a half' to C&D and had already agreed to sell 

to EnerSys, which would have given Microporous 40-50% of the UPS market in North 

America.14 (Gilchrst, Tr. 398-399; Axt, Tr. 2104) Entek made the product years ago but has 

(Gilespie, Tr. 

3037, in camera).IS
 

(Gilespie, Tr. 3041, in camera).
 

(Gillespie, Tr. 3018-3020, 3041, in camera). 

(Gilespie, Tr. 3048). Yet, there is no one else that 

Exide can tu to for these separators. (See CCFOF -i-i 503,507). Without Microporous, Exide
 

and other customers have lost the only leverage they had. 

Although any HHI calculation would be an estimate, based on what Microporous was 

, the resulting HHI post-merger would be 10,000, and the change 

14 Executives at Microporous anticipated revenues from the product as early as 2008 or 2009. 

(fPX0664 at 001. in camera 

(Weerts, Tr. 4492­

(Gilespie, Tr. 3037) 

24 
Thus, the loss of competition from Microporous clearly lessened competition substantially in the 

UPS market. 

4. Starting, Lighting, Ignition ("SLI") Battery Separators
 

Separators for automobile SLI batteries is a relevant market in which to assess the impact 

ofDaramic's acquisition of Micro porous. (See CCFOF ii 147). SLI batteries are used to provide 

a quick and unsustained surge of curent primarily to start the engine, after which the car's 

engine becomes the source of 
 power. The SLI market is the largest separator market. (PX0131 

at 032). 

In North America, separators for SLI batteries are made from PE. (See CCFOF iiii 293­

294). SLI batteries contain little or no antimony and do not require a rubberized separator. SLI 

separators must also have a very low electrcal resistance ("ER") to provide the surge in current. 

(PX0913 at 004, in camera; PX0669 at 004, 019, in camera). 

battery separators for SLI batteries are, for all of these reasons, a relevant product market in 

which to assess the competitive impact of Daramic's acquisition of Micro porous. 

Post-acquisition, Daramic analyzed the SLI product market and "competition" and found 

that only Entek competed against it outside of Asia. (PX0395 at 023; see generally CCFOF iiii 

247-252). Microporous also analyzed the SLI battery separator market and found that it 

competed against Daramic and Entek; the other producers, primarily Asian, were only regional 

players and did not compete in North America. (Gilchrst, Tr. 307). Indeed, Microporous was 

16 (PX0033 at 018). Daramic's Strategy Audit states 

_ (PX0265 at 005). AGM batteries reqUIre M separators, an A M separators
 

~le with flooded batteries and are thus not in the relevant market. Purchasers of
 

SLI separators for flooded batteries cannot switch to using an AGM separator and would not 

switch to producing AGM batteries in response to a SSNIP. (See, e.g., PX0029). 

25 
"never confronted by a customer or potential customer with" any competitors other than DaramIc 

or Entek in North America. (Gilchrst, Tr. 342; Seibert, Tr. 4266). 

That SLI automotive separators constitute a separate market is clear. (See PX0033 at 

018). Indeed, Respondent's documents analyze competition in the context of a market for SLI 

battery separators. (See, e.g., PX0080 at 060, in camera; PX0088 at 001; PX0131 at 032-035; 

PX0402 at 012, in camera; PX0506 at 001-002, 006-007; CCFOF ir 303). For example, a 

presentation by Microporous' s management to its board of directors shows 

(PX0080 at 060, 

in camera). Thus, the demand for SLI separators is inelastic, meaning that Microporous, 

Daramic and Entek are sellng into the same customer demand. 

Notably, Microporous had manufactued and sold SLI separators in North America and 

considered itself to be a competitor in that market. (Gilchrst, Tr. 308, 313, 341-342) 

Microporous was definite1y ready to sell SLI separators out of Feistrtz, (Gaug1, Tr. 4626) and 

was also going to restart its SLI manufactung in Tennessee. It had already been approved as an 

SLI separator producer by JCI (several years before,i7 and was again competing for JCI's 

business), and had agreed to produce SLI separators for Exide in Nort America and in Europe. 

(Gilchrst, Tr. 562 (JCI had even approved Ce1IForce as an SLI separator); Gilespie, Tr. 2976 

("We had (the) full intention that we were going to be buying Microporous separators in 2010")). 

Microporous would also have produced SLI separators for East Penn, but for the acquisition. 

(Trevathan, Tr. 3722-3723 (Phase III for East Penn was "discontinued because of 
 the acquisition

of Microporous by Daramic"); Leister, Tr. 4010, 4016-4018 (East Penn wanted to purchase SLI 

from Microporous, which was a "viable" supplier)). 

17 United States v. El Paso Natural Gas Co., et al., 376 U.S. 651, 661 (1964) ("(u)nsuccessful 

bidders are no less competitors than the successful one"). 

26 
Daramic also regarded Microporous as a competitor in SLI. Indeed, it repeatedly reacted 

to the threat of Micro porous as a SLI separator. (Roe, Tr. 1242-3; PX0258; PX0255, in camera; 

R~e, Tr. 1285-1286, 1289-1290, 1292-1294, 1350-1354, in camera (the "MP Plan")). _
 

J (Weerts,
 

Tr. 4517, in camera). Microporous was thus a very real competitor in SLI. But, at the very 

least, Microporous was, using the definition in the Merger Guidelines, an "uncommitted entrant," 

which should thus be included in the market definition as a participant. l(Kahwaty, Tr. 5413­

5414, in camera
 

Simpson, Tr. 3461-3462, in camera 

Daramic feared Microporous' s competition in SLI, and its documents express concern 

that "unlike prior years, we have a tre legitimate big competitor enterig the market (MP 

(Microporous J) and for sure they wil capture volume at whatever it takes. This is an element we 

have not faced in many years." (PX0238). Absent the acquisition of Microporous, Daramic 

predicted that Daramic would have had to 

J (PX0174
 

at 003,016, in camera). In fact, the Po1ypore Board 

18 Under the Merger Guidelines, 'i1.0, an uncommitted entrant should be included as a "market 

participant," because (as Microporous was) such an entrant "likely influenced the market premerger" and would thus also influence it "post-merger," but for the acquisition. Even if 

Microporous was not an actual competitor in SLI, it would stil have been a perceived potential 

competitor or a potential competitor, as those terms are described by United States v. Marine 

Bancorp., Inc., 418 U.S. 602, 627 (1974); FTC v. Proctor & Gamble Co, 386 U.S. 568, 580 

(1967). But, because Microporous had actually sold SLI into the market place, already had the 

plants to make SLI in Tennessee and Austra, and actually competed and won business from 

Exide and was going to sell to East Penn post-acquisition, it is clearly an actual competitor in the 

market. 

27 
l. (PX0823 at 008, 013, in camera; Roe, Tr. 1382, in camera). Microporous's
 

successful efforts to obtain sales in SLI, and its impact on pricing, demonstrate that prior to the 

acquisition, Microporous was an actual and direct competitor to Daramic and Entek in the supply 

of battery separators to SLI customers. 

Based on what Microporous was committed to selling to equally committed customers in 

the SLI market, the HHI change from the acquisition as of Januar 2010 (when Microporous 

would have sold its SLI separators to curent customers) would have been at least _ 

(See, Simpson, Tr. 3186 (using the projected sales from 

Microporous and comparing them to Daramic's own projections of Microporous's sales (e.g., 

PX0276 at 007,009); CCFOF irir 301, 306). When competition is changing in the futue, cours 

require that the analysis is forward-looking, as we have done here. See Grumman Corporation v. 

The LTV Corporation, 665 F.2d 10, 15 (2d Cir. 1981) ("the (lower) Cour's assessment of the 

anticompetitive effect of a Grumman-Vought merger focused quite properly on the 'probable 

futue' of 
 the market." Id. at 15 (citing United States v. General Dynamics Corp., 415 U.S. 486, 

498 (1974)).19 Thus, the increase in concentration in SLI separators is so large that it leads to a 

presumption of anti competitive effects. (Merger Guidelines, ir 1.51). 

B. The Relevant Geographic Market is North America 

The Supreme Cour has defined the relevant geographic market as the region "in which 

the seller operates, and to which the purchaser can practicably tu for supplies." Tampa Elec. 

Co. v. Nashvile Coal Co., 365 U.S. 320, 327 (1961). The leading case on geographic market
 

definition is Philadelphia National Bank, in which the Cour held that the "proper question" to 

19 One measure of 
 Micro porous's futue impact on this market is the use of the estimated sales 

from a_. (PX0080 at 060, in camera; PX0920 at 023, in camera). Using these
 

estimat~rous would have had
 

(PX0080 at 060, in camera). 

28 
ask about the geographic market definition is "not where the parties to the merger do business or 

even where they compete, but where, within the area of competitive overlap, the effect of the 

merger on competition wil be direct and immediate." 374 U.S. at 357. More recently, the 

Eighth Circuit Cour of Appeals elaborated on the Supreme Cour's analysis, determining that 

the relevant geographic market is the area "to which consumers can practicably tu for
 

alternative sources of the product and in which the antitrst defendants face competition."
 

Morgenstern v. Wilson, 29 F.3d 1291, 1296 (8th Cir. 1994), cert. denied, 513 U.S. 1150 (1995); 

followed by Staples, 970 F. Supp. at 1073; see United States v. Pabst Brewing Co., 384 U.S. 546, 

549 (1966) (approving of geographic markets where the merging paries competed the most). 

"Nonetheless, the relevant geographic market must be sufficiently defined so that the Cour 

understands in which part of the countr competition is threatened" FTC v. Cardinal Health, 

Inc., et aI., 12 F. Supp. 2d 34, 49 (D.D.C. 1998). The geographic market may also be proven by 

demonstrating that it is the smallest region within which a hypothetical monopolist could 

"profitably impose at least a 'small but significant and nontransitory' increase in price." Merger 

Guidelines § 1.21. 

Under either the test of Philadelphia National Bank or the Merger Guidelines, the
 

geographic market for all four products is North America. Except for sales that were scheduled 

to move to the new Austran plant, almost all of Microporous' s sales had historically been in 

North America prior to the merger, and most of its customers were in this market. Thus, the 

most "direct and immediate" effect of the acquisition has been felt in North America. Moreover, 

as the recent price increases have proven and 

. (Simpson Report,
 

29
 
PX0033 at 006-007 (Using the Merger Guidelines and a critica110ss analysis to confirm the 

results)). 

Curently, North American flooded-battery manufactung plants only buy deep-cycle, 

motive and UPS separators from Daramic and, with respect to SLI separators, Daramic and 

Entek. (PX0911 at 031). There is no evidence that customers located in North America have 

ever sourced any of the relevant products from anywhere but North America. (See CCFOF irir 

247-252). Indeed, of the hundreds of 
 thousands of documents produced in this matter, Daramic 

has not been able to point to any evidence that Asian producers are selling any of the relevant 

products to any North American customer. (Seibert, Tr. 4266-4267, in camera 

Nor would a 5% price increase entice imports. For example, Daramic/Microporous and 

Entek all raised prices on all of 
 their relevant products in North America in 2007, 2008, and 2009 

and not one customer began importing separators for any of the relevant products from outside of 

Nort America. (PX0263 at 003; PX0371; PX0911 at 031; see also CCFOF irir 422-424, 467, 

645). Significantly, in 2006, when Daramic declared force majeure and informed its North 

American customers that they would not receive all of their separator requirements, customers 

were unable to import any of the relevant products from any producer. The same was tre in 

October 2008 when Daramic declared force majeure because of a strke at its Owensboro, KY 

plant: customers were unable to substitute any of the relevant products from other producers 

outside of 
 North America despite a lack of complete supply from Daramic.20 

North American battery manufactuers prefer to source their PE separators from local 

suppliers. Having a local source of supply reduces the time and expense needed to get the 

20 EnerSys was forced to air freight a container from Daramic's Feistritz facility at a 

significantly higher cost. (PX1285). This would not be a durable solution. 

30 
product to the customers, which reduces the risk of a disruption in the supply chain. (See
 

PX0923 at 020-021 (Hauswa1d, IH at 56-58); PX0910 at 018-019 (Trevathan, Dep. at 146-152); 

CCFOF ~~ 174, 177, 185-186, 189). For example, _l told Microporous that it had to 

build a PE separator plant in Europe to supply its European battery production facility, instead of 

continuing to source its needs from Microporous's plant in Piney Flats, TN. (PX091O at 005 

the separator manufacturer is local, it has a 

better opportnity to quickly troubleshoot technical problems that a customer may be having 

(Trevathan, Dep. at 34); see also CCFOF ~ 187). If 


with its separators or the customer's machines. (See CCFOF ~~ 176, 178). 

Separator prices are
 

(Gilespie, Tr. 2998, in camera; see CCFOF ~~ 164, 166, 168-169). Indeed, Daramic's Roe 

insisted that comparng prices from these different regions was 

(Roe, Tr. 1797, 1799, in camera; Seibert, Tr. 4252, in 

camera (Daramic tracks sales by region). Daramic prices its products locally, based on 

numerous factors, including local plant costs. For example, Enersys bought product from Europe 

and found that the prices were 20% higher there. (Burkert, Tr. 2334; see also CCFOF ~ 167) 

(See Simpson Reports, PX0033 at 005-007, in camera (using SSNIP (critical 

loss analysis) and price discrimination, PX2251 at 005-006, in camera (same); Merger 

Guidelines, ~ 1.21 (using SSNIP) and ~ 1.21 (price Discrimination); Simpson, Tr. 3183). 

Because manufactuers of deep-cycle, motive, UPS, and SLI battery separators can_ 

(Simpson, Tr. 3183). Dr. Simpson concluded from reviewing the testimony of buyers and the 

31 
documents in this case that a hypothetical monopolist could impose a "small but significant and 

nontransitory" increase in price on buyers in North America. (Simpson, Tr. 3183; Merger 

Guidelines, §1.22).
 

Asian separator suppliers simply do not sell any products in North America. (Seibert, Tr. 

4267, in camera; Thuet, Tr. 4379-4382, in camera; Weerts, Tr. 4500; Roe, Tr. 1236 (No Asian 

suppliers have ever supplied PE separators to North America)). As Mr. Toth admitted to the 

FTC staff durng the investigation, the reason no Asian producers have ever competed here is 

that the margins "aren't high enough" for them to be competitive. (Toth, Tr. 1404). _ 

(Hall, Tr. 2727, in camera) .
 

(Hall, Tr., 2734-2736, in camera; PX0907 at 21 (Kung, 

Dep. at 153, 155-156, in camera 

176, in camera ); PX1522 at 005_ 

(Hall, Tr. 2745; Gilespie, Tr. 3028-3030, in camera_ 

see also CCFOF iìiì 203, 205). 

(Gilespie, Tr. 30253029, in camera 

_)1 

Nevertheless, even though the evidence clearly demonstrates a North American market 

for each of the four product markets, a broader market wil not change the outcome in this case. 

F or example, with the small exception of a small number 

32
 
, there simply are no other producers 

of deep-cycle, motive or UPS battery separators outside of 
 North America. (See CCFOF ii 253). 

For SLI battery separators, the few regional players in Asia, with their collective, single-digit 

market share, have never had any economic effect on prices here in North America where 

Microporous was competing. But even if Daramic is right that there is some kind of world-wide 

PE separator market, the HHI's are still staggering: post-acquisition of 

Ill. (Kahwaty, Tr. 5290, in camera (derived from PX0522 at 015)). In the world, Daramic, by
 

far the largest producer, has more than twice the share ofPE separator sales as. and dwarfs 

these other small suppliers. (Hauswa1d, Tr. 771, in camera, PX0522 at 015, in camera). In a 

world-wide market, as Dr. Kahwaty proposed, Microporous was stil the third largest player, 

behind Daramic and Entek, and using his HHI's, this acquisition stil resulted in a substantial 

lessening of competition. As Mr. Gilchrst explained, aside from Daramic and Entek, there were 

no other competitors that "could actually do what Microporous was doing in SLI" against 

Daramic and Entek. (Gilchrst, Tr. 423-434). 

In sum, the evidence in this case indicates that a North American monopolist that raised 

prices by 5% in any ofthe four product markets would 

l. (PX0033 at 007). All the evidence in the case demonstrates a 

"direct and immediate" har to customers here in North America as a result of this acquisition. 

Philadelphia Natl Bank, 374 U.S. at 357. Thus, the appropriate geographic market is Nort 

America. 

C. Respondent Cannot Rebut Complaint Counsel's Prima Facie Case 

Because Complaint Counsel has demonstrated that concentration levels are high as a 

result of this acquisition, the burden shifts to Daramic to rebut the presumption of a substantial 

lessening of competition. Respondent's only rebuttal arguents are (i) that the markets should 

33
 
be one PE market; (ii) entr wil restore competition; (iii) there have been no anti 
 competitive 

effects from the acquisition; and (iv) efficiencies. None of 
 these arguments is sufficient. 

First, as described above, even if Your Honor and the Commission were to accept a 

worldwide PE market, the HHI's are stil extraordinarily high. Thus, this simply is not a defense. 

In addition, Daramic' s remaining defenses are likewise unsupported. 

1. Respondent Cannot Demonstrate that Entry into the Relevant
 

Markets Would be Timely, Likely or Suffcient 

To prevent a reduction in competition, entry "must restore the competition lost from the 

merger." Chicago Bridge, 534 F.3d at 429 ("(Clourts have generally concluded that for entr to 

constrain supracompetitive prices, the entr has to be of a 'suffcient scale' adequate to constrain
 

prices and break entr barrers."). A merger between two firms may be unlikely to lead to 

anti competitive harm only if entr by new firms "would be timely, likely, and sufficient in its 

magnitude, character and scope to deter or counteract the competitive effects of concern." 

Merger Guidelines § 3. However, Respondent's claim that timely, likely, and sufficient entr 

wil rescue this anticompetitive merger is unfounded. Based on the monopoly and nearmonopoly levels of concentration in the relevant markets, Respondent has the burden of 

providing particularly compellng evidence of ease of entr. Chicago Bridge, 534 F.3d at 430, 

and n.10 (quoting 2A Areeda & Hovenkamp at ii 422 ("The more concentrated the market and 

the greater the threat posed by the challenged practice, the more convincing must be the evidence 

of likely, timely, and effective entr.")). Mere evidence of customers inquirig about suppliers 

wilingness in the futue to provide deep-cycle, motive, and UPS separators "falls far short of 

proving. . . that entr (wil be) suffcient to replace the competition lost from the acquisition."
 

In re Chicago Bridge & Iron Co., 138 F.T.C. 1024, 1102. Instead, as the Commission explained 

34
 
in Chicago Bridge, such efforts show "little more than a refusal to throw themselves on (a 

supplier's) mercy." !d. 

In this case, entr would not be timely, likely, or suffcient to counteract the 

anti competitive effects of the acquisition. Furhermore, it would take many years for a new 

competitor to have enough of a significant market impact to restore competition - primarly 

because there are high barrers to entr, as Respondent's own documents confirm. 

"The history of entr into the relevant market is a central factor in assessing the 

likelihood of entr in the futue." FTC v. Cardinal Health, 12 F. Supp. 2d. 34, 56 (D.D.C. 1998);
 

Chicago Bridge, 138 F.T.C. at 1037 n.45 (quoting 2A Areeda, Hovenkamp & Solow, Antitrst 

Law ~ 420b at 60 (2d ed. 2002) ("The only trly reliable evidence of low barrers is repeated past 

entr in circumstances similar to curent conditions.")). There has been no de novo entr in any 

of these markets in North America in the last decade. In fact, 

. Microporous' own efforts to expand in motive, UPS, and SLI have taken 

many, many years and have been fraught with difficulties. 

The fudamental reason for the lack of entr is that these markets are characterized by 

high barrers to entr,
 

(PX0265 at 004,011, in camera; see also CCFOF ~ 996). Respondent has repeatedly admitted 

that these markets are characterized by barrers to entr,21 including: "significant capital 

investment," "sophisticated production processes," "extensive customer relationships," "patent21 See, e.g., PX0829 at 001 (stating to Standard and Poor's "the SUBSTANTIA technical 

ability, capital investment, lengthy qualification requirement, market share and other 'barrers to 

entr."'); (PX0485 at 001 (handwrtten notes by the Polyp 
 ore CEO relating to an analyst meeting 

stating "Daramic . . . Barrers to Entr - 'Technology' - Global Scale/Ifra(strctue), Lowcost, Grades/Prod Dv1pment, Low Cost %, But FunctionaL"). 

35 
protected technology," and the "high customer switching costs." (Gilchrst, Tr. 604, RX00741 at 

015; PX0194 at 025 

(PX3015 

at 017, in camera; Toth, Tr. 1428-1429; PX0485 at 001-002 (Toth's notes on 

commenting on PX1715 at 001-003, in camera (notes from an investor presentation); see also 

CCFOF ilil 988-995). World-wide customers, like Exide, need suppliers to have "quality," 

"technology," "infrastrctue," "R&D," and "global" scale to meet their needs. (Gillespie, Tr. 

2956-2958). (Hauswa1d, Tr. 784-785, in camera). For
 

example, when Daramic had a strke in Kentucky, it could not run its own plant effectively, even 

with other Daramic employees. (Gilespie, Tr. 2992). 

Dr. Simpson also explained that 

L (Simpson, Tr. 3205, in camera). Dr. 

Simpson testified: 

l. (Simpson, Tr. 3205-3206, in camera). Dr. Simpson also cited 

(Simpson, Tr. 3206, in camera). Finally, Dr. Simpson noted that 

i22 (Simpson, Tr. 3206, 

36
 
in camera; accord, Gilchrst, Tr. 604, RX00741 at 015; PX0194 at 025; Hauswa1d, Tr. 784-785; 

PX3015 at 017; Toth, Tr. 1428-1429; PX0485 at 001; PX1715; (Gilespie, Tr. 2956-2958). 

These were exactly the same kinds of entr requirements that were upheld in Chicago Bridge,
 

534 F.3d at 437-440, and they likewise are Ulebutted by Daramic here. 

Significantly, Daramic's own conviction that 

(See, e.g., PX0276 at 009; PX0174 

at 003; PX0212). In short, the evidence demonstrates that no entrants can compete at "sufficient 

scale" and on the "same playing field" as Daramic - as the former Microporous was - and thus 

"eliminate the anti competitive effects" of 
 the acquisition. Chicago Bridge, 534 F.3d at 430,442; 

CB&I Initial Decision, at 101 (entr must be '''effective in offsetting any loss of competition"') 

(citation omitted). 

a. Entry Would Not Be Timely 

The Merger Guidelines generally use "two years from initial planning to significant 

market impact" as a theshold for measurg whether entr would be timely. Merger Guidelines 

§ 3.2. De novo entr into any of 
 the relevant markets - in the form of entr at a greenfield plant 

site - would take well in excess of two years. Building a plant and training a workforce takes 

about one to two years, which assumes expertise in how to build a PE separator production line. 

A de novo entrant would need years simply to develop the necessary technology to 

compete in the more specialized markets for UPS, motive power and deep-cycle separators, 

including working with customers to understand and develop product for their specific 

applications, obtaining product qualifications, and workig around Daramic' s significant 

(Simpson, Tr. 3206, in camera). Dr. Simpson noted that _ 

J (Simpson, Tr. 3207-3208, in camera).
 

37 
patent/P position. The testing requirements to gain customer approval add significantly to the 

amount of time it takes to enter each of 
 the product markets. (See generally CCFOF irir 881,883, 

886-888). Testing for motive and UPS products tyically takes two-to-three years. (Whear, Tr. 

4798; Gagge, Tr. 2490-2492; Gilespie, Tr. 2973-2974; see also CCFOF irir 889-892). Testing for 

deep-cycle separators tyically take 18-24 months. (Gilespie, Tr. 2934; Godber, Tr. 163; see
 

also CCFOF irir 897-901, 903). Customer testing of SLI testing can last from 18-24 months. 

(Gilespie, Tr. 2973; RX00013 at 009). Just as Daramic spent many years23 tring to design a 

battery separator that would work well in deep-cycle applications, it would be impossible for a 

new entrant to develop and design a deep-cycle separator from scratch and have it tested and 

ready for commercial sales within two years. (See, e.g., PX0433 at 001; CCFOF irir 877-879). 

A new entrant would also need to provide customers with products that the customer 

could test to ensure that it consistently met the customer's quality requirements. Testing can take 

a considerable time - more than a year in the case of deep-cycle, motive and UPS separators. 

For example, Microporous's own expansion in Tennessee took more than five years to 

accomplish. (Gilchrst, Tr. 323). There simply is no evidence that anyone is actually going to 

enter any of these markets within two years. 

b. Respondent Cannot Demonstrate that Entry Into the Relevant Markets is 

Likely 

In order to demonstrate that entr is likely, Respondent must be able to demonstrate that 

entr would be profitable at pre-merger prices, and such prices could be secured by the entrant. 

Merger Guidelines § 3.3. Based on the record in this case, there is no evidence of either. Rather, 

the market share that a new entrant would surely need to justify its investment would be sure to 

23 Daramic's own development of 
 its deep-cycle separator (PX0950 at 064). 

38
 
drve prices down well below pre-merger prices. That impact would make entr unattactive and 

therefore unlikely. This, together with the high barrers to entr, makes suffcient and timely 

entr unlikely.
 

In the deep-cycle market, Daramic now owns all the patents for using rubber additives in 

PE separators for suppression of antimony, as used in CellForce and Daramic HD. (PX2161; 

PX2166; PX1124 at 001). While other separator additives have been considered for antimony 

suppression, natual or synthetic rubber is the only additive known to adequately suppress
 

antimony in deep-cycle batteries. (See, e.g., PX2189 at 027). Daramic failed in its attempt to 

use wood lignin as an additive and switched to rubber for deep-cycle. (See generally PX0319). 

An entrant wishing to enter this market would have substantial difficulty inventing or proving the 

effectiveness of an antimony suppression technology that does not infrge Daramic's patents. 

Even if some company decided to enter or expand into any of the four markets in North. 

America, none could build a line, train their people, design a product, test that product and begin 

commercial production within two years. Neither Daramic nor Microporous ever did it, and it is 

even more unlikely that someone else would. See Merger Guidelines, ~ 3.1 ("All phases of 
 the 

entr effort wil be considered" for the two-year requirement, including "planning, design . . .
 

constrction, debugging. . . and qualification requirements"). 

c. Respondent Cannot Demonstrate that Entry Would Be Suffcient to 

Overcome Anticompetitive Effects 

Respondent canot demonstrate that entr would be suffcient to restore the competition 

lost as a result of the merger because it must be able to point to firms that would be able "in a 

reasonable time frame to build a reputation for quality and reliability." Chicago Bridge,138 

F.T.C. at 1095; Coca-Cola, 117 F.T.C. at 953,960 (Entr "must be able to restore competitive 

pricing - i.e., it must be effective in offsetting any loss of competition" resulting from the 

39
 
acquisition). Daramic must also prove that these firms would "be of a sufficient scale to 

compete on the same playing field as (Daramic) and thus would be unable to constrain the likely 

anti competitive effects." Chicago Bridge, 534 F.3d at 430. The uncontroverted evidence shows 

that no such entr is likely to be sufficient. 

No potential entrants have demonstrated that they have the technology, product quality 

and supply capability to be taken seriously by North American customers in these markets. (See 

CCFOF ir 935). Indeed, Daramic documents 

(PX0265 at 011; see generally CCFOF irir 914-918). Based upon the 

experience Microporous gained through learning by doing, 

(PX0033 at 010). Microporous's reputation for good product 

design, efficiently making battery separators that met customers' needs, an engineering and 

business staff with the technical skill to solve problems, and customer acceptance of their 

products lead to a proven record and the development of relationships with battery 

manufactuers. (See, e.g., PX0131 at 054,056,064; PX0910 at 024). 

No potential entrants are likely to replicate the competitive presence of Microporous. 

(See, e.g., PX0131 at 054, 056, 064; PX0265 at 012; PX0910 at 024; PX0092 at 001). 

Manufactung know how is accumulated over multiple years. (See, e.g., PX0131 at 054, 056, 

064; PX0910 at 024; PX0092 at 001). Asian suppliers substantially lag Daramic and 

Microporous in these assets. (See, e.g., PX0913 at 045,046 

l). For example, in assessing a small SLI battery separator manufactuer in
 

_J Daramic noted that:
 

40
 
l. (PX0216 at 001; see also PX0217 at
 

002, 003).
 

Daramic, however, claims that some Asian manufactuer might expand in Asia. But such 

an expansion wil have no effect here in North America. It never has. f(See Kahwaty, Tr. 5377 

L As the Merger Guidelines, ~ 

3.4, explain, "where the competitive effect of concern is not uniform across the relevant market, 

in order for entr to be sufficient, the character and scope of entrants' products must be
 

responsive to the localized sales opportities" - in this case, in North America. As discussed 

below, none of these supposed foreign competitors sells anything here. (See CCFOF ~~ 247­

251). Even if 
 they ever did, they would not restore competition to pre-merger levels. 

In sum, there is no evidence that any entr would be likely, timely, or suffcient to restore 

competition to pre-acquisition levels. 

2. Respondent's Claim of No Anticompetitive Effects Is Contrary To
 

The Evidence
 

Daramic has claimed that there is no evidence of any likelihood of competitive harm 

from the acquisition. But the evidence is overwhelmingly to the contrary. As Your Honor Judge 

held in Chicago Bridge, Complaint Counsel is "not required to prove that anti 
 competitive effects 

have in fact occured." (CBI Inital Decision at 114). Instead, the high concentration of 
 the postacquisition markets is sufficient to show the probability of unilateral or coordinated effects. 

Nevertheless, actual evidence of effects is abundant in this case. Daramic's own intent to raise 

prices, actual unilateral effects and the likelihood of coordinated effects are the clearest 

examples. 

41
 
a. Daramic's Intent To Raise Prices Post-Acquisition
 

Daramic predicted that the result of the acquisition would be higher prices for customers, 

and indeed its prediction has come tre. The Supreme Cour has clearly said that "evidence 

indicating the purose of the merging parties, where available, is an aid in predicting the 

probable futue conduct of the parties and thus the probable effects of the merger." Brown Shoe 

v. United States, 370 U.S. 294, 329 n.48 (1962) (emphasis added); see also 4A Philip E. Areeda 

et aI., Antitrst Law ~ 964a (2d ed. 2006) ("(E)vidence of anti 
 competitive intent cannot be 

disregarded."); Whole Foods, 548 F.3d at 1047 (Tate1, 1.). In this case, Daramic's view that 

acquirng Microporous would eliminate a major competitor and reduce price competition is 

stated repeatedly in its documents throughout a period of several years, right up until the time of 

the acquisition.
 

As early as July 2003, Daramic's head of sales, Tucker Roe, sent a memo to the President 

of Daramic summarizing the rationale for acquiring Microporous: 

l (PX0935 at 001). (See also PX0932).
 

(PX0433 at 004). 

l; CCFOF ~~ 648-652). 

When Daramic's former President passed the reins to Pierre Hauswald in August 2006, he left 

these final thoughts:
 

42
 
l. (PX0167).
 

That the acquisition eliminated competition is more fully fleshed out in virtally all of the 

documents prepared either by Daramic or Daramic executives immediately prior to the 

acquisition. These documents project that the acquisition 

. For
 

example, in a September 2007 presentation titled "Microporous Products, L.P. Acquisition," 

Daramic executives wrte that 

l. (PX0275 at 012). Daramic would also have to 

(PX0275 at 012). In analyzing the benefits of a Microporous acquisition, Hauswa1d told his 

Board that Daramic would be able to 

L (Id. at 014). 

With respect to the business risks associated with the Microporous acquisition, Daramic' s 

executives expressed concern about the increasing competition with Microporous, and describes 

three risks, including a 

l. (Id.
 

at 017). (See generally PX0276; PX0294 at 013, in camera 

Pierre Hauswa1d even told his Board that he 

was projecting a (Hauswa1d, 

43
 
Tr. 789-790, in camera). There is thus no doubt that DaramIc's executives anticipated that the 

transaction would and that this was one of the driving reasons for the 

transaction. 

b. Post-acquisition, Daramic Has Exerted Unilateral Market Power 

Once it eliminated Microporous as a threat,
 

Daramic has actually raised pnces.
 

L (Simpson, Tr. 3192-3194,
 

in camera). Dr. Simpson stated that 

L (Simpson, Tr. 3193, in camera). 

L (Simpson,
 

Tr. 3193-3194, in camera). 

Daramic claims that raised prices because its costs went up. But Microporous and 

Daramic had experienced cost increases before and had never been able to raise prices to the 

extent Daramic has post-acquisition. Just because a company has cost increases does not entitle 

them to raise prices. Competition is supposed to set the price, not Daramic. That Daramic's 

excuse is baseless is clear. First, 

(Seibert, Tr. 4278, in camera). Second, it raised 

prices more than 

l. (Weerts, Tr. 4511, in camera). Third, as Dr. Simpson analyzed,
 

l. (PX0033 at 024, in camera)
 

44
 
1. (PX0033 at 025, in camera)l; see also 

CCFOF iiii 797-802). In short, Exide, Enersys, and u.s. Battery all testified that they were able 

to reduce price increases and in many cases defeat price increases when they had competition 

between Microporous and Daramic. But after the acquisition, they were just "stuck." 

(Benjamin, Tr. 3526). 

In addition, 

1 (Simpson, Tr. 3194, zn
 

camera). First, 

_1 (Simpson, Tr. 3194, zn camera). Second, for smaller battery manufacturers, 

Microporous 

1 (Simpson, Tr. 3194-3195, in camera). Dr.
 

Simpson testified: I 

1 (Simpson, Tr. 3194-3195, in camera).
 

c. In a Three- To-Two Merger In SLI, Coordinated Effects Are Likely 

In the SLI market, in which Entek stil competes, however, there is also a strong 

presumption of coordinated effects. Merger law "rests upon the theory that, where rivals are 

few, firms wil be able to coordinate their behavior, either by overt collusion or implicit 

understanding, in order to restrct output and achieve profits above competitive levels." Heinz, 

246 F.3d at 715. Absent extraordinary circumstances, a merger that results in an increase in 

concentration above certain levels "raises a likelihood of 'interdependent anticompetitive
 

conduct.'" PPG Indus., 798 F.2d 1500, 1503 (1986) (quoting United States v. Gen. Dynamics 

45
 
Corp., 415 u.s. 486, 497 (1974); see also FTC v. Univ. Health, Inc., 938 F.2d 1206, 1218 n.24 

(1Ith Cir. 1991) (high concentration makes it "easier for firms in the market to collude, expressly 

or tacitly, and thereby force price above or farther above the competitive level"). "Because the 

FTC has established a prima facie case, the burden is on (Daramic) to demonstrate 'strctual
 

barrers,' unique to this industr, that are sufficient to defeat the 'ordinary presumption'" of 

coordination in such a "highly concentrated market." CCC Holdings, 605 F. Supp. 2d at 60, 

quoting Heinz, 246 F.3d at 725; see also Merger Guidelines, ir 2.1 (Coordinated Interaction). 

Although Entek, the only remaining competitor in North America, may say that it is 

wiling to compete, under the law there is a strong presumption that when there are few
 

competitors there are less "incentives to engage in healthy competition." CCC Holdings, at 66. 

As Judge Coller recently explained in a lengthy opinion describing the law of coordinated 

interaction, "With only two dominant firms left in the market, the incentives to preserve market 

shares would be even greater, and the costs of price cutting riskier, as an attempt by either firm to 

undercut the other may result in a debilitating race to the bottom." Id. at 67. 

Daramic offered nothing to defeat this presumption and did not even tr to show any 

"strctual barrers" to coordination. Rather, it has said that because Entek won one large
 

customer, it wil 
 likely compete even more aggressively in the futue. Yet, neither the law, nor 

economics, nor the facts support such a theory. First, absent evidence of 
 barrers to coordination,
 

we simply canot take Entek's or Daramic's word that they wil promise to compete more now. 

See Heinz, 246 F.3d at 721, 724-25. Second, as Dr. Simpson explains, economic theory supports 

the idea that the risks of coordination increase with concentration. (PX0033 at 021, in camera). 

Finally, the evidence corroborates the presumption. 

46
 
For example, Daramic's Strategy Audit notes that 

L (PX0265 at 008, 

in camera). In comments on an earlier draft of this Strategy Audit, Tucker Roe of Daramic 

stated: "I would say that over the past years there has not been an aggressive rivalr among 

competitors but this has changed when Microporous Products entered the market and more 

recently seen by Entek," which implies that Microporous's entr prompted the increased rivalr. 

(PX0482 at 002; Roe, Tr. 1281). 

And long before Microporous began expanding as a maverick, Entek and Daramic "were 

not aggressively competing against each other for business." (Hall, Tr. 2666-2667, 2692).
 

Absent Microporous, Daramic and Entek had been 

l. (Hall, Tr.
 

2873-2874, in camera, RX00044 at 002, in camera). 

(Hall, Tr. 2873-2874, in 

camera)i24 As Judge Collier explained, "(i)n a highly concentrated market, with stable market 

shares, low growth rates and significant barers to entr, there are few incentives to engage in
 

healthy competition." CCC Holdings, 605 F. Supp. 2d at 66. 

In short, post-acquisition price increases add to the strong presumption that a merger to 

monopoly in three markets, and from three to two in the SLI market, wil lead to anti 
 competitive 

effects. Daramic has simply failed to rebut these presumptions and the additional evidence that 

supports them. 

834-835, in camera
 

_; Weerts, Tr. 4514, in camera
 

47 

24 
3. Respondent's Claimed Effciencies Defense Fails 

Daramic attempts to rebut all the counts in the complaint with an affirmative defense of 

efficiencies. But its defense fails. Under the law, Daramic must prove "extraordinary
 

efficiencies" to rebut a strong presumption of anticompetitive effects. Heinz, 246 F.3d at 720; 

see also Philip E. Areeda, et at., Antitrust Law ~ 97lf, at 44 (2d ed. 2006) (requiring "a showing 

of 'extraordinary'" efficiencies where the "post-merger market's HHI is well above 1800 and the 

HHI increase is well above 100"). Moreover, "the cour must undertake a rigorous analysis of 

the kids of efficiencies being urged by the partes in order to ensure that those 'efficiencies' 

represent more than mere speculation and promises about post-merger behavior." Heinz, 246 

F.3d at 721. "Delayed benefits from efficiencies. . . wil be given less weight." Merger 

Guidelines § 4, n.37. Indeed, courts wil not allow an effciencies defense when the respondent 

cannot prove "that (its J efficiencies are verifiable" or "that the cost savings achieved through 

efficiencies are likely to be greater than the transaction's likely anticompetitive effects," and that 

they are passed through to the customers. CCC, 2009 WL 723031, *39 (citations omitted). 

Respondent has not yet presented any comprehensive, well-documented efficiency 

evidence. (See, e.g., PX0912 at 008, 009, 012-013 (Riey, Dep. at 63-64, 71, 104, 106, 108, in 

camera); see also CCFOF ~~ 1051-1056). Daramic's vague and unsupported claim that it might 

Few former Microporous employees with expertise in rubber (e.g., Gilchrst, Wimberly, 

Bri1myer) are still with the company. (See PX0912 at 014, 015 (Riey, Dep. at 89-90, in 

camera); PX0950 at 060, in camera). Finally, Daramic's own expert, Dr. Kahwaty_ 

. (Kahwaty, Tr. 5249-5250, in camera).
 

48
 
* * *
 

In sum, the overwhelming evidence in this case is that Daramic knew it was buying 

Microporous to eliminate it as a competitor. The concentration levels in all the relevant markets, 

and even in the market Daramic proposes, are extraordinarily high. Daramic failed to rebut 

Complaint Counsel's prima facie case. In addition, the evidence demonstrates that a substantial 

lessening of competition has occured, which is far more evidence than required under Section 7 

to find a violation of 
 the law. 

III. Daramic Monopolied and Attempted to Monopolie the Relevant Markets and
 

Entered into Agreements that Unlawfully Restrained Trade 

In addition to its unlawful acquisition of Microporous, Daramic engaged in other conduct 

that violated Section 5 of 
 the FTC Act. Section 5 prohibits "unfair methods of competition." 15 

U.S.C. § 45(a)(1) (2006). Unfair methods of competition include, but are not limited to, any 

conduct that would violate Sections 1 or 2 of the Sherman Act. See, e.g., California Dental 

Assn. v. FTC, 526 U.S. 756, 762 & n.3 (1999); FTC v. Cement Inst., 333 U.S. 683, 694 (1948); 

Fashion Originators' Guild v. FTC, 312 U.S. 457, 463-64 (1941). Although the Commission 

does not directly enforce the Sherman Act, conduct that violates the Sherman Act is generally 

deemed to be a violation of Section 5 of 
 the FTC Act as well. E.g., Fashion Originators' Guild, 

Inc. v. FTC, 312 U.S. 457,463-64 (1941). 

The evidence at tral showed that Daramic engaged in conduct that violated both 

Section 1 (Complaint ~~ 47, 50-51) and Section 2 (Complaint ~~ 39-46, 52-53) standards of 

antitrst liability. Daramic's pattern of coercive and exclusionary behavior to obtain or maintain
 

monopoly status in several relevant markets through its exclusionary bargaining and contracting 

arangements - a pattern that continues to this day - violates Section 5. In addition, Daramic's 

49
 
agreement to allocate battery separator markets with Hollingsworth and V ose ("H& V") is a 

combination or conspiracy between potential competitors that umeasonab1y restrains trade. 

A. Count III: Monopoliation and Attempted Monopolization
 

The acquisition of Microporous is only the latest chapter in Daramic's long-ruing 

campaign to suppress the competitive threat that Microporous posed to Daramic' s battery 

separator business. Durng 2006 and 2007, Daramic coerced, pressured, and induced customers 

- large and small - to enter into exclusive dealing arrangements with Daramic, and as a
 

consequence, to accept contract terms that weakened Microporous, harmed the competitive 

process, and injured consumers of battery separators.
 

The evidence shows that Microporous presented a less potent competitive threat to 

Daramic than would have been the case without Daramic' s exclusionary bargaining and 

contracting practices. (See CCFOF ~~ 1101-1103). The subsequent and unlawful acquisition of 

Microporous serves to obscure the full effects of Daramic's exclusive dealing strategy, but 

certinly does not constitute a defense to liability. See United States v. Microsoft Corp., 253
 

F.3d 34, 79 (D.C. Cir. 2001) ("To some degree, 'the defendant is made to suffer the uncertain 

consequences of its own undesirable conduct.'" (quoting 3 Areeda ~ 650c, at 69 (1996)). As 

detailed below, Daramic's pre-acquisition conduct violates Section 2 of the Sherman Act as well 

as Section 5 of the FTC Act. 

1. Legal Standard
 

The offense of monopolization has two elements: "( 1) the possession of monopoly power 

il the relevant market and (2) the wilful acquisition or maintenance of that power as
 

distinguished from growt or development as a consequence of a superior product, business 

50
 
acumen, or historic accident." United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966); see 

also Microsoft, 253 F.3d at 50. 

The offense of attempted monopoly maintenance has four elements: (1) that the 

defendant possesses monopoly power, and (2) has engaged in predatory or anticompetitive 

conduct with (3) a specific intent to monopolize, and (4) a dangerous probability of 
 maintaining 

monopoly power. Order Denying Respondent's Motion to Dismiss Counts II and III of the 

Complaint for Failure to State a Claim (December 4, 2008) at 3 (Chappell, 1.); See also Lorain 

Journal Co. v. United States, 342 U.S. 143, 153-54 (1951). 

2. Monopoly Power/Dangerous Probabilty of Maintaining Monopoly
 

Power 

As the D.C. Circuit has stated, courts "tyically examine market strctue in search of 

circumstantial evidence of 
 monopoly power." Microsoft, 253 F.3d at 51. "Under this strctural 

approach, monopoly power may be inferred from a firm's possession of a dominant share of a 

relevant market that is protected by entr barrers." Id.25
 

Daramic's pre-merger share of the North American UPS and motive separator markets 

was in excess of 90%; shares in both are now 100%. Market shares of this magnitude are 

sufficient to support a finding of monopoly power. See, e.g., Spirit Airlines v. Nw. Airlines, 431 

F.3d 917, 935-36 (6th Cir. 2005); Conwood Co. v. United States Tobacco Co., 290 F.3d 768, 783 

25 Daramic asserts that the existence of entr barers is not a sufficient predicate for finding 

monopoly power: that Complaint Counsel must make the fuher showing that respondent has 

the power literally to preclude all market entr. This is incorrect as a matter of law. In 

monopolization cases, as in merger cases, the relevant inquiry is whether entr would be timely, 

likely, and sufficient to defeat the exercise of 
 market power. E.g., Rebel Oil Co. v. Auto Flite Oil 

Co., 51 F.3d 1421, 1440 (9th Cir. 1995) ("The fact that entr has occured does not necessarily 

preclude the existence of 'significant' entr barers. If the output or capacity of the entrant is
 

insuffcient to take business away from the predator, they are unlikely to represent a challenge to 

the predator's market power) (citing Merger Guidelines); Oahu Gas Serv., Inc. v. Pac. Res., Inc., 

838 F.2d 360,366-67 (9th Cir. 1988) (minor entr and defendant's declining market share do not 

preclude a finding of 
 monopoly power). 

51 
n.2, (6th Cir. 2002); Image Technical Servs. v. Eastman Kodak Co., 125 F.3d 1195, 1206 (9th 

Cir. 1997). Daramic's share of the SLI separator market in North America was approximately 

50 percent. (See CCFOF ir 305). Because of various market factors, including the fact that its 

principal SLI competitor has been capacity-constrained, Daramic was able to exercise monopoly 

power vis-a-vis certain customers in this market as well. See United States v. Dentsply Intl Inc., 

399 F.3d 181, 187 (3d Cir. 2005) ("A less than predominant share of the market combined with 

other relevant factors may suffice to demonstrate monopoly power."); accord Finemanv. 

Armstrong World Indus. Inc., 980 F.2d 171, 201 (3d Cir. 1992). 

As described above, entr into all of 
 these markets is difficult and slow. Because barrers 

to entr are substantial, there exists at all relevant times a dangerous probability that Daramic's 

monopoly power wil persist. (See CCFOF irir 823, 987). 

Evidence concerning the relationship between Daramic and its customers bolsters the 

conclusion that Daramic possessed monopoly power. Daramic is able to charge supracompetitive prices, to dictate important terms of dealing, and perhaps most importantly, to coerce 

customers to abandon plans to purchase battery separators from competitors of Daramic. A firm 

that can present unwiling customers with an all-or-nothing ultimatum and then walk away with 

an exclusive supply contract is a firm with monopoly power. 

3. Exclusionary Conduct
 

A firm violates Section 2 when it maintains or attempts to maintain a monopoly by 

engaging in exclusionar conduct. Microsoft, 253 F.3d at 58. Conduct may be judged 

exclusionary when it tends to exclude competitors "on some basis other than efficiency," i.e., 

when it "tends to impair the opportities of rivals" but "either does not fuher competition on 

52
 
the merits or does so in an unecessarly restrctive way." Aspen Skiing Co. v. Aspen Highlands 

Skiing Corp., 472 U.S. 585,605 & n.32 (citations omitted). 

Exclusive dealing arangements require a buyer to purchase products or services for a 

period of time exclusively or predominantly from one supplier. Exclusive dealing, by its nature, 

excludes (or "forecloses") rival suppliers from marketing their goods to the particular buyer. Of 

course not every exclusive transaction constitutes a violation of the antitrust laws. Exclusive 

dealing becomes a competitive problem when, as a result of this foreclosure, the ability of rivals 

to limit the exercise of monopoly power by the defendant is impaired. See, e.g., Microsoft, 253 

F.3d at 68-69; R.J Reynolds Tobacco Co. v. Philip Morris, Inc., 199 F. Supp. 2d 362, 387-89 

(M.D.N.C. 2002), aiI'd, 67 Fed. Appx. 810 (4th Cir. 2003).26 

There are various permissible methods and means for establishing that a monopolist's 

conduct has harmed competition. In several recent cases addressing the unlawful maintenance of 

monopoly power through exclusive dealing, cours have employed the following analytical 

framework: The plaintiff bears the initial burden to show that the defendant's conduct impairs 

the ability of one or more significant rivals to compete effectively, and thus to constrain the 

exercise of 
 monopoly power by the defendant. Dentsply, 399 F.3d at 187; LePage's Inc. v. 3A1 

324 F.3d 141, 164 (3d Cir. 2003); Microsoft, 253 F.3d at 69; R.J Reynolds, 199 F. Supp. 2d at 

387. If the plaintiff successfully establishes a prima facie case of competitive harm, then the 

monopolist may proffer a pro 
 competitive justification for its conduct. See id. 

The two governent cases cited above are the most relevant. In Dentsply, the defendant 

was the largest manufactuer of arificial teeth in the United States, accounting for approximately 

26 See also Jonathan M. Jacobson & Scott A. Sher, "No Economic Sense" Makes No Sense For 

Exclusive Dealing, 73 Antitrst L. 1. 779, 786 (2006) ("From an antitrst perspective, the 

concern with exclusive dealing is that rivals wil be excluded or marginalized to such an extent 

that they can no longer constrain the defendant's market power - resulting in higher prices, lower 

output, and diminished quality for consumers."). 

53 
75 percent of sales. Dentsp1y prohibited its network of authorized dealers, 23 firms in total, from 

also marketing the teeth of competing sellers. The government established competitive harm by 

showing that Dentsp1y had blocked rival manufactuers from access to these "key dealers," 399 

F.3d at 189, which impeded these rivals from expanding to where they could pose a "real 

threat, " id. at 191, to Dentsp1y's market power. 

The Microsoft case is similar. Microsoft entered into exclusive dealing agreements with 

various computer manufactuers and Internet access providers (IAs). These were the most 

efficient channels for distrbuting browsing softare. The excluded rival, Netscape, was 

compelled to use more costly means for reaching consumers, such as offering free downloads on 

the Internet. The exclusive dealing arrangements diminished Netscape's ability to constrain 

Microsoft's operating system monopoly. The showing of the above facts was suffcient to 

establish a prima facie case of competitive harm. Microsoft, 253 F.3d at 71 ("Microsoft's deals 

with the IAPs clearly have a significant effect in preserving its monopoly; they help keep usage 

of (Netscape's) Navigator below the critica11eve1 necessary for Navigator or any other rival to 

pose a real threat to Microsoft's monopoly."). 

The pricipal way in which exclusive dealing impairs the ability of competitors to 

constrain the market power of the monopoly firm is by increasing the costs of the competitors. 

In Microsoft and Dentsply, the monopolist raised the rivals' costs of distrbution. Here, Daramic 

used exclusive contracts with end-users ("customer foreclosure"i7 to raise the cost to 

27 See Steven C. Salop & R. Craig Romaine, Preserving Monopoly: Economic Analysis, Legal 

Standards, and Microsoft, 7 Geo. Mason L. Rev. 617, 627 (1999) ("Customer foreclosure refers 

to using exclusive contracts and other strategies that exclude rivals from access to a suffcient 

customer base. If the monopolist can reduce the sales of a competitor through the use of 

exclusive contracts, bundling, or other means, the rival may suffer higher costs that make it a less 

formidable competitor in selling to other customers."). 

54
 
Microporous of manufactung battery separators. The classic customer foreclosure case is 

Lorain Journal Co. v. United States, 342 U.S. 143 (1951). The Joural was the sole daily 

newspaper in Lorain, Ohio, and a monopolist in the sale of local advertising. This monopoly 

status was threatened by a new entrant, a local radio station. The newspaper responded by 

refusing to accept advertising from merchants that also advertised over the radio station. 

''Numerous Lorain advertisers wished to supplement their local newspaper advertising with local 

radio advertising but could not afford to discontinue their newspaper advertising in order to use 

the radio." 342 U.S. at 153. the policy threatened to force the radio station into bankptcy, 

which would allow the Joural to raise its prices. Furher, there was no apparent efficiency 

justification for the Joural's exclusive dealing policy. On this record, the Supreme Cour 

affrmed a finding of liability for attempted monopolization. 

The tral record shows that Daramic was intent on secunng exclusive dealing
 

arrangements - going so far as to bully and alienate major customers - for the very reason that 

these contracts would weaken Microporous. (See CCFOF ~~ 1089-1090). One measure of the 

effectiveness of Daramic's anticompetitive campaign is this: 

. (See CCFOF ~ 1103). 

Four key examples ofDaramic's monopolistic conduct stand out: 

(i) Enersys: In September 2006, Daramic used its 90% market share (i.e., monopoly
 

power) in motive separators to force 

(See CCFOF 

~~ 1124, 1141, 1144). Late in 2005, Pierre Hauswa1d discovered that
 

(PX0694; 

Hauswald, Tr. 1151-1152). Hauswa1d determined that Daramic had "leverage" to tell Enersys 

55
 
that Daramic would supply them "all or nothing." (PX0694 at 001; see also CCFOF ir 1117). 

Hauswa1d ended his comments by saying that "it would be better to solve the (Microporous) case 

definitively." (PX0694 at 001). 

In September 2006, Enersys told Daramic again that it was about to enter into an 

agreement to purchase motive separators from Microporous. (Axt, Tr. 2128-2129, 2148, 2166, 

2146, in camera) It had received a far better price from Microporous. (Id. 2121-2122). Enersys 

told Daramic that their offer was 

(Id. at 2146) Shortly afterwards, on September 20,2006, Roe reported Enersys' decision to his 

CEO, Bob Toth. (PX0456 at 001-002). Did Daramic respond with a more competitive offer? 

No. Toth said: "Seems like we should pull our offer and force a decision. (W)e should play hard 

ball here." (Id.) 

And hard ball was played: Daramic first weighed its f' 

"l. (PX0852 at 001, in camera; Roe, Tr. 1355-1357, in camera; see also CCFOF 

ir 1145). Within two weeks, Daramic claimed a force majeure and notified EnerSys that their 

allocation of separators durng the force majeure would be in the ten percent range. (PX0487; 

PX0911 (Roe, Dep. at 203-204); see also CCFOF irir 1146-1147). The force majeure threatened 

to " (Axt,
 

Tr. 2128-2129, 2146, in camera, 2148, 2166; see also CCFOF ir 1156). But Daramic's Pierre 

Hauswald then told Enersys' Larr Axt directly that 

_ the Daramic contract and
 

(Id. at 2147, in camera). 

The "force majeure" was simply a tactic in Daramic's monopoly playbook. The trth 

was that Ticona, Daramic's PE producer indeed had a shortge of PE in Europe, but that the 

56
 
1 (Hauswa1d, Tr. 1136, in camera; see also CCFOF ir 1148). II
 

1 (Hauswa1d, Tr. 1137-1138, in camera; PX0473 at 006). 

(PX0473 at 005, in camera). Instead, as Mr. Hauswald and Mr. Roe admitted, the European
 

Ticona silica shortage 

(Gilchrst, Tr.
 

414-415,611,621, in camera; see also CCFOF ir 1151). 

The evidence demonstrates that, although there was some shortage of PE in Europe, no 

one had any shortage in North America. Microporous also bought its silica from Ticona and 

"was not affected at all" by Ticona's silica shortage. (Trevathan, Tr. 3655). No other customers 

except Enersys and C&D - both of which were negotiating with Daramic for a contract - had 

such a low allocation of products from Daramic due to the supposed force majeure. (Roe, Tr. 

1804; Gilespie, Tr. 2985 (Exide had no shortage); cf PX1048 (promising 80-100% supply to 

Exide) with PXl207 (promising 10-50% to Enersys). 

Yet, using this pretended shortge in North America as a threat, Daramic parent
 

company's CEO, Bob Toth, told Enersys's CEO, John Craig, that Daramic could give Enersys "a 

hundred percent supply," despite the supposed force majeure, if Enersys signed a "long-term 

contract." (Craig, Tr. 2556). Toth then threatened Craig that Daramic would "stop shipping
 

product within two weeks if 
 you don't sign a long-term contract." (Id. at 2557,2559-2560; see 

also CCFOF irir 1157, 1159). This threatened half of Enersys's two billon dollar company. 

57
 

1 
After Daramic "held a gun" to Enersys' head, Enersys signed the contract, and the force majeure 

just "went away," and Enersys had all the supply the needed. (Id. at 2562-2563, 2570). As a 

result, Enersys had to 

(Axt, Tr. 2148; see also CCFOF irir 1158, 1160). 

(ii) MP Plan: When Microporouss' plans to supply Enersys were thwarted, Microporous 

went in search of contracts to fill out the company's production lines. Daramic learned of this 

development, and devised a counter-strategy (dubbed the "MP Plan"). (PX0258; PX0255, in 

camera; PX0911 (Roe Dep. 173-174)). Daramic's plan was to approach the customers most 

likely to contract with Microporous (Crown Battery, Douglas Battery, and East Penn Battery) 

and offer each an "all-or-nothing" proposition: that is, contract with Daramic exclusively or near 

exclusively, and on a long-term basis, or no battery separators wil be available from Daramic. 

(Roe, Tr. 1285-1286; 1291-1292; PX0258 at 001-002; see also CCFOF irir 725-727, 747). In the 

end, J. (Balcerzak, Tr. 4104; RX00994,
 

in camera; PX2058, in camera; PX0637 at 002-009; RX01519; see also CCFOF irir 728-734). 

(iii) Exide: In 2007, 

(Gilespie, Tr. 3011-3012, 3016 in camera; PX1028 at 041-046, 058-060, in camera). Further, 

Daramic informed Exide that 

J (PXI050, in camera; Bregman Tr. 2901-2902, in 

camera). Instead, Daramic
 

J. (Gilespie, Tr. 3011-3012, 3016 in camera; PX1028 at
 

041-046,058-060, in camera). 

58
 
(iv) FlAMM: In late 2007, Daramic was involved in negotiations with 

J (Roe, Tr. 1345-1346, in camera). J 

automotive battery manufactuer in Europe. (Roe, Tr. 1345, in camera; PX0215 at 002, zn 

camera). Daramic's sales personnel learned that 

l (Roe, Tr. 1352, in camera; PX0222 at 04, in camera). Daramic grew 

concerned because _J would be 

_ (PX0215 at 003, in camera; see also CCFOF ir 744). Yet again, Daramic concluded
 

(PX0214, in camera). 

Daramic then 

l. (Roe, Tr. 1345-1346, in camera; see also CCFOF ir 745).28 

With these exclusionary tactics and contracts, Daramic succeeded in its aim of impairing 

Microporous's effectiveness as a competitor. See LePage's, 324 F.3d at 161 (exclusionary 

conduct caused plaintiff to lose sales, and as a result its "manufacturing process became less 

efficient"). As Dr. Simpson, the FTC's economics expert, testified 

l (Simpson, Tr. 3227, in
 

camera), and Daramic successfully used this tactic to har Microporous and thus customers.i9 

In sum, but for Daramic's exclusive dealing, and without the acquisition, Microporous would 

28 Microporous's European business was expanding in a way that would have given it more 

competitive clout both worldwide and in North America. Thus, this attck on its European 

expansion had an effect in Nort America as well. 29 Dr. Simpson fuher testified that: 

59
 
today be in a much improved position to constrain Daramic' s ability to charge supra-competitive 

pnces. 

Daramic claims that this showing of competitive harm is insufficient for three reasons: 

(1) exclusive dealing did not entirely eliminate Microporous from the market; (2) the challenged 

contracts are not entirely exclusive; and (3) Complaint Counsel did not show the precise 

percentage of all the separator markets that have been foreclosed through exclusive dealing. 

Each of these arguments is without merit and contrar to precedent. 

First, in a monopoly maintenance case, it is not necessar to prove that a rival has been 

entirely excluded from the market. It is instead sufficient to show that competition has been 

harmed. The rationale is found in basic economics and reflected in the law: raising the rival's 

costs creates a price umbrella that enables the monopolist to raise its own prices. Thus, 

Microsoft was held liable where its primar rival, Netscape, was impaired but not eliminated. 

Microsoft, 253 F.3d at 60 (Microsoft's conduct kept rival browsers from gaining a "critical mass 

of users"). Dentsp1y was also held liable where its multiple rivals were impaired but not 

eliminated. Dentsply, 399 F.3d at 191 ("'Consumer injury results from the delay that the 

dominant firm imposes on the smaller rival's growth.") (quoting Herbert Hovenkamp, Antitrust 

Law ~ 1802c at 64 (2d ed. 2002). Snuff manufactuer U.S. Tobacco was held liable for 

monopoly maintenance when its pricipal rival was impaired but not eliminated. Conwood Co. 

v. us. Tobacco Co., 290 F.3d 768, 781-82 (6th Cir. 2002) (absent anticompetitive conduct, the 

monopolist's market share would have declined at a faster rate). 

Second, in a monopoly maintenance case, it is also not necessary to show that the 

challenged agreements are completely exclusive; near exclusivity wil suffce. More precisely,
 

and as discussed above, the relevant requirement is that the foreclosure be sufficient to impair the 

60
 
competitive effectiveness of 
 the monopolist's rivals. United Shoe Mach. Corp. v. United States, 

258 U.S. 451, 454-55 (1922); Microsoft, 253 F.3d at 68 (Microsoft required lAPs to keep 

shipments of 
 Netscape's browser under 25%); Masimo Corp. v. Tyco Health Care Group, L.P., 

2006 U.S. Dist. LEXIS 29977 at *18-19 (C.D. Cai. March 22,2006) (sustaining 
 jur verdict that
 

competitors being forclosed from great than 34% of the market was substantial); RJ. Reynolds 

Tobacco Co. v. Philip Morris Inc., 60 F. Supp. 2d 502,510-11 (M.D.N.C. 1999). 

Third, in a monopoly maintenance case, it is not necessar to show that any particular 

percentage of the market has been foreclosed. Certainly, a substantial foreclosure number 

supports the inference that a rivals' ability to constrain the exercise of market power has been 

impaired. But alternative evidence of actual or likely competitive harm wil suffice. Thus, the 

opinion in Microsoft does not specify what percentage of the distrbution market was foreclosed 

by exclusive dealing. Microsoft, 253 F.3d at 70. Significantly, the Microsoft cour observed that 

Microsoft's exclusionary conduct violated Section 2 "even though the contracts foreclose less 

than the roughly 40% or 50% share usually required in order to establish a §1 violation." Id. 

The opinion in Dentsply does not reference any percentage of the distrbution market that was 

foreclosed by exclusive dealing. Dentsply, 399 F.3d at 185 (Dentsply's exclusive network
 

included 23 of the "hundreds of dealers" in the market). The opinion in Conwood does not 

reference any percentage of the distrbution market that was affected by the monopolist's
 

anticompetitive conduct. LePage's, 324 F.3d at 157. Finally, the opinion in LePage's states that 

the defendant entered into exclusive dealing arrangements with "large customers," but does not 

reference any percentage of the distrbution market that was foreclosed. Conwood, 290 F.3d at 

783. The reason for these results is that any wrongful conduct that maintains a monopoly is a 

violation of the Sherman Act. 

61 
4. Specific Intent
 

Unlike monopolization, for which a mere intent to do the act is suffcient, attempted 

monopolization requires proof that the defendant had a specific intent to destroy competition or 

build monopoly. See, e.g., Spirit Airlines, Inc. v. Nw. Airlines, Inc., 431 F.3d 917, 932 (6th Cir. 

2005), Tops Mks., Inc. v. Quality Mkts., Inc., 142 F.3d 90, 100-101(2d Cir. 1998); see also ABA 

Section of Antitrst Law, Antitrust Law Developments at 309 (6th ed. 2007). Specific intent may 

be proven by direct evidence. Alternatively, where the defendant's conduct is sufficiently 

egregious, specific intent to monopolize may be inferred from conduct alone. E.g., Spectrm 

Sports v. McQuilan, 506 u.s. 447, 459 (1993) (Unfair or predatory "conduct may be suffcient 

to prove the necessar intent to monopolize."); Confederated Tribes of Siletz Indians v. 

Weyerhaeuser Co., 411 F .3d 1030, 1042 (9th Cir. 2005). 

Daramic's bargaining tactics toward its customers were so egregious, coercive, and 

hostile as to support an inference that the company's tre purose was to maintain its monopoly 

power. This inference is confired by direct evidence showing that Daramic intended,_ 

to exclude Microporous from the battery separator 

industry. (PX1793 at 001-003, in camera; PX0215 at 002, in camera); see supra Part III.A.3 

(describing Daramic's monopolistic conduct). 

5. No Legitimate Justifcation for Daramic's Monopoly Conduct
 

When a prima facie case of competitive harm monopolization has been established, the 

burden of going forward shifts to the respondent to proffer a procompetitive justification for the 

challenged conduct. Dentsply, 399 F.3d at 196; Microsoft, 253 F.3d at 59. The tyes of 

efficiencies that are cognizable are those that offer the prospect of lower prices, greater output, or 

other benefits to consumers. 

62
 
Daramic asserts that its exclusive dealing arrangements allowed the company to reduce 

its risks by reserving or committing capacity to individual customers. This explanation is legal 

and economic nonsense. Any contract for a specific and definite volume would enable Daramic 

to allocate its capacity. The benefits of advance planning are not fuhered by Daramic's demand 

that customers forgo purchases from alternative suppliers. 

With regard to Enersys, Daramic contends that the invocation of force majeure was 

legitimate. This is contrary to the evidence. But even if accurate, this does not justify Daramic's 

conduct. A force majeure event results in scarcity, and may excuse Daramic from complying 

with its obligation to supply product to Enersys for the short time of supposed scarcity. But stil 

unexplained (and unjustified) is Daramic's decision to exploit the scarcity of 
 product in 2006 so 

as to extend its exclusive contract with Daramic's using the 

scarcity of its monopoly product to leverage futue orders, to be delivered when the scarcity has 

passed and competing sources of supply have developed, is not efficient. 

B. Count II: Unreasonable Restraint of Trade
 

In addition to the monopolization and attempted monopolization conduct described
 

above, Daramic also entered into agreements in uneasonable restraint of 
 trade. In 2000-2001, it 

became apparent to Daramic that Hollingswort & V ose ("H& V"), then a producer of absorptive 

glass mat ("AGM") battery separators for sealed lead-acid batteries, was interested in entering 

the PE separator industr. (Hauswald, Tr. 640; PX0169 at 001; PX0035 at 005-006; see also 

CCFOF ~~ 1168, 1170-1178). In order to block this competitive threat, Daramic approached 

H&V and proposed an "alliance" between the two companies. (PX0169 at 001; Hauswa1d, Tr. 

640-641,643). From the outset, the core of this arrangement was a set of 
 mutual promises to 

. (PX0169 at 001; PX0094 at 002-003, in camera; PX0035 at
 

63
 
005-006; PX2150 at 001, in camera; PX1356 at 001). Specifically, 

(Hauswa1d, Tr. 636-637; PX0094 at 002-003, in camera). 

Once this sweeping non-compete restrction was agreed upon, the parties then discussed 

where in the world they might benefit from each other's "representation." (Roe, Tr. 1746, 1811). 

Because both H& V and Daramic 

l. (PX0917 at 015-016
 

(Cullen, Dep. at 59-60, in camera); PX0925 at 031 (Porter, Dep. at 126-127, in camera); 

PX0094 at 013, in camera). But by the time L
 

(PX0158, in camera) this "global alliance" of market leaders had 

. (Roe, Tr. 1810-1811; PX0014, in camera). _ 

(PX0923 at 030 (Hauswald, IH at 280, in 

camera)). In fact, the Vice President of Sales and Marketing for Daramic - one of the architects
 

of the agreement - conceded that the parties could put on customer appreciation events together 

without any such agreement. (Roe, Tr. 1811-1812).
 

Daramic's conduct violates Section 1 of the Sherman Act as well as Section 5 of 
 the FTC 

Act. Liability may be founded upon an abbreviated analysis that focuses on the inerently 

suspect natue of the challenged restraint, or instead based on a full rule of reason analysis that 

takes account of 
 Daramic's substantial market power. See PolyGram Holding, Inc. v. FTC, 416 

F.3d 29, 36 (D.C. Cir. 2005) ("If, based upon economic learning and the experience of the 

64
 
market, it is obvious that a restraint of trade likely impairs competition, then the restraint is 

presumed unlawful. . ."). 

1. Legal Standard
 

Three elements must be established in order to prove a Section 1 violation: (1) the 

existence of a contract, combination, or conspiracy among two or more separate entities, that 

(2) umeasonab1y restrains trade, and (3) affects interstate or foreign commerce. See, e.g., Law v. 

NCAA, 134 F.3d 1010, 1016 (10th Cir. 1998). 

Daramic does not deny the existence of an agreement with H& V that restrcts the tyes of
 

separators that each company may selL Daramic admits that its conduct is in and affects 

interstate commerce. (RX01589 at 003). Accordingly, with regard to Count II of 
 the Complaint, 

the only issue to be decided is whether the challenged agreement umeasonab1y restrains
 

competition. 

2. The Daramic/H&V Market Division Agreement Unreasonably 

Restrains Competition 

Complaint Counsel bears the initial burden of showing that the agreement between 

Daramic and H&V likely had a deleterious effect upon consumers. Then the burden of 

production shifts to the Respondent to advance a pro-competitive justification for the challenged 

restraint. If Complaint Counsel shows that the challenged restraint is not reasonably necessary to 

achieve the Respondent's pro-competitive justifications, or that those objectives may be achieved 

in a manner less restrictive of competition, then the defense fails. This basic framework is 

employed in both PolyGram Holding, Inc. v. FTC, 416 F.3d 29 (D.C. Cir. 2004) (inerently 

suspect restraint) and United States v. Visa USA., Inc., 344 F.3d 229, 238 (2d Cir. 2003) (full 

rule of 
 reason analysis). 

65
 
Given Daramic's dominant market position, a restraint affecting even a subsidiary 

dimension of 
 rivalry can result in significant harm to consumers. FTC v. Indiana Federation of 

Dentists, 476 U.S. 447, 460-61 (1986) (market power is a "surogate for detrmental effects"); 

Capital Imaging Assoc. v. Mohawk Valley Medial Assoc., 996 F.2d 537, 547 (2d Cir. 1993); 

RDK Truck Sales and Service Inc. v. Mack Trucks, Inc., 2009 U.S. Dist LEXIS 43245 at 14 (E.D. 

Pa. May 19,2009) ("(Clours tyically allow proof of defendant's market power to act as a proxy
 

for evidence of detrmental anti 
 competitive effects."). 

Of course, H& V is not simply impeded from competing with Daramic in some minor 

way. Instead, the parties have agreed to the complete exclusion of H&V from each of the PE 

battery separator markets. It is a fundamental principle of Section 1 law that a market division 

agreement is inherently suspect, which is to say, presumptively anticompetitive even absent a 

showing of market power. E.g., Nynex Corp. v. Discon, Inc., 525 U.S. 128, 134 (1998) 

(horizontal market division is "unlawful per se"); Palmer v. BRG of Georgia, Inc., 498 U.S. 46 

(1990) (same). Antitrst law's long-standing hostility to market division agreements is rooted in 

uncontroversial economic analysis. A horizontal agreement to forgo all competition is likely to 

result in higher consumer prices, lower output, and reduced allocative efficiency. ScheringPlough Corp. v. FTC, 402 F.3d 1056, 1064 (1Ith Cir. 2005).4 

Daramic's response to this showing of competitive har is to deny that H& V would have 

entered any of the PE battery separator markets in the absence of the parties' market division 

4 As Judge Posner explains: "The analogy between price-fixing and division of markets is 

compelling. It would be a strange interpretation of antitrst law that forbade competitors to 

agree on what price to charge, thus eliminating price competition among them, but allowed them 

to divide markets, thus eliminating all competition among them." Blue Cross & Blue Shield 

United v. Marshfield Clinic, 65 F.3d 1406, 1415 (7th Cir. 1995). Accord H. Hovenkamp, XII 

Antitrst Law ir 2030a at 174 (1999) (''Naked horizontal market division agreements enable the 

participants to reduce output in their assigned terrtorial, product, or customer area, thus raising 

the price above the competitive levels."). 

66 
agreement. The evidence establishes, however, 

(PX1368 at 001-002; PX0925 at 009-010 (Porter, Dep. at 37-38, in camera)). It was H&V's bid 

for the Exide PE assets that triggered Daramic's efforts to block H&V from expanding into 

Daramic's market. (PX0169 at 001; PX0035 at 005; see also CCFOF iìl191). This is suffcient 

to establish H&V as a bona fide potential rivaL 

In sum, the evidence establishes that Daramic induced H& V to agree not to compete in 

several markets - markets that have long been dominated by Daramic. The burden now shifts to 

Daramic to advance a cognizable and plausible efficiency justification. In this regard, Daramic 

asserts that the non-compete agreement was reasonably necessary to guard against the misuse by 

H&V of confidential information supplied by Daramic as par of a supposed joint ventue. 

(Respondent's Pretral Brief at p.34). 

There are two critical defects to this argument. First, Daramic and H&V were not 

engaged in a legitimate joint ventue. H& V made no sales on behalf of Daramic, and Daramic' s 

sales of H&V products were trviaL (Roe, Tr. 1810-1811; PX2145 at 001-002; PX0014, in
 

camera). The parties' collaboration was insubstantial, and merely an excuse for eliminating 

competition. Cf Palmer v. BRG of Georgia, Inc., 498 U.S. 46 (1990) (market division 

agreement judged per se ilegal notwithstanding trvia11icensing arrangement between parties); 

Engine Specialties, Inc. v. Bombardier Ltd., 605 F.2d 1 (1st Cir. 1979) (market allocation 

agreement judged per se ilegal where contemplated collaboration was not implemented). As for 

testimony that Daramic and H& V jointly hosted "customer appreciation nights" and shared 

67
 
booth space at annual industr conventions, (Roe, Tr. 1811-1812; RX00370 at 002), this is not a 

serious foundation for a market allocation agreement. 

Second, Daramic has offered no evidence that the company shared with H& V durng 

their collaboration any of its (i) trade secrets, know-how or other intellectual propert related to 

PE manufactung; or (ii) internal pricing plans or marketing strategies related to futue PE sales; 

(iii) the disclosure of which would have required a worldwide non-compete agreement from 

2001 through 2014 to protect against potential misuse by H&V. To the extent that legitimate 

confidentiality concerns might have arisen, the parties had less restrictive means to deal with 

them. (PX0094 at 007-008, in camera; PX1356 at 001). 

At this point, moreover, the agency relationship has ceased. Only the non-compete 

surives. And absent any pro-competitive justification for such an agreement, we respectfully 

'suggest that it be enjoined and terminated. 

iv. Complete Divestiture and a Cease and Desist Order Are Necessary to
 

Restore and Protect Competition 

It is well-settled that the "Commission has wide discretion in its choice of a remedy" so 

long as the remedy has a "reasonable relation to the unlawful practices found to exist." Jacob 

Siegel Co. v. FTC, 327 U.S. 608, 611-13, (1946); see also Chicago Bridge, 138 F.T.C. at 1161, 

n.566. Furhermore, "once the Government has successfully borne the considerable burden of 

establishing a violation of law, all doubts as to the remedy are to be resolved in its favor." 

United States v. E.I. du Pont de Nemours & Co., 366 U.S. 316, 334 (1961) (footnote omitted); 

see also Chicago Bridge, 534 F.3d at 441. As explained by the Commission, "In Section 7 cases, 

the principal purose of relief is to restore competition to the state in which it existed prior to, 

and would have continued to exist but for, the ilegal merger.'" In re B.F. Goodrich Co., 110 

F.T.C. 207, 345 (1988), (quoting In re RSR Corp., 88 F.T.C. 800, 893 (1976)). The Clayton Act 

68
 
requires that upon a finding of a Section 7 violation, "the Commission . . . shall . . . order . . . 

such person to cease and desist from such violations, and divest itself of 
 the . . . assets, held." 15 

U.S.C. § 21(b) (Emphasis added).30
 

Daramic's expert, Dr. Kahwaty,
 

_ (Kahwaty, Tr. 5432, in camera).
 

_ (Kahwaty, Tr. 5262-5263). This makes no sense.
 

A full and complete remedy must restore Microporous to the competitive position it had 

but for Daramic's wrongful conduct. (See CCFOF ir 1197). Prior to the acquisition, 

Microporous had become a worldwide, competitive threat to Daramic and Entek. In a fair 

remedy, the customers deserve that a restored Microporous should not be anything less. Thus, 

any remedy must, at a minimum, divest all the plants and facilities that Microporous had at the 

time of the acquisition, including the Piney Flats and Microporous facilities and production lines, 

and the F eistrtz, Austra plant. (See CCFOF ir 1198). The record here supports relief including, 

but not limited to, an order that wil 1) divest a new entity, referred to here as "Newco," as a 

fully independent and viable competitor in all of the relevant markets to the same degree that 

30 See also Section 5(b) ofthe FTC Act, 15 U.S.C. § 45(b), allowing the Commission to "issue. . 

. an order requirng such. . . Corporation to cease and desist from using such method of 

competition or such act of 
 practice."; FTC v. Natl Lead Co., 352 U.S. 419, 428 (1957) 

(Commission is authorized "to enter an order requirng the offender to 'cease and desist' from 

using such unfair method(s)."). 

69 
Microporous competed or would likely have competed in those markets but for the acquisition, 

and 2) require Daramic to cease and desist in its anti competitive conduct.31
 

A. Complete Divestiture Restores the Entity That Would Have Existed But For the 

Merger and Allows it to Compete on an Equal Footing with Daramic 

As the Commission has held, "(i)n Section 7 cases, the principal purose of relief is to 

restore competition to the state in which it existed prior to, and would have continued to exist but 

for, the ilegal merger.'" In re B.F. Goodrich Co., 110 F.T.C. 207 at 345 (1988), (quoting In re 

RSR Corp., 88 F.T.C. 800, 893 (1976)). "Ordinarily, a presumption should favor total divestiture 

of the acquired assets as the best means of accomplishing this result. . . ." In re RSR Corp., 88 

F.T.C. at 893 (citation omitted), ajf'd 602 F.2d 1317 (9th Cir. 1979). "Complete divestitue is 

particularly appropriate where asset or stock acquisitions violate the antitrst laws." Ford Motor 

Co. v. United States, 405 U.S. 562, 573 (1972). Consistent with these principals, the Proposed 

Order requires a total divestitue. 

Moreover, only through a total divestitue, including the Feistrtz facility, can it be 

assured that Newco wil be as competitive in Nort America and have as much a chance to be 

viable as a competitor as Microporous was. In this case, as in Chicago Bridge, Daramic's
 

violation "is the acquisition of a previously viable and independent entity capable of competing 

on an equal footing." Chicago Bridge & Iron Company N. V. v. FTC, 534 F.3d 410, 441 (5th Cir. 

2008). In Chicago Bridge, the antitrst violation related solely to the constrction of cryogenic 

tanks. Id. The Commission, however, also required divestitue of the water plant division and 

other assets "necessary to enable the separate entity to compete... on an 'equal footing.'" Id. 

The Fift Circuit affirmed holding "(t)he Commission's divestitue of the water plant division 

31 To remedy the anticompetitive effects of the merger and Respondent's other ilegal acts, the 

Notice of Contemplated Relief provided that the Commission may order such relief against 

Respondent as is supported by the record and is necessary and appropriate. 

70
 
along with the cryogenic tank division is consistent with and relevant to creating a viable 

competitor, because the water deparent provides a consistent revenue stream to complement 

sporadic tank sales." Id. Similarly, the divestitue here should effectively reconstitute a viable
 

competitor that can compete on an "equal footing" with Daramic. 

1. Divestiture of the Piney Flats, Feistritz and Microporous Facilties
 

and Production Lines is Necessary to Restore Competition 

As a part of the total divestitue of Microporous, divestiture of 
 the Feistritz, Austria plant 

is necessary to allow the new company to serve as a viable competitor. The Feistrtz plant has 

two lines capable of 
 producing both CellForce and PE separators for automotive SLI. (Gilchrst, 

Tr. 312-313). 

The Feistrtz plant is critical to give the acquirer a "global footprint" to locally supply the 

world-wide demand of customers in the North America market. (Gilchrst, Tr. 309-310 

(testifying to importance of a global footprint); Hauswa1d, Tr. 713-714). As Microporous's 

former CEO testified, it is 

(Gilchrst, Tr. 525). He explained how important is was for Microporous to have a global
 

footprint in order to compete for the large customers. (Gilchrst, Tr. 593-601 (world-wide 

expansion was a "key element"). 

Daramic's Hauswa1d also admitted that having worldwide facilities gives a competitor in 

these markets a "competitive advantage" and reduces the supply-chain risks to customers. 

(Hauswa1d, Tr. 722, 726-727, 807, in camera 

1; PX0206 at 004; Hauswa1d, Dep. 68; see also CCFOF ~ 1202). 

Daramic advertises to its customers that it can give them local supply from a global company, 

71 
and considers this to be a market advantage. (Hauswa1d, Tr. 711, 722, 1319-1319; PX0582 at 

018). 

Both Daramic and Entek, the two other competitors to Newco in the u.s. market, possess 

a global footprint. (Gilchrst, Tr. 310-311). Also, having multiple locations gives customers
 

securty, should one plant stop operating. (Gilespie, Tr. 2993 (lessons from the Daramic strke); 

Gaug1, Tr. 4602 ("continuity of supply" important)). Customers state they prefer a supplier with 

multiple plants so that an outage in one facility wil not result in a complete disruption of supply. 

(Godber, Tr. 225-226, in camera; Toth, Tr. 1440-1441). 

Two of the key world-wide customers for Microporous were instrmental in moving the 

company towards a global footprint: Enersys and Exide. For Enersys, it was critical that its 

suppliers have more than one plant, because half of its revenue depended on the source of 

separator supply. (Axt, Tr. 2129; see also CCFOF ir 1209). 

(Axt, Tr. 2144, 2152; RX00207 at 10, in camera). Exide and 

Microporous also agreed that Microporous would have a second plant in Europe to meet Exide's 

worldwide needs. (Gilespie, Tr. 2969-70). It was also critical to Microporous's ability to 

compete that it could shift production to Europe for Enersys, so that it could open up more 

production capacity in North America and expand its business there. (Trevathan, Tr. 3721, 

3774). Microporous determined that it if wanted to be a "major supplier," to companies like 

Enersys, it needed to "become a global player." (Gilchrst, Tr. 309-311). That is why it
 

expanded into Austra. (Id.) 

For Trojan, the Microporous expansion in Austra meant that it could switch more F1exSil to CellForce in the United States, which would giveit a "cost advantage" and a backup source 

72
 
of supply if anything happened to the u.s. plant. (Godber, Tr. 224-228; see also CCFOF irir 

1213-1215). Microporous had completed the construction of the Austran plant before the 

acquisition, and that plant was producing product within a week of the deaL (Gilchrst, Tr. 334­

335). 

Therefore, by enabling Newco to serve European demand for CellForce from Feistritz, 

Newco wil have more CellForce capacity available at its u.s. Piney Flats facility to supply to 

U.S.-based customers. This wil permit Newco to compete more effectively with Daramic in the 

u.s. in several of the relevant markets and benefits customers. (See, e.g., Godber, Tr. 224-225,
 

226-227 (with more Ce1IForce products available in the U.S., Trojan Battery planned to switch 

an additional five to ten percent of its purchases from F1ex-Si1 to the less expensive CellForce, 

saving roughly 10 percent.)). 

The F eistrtz plant also wil give the acquirer the scale necessary to compete with
 

Daramic. Scale to supply entire plants is important to the large battery manufacturer customers. 

(Gilespie, Tr. 3052; Enersys, Tr. 2129-2130; Hauswald, Tr. 806-807, in camera). (At the time 

of the acquisition, Microporous was supplying large battery manufactuers. (Hauswa1d, Tr. 934, 

in camera); see also CCFOF ir 1205). Scale is also important for a new company, because it wil 

need the scale to make it "sustainable in the long ru." (Gilespie, Tr. 3053). Finally, scale
 

provides a cost advantage due to significant economies of scale. (Simpson, Tr. 3225-3226, 3229, 

3233, in camera (citing PX0241); Gilespie, Tr. 3053; Hauswa1d, Tr. 821-825; Toth, Tr. 1443
 

(citing PX0476, in camera). Even Daramic 

. (Hauswald, Tr.
 

726-727; PX0194 at 030 

; Toth, Tr. 1434 (referrng to PX0483 at 013)). 

73
 
Daramic may not avoid divestitue of the Feistritz plant merely because it is located 

outside of Complaint Counsel's asserted geographic market of North America. A total 

divestitue can clearly include assets outside the parts of a company in which an antitrst 

violation is found, "especially where, as here, total divestitue is necessary to restore effective
 

competition." Chicago Bridge, 534 F.3d at 441 (citing OKC Corp. v. FTC, 455 F.2d 1159, 1163 

(10th Cir. 1972)).
 

Total divestitue of Microporous's plants must also include the "line in the box"
 

discussed at the hearng. Microporous purchased that line to service its Enersys contract and 

Daramic chose to discontinue installation of the line due to the acquisition. (Gilchrst, Tr. 374).
 

(line had been destined for Tennessee). Absent the acquisition, Microporous would have 

installed this additional line, which must be retued to restore competition to what it would have 

been but for the merger. Daramic must also retu any pieces of that line which it transferred out 

of Daramic' s facilities. 

Total divestitue of the Piney Flats and Feistrtz facilities wil provide Newco with lines 

producing Flex-Sil, Ace-Sil, CellForce and automotive SLI separators. Microporous's primary 

source of revenue came from Flex-Si1 sales, and gave Microporous the income and scale to 

expand and compete in other tyes of separators. The Ace-Si1 line provides separators to 

Enersys, a primary customer of the Feistrtz facility and is used as the primary component of 

CellForce. The plant in Tennessee was primarily a rubber plant for F1ex-Sil and Ace-Sil, which 

also was the component for Ce1IForce, which was made in the adjoining building at the plant. 

The two buildings never operated "independently." (Gaug1, Tr. 4641).
 

(See Kahwaty, Tr. 5262-5263, in camera). The 

74
 
II 

evidence shows this is demonstrably incorrect. 

(see Kahwaty, Tr. 5571, in camera), 


32 

Along with the production facilities, Daramic must divest all customer contracts 

associated with the divested plants at Piney Flats and Feistrtz. (See CCFOF, 1218). This wil 

give the acquirer a base of 
 business from day one to aid in its viability and gain experience in the 

market. See Gilespie, Tr. 3053 (Exide stating desirability of divesting customer contracts to 

Newco). Those contracts wil include contracts supplied with automotive separators, a market in 

which Microporous was beginning to compete at the time of the acquisition. (See Gilchrst, Tr. 

346-348). Divestitue of these contracts is appropriate as they are necessary to restore effective 

competition. See Chicago Bridge, 534 F.3d at 441. 

2. The Remaining Provisions of Paragraph II of the Proposed Order Wil 

Further the Creation of a Viable Competitor 

Paragraph II contains other provisions tyically found in an order for divestiture in order 

to create a viable competitor. Respondent would be required to divest to Newco any assets 

removed after the acquisition, (Paragraph II. 
 C), to tu over to the acquirer all confidential
 

business information related to Microporous, (Paragraph II.G), not to interfere with Newco's 

ability to employ the curent and former employees of Micro porous, (Paragraphs II.D. and II.E), 

and to give assistance to Newco as needed to enable the acquirer to take over the business, 

(Paragraph II.FA). This divestitue must include the original R&D and technology departents 

that Microporous had. Microporous believed that it was "imperative" to have a R&D and testing 

32 Under the proposed order, Daramic may remove from Piney Flats the equipment that Daramic 

added, if any, to enable the Piney Flats PE CellForce line to manufactue Daramic HD. 

Likewise, contracts associated solely with Daramic HD are not subject to divestitue. 

75 
laboratory in order to be competitive. (Gilchrst, Tr. 327-328; Axt, Tr. 2109-2110 ("technical
 

expertise" is important; Gilespie, Tr. 3051-3052, in camera 

l). 

In addition, Daramic must covenant not to sue the acqUlrer over any technology
 

Microporous had prior to the acquisition. By the same token, Daramic may receive a similar 

assurance from the acquirer. At this point, Daramic has owned Microporous for well over a 

year. It has had ample time to examine Microporous's intellectual propert portfolio and files, 

and determine the weakesses in Microporous's positions. There would be no effective way to 

purge this information from the minds of Daramic' s personnel, and it would be an adverse effect 

from the merger to allow Daramic to use this knowledge post-divestitue in any action it might 

bring against the acquirer. In these circumstances, the only appropriate response is to require
 

each part to stand down from any enforcement action related to pre-acquisition products. 

The Proposed Order also provides for the appointment of a Monitor Trustee, (Paragraph 

III), to make sure that respondent complies with the requirements of the Order, and a Divestiture 

Trustee, (Paragraph IV), in case respondent does not divest within the required time frame.
 

Paragraph V of the Proposed Order requires respondent to maintain the viability and 

competitiveness of Microporous pending divestitue. These are standard provisions in 

Commission divestitue orders. See, Chicago Bridge, 138 F.T.C. at 1024. 

3. A Cease and Desist Order is Necessary to Prevent Respondent's Further 

Anticompetitive Behavior 

In addition to the merger-specific relief requested, Complaint Counsel requests an order 

that requires Daramic to cease and desist from any other practice that is found to be an unfair 

method of competition or an uneasonable restraint of trade in violation of Section 7 of the 

Clayton Act, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, 15 U.S.C. 

76
 
§ 45. This order should require Daramic to cease and desist from conduct, agreements, and
 

attempts to enter agreements that are in restraint of competition, and any activity deemed an 

unfair method of competition, and to take all such measures as are appropriate to correct or 

remedy, or to prevent the recurence of, the anticompetitive practices engaged in by Daramic. 

Paragraph VI of the Proposed Order requires respondent to undo the H& V Agreement 

and to refrain from enterig into similar agreements in the future. The Proposed Order also 

prohibits respondent from engaging in conduct that inibited customers from also using 

alternative suppliers. These provisions are necessary to ensure that Daramic does not resume its 

anti competitive conduct after the divestiture. These provisions are narrowly tailored to attack the 

anti competitive conduct engaged in by respondent, while allowing it to engage in appropriate 

competitive behavior. "(T)he Commission has a broad discretion, akin to that of a cour of 

equity, in deciding what relief is necessary to cure a violation of law and ensure against its 

repetition. . . ." Hosp. Corp. of Am. v. FTC, 807 F.2d 1381, 1393 (7th Cir. 1986) (citations
 

omitted). 

Paragraph VII of the Proposed Order allows customers to reopen, and renegotiate or 

terminate, contracts entered into by Daramic in the exercise of market power. This provision is 

necessary to prevent respondent from continuing to reap the benefits of its unlawful conduct. 

See In re N. Tex. Specialty Physicians, 140 F.T.C. 715, 775 (2005), aff'd 528 F.3d 346 (5th Cir. 

2008); see also Gillespie, Tr. 3053, in camera 

. As Microporous' s former CEO testified, 

customers 

(Gilespie, Tr. 3053, in
 

77
 
camera). Specifically, customers of products in the relevant markets may renegotiate contracts 

entered into after Daramic's acquisition of 
 Microporous. Customers ofDaramic motive and UPS 

separators in the u.s. may also reopen and renegotiate their contracts to counteract Daramic's 

monopolization conduct. Finally, the contracts Microporous entered into before the acquisition 

may be reopened and renegotiated only to the extent those contracts were amended or prices 

renegotiated or increased after the acquisition. 

Paragraph VIII of the Proposed Order prohibits Daramic from introducing any battery 

separator using cross-linked rubber for a period of two years. This technology was exclusively 

Microporous's before the acquisition, and wil be divested pursuant to the Order. Although it
 

therefore would be a violation of the Order for Daramic to utilize the Microporous intellectual 

propert after the divestitue, it may be difficult to later prove that any precise technology later
 

used by Daramic was not developed independently. Such development by Daramic, however,
 

would take time, and we can presume that any such introduction within a short period after the 

divestitue would be based improperly on Microporous technology. Accordingly, a flat ban for 

two years is appropriate. "(R)espondent() must remember that those caught violating the Act 

must expect some fencing in." Hosp. Corp. of Am., 807 F.2d at 1393 (7th Cir. 1986) (citation 

omitted). 

V. Conclusion
 

F or the reasons stated above, as is fully supported by the evidence at tral, Daramic' s 

acquisition of Microporous and its anticompetitive conduct are ilegaL The public deserves a 

complete remedy to restore competition and prevent fuher harm to competition. A proposed 

order is attached. 

78
 
Dated: July 17, 2009 Respectfully submitted, 

By:f;~~~
 

J. R BERT ROBERTSON 0
 

Federal Trade Commission
 

Bureau of Competition
 

600 Pennsylvania Ave., N.W.
 

Washington, DC 20580
 

Telephone: (202) 326-2008
 

Fax: (202) 326-2884
 

Complaint Counsel
 

79
 
UNITED STATES OF AMERICA 

FEDERA TRAE COMMISSION
 

COMMISSIONERS: Jon Leibowitz, Chairman 

Pamela Jones Harbour 

Wiliam E. Kovacic 

J. Thomas Rosch 

) In the Matter of )
 

)
 Polypore International, Inc., ) Docket No. 9327
 

a corporation.
 ) 

) 

PROPOSED ORDER 

I. 

IT IS ORDERED that, as used in the Order, the following definitions shall apply: 

A. "Acquirer" means any Person approved by the Commssion pursuant to this Order
 

to acquire Microporous. 

B. "Acquisition" means the acquisition of all of the outstanding shares of
 

Microporous by Respondent Po1ypore pursuant to a Stock Purchase Agreement 

dated February 29,2008. 

C. "Acquisition Date" means February 29,2008.
 

D. "Battery Separator(s)" means porous electronic insulators placed between
 

positively and negatively charged lead plates in flooded lead-acid batteries to 

prevent electrcal short circuits while allowing ionic curent to flow through the 

separator. 

E. "Books and Records" means all originals and all copies of any operating, financial 

or other books, records, documents, data and files relating to Microporous, 

including, without limitation: customer fies and records, customer lists, customer 

product specifications, customer purchasing histories, customer service and 

support materials, Customer Approvals and Information; accounting records; credit 

records and information; correspondence; research and development data and fies; 

production records; distrbutor files; vendor fies, vendor lists; advertising, 
promotional and marketing materials, including website content; sales materials; 

records relating to any employees who accepts employment with the Acquirer; 

educational materials; technical information, data bases, and other documents, 

information, and fies of any kind, regardless whether the document, information, 

or fies are stored or maintained in traditional paper format, by means of electronic, 

optical, or magnetic media or devices, photographic or video images, or any other 

format or media; 

provided, however, that where documents or other materials included in the Books 

and Records to be divested with Microporous contain information: (1) that relates 

both to Microporous and to Po1ypore's Retained Assets or its other products or 

businesses and cannot be segregated in a manner that preserves the usefulness of 

the information as it relates to Microporous; or (2) for which the relevant par has 

a legal obligation to retain the original copies, the relevant part shall be required 

to provide only copies or relevant excerpts of the documents and materials
 

containing this information. In instances where such copies are provided to the 

Acquirer, the relevant part shall provide the Acquirer access to original 

documents under circumstances where copies of the documents are insufficient for 

evidentiary or regulatory purposes. The purose of this proviso is to ensure that 

Po1ypore provides the Acquirer with the above-described information without
 

requiring Po1ypore to divest itself completely of information that, in content, also 

relates to its Retained Assets or its other products or businesses. 

F. "Commission" means the Federal Trade Commission.
 

G. "Confidential Business Information" means any non-public information relating to 

Microporous either prior to or after the Effective Date of Divestitue, including, 

but not limited to, all customer lists, price lists, distrbution or marketing methods, 

or Intellectual Propert relating to Microporous and: 

1. Obtained by Respondent prior to the Effective Date of Divestitue; or, 

2. Obtained by Respondent after the Effective Date of Divestitue, in the
 

course of performng Respondent's obligations under any Divestitue 

Agreement; 

Provided, however, that Confidential Business Information shall not include: 

1. Information that Respondent can demonstrate it obtained prior to the
 

Acquisition Date, other than information it obtained from Microporous 

durg due diligence pursuant to any confidentiality or non-disclosure 

agreement; 

2. Information that is in the public domain when received by Respondent;
 

2 
3. Information that is not in the public domain when received by Respondent
 

and thereafter becomes public through no act or failure to act by
 

Respondent; 

4. Information that Respondent develops or obtains independently, without
 

violating any applicable law or this Order; and 

5. Information that becomes known to Respondent from a third part not in
 

breach of applicable law or a confidentiality obligation with respect to the 

information. 

H. "Contracts" means all contracts or agreements of any kind related to Microporous, 

and all rights under such contracts or agreements, including: Microporous
 

Customer Contracts, leases, softare licenses, Intellectual Propert licenses, 

warranties, guaranties, insurance agreements, employment contracts, distribution 

agreements, product swap agreements, sales contracts, supply agreements, utility 

contracts, collective bargaining agreements, confidentiality agreements, and nondisclosure agreements. 

i. "Customer" means any Person that is a direct or indirect purchaser of any Battery 

Separator. 

J. "Customer Approvals and Information" means, with respect to any Microporous
 

Battery Separator(s): 

1. All consents, authorizations and other approvals, and pending applications
 

and requests therefore, required by any Customer applicable or related to 

the research, development, manufactue, finishing, packaging, distrbution, 

marketing or sale of any Battery Separator; and, 

2. All underlying information, data, fiings, reports, correspondence or other
 

materials used to obtain or apply for any of the foregoing, including,
 

without limitation, all data submitted to and all correspondence with the 

Customer or any other Person. 

K. "Daramic Battery Separator(s)" means any Battery Separators manufactued or 

sold by Respondent as of the day before Acquisition Date, and any Battery 

Separators manufactued or sold by Respondent after the Acquisition Date that do 

not utilize any Microporous Intellectual Propert other than Shared Intellectual 

Propert . 

L. "Direct Cost" means the cost of direct material and direct labor used to provide the 

relevant assistance or service. 

3 
M. "Divestitue Agreement" means any agreement( s) between Respondent (or 

between a Divestiture Trustee appointed under this Order) and the Acquirer 

approved by the Commission, that effectuate the divestitue of Microporous 

required by Paragraphs II. or iv. of this Order, to accomplish the purose and 

requirements of this Order, as well as all amendments, exhibits, attchments,
 

agreements and schedules thereto, including, but not limited to, any Technical 

Assistance Agreement or Transition Services Agreement. 

N. "Divestitue Trustee" means a Person appointed pursuant to Paragraph IV. of this
 

Order to accomplish the divestitue of Microporous. 

O. "Effective Date of Divestitue" means the date on which the divestitue of 

Microporous to an Acquirer pursuant to the requirements of 
 Paragraph II. or IV. of 

this Order is completed. 

P. "Employee Information" means the following, to the full extent permitted by 

applicable law: 

1. A complete and accurate list containing the name of each Microporous
 

Employee; 

2. With respect to each such employee, the following information:
 

a. The date of hire and effective service date;
 

b. Job title or position held;
 

c. A specific description of the employee's responsibilities related to
 

Microporous Battery Separators; provided, however, in lieu of this 

description, Respondent may provide the employee's most recent 

performance appraisal; 

d. The base salary or curent wages;
 

e. The most recent bonus paid, aggregate annual compensation for
 

Respondent's last fiscal year and curent target or guaranteed
 

bonus, if any; 

f. Employment status (i.e., active or on leave or disability; full-timne 

or par-time); and 

g. Any other material terms and conditions of employment in regard to 

such employee that are not otherwise generally available to 

4 
similarly situated employees; and 

3. At the proposed Acquirer's option, copies of all employee benefit plan
 

descriptions (if any) applicable to the relevant employees. 

Q. "Feistritz Plant" means all propert and assets, tangible and intangible, owned, 

leased, or operated by Respondent and located or used in connection with the 

research, development, manufactue, finishing, packaging, distrbution, marketing 

or sale of anyone or more of the Microporous Battery Separators at the former
 

Microporous facility in Feistrtz, Austra, at any time between the Acquisition Date 

and the Effective Date of 
 Divestitue, including, but not limited to: 

1. All real propert interests (including fee simple and leasehold interests),
 

including all rights, easements and appurenances, together with all 

buildings, strctues, facilities (including R&D and testing facilities), 

improvements, and fixtues, including, but not limited to, all Battery 

Separator production lines (including the two (2) production lines for 

polyethylene (PE) and/or CellForce Battery Separators); 

2. All Tangible Personal Propert;
 

3. All governmental approvals, consents, licenses, permits, waivers, or other
 

authorizations, to the extent assignable; and 

4. Inventories existing as of the Effective Date of Divestiture. 

Provided, however, that the definition of "Feistrtz Plant" shall not include any 

assets used solely to manufactue Daramic Battery Separators. 

R. "Force Majeure Event" means whatever events, actions, occurences or 

circumstances have been identified or specified as constituting "force majeure" or 

a "force majeure event" in a contract or agreement between the Respondent and a 

Customer for the supply of Battery Separators.
 

S. "Governmental Entity(ies)" means any federal, provincial, state, county, local, or 

other political subdivision of the United States or any other countr, or any 

department or agency thereof. 

T. "H& V Agreement" means the Cross Agency Agreement dated March 23, 2001,
 

between Daramic, Inc. and Hollingsworth & V ose Company, and all amendments 

(including, but not limited to, the Renewal dated March 23, 2006), exhibits, 

attachments, agreements, and schedules thereto. 

U. "Intellectual Propert" means Patents, Manufactung Technology, Know-How,
 

5 
and Trade Names and Marks. 

V. "Inventories" means:
 

1. All inventories, stores and supplies of finished Battery Separators and work
 

in progress; and, 

2. All inventories, stores and supplies of raw materials and other supplies
 

related to the research, development, manufactue, finishing, packaging, 

distribution, marketing or sale of any Battery Separators. 

W. "Jungfer Technology" means all Intellectual Propert owned or licensed by 

Respondent as a result of its acquisition of Separatorenerzeungug GmbH 

("Jungfer") on November 16, 2001. 

X. "Know-How" means all know-how, trade secrets, techniques, systems, softare, 

data (including data contained in softare), formulae, designs, research and test
 

procedures and information, inventions, processes, practices, protocols, standards, 

methods (including, but not limited to, test methods and results), customer service 

and support materials, and other confidential or proprietary technical, 

technological, business, research, development and other materials and information 

related to the research, development, manufactue, finishing, packaging,
 

distrbution, marketing or sale of Battery Separators, and all rights in any
 

jursdiction to limit the use or disclosure thereof, anywhere in the world. 

Y. "Line in Boxes" means all propert and assets, tangible and intangible, related to 

any capacity expansions proposed, planned or under consideration by Microporous 

as of the Acquisition Date, including, but not limited to, all engineering plans,
 

equipment, machinery, tooling, spare parts, and other tangible propert, wherever 

located, relating to a proposed, planned or contemplated capacity expansion to be 

accomplished through installation of an additional Battery Separator production 

line at the Piney Flats Plant. 

Z. "Manufactug Technology" means all technology, technical information, data, 

trade secrets, Know-How, and proprietary information, anywhere in the world, 

related to the research, development, manufactue, finishing, packaging or 

distrbution of Battery Separators, including, but not limited to, all recipes, 

formulas, formulations, blend specifications, customer specifications, equipment 

(including repair and maintenance information), tooling, spare parts, processes, 

procedures, product development records, trade secrets, manuals, quality assurance 

and quality control information and documentation, regulatory communications, 

and all other information relating to the above-described processes. 

6 
AA. "Microporous" means Microporous Holding Corporation, a corporation organized, 

existing and doing business under and by virte of the laws of the State of
 

Delaware, _with its offices and principal place of business as of the Acquisition 

Date located at 100 Spear Street, Suite 100, San Francisco, CA 94111, and its joint 

ventures, subsidiaries, divisions, groups, and affiliates (including, but not limited 

to, Microporous Products, L.P. and Microporous Products, GmbH) controlled by 

Microporous Holding Corporation, and all assets of Microporous Holding
 

Corporation acquired by Respondent in connection with the Acquisition, including, 

but not limited to: 

1. All of Respondent's rights, title and interest in and to the following
 

propert and assets, tangible and intangible, wherever located, and any 

improvements, replacements or additions thereto that have been created, 

developed, leased, purchased, or otherwise acquired by Respondent after 

the Acquisition Date, relating to the research, development, manufacture, 

finishing, packaging, distrbution, marketing, or sale of Microporous
 

Battery Separators:
 

a. the Piney Flats Plant;
 

b. the Feistrtz Plant;
 

c. the Line in Boxes;
 

d. Microporous Intellectual Propert;
 

e. Contracts; and
 

f. Books and Records; and
 

2. All rights to use Shared Intellectual Propert pursuant to a Shared
 

Intellectual Propert License; 

BB. "Microporous Battery Separator(s)" means all Battery Separators in which 

Microporous was engaged in research, development, manufactue, finishing, 

packaging, distrbution, marketing or sale as of the Acquisition Date, and all 

Battery Separators distrbuted, marketed or sold after the Acquisition Date using 

any Microporous Trade Names and Marks. 

CC. "Microporous Copyrghts" means all rights to all original works of authorship of 

any kind, both published and unpublished, relating to Microporous Battery 

Separators and any registrations and applications for registrations thereof and all 

rights to obtain and file for copyrghts and registrations thereof. 

7
 
DD. "Microporous Customer Contracts" means all open purchase orders, contracts or 

agreements or Terminable Contracts for Microporous Battery Separators or for 

Battery Separators being supplied from the Piney Flats Plant or the Feistitz Plant at 

any time between the Acquisition Date and the Effective Date of Divestitue 

except for Daramic Battery Separators. 

EE. "Microporous Emp10yee(s)" means any Person:
 

1. Employed by Microporous as of the Acquisition Date;
 

2. Employed at the Piney Flats Plant at any time between the Acquisition 

Date and the Effective Date of Divestitue; or
 

3. Employed at the Feistrtz Plant at any time between the Acquisition Date 

and the Effective Date of 
 Divestitue. 

FF. "Microporous Intellectual Propert" means all rights, title and interest in and to all: 

1. Microporous Patents;
 

2. Microporous Manufactung Technology;
 

3. Microporous Know-How;
 

4. Microporous Trade Names and Marks;
 

5. Microporous Copyrghts; and
 

6. All rights in any jursdiction anywhere in the world to sue and recover
 

damages or obtain injunctive relief for infrgement, dilution, 

misappropriation, violation or breach, or otherwise to limit the use or
 

disclosure of any of the foregoing. 

GG. "Microporous Know-How" means all Know-How relating to the research, 

development, manufactue, finishing, packaging, distrbution, marketing, or sale of 

Microporous Battery Separators or otherwise used in connection with 

Microporous. 

HH. "Microporous Manufactug Technology" means all Manufactung Technology 

relating to the research, development, manufactue, finishing, packaging,
 

distrbution, marketing, or sale of Microporous Battery Separators or otherwise 

used in connection with Microporous. 

8 
II. "Microporous Patents" means all Patents relating to the research, development,
 

manufactue, finishing, packaging, distrbution, marketing, or sale of Microporous 

Battery Separators or otherwise used in connection with Microporous. 

JJ. "Microporous Trade Names and Marks" means all Trade Names and Marks
 

relating to the research, development, manufactue, finishing, packaging,
 

distrbution, marketing, or sale of Microporous Battery Separators or otherwise 

used in connection with Microporous, including, but not limited to, all rights to 

commercial names, "doing business as" (d//a! names, service marks and
 

applications for or using the words: "Microporous," "Amerace," "CellForce," 

"FLEX-SIL,''''ACE-SIL;'' and all rights in internet web sites and internet domain 

names using any of the above. 

KK. "Monitor Trustee" means a Person appointed with the Commission's approval to 

oversee the divestitue requirements of this Order, including Respondent's
 

compliance with the Order's requirements. 

LL. "Patent(s)" means all patents, patents pending, patent applications and statutory 

invention registrations, including reissues, divisions, continuations, continuationsin-part, substitutions, extensions and reexaminations thereof, all inventions 

disclosed therein, all rights therein provided by international treaties and 

conventions, and all rights to obtain and file for patents and registrations thereto, 

anywhere in the world. 

MM. "Person" means any individual, partership, joint ventue, firm, corporation, 

association, trst, unincorporated organization, joint ventue, or other business or 

governental entity, and any subsidiaries, divisions, groups or affiliates thereof. 

NN. "Piney Flats Plant" means all propert and assets, tangible and intangible, owned, 

leased, or operated by Respondent. and located or used in connection with the 

research, development, manufactue, finishing, packaging, distrbution, marketing 

or sale of anyone or more of the Microporous Battery Separators at the former 

Microporous facility in Piney Flats, Tennessee, at any time between the 

Acquisition Date and the Effective Date of Divestitue, including, but not limited 

to: 

1. All real propert interests (including fee simple and leasehold interests),
 

including all rights, easements and appurenances, together with all 

buildings, strctues, facilities (including R&D and testing facilities), 

improvements, and fixtues, including, but not limited to, all Battery 

Separator production lines (including the three (3) production lines for 

Ace-Si1, Flex-Sil, and polyethylene (PE) and/or CellForce Battery
 

Separators), pilot lines and test lines; 

9 
2. All Tangible Personal Propert;
 

3. All governmental approvals, consents, licenses, permits, waivers, or other
 

authorizations, to the extent assignable; and 

4. Inventories existing as of the Effective Date of 
 Divestitue. 

Provided, however, that the definition of "Piney Flats Plant" shall not include any 

assets used solely to manufactue Daramic Battery Separators. 

00. "Polyp ore" or "Respondent" means Polyp ore International, Inc., its directors,
 

officers, employees, agents, representatives, predecessors, successors, and assigns; 

and its joint ventues, subsidiaries, divisions, groups and affliates controlled by 

Po1ypore International, Inc. (including, but not limited to, Daramic, LLC), and the 

respective directors, officers, employees, agents, representatives, predecessors,
 

successors, and assigns of each.
 

PP. "Releasee(s)" means the Acquirer, any entity controlled by or under common 

control with the Acquirer, and any licensees, sublicensees, manufactuers,
 

suppliers, and distrbutors of the Acquirer ("affiiates"); and any Customers of the 

Acquirer or of affliates of the Acquirer. 

QQ. "Retained Asset(s)" means: 

1. Any propert(ies) or asset(s), tangible or intangible: 

a. That were owned, created, developed, leased, or operated by 

Po1ypore prior to the Acquisition; or 

b. That relate(s) solely to any Po1ypore product, service or business
 

except what is included in the defmition of Microporous under this 

Order; and 

2. Po1ypore's right to use, exploit, and improve Shared Intellectual Propert;
 

provided, however, that Po1ypore shall have no right to hinder, prevent, or 

enjoin the Acquirer's use, exploitation, or improvement of Shared 

Intellectual Propert, or to use without the Acquirer's consent any 

improvements after the Effective Date of Divestitue to the Shared
 

Intellectual Propert by the Acquirer. 

RR. "Retention Bonus" means the compensation provided for each of the Microporous 

Employees. 

SS. "Shared Intellectual Propert" means any Intellectual Propert that is a Retained 

10 
Asset or that has been used by Respondent in connection with a Retained Asset 

that was also used in connection with the research, development, manufactue, 

finishing, packaging, distrbution, marketing, or sale of Microporous Battery 

Separators or otherwise used in connection with Microporous at any time between 

the Acquisition Date and the Effective Date of Divestitue. 

TT. "Shared Intellectual Propert License" means: (i) a worldwide, royalty-free, 

perpetual, irrevocable, transferrable, sublicensab1e, non-exclusive license to all 

Shared Intellectual Propert owned by or licensed to Respondent for any use, and 

(ii) such tangible embodiments of the licensed rights (including but not limited to 

physical and electronic copies) as may be necessary to enable the Acquirer to 

utilize the licensed rights. 

DU. "Tangible Personal Propert" means all machinery, equipment, spare parts, tools, 

and tooling (whether customer specific or otherwise); furnitue, office equipment, 

computer hardware, supplies and materials; vehicles and rolling stock; and other 

items of tangible personal propert of every kind whether owned or leased, 

together with any express or implied warranty by the manufactuers, sellers or 

lessors of any item or component part thereof, and all maintenance records and 

other documents relating thereto. 

VV. "Technical Services Agreement" means the provision by Respondent Po1ypore at 

Direct Cost of all advice, consultation, and assistance reasonably necessary for any 

Acquirer to receive and use, in any manner related to achieving the puroses of 

this Order, any asset, right, or interest relating to Microporous. 

WW. "Terminable Contract(s)" means all contracts or agreements and rights under 

contracts or agreements between the Respondent and any Customer( s) for the 

supply of any Battery Separator in or to North America (including the entirety of 

any contract or agreement that includes in the same contract or agreement the
 

supply of Battery Separators both inside and outside North America) in effect at 

any time between the date the Order becomes final and the Effective Date of 

Divestitue; provided, however, that "Terminable Contracts" does not include any
 

contracts or agreements between Microporous and any Customer(s) for the supply 

of any Battery Separator that was entered into prior to the Acquisition Date, except 

to the extent such contract or agreement was amended or modified, including 

changes to the pricing terms, after the Acquisition Date; provided further, 

however, that such amended or modified portion of such contract or agreement 

shall be considered a "Terminable Contract." 

XX. "Trade Names and Marks" means all trade names, commercial names and brand 

names, all registered and llegistered trademarks, including registrations and
 

applications for registration thereof (and all renewals, modifications, and
 

extensions thereof), trade dress, logos, service marks and applications, 

11 
geographical indications or designations, and all rights related thereto under 

common law and otherwise, and the goodwil symbolized by and associated 

therewith, anywhere in the world. 

YY. "Transition Services Agreement" means an agreement requinng Respondent 

Polypore to provide at Direct Cost all services reasonably necessary to transfer 

administrative support services to Acquirer of Microporous, including, but not 

limited to, such services related to payroll, employee benefits, accounts receivable, 

accounts payable, and other administrative and logistical support. 

II. 

IT is FURTHER ORDERED that: 

A. Not later than six (6) months after the date the divestitue provisions of this Order 

become final, Respondent shall divest Microporous, absolutely and in good faith, 

and at no minimum price, to an Acquirer that receives the prior approval of the 

Commission and in a manner, including pursuant to a Divestitue Agreement, that 

receives the prior approval of the Commission. 

B. Respondent shall comply with all terms of the Divestitue Agreement approved by 

the Commission pursuant to this Order, which agreement shall be deemed
 

incorporated by reference into this Order, and any failure by Respondent to comply 

with any term of the Divestiture Agreement shall constitute a failure to comply 

with this Order. The Divestitue Agreement shall not reduce, limit or contradict, or 

be construed to reduce, limit or contradict, the terms of this Order; provided,
 

however, that nothing in this Order shall be constred to reduce any rights or 

benefits of any Acquirer or to reduce any obligations of Respondent under such 

agreement; provided further, however, that if any term of the Divestitue
 

Agreement varies from the terms of this Order ("Order Term"), then to the extent 

that Respondent cannot fully comply with both terms, the Order Term shall 

determine Respondent's obligations under this Order. Notwithstanding any 

paragraph, section, or other provision of the Divestitue Agreement, any failure to 

meet any condition precedent to closing (whether waived or not) or any 

modification of the Divestitue Agreement, without the prior approval of the 

Commission, shall constitute a failure to comply with this Order. 

C. Prior to the Effective Date of Divestitue, Respondent shall:
 

1. Restore to Microporous any assets of Microporous as of the Acquisition
 

Date that were removed from Microporous at any time between the
 

Acquisition Date and the Effective Date of Divestitue, other than Battery 

Separators sold in the ordinary course of business and Inventories
 

consumed in the ordinar course of 
 business; 

12 
2. To the extent any fixtues or Tangible Personal Propert have been
 

removed from the Feistrtz Plant, the Piney Flats Plant or the Line in Boxes 

after the Acquisition Date and not retued or replaced with equivalent
 

assets, such fixtues or Tangible Personal Propert shall be retued and 

restored to good working order suitable for use under normal operating
 

conditions or replaced with equivalent assets; 

3. Secure at its sole expense all consents and waivers from Persons that are
 

necessary to divest any propert or assets, tangible or intangible (including, 

but not limited to, any Contract), of Microporous to the Acquirer;
 

provided, however, that in instances where (i) Microporous Battery
 

Separators are sold together with Daramic Battery Separators under the 

same Terminable Contract, Respondent shall only be required to obtain 

such consents and waivers from the Customer as necessary to divest that 

portion of the Terminable Contract pertaining to Microporous Battery
 

Separators; or (ii) any Contracts (including, but not limited to, supply 

agreements) are utilized in connection with the manufactue of 

Microporous Battery Separators and Daramic Battery Separators under the 

same Contract, Respondent shall only be required to obtain such consents 

and waivers from the other contracting part as necessary to divest that 

portion of the Contract pertaining to Microporous Battery Separators;
 

provided jirther, however, that if for any reason Respondent is unable to 

accomplish such an assignent or transfer of Contracts, it shall enter into 

such agreements, contracts, or licenses as are necessary to realize the same 

effect as such transfer or assignment; and 

4. Grant to the Acquirer a Shared Intellectual Propert License for use in
 

connection with Microporous as divested pursuant to this Order. 

D. Respondent shall take all actions reasonably necessary to assist the Acquirer in 

evaluating, recruiting and employing any Microporous Employees, including (at 

the Acquirer's option), but not limited to, the following: 

1. Not later than thirt (30) days before the execution of a Divestitue
 

Agreement, Respondent shall: (i) provide the Acquirer with a list of all 

Microporous Employees, and Employee Information for each Person on the 

list; (ii) provide any available contact information, including last known 

address for any Person formerly employed as a Microporous Employee 

whose employment termnated prior to execution of a Divestitue 

Agreement; (iii) allow the Acquirer an opportnity to interview any
 

Microporous Employees personally, and outside the presence or hearing of 

any employee or agent of Respondent; and, (iv) allow the Acquirer to 

inspect the personnel fies and other documentation relating to such
 

13 
Microporous Employees, to the extent permitted under applicable laws; 

2. Respondent shall: (i) not directly or indirectly impede or interfere with the 

Acquirer's offer of employment to any Microporous Emp10yee(s); (ii) not 

directly or indirectly attempt to persuade, or offer any incentive to, any 

Microporous Emp10yee(s) to decline employment with the Acquirer; (iii) 

remove any contractual impediments and irrevocably waive any legal or 

equitable rights it may have that may deter any Microporous Employee 

from accepting employment with the Acquirer, including, but not limited 

to, any non-compete or confidentiality provisions of employment or other 

contracts with Respondent; provided, however, that Respondent may 

enforce confidentiality provisions related to DaramIc Battery Separators; 

and, 

3. Respondent shall: (i) continue to extend to any Microporous Employees,
 

durng their employment prior to the Effective Date of Divestiture, all 

employee benefits offered by Respondent, including regularly scheduled or 

merit raises and bonuses, and regularly scheduled vesting of all pension 

benefits; (ii) pay a Retention Bonus to any Microporous Emp10yee(s) to 

whom the Acquirer has made a written offer of employment who accepts a 

position with the Acquirer at the time of divestitue of Micro pro us. 

E. For a period of two (2) years from the Effective Date of Divestitue, Respondent
 

shall not: 

1. directly or indirectly solicit or induce, or attempt to solicit or induce, any
 

Microporous Employee who has accepted an offer of employment with, or 

who is employed by, the Acquirer to terminate his or her employment
 

relationship with the Acquirer; or 

2. hire or enter into any arrangement for the services of any Microporous
 

Employee who has accepted an offer of employment with, or who is 

employed by, the Acquirer; 

provided, however, Respondent may do the following: (i) advertise for employees 

in newspapers, trade publications, or other media not targeted specifically at any 

one or more of the employees of 
 the Acquirer; (ii) hire any Microporous Employee 

whose employment has been terminated by the Acquirer; or (iii) hire a 

Microporous Employee who has applied for employment with Respondent, 

provided that such application was not solicited or induced in violation of this 

Order. 

14 
F. Respondent shall include in any Divestiture Agreement related to Microporous the 

following provisions: 

1. Respondent shall covenant to the Acquirer that Respondent shall not join, 

file, prosecute or maintain any suit, in law or equity, either directly or 

indirectly through a third part, against the Acquirer or any Re1easees
 

under Intellectual Propert that is owned or licensed by Respondent as of 

the Effective Date of Divestitue, including, but not limited to, the Jungfer 

Technology, if such suit would have the potential to interfere with the 

Acquirer's freedom to practice in the research, development, manufacture, 

use, import, export, distrbution, offer to sell or sale of Micro porous Battery 

Separators; 

2. Upon reasonable notice and request from the Acquirer to Respondent, 

Respondent shall provide, in a timely manner, at no greater than Direct 

Cost, assistance of knowledgeable employees of the Respondent to assist 

the Acquirer to defend against, respond to, or otherwise participate in any 

litigation related to the Microporous Intellectual Propert or Shared 

Intellectual Propert; and 

3. At the option of 
 the Acquirer: 

a. A Technical Services Agreement, provided, however, the term of
 

any Technical Services Agreement shall be at the option of the 

Acquirer, but not longer than two (2) years from the Effective Date 

of Divestitue. 

b. A Transition Services Agreement, provided, however, the term of
 

the Transition Services Agreement shall be at the option of the 

Acquirer, but not longer than two (2) years from the Effective Date 

of Divestitue; 

Provided, however, that Respondent shall not (i) require the Acquirer to 

pay compensation for services under such agreements that exceeds the 

Direct Cost of providing such goods and services, or (ii) terminate its 

ob1igation(s) under such agreements because of a material breach by the 

Acquirer of any such agreement in the absence of a final order by a cour of 

competent jursdiction, or (iii) seek to limit the damages (such as indirect, 

special, and consequential damages) which any Acquirer would be entitled 

to receive in the event of Respondent's breach of any such agreement. 

15 
G. Respondent shall:
 

1. submit to the Acquirer, at Respondent's expense, all Confidential Business
 

Information; 

2. deliver such Confidential Business Information as follows: (i) in good
 

faith; (ii) as soon as practicable, avoiding any delays in transmission of the 

respective information; and (iii) in a manner that ensures its completeness 

and accuracy and that fully preserves its usefulness; 

3. pending complete delivery of all such Confidential Business Information to
 

the Acquirer, provide the Acquirer and the Monitor Trustee (if any has 

been appointed) with access to all such Confidential Business Information 

and employees who possess or are able to locate such information for the 

puroses of identifying the books, records, and files that contain such 

Confidential Business Information and facilitating the delivery in a manner 

consistent with this Order; 

4. not use, directly or indirectly, any such Confidential Business Information
 

(other than as necessary to comply with the following: (i) the requirements 

of this Order; (ii) the Respondent's obligations to the Acquirer under the 

terms of any Divestitue Agreement; or (iii) applicable law); 

5. not disclose or convey any such Confidential Business Information,
 

directly or indirectly, to any Person except the Acquirer, the Monitor 

Trustee, or the Commission; 

6. Respondent shall devise and implement measures to protect against the
 

storage, distrbution, and use of Confidential Business Information that is 

not expressly permtted by this Order. These measures shall include, but 

not be limited to, restrctions placed on access by Persons to information 

available or stored on any of Respondent's computers or computer
 

networks; and 

7. Respondent may use Confidential Business Information only (i) for the 

purose of 
 performing Respondent's obligations under this Order; or, (ii) to

ensure compliance with legal and regulatory requirements; to perform 

required auditing fuctions; to provide accounting, information technology
 

and credit-underwting services, to provide legal services associated with 

actual or potential litigation and transactions; and to monitor and ensure 

compliance with financial, tax reporting, governental environmental,
 

health, and safety requirements. 

16 
H. The purose of the divestitue of Microporous is to create an independent, viable 

and effective competitor in the markets in which Microporous was engaged at the 

time of the Acquisition Date, and to remedy the lessening of competition resulting 

from the Acquisition as alleged in the Commission's Complaint. 

III. 

IT IS FURTHER ORDERED that: 

A. Within thirt (30) days after this Order becomes final, Respondent shall retain a
 

Monitor Trustee, acceptable to the Commission, to monitor Respondent's
 

compliance with its obligations and responsibilities under this Order, consult with 

Commission staff, and report to the Commission regarding Respondent's
 

compliance with its obligations and responsibilities under this Order. 

B. If Respondent fails to retain a Monitor Trustee as provided in Paragraph III.A. of
 

this Order, a Monitor Trustee, acceptable to the Commission, shall be identified 

and selected by the Commission's staff 
 within fort-five (45) days after this Order 

is finaL 

C. Respondent shall consent to the following terms and conditions regarding the 

powers, duties, authorities, and responsibilities of the Monitor Trustee selected 

under Paragraph III.A or III.B. of this Order: 

1. The Monitor Trustee shall have the power and authority to monitor
 

Respondent's compliance with the terms of this Order and shall exercise 

such power and fluthority and carr out the duties and responsibilities of the 

Monitor Trustee pursuant to the terms of this Order in a maner consistent 

with the puroses of the Order and in consultation with Commission's
 

staff. 

2. Within ten (10) days after the Commission's approval of the Monitor
 

Trustee, Respondent shall execute an agreement that, subject to the 

approval of the Commission, confers on the Monitor Trustee all the rights 

and powers necessary to permit the Monitor Trustee to monitor
 

Respondent's compliance with the terms of this Order in a manner
 

consistent with the puroses of this Order. If requested by Respondent, the 

Monitor Trustee shall sign a confidentiality agreement prohibiting the use, 

or the disclosure to anyone other than the Commission (or any Person 

retained by the Monitor Trustee pursuant to Paragraph III.C.5. of this 

Order), of any competitively sensitive or proprietary information gained as 

a result of his or her role as Monitor Trustee, for any purose other than 

performance of the Monitor Trustee's duties under this Order. 

3. The Monitor Trustee shall serve until the expiration of period for 

Customers to seek reopening and renegotiation or termination of 

17 
Terminable Contracts as provided in Paragraph VI. of 
 this Order; 
 provided, 

however, that the Commission may modify this period as may be necessary 

or appropriate to accomplish the puroses ofthe Order. 

4. Subject to any demonstrated legally recognized privilege, the Monitor
 

Trustee shall have full and complete access to Respondent's personnel,
 

books, documents, records kept in the normal course of business, facilities 

and technical information, and such other relevant information as the 

Monitor Trustee may reasonably request, related to Respondent's 

compliance with its obligations under the Order, including, but not limited 

to, its obligations related to Microporous assets. Respondent shall 

cooperate with any reasonable request of the Monitor Trustee and shall take 

no action to interfere with or impede the Monitor Trustee's ability to 

monitor Respondent's compliance with the Order. 

5. The Monitor Trustee shall serve, without bond or other security, at the 

expense of Respondent on such reasonable and customary terms and 

conditions as the Commission may set. The Monitor Trustee shall have 

authority to employ, at the expense of the Respondent, such consultants, 

accountants, attorneys and other representatives and assistants as are 

reasonably necessary to carr out the Monitor Trustee's duties and
 

responsibilities. The Monitor Trustee shall account for all expenses
 

incured, including fees for his or hers services, subject to the approval of 

the Commission. 

6. Respondent shall indemnify the Monitor Trustee and hold the Monitor
 

Trustee harmless against any losses, claims, damages, liabilities, or 

expenses arising out of, or in connection with, the performance of the
 

Monitor Trustee's duties, including all reasonable fees of counsel and other 

reasonable expenses incurred in connection with the preparations for, or 

defense of, any claim, whether or not resulting in any liability, except to the 

extent that such losses, claims, damages, liabilities, or expenses result from 

the Monitor Trustee's gross negligence or wilful misconduct. For 

puroses of this Paragraph III.C.6., the term "Monitor Trustee" shall

include all Persons retained by the Monitor Trustee pursuant to Paragraph 

III.C.5. of 
 this Order. 

7. Respondent shall provide copies of reports to the Monitor Trustee in
 

accordance with the requirements of this Order and/or as otherwise
 

provided in any agreement approved by the Commission. 

8. The Monitor Trustee shall report in writing to the Commission (i) every 

sixty (60) days from the date the Monitor Trustee is appointed, (ii) at the 

time a divestitue package is presented to the Commission for its approval, 

18 
and (iii) at any other time as requested by the staff of the Commission, 

concerning Respondent's compliance with this order. 

D. The Commission may, among other things, require the Monitor Trustee and each 

of the Monitor Trustee's consultants, accountants, attorneys and other 

representatives and assistants to sign an appropriate confidentiality agreement
 

related to Commission materials and information received in connection with the 

performance of the Monitor Trustee's duties. 

E. If at any time the Commission determines that the Monitor Trustee has ceased to
 

act or failed to act diligently, the Commission may appoint a substitute Monitor 

Trustee in the same manner as provided in this Paragraph. 

F. The Commission may on its own initiative, or at the request of the Monitor 

Trustee, issue such additional orders or directions as may be necessary or 

appropriate to assure compliance with the requirements ofthe Order. 

G. Respondent shall cooperate with the Monitor Trustee appointed pursuant to this 

Paragraph in the performance any duties and responsibilities under this Order. 

IV. 

IT is FURTHER ORDERED that: 

A. If Respondent has not divested, absolutely and in good faith, Microporous within 

the time period or in the manner required by Paragraph II. of this Order, then the 

Commission may at any time appoint a Divestitue Trustee to divest Microporous 

to an Acquirer and in a manner, including pursuant to a Divestitue Agreement,
 

that satisfies the puroses and requirements ofthis Order. 

B. In the event that the Commission or the Attorney General brings an action pursuant 

to § 5(l) of the Federal Trade Commission Act, 15 U.S.C. § 45(1), or any other 

statute enforced by the Commission, for any failure by Respondent to comply with 

this Order, Respondent shall consent to the appointment of a Divestitue Trustee in 

such action. N either the decision of the Commission to appoint a Divestitue 

Trustee, nor the decision of the Commission not to appoint a Divestitue Trustee, 

shall preclude the Commission or the Attorney General from seeking civil 

penalties or any other available relief, including a cour-appointed trstee, pursuant 

to § 5(l) of the Federal Trade Commission Act, 15 U.S.C. § 45(1), or any other 

statute enforced by the Commission, for any failure by the Respondent to comply 

with this Order. 

C. The Commission shall select the Divestitue Trustee, subject to the consent of 

Respondent, which consent shall not be uneasonably withheld. The Divestitue 

Trustee shall be a Person with experience and expertise in acquisitions and 

19 
divestitures and may be the same Person as the Monitor Trustee appointed under 

Paragraph III. of this Order. If Respondent has not opposed, in writing, including 

the reasons for opposing, the selection of any proposed Divestitue Trustee within 

ten (10) days after notice by the staff of the Commission to Respondent of the 

identity of any proposed Divestitue Trustee, Respondent shall be deemed to have 

consented to the selection of 
 the proposed Divestitue Trustee. 

D. Within ten (10) days after appointment of the Divestitue Trustee, Respondent 

shall execute a trst agreement ("Divestitue Trustee Agreement") that, subject to 

the prior approval of the Commission transfers to the Divestitue Trustee all rights 

and powers necessary to effect the relevant divestitue, and to enter into any 

relevant agreements, required by this Order. 

E. If a Divestitue Trustee is appointed by the Commission or a cour pursuant to this 

Paragraph IV. of this Order, Respondent shall consent to, and the Divestitue 

Trustee Agreement shall include, the following terms and conditions regarding the 

Divestitue Trustee's powers, duties, authority, and responsibilities: 

1. Subject to the prior approval of the Commission, the Divestitue Trustee
 

shall have the exclusive power and authority to divest relevant assets or 

enter into relevant agreements pursuant to the terms of this Order and in a 

manner consistent with the puroses of this Order. 

2. The Divestitue Trustee shall have twelve (12) months from the date the
 

Commission approves the Divestitue Trustee Agreement described in this 

Paragraph iv. of this Order to divest relevant assets pursuant to the terms 

of this Order. If, however, at the end of the applicable twelve-month
 

period, the Divestitue Trustee has submitted to the Commission a plan of 

divestitue, or believes that divestitue can be achieved within a reasonable 

time, such period may be extended by the Commission, or, in the case of a 

cour-appointed trstee, by the cour. 

3. Subject to any demonstrated legally recognized privilege, the Divestitue
 

Trustee shall have full and complete access to the personnel, books, records 

and facilities of Respondent related to Microporous or related to any other 

relevant information, as the Divestitue Trustee may request. Respondent 

shall develop such financial or other information as the Divestitue Trustee 

may request and shall cooperate with the Divestitue Trustee. Respondent 

shall take no action to interfere with or impede the Divestitue Trustee's 

accomplishment of his or her responsibilities. At the option of the
 

Commission, any delays in divestitue or entering into any agreement 

caused by Respondent shall extend the time for divestitue under this 

Paragraph IV. in an amount equal to the delay, as determined by the 

Commission or, for a cour-appointed Divestitue Trustee, by the cour. 

20 
4. The Divestitue Trustee Agreement shall prohibit the Divestitue Trustee,
 

and each of the Divestitue Trustee's consultants, accountants, attorneys, 

and other representatives and assistants from disclosing, except to the 

Commission (and in the case of a cour-appointed trstee, to the cour) 

Confidential Business Information; provided, however, Confidential 

Business Information may be disclosed to potential acquirers and to the 

Acquirer as may be reasonably necessary to achieve the divestiture 

required by this Order. The Divestitue Trustee Agreement shall terminate 

when the divestitue required by this Order is consummated. 

5. The Divestiture Trustee shall use commercially reasonable best efforts to
 

negotiate the most favorable price and terms available in each contract that 

is submitted to the Commission, subject to Respondent's absolute and
 

unconditional obligation to divest at no minimum price. The divestiture 

shall be made to, and a Divestitue Agreement executed with, an Acquirer 

in the manner set forth in Paragraphs II. of this Order; provided, however, 

if the Divestitue Trustee receives bona fide offers from more than one 

acquiring entity, and if the Commission determines to approve more than 

one acquiring entity, the Divestiture Trustee shall divest to the acquiring 

entity or entities selected by Respondent from among those approved by 

the Commission, provided further, however, that Respondent shall select 

such entity within five (5) days of receiving notification of the 

Commission's approvaL
 

6. The Divestitue Trustee shall serve, without bond or other securty, at the
 

expense of Respondent, on such reasonable and customary terms and
 

conditions as the Commission or a cour may set. The Divestitue Trustee 

shall have the authority to employ, at the expense of Respondent, such 

consultants, accountants, attorneys, investment bankers, business brokers, 

appraisers, and other representatives and assistants as are necessar to carr 

out the Divestitue Trustee's duties and responsibilities. The Divestitue 

Trustee shall account for all monies derived from the divestitue and all 

expenses incured. After approval by the Commission and, in the case of a 

court-appointed trustee, by the cour, of the account of the trstee,
 

including fees for his or her services, all remaining monies shall be paid at 

the direction of 
 Respondent. The Divestitue Trustee's compensation shall 

be based at least in significant part on a commission arrangement
 

contingent on the Divestitue Trustee's locating an Acquirer and assurng 

compliance with this Order. The powers, duties, and responsibilities of the 

Divestitue Trustee (including, but not limited to, the right to incur fees or 

other expenses) shall terminate when the divestitue required by this Order 

is consummated, and the Divestitue Trustee has provided an accounting
 

for all monies derived from the divestitue and all expenses occured. 

21 
7. Respondent shall indemnify the Divestitue Trustee and hold the
 

Divestitue Trustee harmless against any losses, claims, damages,
 

liabilities, or expenses arising out of, or in connection with, the 

performance of the Divestiture Trustee's duties, including all reasonable 

fees of counsel and other expenses incured in connection with the
 

preparation for, or defense of, any claim, whether or not resulting in any 

liability, except to the extent that such losses, claims, damages, liabilities, 

or expenses result from gross negligence, wilful or wanton acts, or bad 

faith by the Divestitue Trustee. For puroses of this Paragraph, the term
 

"Divestitue Trustee" shall include all Persons retained by the Divestitue 

Trustee pursuant to Paragraph IV.E.6. ofthis Order. 

8. The Divestitue Trustee shall have no obligation or authority to operate or
 

maintain Microporous. 

9. The Divestitue Trustee shall report in wrting to the Commission every
 

two (2) months concerning his or her efforts to divest and enter into 

agreements related to Microporous, and Respondent's compliance with the 

terms of this Order. 

F. If the Commission determines that the Divestitue Trustee has ceased to act or
 

failed to act diligently, the Commission may appoint a substitute trstee in the 

same maner as provided in this Paragraph IV. of this Order. 

G. The Commission or, in the case of a cour-appointed trstee, the cour, may on its 

own initiative or at the request of the Divestitue Trustee issue such additional 

orders or directions as may be necessary or appropriate to comply with the terms 

of this Order. 

H. Respondent shall comply with all terms of the Divestitue Trustee Agreement, and 

any breach by Respondent of any term of the Divestiture Trustee Agreement shall 

constitute a violation of this Order. Notwithstanding any paragraph, section, or 

other provision of the Divestitue Trustee Agreement, any modification of the
 

Divestitue Trustee Agreement, without the prior approval of the Commission,
 

shall constitute a failure to comply with this Order. 

v. 

IT is FURTHER ORDERED that: 

A. From the date this Order becomes final until the Effective Date of Divestitue, 

Respondent shall take such actions as are necessar to maintain the full economic 

22 
viability, marketability, and competitiveness of 
 Micro porous, and shall prevent the 

destruction, removal, wasting, deterioration, sale, disposition, transfer, or 

impairment of Microporous and assets related thereto except for ordinary wear and 

tear, including, but not limited to, continuing in effect and maintaining Intellectual 

Propert, Contracts, Trade Names and Marks, and renewing or extending any 

leases or licenses that expire or terminate prior to the Effective Date of Divestiture. 

B. Respondent shall maintain the operations of Microporous in the ordinary course of 

business and in accordance with past practice (including regular repair and 

maintenance of the assets included within Microporous). Among other things as 

may be necessary, Respondent shall: 

1. Maintain a work force at least as equivalent in. size, training, and expertise 

to what was associated with Microporous prior to the Acquisition Date; 

2. Assure that Respondent's employees with primary responsibility for
 

managing and operating Microporous are not transferred or reassigned to 

other areas within Respondent's organizations except for transfer bids 

initiated by employees pursuant to Respondent's regular, established job 

posting policy; 

3. Provide suffcient working capital to operate Microporous at least at
 

curent rates of operation, to meet all capital calls with respect to 

Microporous and to carr on, at least at their scheduled pace, all capital 

projects, business plans and promotional activities; 

4. Make available for use by Microporous fuds suffcient to perform all 

routine maintenance and all other maintenance as may be necessary to, and 

all replacements of, the assets of Microporous; 

5. Use best efforts to preserve and maintain the existing relationships with
 

Customers, suppliers, vendors, private and Governental Entities, and 

other Persons having business relations with Microporous; and 

6. Except as part of a divestitue approved by the Commission pursuant to this
 

Order, not remove, sell, lease, assign, transfer, license, pledge for 

collateral, or otherwise dispose of Microporous, provided however, that 

nothing in this provision shall prohibit Respondent from such activities in 

the ordinary course of business consistent with past practices. 

23
 
VI.
 

IT is FURTHER ORDERED that: 

A. Respondent shall allow all Customers with Terminable Contracts the right and 

option unilaterally to reopen and renegotiate or to terminate their contracts, solely 

at the Customer's option, without penalty, forfeiture or other charge to the 

customer, and consistent with the requirements of this Order including the 

following: 

1. No later than ten (10) days from the date this Order becomes final, 

Respondent shall notifY all Customers with Terminable Contracts oftheir 

rights under this Order and, for each such Terminable Contract, offer the 

Customer the opportity to reopen and renegotiate or to terminate their 

contract(s). Respondent shall send written notification of 
 this requirement 

and a copy of this Order and the Complaint, by certified mail with return 

receipt requested to: (i) the person designated in the Terminable Contract to 

receive notices from Respondent; or (ii) the Chief Executive Offcer and 

General Counsel of the Customer. Respondent shall keep a file of such 

return receipts for three (3) years after the date on which this Order 

becomes finaL 

2. No later that ten (10) days from the Effective Date of 
 Divestiture, 

Respondent shall send written notification of the Effective Date of 

Divestitue to all customers with Terminable Contracts, by certified mail 

with retu receipt requested to: (i) the person designated in the Terminable
 

Contract to receive notices from Respondent; or (ii) the Chief Executive 

Officer and General Counsel of 
 the Customer. Respondent shall keep a fie 

of such retu receipts for three (3) years after the date on which this Order
 

becomes finaL 

3. A Customer may exercise its option to reopen and renegotiate or terminate 

any Terminable Contract by sending by certified mail, retu receipt
 

requested, a written notice to Respondent either to: (i) the address for 

notice stated in the Contract; or, (ii) Respondent's principal place of 

business at any time prior to five (5) years after the Effective Date of 

Divestitue. The written notice shall identifY the Terminable Contract that 

wil be reopened or terminated, and the date upon which any termination 

shall be effective; 
 provided, however, that: (a) a Customer with more than 

one Terminable Contract who sends written notice with regard to less than 

all of its Terminable Contracts shall not lose its opportity to reopen and 

renegotiate or termnate any remaining Terminable Contracts; (b) any 

24 
Customer who reopens and renegotiates a Terminable Contract prior to the 

Effective Date of 
 Divestitue shall have a further opportity to reopen and 

renegotiate or terminate such Terminable Contract after the Effective Date 

of Divestitue at any time prior to five (5) years after the Effective Date of 

Divestitue; (c) Respondent shall not be obligated to reopen and renegotiate 

or terminate, as the case may be, a Terminable Contract on less than thirt 

(30) days' notice; and (d) any request by a Customer to reopen and 

renegotiate or terminate a Terminable Contract on less than thirt (30)
 

days' notice shall be treated by Respondent as a request to reopen and 

renegotiate or terminate, as the case may be, effective thirt (30) days from 

the date of the request. 

4. Respondent shall not directly or indirectly: 

a. Require any Customer to make or pay any payment, penalty, or
 

charge for, or provide any consideration relating to, or otherwise 

deter, the exercise of the option to reopen 
 and renegotiate or 

terminate or the reopening and renegotiation or termnation of any 

Terminable Contract; or 

b. Retaliate against, or take any action adverse to the economic
 

interests of, any Customer that exercises its right under the Order to 

reopen and renegotiate or terminate any Terminable Contract; 

provided, however, that Respondent may enforce Contracts, or seek judicial 

remedies for breaches of Contracts, based upon rights or causes of action 

that accrued prior to the exercise by a Customer of an option to terminate a 

Contract. 

5. Respondent shall include in the Divestitue Agreement a requirement that
 

the Acquirer shall allow all Customers with Terminable Contracts for 

Microporous Battery Separators the right and option unilaterally to reopen 

and renegotiate or to termnate their contracts, solely at the Customer's 

option, without penalty, forfeitue or other charge to the Customer, and 

consistent with the requirements of this Paragraph of the Order as if the 

Terminable Contract remained with Respondent. Respondent shall include 

in the Divestitue Agreement a requirement that all Customers with 

Terminable Contracts for Microporous Battery Separators shall be third 

part beneficiaries of this provision of the Divestitue Agreement, with the 

right to enforce this provision independent of, and apar from, Respondent. 

provided, however, that nothing in this Order wil affect the rights and 

responsibilities under any Termnable Contract for any Customer who fails 

to notify Respondent or the Acquirer, as the case may be, within the time 

25 
allotted in this Paragraph. 

VII. 

IT IS FURTHER ORDERED that Respondent shall not, directly or indirectly, take or 

threaten to take any coercive, retaliatory or deterrent actions, financia1 or non-financia1,
 

against or directed at a Customer based on that Customer's purchase of, or consideration
 

to purchase, any volume or amount of Battery Separators from a Person other than
 

Respondent, including, but not limited to, the following:
 

A. Refusing to supply or otherwise conditioning the sale of Battery Separators to a 

Customer based on that Customer's purchase of, or consideration to purchase, any 

Battery Separators from a Person other than Respondent; 

B. Suspending, delaying or terminating the supply of 
 Battery Separators to a 

Customer, or threatening to do so; 

C. Entering into or enforcing any agreement or other arrangement, express or implied,
 

that prevents or restrcts a Customer from purchasing Battery Separators from a 

Person other than Respondent; 

D. Auditing a Customer's purchases of 
 Battery Separators to determine the extent of 

purchases from non-Respondent sources; 

E. Retaliating against a Customer for exercising any of the options or rights provided
 

for Customers under Paragraph VI of this Order; or 

F. Invoking a Force Majeure Event to suspend or terminate the supply of 
 Battery 

Separators to any Customer(s) unless such Force Majeure Event is bonafide; 

Respondent shall bear the burden of establishing the existence of such Force 

Majeure Event at the request of any Customer adversely affected by it, and shall 

take commercially reasonable steps to address or correct any disruption and restore 

supply to such Customer(s) as expeditiously as possible. 

VIII. 

IT is FURTHER ORDERED that: 

A. Respondent shall:
 

1. Within fifteen (15) days after the date this Order becomes final: (a) modify
 

and amend the H& V Agreement in writing to terminate and declare null 

and void, and (b) cease and desist from, directly or indirectly, or through 

any corporate or other device, implementing or enforcing, the covenant not 

26 
to compete set fort in Section 4 of the H& V Agreement, and all related 

terms and definitions, as that covenant applies to North America and to 

actual and potential customers within North America. 

2. Within thirt (30) days after the date this Order becomes final, file with the
 

Commission the written amendment to the H& V Agreement 

("Amendment") that complies with the requirements of Paragraph VI.A.1, 

it being understood that nothing in the H& V Agreement, currently or as 

amended in the futue, or the Amendment shall be constred to reduce any 

obligations of 
 the Respondent under this Order. The Amendment shall be 

deemed incorporated into this Order, and any failure by Respondent to 

comply with any term of such Amendment shall constitute a failure to 

comply with this Order. The Amendment shall not be modified, directly or 

indirectly, without the prior approval of the Commission. 

B. Respondent shall cease and desist from, directly, indirectly, or through any 

corporate or other device, in or affecting commerce, as "commerce" is defined in 

the Federal Trade Commission Act, inviting, entering into or attempting to enter 

into, organizing or attempting to organize, implementing or attempting to 

implement, continuing or attempting to continue, soliciting, or otherwise 

facilitating any combination, agreement, or understanding, either express or 

implied, with any Person curently engaged, or that might potentially become 

engaged, in the development, production, marketing or sale of any Battery 

Separator, to allocate or divide markets, customers, contracts, lines of commerce, 

or geographic terrtories in connection with Battery Separators, or otherwise to 

restrct the scope or level of competition related to Battery Separators. 

Provided, however, that it shall not, of 
 itself, constitute a violation of 
 this 

Paragraph for Respondent to enter into a bona fide and written j oint ventue 

agreement with any Person to manufacture, develop, market or sell a new Battery 

Separator, technology or service, or any material improvement to an existing 

Battery Separator, technology or service, in which both Respondent and the other 

Person contrbute significant personnel, equipment, technology, investment capital 

or other resources, that prohibits such Person from sellng products or services in 

competition with the joint ventue in geographic markets in which the joint ventue 

does business or competes for a reasonable period of 
 time. Providedfurther,
 

however, that Respondent shall, within ten (10) days after execution, fie a tre and
 

correct copy of such joint ventue agreement with the Commission. 

IX. 

IT is FURTHER ORDERED that, for a period of 
 two (2) years from the Effective Date 

of Divestitue, Respondent shall not advertise, market or sell any Battery Separator 

utilizing cross lined rubber anywhere in the world. 

27 
x. 

IT is FURTHER ORDERED that, no later than ten (10) days from the date on which 

this Order becomes fma1, Respondent shall provide a copy of this Order to each of 

Respondent's officers, employees, or agents having managerial responsibilities for any of 

Respondent's obligations under this Order. 

XI. 

IT is FURTHER ORDERED that Respondent shall notify the Commission at least 

thirt (30) days prior to:
 

A. any proposed dissolution of Respondent;
 

B. any proposed acquisition, merger or consolidation of Respondent; or
 

C. any other change in the Respondent, including, but not limited to, assignment and
 

the creation or dissolution of subsidiaries, if such change might affect compliance 

obligations arising out ofthe Order. 

XIi. 

IT is FURTHER ORDERED that: 

A. Within thirt (30) days after the date this Order becomes final and every thirt (30)
 

days thereafter until the Effective Date of 
 Divestitue, and thereafter every sixty 

(60) days until the Respondent has fully complied with the provisions of Paragraphs II., III., IV., V., and VI. of 
 this Order, Respondent shall submit to the 

Commission (with simultaneous copies to the Monitor Trustee and Divestitue 

Trustee(s), as appropriate) verified wrtten reports setting forth in detail the manner 

and form in which Respondent intends to comply, is complying, and has complied 

with the relevant provisions ofthis Order. 

B. Respondent shall include in its compliance reports, among other things required by 

the Commission, a description of all substantive contacts or negotiations for the 

divestitue required by this Order, the identity of all pares contacted, copies of all 

material written communications to and from such parties, and all reports and 

recommendations concerning the divestiture, the Effective Date of Divestiture, and 

a statement that the divestitue has been accomplished in the maner approved by 

the Commission. 

C. One (1) year from the date this Order becomes final on the anniversary ofthe date 

this Order becomes final, and annually until expiration or termination of 

28 
Respondent's obligations under the Order, Respondent shall fie verified written 

reports with the Commission setting forth in detail the maner and form in which it 

has complied and is complying with this Order. Respondent shall deliver a copy of 

each such report to the Monitor Trustee. 

XIII. 

IT is FURTHER ORDERED that, for puroses of determning or securng compliance 

with this Order, and subject to any legally recognized privilege, and upon written request 

and upon five (5) days notice to Respondent, Respondent shall, without restraint or 

interference, permit any duly authorized representative of the Commission: 

A. access, durng business offce hours of Respondent and in the presence of counsel, 

to all facilities and access to inspect and copy all books, ledgers, accounts, 

correspondence, memoranda and all other records and documents in the possession 

or under the control of 
 Respondent related to any matter contained in this Order, 

which copying services shall be provided by Respondent at the request of the 

authorized representative(s) of the Commission and at the expense of the 

Respondent; and 

B. to interview officers, directors, or employees of 
 Respondent, who may have 

counsel present, regarding such matters. 

XI. 

IT is FURTHER ORDERED that this Order shall terminate twenty (20) years from the 

date this Order becomes finaL 

By the Commission. 

Donald S. Clark 

Secretar 

SEAL 

ISSUED: 

29 
CERTIFICATE OF SERVICE 

I hereby certify that on July 17,2009, I filed via hand delivery an original and two 

copies of the foregoing public version of Complaint Counsel's Post-Trial Brief with: 

Donald S. Clark, Secretar 

Office of the Secretary 

Federal Trade Commission 

600 Pennsylvania Avenue, NW, Rm. H-135 

Washington, DC 20580 

I hereby certify that on July 17, 2009, I served via electronic mail and hand 

delivery two copies of the foregoing public version of Complaint Counsel's Post-Trial 

Brief with:
 

The Honorable D. Michael Chappell 

Administrative Law Judge 

Federal Trade Commission 

600 Pennsylvania Avenue, NW, H-106 

Washington, DC 20580 

oa1i (gftc.gov 

I hereby certify that on July 17, 2009, I served via electronic mail delivery and 

first class mail two copies of the foregoing public version of Complaint Counsel's PostTrial Brief 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 

wiliamrikard (g parkerpoe. com 

ericwe1sh (gparkerpoe.com 

Linda Cunnin 

Federal Trade ommissio 

600 Pennsylvania ue, NW
 

Washington, DC 20580 

Telephone: (202) 326-2638 

lcunningham (g ftc. gov