ORIGINAL
 

UNITED STATES OF AMERICA
 

BEFORE THE FEDERA TRAE COMMISSION
 

In the Matter of ) 

) 

Polypore International, Inc., )

a corporation. ) 

) 

PUBLIC
 

Docket No. 9327
 

COMPLAINT COUNSEL'S POST-TRIAL BRIEF
 

ON THE REOPENED RECORD
 

RICHARD A. FEINSTEIN 

Director 

PETER J. LEVIT AS 

Deputy Director 

Bureau of Competition 

CATHARINE MOSCA TELL! 

Assistant Director 

MORRS BLOOM 

Deputy Assistant Director 

Bureau of Competition 

Mergers II 

J. ROBERT ROBERTSON 

STEVEN DAH 

BENJAMIN GRIS 

JOEL CHRSTff 

STEPHEN ANTONIO 

CHRSTIAN H. WOOLLEY 

PRIYA VISWANATH 

Federal Trade Commission 

Bureau of Competition 

600 Pennsylvania Ave., N.W. 

Washington, DC 20580 

Telephone: (202) 326-2008 

Fax: (202) 326-2884 

Counsel Supporting the Complaint 

DECEMBER 1,2009
 
TABLE OF CONTENTS
 

TABLE OF AUTHORITIES................................................ ii
 

i. Introduction ....................................................... 1
 

II. The Facts Do Not Support Any of 
 Respondent's Proffers. . . . . . . . . . . . . . . . . .. 2 

III. A Power-Buyer Argument Along is not Sufficient Rebuttal to 

Complaint Counsel's Prima Facie Case ................................. 6
 

A. The Power-Buyer Argument is Only Credited Where There are Other
 

Significant Factors that Alone Defeat the Government's Prima Facie
 

Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
 

IV. Events and Evidence Subject to Respondent's Manipulation are
 

Entitled to Little or No Weight. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 12
 

V. Attempted Monopolization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 14
 

VI. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 19
 
TABLE OF AUTHORITIES
 

Cases
 

FTC v. Chicago Bridge & Iron Co., 534 F.3d 410 (5th Cir. 2008) . . . . . . . . . . . . . 2, 7,8, 10, 13
 

FTC v. Consolidated Foods Corp., 380 U.S. 592 (1965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 13
 

FTC v. H.J. Heinz Co., 246 F.3d 708 (D.C. Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 8
 

FTC v. Staples,lnc., 970 F. Supp. 1066 (D.D.C. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7
 

HDC Medical, Inc. v. Minntech Corp., 474 F.3d 543 (8th Cir. 2007) . . . . . . . . . . . . . . . . . . . . . 18
 

Hospital Corp. of America v. FTC, 807 F.2d 1381 (7th Cir. 1986) . . . . . . . . . . . . . . . . . . . . . . . 13
 

In re B.F. Goodrich Co., 110 F.T.C. 207 (1988) . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
 

Lorain Journal Co. v. United States, 342 U.S. 143 (1951) .............................17
 

Taylor Pub Co. v. Jostens, Inc., 216 F.3d 465 (5th Cir. 2000) .......................... 18
 

United States v. Archer-Daniels-Midland Co., 781 F. Supp. 1400 (S.D. Iowa 1991) ...... 8, 11
 

United States v. Baker Hughes, 908 F.2d 981 (1990) ..............................2, 7, 9
 

United States v. Country Lake Foods, Inc.., 754 F. Supp. 669 (D. Minn. 1990) . . . . . . . . . 7, 9, 10
 

United States v. General Dynamics Corp., 415 U.S. 486 (1974) . . . . . . . . . . . . . . . . . . . . . . .. 13
 

United States v. Microsoft Corp., 65 F. Supp. 2d 1 (D.D.C. 1999) . . . . . . . . . . . . . . . . . . . . . . . 19
 

United States v. United Tote, Inc., 768 F. Supp. 1064 (D. DeL. 1991). . . . . . . . . . . . . . . . . . . . .10
 

Other Authorities 

Philip E. Areeda, et aI., Antitrust Law (2nd Ed. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 10, 19
 

U.S. DOJ and FTC Horizontal Merger Guidelines (1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
 

11 
I. Introduction
 

Complaint Counsel has proven that the acquisition of Micro porous by Daramic 

has significantly reduced competition in four markets. Complaint Counsel has also 

proven its monopolization counts; although, such proof is not necessary for either a 

Section 7 claim or for any of the relief 
 requested. Signally, Respondent's counsel, Mr. 

Welsh, admitted in his closing that Respondent failed to put "(s)ignificant evidence to 

rebut these charges . . . before the court at the time during this hearing last .summer." 

(11/12/09 Tr. 5874) Mr. Welsh is correct. Indeed, Respondent has not rebutted 

Complaint Counsel's case at alL. 

In its second attempt to add evidence post trial, Respondent stil does not offer 

any evidence to challenge Complaint Counsel's prima facie case.! Respondent claimed 

that it had "new" evidence for a "power-buyer" argument. However, Respondent has 

failed to prove its four proffers of evidence. On the other hand, Complaint Counsel has 

offered evidence that affirmatively disproves the proffers. 

Respondent has failed to prove any of its proffers, but even if the proffers were 

true, it would not change the outcome of 
 this case. This is because (1) the "power buyer" 

argument is a weak defense, which should not be relevant in such highly concentrated 

markets; (2) the proffers, even had they turned out to be true, would not support a power 

buyer argument; (3) events and evidence subject to Respondent's manipulation are 

i In fact, all ofthe evidence in the second hearing supports Complaint Counsel's product and geographic 

market definitions, market paricipant and concentration evidence, as well as proving that there is no entry 

occurring or likely to occur. When the "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. Under these conditions, the respondent's burden of production on rebuttal is also heightened. 

Chicago Bridge & Iron Co., N V v. FTC, 534 F.3d 410, 426 (5th Cir. 2008) (citing United States v. Baker 

Hughes Inc., 908 F.2d 981, 991 (D.C. Cir. 1990). 

1 
entitled to little or no weight; and (4) Complaint Counsel's prima facie case remains 

extraordinarily strong.
 

Respondent has also failed to put forward any evidence contradicting Complaint 

Counsel's proof 
 that Respondent possesses monopoly power. The evidence presented in 

the second hearing demonstrates that 
 Daramic's coercive behavior in negotiations with 

Exide has not changed. Daramic's pattern of 
 punishing a customer who tries to do 

business with another supplier continues, just as it was before Daramic acquired 

Microporous. (See CCPTB at 49-63). The bare fact that Exide has asked repeatedly for 

~ ,l which Daramic 

has consistently refused, shows nothing but Daramic's power in this relationship. If 

Exide and other battery manufacturers only had a choice of another supplier - i.e., 

Microporous - they would have some power through competition, which is what the law 

is intended to promote. Finally, the supposed new evidence is related solely to 

automotive ("SLI") battery separators and has no bearing on the merger's resulting in a 

monopoly in flooded lead-acid battery separators for UPS, motive, and deep-cycle 

applications. This entire case and the entire proposed remedy, including the divestiture 

of both the Tennessee and Austrian facilities (both of which make primarily these other 

products) is not undermined by this baseless detour offered by Respondent. 

II. The Facts Do Not Support Any of 
 Respondent's Proffers 

The evidence demonstrates that each of 
 Respondent's four proffers is false. 

Respondent's first proffer states that 

(a )fter the close ofthe record, Exide decided to move ~ L its PE

separator purchases for ~ L to another supplier, and in the 

span ofless than three months, Exide has placed orders from Daramic in 

excess ~ L ofPE separators, all requested to be delivered 

2
 
by ~ J. This amount exceeds any reasonable forecast provided by
 

Exide, is inconsistent with past order patters an, based on Exide's 

~ J, amounts to approximately ~ n worth of
 

PE separator(s). Douglas Gilespie of Ex ide has admitted to Respondent 

that Exide's recent purchase orders equate to ~ n worth ofPE 

separator purchases from Daramic. 

Complaint Counsel has proven that this proffer is baseless. First, to this day Exide 

has not made any decision to move ~ J its PE separator2 purchases for ~ 

J to another supplier. (CCFOF irir 1252-1257, 1278-1280). Second, the 

evidence demonstrates that Exide provided Daramic with its plans to place these orders in 

April, before the first hearing in this matter even began and placed its first order in June, 

during the hearing on this matter, certainly not after the close of 
 the record as Respondent 

asserts. (CCFOF irir 1261-1266). Third, ~ 

J (CCFOF irir 1267, 1277). Fourth, 

despite Respondent assertion that the orders ~ 

J less than ~
 

J under its contract with Daramic. (CCFOF irir 1269, 

1271). Indeed, Exide informed Daramic on a number of occasions that it intended to 

~ J 

(CCFOF ir 1268). Fifth, these purchase orders are consistent with ~ 

.J (CCFOF irir 1273-1274). Sixth, the asserted ~ 'J
 

worth of PE separators is not based on ~ J but on Exide's past ~
 

.J (CCFOF ir 1260). Those ~ J occurred during the worst of 

2 The "PE separator purchases" discussed in Respondent's proffer are limited to SLI separators only. 

(CCFOF irir 1258- 1259). Daramic continues to be the sole supplier available to Exide for motive, UPS and 

deep-cycle separators. (CCFOF irir 1251, 1256-1257, 1340). 

3 
the recession and cannot reliably be used to predict the next ~ J. 

(CCFOF ir 1260). Seventh, Mr. Gilespie does not admit that Exide's recent purchase 

orders equate to ~ J worth ofPE separator purchases from Daramic, and in fact 

denies it. (CCFOF ir 1260). Respondent's only evidence to the contrary is its own selfserving and unreliable "state of mind." 

Respondent's second proffer is contradicted by the actual facts. This proffer 

states that 

(w)ith Exide's purchase orders for more than ~ J ofPE 

separators from Daramic, Exide does not intend to and wil not purchase any 

additional PE separators from Daramic in either ~ J.
 

Complaint Counsel has proven that this proffer is untrue. The evidence 

indisputably demonstrates that ~ 

.J (CCFOF irir 1252-1257, 1278-1280). Indeed, 

~ J 

(CCFOF irir 1281-1282). Ignoring the fact that ~ 

J (CCFOF irir 1256-1257). This proffer 

could only be true ifDaramic actually fills all of Ex ide's purchase orders in 2009 and the 

~ J are accurate (i.e. that Daramic actually supplies Exide with ~ J worth 

of separators by the end ofthe year). The evidence demonstrates that the ~ J 

used by Respondent understate Exide's ~ J and that
 

Daramic ~
 

J (CCFOF ir 1260; CCFOF 

irir 1283-1287). 

3 f 1 

4 
Respondent's third proffer is also contradicted by the actual facts. This proffer 

states that 

(i)n light ofExide's apparent decision not to purchase PE separators from 

Daramic in ~ J, Daramic wil likely have to ~
 

Complaint Counsel has proven that this proffer is without any basis. First, as discussed 

above, Exide has made no such decision. (CCFOF irir 1252-1259). Second, ~ 

.J4 

(CCFOF irir 1292-1308). In fact, Respondent's documents demonstrate that it wil ~ 

J (CCFOF irir 1304­

1306). Third, Respondent has been evaluating ~ J for more than a year, not 

just recently "in light ofExide's apparent decision." (CCFOF ir 1292). 

Respondent's final proffer is also contradicted by the actual facts. This proffer 

states that 

(i)fDaramic is able to retain any small amount of business from Exide in 

~ J, or thereafter, which appears unlikely, Daramic will only be able to

obtain such sales through a ~ J.
 

Complaint Counsel has also proven that this proffer is untrue. First, it appears likely that 

~ J in ~ J. (CCFOF irir 1252-1257, 

1278-1282, 1309-1311). Daramic anticipates a ~ 

J, and no probability that it wil have 

none. (CCFOF irir 1310). Second, ~ 

J and has no idea what such a ~ J would be. (CCFOF 

irir 1312-1315). Daramic has never offered a ~ J to Exide for anything ~
 

4 Respondent appears to use the terms "close" and "idle" interchangeably. However, Mr. Toth's deposition


testimony makes it clear that f 1 (PX5075 (Toth,

Dep. at 12), in camera). 

5 
J, which is currently ~ 

J (CCFOF irir 1316-1322, 1325; CCFOF irir 1326-1327). Third, Daramic has not 

offered a ~
 J on any amount of motive, UPS, or deep-cycle 

separators. (CCFOF irir 1321). 

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 transaction wil 

substantially lessen competition." Id. Upon such a showing, the burden shifts to 

Respondent to rebut the presumption with evidence that "'shows that the market-share 

statistics (give) an inaccurate account ofthe (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 

of 

Respondent's proffers and in fact contradict them. Respondent has failed to provide any 

facts that rebut Complaint Counsel's prima facie case. 

(D.D.C. 1997). As Complaint Counsel has demonstrated, the facts do not support any 


III. A Power-Buyer Argument Alone is not Suffcient Rebuttal to 

Complaint Counsel's Prima Facie Case 

No court has permitted an otherwise anti 
 competitive merger based solely on the 

presence of 
 powerful buyers.5 Chicago Bridge, makes this point clear, "courts have not 

considered the "sophisticated customer" argument as itself independently adequate to 

5 In Baker Hughes, along with accepting the district court's finding of 
 buyer power, the 

circuit court noted "compellng evidence on the ease of entry." 908 F.2d 981, 987. In 

Country Lake "Significant effciencies" were noted by the court as well as other 

"commercial realities" which defeated the government's primafacže case. 754 F. Supp. 

669,674-75. 

6 
rebut a prima facie case." 534 F.3d 410,440 (5th Cir. 2008). In evaluating the argument, 

the Fifth Circuit held that in a case where structural presumptions apply, "the economic 

argument for even partially rebutting a presumptive case, because the market is 

dominated by large buyers, is weak. Id. at 440. As the Court pointed out, "it would be 

inappropriate to give formal recognition to buyer concentration and related factors in the 

ordinary run of 
 merger cases." Id. at 440 (quoting 4 Philip E. Areeda & Herbert 

Hovenkamp, Antitrust Law: an Analysis of Antitrst Principles and their Application P 

943c (2nd Ed. 2000)). This must be the case where a merger results in a monopoly or 

duopoly. See Heinz, 246 F.3d at 724 n.23 ("(i)n a duopoly, a market with only two 

competitors, supracompetitive pricing at monopolistic levels is a danger.") 

A. The Power-Buyer Argument is Only Credited Where There are Other
 

Significant Factors that Alone Defeat the Government's Prima Facie 

Case 

In the rare cases where courts have entertained a "buyer power" argument, the 

courts have noted other significant factors, which would be relevant to a defense against 

the government's prima-facie case. In Archer-Daniels-Midland, the court highlighted the 

importance of 
 buyers' ability to switch orders among various alternative producers 

saying, 

Buyers continually play suppliers off against one another, cutting back or 

discontinuing purchases from sellers as a means of obtaining the lowest possible 

prices. As a result, purchaser-supplier relationships are highly unstable, with
 

suppliers, including ADM, frequently losing business, regaining it, and losing it 

again on price grounds-sometimes within the same quarter year. 

United States v. Archer-Daniels-Midland Co., 781 F. Supp. 1400, 1419 (S.D. Iowa 1991). 

What was critical in Archer-Daniels-Midland was the existence of 
 multiple supply 

alternatives. There simply are none here. The notion behind the "power buyer" theory,
 

7
 
as explained in the Merger Guidelines, is that in some cases, large buyers tie up the 

market with "long-term contracting" so that collusion by the sellers would be diffcult. 

Merger Guidelines § 2.12. That scenario does not apply here. Indeed, the evidence shows 

that ~
 J 

Similarly, in Baker Hughes, the DC circuit relied upon the findings of the district 

court regarding the buyer's sophistication and large order sizes, coupled with their ability 

to "closely examine available options" while "typically insist(ing) on multiple, 

confidential bids for each order," as convincing evidence of 
 bargaining power which 

would allow customers to resist anti 
 competitive price increases that might result from the 

merger. United States v. Baker Hughes Inc., 908 F.2d 981, 986-87 (D.C. Cir. 1990). 

In Country Lake, the court focused on two primary elements in approving the 

power-buyer argument: the sophistication ofthe buyers, and the existence of alternative 

fluid milk producers just outside ofthe relevant market. Unites States v. Country Lake 

Foods, Inc., 754 F. Supp. 669, 672-73 (D. Minn. 1990). Noteworthy was the testimony 

of five purchasers who asserted that in the event of a large price increase they would 

either aggressively negotiate a reduced price, or "seek a substitute or replacement 

supplier of 
 fluid milk" be they in or outside ofthe alleged geographic market. Id. at 673. 

Evidence was presented concerning the lack of entry barriers and the industry's 

recognition of 
 fluid milk producers' ability to cheaply and rapidly expand in order to 

supply milk to a new market. Id. at 672-74. The court held that the purchasers of fluid 

milk within the MSP/MSA 6 "could and would immediately challenge increases in fluid 

milk prices not related to normal market conditions, and could and would quickly seek 

6 Minneapolis-St. Paul Metropolitan Statistical Area 

8 
milk suppliers outside of the MSP/MSA if 
 their current suppliers attempted to increase 

their prices." Id. at 674. 

But the fundamental reason why the power-buyer factor has no relevance here is 

that Exide does not have market power itself. Exide has only a small part of the market 

and its position has been dropping significantly. (Siebert Tr. 5673, 5716, in camera; 

PX5076 (Seibert, Dep. at 24), in camera; Toth, Tr. 5737, in camera; RXOI726 at 004 

the previously announced transition of 

two accounts to competitors."). For the power-buyer factor to have any relevance, the 

alleged buyer must be very large or colluding with other very large buyers and there 

cannot be any other smaller buyers (like Bull Dog Battery, etc.); otherwise, the so-called 

power buyer may get a slightly better deal for itself, but the market wil stil have to pay 

(Exide's "lower aftermarket sales are the result of 


higher prices. United States v. United Tote, 768 F. Supp. 1064, 1085 (D. DeL. 1991) 

(Rejecting argument because it left smaller buyers "unprotected"). As the leading treatise 

explains, the "case for giving explicit recognition" to power buyers in a merger case "is 

weak." 4 Areeda & Hovenkamp, at ir 943b, and followed by Chicago Bridge, 534 F.3d at 

440. Indeed, "one cannot reason from the premise that the post-merger suppliers face 

highly concentrated and sophisticated buyers to the conclusion that monopoly pricing is 

impossible." Id. 

In any case, the evidence in this case is that Exide and certainly other customers 

lack the kind of 
 buyer power that the cases consider. The markets for flooded lead-acid 

battery separators are characterized by extremely limited alternative supply sources. In 

the SLI market, as a direct result of 
 the merger, there are but two suppliers, Daramic and 

9 
Entek. The prospect of shufflng suppliers and playing them "off against one another,,7 is 

meaningless in such a highly concentrated market with only two suppliers and high 

switching costs.8 This negates one of 
 the foundational requirements for effective buyer 

power-alternative sources of supply. Respondent has failed to show that Exide has ever 

had an ability to secure lower prices, let alone a history of 
 "consistently" being able to do 

so. 

The evidence on the stil on-going negotiations between Daramic and Exide 

provides very little useful information for Respondent's claims. Its efforts to characterize 

Exide's proposals mid counterproposals as "demands" fall flat since Daramic has not 

agreed to any ofthem. (CCFOF irir 1323-1324). Likewise, Daramic's ~ J
 

"concessions" are all conditioned on ~ J that Exide has 

communicated it is unwiling to accept. (CCFOF irir 1316-1320, 1325). The outcome of 

these negotiations is uncertain. 

Nevertheless, Daramic does not behave as one would expect ifExide truly was a 

power-buyer able to resist Daramic's market power. ~ 

.J (CCFOF irir 1283-1290, 1328-1333). For the orders that 

Daramic has accepted, it also ~ 

J (CCFOF irir 1337-1339). This 

J (RX01693 at 001, in camera October 20,2009 letter from Harry Siebert to 

Douglas Gilespie). Daramic is using the ~ J as a means of coercing a favorable 

7 An ability noted by the court in Archer-Daniels. 781 F. Supp. 1400, 1419

8 This is particularly true where the buyer ~ J 

10 
contract from Exide and locking up ~ 1 ofExide's business. As Mr. Seibert wrote, 

~" 

"J (RX01693 at 001, in camera). 

Daramic now ~
 

.J (CCFOF irir 1334-1336). ~ 

J ~
 

.J 

(CCFOF irir 1256-1257). As Mr. Gilespie testified, ~" 

"J (Gillespie, Tr.
 

5867, in camera). 

Despite all this evidence that ~ 

.J (CCFOF irir 1328-1331). Exide's "incremental" orders would seem to call for 

increased, rather than decreased production. ~ 

J 

suggests that Exide holds no power over Daramic at alL. 

11 
These facts do not present a picture ofthe type of relationship that courts have 

viewed as dominated by the purchaser. It is clear from the evidence that Daramic 

continues to wield far greater power. 

In the markets for motive, UPS, and deep-cycle separators, after the acquisition of 

Microporous, ~
 

J (CCFOF irir 1256-1257). ~ 

.J Id.
 

Therefore, under any reasonable reading ofthe law, the power buyer argument is 

meritless in the North American, flooded lead-acid battery separator markets. 

iv. Events and Evidence Subject to Respondent's Manipulation are
 

Entitled to Little or No Weight 

The events and evidence presented in this hearing are subject to manipulation by 

Respondent. "Post-acquisition evidence that is subject to manipulation by the part 

seeking to use it is entitled to little or no weight." In re Chi. Bridge & Iron Co. N v., 139 

F.T.C. 553, 583 n.97 (F.T.C. 2005) United States v. General Dynamics Corp., 415 U.S. 

486, 504-05 (1974) ("If a demonstration that no anti 
 competitive effects had occurred at 

the time oftrial . . . constituted a permissible defense to a §7 divestiture suit, violators 

could stave off such actions merely by refraining from aggressive or anticompetitive 

behavior."); Hospital Corp. of America v. FTC, 807 F.2d 1381, 1384 (7th Cir. 1986) 

("Post-acquisition evidence that is subject to manipulation by the part seeking to use it is 

entitled to little or no weight."); B.F. Goodrich Co., 110 F.T.C. 207,341 (1988) (same). 

See also FTC v. Consolidated Foods Corp., 380 U.S. 592, 598 (1965) (finding that the 

court of appeals gave too much weight to post-acquisition evidence that, among other 

things, showed a declining share). 

12 
Daramic is involved in a negotiation with Exide. Daramic is able to take any position in 

that negotiation that it believes wil be beneficial to the outcome ofthis proceeding. Daramic 

can also manipulate other events. For example, Mr. Seibert testified at 12:51 pm at the offices of 

Parker Poe on October 27 that he had ~ 

the deposition, after a 

lengthy break and under redirect, Mr. Seibert testified that Daramic had "~ 

.) (CCFOF ir 1346). At the end of 


)" 

(CCFOF ir 1346). When Respondent produced its exhibits to Complaint Counsel it included 

RX01719, a letter from Tucker Roe, dated October 27,2009, the same date as Mr. Seibert's

deposition, to ~ ). (CCFOF ir
 

1347). The timing ofthis letter, in view of 
 Mr. Seibert changing his testimony that day is 

extraordinarily suspicious.
 

Just as RX1719 is suspicious, all ofthe post-transaction, post-hearing "new" evidence 

proffered by Respondent cannot be trusted because it is subject to manipulation by Respondent. 

This is particularly true of documents created after Respondent decided to move this Court for a 

second hearing on or before September 25,2009. This is because Respondent can write any selfserving statement it believes might be helpful to it in this litigation in its correspondence or its 

documents. See e.g. RX01707 at 003, in camera (example of 
 unlikely internal PowerPoint 

presentation: "~ )").
 

Respondent has produced a large number of documents for this second hearing that appear 

to have been created for the purpose ofthis, or subsequent, litigation with Exide. See e.g. 

RX01679, in camera ~ 

13 
1; Many of these documents appear to 

have been generated from Daramic's AFS database on October 9 (after the reopening of 

the Hearing Record) rather than something that would normally exist in the ordinary 

course of 
 business. Such post-transaction documents were likely created for the purpose 

ofthis litigation, are subject to manipulation by Respondent, and should be entitled to 

little, if any, weight. 

V. Attempted Monopolization
 

The evidence introduced at the hearing on November 12,2009 confirms that 

Daramic has violated Section 5 ofthe FTC Act by attempting to monopolize the North 

American SLI market. The purported "facts" proffered by Respondent are false. (See 

Section II, above.). The post trial evidence demonstrates that Daramic continues to 

exercise market power that it achieved through the merger and its exclusionary conduct. 

The Complaint alleges, among other things, that prior to the acquisition of 

Microporous, "Daramic attempted through anti 
 competitive means to maintain monopoly 

power against a challenge from Microporous" in four relevant markets in North America. 

(Complaint ir 39). Only one ofthose markets - the automotive battery separator marketwas addressed by Respondent at the November hearing. (Seibert, Tr. 5667, in camera 

H 

14 
Hand 5701, in camera; RX01679 at 001, in camera H 

)); Gilespie, Tr. 5791, 5795, 5807; in 

camera). No new information was proffered or presented by Respondent to show that 

Daramic lacks monopoly power in the North American markets for flooded lead-acid 

battery separators for UPS, motive and deep-cycle applications, particularly since the 

acquisition of Micro porous. There simply are not any other suppliers for these products 

in North America. Furthermore, evidence concerning Daramic's prior anticompetitive 

activities - including the acquisition itself - was not at issue in the second hearing, which 

was "strictly limited to the proffered evidence" enumerated in the Court's Order of 

October 15,2009. (See Order Denying Complaint Counsel's Motion to Compel 

Discovery Responses, October 22, 2009). 

~ 

) (Gilespie, Tr. 5855, H 

)), in camera; see also Gilespie, Tr. 5823, 5829, in camera; 

CCFOF irir 1256, 1321, 1340). After the acquisition of Micro porous, no competition 

remains in these three markets. (See CCPTB at 14-16, 19,21-24). Moreover, since the 

first hearing concluded, Daramic' s coercive behavior in negotiations with Exide has not 

changed. Daramic stil seeks to coerce Exide to purchase at least ~ ) of
 

its PE separators from Daramic. (Gilespie, Tr. 5801, 5803, 5805, 5821-5823, in camera; 

PX5076 (Seibert, Dep. at 71-72), in camera). Thus, the pattern of 
 punishing any 

customer who tries to do business with another supplier continues, just as it was before 

Daramic acquired Microporous. (See CCPTB at 49-63). 

15 
At the hearing in May and June, Complaint Counsel established each element of 

the attempted monopolization offense in the SLI market: (1) Daramic possesses 

monopoly power; and (2) has engaged in anti 
 competitive conduct with (3) a specific 

intent to monopolize, and (4) a dangerous probability of success. (See Lorain Journal 

Co. v. United States, 342 U.S. 143, 153-54 (1951)). The evidence at the second hearing 

again shows that Daramic has engaged in conduct with the purpose and likelihood of 

maintaining monopoly power in the North American SLI market. 

Respondent asserts that after the first hearing, ~ 

) (Respondent's October 7,2009 Reply Memorandum at 2, in camera). The 

legal conclusion Respondent would have the Court draw from these purported facts is 

that "Daramic does not have market power." (Id.). Respondent, however, failed to prove 

what it promised. 

Respondent put forward no evidence showing what its share ofthe North 

American SLI market was in 2009, or whether its share has changed at all since the first 

hearing (or even since the beginning of this year). The self-serving testimony of Mr. 

Seibert that ~ ) does not address whether
 

Daramic's share ofthe SLI market has changed. (Seibert, Tr. 5648, 5660, in camera). If 

anything,. this testimony, coupled with the evidence that ~ 

) indicates that 

16 
Daramic's 2009 market share is growing. (Gilespie, Tr. 5798, in camera; CCFOF irir 1261­

1262, 1265-1266, 1332-1333).
 

In his closing argument, Respondent's counsel stated that ~ 

) (Welsh, Tr. 5881, in camera). This 

empty speculation, of course, is disproven by Daramic's internal planning documents and the 

testimony of its own witnesses. (See CCFOF irir 1309,1311). Even if this unfounded claim were 

true, however, it would have no bearing on the determination of 
 whether Respondent violated the 

prohibition against attempted monopolization in 2009 or before. (See, e.g., HDC Medical, Inc. v. 

Minntech Corp., 474 F.3d 543,550 (finder of fact looks to defendant's market share at the time 

the challenged conduct occurred in assessing dangerous probability of 
 success); Taylor Pub. Co. 

v. Jostens, Inc., 216 F.3d 465 (5th Cir. 2000) (outcome of challenged conduct is not dispositive; 

rather, court examines likelihood that monopoly would be created, measured from the time the 

conduct occurred)). 

Not surprisingly, Daramic's conduct with respect to Exide during 2009 is similar to its 

behavior in 2007, when ~ 

). (CCFOF irir 1064-1065; see generally CCFOF irir 

1059-1078). First, ~ 

) (Gilespie,
 

Tr. 5798-5799, in camera). Moreover, ~ 

.) (Gilespie, Tr. 5799, in
 

camera). Second, in October 2009, Daramic's General Counsel, Mr. Bryson, ~ 

17 
) (Gilespie, Tr. 5817-5818, in camera; CCFOF irir 1341-1342). The 

threat is real; ~
 ) 

(CCFOF irir 1334-1336). Third, ~ 

) (CCFOF irir 1338-1339). 

A supplier that threatens to reduce output and withhold supply from a customer 

unless that customer agrees to purchase a particular volume of its future requirements 

from that supplier would be acting irrationally in a competitive market. Daramic's tactics 

would appear all the more irrational, because ~ 

.) (CCFOF irir 1334-1336; 1326). 

What makes Daramic's actions rational, and plainly anticompetitive, is its possession of 

substantial market power. (See, e.g., United States v. Microsoft Corp., 65 F. Supp. 2d 1, 

18 (D.D.C. 1999), aff'd253 F.3d 34,57-58 (D.C. Cir.); see also Areeda ir 807b3, ("(I)n 

the absence of power, the only payoffto the refusal to deal would have been loss of 

customers."). 

Perhaps even more telling is Daramic's failure to provide evidence that its 

contract negotiations ~
 

.) 

(Seibert, Tr. 5648-5649, 5662-5664, 5703, 5705-5706, in camera; Gilespie, Tr. 5814­

5815,5865-5866, in camera; RX01667 at 002, in camera (f 

18 
J). Even Mr. Toth admitted that, 

after a lengthy recital concerning ~ 

) (Toth, Tr. 5754-5759, in camera).
 

As noted above, Daramic predicts that it has a ~ 

.) (CCFOF ir 

1305). The company's posturing during negotiations with Exide, and the self-serving 

testimony of its executives at the second hearing, cannot overcome this objective 

evidence ofDaramic's market power. Daramic's conduct in 2009 toward Exide is 

evidence of its monopoly power in the North American SLI market, and together with the 

evidence of its anticompetitive actions at the first hearing, has created the dangerous 

probability that its monopoly power wil continue. (CCFOF irir 1330-1331). A strong 

likelihood of durable monopoly power exists ifDaramic's conduct is not enjoined. The 

market in question is characterized by high entry barriers (CCPTB at 34-41; CCFOF irir 

817-888,905,909-917, 935-945, 960-965, 991-1036). Daramic's refusal to offer to 

~ ) is dramatic evidence of 
 Respondent's

monopoly power in this market. (CCFOF irir 1254-1255). 

VI. Conclusion
 

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

trial and the second hearing in this matter, Daramic's acquisition of 
 Micro porous and its 

19 
anti-competitive conduct are ilegaL. The public deserves a complete remedy to restore 

competition and prevent further harm to competition. 

Dated: December 1,2009 Respectfully submitted, 

~ 

J. R BERT ROBERTSON 

Fed ral Trade Commission 

Bureau of Competition 

600 Pennsylvania Ave., N.W. 

Washington, DC 20580 

Telephone: (202) 326-2008 

Fax:(202)326-2884 

20
 
CERTIFICATE OF SERVICE 

I hereby certify that on December 1,2009, I filed via hand delivery an original 

and two copies of the foregoing public version of 
 Complaint Counsel's Post-Trial Brief 

on the Reopened Record 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 December 1,2009, I served via electronic mail and hand 

delivery two copies of the foregoing public version of Complaint Counsel's Post-Trial 

Brief on the Reopened Record with: 

The Honorable D. Michael Chappell 

Administrative Law Judge 

Federal Trade Commission 

600 Pennsylvana Avenue, NW, H-I06 

Washington, DC 20580 

oali~ftc.gov 

I hereby certify that on December 1,2009, I served via electronic mail delivery 

and first class mail two copies of the foregoing public version of 
 Complaint Counsel's 

Brief on the Reopened Record with: 

Wiliam L. Rikard, Jr., Esq. 

Eric D. Welsh, Esq. 

Parker, Poe, Adams & Bernstein, LLP 

401 South Tryon Street, Suite 3000 

Charlotte, North Carolina 28202 

wiliamrikard~parkerpoe.com 

ericwelsh~parkerpoe.com 

Linda Cuningham 

Federal Trade Commissi n 

600 Pennsylvana A venu , 

Washington, DC 20580 

Telephone: (202) 326-2638 

lcunningham~ftc.gov