No. 14-11363 

IN THE UNITED STATES COURT OF APPEALS 

FOR THE ELEVENTH CIRCUIT 

______________________________

MCWANE, INC.,

Petitioner,

v.

FEDERAL TRADE COMMISSION,

Respondent.

______________________________

On Petition for Review of an Order

of the Federal Trade Commission, 

FTC Docket No. 9351 

_____________________________________

FEDERAL TRADE COMMISSION’S BRIEF 

ON SEALED RECORD MATERIALS

______________________________

JONATHAN E. NUECHTERLEIN

 General Counsel 

JOEL MARCUS

 Director of Litigation 

THEODORE (JACK) METZLER

 Attorney 

Office of the General Counsel 

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue NW 

Washington, D.C. 20580 

(202) 326-3502 (telephone) 

(202) 326-2477 (facsimile) 

tmetzler@ftc.gov

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At oral argument, the Court asked the parties to submit briefs addressing 

whether sealed materials in the record should continue to remain under seal.1

 The 

Court asked the parties specifically to address whether information falling into the 

following categories should remain sealed: 

1. The market shares of McWane, Inc. and Star Pipe Products in the 

domestic-only fittings market; 

2. The price differences between McWane’s fittings for domestic-only 

projects and for other projects; 

3. McWane’s profits; 

4. Star’s estimate of the cost of acquiring a foundry; 

5. Star’s estimate of the sales levels necessary to justify a foundry; and 

1

 McWane’s contemporaneous brief appears to use this supplemental briefing 

round as an opportunity to rebrief the merits of this case. The Commission does 

not take a similar view of the Court’s request for further briefing but will respond 

to McWane's new factual arguments, which are meritless, if the Court so requests. 

The Commission does wish to stress, however, that McWane’s proposed legal 

standard for judging anticompetitive effects (see Supp. Br. 2-3) is misconceived. 

The cases that McWane cites for its standard are not monopolization cases brought 

under Section 2 of the Sherman Act; they are instead cases involving concerted 

action cognizable under Section 1. As we have previously explained (see FTC Br. 

46-49, 54-57), a plaintiff in a monopoly-maintenance case, as opposed to a plaintiff 

in cases involving more competitive markets, need only show that the “defendant 

has engaged in anticompetitive conduct that reasonably appear[s] capable of 

making a significant contribution to maintaining monopoly power.” United States 

v. Microsoft, 253 F.3d 34, 79 (D.C. Cir. 2001) (en banc) (internal quotation marks 

and ellipsis omitted). To prove liability (as distinguished from damages) in such 

cases, the plaintiff bears no burden of proving that the conduct caused specific 

harm that would have been absent in the but-for world, and “the defendant is made 

to suffer the uncertain consequences of its own undesirable conduct.” Id. at 79 

(internal quotation marks omitted). 

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6. Star’s estimate of the cost to produce domestic fittings at its own 

foundry. 

The court also asked the parties to address more generally whether the other sealed 

record materials must remain so. 

As explained below, the Commission does not believe information in any of 

the categories identified above need remain under seal; however, certain other 

information that was redacted in the Commission’s brief or in its underlying 

opinion should remain sealed. In addition, other sealed parts of the record should 

remain sealed unless the party that submitted the information is first given the 

opportunity to oppose its disclosure. 

LEGAL STANDARD 

The FTC Act directs the Commission “to prevent . . . unfair methods of 

competition in commerce and unfair or deceptive acts or practices in commerce.” 

15 U.S.C. 45(a). The Act likewise gives the Commission a “broad power of 

investigation and subpoena” to further that mission by gathering information on the 

activities of companies and individuals engaged in commerce. Automatic Canteen 

Co. v. FTC, 346 U.S. 61, 79 (1953); see 15 U.S.C. §§ 46, 49, 57b-1. By necessity, 

the Commission regularly receives confidential and competitively sensitive 

commercial information in the course of its investigations. To encourage parties to 

cooperate in those investigations and to protect the interests of such parties, the Act 

prohibits the Commission from publicly disclosing various categories of 

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confidential information, subject to limited exceptions. See, e.g., 15 U.S.C. 

§§ 46(f), 57b-2. 

For example, the Commission generally may not disclose documents and 

testimony obtained through compulsory process. 15 U.S.C. § 57b-2(b)(3)(C).

Information that is provided voluntarily in lieu of compulsory process is likewise 

protected from disclosure.2 Id.; National Education Ass’n v. FTC, 1983 U.S. Dist. 

LEXIS 13434 (D. Mass. Sept. 26, 1983). The Commission seeks to preserve its 

ability to conduct investigations by, as appropriate, defending the confidentiality of 

sensitive information from requests for public disclosure. See, e.g., In re Air 

Passenger Computer Reservation Systems Antitrust Litig., 116 F.R.D. 390, 392 

(C.D. Cal. 1986); United States v. AT&T Co., 86 F.R.D. 603, 647 (D.D.C. 1979).

However, the Act “specifically limits the confidentiality provisions so that 

they apply only to the agency.” Brown & Williamson Tobacco Corp. v. FTC, 710 

F.2d 1165, 1180 (6th Cir. 1983). “Any disclosure of relevant and material 

information in . . . judicial proceedings to which the Commission is a party shall be 

governed by . . . court rules or orders.” 15 U.S.C. § 57b-2(d)(2). Finally, the 

Commission’s regulations permit the disclosure of confidential materials in an 

2

 In this case, the record materials at issue were sealed under the administrative law 

judge’s protective order. FTC Admin. Docket No. 3 (Jan. 5, 2012); see also 16 

C.F.R. § 3.31(d) (governing the designation and treatment of confidential material 

in agency adjudications). The administrative law judge, the parties, and the 

Commission maintained the confidentiality of those materials by submitting briefs 

and issuing opinions under seal and by preparing redacted versions for the public. 

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administrative or judicial proceeding so long as the party that originally submitted 

those materials first is “afforded an opportunity to seek an appropriate protective or 

in camera order.” 16 C.F.R. § 4.10(g).

DISCUSSION 

A. None of the Information Specifically Identified by the Court Need 

Remain Under Seal. 

After argument, the Commission informed Star of the Court’s request for 

briefing and gave Star the opportunity to object to the release of sealed information 

that it had submitted to the FTC. Given Star’s response (attached to this brief as 

Exhibit 1), there is no legal impediment to unsealing any of the six categories of 

information specifically enumerated by the Court, absent objection from McWane 

itself.

1. The market shares of McWane and Star in the domestic-only fittings 

market

The FTC’s brief (at 14) states three relevant types of market-share figures: 

Star’s shares of (1) all fittings sold into all U.S. projects (both domestic and open 

specifications); (2) fittings sold into projects with open specifications; and (3) 

fittings sold into projects with domestic-only specifications. Star objected only to 

disclosure of figures in the first and second categories (and even then, only if 

McWane’s share is not also disclosed). Star did not object to release of the 

information the Court specifically asked about: Star’s shares in 2010 and 2011 of 

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the domestic-only market. Accordingly, there is no need for these figures to 

remain sealed.

2. The price differential between McWane’s fittings sold into domesticspecification vs. open-specification projects 

The administrative law judge’s opinion found (at ¶ 1076) that McWane’s 

price multipliers for fittings in domestic-only projects were 21%-96% higher than 

those for physically identical fittings sold for projects with open specifications. 

That information, while redacted in the Commission’s brief, is thus already a part 

of the public record, and there is no reason to redact it from any judicial decision. 

3. McWane’s profits 

The Commission found (Op. 16-18) that McWane possessed monopoly 

power throughout the relevant period. The evidence of that monopoly power 

included the wide (and widening) gap between McWane’s profits on fittings for 

domestic-only projects and its profits on fittings for open-specification projects, 

which faced greater competition. See Op. 18 (citing ALJ ¶ 1091); FTC Br. 30-31.

Unless McWane itself objects, there is no impediment to unsealing the specific 

profitability figures. See p. 3, supra; 16 C.F.R. § 4.10(g).

4. Star’s estimate of the cost of acquiring a foundry; 

5. Star’s estimate of the sales levels necessary to justify a foundry; and 

6. Star’s estimate of the cost to produce domestic fittings at its own 

foundry

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In its response to the Commission’s letter, Star did not object to the 

disclosure of sealed information related to these topics, nor did it identify any 

redacted information in these categories that it believed should remain sealed. 

Accordingly, there is no reason the information must remain under seal. 

B. Certain Other Redacted Information Should Remain Sealed. 

Both the Commission’s opinion and its brief include redacted information 

beyond the categories specifically enumerated by the Court. Star does object to 

public disclosure of some of that information. 

First, Star objects to disclosure of the redacted information on pages 35 and 

41 of the Commission’s brief, which quantifies Star’s relationship with the 

industry’s largest distributor: HD Supply. Star’s share of HD Supply’s business 

for projects with domestic-only specifications was extremely small compared to 

Star’s share of HD Supply’s business for projects with open specifications. Star is 

concerned that public disclosure of these two sales numbers could provide an 

unfair commercial advantage to its competitors. The Court may nonetheless wish 

to discuss the large discrepancy between these numbers. That discrepancy 

confirms that, after McWane announced its exclusivity mandate, this leading 

distributor not only canceled pending orders with Star (see FTC Br. 35), but 

thereafter refused to do substantial business with Star in the domestic-only market, 

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specifications market. The FTC suggests that the Court balance Star’s 

confidentiality interest against the public’s interest in access to the material facts of 

this case by addressing the HD Supply evidence in qualitative rather than 

quantitative terms. 

Star likewise objects to the disclosure of (1) its shares of non-domestic-only 

fittings sales (as noted above); (2) its profitability in 2009, 2010, or 2011 (p. 10 of 

the Commission’s order); and (3) its sales to the distributor Hajoca (p. 11 of the 

Commission’s order). The Commission agrees that these categories of information 

are competitively sensitive and should not be disclosed. Thus, insofar as the Court 

addresses these issues, it should address them in non-quantitative terms. 

Lastly, to the extent that the Court wishes to include any other currently 

sealed material in its opinion, it should first give the party that originally submitted 

this material an opportunity to seek an appropriate order limiting its disclosure. 

The FTC is willing to facilitate that process by contacting the relevant party upon 

request by the Court.

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Respectfully submitted, 

JONATHAN E. NUECHTERLEIN

 General Counsel 

JOEL MARCUS

 Director of Litigation 

Dated: February 17, 2014 /s/ Theodore (Jack) Metzler 

THEODORE (JACK) METZLER

Attorney

Office of the General Counsel 

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue NW 

Washington, D.C. 20580 

(202) 326-3502 (telephone) 

(202) 326-2477 (facsimile) 

tmetzler@ftc.gov

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EXHIBIT 1 

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CERTIFICATE OF SERVICE 

I hereby certify that on February 17, 2015 I filed the foregoing with the 

Court’s appellate CM-ECF system, and that I caused the foregoing to be served 

through the CM-ECF system on counsel of record for petitioner, who are registered 

ECF users. 

/s/ Theodore (Jack) Metzler 

Theodore (Jack) Metzler 

Attorney

Office of the General Counsel 

Federal Trade Commission 

600 Pennsylvania Ave. N.W. 

Washington, D.C. 20580 

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