We use the term “Commission” to refer to the Commissioners at the Federal Trade 1

Commission that decided this case at the final administrative level. Its opinion at issue on

this appeal is Chicago Bridge & Iron Co., et al., 2005 WL 120878 (FTC), Docket No. 9300

(Jan. 6, 2005) (“Op.”). We use the term the “Government” to refer to complainant counsel

executing the Federal Trade Commission’s separate investigatory and enforcement

1

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

 ______________________ 

No. 05-60192

_____________________

CHICAGO BRIDGE & IRON COMPANY N.V., a foreign corporation, and

CHICAGO BRIDGE & IRON COMPANY

Petitioners

v.

FEDERAL TRADE COMMISSION

Respondent

________________________________________________

Petition For Review Of An Order 

of the Federal Trade Commission

________________________________________________

Before REAVLEY, GARZA, and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:

Chicago Bridge and Iron Company, a Dutch corporation, and its United

States subsidiary, Chicago Bridge and Iron Company, (collectively, “petitioner”

or “CB&I”), petition for review of an order of the Federal Trade Commission

(“Commission”) to divest assets acquired from Pitt-Des Moines, Inc. (“PDM”), 1

United States Court of Appeals

Fifth Circuit

F I L E D

January 25, 2008

Charles R. Fulbruge III

Clerk
functions. In other words, the “Government” brings a complaint before the “Commission”

for adjudication. See 16 C.F.R. §§ 3.2, 3.11; see also Genuine Parts Co. v. FTC, 445 F.2d

1382, 1388 (5th Cir. 1971).

2

a Pennsylvania corporation, used in the business of designing, engineering and

building field-erected cryogenic storage tanks. The Commission ruled that

CB&I’s acquisition of these assets on February 7, 2001 would likely result in a

substantial lessening of competition or tend to create a monopoly in the relevant

markets in violation of section seven of the Clayton Act, 15 U.S.C. § 18, and

section five of the Federal Trade Commission Act, 15 U.S.C. § 45. We DENY the

petition for review.

I.

Before the acquisition, both CB&I and PDM designed, engineered, and

constructed industrial storage tanks in the United States for liquified natural

gas (LNG), liquified petroleum gas (LPG), and liquid atmospheric gases, such as

nitrogen, oxygen, and argon (LIN/LOX), as well as thermal vacuum chambers

(TVCs) for testing aerospace satellites. The two firms were the dominant

suppliers of the products in these four relevant United States markets. Before

2001, they had a virtual duopoly in those markets. Between 1990 and 2001, they

were the only builders of LNG tanks in the United States. Between 1975 and the

acquisition, they were the only builders of LNG tanks for import terminals, and

they built all but 7 of the 95 peak-shaving LNG tanks constructed in the United

States. In the LPG tank market, between 1990 and the acquisition, all but two

of the 11 projects were awarded to CB&I and PDM. In the LIN/LOX tank

market, the only other significant competitor, Graver Tank, left the market in

2001, leaving CB&I as the dominant firm now in that market. In the TVC

market, CB&I and PDM were the only firms that had built any large, fielderected TVCs in the United States since 1960.
On August 29, 2000, CB&I and PDM entered into a letter of intent for CB&I to 2

acquire the assets from PDM. On September 12, 2000, CB&I notified the U.S. Department

of Justice of the proposed acquisition per 15 U.S.C. § 18a, which requires notification for

certain large acquisitions of securities and assets. Under 15 U.S.C. § 18b, the parties were

required to wait thirty days before concluding the transaction. More than thirty days later,

but before executing the acquisition, the Commission notified CB&I that it had begun its

investigation. See 15 U.S.C. § 46; 16 C.F.R. § 2.1. CB&I initially agreed to delay executing

the merger to accommodate the Government’s investigation. Approximately four months

after the expiration of the 30-day statutory waiting period, on February 7, 2001, CB&I

concluded the deal and acquired PDM’s pertinent assets for approximately $84 million. 

3

 On February 7, 2001, CB&I acquired all of PDM’s assets relating to these

four markets for approximately $84 million. Prior to the acquisition, the

Commission notified CB&I that it had significant antitrust concerns about the

acquisition and was conducting an investigation. On October, 2001, the 2

Commission issued an administrative complaint charging that CB&I’s

acquisition of those assets of its principal competitor, PDM, violated Section 7

of the Clayton Act, 15 U.S.C. § 18 and Section 5 of the Federal Trade

Commission (FTC) Act, 15 U.S.C. § 45. An Administrative Law Judge (ALJ)

held an evidentiary hearing, issued an Initial Decision, concluding that CB&I

had violated both Acts and ordered a divestiture of the assets. After briefing,

argument and a de novo review of the record, the Commission issued a final

order affirming the ALJ’s determination of liability and issuing a modified

divestiture order. 

In its order, the Commission adopted the ALJ’s decision with some

modifications. Noting that the relevant product and geographic markets are

undisputed, the Commission affirmed the ALJ’s determination that the

acquisition’s effects must be assessed in each of the United States markets for

LNG, LPG, and LIN/LOX tanks, and for TVCs. Op., at 9. Finding that sales of

the relevant products had been sporadic, the ALJ rejected the traditional method

of measuring market concentration with the Herfindahl-Hirshmen Index (HHI)
4

on an annualized basis. Id., at 3. Nonetheless, based on the bidding history in

each market, the ALJ found that the acquisition resulted in an undue accretion

of market power in CB&I that could not be constrained by timely entry of new

competitors. Id. The Commission disagreed with the ALJ’s complete disregard

for the HHI, stating that, because CB&I and PDM had been the only competitors

in the relevant markets for the past two decades, it was appropriate to analyze

their sales data over an extended time frame. Id., at 18. Using the HHIs

accordingly, the Commission concluded that the resulting market concentration

established a prima facie case that the acquisition violates Section 7 of the

Clayton Act and Section 5 of the FTC Act. Op., at 18-20. Furthermore, the

Commission found an independent reason for a prima facie case of presumptive

illegality in the qualitative evidence showing that the acquisition left CB&I as

the only major player in each of the relevant markets, e.g., the views of

customers with first-hand knowledge that CB&I and PDM were the only LNG

tank suppliers and that the acquisition substantially harmed competition;

CB&I’s and PDM’s own documents confirmed that they focused almost

exclusively on each other in assessing competition and paid little or no attention

to other companies. Id., at 19-20. 

The Commission also found that evidence of high entry barriers

necessarily strengthened the anti-competitive effects of the acquisition. Id., at

29. In addition to customer testimony and behavior in past LNG project awards,

the Commission cited reasons that entry into the relevant markets is

exceedingly difficult and cannot be achieved in a timely fashion: the nickel-steel

composition in LNG tanks requires a specialized construction skill set; LNG

tanks require sophisticated engineering, trained supervisors, knowledge of local
 The discussion here refers primarily to the LNG tanks, because both appellants 3

and appellee focus on the LNG market and extrapolate the general conclusions about the

LNG market to all markets. 

5

labor markets, as well as specialized procedures and proprietary techniques.3

Id., at 30. Additionally, the FERC regulatory and approval process is

complicated and potentially time consuming; customers expect significant

experience in builders of LNG tanks that takes a number of years to gain. Op.,

at 53-56. Thus, the Commission concluded that CB&I’s long-standing dominance

in the relevant U.S. markets gives it a virtually insurmountable advantage over

newly entering competitors. Accordingly, the Commission decided that the entry

and expansion in the relevant markets are not likely to replace the competition

lost through the acquisition or to sufficiently constrain CB&I in a timely

manner. E.g., id., at 82.

CB&I did not contend that the acquisition would lead to enhanced

efficiencies benefitting competition. Rather, it argued that the evidence of high

market concentration and entry barriers was rebutted by evidence of recent

actual and potential entry into three of the four markets. On examining the

record evidence, however, the Commission affirmed the ALJ’s finding that the

purported new entry is insufficient to constrain CB&I post-acquisition. Id., at 82.

Three joint-ventures identified by CB&I as new entrants lacked sufficient

experience to compete effectively with CB&I. None had built an LNG tank in

the United States. At the time of trial, none had won a LNG tank bid postacquisition while CB&I had won six sole-source contracts during that period.

Customers with upcoming LNG projects were not aware of the alleged new

entrants. The Commission concluded that although the new entrants had taken

a step toward competing in the United States by partnering with United States

construction firms, they cannot likely restore the competition lost as a result of
On February 1, 2005, CB&I filed with the Commission a petition to reconsider in 4

light of further evidence of actual new entry of foreign competitors into the relevant

markets. On March 11, 2005, CB&I filed a petition for review of the December 21st Order

and Opinion with this court. See 15 U.S.C. § 45(c). On May 10, 2005, the Commission

denied the petition regarding actual new entry because CB&I had failed to show that any

new entry could counteract competition lost from CB&I’s acquisition of PDM. See Chicago

Bridge & Iron Co., et. al., 2005 WL 2329811, Docket No. 9300 (2005) (“R.O.”). On

December 15, 2005, CB&I filed a motion to adduce additional evidence, substantially

similar to new evidence submitted in the petition to reconsider below, with this court. We

denied this motion on April 13, 2005.

6

CB&I’s acquisition of PDM’s relevant assets in the foreseeable future. Id., at 58.

 The Commission ruled that CB&I’s acquisition of these assets would

likely result in a substantial lessening of competition in the relevant markets in

violation of section seven of the Clayton Act, 15 U.S.C. § 18, and section five of

the Federal Trade Commission Act, 15 U.S.C. § 45. Id., at 105. The Commission

expanded the divestiture remedy, ordering CB&I to divide its cryogenic business

into two separate entities (New CB&I and New PDM) equally capable of

competing in the four markets.4

CB&I contends that the Commission: (1) applied incorrect legal standards

in shifting burdens of proof and persuasion; (2) applied incorrect legal standards

related to the petitioner’s “actual and potential entry” defense; (3) found, without

substantial evidentiary support, that CB&I failed to rebut the Government’s

prima facie case; and (4) abused its discretion in its remedial order. 

II.

This court reviews the Commission’s factual determinations under the

substantial evidence standard. 15 U.S.C. § 21(c); Jim Walter Corp. v. FTC, 625

F.2d 676, 683 (5th Cir. 1980). “Substantial evidence is evidence that provides

a substantial basis of fact from which the fact in issue can be reasonably

inferred.” Diamond Drilling Co. v. Marshall, 577 F.2d 1003, 1006 (5th Cir.
 The appeal at issue primarily concerns section 7 of the Clayton Act as section 5 of 5

the FTC Act is, as the Commission determined and the parties do not contest, a derivative

violation that does not require independent analysis. See Op., at 5 n.23.

7

1978). We review de novo all legal questions pertaining to Commission orders.

FTC v. Ind. Fed’n of Dentists, 476 U.S. 447, 454 (1986).

Section 7 of the Clayton Act prohibits acquisitions, including mergers

“where in any line of commerce or in any activity affecting 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; see United 5

States v. Philadelphia Nat’l Bank, 374 U.S. 321, 355 (1963) (“The statutory test

is whether the effect of the merger may be substantially to lessen competition

in any line of commerce in any section of the country.”) (internal quotations

omitted); see also Brown Shoe Co. v. United States, 370 U.S. 294, 323, n.39

(1962) (“‘The use of these words (‘may be') means that the bill, if enacted, would

not apply to the mere possibility but only to the reasonable probability of the

prescribed (sic) effect * * *. The words ‘may be' have been in section 7 of the

Clayton Act since 1914. The concept of reasonable probability conveyed by these

words is a necessary element in any statute which seeks to arrest restraints of

trade in their incipiency and before they develop into full-fledged restraints

violative of the Sherman Act. A requirement of certainty and actuality of injury

to competition is incompatible with any effort to supplement the Sherman Act

by reaching incipient restraints.’”) (quoting S. Rep. No.1775, 81st Cong., 2d Sess.

6, U.S. Code Cong. and Adm. News 1950, p. 4298); see generally FTC v. H.J.

Heinz Co., 246 F.3d 708 (D.C. Cir. 2001) (citing H.R. Rep. No. 1142, at 18-19

(1914)). 

1. The Commission Correctly Applied the Legal Standards of Burdens of Proof

and Persuasion
8

CB&I first challenges the Commission's application of the legal standards

for production of evidence and persuasion.

The burden-shifting framework for deciding Clayton Act section 7 actions

first requires the Government to establish a prima facie case that an acquisition

is unlawful. See H.J. Heinz Co., 246 F.3d at 715 (citing United States v. Baker

Hughes, Inc., 908 F.2d 981, 982-83 (D.C. Cir. 1990)). Typically the Government

establishes a prima facie case by showing that the transaction in question will

significantly increase market concentration, thereby creating a presumption that

the transaction is likely to substantially lessen competition. Id. Once the

Government establishes the prima facie case, the respondent may rebut it by

producing evidence to cast doubt on the accuracy of the Government’s evidence

as predictive of future anti-competitive effects. Id. Finally, if the respondent

successfully rebuts the prima facie case, the burden of production shifts back to

the Government and merges with the ultimate burden of persuasion, which is

incumbent on the Government at all times. Baker Hughes, 908 F.2d at 982-83;

FTC v. Univ. Health, Inc., 938 F.2d 1206, 1219 (11th Cir. 1991); Kaiser

Aluminum & Chem. Corp. v. FTC, 652 F.2d 1324, 1340 (7th Cir. 1981). 

CB&I contends that the Commission’s conclusion that CB&I failed to

rebut the government’s prima facie case was reached by erroneously subjecting

CB&I to a burden of persuasion rather than switching the burden of production

back to the Government after CB&I offered its rebuttal evidence. We disagree

and, instead, conclude that the Commission reasonably found that the evidence

produced by CB&I simply failed to rebut the Government’s prima facie case. As

occurs in most cases, the Government introduced all of its evidence at once. 

In addition to making a prima facie case based on concentration numbers and

a detailed examination of competitive conditions in each market, the

Government presented evidence that all relevant markets are difficult to enter.
9

The Government’s evidence not only established its prima facie case that CB&I’s

acquisition likely would have anti-competitive effects; it also served as a redoubt

against CB&I’s evidence that actual or potential entry of new competitors would

offset the merger’s substantial lessening of competition. The Commission

expressly decided that, based on the totality of the evidence, CB&I had not

rebutted the Government’s prima facie case. From our review of the record and

the Commission’s opinion, we conclude that the Commission’s decision is

supported by substantial evidence and that the Commission did not improperly

place the burden of persuasion upon CB&I. 

CB&I primarily relies on Baker Hughes as the authority for the burdenshifting framework within the anti-trust context. The Ninth and Eleventh

Circuits interpret Baker Hughes’ burden-shifting language as describing a

flexible framework rather than an air-tight rule. The Ninth Circuit in Olin

Corp. v. FTC distinguishes Baker Hughes by holding that the Commission does

not need to switch burdens back to the Government if the Government addresses

the respondent-company’s rebuttal evidence in its prima facie case; in other

words, based on an assessment of the rebuttal evidence in light of the prima

facie case, the Commission can determine that the respondent company’s

rebuttal does not satisfy its burden of production and therefore decline to switch

the burden of production back to the Government. 986 F.2d 1295, 1305 (9th Cir.

1993). The Ninth Circuit writes: 

The clearest reason why Baker Hughes does not control here is that

the Commission responded to the Company’s rebuttal, whereas in

Baker Hughes the government did not. In the present case, the

Commission pointed to evidence indicating why Olin’s viability

argument should fail. The Commission is able to do this because it

is Olin’s burden to rebut a prima facie case of illegality. 

Id. (citations omitted). We believe the same situation applies in this case. The
CB&I misinterprets the last sentence to argue that the Eleventh Circuit’s flexible

6

reading of the burden-shifting framework applies only when time is of the essence. 

Without any basis in the text, CB&I narrows the Eleventh Circuit’s opinion. Reading the

passage as a whole, the Eleventh Circuit considers the Baker Hughes framework as

generally flexible in practice for all situations, but only emphasizes the need for flexibility

when time is of the essence. See Univ. Health, 938 F.2d at 1219 n.25 (“This is particularly

true when the government seeks a temporary restraining order or, as here, a preliminary

injunction and, thus, time is of the essence.”) (emphasis added).

10

Government’s prima facie case addresses why the rebuttal evidence is not

sufficient and CB&I’s construal of the rebuttal evidence is not credible; therefore

the Commission can conclude CB&I’s burden of production on rebuttal is not

satisfied without having to formally switch the burden of production back to the

Government. The Eleventh Circuit in Univ. Health, Inc. approves Baker

Hughes’ general framework but concludes, in accord with the Ninth Circuit,

that, in practice, evidence is often considered all at once and the burdens are

often analyzed together. 938 F.2d at 1218-19 & n.25. The Eleventh Circuit

writes:

Conceptually, this shifting of the burdens of production, with the

ultimate burden of persuasion remaining always with the

government, conjures up images of a tennis match, where the

government serves up its prima facie case, the defendant returns

with evidence undermining the government's case, and then the

government must respond to win the point. In practice, however, the

government usually introduces all of its evidence at one time, and

the defendant responds in kind. This is particularly true when the

government seeks a temporary restraining order or, as here, a

preliminary injunction and, thus, time is of the essence.6

Id.; see also Baker Hughes, 908 F.2d at 991 (calling the “distinction between [the

burden of production] and the ultimate burden of persuasion” “always an elusive

distinction.”); FTC v. Butterworth Health Corp., 121 F.3d 708, 1997 WL 420543,

*1 (6th Cir. Jul. 8, 1997) (unpublished) (calling Baker Hughes burden-shifting
11

framework “somewhat artificial.”). The Ninth and Eleventh Circuit

interpretations of the Baker Hughes burden-shifting framework accommodate

the practical difficulties in separating the burden to persuade and the burdens

to produce. The flexible approach allows the Commission to preserve the prima

facie presumption if the respondent, CB&I, fails to satisfy the burden of

production in light of contrary evidence in the prima facie case. 

CB&I then challenges the order by contending the Commission imposed

an onerous burden of production that approximates a burden of persuasion. The

Commission must determine whether the defendant has come forward with

sufficient evidence to rebut the government’s prima facie case; but the

Government continues to bear the burden of persuasion even after it has made

out a prima facie case through statistical evidence; the defendant is not required

to present a defense upon which he bears the burden of proof in the sense of

ultimately persuading the trier of fact that he is entitled to relief. See Automatic

Canteen Co. of Am. v. FTC, 346 U.S. 61, 80-82 (1953); Vanity Fair Paper Mills,

Inc. v. FTC, 311 F.2d 480, 486 (2nd Cir. 1962); see also Kaiser Aluminum, 652

F.2d at 1340; cf. Fed. R. Evid. 301. The burden of production is “the obligation

to come forward with evidence of a litigant’s necessary propositions of fact.” El

v. Se. Penn. Transp. Auth. (SEPTA), 479 F.3d 232, 237 n.6 (3d Cir. 1997). 

Under the burden of production, even if the respondent produces evidence, the

court must “credit[]” the evidence and the evidence must “justify” the rebuttal

arguments the respondent espouses. Baker Hughes, 908 F.2d at 992; see also

id. at 991 (noting the rebuttal evidence should “discredit[] the data underlying

the initial presumption in the government’s favor”). In other words, the

Commission can judge whether the nexus between the rebuttal arguments and

the proffered evidence is plausible so as to satisfy the burden of production as a

matter of law. See, e.g., Olin Corp., 986 F.2d at 1303; Univ. Health, Inc., 938
12

F.2d at 1223-24. We therefore read the Commission’s opinion as deciding

whether respondent’s rebuttal arguments and evidence plausibly and justifiably

“show[ ] that the market-share statistics give an inaccurate account of the

acquisition’s possible effect on competition in the relevant market” so as to

satisfy its burden of production as a matter of law. Cf. Id. at 1218. Under the

flexible approach, the Commission can decide this in light of any argument in

the prima facie case that may undermine the rebuttal evidence. Olin Corp., 986

F.2d at 1305. 

Nevertheless, the Commission cannot impose too exacting a standard that

might approach a burden of persuasion, which would require a party to

“convince the factfinder at trial that a litigant’s necessary propositions of fact are

indeed true.” El, 479 F.3d at 237 n.6. However, the Commission has some

discretion to decide if the respondent’s proffered evidence justifies its arguments

in rebuttal. See, e.g., Olin Corp., 986 F.2d at 1305-06 (finding a rebuttal

argument “not plausible” in light of the proffered evidence); see also United

States v. Marine Bancorporation, 418 U.S. 602, 631 (1974) (“Appellees

introduced no significant evidence . . . .”) (emphasis added); FTC v. Staples, 970

F. Supp. 1066, 1083 (D. D.C. 1997) (“To meet [its] burden, the defendants must

show that the market-share statistics give an inaccurate prediction of the

proposed acquisition’s probable effect on competition.”). In addition, if a

Government’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. Op. at 49 (“Complainant Counsel have established

a strong prima facie case.”). Under these conditions, the respondent’s burden of

production on rebuttal is also heightened. Baker Hughes, 908 F.2d at 991 (“The

more compelling the prima facie case, the more evidence the defendant must

present to rebut it successfully.”). By carefully examining the rebuttal evidence
The mere fact that the Commission used the word “persuasive” does not prevent 7

this court from independently examining the context of its conclusions and affirming the

judgment if it was indeed correct under the proper legal standards. Cf. Rebel Oil Co., Inc.

v. Atlantic Richfield Co., 51 F.3d 1421, 1435-36 (9th Cir. 1995) (engaging an independent

review of the evidence despite respondent’s claim that the trial court’s “persuasive”

language possibly implied an improper weighing of the evidence). In any event, CB&I

misconstrues the Commission’s use of the word “persuasive,” and its use does not suggest

any improper burden-shifting. The Commission did not use “persuasive” to compare

CB&I’s evidence to the prima facie evidence. Instead, in the instances cited by CB&I, (1)

the Commission describes CB&I’s arguments that certain conclusions should be inferred

from its evidence as “unpersuasive” and does not address the evidence itself, see, e.g., Op.

at 61, Op. at 71, Op. at 91, R.O. at 9; and (2) the Commission describes a customer’s

statement as internally “unpersuasive,” because it contradicts the customer’s other

proffered evidence; again, this does not describe any comparison between CB&I’s evidence

and the prima facie case. See Op. at 65.

13

in light of strong and relevant contrary evidence in the prima facie case, the

Commission did not unjustifiably impose a “heavy burden” on CB&I to “clearly”

disprove future anti-competitive effects. Baker Hughes, 908 F.2d at 991 (noting

that a burden to “clearly” disprove future anti-competitive effects is too onerous

a standard for judging the burden of production). 

Analogous with the situations in Olin Corp. and Baker Hughes, the

Commission here never identified the exact standard used in assessing whether

the respondent’s rebuttal satisfied its burden of production in this case. Olin

Corp., 986 F.2d at 1305 n.11. Neither the Government nor the Commission

urges an unreasonable evidentiary burden on the respondents. The Commission

reasonably found, based on substantial evidence, that CB&I’s somewhat

ineffectual evidence did not rebut the Government’s stalwart prima facie case.

Id. at 1305; Automatic Canteen Co., 346 U.S. at 81-82. We, therefore, do not find

improper burden-shifting in this case. Based on the foregoing, the Commission 7

properly applied the correct legal standards in concluding that “[CB&I] [has] not

rebutted Complainant Counsel’s prima facie case.” Op., at 91. 

2. The Commission Properly Analyzed the “Potential Entry” Defense and had

Substantial Evidence to Conclude that “Potential Entry” Evidence was
14

Insufficient to Rebut the Prima Facie Case

A. The Commission Applied the Correct Legal Standard For Analyzing the

“Potential Entry” Defense

CB&I also argues that the Commission addressed the incorrect analytical

question concerning the extent of potential entry necessary to counteract any

anti-competitive effects. CB&I argues that the correct legal standard should

have been: “if there was a supracompetitive price increase, entry would be

sufficient to counteract such an increase.” See, e.g., Cargill, Inc. v. Monfort of

Colorado, Inc., 479 U.S. 104, 119 n.15 (1986) (“In evaluating entry barriers in the

context of a predatory pricing claim, however, a court should focus on whether

significant entry barriers would exist after the merged firm had eliminated some

of its rivals, because at that point the remaining firms would begin to charge

supracompetitive prices, and the barriers that existed during competitive

conditions might well prove insignificant.”). Instead, according to CB&I, the

Commission considered only whether there was already entry sufficient to

constrain CB&I from raising prices. CB&I mischaracterizes the Commission’s

analysis. The Commission not only addressed whether existing entry is

sufficient to constrain CB&I from raising prices but also used existing entry and

the history of entry as evidence in determining whether future entry would be

able to counteract a merger’s anti-competitive effects, such as a supracompetitive

price increase. See United States v. General Dynamics Corp., 415 U.S. 486, 501

(1974) (“Thus, companies that have controlled sufficiently large shares of a

concentrated market are barred from merger by § 7 [of the Clayton Act], not

because of their past acts, but because their past performances imply an ability

to continue to dominate with at least equal vigor.”); see also Brown Shoe Co., 370

U.S. at 322 n.38 (“[O]nly a further examination of the particular market – its

structure, history, and probable future – can provide the appropriate setting for
15

judging the probable anticompetitive effect of the merger.”); FTC v. Nat’l Tea

Co., 603 F.2d 694, 700 (8th Cir. 1979). In this case, the Commission clearly

concluded that:

The history of these markets reveals that they have not been

characterized by easy entry and expansion and have been

dominated by [CB&I and PDM] for decades . . . The evidence

strongly suggests that this dynamic would have continued absent

the merger, and [CB&I and PDM’s] own strategic planning

documents predicted that the merged firm would “dominate” the

relevant markets. Thus, to determine whether the entry [CB&I]

suggest[s] is likely to restore competition lost from the merger, [the

Commission] must determine whether a sea-change has occurred in

the markets so as to render inapplicable the competitive conditions

that have held for so long. Based on the evidence, [the Commission]

conclude[s] that such is not the case and that the entry and

expansion alleged by [CB&I and PDM] are not sufficient to

constrain CB&I’s conduct in the foreseeable future. 

Op., at 9; see also Op., at 53 (“[The Commission] conclude[s] that these new

entrants do not confront CB&I with competition sufficient to constrain it from

raising prices.”). The Commission also clearly stated: “In light of these

assertedly low entry barriers, [CB&I] then argue[s] that potential entrants

either already constrain CB&I or can be expected to enter the market in the

event of anticompetitive price increased by CB&I . . . We . . . reject [CB&I’s]

arguments.” Op., at 83. Thus, the Commission concludes that if

supracompetitive pricing existed, the new entrants would be insufficient to

counteract it - the exact legal standard CB&I proposes. 

B. There Is No Structural Change in the Markets to Indicate That the Potential

for Future Entry Would Be Any Greater than the Minimal Entry of the Past

CB&I also argues that the evidence of potential entry can be distinguished

from the history of actual entry because structural changes in the market create

a tendency toward stronger competition. See Baker Hughes, 908 F.2d at 986
Entry barriers are “additional long-run costs that were not incurred by incumbent 8

firms but must be incurred by new entrants,” or “factors in the market that deter entry

while permitting incumbent firms to earn monopoly returns.” Los Angeles Land Co. v.

Brunswick Corp., 6 F.3d 1422, 1427-28 (9th Cir.1993) (internal quotations omitted); see

also Colorado Interstate Gas Co. v. Natural Gas Pipeline Co. Of Am., 885 F.2d 683, 696

n.21 (10th Cir. 1989) (“Barriers to entry are market characteristics which make it difficult

or time-consuming for new firms to enter a market.”).

16

(citing United States v. Int’l Harvester, 564 F.2d 769, 773-779 (7th Cir. 1977)).

As we stated in Fort Worth Nat’l Corp. v. Fed. Sav. & Loan Ins. Corp.: 

. . . Congress provided [the Commission] authority for arresting

mergers at a time when the trend to a lessening of competition was

still in its incipiency. Application of this standard requires not

merely an appraisal of the immediate impact of the merger upon

competition, but a prediction of its impact upon competitive

conditions in the future. 

469 F.2d 47, 60-61 (5th Cir. 1972) (internal citations and quotations omitted). 

CB&I’s bald assertion does not rebut the Government’s strong prima facie

evidence. As we discuss later, the Government provides substantial evidence of

barriers to entry and substantial evidence that they will continue to exist in the

near future. Thus, the Commission relies on substantial evidence for its

prediction that no “sea change” in market structure distinguishes current

market conditions from the history of market conditions. Op. at 71. CB&I does

not provide sufficient evidence in its rebuttal that potential entrants will

overcome these entrenched barriers to entry and encourage stronger 8

competition even if there are supracompetitive prices. As the Commission

concludes: “In short, the post-acquisition evidence in the LPG market

demonstrates no more than two minor competitors submitted bids after the

acquisition. We are not, however, persuaded that CB&I’s cost-cutting and

margin-shaving represent a ‘sea-change’ in the market sufficient to overcome the

contrary evidence.” Op., at 71. 
CB&I also misconstrues the I.D. and the Commission opinion to argue that the

9

Commission ignored the ALJ’s finding of no supracompetitive price increases postacquisition. In fact, the ALJ only concluded that the Government did not prove nor was

required to prove supracompetitive prices existed post-acquisition. I.D., at 114. Neither

the ALJ nor the Commission directly ruled that there were no supracompetitive price

increases post-acquisition. See Op., at 91; I.D., at 114. In the pertinent part of the

opinion, the Commission rejected the Government’s proffered evidence of post-acquisition

price increases because while such evidence tends to show the acquisition would lead to

anti-competitive conditions, existing evidence was already sufficient to lead to that

conclusion. “Whether post-acquisition evidence is admissible depends on the nature of the

evidence.” Dailey v. Quality School Plan, Inc., 427 F.2d 1080, 1082 (5th Cir. 1970) (citing

FTC v. Procter & Gamble, 386 U.S. 568 (1967)); see id. at 576 (rejecting Court of Appeal’s

reliance on four years of post-merger data as “misapprehend[ing] the standards for its

review and the standards applicable in a [Section 7 of the Clayton Act] proceeding.”). We

read Dailey as providing the trial court discretion in deciding when to admit postacquisition evidence and Procter & Gamble as concluding that post-acquisition evidence is

not dispositive. The Commission thus did not abuse its discretion in so ruling. See In re

Plywood Antitrust Litigation, 655 F.2d 627, 637 (5th Cir. 1981). 

17

The continued existence of high entry barriers distinguishes this case from

Stearns Airport Equipment Co., Inc. v. FMC Corp., 170 F.3d 518, 530 (5th Cir.

1999); in this case, the Government can point to viable specific barriers to

foreign firms that CB&I did not sufficiently rebut. These high barriers to entry

will prevent sufficient entry to counteract supracompetitive pricing. “Of course,

for a potential entrant or the threat of a potential entrant to act as a competitive

constraint on incumbent firms, entry -- at least for that firm -- must be easy.”

Baker Hughes, 908 F.2d, at 986. The Government in its prima facie case

identifies substantial evidence of “special industry conditions” that would block

and continue to block foreign entrants despite supracompetitive prices not found

in the FMC or Baker Hughes cases where barriers to entry were low. See FMC

Corp., 170 F.3d at 530.9

C. The Commission’s Use of the Words “Parity” and “On Par” Does Not Imply

The Application of An Incorrect Legal Standard

CB&I also argues that the Commission burdened petitioner with a novel

and onerous entry standard, requiring new entrants to enter “on par” with CB&I
18

in order for entry to be sufficient to counteract the acquisition’s anti-competitive

effects. CB&I misconstrues the Commission’s opinion by interpreting the

Commission’s use of the words “on par” or “parity” out-of-context to mean the

Commission required new entrants to be “equal” to CB&I. See Op., at 54, 57, 58.

Instead, reading the use of “on par” or “parity” contextually, the Commission is

simply commenting on the high barriers of entry that prevent the new entrants

from ever competing with CB&I on “an equal footing.” Id. at 58 (“While new

suppliers appear to have gained or are seeking to gain a toehold in the market,

they are not on equal footing with CB&I, and their modest progress cannot

restore the vibrant competition that once existed.”); see also id. at 67. For

example, the Commission refers to the fact that United States customers would

not rate the new entrants as having a reputation on par with that of CB&I and

therefore would not treat them similarly; such an observation has nothing to do

with applying an onerous entry standard but is merely an observation

buttressing the conclusion that reputation is a potential barrier to entry. Op., at

54. We read the “equal footing” language to mean that new entrants would be

unable to compete at a level able to constrain CB&I’s price increases and not so

literally to mean that new entrants must be “equal” to CB&I in competitive

power. 

 Other courts have generally concluded that for entry to constrain

supracompetive prices, the entry has to be of a “sufficient scale” adequate to

constrain prices and break entry barriers. See United States v. Visa USA, Inc.,

163 F. Supp. 2d 322, 342 (S.D. N.Y. 2001) (entry must be “timely, likely, and [of

a] sufficient scale to deter or counteract any anticompetitive restraints.”); Rebel

Oil, 51 F.3d at 1440 (“Barriers may still be ‘significant’ if the market is unable

to correct itself despite the entry of small rivals.”); Oahu Gas Serv., Inc. v. Pac.

Res., Inc., 838 F.2d 360, 367 (9th Cir. 1988 ); United States v. Falstaff Brewing
 CB&I relies on Baker Hughes to argue that the very threat of entry from foreign 10

firms would constrain anti-competitive effects a fortiori such that it is not necessary that a

new entrant enter “on par.” See Baker Hughes, 908 F.2d at 988. Such reliance is

misplaced. First, Baker Hughes’ conclusion that a mere threat of entry is sufficient to

constrain anti-competitive effects has been criticized, and we will not adopt it here. See

United States v. United Tote, Inc., 768 F. Supp. 1064, 1081 (D. Del. 1991) (noting that

interpreting Baker Hughes as encouraging a lax standard is inconsistent with the critical

examination of potential entrant’s ability to restrain competition); see also 4 Phillip E.

Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and

Their Application ¶ 941h (2d ed. 2000) (criticizing Baker Hughes’ lax standards that favor

respondents) (“Areeda & Hovenkamp”); Darren Bush & Salvatorre Massa, “Rethinking the

Potential Competition Doctrine,” 2004 WIS. L. REV. 1035, 1074-79 (2004). Morever, there is

a high threshold applied to assertions as to whether a company can be considered a

potential entrant for anti-trust purposes. See 2A Areeda & Hovenkamp, at ¶ 422 (“The

more concentrated the market and the greater the threat posted by the challenged practice,

the more convincing must be the evidence of likely, timely, and effective entry.”). The

burden of production must provide evidence that the likelihood of entry reaches a threshold

ranging from “reasonable probability” to “certainty.” CB&I's evidence does not approach

either threshold so as to rebut the prima facie case. See BOC Intern'l v. FTC, 557 F.2d 24,

28 n.7 (2d Cir. 1977); FTC v. Atlantic Richfield Co., 549 F.2d 289, 294-295 (4th Cir. 1977);

Mercantile Texas Corp. v. Board of Governors of Fed. Reserve Sys., 638 F.2d 1255, 1266

(5th Cir. 1981). Therefore, the Commission had substantial evidence to conclude that CB&I

failed to rebut the prima facie case, because there is no such evidence that the threat of

potential entrants will constrain the acquisition’s anti-competitive effects. 

19

Corp., 410 U.S. 526, 531-32 (1973) (“The existence of an aggressive, well

equipped and well financed corporation engaged in the same or related lines of

commerce waiting anxiously to enter an oligopolistic market would be a

substantial incentive to competition which cannot be underestimated.”); see also

U.S. Dep’t of Justice and Fed. Trade Comm’n, 1992 Horizontal Merger

Guidelines, 57 Fed. Reg. 41552, 41561 (Sep. 10, 1992), at ¶ 3.0 (entry must be

“timely, likely, and sufficient in magnitude, character and scope to deter or

counteract the [anti]competitive effects of concern.”) (“Merger Guidelines”). We 10

read the Commission’s opinion to suggest that entry would not be at a sufficient

scale capable of competing with CB&I and piercing the barriers to entry. See

Op., at 67 (“The actual or potential entrants in this market also appear vastly

overmatched by CB&I”); Op., at 66 (“[T]he testimony of these customers . . . does
20

not demonstrate that they are adequate replacement for the competition that

has been lost.”) (emphasis added); Op., at 82 (“[E]ntry pointed to by [CB&I] is

insufficient to constrain CB&I post-acquisition.”) (emphasis added). Therefore,

the Commission applied the correct legal standard and rightfully concluded that

potential entrants would not be of a sufficient scale to compete on the same

playing field as CB&I and thus would be unable to constrain the likely anticompetitive effects.

3. The Commission Relied On Substantial Evidence For Its Factual Findings

Under the “substantial evidence” standard, “[o]ur task is not to reweigh

the evidence but only to determine whether there is such relevant evidence that

a reasonable mind might accept as adequate to support a conclusion.” Gibson

v. FTC, 682 F.2d 554, 571 (5th Cir. 1982) (internal quotations and citations

omitted). Contrary to CB&I’s contentions, the Commission did not clearly

discount the merits of CB&I’s arguments and did not make “its decision before

it considered any contrary conclusion.” Schering-Plough Corp. v. FTC, 402 F.3d

1056, 1065 (11th Cir. 2005). In Schering-Plough Corp., the Commission

explicitly ignored obvious Eleventh Circuit precedent supporting the

respondent’s arguments. 402 F.3d at 1068 n.18. In this case, the Commission

did not ignore obvious precedent to reach an unjustified decision. The

Commission carefully examined and discussed CB&I’s various arguments. We

therefore find CB&I’s attempt to analogize this case to Schering-Plough Corp.

is without merit. 

In respect to its argument that the Commission did not rely on substantial

evidence for its factual findings, CB&I challenges the Commission’s opinion on

three grounds: (A) the Government’s proffered HHI statistics were misleading

predictors of probable future competitiveness in the markets; (B) the

Commission’s finding of “nearly insurmountable” entry barriers ignores rebuttal
21

evidence to the contrary; and (C) the Commission’s finding that CB&I’s

customers have no real alternatives to CB&I.

A. The Proffered HHIs Can Be Used As Indicators of Probable Future

Competitiveness

The HHIs are just one element in the Government’s strong prima facie

case. Market concentration figures should be examined in the context of the

entire prima facie case. See H.J. Heinz Co., 246 F.3d at 717-18. Here, the prima

facie case establishes without dispute that the two dominant, and often only,

players in these four domestic markets are merging. This indisputable fact

“bolster[s]” the Government’s market concentration figures. See id. Where the

post-merger HHI exceeds 1,800, and the merger produces an increase in the HHI

of more than 100 points, the merger guidelines create a presumption of adverse

competitive consequences. See Merger Guidelines, 57 Fed. Reg. 41558 at § 1.51;

see also United States v. Loew’s Inc., 882 F.2d 29, 32, n.2 (2d Cir. 1989); FTC v.

Cardinal Health, Inc., 12 F. Supp.2d 34, 53 (D. D.C. 1998). The increases in

HHIs in this case are extremely high. HHI increases of 2,635 for the LIN/LOX

tank market, 3,911 for the LPG tank market, 4,956 for the LNG tank market,

and 4,999 for the TVC tank market are predicted post-merger. An HHI of 10,000

denotes a complete monopoly. See 4 Areeda & Hovenkamp, at ¶ 931d3. Postacquisition HHIs for the four markets are: 5,845 for LIN/LOX, 8,380 for LPG,

and 10,000 for the LNG and TVC markets. 

CB&I now urges us to disagree with the Commission’s rejection of the

ALJ’s conclusion that the HHIs were unreliable because the HHIs relied on

sporadic sales data, which would generate unreliable market share data. We

may scrutinize the HHI statistics more carefully when the Commission’s

conclusion differs from the ALJ, as in this case. See Schering-Plough, 402 F.3d

at 1062. The Commission agrees with the ALJ that the use of HHIs based
 Merger Guidelines are often used as persuasive authority when deciding if a

11

particular acquisition violates anti-trust laws. See United States v. Kinder, 64 F.3d 757,

771 (2d Cir. 1995).

Long-term trends in HHI changes can be used to examine the structure of

12

markets and are used to determine the effect of mergers on the market. See State of N.Y.

v. Kraft Gen. Foods, Inc., 926 F.Supp. 321, 362 (S.D.N.Y. 1995). Here, the market trends

in HHIs provide substantial evidence that CB&I and PDM have been the dominant players

in the relevant markets and do not indicate any trend of reduced concentration; rather, a

merger accelerates the trend towards increased concentration, as its previous competitors

have dropped out of the relevant markets. Id.

22

solely on sales from the 1996-2001 period is unreliable, and therefore extended

the sales data time period to a 11-year period, 1990-2001. When sales data are

sporadic, a longer historical perspective may be necessary. The Department of

Justice and Federal Trade Commission’s Merger Guidelines, which describe the 11

standards applied by the Government in exercising its prosecutorial discretion

in the anti-trust realm, note, “[t]ypically, annual data are used, but where

individual sales are large and infrequent so that annual data may be

unrepresentative, the [Department of Justice and the Commission] may measure

market shares over a longer period of time.” Merger Guidelines, 57 Fed. Reg. at

41557, at § 1.41; cf. 2A Areeda & Hovenkamp, at ¶ 535d (noting that averaging

over a significantly long period of time is a solution, albeit an imperfect solution,

to “lumpy” sales statistics.). Regardless, the Commission adequately explained 12

why it chose an extended period: (1) the extended period provided more data

points, which averages out the year-to-year fluctuations and “chance outcomes”

and (2) CB&I presents no evidence that a structural change affected the market,

and thus the same market conditions persist in the 1996-2001 time-period as the

11-year period, except the 11-year period has additional data points. See Op.,

at 19; cf. KeySpan-Ravenswood, LLC v. F.E.R.C., 348 F.3d 1053, 1055-60 (D.C.

Cir. 2003). 

In any event, CB&I places too much weight on the HHIs as a dispositive
23

measure of market concentration when other indicators of the market structure

and history of the market clearly bolster what the HHIs already indicate - that

rivals are limited and CB&I and PDM are the only two firms with any market

power in these markets. See FTC v. Warner Communications, Inc., 742 F.2d

1156, 1163 n.1 (9th Cir. 1984 ) (concluding that concentration statistics merely

provide a “meaningful context within which to address the question of the

merger’s competitive effects.”) (citing Gen. Dynamics Corp., 415 U.S. at 498); see

also FTC v. PPG Inds., Inc., 798 F.2d 1500, 1503 (D.C. Cir. 1986) (noting that the

use of the HHIs “rests upon the theory, that, where rivals are few, firms will be

able to coordinate their behavior, either by overt collusion or implicit

understanding, in order to restrict output and achieve profits above competitive

levels.”). The Commission also provided evidence of high entry barriers and

customers’ perception of differences between CB&I and potential entrants. See

infra Section II.3.C.iii. These circumstances justify a conclusion of high market

concentration. See, e.g., R.J. Reynolds Tobacco Co. v. Cigarettes Cheaper!, 462

F.3d 690, 695 (7th Cir. 2006) (concluding that when the market is “concentrated

(the Herfindahl-Hirschmann Index exceeds 3,000),” “new entry is difficult if not

impossible,” and “customers perceive quality differences among brands,” a

finding of high market concentration is justified). We do not see a problem with

using the HHIs as part of this “totality of circumstances” that indicate this

acquisition’s potential anti-competitive effects. See Baker Hughes, 908 F.2d at

984. 

In addition to its challenge of the selection of the time period, CB&I also

argues that the “sporadic” nature of the sales data undermines all evidence of

market power. In Baker Hughes, 908 F.2d at 986, the D.C. Circuit did conclude

that a small number of sales of an esoteric product may suggest concentration

statistics are misleading. In Lockheed Martin Corp. v. Boeing Co., 390 F.
24

Supp.2d 1073, 1080 (M.D. Fla. 2005), the court dismissed monopolization claims

for the “heavy-lift satellite launch services for the government” market, because

the sales data was limited to two launch contracts. We agree that reliance on

very limited data, such as two data points may undermine an entire prima facie

case. However, we find this to be a very limited exception, such as the extreme

situation in Lockheed Martin, because the academic literature has not accepted

any broad conclusion that small markets are all per se problematic. See 4

Areeda & Hovenkamp, at ¶ 929; see also FTC v. Food Town Stores, 539 F.2d

1339, 1345 (4th Cir. 1976) (“The fact that the markets in which the firms

compete may be small is irrelevant under the Clayton Act, and does not affect

the legality of the merger.”). 

In contrast, for three of the four markets here, the data underlying the

HHI for market concentration is not nearly as sparse as that in Lockheed

Martin. For the LNG market, from 1990 to the acquisition date, nine LNG tank

plants were awarded --- CB&I won five and PDM won four. I.D., at 65. Out of

all seventy-five LNG peak-shaving plants in the United States, CB&I and PDM

constructed all but six of them (the six were constructed by a now out-of-business

competitor). Id. at 64. For the LPG market, out of the eleven LPG tank projects

awarded in the United States between 1990 and 2001, CB&I won five and PDM

won four. Id., at 213. From 1990 to the Acquisition, 109 LIN/LOX tanks were

constructed and CB&I and PDM built 72.8% of these tanks. Id. at 269. The

third major player, accounting for 23.3% of those tanks, went out of business in

2001. Id. at 270. This history provides substantial evidence for discerning a

trend towards increased market concentration. However, for the same reasons

as in Lockheed Martin, we conclude that the evidence in the TVC market is too

sparse and sporadic for that market’s HHI statistics to be a reliable factor.

Lockheed Martin, 390 F. Supp.2d, at 18-19. The TVC market’s HHI statistic
25

relies on only one TVC tank project and another proposed project within the

eleven-year period. I.D., at 55. Even without the HHI, we find substantial

evidence, as did the ALJ, to support the Commission’s conclusion that the

acquisition has a pronounced anti-competitive effect in the TVC market

sufficient to establish the prima facie case. The Government produced evidence

that CB&I and PDM were the only two competitors in the market since 1960.

See, e.g., I.D. at 97. The Government also provided ample other evidence to

establish its strong prima facie case, such as customer testimony, history of the

market, and CB&I and PDM’s internal documents. See Op., at 28. 

We find that the record contains substantial evidence to support the

Commission’s finding that the HHIs are not completely irrelevant in three of the

four markets. Instead of ignoring HHIs, we agree with the Commission that they

should be viewed with caution and within the larger picture of long-term trends

and market structure. See Brown Shoe, 370 U.S. at 322 n.38. Long-term trends

in the market and the Government’s other evidence favor what the HHIs also

indicate: the proposed merger will substantially lessen competition. Even

excluding the HHIs, the Government’s other evidence independently suffices to

establish a prima facie case in all markets, including the TVC market. 

B. Merger Guidelines

CB&I also contends the Commission committed “reversible error” because

the Commission failed to follow the Merger Guidelines, 57 Fed. Reg. at 4.1557

§ 1.41 n.15. CB&I argues the Commission, in contravention of the Merger

Guidelines, did not credit the field of potential entrants with an equal likelihood

to win bids but instead identified CB&I as a dominant player and a likely

winner in all bid competitions. 

CB&I’s argument is without merit. CB&I misconstrues the language it
 Moreover, as we noted earlier in supra note 11, the Merger Guidelines are not 13

binding on the courts and the agency during adjudication but are only highly persuasive

authorities as a “benchmark of legality.” See United States v. Kinder, 64 F.3d 757, 771 &

n.22 (2d Cir. 1995) (“Although it is widely acknowledged that the Merger Guidelines do not

bind the judiciary in determining whether to sanction a corporate merger or acquisition for

anticompetitive effect, courts commonly cite them as a benchmark of legality.”). The

Merger Guidelines do not guide adjudicative decisions at the agency and court-level,

because they are merely enforcement policy statements that establish standards for

exercising prosecutorial discretion. Id.; see also Native Am. Arts, Inc. v. Waldron Corp.,

399 F.3d 871, 874 (7th Cir. 2005); Merger Guidelines, 57 Fed. Reg. at 41553 § 0. 

Enforcement policy is not binding on the agency and has no force of law. See Olin Corp.,

986 F.2d at 1300 (“Certainly the [Merger] Guidelines are not binding on the courts . . . or,

for that matter, on the Commission.”) (emphasis added); Brock v. Cathedral Bluffs Shale

Oil Co., 796 F.2d 533, 538 (D.C. Cir. 1986); see also Nat’l Wrestling Coaches Ass’n v. Dep’t

of Educ., 383 F.3d 1047, 1048 (D.C. Cir. 2004); cf. Ash Grove Cement Co. v. F. T. C., 577

F.2d 1368, 1374 (9th Cir. 1978). CB&I’s citation to Nevins v. NLRB, 796 F.2d 14, 18 (2d

Cir. 1986) is inapposite. Nevins deals with guidelines concerning the adjudicatory function

within the NLRB context, but the Merger Guidelines deal with the enforcement function of

the agency and are explicitly denoted as non-binding. Enforcement, unlike adjudication, is

also an area the courts are “most reluctant to interfere.” See Brock, 796 F.2d at 538.

Even so, the Merger Guidelines delegate much discretion in the application of 14

these rules and reject a “mechanical application” of the Guidelines. Merger Guidelines, 57

Fed. Reg. at 41552. The Merger Guidelines urge the Commission to “apply [the Guidelines’]

standards reasonably and flexibly to the particular facts and circumstances of each

proposed merger.” Id.

26

cites in the Merger Guidelines. The Merger Guidelines, 57 Fed. Reg. at 4.1557 13

§ 1.41 n.15, simply state: “[w]here all firms have, on a forward-looking basis, an

equal likelihood of securing sales, the [Department of Justice and the Federal

Trade Commission] will assign firms equal [market] shares.” Under this rule,

in order to apply an equal number of market shares to the field of competitors,

as CB&I urges, the competitors, on a forward-looking basis, must have “an equal

likelihood of securing sales.” The Commission relied on substantial and 14

overwhelming evidence that there is no equal likelihood to secure bids given the

high entry barriers, i.e., because of CB&I’s reputation and control of skilled

crews. See infra Section II.3.C.iii.

C. Commission’s Rejection of Rebuttal Arguments, viz., Alleged Market Entry

and Low Entry Barriers, Is Supported by Substantial Evidence
27

i. Post-Acquisition Evidence Has Little Probative Weight if It Is

Manipulable, and Evidence in this Case Is Reasonably Viewed as

Manipulable. 

We agree with CB&I that post-acquisition evidence may be useful in

determining the possibility that new entrants would counteract the anticompetitive effects of an acquisition. “Whether post-acquisition evidence is

admissible depends on the nature of the evidence.” Dailey, 427 F.2d at 1082.

Nevertheless, there are significant reasons why post-acquisition evidence’s

probative value may be limited. The Supreme Court has so concluded by noting:

[T]he probative value of [post-acquisition] evidence was found to be

extremely limited, and judgments against the Government were in

each instance reversed in part because ‘too much weight’ had been

given to postacquisition events. The need for such a limitation is

obvious. If a demonstration that no anticompetitive effects had

occurred at the time of trial or of judgment constituted a permissible

defense to a § 7 divestiture suit, violators could stave off such

actions merely by refraining from aggressive or anticompetitive

behavior when such a suit was threatened or pending. 

General Dynamics, 415 U.S. at 504-05; see also Alberta Gas Chemicals Ltd. v.

E.I. Du Pont de Nemours and Co., 826 F.2d 1235, 1244 (3d Cir. 1987). The

probative value of such evidence is deemed limited not just when evidence is

actually subject to manipulation, but rather is deemed of limited value whenever

such evidence could arguably be subject to manipulation. See Lektro-Vend Corp.

v. Vendo Co., 660 F.2d 225, 276 (7th Cir. 1981) (“The post-acquisition evidence

in this case is the type which cannot arguably have been subject to the

defendant’s deliberate manipulation, nor is it likely that the market was less

competitive after the acquisition than it would have been otherwise.”) (emphasis

added); Hosp. Corp. of Am. v. FTC, 807 F.2d 1381, 1384 (7th Cir. 1986)

(“Post-acquisition evidence that is subject to manipulation by the party seeking

to use it is entitled to little or no weight.”) (emphasis added). CB&I argues that
Just allowing entrants to win bids does not guarantee the entrants would be able 15

to enter the market permanently, since winning a bid does not necessarily result in the

successful completion of the project especially in light of evidence that CB&I controls

skilled laborers necessary for success that other competitors do not have.

28

its post-acquisition evidence is probative, because there is no evidence CB&I

manipulated the evidence. We disagree. Any discussion concerning CB&I’s

alleged manipulation of post-acquisition evidence is irrelevant, because the

evidence’s probative weight is lessened if it is arguably subject to possible

manipulation. The Commission was correct to hold that evidence “subject to

manipulation” was the correct standard when deciding whether post-acquisition

evidence is probative. See Op., at 62 (“[T]he price reductions cited by the

Respondents occurred well after the Complaint in this case issued and are the

type of evidence that is wholly manipulable”). The post-acquisition evidence is

arguably manipulable because the existence of actual and potential entry

sufficient to constrain post-acquisition anti-competitive effects is based on the

purported success of these entrants in t h e b id m a r k e ts . CB&I could refuse

to bid or negotiate with draconian terms in the immediate aftermath of the

acquisition so as to permit entrants to win a few bids so as to bolster the

market’s appearance of competitiveness.15

ii. Evidence of Actual Entry Is Outside the Administrative Record

Using post-acquisition evidence, CB&I argues that, post-acquisition,

foreign competitors have made significant inroads into the four markets and won

several bids. Therefore, CB&I argues this rebuttal evidence shows how actual

entrants can constrain post-acquisition anti-competitive effects. However, the

evidence of actual entry post-acquisition that CB&I relies on in its brief is

outside the administrative record and hence outside the scope of our review. The

evidence in question includes bidding on the Hackberry Project past the

preliminary stages (in fact, the brief quotes verbatim passages from evidence
 The petitioner’s argument that the evidence is part of the administrative record, 16

because the petition for reconsideration at the Commission level was included in Fed. R.

App. P. 17's certified list of documents listing the “record” on appeal is without merit. The

certified list includes not only “any findings or report on which [the order at issue on

appeal] is based,” but also any “pleadings, evidence, and other parts of the proceedings

before the agency.” Fed. R. App. P. 16(a); Fed. R. App. P. 17. Pleadings and evidence

relevant to other parts of the proceedings before the agency, such as a petition for

reconsideration, do not constitute the administrative record for the order at issue.

Moreover, the Commission has explicitly rejected the evidence as a basis for its order in its

denial of the petition to reconsider. See Global Van Lines, Inc. v. I.C.C., 714 F.2d 1290,

1298 (5th Cir. 1983) (“It has, moreover, been settled for at least forty years that ‘[t]he

grounds upon which an administrative order must be judged are those upon which the

record discloses that its action was based.’”) (quoting SEC v. Chenery Corp. (Chenery I),

318 U.S. 80, 87 (1943)). 

In addition, for the reasons we noted in Section II.3.C.i, supra, this post- 17

acquisition evidence is likely not very probative, because it can arguably be subject to

manipulation. 

29

attached to CB&I’s motion to adduce that we denied). The evidence in question

also includes the bids regarding the Cheniere Corpus Christi and Sabine Pass

and certain other outstanding bid competitions (Golden Pass LNG and

Washington Gas Co.). CB&I cites to its petition for reconsideration filed with

the Commission below when discussing this evidence. However, the Commission

denied its petition for reconsideration and did not include the evidence attached

to the petition in its administrative record. See R.O., at 6 & nn.27-29. In fact,

CB&I readily concedes, in its various filings, that the evidence presented below

in its petition is outside the administrative record (“post-record”) and therefore

filed a motion to adduce this evidence both at the Commission level and with

this court. The Commission and this court both denied its motions. Despite

these clear indications that this evidence is not in the administrative record,

CB&I continues to cite to this evidence. We reject its use of this evidence as a

basis for its appeal.16

Even assuming arguendo that the evidence should be considered, it does

not alter or affect our decision. Only one piece of this evidence would possibly 17
30

be relevant to our decision, and this evidence of one successful entry by a foreign

company does not affect the substantial evidence upon which the Commission

based its decision and our decision to deny CB&I’s petition. CB&I’s prime

example of actual entry is Dynegy’s Hackberry project, which was awarded to a

foreign firm, Skanska, at the outset, but then awarded to another foreign firm,

IHI. CB&I argues that this is evidence that CB&I lost two chances to work on

the large Hackberry project. CB&I inaccurately characterizes the evidence. The

Commission noted that this evidence was for the whole LNG port, and there was

supposed to be a separate bid for the tank work as a sub-contract. R.O. at 12-

15. As for the Freeport LNG project, after learning that it was not awarded the

entire project, CB&I withdrew from any participation in the project, which might

have yielded some tank work as a sub-contract. Id. at 15. The only bid possibly

lost on the merits was LNG tank work in the Sabine Pass Project. This single

instance post-record is not enough to undermine the Commission’s conclusion

that the rebuttal evidence of actual entry was not sufficient. The post-record

evidence also shows that CB&I was awarded three non-competitive sole-source

contracts for LNG tanks in addition to the five commitments before the record

closed. R.O. at 17. The proffered evidence tends to reflect that actual entry into

LNG market was marginal at best. 

iii. CB&I Did Not Rebut Evidence of High Entry Barriers, so a

Potential Entry Theory Fails

In the alternative, if the post-acquisition evidence of actual entry is not

admitted, CB&I contends these large foreign firms are potential entrants that

may constrain the post-acquisition anti-competitive effects. CB&I’s argument

is without merit. A potential entrant’s ability to constrain market power is used

in contexts when there is an “ease of market entry.” See United States v. Marine

Bancorp, Inc., 418 U.S. 602, 628 (1974) (“[E]ase of entry on the part of the
31

acquiring firm is a central premise of the potential-competition doctrine.”); FMC

Corp., 170 F.3d at 530 (“If barriers in an industry are low, new entrants into the

industry will appear when the monopolist raises its prices.”). The mere

existence of potential entrants does not by itself rebut the anti-competitive

nature of an acquisition. The potential entry must face low enough barriers for

a threat of potential entry to be likely. Therefore assertions that potential entry

may meaningfully constrain market power turns on the existence of low or no

entry barriers. See Reazin v. Blue Cross & Blue Shield of Kansas, Inc., 899 F.2d

951, 974 (10th Cir. 1990) (“Thus, we agree with the district court that it properly

focused the jury’s attention on barriers to meaningful competition - competition

which could inhibit anticompetitive conduct.”) (citing United States v. Waste

Mgmt., Inc., 743 F.2d 976, 983 (2d Cir.1984)); Yamaha Motor Co., Ltd. v. FTC,

657 F.2d 971, 977 (8th Cir. 1981) (noting that an “alleged potential entrant”

must have “a substantial likelihood of ultimately producing deconcentration of

that market or other significant procompetitive effects”) (quoting Marine

Bancorporation, 418 U.S. at 633).

We will, therefore, consider CB&I’s potential entry argument in concert

with evidence regarding the barriers to entry. CB&I contends the Commission’s

conclusion that CB&I failed to rebut the three main barriers to entry offered in

the Government’s prima facie case, (1) reputation/experience, (2) regulatory and

technical expertise, and (3) access to local labor and trained supervisors, is not

based on substantial evidence. Based on the substantial evidence standard, as

long as the Commission derives a “reasonable inference” from the evidence that

CB&I failed to rebut the prima facie case, we defer to the Commission’s findings.

See Gibson 682 F.2d at 569. 

a. Reputation/Experience

We agree with CB&I that general reputation alone is not an effective
32

barrier to entry. Am. Prof’l Testing Serv., Inc. v. Harcourt Brace Jovanovich

Legal & Prof’l Publ’ns, Inc., 108 F.3d 1147, 1154 (9th Cir. 1997); see also FMC

Corp., 170 F.3d at 531 . However, unlike FMC Corp. and Am. Prof’l Testing

Serv., the Government presents something more than just generalized

reputation as a market entry barrier. Instead, what the Government presents

as “reputation” is CB&I’s reputation for particular industry-specific traits. See

Advo Inc. v. Philadelphia Newspapers, Inc., 51 F.3d 1191, 1202 & n.11 (3d Cir.

1995) (“[W]e do not question the judgment of other courts of appeals that in

other market contexts reputation is a significant barrier to entry.”) (citing

Thompson v. Metro. Multi-List, Inc., 934 F.2d 1566, 1577 (11th Cir. 1991); U.S.

Philips Corp. v. Windmere Corp., 861 F.2d 695, 703 (Fed. Cir. 1988)); see also

United Tote, 768 F. Supp. at 1075-76. Advo concludes that reputation evidence

could be considered a market barrier if there is some limiting principle. Id. at

1202. The Government presents its reputation evidence in a limited fashion;

“reputation” is considered in this case as a proxy for experience and success in

building LNG projects in the United States, foremost an understanding of

industry-specific U.S. regulations, labor force, and “cost-competitiveness.” CB&I

is therefore able to distinguish its brand within the industry as the foremost

(and now only) domestic expert. Compare Op., at 58, with Dimmitt Agri Indus.,

Inc. v. CPC Int’l, Inc., 679 F.2d 516, 529 n.12 (5th Cir. 1982) (“When a seller

possesses an overwhelmingly dominant share of the market, however, and

differentiates its product from others through a recognized and extensively

advertised brand name, thereby enabling the seller to control prices or

unreasonably restrict competition, then monopoly power may be found to exist.”)

(quoting Borden, Inc. v. FTC, 674 F.2d 498, 512 (6th Cir. 1982)). Therefore, the

Commission has substantial evidence for its determination that the reputation

for expertise and experience in building tank projects in the United States is a
18 The Commission concluded that “[a]ll of the factors work together to help form

CB&I’s reputation for quality and reliability.” Op. at 58. Reputation here can be

considered an industry-specific “entrenched buyer preference[] for [an] established brand[]”

built into the industry-specific bid process. See, e.g., Am. Council for Certified Podiatric

Physicians and Surgeons v. Am. Board of Podiatric Surgery, Inc., 185 F.3d 606, 623 (6th

Cir. 1999) (“[E]stablishing credibility naturally seems to be a significant barrier to entry,

particularly for an enterprise that depends heavily upon reputation, such as certification of

medical specialists.”); Los Angeles Land Co. v. Brunswick Corp., 6 F.3d 1422, 1428 n.4 

(9th Cir. 1993) (“The main sources of entry barriers are: . . . (3) entrenched buyer

preferences for established brands or company reputations.”) (emphasis added); cf. FMC

Corp., 170 F.3d at 531 (“The question is not whether there are barriers to entry, but rather

whether the barriers in a particular industry are large enough to trigger judicial concern.”)

(emphasis added). District courts have also so held. See, e.g., Cardinal Health, Inc., 12 F.

Supp. 2d at 57 (“The sheer economies of scale and strength of reputation that the

Defendants already have over these wholesalers serve as barriers to competitors as they

attempt to grow significantly in size.”); United States v. Franklin Elec. Co., Inc., 130 F.

Supp.2d 1025, 1031-032 (W.D. Wis. 2000); see generally United Tote, Inc., 768 F. Supp. at

1075, 1079-81 (“In reality, the weight accorded to reputational barriers to entry will vary

with the circumstances of a given case.”).

33

barrier to entry, and thus the potential entrants’ international reputation

evidence offered in CB&I’s rebuttal is inapposite. 

The Commission presented substantial evidence that domestic reputation

was critical to the bidding process in this industry, which CB&I failed to rebut.18

 The Commission showed that (a) the bidding evaluation process takes into

account the bidders’ experience and history with various projects, see Op. at 34;

(b) customers’ testimony acknowledging reputation, including domestic

reputation, as important for choosing bidders, see Op. at 38, and (c) the industry

requires highly sophisticated and specialized construction work and credits

reputation and an established brand name, because brand names have a track

record with highly specialized and skilled local crews, see Op. at 36. Therefore,

we find the Commission presented substantial evidence that reputation in this

specific industry context is a barrier to entry and that CB&I failed to rebut this

evidence.

b. Regulatory and Technical Experience
34

CB&I also challenges the Commission’s conclusion that regulatory

experience with the Federal Energy Regulatory Commission (“FERC”) is a

barrier to entry. Ability to do FERC work is a component of the bidding proposal

and CB&I, in its own advertising materials, advertises FERC’s familiarity with

and its respect for CB&I. Op. at 41 n.248. FERC expertise can be analogized to

other technical prerequisites to doing business in a market that are considered

barriers to entry. See United States v. Syufy Enters., 903 F.2d 659, 673 (9th

Cir.1990) (“It is well known that some of the most insuperable barriers in the

great race of competition are the result of government regulation.”); Rebel Oil,

51 F.3d at 1439 (noting that one “main source[] of entry barriers” is “legal license

requirements.”); cf. Reazin v. Blue Cross & Blue Shield of Kan., 663 F. Supp.

1360, 1435-436 (D. Kan. 1987), aff’d, 899 F.2d 951 (10th Cir.), cert. denied, 497

U.S. 1005 (1990) (recognizing as an entry of barrier “the ‘clout’ with Kansas

hospitals, which defendant itself recognizes.”); United States v. Blue Bell, Inc.,

395 F.Supp. 538, 549 (M. D. Tenn. 1975) (recognizing familiarity with setting up

the business as a barrier to entry); Atl. Richfield Co., 439 F.2d at 295

(recognizing “technical expertise” as a barrier to entry). There is strong prima

facie evidence from one customer that a lack of FERC experience is a dealbreaker and a reason to award CB&I sole-source contracts. Op., at 56-57. 

While we agree with CB&I that owners are responsible for filing applications

and other outside consultants are available, the fact remains that as part of the

bidding process, customers select LNG tank builders depending on whether they

would be able to help with the highly technical application process as a

component of a whole LNG tank building project. CB&I does present evidence

that one foreign firm successfully guided a huge project towards FERC

compliance. We cannot conclude that this single instance is production of

sufficient evidence to rebut the Commission’s finding on this issue; however,
35

even if it were, it is not sufficient evidence to rebut the Commission’s general

conclusion that high entry barriers exist in these markets based on the findings

concerning the other two barriers.

c. The Control over the Specialized Labor Force

“Control of essential or superior resources” is a recognized barrier to entry.

Image Technical Serv., Inc. v. Eastman Kodak, Co., 125 F.3d 1195, 1208 (9th

Cir. 1997). “Employee skill levels required for a firm to be successful” can be

considered a barrier to entry. See In Re IBM Peripheral EDP Devices Antitrust

Litig., 481 F. Supp. 965, 976 (N.D. Cal. 1979). Here, the Government presents

specific evidence that employee skills in cryogenic tank construction is a limited

resource significantly captured by CB&I. See Op., at 37 & n.230. CB&I controls

highly specialized supervisory crews resulting in quicker turnaround

construction time and lower-priced bids. Id. CB&I has also developed specialized

and proprietary welding techniques and trained crews with those techniques.

Id. at 38. As the Commission notes, CB&I does not present sufficient rebuttal

evidence that potential entrants would be able to develop comparable techniques

and train sufficient numbers of supervisory personnel to effectively compete. 

We find that the Commission’s conclusion that CB&I’s evidence does not

rebut the strong prima facie case for at least two high entry barriers is a

reasonable inference from the evidence presented.

D. Rejection of Rebuttal Evidence that Sophisticated Customers Have

Meaningful Alternatives to CB&I is Supported by Substantial Evidence

In the proceedings below, CB&I argues that because customers in these

markets are large and sophisticated consumers, they would be able to constrain

the anti-competitive effects by altering the bid process and searching for

alternatives. Most of the rebuttal evidence for CB&I’s “sophisticated customer”

defense is derived from post-record evidence, which cannot appropriately be
36

considered in this appeal. Assuming arguendo, however, the propriety of its

consideration, CB&I still has not produced sufficient evidence to rebut the

Government’s prima facie case based on evidence that large and sophisticated

customers continue to choose CB&I for sole-source contracts without any

bidding, and that CB&I has utilized its market power to force sole-source

contracts by choosing not to participate in bidding. See R.O. at 17 & n.82. In

other words, there is no history nor other indication that customers who

formerly relied on CB&I and PDM for tank design, engineering, and construction

services will undertake to perform them on their own. The absence of such

evidence, together with the lack of evidence of adequate entry of competitors,

undermine the basic premise for this defense. In this respect, this case is unlike

Baker Hughes, which CB&I relies on heavily, where there were ample available

alternatives for customers in a market with low entry barriers. 908 F.2d at 986

(internal citations omitted); id. at 987 (“Because the defendants also provided

compelling evidence on ease of entry into this market, we need not decide

whether these findings, without more, are sufficient to rebut the government’s

prima facie case.”). In addition, unlike in Baker Hughes, pricing data for the

four markets are mostly confidential from bid-to-bid, and thus buyers are

generally unable to ascertain whether CB&I is imposing supracompetitive prices

on any particular bid weakening buyers’ ability to demand competitive prices.

See United States v. Country Lake Foods, Inc., 754 F. Supp. 669, 673 (D. Minn.

1990); Op., at 89-90. Therefore customers have imperfect information and a

weak bargaining position that is compounded by the lack of meaningful

alternatives. Certain powers held by the customer that would favor a

“sophisticated customer” defense are listed in United States v. Archer-DanielsMidland, Co., 781 F. Supp. 1400, 1417-418 (S.D. Iowa 1991). Such powers are

not present here. Under Archer-Daniels, the conditions include the customers’
37

ability to: 

(a) Refus[e] to reveal the prices quoted by other suppliers and the

price which a supplier must meet to obtain or retain business,

creating uncertainty among suppliers.

(b) Swing[ ] large volume back and forth among suppliers to show

each supplier that it better quote a lower price to obtain and keep

large volume sales.

(c) Delay[ ] agreement to a contract and refusing to purchase product until

a supplier accedes to acceptable terms.

(d) Hold[ ] out the threat of inducing a new entrant into HFCS production

and assuring the new entrant adequate volume and returns

Id. at 1418. 

None of the factors apply to the present situation, in which: (a) Buyers

cannot compare past bids not only because they are mostly confidential, but also

because each project is unique; (b) As we noted earlier, the market has had only

two dominant players, PDM and CB&I, so buyers cannot now swing back and

forth between competitors to lower bids post-acquisition; (c) Instances of CB&I

pressuring customers to offer sole-source contracts by withdrawing its bid and

CB&I’s success at obtaining sole-source contracts undermine any argument that

buyers have the ability to pressure CB&I in contract negotiations; and (d) No

buyer can assure that a new entrant has “adequate volume and returns” for

meaningful entry into the market as there is no evidence that buying power is

sufficiently concentrated.

In addition, courts have not considered the “sophisticated customer”

defense as itself independently adequate to rebut a prima facie case. “Although

the courts have not yet found that power buyers alone enable a defendant to

overcome the government’s presumption of anti-competitiveness, courts have

found that the existence of power buyers can be considered in their evaluation

of an anti-trust case, along with such other factors as the ease of entry and likely

efficiencies.” Cardinal Health, 12 F. Supp.2d at 58; see also 4 Areeda &
CB&I cites to Reynolds Metals Co. v. FTC, 309 F.2d 223, 230-231 (D.C. Cir. 1962), 19

to suggest the Commission failed to distinguish between after-acquired properties and

before-acquired properties as in Reynolds. In Cascade Natural Gas Corp. v. El Paso

38

Hovenkamp, at ¶ 943c. Moreover, the economic argument for even partially

rebutting a presumptive case, because a market is dominated by large buyers,

is weak. See id. at ¶ 943 (concluding that “it would be inappropriate to give

formal recognition to buyer concentration and related factors in the ordinary run

of merger cases”). We therefore agree with the Commission that CB&I’s

evidence of sophisticated customers does not carry the burden for producing

evidence sufficient to rebut the Commission’s prima facie case. 

4. The Commission Did Not Abuse Its Discretion In Issuing Its Remedy

Provisions

A. The Remedial Provisions Are Not Overbroad Nor Punitive

CB&I argues that the Commission’s remedial provisions are overbroad and

punitive. We review the Commission’s remedial mandates for abuse of

discretion. Jacob Siegel Co. v. FTC, 327 U.S. 608, 611-612 (1946). “[A]ll doubts

as to the remedy are to be resolved in [the Commission's] favor.” United States

v. E.I. duPont de Nemours & Co., 366 U.S. 316, 334 (1961). The Commission is

“clothed with wide discretion in determining the type of order that is necessary

to bring an end to the unfair practices found to exist.” FTC v. Nat’l Lead Co.,

352 U.S. 419, 428 (1957). It has “wide latitude for judgment and the courts will

not interfere except where the remedy selected has no reasonable relation to the

unlawful practices found to exist.” Id. (internal quotations omitted). 

 In this case, the Commission ordered a divestiture of assets to create a

competitor, “new PDM,” capable of competing on an “equal footing.” See R.O.,

at 23. CB&I objects to this remedy, because it would require divestment of

PDM’s Water Division and potentially other assets. The Government argues 19
Natural Gas Co., 386 U.S. 129, 136-137 (1967), the Supreme Court assumed after-acquired

assets may be included in the divestiture order, though the Court in Cascade Natural Gas

remanded the case for an additional hearing on how assets should be divided. Here,

instead of a hearing, the Commission devolved authority to decide what assets will be

involved in the divestiture to CB&I and the monitor trustee. Permitting the respondent

and a trustee to decide, instead of holding another court hearing, is within the

Commission’s broad authority to fashion relief. The Commission’s remedy in this case is

also possibly a superior and more efficient method to resolve the issue. 

39

that though the assets are unrelated to the construction of cryogenic tanks, they

are necessary to enable the separate entity to compete with CB&I on an “equal

footing.” “Total divestiture is not necessarily inappropriate even though the

antitrust violation found relates to but one aspect of the company thus acquired,

especially where, as here, total divestiture is deemed necessary to restore

effective competition.” OKC Corp. v. FTC, 455 F.2d 1159, 1163 (10th Cir. 1972).

Total divestiture here “does not appear to be a remedy that ‘has no reasonable

relation to the unlawful practices found to exist.’” Toys “R” Us, Inc. v. FTC, 221

F.3d 928, 940 (7th Cir. 2000) (quoting Seigel Co., 327 U.S. at 612-613). Here, the

violation is the acquisition of a previously viable and independent entity capable

of competing on an equal footing. The Commission’s divestiture of the water

plant division along with the cryogenic tank division is consistent with and

relevant to creating a viable competitor, because the water department provides

a consistent revenue stream to complement sporadic tank sales. Compare Olin

Corp., 986 F.2d at 1307, with Op. at 92, 96. We should be clear to note that the

order does not create, as CB&I so misconstrues, two competitors of “equal size.”

Instead, the remedy only mandates the entities be capable of competing for an

“equal share” of the market similar to the situation pre-acquisition. R.O. at 23.

Therefore, as the Commission concluded when the petitioner raised similar

arguments below, the new CB&I and new PDM consist of two competitors

capable of competing on an equal footing in the relevant businesses as was the

situation before the acquisition. R.O., at 23. This means the new PDM only has
We also find the Commission’s detailed decisions in both its Opinion and Decision 20

on Petition for Reconsideration where remedy issues were discussed, see, e.g., R.O., at 23-

24, as providing adequate reasons justifying the remedy and its relationship with its

objectives. Unlike in United States v. Microsoft, 253 F.3d 34, 103 (D.C. Cir. 2001), which

remanded due to the lack of an adequate explanation for the remedy, the Commission

provided much more in form and substance than a “mere four paragraphs” to explain its

remedy. 

40

to become an entity equally capable of competing in the future; the order does

not intend CB&I to be split into two equal halves. Id. Instead, the order

carefully devolves discretion to CB&I and a third-party monitor to determine

how assets must be divided to effectuate the order and its general remedial

purpose. Op. at 95 (“[W]e have included a provision that allows the exclusion of

the water assets if the acquirer and monitor trustee both find them

unnecessary.”). Accordingly, as we read the Commission’s order, CB&I and the

monitor are required to divest to the new separate entity no more nor less of the

former PDM assets as are necessary for the new separate entity to compete with

CB&I in the relevant markets on an equal footing. Construing the Commission's

order as having this meaning and intent, we conclude that the Commission did

not abuse its discretion, but instead fashioned a remedy reasonably calculated

to eliminate the anti-competitive effects of CB&I’s acquisition in violation of the

Clayton and FTC Acts.20

B. A Separate Evidentiary Hearing Was Not Required In This Case 

Finally, the petitioner argues that a hearing was required for the remedy

phase of the proceedings separate from the liability phase. We disagree. 

Generally, a hearing is required if, for example, new evidence was not presented

at trial or important factual issues were not resolved by the trier of fact in

respect to the remedy. See Microsoft, 253 F.3d at 101-102; Am. Can Co. v.

Mansukhani, 814 F.2d 421, 425 (7th Cir. 1987). We review the denial of an

evidentiary hearing under an abuse of discretion standard. Alberti v.
Even assuming CB&I was surprised by the extent of the remedy, surprise itself 21

does not merit reversal without allegations of prejudice. See Microsoft, 253 F.3d at 103; Eli

Lilly & Co. v. Generix Drug Sales, 460 F.2d 1096, 1106 (5th Cir. 1972) (“[S]urprise alone is

not a sufficient basis for appellate reversal; appellant must also show that the procedures

followed resulted in prejudice.”). CB&I does not present any argument “that the lack of

notice caused the complaining party to withhold certain proof which would show his

entitlement to relief on the merits,” thus we cannot reverse based on allegations of surprise

alone. Id.

41

Klevenhagen, 46 F.3d 1347, 1358 (5th Cir. 1995). CB&I now proffers parts of the

trial transcripts as evidence that a new evidentiary hearing should be offered.

However, that evidence was considered by the Commission in fashioning the

remedy imposed. CB&I does not present any new evidence or factual issues

critical to the remedy phase not already considered by the trier of fact as a basis

for a possible evidentiary hearing. The long trial below offered opportunities for

both sides to extensively discuss the ramifications of possible remedies. See Op.

at 93-106. The ALJ and the Commission both considered a great amount of

evidence relating to the remedy before fashioning the remedial order. Id. There

is thus no new factual dispute warranting a remand for an evidentiary trial. Id.

CB&I also requests a remand, because it was allegedly “surprised” by the

extent of the remedy. CB&I misconstrues the Commission’s order, however, 21

in arguing that the extent of the remedy was a “surprise.” The remedy does not,

as CB&I contends, create two “equal” tank companies. The remedy, as we have

stated above, only requires the creation of two companies equally able to

compete for bids in the relevant markets. Any interpretation to the contrary

misstates the remedy. Moreover, this was clearly the contemplated relief from

the very beginning of the proceedings below. In its complaint, the Government

gave notice that the possible remedy in this case may include the

“[r]eestablishment by CB&I of two distinct and separate, viable and competing

businesses . . . and such other businesses as necessary to ensure each of their
42

viability and competitiveness . . . [and] [s]uch other or additional relief as is

necessary to ensure the creation of one or more viable competitive independent

entities to compete against CB&I in the manufacture and sale of any relevant

product.” For these reasons, we conclude that the Commission did not abuse its

discretion in denying CB&I’s request for a rehearing and an additional

evidentiary hearing on the remedy to be imposed in this case. 

We therefore DENY the petition to review the Federal Trade Commission

order.