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UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRAE COMMISSION

In the Matter of )

)

)

)

)

PUBLIC

Polyp ore International, Inc.,

a corporation.

Docket No. 9327

COMPLAINT COUNSEL'S PRE-TRIAL BRIF

DAVID WALES

Acting Director

KEN GLAZER

Senior Deputy Director

Bureau of Competition

1. ROBERT ROBERTSON

Chief Trial Counsel

Federal Trade Commission

Bureau of Competition

600 Pennsylvania Ave., N.W.

Washington, DC 20580

Telephone: (202) 326-2008

CATHAE MOSCA TELL! Fax: (202) 326-2884

Assistant Director

MORRS BLOOM

Deputy Assistant Director

Counsel Supporting the Complaint

STEVEN DAHM

BENJAMIN GRIS

JOEL CHRISTIE

STEPHEN ANTONIO

CHRISTIAN WOOLLEY

Attorneys

Federal Trade Commission

Bureau of Competition

Mergers II

April 23, 2009
TABLE OF CONTENTS

TABLE OF AUTHORITIES. . . . . ...................... .. ............... ...... .. iii

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

i. Factual Background .......................................................... 3

II. Polypore's Acquisition of Microporous Has Increased Market Power and Reduced Curent

and/or Potential Competition Significantly in the Markets for Deep-Cycle, Motive, SLI and UPS

Batter Separators .............................................................. 8

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

Separators for Flooded Batteries ................. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

i. Deep-Cycle Battery Separators are a Product Market . . . . . . . . . . . . . . . . . . . . 9

2. Motive Separators are a Relevant Market ....................... . . . . . 10

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

4. Starting, Lighting, Ignition ("SLI") Battery Separators ................. 12

B. The Relevant Geographic Market is North America ......................... 13

C. The Acquisition is Likely to Lessen Competition in the Relevant Markets in Violation

of Section 7 ........................................................... 16

i. The Acquisition Established a Monopoly in Markets for

Separators Used in Motive Power and Deep-Cycle. . . . . . . . . . . . . . . . . . . . . . . 17

a. Deep-Cycle Monopoly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

b. Motive Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

2. The Acquisition Eliminated an Existing Competitor in the SLI

Separator Market and Prevented Significant

De-Concentration of that Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

3. The Acquisition Eliminated Microporous as a Potential Entrant

in the Market for UPS Separators .................................... 21

4. Daramic Expected that the Merger Would Eliminate a

Dangerous Competitor and Provide it With the Monopoly Power
to Raise Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

5. The Alternative Market of All PE Also Raises Significant

Concerns ....................................................... 23

6. Respondent Cannot Demonstrate that Entr Would Prevent

Anti-competitive Effects in the Four Markets. . . . . . . . . . . . . . . . . . . . . . . . . . .23

a. Respondent Cannot Demonstrate that Entry Into the

Relevant Markets Would be Timely, Likely or Sufficient ...........24

(1) Entr Would Not Be Timely .........................25

(2) Respondent Cannot Demonstrate that Entr Into

the Relevant Markets is Likely .......................... 26

(3) Respondent Cannot Demonstrate that Entry

Would Be Suffcient to Overcome Anti-competitive

Effects ............................................. 26

D. Respondent's Claimed Efficiencies Defense Fails. . . . . . . . . . . . . . . . . . . . . . . . . . .28

III. Daramic Entered Into Agreements that Unlawfully Restrained Trade ................. 29

A. Count II: Unreasonable Restraint of Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

i. Legal Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

2. The Challenged Agreement Injuries Competition . . . . . . . . . . . . . . . . . . . . . . 31

B. Count III: Monopolization and Attempted Monopolization . . . . . . . . . . . . . . . . . . . . 32

1. Legal Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

2. Monopoly Power/Dangerous Probability of Maintaining

Monopoly Power ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

3. Exclusionary Conduct ........................................... 34

IV. Divestitue and a Cease and Desist Order Are Needed to Restore and Protect Competition in

the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

V. Conclusion ............................................................... 38

11
TABLE OF AUTHORITIES

CASES:

Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985). ................34

Blackburn v. Sweeney, 53 F.3d 825 (7th Cir.1995). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

Blue Cross & Blue Shield United v. Marshfeld Clinic, 65 F.3d 1406 (7th Cir.1995). .......31

Brown Shoe Co. v. United States, 370 U.S. 294 (1962). ...............................8

California Dental Assn. v. FTC, 526 U.S. 756 (1999) ................................29

Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643 (1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

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

Conwood Co. v. United States Tobacco Co., 290 F.3d 768 (6th Cir. 2002) ................33

Fashion Originators' Guildv. FTC, 312 U.S. 457 (1941) .............................29

FTC v. Cardinal Health, 12 F. Supp. 2d 34 (D. D.C. 1998) ..........................9,24

FTC v. CCC Holdings, et al., -- F. Supp. -- WL 723031 (D. D.C., Mar. 18,2009) ..........28

FTC v. Cement Inst., 333 U.S. 683 (1948) .........................................29

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

FTC v. Natl Lead Co., 352 U.S. 419 (1957) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

FTC v. Staples, Inc., 970 F. Supp. 1066 (D. D.C. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,9, 13

Grumman Corporation v. The LTV Corporation, 665 F.2d 10 (2d. Cir. 1981) . . . . . . . . . . . . . . 19

Hospital Corp. of America v. FTC, 807 F.2d 1381 (7th Cir. 1986) . . . . . . . . . . . . . . . . . . . . . . . 16

Image Technical Servs. v. Eastman Kodak Co., 125 F.3d 1195 (9th Cir. 1997) . . . . . . . . . . . . .33

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

Decision 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

In re Chicago Bridge & Iron Co., N v., et al., 2003 WL 22217293 (F.T.C. Sep. 10,2003) . 1,26

11
In re Terazosin Hydrochloride Antitrust Litig., 325 F. Supp. 2d 1279 (S.D. Fla. 2005) ......31

In the MatterofB.F. Goodrich Co., 110 F.T.C. 207 (1988) ............................36

In the Matter of PolyGram Holding, Inc. et al., 136 F.T.C. 310

(slip. op. July 24,2003) ....... . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. . . . . 30, 31, 32

In the Matter of North Texas Specialty Physicians, 2005 WL 3366980 (F.T.C. Dec. 1,2005) .30

In the Matter of RSR Corp., 88 F.T.C. 800 (1976) ...................................36

Jacob Siegel Co. v. FTC, 327 U.S. 608, 66 S. Ct. 758 (1946) . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Lorain Journal Co. v. United States, 342 U.S. 143 (1951) .... . . . . . . . . . . . . . . . . . . . . . .33,34

Morgenstern v. Wilson, 29 F.3d 1291 (8th Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Palmer v. BRG of Georgia, Inc., 498 U.S. 46 (1990) ................................. 31

PolyGram Holding, Inc. v. FTC, 416 F.3d 29 (D.C. Cir. 2005) .........................31

Roland Machinery Co. v. Dresser Industries, Inc., 749 F.2d 380 (7th Cir. 1984) ...........36

Rothery Storage & Van Co. v. Atlas Van Lines, 792 F.2d 210 (D.C. Cir. 1986) .............9

Spirit Airlines v. Northwest Airlines, 431 F.3d 917 (6th Cir. 2005) ...................... 33

United States v. Baker Hughes, Inc., 908 F.2d 981 (D.C. Cir. 1990). .....................8

United States v. Brown, 936 F.2d 1042 (9th Cir. 1991). ..............................31

United States v. Dentsply Intl Inc., 399 F.3d 181 (3d Cir. 2005) . . . . . . . . . . . . . . . . . . . . .34,36

United States v. E.I du Pont de Nemours & Co., 366 U.S. 316 (1961). ..................36

United States v. El Paso Natural Gas Co., et al., 376 U.S. 651 (1964). .................. 19

United States v. Franklin Electric Co., Inc.,

2000 U.S. Dist. LEXIS 20676 (W.D. Wis. 2000). ............................. 16

United States v. Gen. Dynamics Corp., 415 U.S. 486 (1974). ........................8, 19

United States v. Grinnell Corp., 384 U.S. 563 (1966) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . 33, 36

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

United States v. S. Natl Bank, 422 U.S. 86 (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Yamaha Motor Co. v. FTC, 657 F.2d 971 (8th Cir. 1981). ............................32

STATUTES:

15 U.S.C. § 18 ........................................................ 2, 8, 16,37

15 U.S.C. § 45 .......................................................... 29, 36, 38

OTHER AUTHORITIES

2A Areeda, et aI., Antitrust Law, (2d ed. 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 28

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

Richard A. Posner, Veritical Restraints and Antitrust Policy, 72 U. Chi. L. Rev. 229 (2005) . . 34

John Simpson & Abraham L. Wicke1gren, The Use of Exclusive Contracts to Deter Entry (July

18,2001) ................................................................... 34

v
INTRODUCTION

REDACTED

PX0803. There are good reasons that Daramic would have trouble convincing its

customers that it is not a monopolist: its acquisition of Micro porous, its closest and only competitor,

gave it a monopoly in the deep-cycle and motive separator markets, and preserved its monopoly in

the UPS separator market. The acquisition also eliminated a third competitor in the market for

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

North America.

It is also no wonder that customers have had trouble with Polypore's oppressive discovery

demands in this case when this monopolist: (i) sued Microporous to keep it from competing; (ii)

bought Microporous to keep it from competing; (iii) eliminated other competition; (iv) held back

supply and service from customers; (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 unrestrained

exertion of market power is shocking.

Yet, 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 need show only that '''the

effect of (the ) acquisition may be substantially to lessen competition, or tend to create a monopoly.'"

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, aff'd, 2003 WL 22217293 (F.T.C.

i Daramic LLC ("Daramic") is Respondent Polypore International, Inc.'s ("Polypore")

operating subsidiary that manufactures and sells the types of battery separators at issue in this

case. Microporous Products Limited Parters ("Microporous") was synonymous with Amerace,

and industry documents refer to them synonymously.

-1-
Sep. 10,2003), aff'd Chicago Bridge & Iron Co., N v., et al. 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)). To

show that competition "may be substantially" lessened, all that Complaint Counsel must show is that

the acquisition would produce '''a firm controlling an undue percentage share oftherelevantmarket,

and would result in a significant increase in the concentration of the firms in that market.'" CB&I

Initial Decision, at 88 (Citations omitted).

Daramic's market share in North America for deep-cycle, motive and UPS battery separators

is now 100%. For SLI, it is just under 50%, with only one remaining supplier, Entek. Prior to 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 Micro porous, a strong viable

competitor in all of these markets, significantly lessened competition.

Daramic has asserted only two factual defenses to this strong prima facie case: potential

entry and efficiencies. But there are no entrants anywhere in the world for deep-cycle, motive, or

UPS battery separators. And in SLI, there are none even preparing to enter North America.

Elsewhere in the world, the few fringe players in SLI cannot possibly compete against Daramic or

Entek in North America; nor is there any evidence that any wil do so.

Daramic has not even attempted to offer any evidence of the elements of an effciencies

defense, and thus it cannot possibly reach the level of extraordinary efficiencies required to offset

Complaint Counsel's prima facie case. Nor has Daramic offered any evidence to counter Complaint

Counsel's evidence of monopolistic behavior, except to say that it is simply raising prices and suing

or threatening to sue its customers to recover cost increases. This behavior proves that Daramic's

market power is now uncontested.

In short, we respectfully suggest that this ilegal acquisition and Daramic' s conduct have

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

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eliminate the anti-competitive effects caused by Daramic.

I. Factual Background

A battery separator is a porous electronic insulator placed between two plates of opposing

polarity in flooded lead-acid batteries ("flooded batteries") that prevents electrical short circuits

while allowing ionic curent to flow through the separator. Separators are the most highly

engineered component of a battery and even small chemical and physical differences in separators

have a large impact on the quality and fuction of the battery.

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

manufacturer of deep-cycle, motive, and UPS separators in North America today, and only two

manufactuers of SLI separators. The merger is a final step in a long history of exclusionar 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 i 0 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

REDACTED and then sued Microporous to prevent it from selling SLI

in Europe. PX2124-002; PX2241.

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 markets, Daramic also

entered into ilegal market division agreements. When Daramic leared that an Absorptive Glass

Mat ("AGM") separator manufactuer, Hollingsworth & Vose ("H&V"), might enter one or more

of the markets for PE separators, it entered into an agreement with H&V,

-3-
PXOI69-001; PX0035-005. This market division agreement took effect March 23, 2001,

REDACTED

PX0094; PXOI58. This agreement is an unreasonable, horizontal restraint of trade and is ilegaL.

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

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. REDACTED

Shortly thereafter, Daramic began a campaign of

exclusionary conduct. After Daramic learned in 2003 that Microporous

REDACTED

PX0744-001. 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 REDACTED PX0932.

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

business, it concluded that Microporous

REDACTED

PXO 168-002. Daramic decided that it should fight this threat because

REDACTED

PX0694-001. Indeed, when it became clear that intended to switch to Microporous in

2006, Daramic used the threat of cutting off supply to force to extend its contract

Id. at -001; PX1211-001; PX0456. REDACTED

When Daramic learned that another customer, intended to shift a portion of its

separator purchases to Microporous it took steps to prevent from moving its

-4-
business. In response to an REDACTED Daramic would only quote for what was effectively

i 00% of needs. Because of capacity restraints at Microporous and Entek, Daramic knew

its capacity was essential to and its response prevented from switching any of its

business to Microporous.

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

merger. In 2007, Daramic devised the REDACTED Pursuant to this plan, Daramic entered into longterm, exclusionary contracts with key customers to prevent Microporous from contracting with

them. Daramic believed that by contracting with these customers, Microporous' expansion could

be slowed. Daramic' s conduct prevented Microporous from acquiring sales opportnities needed

for its expansion. Despite Daramic' s continued efforts, Microporous finally managed to build a new

facility in Feistritz, Austria in 2008. Polypore bought Microporous just weeks before the new

factory was set to begin full commercial production. Microporous' European expansion would have

freed up significant capacity for the North American markets and Microporous had marketed this

capacity in North America for months before it was acquired.

Daramic thus believed that it needed to REDACTED

PXO 168-002; PX0694-00 1. Daramic believed an acquisition would REDACTED

PX0932. Polypore finally acquired Microporous on February 29,2008.2

Polypore's documents analyzing the 2008 acquisition of Microporous demonstrate its anticompetitive intent. Presentations to Polypore's Board highlight that:

REDACTED

2Although valued at $76 milion the transaction REDACTED

PX0954-006.

On receiving several customer complaints shortly after the acquisition was announced, the FTC

staff requested that Polypore hold the former Microporous separate during the FTC proceedings.

PX0290; PX0291. Polypore refused. PX0955-005.

-5-
REDACTED

Polypore Board that

PX0203-088. Indeed, Daramic management asserted to the

REDACTED

/d. All of the financial projections that were done at Polypore and

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

merger would eliminate competition from Microporous and allow for higher prices. The

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

a result of the acquisition,

REDACTED

PX0049-00 i.

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 higher prices.

In SLI separators, Polypore eliminated 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. Microporous had targeted an expansion into this business

for years, and had competed to supply two SLI separator customers:

REDACTED It was only because ofDaramic's efforts to ward offthe

-6-
Microporous threat that Microporous had not secured commercial sales. Yet, Microporous' 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. Microporous, however, had developed a PE separator for the UPS

market that competed with Daramic's product and was testing it with customers. By virte of its

location and expertise, Microporous was uniquely situated to enter this market. Absent the

acquisition, Microporous would have entered the market for UPS separators and disrupted

Daramic's monopoly. The acquisition eliminated this actual potential competition.

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

would counter such anti-competitive effects. Indeed, no other competitor has attempted to enter the

North American market despite Polypore'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 wil not accept these monopolistic price increases. Nor is there any

evidence of efficiencies that benefit competition or customers.

The only effective remedy for the unlawful acquisition is to restore competition by requiring

that Polypore divest the complete Microporous business, including its recently completed plant in

Feistritz, Austra, the equipment purchased for its expansion in North America, all of the former

Microporous' intellectual propert, and the business and employees associated with those facilities.

Because Polypore's exclusionary conduct has effectively reduced competition in these markets for

nearly ten years, Complaint Counsel also seeks the divestiture of additional PE manufacturing lines,

that contracts be voidable at any customer's request, and that a monitor trustee be appointed at

Polypore's expense to ensure that Polypore does not take anti-competitive actions that reduce the

effectiveness of the Commission's remedy in this matter. Finally, the ALJ should void the market

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division agreement with H& V and enjoin similar future agreements. Complaint Counsel also seeks

additional orders consistent with these remedies.

II. Polypore's Acquisition of Microporous Has Increased Market Power and Reduced

Current and/or Potential Competition Signifcantly in the Markets for Deep-Cycle,

Motive, SLI and UPS Battery Separators

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 FTC v. HJ. Heinz Co., 246 F.3d

708, 713 (D.C. Cir. 2001). The Supreme Cour 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)).

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

to "undue concentration in the market for a particular 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 merger wil substantially lessen competition." Id. (citations omitted). 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 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

In determining relevant product markets, cours have traditionally considered two factors:

"( I) 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

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"whether two products can be used for the same purpose, 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). "(T)he determination ofthe relevant market in the end is 'a matter of business

reality - of how the market is perceived by those who strive to profit in it.'" FTC v. Cardinal Health,

12 F. Supp. 2d 34, 46 (D.D.C. 1998) (citations omitted). Thus, "'industr or public recognition of

the (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).

There are four relevant markets in which to properly assess the anti-competitive impact of

Polypore'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.3

1. Deep-Cycle Battery Separators are a Product Market

The deep-cycle separator market comprises separators used in golf cart and scrubber

batteries. Due to the technical requirements of deep-cycle batteries, the only separators considered

effective by purchasers in this market are made from rubber and PE-rubber. These rubberized

separators are unique in that they offer the ability for the battery to outlive batteries with

conventional PE separators while being constantly discharged and then recharged (cycling) after

exhausting up to 100% of the battery's energy. Deep-cycle batteries contain an antimony additive

that facilitates this cycling process. See, e.g., PX1791-001. The deposition of antimony onto the

negative plate, sometimes called "antimony poisoning" drastically reduces the cycle life of the

battery. See, e.g., PX 1791-00 i; PX 1124-00 1. Deep-cycle batteries require separators containing

rubber to suppress antimony poisoning. See, e.g., PX1791-001; PX0072-020; PX0798. Pure PE

3 Complaint Counsel also asserts an alternative relevant market comprising all battery

separators made with PE.

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does not suffciently suppress the transfer of antimony in a deep-cycle battery. In a deep-cycle

application, a battery with a pure PE separator would last far fewer cycles. PX1124. Using a PE

separator could risk a golf cart not lasting a full round of golf.

Microporous' Flexsil is a natural rubber separator that is recognized as the industry standard

for deep-cycle batteries. REDACTED for a

less expensive separator, Microporous developed a PE-rubber separator called CellForce. The

addition of rubber allows the PE separator to achieve antimony suppression similar to Flexsil, but

at a significantly lower cost. See PX0798-003-004. Daramic introduced a competing PE-rubber

separator, HD4, several years ago, and had been gaining market share ever since. See, e.g., PX1744-

004; PXL 071; PX0222-001; PX0033-040; see also, PX0736-002

PX0316-002. According to the former CEO of Microporous, HD was the only competitor to

Microporous' Flex-Sil and CellForce products for deep-cycle batteries. PX0920-0 13; PX0906-0 16.

There are no economic substitutes for rubber or PE-rubber separators for deep-cycle batteries.

PX0319-007 REDACTED

For these reasons deep-cycle separators made from rubber or a

blend of PE and synthetic or natual rubber are a relevant product market in which to assess the

competitive impact of the merger.

2. Motive Separators are a Relevant Market

The motive power battery market is composed primarily of batteries for forklifts. See, e.g.,

PX0922-0 16; PXO 185-006; PX1786-113

REDACTED These batteries serve as

4

-10-
counterweights in the design of industrial vehicles and are among the largest batteries made. See

PX2110-035. These batteries require separators which are much thicker and larger than other

separators. In North America, motive separators are made ofPE or PE-rubber.

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

Microporous' former owners wrote that

REDACTED PXI124-002. See also, e.g., PX0072-020;

PXO 185-006. 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 separators. (A) forklift battery is typically

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

battery ohly for 2000 hours. The requirements as to electrical resistance are lower because

ofthe typically low curent densities for traction batteries. These diferences are reflected

in the design of the modern traction battery separator material.

PX1790-001 (emphasis added). Motive separators are in fact distinguished from other types of

battery separators and are a separate market based on technical and physical properties of the

separator as demanded by the specific end use of the battery in which they are contained.

The demand for motive power battery separators is inelastic, as purchasers do not consider

any other type of battery separator as an adequate substitute. Purchasers of motive separators

consistently testify that they would not switch to PVC, or any other material, in the event of a five

percent increase in the price of Daramic' s motive separators.

3. UPS Separators are a Product Market

Battery separators used in UPS batteries are a relevant product market. The UPS battery

market comprises mainly batteries used to provide temporar back-up power supply in the event of

an unplanned outage to critical data centers and buildings. UPS batteries are designed to sit idle for

extended periods. of time then, when needed, provide a quick burst of sustained current for a few

-11-
minutes until a generator is engaged or an orderly shutdown is made.

The market for flooded UPS battery separators consists of separators made from PE.

Daramic's UPS PE product has the vast majority of sales. Daramic also manufactures a product

called DARAK in Europe that can be used in flooded UPS batteries, but it is more than two times

more expensive. A small but significant and nontransitory increase in price ("SSNIP") in Daramic' s

PE product to North American customers would not cause switching to DARAK or rubber because

of the significant price difference and because Daramic controls the price and sales of both. Finally,

Amersil's PVC made in Europe is considered suspect by many North American purchasers because

it can degrade at higher temperatues. Thus a SSNIP in Daramic's UPS separators would not lead

customers to switch to other materials.

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

SLI separators is a relevant market in which to assess the impact ofPolypore's acquisition

of Microporous. The SLI application is predominately an automotive end use. SLI batteries are

used to provide a quick and unsustained surge of current primarily to start the engine after which

the car's engine becomes the source of power. The SLI market is the largest separator market.

PX013 1-032.

Separators for SLI are made from PE. SLI batteries contain little or no antimony and do not

require a rubberized separator. SLI separators must have a very low electrical resistence ("ER").

PX0913-004; PX0669-019. The low ER is achieved partly due to the thin profie ofthe separator.

See, e.g., PX0669-004. These attributes ofPE account for its being recognized as the best material

from which to make a separator for a flooded battery for an SLI application. In some parts of the

world, other material is used but in decreasing quantities, as even these more remote regions are

progressively converting to PE. PX0923-016-017. North American battery manufactuers would

-12-
not switch to these inferior SLI materials in response to a SSNIP.5 PE battery separators for SLI

batteries are, for all of these reasons, a relevant product market in which to assess the competitive

impact of Polyp ore's acquisition of Microporous.

B. The Relevant Geographic Market is North America

The relevant geographic market is that geographic area "to which consumers can practically

turn for alternative sources ofthe product and in which the antitrst defendant faces competition."

Staples, 970 F. Supp. at 1073 (quoting Morgenstern v. Wilson, 29 F.3d 1291,1296 (8th Cir. 1994)).

The geographic market can 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. A monopolist of all Nort American

separator production could profitably increase prices to North American customers for each relevant

product by a S SNIP.

Curently, North American battery manufactuers only buy separators for use in their North

American flooded batteries from Daramic and, with respect to SLI separators, Entek. Other than

Daramic, there is not a single producer of separators for lead acid batteries who manufactues or

sells a deep-cycle battery separator outside of North America. PX0911-031; PX0906-028. Likewise

there are no producers of UPS or motive separators outside of North America who are curently

capable of meeting the specifications of North American UPS or motive battery manufactuers.6

PX0911-031. A SSNIP in deep-cycle, UPS, and motive separators wil not be defeated by an

5 AGM batteries require AGM separators, and AGM separators are not compatible 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., PX0513.

6

-13-
increase in purchases from producers of any of these three products outside of North America since

there are currently no such producers. To the extent that a company entered one of these three

product markets outside of North America, they would face the same geographic barriers discussed

with respect to SLI separators below, and therefore would stil not be in the North American

geographic market.

There is no evidence that customers located in North America have ever sourced any of the

relevant products from anywhere but North America.

a single instance in which an Asian producer has ever supplied aN orth American customer

with any of the relevant products. PX0902-022-023; PX0909-012; PX0911-031; PX0264-003;

PX0506. Indeed, of the hundreds ofthousands 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.

Nor would a price increase entice imports. For example, DaramiclMicroporous 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 North

America. PX0263-003; PX0371; PX0911-031. 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 true in October 2008 when Daramic declared force majeure because of a

strike at its Owensboro, KY plant: customers were unable to substitute any ofthe relevant products

from other producers outside of North America despite a lack of complete supply from Daramic.7

Indeed at least one company had to idle its lines for days while it waited for product from Daramic

7

REDACTED This would not be a durable solution.

-14-
during the strike. These two instances demonstrate that non-North American suppliers are not

available even when there is a large and significant increase in price, much less a SSNIP.

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 product

to the customers, which reduces the risk of a disruption in the supply chain. See PX0923-020-021;

PX0920-024-026, PX091O-018-019. For example, told Microporous that it must build

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

continuing to source its needs from Microporous' plant in Piney Flats, TN. PX091O-018-019. If

the separator manufactuer is local it has a better opportity to quickly troubleshoot technical

problems that a customer may be having with its separators or the customers machines.

The only Asian producer ofSLI separators who can produce the most common thickness of

SLI separators used in North America (6 mm) is a Chinese company called Baoding Fengfan Rising

Battery Separator Company ("BFR"). REDACTED have studied the possibility of

importing SLI separators from China and found it to be uneconomicaL. PX1522. BFR

REDACTED

Adding shipping and other costs, such as China' s VAT,

REDACTED

BFR wil not supply North America in response to a SSNIP.

The evidence in this case indicates that a North American monopolist in all four product

markets would lose very little, if any, sales to products outside the geographic market. PX0033-007.

Thus the relevant geographic market to analyze deep-cycle battery separators, motive battery

separators, UPS battery separators, and SLI battery separators is North America.

-15-
C. The Acquisition is Likely to Lessen Competition in the Relevant Markets in

Violation of Section 7

Section 7 of the Clayton Act prohibits any acquisition of stock or assets "where in any line

of commerce. . . in any section of the country, the effect of such acquisition may be substantially

to lessen competition or to tend to create a monopoly." 15 U.S.C. § 18 (2008) (emphasis added).

"Section 7 does not require proof that a merger or other acquisition has caused higher prices in the

affected market. All that is necessary is that the merger create an appreciable danger of such

consequences in the futue." Hospital Corp. of America v. FTC, 807 F.2d 1381, 1389 (7th Cir.

1986); see CB&I Initial Decision at 87-88. In the markets for deep-cycle, motive, and UPS

separators, the acquisition eliminated the only competition and is presumptively ilegaL. United

States v. Franklin Electric Co., Inc., 2000 U.S. Dist. LEXIS 20676, *20 (W.D. Wis. 2000).

A starting point for analyzing the competitive effects of acquisitions is the level of

concentration in a market. All of the battery separator markets identified in the Commission's

Complaint are highly concentrated, as measured by the Herfindahl-Hirschman Index ("HHI").

Three of the markets, after the acquisition, are 1 00% monopolies. A monopoly market share raises

the strongest level of concern that could be associated with a merger.8 Merger Guidelines § 1.5.

As in Chicago Bridge, the high concentration and the evidence of substantial direct

competition establishes a very strong presumption of anti-competitive effects in each ofthe relevant

markets. CB&I Initial Decision at 96; see also Chicago Bridge, 138 F.T.C. 1024, 1053 (January 6,

2005) (Opinion of the Commission) ("Accordingly, the evidence 'creates, by a wide margin, a

presumption that the merger wil lessen competition.''') (quoting Heinz, 246 F.3d at 716).

Respondent must come forward with compelling evidence that the history of direct competition

between Daramic and Microporous, and the monopolistic market shares that Daramic now enjoys,

8 Concentration is best measured in this case using dollar sales. Merger Guidelines § 1.41.

-16-
somehow do not create a strong inference of anti-competitive effects.

"If the Governent's prima facie case anticipates and addresses the respondent's rebuttal

evidence, as in this case, the prima facie case is very compelling and significantly strengthened."

See Chicago Bridge, 534 F .3d at 426. The compelling evidence that Respondent would need to

avoid liability is not present in this case. Rather, Respondent's documents demonstrate that it

understood that acquiring Microporous would eliminate competition and allow it to increase price

in the markets of concern in this case. This evidence strengthens Complaint Counsel's prima facie

case, reinforces the already strong presumption of anti-competitive effects, and adds to Respondent's

burden to overcome the Commission's case.

1. The Acquisition Established a Monopoly in Markets for Separators

Used in Motive Power and Deep-Cycle

In two of the markets alleged in the Commission's Complaint - separators for deep-cycle

and motive power batteries - Daramic has gained a monopoly by acquiring Microporous. For years,

Daramic and Microporous were the only two firms competing to supply customers in North America

in these two markets, and the competition between them grew increasingly intense, to the benefit

of the key customers. After the merger, however, the benefit of that competition was lost.

a. Deep-Cycle Monopoly

Prior to the acquisition, deep-cycle had been Microporous' strongest market and their share

has exceeded 90 percent. However, in 2005, Daramic introduced the HD separator as a direct

competitor to Microporous' Flex -Sil separator. Daramic began to take customers from Microporous

and grew its market share steadily from the low single digits to REDACTED by 2007. PX0033-

040. Daramic has grown its share by developing new products and competing on price and service.

See, e.g., PX0413-005. Following Daramic' s introduction ofHD, Daramic informed customers that

it was "aggressively pursuing" sales into the "golf cart/deep-cycle battery market." PXI071.

-17-
Daramic's efforts to expand the sales ofDaramic HD to deep-cycle customers included touting the

costs savings that would accrue to customers from the purchase of the product. PX0261-007. In

fact, Daramic HD was priced lower than Flex-Sil in every instance where Microporous and Daramic

competed for deep-cycle business. PX0442-002.

There is no evidence of deep-cycle competition from any other firms besides Daramic and

Microporous. Despite imposing steep price increases on deep-cycle separators since the acquisition,

Daramic has not lost deep-cycle business to any competitor. See PX0911-020. Post-acquisition,

Daramic took steps to limit access to lower priced HD product. When one customer tried to increase

its purchases ofthe lower priced HD,

REDACTED

PX0224-002. As a result of the

acquisition, Daramic thus acquired a monopoly in the sale of deep-cycle battery separators to North

American customers. See, e.g., PX0076-002.

b. Motive Power

In 2007, Microporous had REDACTED of the motive market, while Daramic

PX0033-042. There are no other competitors. However, Microporous was aggressively

targeting customers to gain business and, just before the acquisition, had displaced Daramic as a

supplier to REDACTED motive separator customer. Microporous estimated that by 20 i 0,

its market share would be close to 60 percent, and Daramic's close to 40 percent In any event, the

post-acquisition market share is 100 percent (i.e., a monopoly).9

Microporous' efforts at EnerSys and other customers put competitive pressure on Daramic

to respond by reducing its prices. See PX0247; PX0153-002

9 The acquisition increases the HHI, as measured by dollar sales of deep-cycle separators in

North America, by 1663, from 8337 to 10000. PX0033-042. The post-acquisition market share

is 100 percent.

-18-
REDACTED

PX0243; PX0085; PX0041-004. Where

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

See PX0843-001

REDACTED

Daramic's recognition highlights

both the impact of Microporous competition, and the lack of alternatives. As a result of the

acquisition, Daramic thus acquired a monopoly in the sale of motive separators to North American

customers.

2. The Acquisition Eliminated an Existing Competitor in the SLI Separator

Market and Prevented Signifcant De-Concentration of that Market

Microporous was expanding into SLI when the acquisition occured, and the acquisition

stopped the significant effect of its future competition in SLI. 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 future'

of the market." Id., at 15 (citing United States v. General Dynamics Corp., 415 U.S. 486,498

(1974));10 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"). "The effect on

io One measure of 

Micro porous' future impact on this market is the use of the estimated sales

for the new PE line for which Microporous had already purchased equipment that was scheduled

to be finished in the first quarter of2009. PX0080-060; PX0920-023. Using these estimated

sales, Microporous would have had 6 percent share of the market, Entek 62 percent, and

Daramic 32 percent. PX0080-060. In 2010, the HHI would have been 4904, and the merger

effectively increased the HHI by 382 to 5288. PX0033-041.

-19-
competition in a particular market through acquisition of another company is determined by the

nature or extent of that market and by the nearness of the absorbed company to it, that company's

eagerness to enter that market, its resourcefulness, and so on." Id. at 660.

Prior to the acquisition, Daramic and Entek were the only two companies that had substantial

sales of separators for SLI batteries. As measured by sales, Entek and Daramic

REDACTED of the North American market for SLI separators in 2007. PX0033-

041. However, Microporous had the capability to produce these products, had been a consistent

competitor and had come close to securng SLI business, but stil had not had success in unseating

Daramic or Entek as incumbent suppliers, though Microporous did sell SLI separators to one u.s.

customer in 2005. PX0920-027. At the time of the acquisition, Microporous was very close to

making commercial sales. Microporous had qualified its separators for use in SLI

batteries, had a Memorandum of Understanding with for the supply ofSLI separators, and

had analyzed the capital investments necessary to add the capacity to meet needs.

PX0906-048; PX0909-002; PX0920-028. Microporous had obtained equipment it needed to expand

capacity. PX0910-014. Microporous was also in discussions with other potential customers such

as REDACTED. PX0909-003-004. These sales negotiations had an effect on Daramic's prices.

Microporous' efforts were not lost on Daramic, whose documents express concern that

REDACTED

PX0238. Absent an acquisition of Micro porous, Daramic documents predicted

that Daramic would have had to

REDACTED

PX0174-003, 016. Microporous'

efforts to obtain sales, 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

-20-
separators to SLI customers.

As a result, the acquisition eliminated Microporous as the only effective challenger to

Daramic and Entek in North America.

3. The Acquisition Eliminated Microporous as a Potential Entrant in the

Market for UPS Separators

Daramic has for years enjoyed a monopoly in the supply of PE separators for UPS

applications. Microporous was nearing the successful conclusion of a three year project to enter this

market with a special PE based separator. REDACTED

REDACTED Executives at Microporous anticipated revenues

from the product as early as 2008 or 2009.

Since the acquisition however,

REDACTED

By

eliminating Microporous as an entrant in this market, the acquisition left Daramic's monopoly

unchallenged, and reduced competition. REDACTED also highlights the loss

of innovation competition lost as a result ofthe merger and is an immediate anti-competitive effect

of the acquisition.

4. Daramic Expected that the Merger Would Eliminate a Dangerous

Competitor and Provide it With the Monopoly Power to Raise Price

Daramic's view that acquiring 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,

-21-
sent a memo to the President ofDaramic summarizing the rationale for acquiring Microporous, thus:

REDACTED

PX0935-001. See also PX0932

; PX0034-005

When Daramic' s former President passed the

reins to Pierre Hauswald in August 2006, he left these final thoughts

REDACTED

PXOI67.

That the acquisition eliminated competition is more fully fleshed out in virtally all of the

documents prepared either by Daramic or Polypore executives immediately prior to the acquisition.

These documents project that the acquisition wil allow Daramic to increase price to customers and

avoid the increased competition from expected Microporous expansions. For example, in a

September 2007 presentation titled Microporous Products, L.P. Acquisition, Daramic executives

write that

REDACTED

PX0045-013. Daramic Would also have to

REDACTED

PX0045-0 13. In analyzing the benefits of a Microporous acquisition, Daramic anticipated that it

would be able to REDACTED

-22-
REDACTED Id. at 015. With respect to the business

risks associated with the Microporous acquisition, Polypore's executives expressed concern about

the increasing competition with Microporous, and describes three risks, including a

REDACTED Id. atOl7. SeegenerallyPX0053;PX0294-

013

There is thus

no doubt that Daramic' s executives anticipated that the transaction would reduce competition, and

that this was one of the driving reasons for the transaction.

5. The Alternative Market of All PE Also Raises Significant Concerns

Polypore's expert argues that the market is all PE separators worldwide. If Dr. Kahwaty is

correct, then the market is stil highly concentrated, and the acqui&ition increases concentration

sufficiently to warrant a presumption of anti-competitive effects. Dr. Kahwaty concedes that

according to his calculations, using 2007 dollar sales, the HHI increased by 189, from 3731 to 3920

as a result of the acquisition of Micro porous by Polypore. Kahwaty (Polypore's Expert) Dep. Tr.

79:18-80:9. However, Dr. Kahwaty does not calculate a North American all PE market, which is

significantly more concentrated (comprising only Entek, Daramic, and Microporous) and would

therefore result in a significantly larger increase in HHI as a result of the transaction.

6. Respondent Cannot Demonstrate that Entry Would Prevent Anticompetitive Effects in the Four Markets

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

merger." Chicago Bridge, 534 F.3d at 429 ("(C)ours 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 barriers. ") ( citing cases). A merger between two firms would be unlikely to

-23-
lead to anti-competitive harm only if entry 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. Respondent's claim that timely, likely, and suffcient entr wil rescue this

anti-competitive merger is unfounded. Based on the monopoly and near-monopoly levels of

concentration in the relevant markets, Respondent has the burden of providing particularly

compelling evidence of ease of entr. Chicago Bridge, 534 F.3d at 430, and n.10 (quoting Areeda

& Hovenkamp at ~ 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

entry.")). The mere evidence of customers inquiring about suppliers wilingness in the future to

provide deep-cycle, motive, and UPS separators "falls short of proving . . . that entr (wil be)

sufficient to replace the competition lost from the acquisition." Chicago Bridge, 138 F. T.C. at 1102.

Instead, as the Commission described, such efforts show "little more than a refusal to throw

themselves on (a supplier's) mercy." Id.

In this case, new entry would not be timely, likely, or suffcient to counteract the anticompetitive 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.

a. Respondent Cannot Demonstrate that Entry Into the Relevant

Markets Would be Timely, Likely or Suffcient

"The history of entry into the relevant market is a central factor in assessing the likelihood

of entry 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 barriers is repeated past entr in

circumstances similar to current conditions.")).

There has been no de novo entr in any ofthese markets in North America in the last decade.

-24-
In fact, Entek exited the motive market almost nine years ago. Microporous' own efforts to expand

in motive, UPS, and SLI have taken many, many years and have been fraught with difficulties. This

is because these markets are characterized by high barrers to entr, including high capital costs to

achieve necessary scale-based benefits, experience and learing effects, specialized expertise, and

the value of reputation or brand. PX0265-004, 011. Respondent has represented to the investing

public that these markets are characterized by barrers to entry. 11 Respondent's conviction that

eliminating Microporous would lead to higher prices must as a matter of economic logic mean that

Respondent cannot believe that entr is suffciently easy to prevent its projected price increases.

See, e.g., PX0276-009; PXO i 74-003; PX0212. In short, the evidence demonstrates that no entrants

can compete at "sufficient scale" and on the "same playing field" as Daramic and thus "eliminate

the anti-competitive effects" ofthe 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).

(1) Entry Would Not Be Timely

The Merger Guidelines generally use "two years from initial planning to significant market

impact" as a threshold for measuring whether entry would be timely. Merger Guidelines § 3.2. De

novo entry into any of the relevant markets - in the form of entry 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

11 See, e.g., PX0829 (stating to Standard and Poor's "the SUBSTANTIAL technical ability,

capital investment, lengthy qualification requirement, market share and other 'barriers to

entry. ");

-25-
working with customers to understand and develop product for their specific applications, obtaining

product qualifications, and working around Daramic' s significant patent/IP position. Just as

Daramic spent many years 12 trying 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-

001.

The 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' greenfield entr in Europe took more than three years to accomplish.

(2) Respondent Cannot Demonstrate that Entry Into the

Relevant Markets is Likely

In order to demonstrate that entry 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 drive

prices down well below pre-merger prices. That impact would make entry unattactive and therefore

unlikely. This, together with the high barrers to entry, make suffcient and timely entry unlikely.

(3) Respondent Cannot Demonstrate that Entry Would Be

Suffcient to Overcome Anti-competitive Effects

Respondent cannot demonstrate that entr would be suffcient to restore the competition lost

as a result of the 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. It must

12 Daramic' s own development of its deep-cycle separator

064.

REDACTED PX0950-

-26-
also prove that these firms would "be of a suffcient 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.

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. Indeed,

Daramic documents explicitly cite a firm's need to develop a reputation as a barrer to entr.

PX0266-0 12. Based upon the experience Microporous gained through learing by doing, it obtained

a superior reputation with North American customers. PX0033-01O. Microporous' reputation for

good product design, effciently making battery separators that met customers' needs, an engineering

and business staff with the technical skil 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., PX013 1-054-056, 064; PX091O-024.

No potential entrants are likely to replicate the competitive presence of Micro porous See,

e.g., PX013 1-054-056, 064; PX0266-012; PX091O-024; PX0092-001. Manufactung know how

is accumulated over multiple years. See, e.g., PXO 131-054-056, 064; PX0910-024; PX0092-00 i.

Asian suppliers substantially lag Daramic and Microporous in these assets. See, e.g., PX0913-045-

046

REDACTED

separator manufactuer in

F or example, in assessing a small SLI battery

Daramic noted that:

PX0216-001; see

REDACTED

also PX0217 -002-003.

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;

PX1124-001. While other separator additives have been considered for antimony suppression,

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natual or synthetic rubber is the only additive known to adequately suppress antimony in deep-cycle

batteries. See, e.g., PX2189-027. Daraiiic 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 which does not infringe Daramic's patents.

D. Respondent's Claimed Effciencies Defense Fails

When an acquisition increases concentration in a highly concentrated market, it is presumed

that anti-competitive effects may be the result. CB&I Initial Decision at 88 (and cases cited therein).

In three markets that resulted in a monopoly (deep-cycle, motive, and UPS), the unilateral effects

are irrefutable. In the SLI market, the reduction of competitors from three to two raises a strong

presumption of anti-competitive effects, such as coordinated or unilateral effects. See FTC v. CCC

Holdings, etal., --- F. Supp. ---,2009 WL 723031, *27, et seq. (D. D.C., Mar. 18,2009). ("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 restrict output and achieve profits

above competitive levels."') (Citation omitted).

Daramic attempts to rebut all the counts in the complaint with an affrmative defense of

effciencies. But its defense fails. Under the law, Daramic must prove "extraordinary efficiencies"

to rebut a strong presumption of anti-competitive effects. Heinz, 246 F.3d at 720; see also Philip

E. Areeda, et aI., Antitrust Law ~ 97lf, at 44 (2d ed. 2006) (requiring "a showing of 'extraordinar'"

effciencies where the "post-merger market's HHI is well above 1800 and the HHI increase is well

above 100"). Moreover, "the court must undertake a rigorous analysis of the kinds of effciencies

being urged by the paries in order to ensure that those 'effciencies' 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, cours wil

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not allow an effciencies defense when the respondent cannot prove "that (its) effciencies are

verifiable" or "that the cost savings achieved through effciencies are likely to be greater than the

transaction's likely anti-competitive effects." CCC, 2009 WL 723031, *39 (Citations omitted).

Respondent has not yet presented any comprehensive, well-documented effciency evidence.

See, e.g., PX0912-008-009, 012-013. Daramic' s vague and unsupported claim that it might one day

develop a superior product based on its PE expertise and Microporous' rubber expertise is mere

speculation, and is belied by the facts that Microporous already possessed PE expertise. Few former

Microporous employees with expertise in rubber (e.g. Gilchrist, Wimberly, Brilmyer) are stil with

the company. See PX0912-0 14-0 15; PX0950-060. Absent any valid defense, Daramic' s acquisition

of Microporous is clearly ilegaL.

III. Daramic 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). Unfair methods of competition include, but are not limited to, any conduct that

would violate Sections i or 2 of the Sherman Antitrst Act. See, e.g., California Dental Assn. v.

FTC, 526 U.S. 756, 762 (1999); FTC v. Cement Inst., 333 U.S. 683, 694 (1948); Fashion

Originators' Guildv. FTC, 312 U.S. 457,463-64 (1941).

The evidence in this case wil show that Daramic engaged in conduct that violated both

Section i (Complaint at ~~ 47,50-51) and Section 2 (Complaint at ~~ 39-46,52-53) standards of

antitrust liability. Specifically, Daramic's agreement to allocate battery separator markets with

Hollingsworth and V ose ("H& V") is a combination or conspiracy between potential competitors that

unreasonably restrains trade. In addition, Daramic' s pattern of coercive and exclusionary behavior

to obtain or maintain monopoly status in several relevant markets - a pattern that continues to this

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day - violated Section 5.

A. Count II: Unreasonable Restraint of Trade

In 2000-2001, it became apparent to Daramic that Hollingsworth &Vose, a producer of

absorptive glass mat ("AGM") battery separators for sealed lead-acid batteries,

REDACTED See, e.g., PX0035-005-006; PXO 169-00 1. In order to block this

competitive threat, Daramic approached H& V and proposed an "alliance" between the two

companies. Id. From the outset, the core ofthis arrangement was a set of mutual promises to stay

out of one another's markets. Specifically, Daramic agreed not to make or sell AGM battery

separators in the United States or anywhere in the world; in retu, H&V agreed not to make or sell

PE battery separators in the United States or anywhere in the world. Over time, the relationship

evolved into a somnolent and insignificant joint sales agreement. The scope of actual collaboration

between Daramic and H& V has never been suffcient to legitimize the parties' broad and continuing

agreement to allocate markets. 

13

As discussed below, Daramic's conduct violates Section 1 of the Sherman Act as well as

Section 5 of the FTC Act.

1. Legal Standard

Three elements must be established in order to prove a Section i violation: (I) the existence

of a contract, combination, or conspiracy among two or more separate entities, that (2) uneasonably

restrains trade, and (3) affects interstate or foreign commerce. In the Matter of North Texas

Specialty Physicians, 2005 WL 3366980 (F.T.C.) at 5 (Dec. 1,2005) (Opinion ofthe Commission).

The Commission's PolyGram decision sets forth an analytical framework for evaluating

13 An initial contract REDACTED ,

March 23,2001. The Agreement specified

PX0094-001, 006; PXOI58-001.

took effect on

and was extended in 2006

The parties also agreed that the

restriction on competition

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whether a horizontal agreement unreasonably restrains competition. In the Matter of PolyGram

Holding,Inc., et al., 136 F.T.C. 310, slip op. at 29-35 (July 24, 2003)(Opinion of the Commission).

The initial and potentially dispositive issues are: (i) Is the challenged restraint inherently suspect?

(ii) Has the respondent advanced a cognizable justification for the challenged restraint? (iii) Has

the respondent advanced a plausible justification for the challenged restraint?

2. The Challenged Agreement Injures Competition

The Cour should consider first whether the agreement between Daramic and H& V falls

within a category of restraints that is "likely, absent countervailing effciency justifications, to have

anti-competitive effects - i.e., to lead to higher prices or reduced output." PolyGram, slip op. at 35-

36. The assessment of a restraint's likely competitive effects is informed by "past judicial

experience and curent economic learning." PolyGram, slip op. at 29, aff'd, PolyGram Holding, Inc.

v. FTC, 416 F.3d 29,36 (D.C. Cir. 2005) ("If, based upon economic learning and the experience of

the market, it is obvious that a restraint of trade likely impairs competition, then the restraint is

presumed unlawful. . ."). Applying these principles, it is apparent that the Daramic/H&V

agreement to allocate markets is inherently suspect.

Agreements between competitors to divide markets are consistently treated by the courts as

presumptively anti-competitive. E.g., Palmer v. BRG of Georgia, Inc., 498 U.S. 46 (1990)

(horizontal market division is "unlawful per se"). 14 Furher, antitrust law's long-standing hostility

to market division agreements is rooted in uncontroversial economic analysis. We expect Daramic

to claim that this inherently suspect agreement to divide markets is reasonably related to a

14 Accord Blue Cross & Blue Shield United v. Marshfield Clinic, 65 F.3d 1406 (7th Cir.

1995); Blackburn v. Sweeney, 53 F.3d 825 (7th Cir. 1995); United States v. Brown, 936 F.2d

1042 (9th Cir. 1991); In re Terazosin Hydrochloride Antitrust Litig., 352 F. Supp. 2d 1279, 1313

(S.D. Fla. 2005) ("As a general class, agreements between competitors to allocate markets are

clearly anticompetitive . . .").

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collaboration between the parties, and hence potentially pro-competitive. Daramic wil point to its

efforts to sell H&V separators in other countries, and to limited joint promotional activities. This

is not a plausible defense because it has nothing to do with eliminating competition in the United

States and is thus overbroad. 

15

Daramic's principal purpose in contracting with H&V was to keep H&V out of the PE

separator market. Indeed, the market division agreement was in place for months if not years before

Daramic began to act as sales agent for H&V, and H&V did not sell any volume ofPE separators

on behalf of Daramic during the life of the agreement. In short, Daramic has entered into an

inherently suspect restraint of trade that is uneasonably overbroad in scope and duration.

B. Count III: Monopoliation and Attempted Monopolization

In the years leading up to the Microporous acquisition, many customers that wished to secure

some volume of battery separators from Daramic were coerced by Daramic into accepting exclusive

or near-exclusive contracts. Customers were in this way precluded from obtaining from

Microporous the desired portion of their requirements. The purpose and effect ofDaramic' s strategy

was to prevent Microporous from entering (or in some cases, expanding its presence in) one or more

battery separator markets. This enabled Daramic to maintain its dominant position. Daramic's

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

in the relevant market and (2) the wilful acquisition or maintenance ofthat power as distinguished

15 PolyGram Holding, slip op. at 21 ("a proffered justification for an otherwise unlawful

restraint must be reasonably 'tailored' to serve the asserted pro competitive interest"); See also

Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643, 649-50 (1980); Yamaha Motor Co. v. FTC,

657 F.2d 971,981 (8th Cir. 1981) (geographic market division scheme was "merely an

agreement between horizontal competitors to direct their efforts elsewhere. It has no substantial

relation to any legitimate purose of the joint ventue.").

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from growth or development as a consequence of superior product, business acumen, or historic

accident." United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966); see also United States v.

Microsoft Corp., 253 F.3d 34,50 (D.C. Cir. 2001).

The offense of attempted monopoly maintenance has four elements: (I) that the defendant

possesses monopoly power, and (2) has engaged in predatory or anti-competitive conduct with (3)

a specific intent to monopolize, and (4) a dangerous probability of maintaining monopoly power.

See 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, 154 (1951).

2. Monopoly Power/Dangerous Probabilty of Maintaining Monopoly

Power

Courts "typically examine market strcture in search of circumstantial evidence of monopoly

power. Under this strctual approach, monopoly power may be inferred from a firm's possession

of a dominant share of a relevant market that is protected from entry barriers." Microsoft, 253 F .3d

at 51 (citations omitted).

Evidence in support of the conclusion that Daramic has long held monopoly power is set

forth above. To recap: The company's pre-merger shares of the UPS and motive separator markets

were in excess of 90 percent.16 Entr into these markets is difficult and slow. Among the most

important impediments to entry are technical expertise from "learning by doing," reputation, and

customer-specific testing requirements. Because barriers to entr are substantial, there exists at all

16 Market shares of 

this magnitude are sufficient to support a finding of monopoly power.

See, e.g., Spirit Airlines v. Northwest Airlines, 431 F.3d 917,935-36 (6th Cir. 2005); Conwood

Co. v. United States Tobacco Co., 290 F.3d 768, 783 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

North American SLI market was above 50 percent, and it was able to exercise monopoly power

in this market as welL.

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relevant times a dangerous probability that Daramic's monopoly power wil persist.

The conclusion that Daramic possessed monopoly power is bolstered by evidence concerning

the relationship between the company and its customers. 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 ofDaramic.

3. Exclusionary Conduct

Conduct is exclusionary when it tends to exclude competition "on some basis other than

effciency," i.e., when it "tends to impair the opportnities of rivals" but "either does not fuher

competition on the merits or does so in an unnecessarily restrictive way." Aspen Skiing Co. v. Aspen

Highlands Skiing Corp., 472 U.S. 585, 605 & n.32 (1985) (citations omitted).

Requiring customers to purchase on an exclusive or near-exclusive basis is a classic strategy

used by monopolists for improperly (albeit effectively) impeding rivals from entering the market.

E.g., Lorain Journal, 342 U.S. at 152-53; United States v. DentsplyInt'l, Inc., 399 F.3d 181 (3dCir.

2005). With exclusive dealing, a monopolist can exploit an entrant's inability to serve a customer's

entire requirements at a particular point in time. For example, entr may be occurring in stages, the

customer may desire some period oftesting before shifting in full to a new supplier, or single stage

entry is possible but takes a significant period of time. In all of these cases, the incumbent

monopolist controls the terms on which customers are supplied during the initial period. The

incumbent monopolist can threaten to withhold supply from, or charge higher prices to, customers

that are unwiling to sign exclusive contracts. The monopolist uses its market power during this

initial period to coerce customers into signing exclusive contracts that extend its market power into

subsequent periods, thereby foreclosing or delaying entr.17

17 See Richard A. Posner, Vertical Restraints and Antitrust Policy, 72 U. Chi. L. Rev. 229,

237 (2005); John Simpson and Abraham L. Wickelgren, The Use of Exclusive Contracts to Deter

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This is precisely the anti-competitive strategy implemented by Daramic in the years leading

up to its acquisition of Microporous. Microporous was interested in entering the SLI and UPS

markets, and gradually expanding its presence in the motive markets. And many battery

manufacturers were interested in facilitating this development (so as to be less vulnerable to

Daramic). Daramic' s response was to threaten to refuse to deal with customers that purchased - or

even considered purchasing - battery separators from Microporous. The battery customers

compelled to deal with Daramic on an exclusive basis include: REDACTED

REDACTED and others. Two of these episodes are described below.

In 2006, informed Daramic that it intended to shift much of its purchases of PE

separators REDACTED to Microporous when its curent contract expired.

PX1203; PX1240; PX0473-005. See generally PX0033-028-031. Daramic responded by declaring

a pretextualforce majeure event and threatening to deliver only percent ofthe PE separator

needs of under the existing contract. PX1207. To avoid a disastrous disruption in

supply, then entered a long-term contract with Daramic.

Earlier, in 2003, and Daramic were negotiating the contract to supply

European operations with PE separators. PX0820-017; PX2112-016-017. goal at the time

was to reduce its reliance on Daramic and redirect some volume of its purchases to Microporous.

When Daramic learned that it might lose substantial sales, it first warned that it would impose

short-term spot pricing, and later threatened to withhold its supply in Europe entirely. Because

felt Daramic REDACTED it was coerced into a worldwide exclusive contract

See, e.g., PXI832-026-027; PX1801; PX1811.

The effect ofDaramic' s coercive negotiating tactics and exclusionary contracts was to delay

Entry (July 18,2001) (available at SSRN:htt://ssrn.comlabstract=287059 or DOl:

i 0.2139/ssrn.287059).

-35-
implementation of Micro porous' plans to constrct a production facility in Feistritz, Austra. See

generally PX0033-030-031. Note that given this direct showing of competitive harm, it is not

necessary for the cour to infer injury from estimates of the percentage of the market foreclosed by

Daramic's exclusive contracts. See, e.g., Dentsply, 399 F.3d at 189-91, 195-96; Roland Machinery

Co. v. Dresser Industries, Inc., 749 F.2d 380,394 (7th Cir. 1984); In re Beltone Electronics Corp.,

100 F.T.C. 68, 204 (1982).

Daramic's bargaining tactics toward its customers were so egregious, coercive, and hostile

as to support an inference that the company's true purpose was to maintain its monopoly power.

This inference wil be bolstered by direct evidence showing that Daramic specifically intended, with

its exclusive contracts, to exclude Microporous from the battery separator industr. None of its

conduct yielded pro-competitive benefits for customers. See, e.g., Microsoft, 253 F.3d at 59

(defendant's conduct must yield pro-competitive benefits that outweigh any anti-competitive

effects).

iv. Divestiture and a Cease and Desist Order Are Needed to Restore and Protect

Competition in the Future

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, 66 S. Ct. 758, 760 (1946); see also Chicago Bridge, 138 F.T.C. at

1161, n.566. Furhermore, "once the Governent has successfully borne the considerable burden

of establishing a violation oflaw, all doubts as to the remedy are to be resolved in its favor." United

Statesv. E.I. duPontdeNemours & Co., 366U.S. 316,334(1961) (footnote omitted). As explained

by the Commission, "In Section 7 cases, the principal purpose 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 the Matter ofB.F. Goodrich Co., 110 F.T.C. 207 at 345 (1988), (quoting In the Matter of RSR

-36-
Corp., 88 F.T.C. 800, 893 (1976)). Furthermore, Section 5(b) of the FTC Act allows the

Commission to "issue. . . an order requirng such. . . Corporation to cease and desist from using

such method of competition or such act of practice." 15 U.S.C. § 45(b); see alsoFTCv. NatlLead

Co., 352 U.S. 419, 428 (1957) (Commission is authorized "to enter an order requiring the offender

to 'cease and desist' from using such unfair method(s).").

To remedy the anti-competitive effects of the merger and Respondent's other ilegal acts,

the Notice of Contemplated Relief provides that the Commission may order such relief against

Respondent as is supported by the record and is necessary and appropriate. This relief should

include, but is not limited to, an order that wil restore Microporous as a fully independent and

viable competitor in all of the relevant markets to the same degree that Microporous competed or

would likely have competed in those markets but for the acquisition by Daramic. This wil require

a divestitue of the reconstituted entity or constitution of a competitive entity that would have

existed in all of the relevant markets but for Daramic's anti-competitive acquisition. Inclusion of

a Polypore PE facility is likely necessary to insure the new or reconstituted entity is competitively

viable in all affected markets at the same scale it would have had absent the acquisition. Assignment

of contracts to the new entity, rescission of contracts, and assignment or licensing of all intellectual

propert and know-how associated with the relevant markets are also be necessar to restore

competition lost as a result of Daramic's acquisition and other anti-competitive conduct. Further

ancilary relief is likely needed and may include, but is not limited to: (1) the replacement of any

acquired assets that no longer exist and restore products or services that have been terminated or

consolidated to other location since the merger; (2) the provision of certain services to an acquirer

ofthe divested entity for a transitional period oftime, including services that are curently provided

by Daramic to the former Microporous from locations other than Piney Flats, TN, or Feistritz,

-37-
Austria; (3) the rescission of non-compete agreements between Polypore and its employees; (4)

assistance to an acquirer of the divested entity to enter into contracts and to employ certain

individuals currently employed by, or associated with Daramic; (5) the opportnity for battery

separator purchasers to terminate their contracts with Daramic; (6) covenant not to sue the divested

entity for its use of PE technology; and (7) the distribution of a final order in this matter to certain

persons and the periodic fiing of compliance reports to the Commission. This requested remedy

is "reasonably calculated to eliminate the anti-competitive effects" ofthe acquisition and is nearly

identical to the one affirmed by the 5th Circuit in CB&I. 534 F.3d at 442.

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 unreasonable 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. § 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

recurrence of, the anti-competitive practices engaged in by Daramic. Such order should include a

requirement to rescind an agreement between Daramic and Hollngsworth & V ose that, among other

things, prevents Hollngsworth & V ose from entering into the PE separator market.

V. Conclusion

For the reasons stated above, which wil be supported by the evidence at trial, Daramic's

acquisition of Microporous and its anti-competitive conduct are ilegaL. The public deserves a

complete remedy to restore competition and prevent further harm to competition.

-38-
Dated: April 23, 2009

-39-

1. ROBERT ROBERTSON

Federal Trade Commission

Bureau of Competition

600 Pennsylvania Ave., N.W.

Washington, DC 20580

Telephone: (202) 326-2008

Fax: (202) 326-2884

Complaint Counsel
CERTIFICATE OF SERVICE

I hereby certify that on April 23, 2009 I fied via hand and e-mail delivery an original and

two copies of the foregoing Public Version of Complaint Counsel's Pre-Trial Brief with:

Donald S. Clark, Secretary

Office of the Secretary

Federal Trade Commission

600 Pennsylvania Avenue, NW, Rm. H-135

Washington, DC 20580

I hereby certify that on April 23, 2009, I served via electronic mail and hand delivery a

copy of the foregoing Public Version of Complaint Counsel's Pre-Trial Brief with:

The Honorable D. Michael Chappell

Administrative Law Judge

Federal Trade Commission

600 Pennsylvania Avenue, NW, H-106

Washington, DC 20580

oalj(ãJftc. gov

I hereby certify that on April 23, 2009, I served via electronic mail delivery and first

class mail two copies of the foregoing Public Version of Complaint Counsel's Pre-Trial Brief

with:

Wiliam L. Rikard, Jr., Esq.

Eric D. Welsh, Esq.

Parker, Poe, Adams & Bernstein, LLP

401 South Tryon Street, Suite 3000

Charlotte, NC 28202

williamrikard(l-v'parkerpoe.com

eri cwelsh(£ parkerpoe. com

1

Linda Cunningham

Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

Telephone: (202) 326-2638

lcunningham(aìftc. gov

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