UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSI 

COMMISSIONERS: Joseph J. Simons, Chairman 

Noah Joshua Phillips 

Rohit Chopra 

Rebecca Kelly Slaughter 

Christine S. Wilson 

In the Matter of 

RA G-Stiftung, 

Evonik Industries AG, 

Evonik Corporation, 

Evonik International Holding B.V., 

One Equity Partners Secondary Fund, Docket No. 9384 L.P., 

One Equity Partners V, L.P., 

Lexington Capital Partners VII (AIV I), 

L.P., 

PeroxyChem Holding Company LLC, 

PeroxyChem Holdings, L.P ., 

PeroxyChem Holdings LLC, 

PeroxyChem LLC 

and 

PeroxyChem Cooperatief U .A. 

RESPONDENTS' MOTION TO THE COMMISSION TO 

WITHDRAW MATTER FROM ADJUDICATION 

Respondents RAG-Stiftung, Evonik Industries AG, Evonik Cmporation, and 

Evonik International Holding B.V. ("Evonik"); and Respondents One Equity Prui ners 

Secondruy Fund, L.P. and One Equity Prui ners V, L.P., Lexington Capital Pruiners 
PUBLIC 

VI(AIV I), L.P., and PeroxyChem Holding Company LLC, PeroxyChem Holdings, L.P., 

PeroxyChem Holdings LLC, PeroxyChem LLC, and PeroxyChem Cooperatief U.A., 

(“PeroxyChem”), (collectively, “Respondents”), move to withdraw the above-captioned 

matter from adjudication pursuant to Rule 3.26(c). 

On January 24, 2020, the district court for the District of Columbia denied the 

Federal Trade Commission’s (“Commission”) motion for a preliminary injunction 

pending adjudication of the administrative proceeding in this matter. Trial in the 

administrative proceeding is set to begin on March 11, 2020. Withdrawal of this matter is 

required under Rule 3.26(c) because: (i) the Commission has not filed any motion for 

relief pending appeal with a court of appeals; (ii) more than seven days have passed 

following the district court’s denial of the preliminary injunction; and (iii) Respondents 

have timely filed this motion under Rules 3.26(b)(1) and 3.26(c). 16 C.F.R. 

§§ 3.26(b)(1), 3.26(c). 

This motion is based on the concurrently filed memorandum, and Respondents 

have also submitted a proposed order. 

Dated: February 7, 2020 

Respectfully submitted,

By: /s/ Eric Mahr 

Eric Mahr (D.C. Bar No. 459350)

Andrew J. Ewalt (D.C. Bar No. 493433)

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FRESHFIELDS BRUCKHAUS 

DERINGER US LLP

700 13th Street, NW, 10th Fl.

Washington, DC 20005

Tel: (202) 777-4500

Fax: (202) 777-4555

E-mail: eric.mahr@freshfields.com

E-mail: andrew.ewalt@freshfields.com

Attorneys of Record for Respondents 

RAG-Stiftung, Evonik Industries AG, 

Evonik Corporation, and 

Evonik International Holding B.V.

By: /s/ Mike G. Cowie 

Mike G. Cowie (D.C. Bar No. 432338)

James A. Fishkin (D.C. Bar No. 478958)

Shari Ross Lahlou (D.C. Bar No. 476630)

DECHERT LLP

1900 K Street, NW 

Washington, DC 20006 

Tel: (202) 261-3300

Fax: (202) 261-3333

E-mail: mike.cowie@dechert.com

E-mail: james.fishkin@dechert.com

E-mail: shari.lahlou@dechert.com

Attorneys of Record for Respondents One 

Equity Partners Secondary Fund, L.P., One 

Equity Partners V, L.P., Lexington Capital 

Partners VII (AIV I), L.P., PeroxyChem 

Holding Company LLC, PeroxyChem 

Holdings L.P., PeroxyChem Holdings LLC, 

PeroxyChem LLC, and PeroxyChem 

Cooperatief U.A.

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UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

In the Matter of 

RAG-Stiftung, 

Evonik Industries AG, 

Evonik Corporation, 

Evonik International Holding B.V., 

One Equity Partners Secondary Fund, 

L.P., Docket No. 9384 

One Equity Partners V, L.P., 

Lexington Capital Partners VII (AIV I), 

L.P., 

PeroxyChem Holding Company LLC, 

PeroxyChem Holdings, L.P., 

PeroxyChem Holdings LLC, 

PeroxyChem LLC 

and 

PeroxyChem Cooperatief U.A. 

MEMORANDUM IN SUPPORT OF RESPONDENTS’ MOTION 

TO THE COMMISSION TO WITHDRAW MATTER FROM ADJUDICATION 

Respondents RAG-Stiftung, Evonik Industries AG, Evonik Corporation, and 

Evonik International Holding B.V. (“Evonik”); and Respondents One Equity Partners 

Secondary Fund, L.P. and One Equity Partners V, L.P., Lexington Capital Partners VIII 

(AIV I), L.P., and PeroxyChem Holding Company LLC, PeroxyChem Holdings, L.P., 
PUBLIC 

PeroxyChem Holdings LLC, PeroxyChem LLC, and PeroxyChem Cooperatief U.A., 

(“PeroxyChem”), (collectively, “Respondents”), submit this memorandum in support of 

their motion to withdraw this matter from adjudication pursuant to Rule 3.26(c). 

Under Rule 3.26(c), the Secretary of the Commission “shall issue an order 

withdrawing the matter from adjudication 2 days after” a motion is filed by Respondents. 

16 C.F.R. § 3.26(c). Withdrawal from adjudication is automatic upon a timely filed 

motion. Id. This motion is timely under Rule 3.26(b)(1) because: (i) the district court 

denied the Federal Trade Commission (“Commission”) motion for a preliminary 

injunction pending adjudication of this administrative proceeding on January 24, 2020; 

(ii) more than seven days have passed following the district court’s denial of the 

preliminary injunction, and the Commission has not filed any motion for relief pending 

appeal with a court of appeals; and (iii) no more than fourteen days have passed 

following the district court’s denial of the preliminary injunction. 16 C.F.R. § 3.26(b)(1). 

The district court issued a thorough and fact-intensive 64-page opinion based on a 

voluminous record, including an evidentiary hearing that spanned two weeks and 

extensive pre- and post-trial briefing by the parties. During the evidentiary hearing, the 

court received hundreds of exhibits and heard testimony from twenty fact witnesses and 

two expert witnesses. Based on this extensive record, the district court denied the 

Commission’s motion for a preliminary injunction and concluded that the Commission 

was not likely to prevail during an administrative proceeding in showing that Evonik’s 

acquisition of PeroxyChem likely would substantially harm competition. 

The Commission has recognized that dismissing parallel administrative merger 

litigation is warranted when a district court has denied a preliminary injunction motion. 

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In light of the district court’s detailed decision, all five factors that the Commission 

considers in deciding whether to continue an administrative proceeding following denial 

of a preliminary injunction weigh in favor of terminating the present case. The district 

court’s decision was based on an extensive evidentiary record and shows that it is very 

unlikely that the Commission would succeed on the merits in an administrative 

proceeding. The opinion was supported by extensive factual findings and numerous 

citations to the record. Moreover, no new evidence would be available to inform an 

administrative hearing as discovery in the administrative proceeding mirrored that in the 

district court litigation and has long been closed. In addition, an administrative hearing 

would be extremely time consuming, costly, and a burden on the Commission’s and 

third-party resources. Lastly, Evonik has closed its acquisition of PeroxyChem and 

begun to integrate the two businesses. Evonik also will shortly be closing its divestiture 

of PeroxyChem’s Prince George plant in the Commission’s alleged Pacific Northwest 

market. As a result, in the unlikely event it would be necessary, fashioning any effective 

remedy would be impracticable. 

For these reasons, Respondents respectfully request that the Commission not only 

withdraw this matter from adjudication as required under Rule 3.26(c), but also exercise 

its discretion to dismiss the proceedings. 

BACKGROUND 

On November 7, 2018, Evonik, a specialty chemicals company, entered into an 

agreement to acquire PeroxyChem, a manufacturer of hydrogen peroxide and related 

chemical products. On August 2, 2019, the Commission filed both an administrative 

complaint and a nearly identical preliminary injunction action seeking to prevent 

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Evonik’s acquisition of PeroxyChem. In both actions, the Commission alleged the same 

relevant product market, “hydrogen peroxide...[except] electronics grade,” and 

geographic markets, the “Pacific Northwest” and the “Southern and Central United 

States.”1

On August 11, 2019, Evonik entered into a divestiture agreement to sell 

PeroxyChem’s Prince George plant and all related assets to United Initiators. United 

Initiators is a leading global supplier of specialty chemicals. The Prince George plant is 

PeroxyChem’s only plant in the alleged Pacific Northwest market. On January 13, 2020, 

the Canadian Competition Bureau (“CCB”) entered into a consent agreement with Evonik 

approving the divestiture to United Initiators, concluding it would prevent a substantial 

lessening of competition from Evonik’s acquisition of PeroxyChem in Canada. 

On January 24, 2020, following extensive discovery, pre-trial briefing, and a twoweek evidentiary hearing during which twenty-two witnesses testified, the district court 

denied the Commission’s motion for a preliminary injunction in a 64-page opinion 

(“Opinion”).2

 The Opinion was detailed and grounded in substantial evidence supported 

by numerous citations to the record. The court found: (i) that the evidence did not 

support the Commission’s alleged product market, Opinion at 24, (ii) that the proposed 

divestiture of the Prince George plant to United Initiators resolves any anticompetitive 

effects in the Commission’s alleged Pacific Northwest geographic market, Opinion at 32; 

(iii) that the evidence did not support the Commission’s alleged relevant geographic 

markets even for the only relevant product markets supported by the record, Opinion at 

 

1 FTC v. Rag-Stiftung et al., Dkt. No. 1 at 10–11, 1:19-CV-02337 (TJK) (D.D.C.); In 

the Matter of Evonik/PeroxyChem, FTC Dkt. No. 9384, at 5–6 (Aug. 2, 2019). 

2 FTC v. Rag-Stiftung et al., Dkt. No. 150, 1:19-CV-02337 (TJK) (D.D.C.). A copy of 

the redacted, public version of the district court’s opinion is attached as Exhibit A. 

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42; (iv) that the evidence did not support a finding of undue concentration in any alleged 

or alternative product and geographic market that could properly be defined, Opinion at 

43; and (v) that the Respondents had in any event presented substantial rebuttal evidence 

and the Commission had not otherwise shown that the merger would likely substantially 

harm competition, Opinion at 46–47. 

Following the district court decision, the Commission elected not to file a motion 

for an emergency injunction or any other relief pending appeal within the seven days 

contemplated by Commission Rules of Practice 3.26. See 16 C.F.R. § 3.26. With no 

impediment to closing, Respondents completed Evonik’s acquisition of PeroxyChem on 

February 3, 2020, and have begun integration. Respondents now timely file this motion 

within fourteen days of the district court’s decision. See 16 C.F.R. §§ 3.26(b)(1), 3.26(c). 

ARGUMENT 

Long-standing Commission policy has been that when a district court denies a 

Commission motion for a preliminary injunction pending an administrative challenge to a 

merger, “the determination to continue a merger challenge in administrative litigation is 

not, and cannot be, either automatic or indiscriminate.” FTC Admin. Litig. Following the 

Denial of a Preliminary Injunction: Policy Statement, 60 Fed. Reg. 39741, 39742 (Aug. 

3, 1995) (the “Policy Statement”). Chairman Simons recently confirmed in a written 

statement before the Senate Judiciary Committee that “if the FTC is denied a preliminary 

injunction in a merger matter, [he does] not believe the Commission should pursue that 

matter in administrative litigation.”3

 This view is shared by former Commissioners, a 

 

3

 Senate Committee on the Judiciary “Oversight of the Enforcement of the Antitrust 

Laws,” Questions for Joseph Simons, Chairman, Federal Trade Commission at 5 

(October 3, 2018), 

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wide-range of policymakers, and antitrust academics and practitioners.4 Indeed, “[t]he 

Commission has not pursued an administrative proceeding following the denial of a 

preliminary injunction in federal court for over twenty years.”5

 Terminating the 

administrative proceedings may be appropriate even where the Commission “still ha[s] 

reason to believe that [the acquisition in question] is likely to have anticompetitive 

effects.” Statement of the Commission, In the Matter of Steris Corporation and Synergy 

Health PLC, FTC Dkt. No. 9365, at 1 (Oct. 30, 2015); see also Statement of 

Commissioners Leibowitz, Kovacic, and Ramirez, In the Matter of Lab. Corp. of Am., et 

al., FTC Dkt. No. 9345, at 1 (Apr. 21, 2011) (“LabCorp Statement”). 

Against this backdrop, the Commission considers five factors in determining 

whether to continue administrative proceedings after the denial of preliminary injunction 

by a district court: 

(i) the factual findings and legal conclusions of the district court or any appellate 

court; (ii) any new evidence developed during the course of the preliminary 

injunction proceeding; (iii) whether the transaction raises important issues of fact, 

law, or merger policy that need resolution in administrative litigation; (iv) an 

overall assessment of the costs and benefits of further proceedings; and (v) any 

other matter that bears on whether it would be in the public interest to proceed 

6 

 

https://www.judiciary.senate.gov/imo/media/doc/Simons%20Responses%20to%20Q

FRs.pdf. 

4

 See, e.g., Senator Mike Lee, SMARTER Act, (Oct. 9, 2015) 

https://www.lee.senate.gov/public/index.cfm/2015/10/smarter-act; A SMARTER 

Section 5: Remarks of Maureen K. Ohlhausen, Sept. 25, 2015, Chamber of 

Commerce, at 17, 

https://www.ftc.gov/system/files/documents/public_statements/804511/150925smarte

rsection5.pdf; Antitrust Modernization Commission Report and Recommendations, 

Ch. II Enforcement Institutions and Processes, Recommendation No. 25 at 131 (April 

2007).

5

 Senate Committee on the Judiciary “Oversight of the Enforcement of the Antitrust 

Laws,” Questions for Joseph Simons, Chairman, Federal Trade Commission at 5-6 

(October 3, 2018), 

https://www.judiciary.senate.gov/imo/media/doc/Simons%20Responses%20to%20Q

FRs.pdf. 
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with the merger challenge. 

Policy Statement at 39743. 

All five of the factors identified in the Commission’s Policy Statement favor 

terminating the instant administrative proceedings before the Commission, Respondents, 

and third-parties incur any further burden or expense. The district court’s detailed 

opinion makes clear that the Commission is unlikely to succeed in an administrative 

proceeding given both the clear weight of the evidence and heightened burden the 

Commission faces to prevail in an administrative trial. Moreover, termination of the 

administrative proceedings would save the expenditure of substantial public resources 

challenging a merger based on an evidentiary record nearly identical to that which was 

found insufficient by the district court and where an effective remedy is impracticable 

because the parties already have closed the transaction and begun to integrate. 

Accordingly, because continuing the administrative proceeding would not be in 

the public interest, the Commission should grant this motion withdrawing the matter from 

adjudication. 

I. THE DISTRICT COURT’S DETAILED FACTUAL FINDINGS DEMONSTRATE THAT 

THE COMMISSION IS UNLIKELY TO SUCCEED ON THE MERITS OF THE CASE. 

To prevail on the merits of its case, the Commission would need to demonstrate 

multiple facts that are contrary to the district court’s findings. This is a high hurdle in 

light of the Opinion, which provides a carefully considered review of a voluminous 

evidentiary record. Indeed, discovery in this matter has been extensive. Prior to its 

complaints, the Commission conducted an investigation spanning nearly nine months. 

During that investigation, the Commission received more than two million pages of 

documents and extensive interrogatory and database responses from the Respondents, 

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conducted 12 investigational hearings, and contacted at least 46 third parties to gather 

information regarding the transaction. As part of the preliminary injunction and 

administrative proceedings, the Commission conducted additional fact and expert 

discovery, receiving more than 100,000 additional pages of documents (including from 

26 third parties) and 36 additional party and third-party depositions. Moreover, because 

discovery in the administrative proceeding mirrored that of the district court litigation and 

has long been closed, it is unlikely there would be any additional evidence presented in 

an administrative hearing that was not available during the district court litigation. 

The district court’s denial of the preliminary injunction motion was based on 

multiple factual findings drawn on an extensive evidentiary record. The district court’s 

opinion demonstrates the difficulty the Commission would face in any administrative 

adjudication on the merits, and weighs strongly in favor of the Commission discontinuing 

the administrative proceeding. 

A. The District Court Properly Found the Evidence Failed to Support Any 

Element of the Commission’s Prima Facie Case. 

The district court found that the heavy weight of the evidence in the record failed 

to support the Commission’s alleged relevant product market. Opinion at 24. The 

alleged product market in both the administrative and preliminary injunction complaints 

consists of multiple different hydrogen peroxide products combined into a single 

“hydrogen peroxide...[except] electronics grade” relevant product market.6

 This district 

court found that this product market definition was not supported by the extensive 

documents, data, and customer and supplier testimony presented at trial. The district 

8 

 

6

 FTC v. Rag-Stiftung et al., Dkt. No. 1 at 10–11, 1:19-CV-02337 (TJK) (D.D.C.); In 

the Matter of Evonik/PeroxyChem, FTC Dkt. No. 9384, at 5–6 (Aug. 2, 2019). 
PUBLIC 

court held that the evidence neither supported the conclusion that customers view 

different hydrogen peroxide products as interchangeable nor that supply-side factors 

justify combining the different hydrogen peroxide products into a single relevant market 

based on the supplier considerations. See Opinion at 14, 24, 28. 

Indeed, the Commission acknowledged that its only basis for aggregating various 

grades of hydrogen peroxide into a single product market is supply-side substitutability 

(i.e., the alleged ability of hydrogen peroxide producers to “swing” production among 

grades of hydrogen peroxide). Opinion at 14. The Commission also agreed, consistent 

with its Horizontal Merger Guidelines, that to aggregate products into a single product 

market based on supply-side substitutability, swinging between products must be nearly 

universal, easy, and profitable. Opinion at 14 (FTC v. Rag-Stiftung et al., Dkt. No. 137 at 

84–85, 1:19-CV-02337 (TJK) (D.D.C.)). The district court carefully considered an 

extensive factual record that included (i) supplier testimony; (ii) customer declarations; 

(iii) documents in evidence; and (iv) expert testimony to conclude that supply-side 

substitutability between grades is not sufficiently universal, easy, or profitable to support 

the Commission’s aggregated product market. Opinion at 11–24. 

The district court could have stopped its analysis there. Instead, the district court 

took the extra step of conducting its own examination of whether the record evidence 

could support an alternative relevant product market not alleged by the Commission. The 

district court found that the record could support only distinct relevant product markets 

for hydrogen peroxide formulated for each different end use. Opinion at 31. However, 

even with that generous finding, the district court held that the record did not contain 

sufficient evidence to support the Commission’s prima facie case. Opinion at 41. 

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10 

The district court also found that the evidence failed to support the Commission’s 

alleged relevant geographic markets. Opinion at 42–43. The Commission alleged the 

same relevant geographic markets in its administrative and preliminary injunction 

complaints: the Pacific Northwest and the Southern and Central United States. As 

discussed further below, the signed divestiture agreement with United Initiators resolves 

any issues in the alleged Pacific Northwest geographic market. With regards to the 

“Southern and Central United States,” the district court found that the Commission did 

not “sufficiently define a relevant geographic market.” Opinion at 42. The district court 

assessed whether the Southern and Central United States geographic market might be 

appropriate for product markets based on hydrogen peroxide for specific end-uses, the 

only relevant product markets supported by the evidence. The district court found 

“substantial evidence suggesting that the Southern and Central United States would not 

be the relevant area of effective competition for each end-use hydrogen peroxide 

product.” Opinion at 41–42. To succeed on the merits, the Commission would need to 

substantiate its alleged geographic markets using the same evidence collected and used 

for the district court proceedings, and which was found insufficient. 

Finally, even without a properly defined product and geographic market, the 

district court assessed whether the record evidence could support any finding of undue 

concentration “in the market for a particular product in a particular geographic area.” 

Opinion at 43. However, the district court found that the evidentiary record, including 

the expert testimony and reports, did not include data or other statistics that would allow 

it to find undue concentration in any properly defined market. Opinion at 43. The 
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district court therefore concluded that the Commission was not likely to be able to 

establish a prima facie case. Opinion at 46. 

B. The District Court Found the Proposed Divestiture Resolves Any 

Anticompetitive Effects in the Alleged Pacific Northwest Market. 

Shortly after the FTC filed its administrative complaint, Evonik and PeroxyChem 

agreed to divest PeroxyChem’s Prince George plant, along with all other assets needed to 

run the plant as a standalone business, to United Initiators. Opinion at 35. Consistent 

with the FTC’s preference for divesting complete and ongoing business units,7 United 

Initiators will have the personnel, customer lists, information systems, and all tangible 

and intangible assets that it needs to compete. Opinion at 35. Indeed, the district court 

found that United Initiators “is buying something more like an ongoing business.” 

Opinion at 36. 

The district court separately found that the proposed divestiture of PeroxyChem’s 

Prince George plant and related assets to United Initiators resolves any anticompetitive 

effects in the alleged Pacific Northwest market. The district court’s analysis of the 

proposed divestiture was supported by the careful consideration of the extensive factual 

record, including testimony from the divestiture buyer. Those facts supported the district 

court’s findings that: (i) “the Prince George divestiture to [United Initiators] is highly 

likely to occur[,]” Opinion at 33; (ii) “[United Initiators] has the experience necessary to 

compete effectively in the hydrogen peroxide industry[,]” Opinion at 34; (iii) “[t]he scope 

of the proposed divestiture is more than sufficient for [United Initiators] to replace 

PeroxyChem in effectively running the Prince George Plant[,]” Opinion at 35; 

 

7

 See FTC, The FTC’s Merger Remedies 2006–2012: A Report of the Bureaus of 

Competition and Economics, at 1 (Jan. 2017), https://www.ftc.gov/reports/ftcsmerger-remedies-2006-2012-report-bureaus-competition-economics. 
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(iv) “[United Initiators] will be an independent competitor in the Pacific Northwest[,]” 

Opinion at 37; and (v) “the proposed purchase price does not cast doubt on the viability 

of the Price George plant if it is sold to [United Initiators],” Opinion at 38. Based on 

these findings, the district court concluded that the proposed divestiture “likely will 

replace PeroxyChem’s competitive significance in the Pacific Northwest” and that 

competition will not be substantially lessened in that alleged geographic market. Opinion 

at 39. 

To prevail on the merits in Pacific Northwest market, the Commission would need 

to demonstrate that the proposed divestiture to United Initiators is somehow 

insufficient—contrary to the district court’s extensive factual findings. Making such a 

showing on the merits would be highly unlikely, particularly based on the same evidence 

already considered by the district court. 

C. The District Court Found Respondents Presented Strong Rebuttal Evidence 

and That the Evidence of Anticompetitive Effects Was Insufficient 

After finding that the Commission failed to make a prima facie case of 

anticompetitive harm, the district court nevertheless turned to a thorough factual inquiry 

into the acquisition’s probable coordinated and unilateral effects. The district court’s 

analysis relied heavily on evidence critical to assessment of the likelihood of 

anticompetitive harm, including ordinary course documents, bid data, and customer and 

supplier testimony. Opinion at 47–63. The district court carefully evaluated the 

Commission’s evidence against the rebuttal evidence presented by Respondents and 

concluded that the evidentiary record did not support a finding that the Commission was 

likely to succeed on the merits in showing likely anticompetitive harm. Opinion at 46–

47. 
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13 

First, the district court undertook a detailed factual analysis of ten factors that bear 

on vulnerability to coordination. Opinion at 49–55. The district court found that the 

evidence related to four of those factors strongly supported the position that the industry 

is not vulnerable to coordination: (i) blind bidding for hydrogen peroxide customers, (ii) 

large and long-term contracts; (iii) sophisticated and powerful customers; and (iv) 

changed industry conditions since a decades old incident of coordination. Opinion at 49–

52. The district court found that another four factors had mixed evidence, but for each, 

the weight of the evidence ranged from suggesting the industry was not vulnerable to 

coordination to neutral: (i) market transparency; (ii) pricing homogeneity; (iii) plant 

capacity; and (iv) recognition of shared economic interest with other producers. Opinion 

at 53–55. The district court found that only two factors, number of suppliers and 

elasticity of demand, supported vulnerability to coordination. Opinion at 49. Carefully 

balancing these factors, the district court made the informed factual determination that the 

weight of the evidence shows that the hydrogen peroxide industry is not vulnerable to 

coordination. 

The district court similarly relied on ample evidence in finding that the proposed 

merger would not enhance the hydrogen peroxide industry’s vulnerability to 

coordination. In particular, the district court credited evidence of current 

competitiveness, including in the Commission’s alleged Pacific Northwest market in 

which there are only three supplier plants today; the factors that currently render 

coordination unlikely and are not likely to change as a result of the merger; and testimony 

that a rival supplier would be poised to disrupt any coordination. Opinion at 56–57. The 
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Commission would need to overcome this substantial evidence to ultimately succeed on 

any coordinated effects theory in an administrative proceeding. 

Finally, the district court held that the evidence failed to support a finding that the 

Commission was likely prevail on the merits in showing likely unilateral anticompetitive 

effects. The district court evaluated the economic models put forward by the 

Commission’s expert and found them inconsistent with the record evidence and therefore 

insufficient. Opinion at 59. On the other hand, the district court found that the weight of 

the qualitative evidence demonstrated that “Evonik and PeroxyChem are not close 

competitors,” and other suppliers are well positioned to constrain Evonik post-merger. 

Opinion at 60–61. In particular, “Evonik’s Mobile, Alabama plant and PeroxyChem’s 

Bayport, Texas plant—their two facilities in the Southern and Central United States—

largely sell hydrogen peroxide intended for different end uses.” Opinion at 60. “Evonik 

and PeroxyChem also have different geographic focuses,” and each face more proximate 

competitors that are “well positioned to check Evonik during the bidding process.” 

Opinion at 60. Moreover, the district court also found the record devoid of evidence that 

Evonik intends to raise prices following the transaction. Opinion at 61–62. 

To prevail on the merits, the Commission would need to show evidence of 

anticompetitive harm sufficient to overcome Respondents’ rebuttal evidence. This is 

another significant hurdle that is difficult to overcome in light of the district court’s 

factual findings, which are based on careful evaluation of the same record evidence that 

would be presented as part of any administrative proceeding. 
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15 

II. NEW EVIDENCE DEVELOPED DURING THE DISTRICT COURT LITIGATION 

SUPPORTS TERMINATION OF THE ADMINISTRATIVE PROCEEDING. 

New evidence developed during the district court litigation only serves to increase 

the difficultly the Commission would face in an administrative hearing. Moreover, the 

evidentiary records developed to support the district court litigation and administrative 

proceeding are identical given the parallel discovery schedules.8 The only new facts 

developed during the district court litigation related to the signed divestiture agreement 

with United Initiators and therefore supports terminating the administrative proceeding. 

 As discussed above, the district court carefully evaluated whether the divestiture 

to United Initiators would replace PeroxyChem’s competitive intensity. Respondents not 

only met their burden of showing that United Initiators will replace PeroxyChem’s 

competitive intensity, they “far exceeded that threshold.” Opinion at 39. Ultimately, the 

court found that with the divestiture, “the merger is not likely to ‘substantially . . . lessen 

competition’ in the FTC’s proposed Pacific Northwest market.” Opinion at 39. 

Moreover, the sale of the Prince George plant and its related assets to United Initiators 

has been approved by the CCB in an executed consent agreement. Opinion at 33–34. 

The divestiture transaction is set to be completed by no later than February 10. 

The only new evidence developed in the district court litigation supports the 

Prince George divestiture, making the Commission’s case only more difficult and 

counsels strongly in favor of discontinuing the administrative proceeding. 

 

8

 As discussed above, the discovery for both proceedings was aligned and coextensive. 

Live testimony in the district court hearing was consistent with the evidentiary record 

built during discovery and served only to bolster the district court’s factual findings. 
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16 

III. THE TRANSACTION DOES NOT IMPLICATE ANY ISSUES OF FACT, LAW, OR 

POLICY WARRANTING CONTINUATION OF THE ADMINISTRATIVE PROCEEDING.

The district court’s opinion offers a fact-intensive and case-specific analysis of the 

transaction. The district court decision does not implicate any issues of fact, law, or 

policy that would affect future Commission litigation or enforcement prospects. 

Instead, the district court applied the legal standards advocated for by the 

Commission throughout the litigation and relied upon the Commission’s own Horizontal 

Merger Guidelines. The district court followed an uncontroversial analytical framework 

in making careful factual determinations regarding market definition, market 

concentration, the sufficiency and certainty of the divestiture, evidence of vulnerability to 

coordination, and evidence of unilateral effects. These factual determinations are the 

core of the district court’s opinion and are grounded in the specific circumstances of this 

matter such that they are unlikely to materially affect future litigations. The district 

court’s decision thus presents no factual, legal, or policy issues that could materially 

impact the Commission’s ability to effectively pursue its mission or enforcement agenda. 

Moreover, the Commission has declined to seek an emergency injunction or other 

relief pending an appeal of the district court’s decision. This decision not to pursue relief 

pending an appeal indicates the Commission itself agrees that the district court decision 

does not implicate issues of fact, law, or policy that would warrant further adjudication. 

Because the transaction does not implicate any issues of fact, law, or policy, the 

Commission should discontinue the administrative proceeding in this matter. 

IV. THE COST OF CONTINUING THE PROCEEDING OUTWEIGHS ANY POTENTIAL 

BENEFITS. 

To prevail on the merits in the administrative trial, the Commission must satisfy a 

substantially higher burden of proof than the one it did not meet in the preliminary 
PUBLIC 

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injunction litigation before the district court. Statement of the Commission, In re Arch 

Coal, Inc., et al., FTC Dkt. No. 9316, at 8 (June 13, 2005) (Commission bears a “higher 

standard of proof” in administrative trial on the merits as compared with preliminary 

injunction motion). In the district court, the Commission was required to show only a 

reasonable likelihood of success on the merits that justified maintaining the status quo 

pending the administrative trial. See FTCv. H.J. Heinz Co., 246 F.3d 708, 713–714, 719 

(D.C. Cir. 2001). In contrast, in the administrative proceeding, the Commission would 

need to meet the higher burden of demonstrating that the merger actually is likely to 

result in substantial harm to competition. See Statement of the Commission, In re Arch 

Coal, Inc., et al., FTC Dkt. No. 9316, at 8 (June 13, 2005). 

The increased burden the Commission is required to satisfy in an administrative 

hearing must be considered with the additional costs of continuing the proceeding. This 

matter already has imposed a substantial cost on the Commission, third-parties, and the 

Respondents. Prior to filing the administrative and district court complaints, the 

Commission investigated the transaction for nearly nine months. During that 

investigation, the Commission received more than two million pages of documents and 

extensive interrogatory and database responses from Respondents, conducted 12 

investigational hearings, and contacted at least 46 third parties to gather information 

regarding the proposed transaction. As part of the administrative proceedings and the 

preliminary injunction proceeding before the district court, the Commission conducted 

extensive additional fact and expert discovery, receiving more than 100,000 additional 

pages of documents (including from 26 third parties) and 36 additional party and thirdparty depositions. The Commission and Respondents submitted voluminous documents 
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from the investigation and post-complaint discovery to the district court. Numerous 

third-parties were required to travel to Washington, D.C. to participate in the evidentiary 

proceeding. The Commission and Respondents also submitted lengthy pre- and post-trial 

briefings to the district court. These costs would continue to mount for the Commission, 

third-parties, and the Respondents in the event the administrative proceeding continues. 

The Commission would need to devote substantial additional resources to 

continue the administrative proceeding, where it has a low probability of success given 

both the district court’s detailed factual findings and the heightened burden of proof. As 

the Commission has recognized, where the costs are high relative to any potential 

benefits, the Commission should favor discontinuing the administrative proceedings. 

V. TERMINATING THE ADMINISTRATIVE PROCEEDING IS IN THE PUBLIC INTEREST. 

Terminating the administrative proceedings in this matter would serve the public 

interest and the Commission’s policy goals. Further administrative proceedings would 

require the use of valuable public resources that the Commission can better deploy on 

other important initiatives and enforcement priorities. Moreover, as noted above, 

Chairman Simons has observed that the Commission has not pursued administrative 

litigation following the denial of a preliminary injunction motion by a district court in 

more than 20 years.9 Continuing this policy by terminating this administrative 

proceeding would promote uniformity of outcomes and overall fairness in how the 

Commission and the Department of Justice’s Antitrust Division enforce the nation’s 

 

9

 Senate Committee on the Judiciary, “Oversight of the Enforcement of the Antitrust 

Laws,” Questions for Joseph Simons, Chairman, Federal Trade Commission at 5 

(October 3, 2018), 

https://www.judiciary.senate.gov/imo/media/doc/Simons%20Responses%20to%20Q

FRs.pdf. 
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antitrust laws in the context of mergers that are notified to the agencies under the HartScott-Rodino Act. 

In addition, because the Commission has elected not to pursue an emergency 

injunction or any other relief pending appeal, the parties have completed their transaction 

and begun integrating the respective businesses. As the Commission has previously 

recognized, “the difficulty of fashioning relief if the Commission were to find a violation 

significantly limits the potential benefits of proceeding relative to the costs.” LabCorp 

Statement at 2. Here, the parties already have begun to integrate their respective plants, 

terminals, and employees, and to work towards optimizing their combined supply 

network and product portfolios. It will be infeasible to separate the two companies or to 

disentangle any individual asset now that the merger is consummated, particularly given 

the interdependencies between certain facilities. As the Commission has recognized, the 

difficulties in crafting a remedy counsel against continuing administrative litigation.

CONCLUSION 

For the foregoing reasons, Respondents respectfully request that the Commission 

grant this motion to withdraw the matter from adjudication. 

Dated: February 7, 2020 

Respectfully submitted,

By: /s/ Eric Mahr 

Eric Mahr (D.C. Bar No. 459350)

Andrew J. Ewalt (D.C. Bar No. 493433)
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FRESHFIELDS BRUCKHAUS 

DERINGER US LLP

700 13th Street, NW, 10th Fl.

Washington, DC 20005

Tel: (202) 777-4500

Fax: (202) 777-4555

E-mail: eric.mahr@freshfields.com

E-mail: andrew.ewalt@freshfields.com

Attorneys of Record for Respondents 

RAG-Stiftung, Evonik Industries AG, 

Evonik Corporation, and 

Evonik International Holding B.V.

By: /s/ Mike G. Cowie 

Mike G. Cowie (D.C. Bar No. 432338)

James A. Fishkin (D.C. Bar No. 478958)

Shari Ross Lahlou (D.C. Bar No. 476630)

DECHERT LLP

1900 K Street, NW 

Washington, DC 20006 

Tel: (202) 261-3300

Fax: (202) 261-3333

E-mail: mike.cowie@dechert.com

E-mail: james.fishkin@dechert.com

E-mail: shari.lahlou@dechert.com

Attorneys of Record for Respondents One 

Equity Partners Secondary Fund, L.P., One 

Equity Partners V, L.P., Lexington Capital 

Partners VII (AIV I), L.P., PeroxyChem 

Holding Company LLC, PeroxyChem 

Holdings L.P., PeroxyChem Holdings LLC, 

PeroxyChem LLC, and PeroxyChem 

Cooperatief U.A.
PUBLIC 

UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

In the Matter of 

RAG-Stiftung, 

Evonik Industries AG, 

Evonik Corporation, 

Evonik International Holding B.V., 

One Equity Partners Secondary Fund, 

L.P., 

One Equity Partners V, L.P., 

Lexington Capital Partners VII (AIV I), 

L.P., 

PeroxyChem Holding Company LLC, 

PeroxyChem Holdings, L.P., 

PeroxyChem Holdings LLC, 

PeroxyChem LLC 

 

Docket No. 9384 

and 

PeroxyChem Cooperatief U.A. 

[PROPOSED] ORDER WITHDRAWING MATTER FROM ADJUDICATION 

PURSUANT TO RULE 3.26(c) OF THE COMMISSION RULES OF PRACTICE 

On February 7, 2020, Respondents in this matter filed a Motion to withdraw this 

matter from adjudication, pursuant to Commission Rule 3.26(c), 16 C.F.R. § 3.26(c). 

Upon consideration of Respondents’ Motion, any opposition thereto, and the Commission 

being fully informed, 
PUBLIC 

IT IS ORDERED, pursuant to Rule 3.26(c) of the Commission Rules of Practice, 

that this matter in its entirety be, and hereby is, withdrawn from adjudication, and that all 

proceedings before the Administrative Law Judge be, and hereby are, stayed. 

By the Commission. 

_________________________ 

April Tabor 

Secretary 

Date: 

 
PUBLIC 

CERTIFICATE OF SERVICE 

I HEREBY CERTIFY that on February 7, 2020, I filed the foregoing documents 

using the Federal Trade Commission’s E-Filing system, which will send notification of 

such filing to: 

Office of the Secretary 

Federal Trade Commission 

600 Pennsylvania Ave., NW, Rm. H-113 

Washington, DC 20580 

The Honorable D. Michael Chappell 

Chief Administrative Law Judge 

Federal Trade Commission, 

600 Pennsylvania Ave., NW, Rm. H-110 

Washington, DC 20580 

 I also HEREBY CERTIFY that I caused a true and correct copy of the foregoing 

documents to be served upon the following via email: 

James Edward Rhilinger, III 

Amy Dobrzynski 

Daniel Matheson 

Dominic Vote 

Cecelia Waldeck 

Frances Anne Johnson 

Michael Blevins 

Michael Lovinger 

Sean Hughto 

Stephen Santulli 

Steven Dahm 

Federal Trade Commission 

600 Pennsylvania Ave., NW 

Washington, DC 20580 

Counsel for Plaintiff Federal Trade 

Commission 

Dated: February 7, 2020 

Mike Cowie 

James Fishkin 

Shari Ross Lahlou 

Dechert LLP 

1900 K St. NW 

Washington, DC 20006 

Counsel for Defendants One Equity Partners 

Secondary Fund, L.P., One Equity Partners V, 

L.P., Lexington Capital Partners VII (AIV I), 

L.P., PeroxyChem Holding Company LLC, 

PeroxyChem Holdings, L.P., PeroxyChem 

Holdings LLC, PeroxyChem LLC, and 

PeroxyChem Cooperatief U.A. 

/s/ Eric J. Mahr 

Eric J. Mahr 

Counsel for RAG-Stiftung, Evonik Industries 

AG, Evonik Corporation, and Evonik 

International Holdings B.V.
PUBLIC 

Exhibit A
UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLUMBIA 

Civil Action No. 19-2337 (TJK) 

FEDERAL TRADE COMMISSION, 

Plaintiff, 

v. 

RAG-STIFTUNG et al., 

Defendants.

MEMORANDUM OPINION 

Hydrogen peroxide (H2O2) is a veritable swiss army knife of chemicals. Often an 

environmentally friendly alternative to other substances, it bleaches paper, treats wastewater, 

disinfects knee scrapes, fuels rockets, and plays a role in manufacturing semiconductors, to name 

a few of its myriad applications. In November 2018, two of the five North American suppliers 

of hydrogen peroxide, Evonik and PeroxyChem, announced a proposed $625 million merger, 

and not long after, the Federal Trade Commission (FTC) launched an investigation into the 

potential anticompetitive effect of the merger. After a nine-month investigation, the FTC filed 

both an administrative complaint and this preliminary injunction action under Section 13(b) of 

the Federal Trade Commission Act, 15 U.S.C. § 53(b), and Section 7 of the Clayton Act, 15 

U.S.C. § 18. The Court held a two-week evidentiary hearing in November 2019, during which it 

heard from twenty fact witnesses and two experts and received hundreds of exhibits. 

The FTC seeks a preliminary injunction barring Evonik’s acquisition of PeroxyChem, 

and it has the burden of showing that it is likely the proposed merger will substantially lessen 

competition in a relevant market. But the FTC made an important misstep. Rather than 

recognizing how hydrogen peroxide suppliers compete for customers served by its countless end 

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uses—accounting for products’ variations in purity, concentration, stabilizer chemicals, 

profitability, and even regulatory approval—the FTC pleaded and argued for a single market for 

all “non-electronics” hydrogen peroxide. And because evaluating a merger’s competitive effects 

on a market requires the FTC to properly define a market in terms of both product and 

geography, that oversimplification all but precludes the Court from siding with it. For the 

reasons explained below, the Court concludes that the FTC has not made out its prima facie case, 

which requires it to show undue concentration for a particular product in a particular geographic 

area, and it has not otherwise shown a likelihood that the proposed Evonik-PeroxyChem merger 

will substantially harm competition. The Court must therefore deny the FTC’s motion for a 

preliminary injunction, ECF No. 3.1

Background 

A. Hydrogen Peroxide Suppliers 

There are five suppliers of hydrogen peroxide in North America: Evonik, PeroxyChem, 

Solvay, Arkema, and Nouryon. DPFFCL at 13 ¶ 34. Evonik is an international chemical 

company based in Germany and controlled by Defendant RAG-Stiftung. Id. at 5 ¶ 3. Evonik 

produces hydrogen peroxide at three North American plants located in Mobile, Alabama; 

Gibbons, Alberta; and Maitland, Ontario. PPFFCL at 1 ¶ 1. Evonik seeks to acquire 

PeroxyChem, a Philadelphia-based international manufacturer of hydrogen peroxide, persulfates, 

and peracetic acid. DPFFCL at 5 ¶ 5. PeroxyChem produces hydrogen peroxide at two North 

 

1

 The documents submitted to the Court in this matter include: Complaint, ECF No. 1 

(“Compl.”); Plaintiff’s Memorandum in Support of Motion for Preliminary Injunction, ECF No. 

45-1 (“Br.”); Defendants’ Opposition to Plaintiff’s Memorandum, ECF No. 56-1 (“Opp.”); 

Plaintiff’s Proposed Findings of Fact and Conclusions of Law, ECF No. 137-1 (“PPFFCL”); 

Defendants’ Proposed Findings of Fact and Conclusions of Law, ECF No. 138-1 (“DPFFCL”). 

The Court hereby incorporates the FTC’s Glossary of Hearing Witnesses, Deponents, and 

Declarants, PPFFCL at x–xi. 

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American plants in Bayport, Texas, and Prince George, British Columbia. PPFFCL at 1–2 ¶ 2. 

Solvay has one plant in Deer Park, Texas—fewer than ten miles from PeroxyChem’s Bayport 

plant—and one plant in Longview, Washington; Arkema has one plant in Memphis, Tennessee, 

and one in Becancour, Quebec; and Nouryon has a plant in Columbus, Mississippi. DPFFCL at 

13–14 ¶ 35. 

B. The Manufacture of Hydrogen Peroxide Products 

To manufacture hydrogen peroxide, suppliers move a working solution through a 

hydrogenation, oxidation, and extraction process, continuously and nearly 365 days a year. 

PPFFCL at 4 ¶ 12; DPFFCL at 8 ¶ 16. The process produces “crude” hydrogen peroxide. 

PPFFCL at 4 ¶ 12. Suppliers stabilize the crude with chemical additives to prevent the product 

from decomposing and concentrate or distill it to produce a marketable product known as 

“standard grade” hydrogen peroxide, which is the lowest purity sold. Id.; DPFFCL at 9 ¶¶ 18–

20. Suppliers formulate standard grade hydrogen peroxide at different concentration levels and 

add stabilizers to serve a variety of end uses, like bleaching pulp and paper (the largest hydrogen 

peroxide end use) and textiles; it is also used in wastewater treatment and in the mining and oil 

and gas industries. PPFFCL at 4 ¶ 13; Dumas Hrg. Tr. 235:1–3; Suter Hrg. Tr. 408:8–14; 

Costanzo Hrg. Tr. 1223:6–13; Montag Hrg. Tr. 1566:5–1567:2, 1600:23–1601:3. Stabilizer 

packages are proprietary, and a stabilizer like tin that works well for some applications does not 

for others. DPFFCL at 7–8 ¶ 13; Corson Hrg. Tr. 666:6–667:16; DX0348; PX1522-001 to -002; 

PX1055-001. 

Suppliers can also purify standard grade to make “specialty grade” hydrogen peroxide. 

PPFFCL at 9 ¶ 27; DPFFCL at 9–10 ¶¶ 21–22. This higher grade or purity level also serves a 

variety of end uses. For example, in the chemical synthesis space, manufacturers use specialty 

grade hydrogen peroxide to make sodium chlorite, organic peroxides, and epoxidized soybean 

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oil; in the home and personal care space, specialty grade is used in products for hair and teeth 

bleaching and in contact lens solutions; and in the food packaging space, manufacturers use it as 

a disinfectant for aseptic packaging. DPFFCL at 6–7 ¶ 11. These specialty grade applications 

not only require specific concentrations and stabilizers, but many of them also require FDA or 

EPA approval before purchasers can put them toward their intended uses. See DPFFCL at 8 

¶ 14. 

A few suppliers further purify specialty grade to produce “pre-electronics grade” 

hydrogen peroxide. DPFFCL at 11 ¶ 27. Only Evonik and Arkema sell pre-electronics grade. 

Id. Manufacturing this grade of hydrogen peroxide, a product for which suppliers measure 

impurities in “parts per billion,” Hamann Hrg. Tr. 1281:13, requires additional equipment, 

including a second reverse osmosis unit, more testing (several times a day), specially trained 

personnel, a specially equipped room and laboratory, and 

. Hamann Hrg. Tr. 1282:3–1286:16. PeroxyChem and Solvay 

produce a purified hydrogen peroxide “feedstock” that is a precursor to their production of 

electronics grade hydrogen peroxide, but the feedstock is not marketed to customers as preelectronics grade hydrogen peroxide. Montag Hrg. Tr. 1528:1–5; Kramer Hrg. Tr. 1635:19–

1636:7; Suter Hrg. Tr. 412:11–17. Over the years, 

 Hancock Decl. ¶¶ 22–23, JX0001-004; Montag Hrg. Tr. 1531:23–1532:1; Suter Hrg. 

Tr. 434:24–435:11; Hill Hrg. Tr. 2080:22–23; JX0001-001; PPFFCL at 10–11 ¶¶ 32–33. 

Some suppliers have the capability to refine pre-electronics grade even further to make 

the highest purity “electronics grade” hydrogen peroxide. Electronics grade is sold to 

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semiconductor manufacturers to clean and etch silicon microchips. DPFFCL at 11–13 ¶¶ 27, 33. 

MGC, PeroxyChem, and Solvay sell electronics grade hydrogen peroxide. Id. at 13 ¶ 33. 

As an engineering matter, a plant can only commit 40 to 50 percent of its output to 

specialty grade hydrogen peroxide, and only 60 percent of that specialty grade can be purified 

into pre-electronics grade, leaving around 36 pounds of pre-electronics grade for every 100 

pounds of crude. 

; JX0151-015. Suppliers can shift production between different grades of 

hydrogen peroxide at a plant merely by adjusting a valve. Hamann Hrg. Tr. 1322:24–1323:13; 

see, e.g., Suter Hrg. Tr. 406:6–14 (“We get customer input, we look at historical data, and we 

operate with basically a 90-day rolling forecast. We can make any grade at any time of the 

month as long as we’re forecasting it properly.” (cleaned up)). 

C. The Sale of Hydrogen Peroxide Products 

Hydrogen peroxide suppliers sell their products by the pound from around 30 cents per 

pound to over a dollar; standard grade is generally the cheapest (and least profitable), then 

specialty grade, pre-electronics grade, and electronics grade. DPFFCL at 14 ¶¶ 36–38; JX0066-

43 fig. 10; JX0151-022; . The annual capacity of hydrogen 

peroxide plants ranges from around million pounds (Evonik’s Maitland plant) to million 

pounds (PeroxyChem’s Bayport plant). PPFFCL at 26–27 ¶¶ 83–93. A significant component 

of each product’s price is transportation cost because hydrogen peroxide is typically heavily 

diluted with water when it is delivered via railcars and trucks. DPFFCL at 15 ¶ 40. As a result, 

the distance between customers and plants is a major factor in competition between suppliers. 

Id. ¶ 41. 

Hydrogen peroxide suppliers compete for customers across grades and end uses through 

blind bidding contests for high-volume, long-term contracts. Id. ¶ 42. A customer publishes a 

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request for proposal (RFP) for a given location, specifying the hydrogen peroxide product, 

volume, and contract length sought; suppliers submit confidential bids; and then the customer 

usually lets one or more of the bidders know how competitive their bid is (without sharing 

specific prices) so that they will lower their bid price. See id. at 15 ¶¶ 42, 44; id. at 66–67 ¶ 173. 

This process produces substantial cost savings for hydrogen peroxide customers, and prices have 

generally decreased the last few years in part as a result. See DPFFCL at 53–55, 66–67 ¶¶ 143–

46, 173; Hill Rpt., JX0066-097 to -099 figs. 44–46. 

D. Procedural History 

Evonik announced its intent to acquire PeroxyChem for $625 million in November 2018. 

JX0078-011 to -013. The two firms filed a pre-merger notification with the FTC pursuant to the 

Hart-Scott-Rodino Improvements Act, 15 U.S.C. § 18a. Compl. ¶ 20. The FTC then launched a 

nine-month investigation, during which Defendants produced millions of pages of documents 

and the FTC interviewed or deposed more than 50 industry participants. Opp. at 2. The FTC 

voted on August 2, 2019, to commence an administrative proceeding to challenge the acquisition 

under Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 53(b), and Section 7 of the 

Clayton Act, 15 U.S.C. § 18, alleging that the proposed merger will substantially lessen 

competition. Compl. ¶ 9. The FTC also filed the instant action and moved for a preliminary 

injunction, ECF No. 3, and the parties entered into a stipulated restraining order preventing 

Defendants from closing the proposed transaction until five business days after the Court rules 

on the motion, ECF No. 9. The parties have delayed the administrative proceeding pending the 

Court’s decision. Mahr Hrg. Tr. 2438:3–10. 

Within days of the FTC moving for a preliminary injunction in this action, Evonik and 

PeroxyChem agreed on a divestiture of PeroxyChem’s plant in Prince George, British Columbia. 

Share Purchase Agreement, JX0147-017. If the merger closes, a new competitor, international 

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chemical producer United Initiators GMBH (UI), will purchase the plant for . Id. The 

Canadian Competition Bureau investigated the proposed merger with PeroxyChem and the 

divestiture of the Prince George plant to UI and entered into a Consent Agreement with Evonik 

that approves both. Consent Agreement (Jan. 13, 2020), ECF No. 141-1 at 1–2, 10, 12–13. The 

proposed divestiture of the Prince George plant means that the FTC’s challenge to Evonik’s 

acquisition of PeroxyChem only concerns its other hydrogen peroxide plant in Bayport, Texas, 

setting aside Evonik’s acquisition of PeroxyChem’s unrelated assets for other chemicals. See

DPFFCL at 6 ¶ 7. 

Legal Standard 

Section 7 of the Clayton Act, 15 U.S.C. § 18, prohibits 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 tend to create a monopoly.” 

“Section 7 involves probabilities, not certainties or possibilities,” United States v. Baker Hughes, 

Inc., 908 F.2d 981, 984 (D.C. Cir. 1990), and a plaintiff must show that the substantial lessening 

of competition will be “sufficiently probable and imminent.” United States v. Marine Bancorp., 

418 U.S. 602, 623 n.22 (1974) (internal quotation omitted); see United States v. Gen. Dynamics 

Corp., 415 U.S. 486, 505 (1974). 

If the FTC “has reason to believe that a corporation is violating, or is about to violate, 

Section 7 of the Clayton Act, the FTC may seek a preliminary injunction” from a federal district 

court under Section 13(b) of the Federal Trade Commission Act, 15 U.S.C. § 53(b), “to prevent a 

merger pending the Commissioner’s administrative adjudication of the merger’s legality.” FTC 

v. H.J. Heinz Co., 246 F.3d 708, 714 (D.C. Cir. 2001) (quoting FTC v. Staples, Inc., 970 F. Supp. 

1066, 1070 (D.D.C. 1997) (Staples I)). Section 13(b) provides for a preliminary injunction to 

block a merger when “such action would be in the public interest,” after “weighing the equities 

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and considering the Commission’s likelihood of ultimate success.” 15 U.S.C. § 53(b); see Heinz, 

246 F.3d at 726. 

To obtain a preliminary injunction, the FTC “is not required to prove, nor is the court 

required to find, that the proposed merger would in fact violate Section 7 of the Clayton Act.” 

Staples I, 970 F. Supp. at 1070. That determination is reserved for the FTC through its 

administrative proceeding. Id. However, the FTC must show that there is a “reasonable 

probability” or “appreciable danger” that the acquisition may substantially lessen competition. 

Id. at 1072; Heinz, 246 F.3d at 713, 719. It can do so by raising “questions going to the merits so 

serious, substantial, difficult and doubtful as to make them fair ground for thorough 

investigation, study, deliberation and determination by the FTC in the first instance and 

ultimately by the Court of Appeals.” Heinz, 246 F.3d at 714–15 (internal citation omitted). That 

burden “is not insubstantial, and a showing of a fair or tenable chance of success on the merits 

will not suffice for injunctive relief.” FTC v. Arch Coal, Inc., 329 F. Supp. 2d 109, 116 (D.D.C. 

2004) (cleaned up); see FTC v. Wilh. Wilhelmsen Holding ASA, 341 F. Supp. 3d 27, 44 (D.D.C. 

2018) (“A preliminary injunction in this context remains an extraordinarily drastic remedy, 

especially since as a result of the short life-span of most tender offers, the issuance of a 

preliminary injunction blocking an acquisition or merger may prevent the transaction from ever 

being consummated.” (cleaned up)). 

To assess the FTC’s likelihood of success on the merits, the Court applies the D.C. 

Circuit’s burden-shifting framework set forth in Baker Hughes, 908 F.2d at 982–83. See Heinz, 

246 F.3d at 715. First, the FTC bears the prima facie burden of showing that the EvonikPeroxyChem merger will lead to “undue concentration in the market for a particular product in a 

particular geographic area.” Baker Hughes, 908 F.2d at 982; see Arch Coal, 329 F. Supp. 2d at 

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117. That showing establishes a presumption that the merger will substantially lessen 

competition. Baker Hughes, 908 F.2d at 982. Defendants can then rebut this presumption by 

demonstrating that the FTC’s prima facie case and market-share statistics inaccurately predict the 

merger’s probable effects in the relevant market. Id. at 991. If Defendants’ rebuttal is 

successful, the burden of producing further evidence of anticompetitive effects shifts to the FTC 

“and merges with the ultimate burden of persuasion which remains with the [FTC] at all times.” 

Id. at 983. 

In addition to assessing the FTC’s prima facie case and any rebuttal evidence, in deciding 

whether to grant preliminary injunctive relief, the Court must weigh the equities. Because the 

public’s interest in effective enforcement of the antitrust laws is paramount, a “showing of 

likelihood of success creates a presumption in favor of preliminary injunctive relief.” Heinz, 246 

F.3d at 726. “Conversely, absent a likelihood of success on the merits, equities alone will not 

justify an injunction.” Arch Coal, 329 F. Supp. 2d at 116. 

The Supreme Court has also stressed that courts must judge “the probable anticompetitive 

effects of the merger” “functionally” and based on “a further examination of the particular 

market—its structure, history and probable future.” Gen. Dynamics, 415 U.S. at 498 (quoting 

Brown Shoe Co. v. United States, 370 U.S. 294, 320–21 & n.38 (1962)) (cleaned up). Therefore, 

“antitrust theory and speculation cannot trump facts, and even Section 13(b) cases must be 

resolved on the basis of the record evidence relating to the market and its probable future.” Arch 

Coal, 329 F. Supp. 2d at 116–17. 

Analysis 

A. The FTC’s Prima Facie Case 

For the FTC to show a likelihood of success on the merits and justify a preliminary 

injunction blocking the Evonik-PeroxyChem merger, it must first meet its prima facie burden by 

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(1) defining a relevant product market, (2) defining a relevant geographic market, and 

(3) showing undue concentration in that combined market. Baker Hughes, 908 F.2d at 983. 

1. Defining the Relevant Market 

“The relevant market is the ‘area of effective competition’ within which the defendants 

operate.” United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586, 649 (1957) (quoting 

Standard Oil Co. of Cal. v. United States, 337 U.S. 293, 299 n.5 (1949)). Defining the relevant 

market is a “necessary predicate” to finding a Clayton Act violation because the proposed merger 

“must be one which will substantially lessen competition within the area of effective 

competition.” Id. at 593 (internal quotations omitted); see Baker Hughes, 908 F.3d at 982 

(government must “show[] that a transaction will lead to undue concentration in the market for a 

particular product”). The scope of the relevant market also dictates the analysis of market power 

and the merger’s anticompetitive effects. See United States v. Sungard Data Sys., Inc., 172 F. 

Supp. 2d 172, 181 (D.D.C. 2001); FTC v. Cardinal Health, Inc., 12 F. Supp. 2d 34, 45 (D.D.C. 

1998). “The FTC bears the burden of proof and persuasion in defining the relevant market.” 

FTC v. Arch Coal, Inc., 329 F. Supp. 2d 109, 119 (D.D.C. 2004). 

A relevant market has two parts: a product market and a geographic market, Marine 

Bancorp., 418 U.S. at 618. The relevant product market identifies the object of Defendants’ 

competition, and the relevant geographic market identifies where that competition takes place. 

See Arch Coal, 329 F. Supp. 2d at 119. 

The parties sharply contest both aspects of the relevant market. The FTC argues that the 

relevant market is non-electronics grade hydrogen peroxide within two separate geographic 

markets, the Pacific Northwest and the Southern and Central United States. Defendants argue 

that both components of the FTC’s proposed market are overbroad and inconsistent with the 

commercial realities of the industry. The Court agrees with Defendants that the FTC has not met 

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its burden of establishing its prima facie case because it has not identified a relevant market 

within which to analyze the merger’s possible anticompetitive effects. That failure begins and 

ends with the FTC’s theory of supply-side substitution, or “swinging,” a substantial departure 

from the typical way in which a product market is defined. 

a. The FTC’s Product Market and Alternative Product Markets 

The Court begins with the FTC’s proposed product market for the sale of standard, 

specialty, and pre-electronics grade hydrogen peroxide, which it calls the “non-electronics” 

hydrogen peroxide market. PPFFCL at 84 ¶¶ 23–25. 

Product markets are almost always defined by demand substitution. See Heinz, 246 F.3d 

at 718; Wilhelmsen, 341 F. Supp. 3d at 45 (demand substitution the “touchstone” of product 

market definition). Demand substitution describes “customers’ ability and willingness to 

substitute away from one product to another in response to a price increase or a corresponding 

non-price change such as a reduction in product quality or service.” Merger Guidelines § 4. 

Demand substitution polices the “outer boundaries of a product market” and is governed by 

either (1) consumers’ “reasonable interchangeability of use” or (2) the “cross-elasticity of 

demand” (price sensitivity) between a product and substitutes for it. Brown Shoe, 370 U.S. at 

325. When aggregating products into a relevant market, courts focus on demand substitution 

because it illuminates whether customers can switch to one product and constrain 

anticompetitive pricing in another. United States v. Aetna Inc., 240 F. Supp. 3d 1, 20 (D.D.C. 

2017); see FTC v. Swedish Match, 131 F. Supp. 2d 151, 157 (D.D.C. 2000); Hill Hrg. Tr. 

2076:15–25. For instance, if customers would switch from Jif peanut butter to Peter Pan 

following a price increase, those two products are more likely to be included in a relevant 

product market. 

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A relevant product market also “must be drawn narrowly to exclude any other product to 

which, within reasonable variations in price, only a limited number of buyers will turn; in 

technical terms, products whose ‘cross-elasticities of demand’ are small.” Times-Picayune Pub. 

Co. v. United States, 345 U.S. 594, 612 n.31 (1953); see Arch Coal, 329 F. Supp. 2d at 120 

(“Relevant market analysis is based on the ‘narrowest market’ principle.”); Merger Guidelines 

§ 4.1.1 (product market defined based on “smallest relevant market satisfying the hypothetical 

monopolist test”). For example, Jif may compete with mayonnaise “in the overall marketplace” 

for sandwich spreads, but that does not necessarily mean both should “be included in the relevant 

product market for antitrust purposes,” Staples I, 970 F. Supp. at 1075. 

Courts use two approaches to help define a relevant product market. The first is the 

“hypothetical monopolist test.” FTC & DOJ Horizontal Merger Guidelines (2010), § 4.1.1. The 

test asks whether a hypothetical monopolist controlling the products in the alleged market could 

profitably impose at least a small but significant and non-transitory increase in price (SSNIP), 

generally assumed to be about five percent, on at least one product in the market.2 FTC v. 

Staples, Inc., 190 F. Supp. 3d 100, 121–22 (D.D.C. 2016) (Staples II). If a hypothetical 

monopolist can profitably impose a SSNIP, the products may comprise a relevant market. Id. at 

121. The second approach weighs the Brown Shoe factors: “industry or public recognition of the 

[relevant market] as a separate economic entity, the product’s peculiar characteristics and uses, 

 

2

 The Merger Guidelines, while not binding on courts, offer persuasive guidance in examining 

competitive effects. See Heinz, 246 F.3d at 716 n.9. They also recognize that a SSNIP may be 

“larger or smaller than five percent” based on industry specifics, § 4.1.2, but the FTC’s 

uncontested position is that a SSNIP of “about five percent” is appropriate. PPFFCL at 2 ¶ 5. 

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unique production facilities, distinct customers, distinct prices, sensitivity to price changes, and 

specialized vendors.” Brown Shoe, 370 U.S. at 325; see Wilhelmsen, 341 F. Supp. 3d at 47.3 

While the Merger Guidelines explicitly state that “[m]arket definition focuses solely on 

demand substitution factors,” § 4, they provide an exception to that general rule when “supply 

side substitution” may be used to aggregate products that are not demand substitutes into one 

market, id. § 5.1 & n.8. Rather than relying on consumers’ ability to constrain prices, supplyside substitution or elasticity focuses on suppliers’ responsiveness to price increases and their 

ability to constrain anticompetitive pricing by readily shifting what they produce. See Rebel Oil 

Co. v. Atl. Richfield Co., 51 F.3d 1421, 1436 (9th Cir. 1995); Rothman Rpt., JX0075-034 

(aggregating products that are supply-side substitutes better “reflect[s] suppliers’ competitive 

significance”). According to supply-side substitution theory, the higher the cross-elasticity of 

supply—“the capability of . . . production facilities to be converted to produce a substitute 

product”—“the more likely it is that the alternative products are to be counted in the relevant 

market.” Cardinal Health, 12 F. Supp. 2d at 46; see Brown Shoe, 370 U.S. at 325 n.42 (“The 

cross-elasticity of production facilities may also be an important factor in defining a product 

market.”); Rothery Storage & Van Co. v. Atlas Van Lines, Inc., 792 F.2d 210, 218 (D.C. Cir. 

1986) (same). 

The Merger Guidelines offer a helpful shorthand for supply side substitution—

“swinging.” Suppliers are said to have “readily available ‘swing’ capacity” to “rapidly” enter a 

product market—and therefore to constrain anticompetitive pricing—if “supply side substitution 

 

3

 “The Brown Shoe practical indicia may indeed be old school, and its analytical framework 

relegated ‘to the jurisprudential sidelines.’ But Brown Shoe remains the law, and this court 

cannot ignore its dictates.” FTC v. Sysco Corp., 113 F. Supp. 3d 1, 27 n.2 (D.D.C. 2015) 

(quoting FTC v. Whole Foods Market, Inc., 548 F.3d 1028, 1059 (2008) (Kavanaugh, J., 

dissenting)) (cleaned up). 

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is” (1) “nearly universal among the firms selling one or more of a group of products,” (2) “easy,” 

and (3) “profitable.” Merger Guidelines § 5.1 & n.8 (cleaned up); PPFFCL at 84–85 ¶ 24. The 

parties’ experts “agree that proof of each of these three conditions is required before a relevant 

product market may be defined based on supply-side considerations,” DPFFCL at 23 ¶ 68, and 

the Court sees no reason to disagree.4 Rebel Oil offers a helpful illustration of supply-side 

substitution. The court in that case grouped the sale of self-serve and full-service gasoline into 

one relevant product market because it found that “sellers of full-serve gasoline can easily 

convert their full-serve pumps, at virtually no cost, into self-serve, cash-only pumps, expanding 

output and thus constraining any attempt by [the defendant] to charge [higher] prices for selfserve gasoline.” 51 F.3d at 1436. 

i. Swinging Between Standard, Specialty, and PreElectronics Grade Hydrogen Peroxide 

The FTC’s only basis for aggregating standard, specialty, and pre-electronics grade 

hydrogen peroxide into a single market is supply-side substitution. Rhilinger Hrg. Tr. 2272:14–

16. The Court therefore turns to the evidence about whether suppliers’ swinging between 

production of these grades is nearly universal, easy, and profitable, as set forth in the Merger 

 

4

 The 2010 Merger Guidelines’ reference to swinging postdates the very few cases that have 

considered supply-side substitution, so those cases do not reference the three swinging 

requirements. Nonetheless, the case law is generally consistent with them. See, e.g., Brown 

Shoe, 370 U.S. at 366–68 (Harlan, J., dissenting in part, concurring in part) (swinging between 

women’s and men’s shoes); United States v. Colum. Steel Co., 334 U.S. 495, 510–11 (1948) 

(swinging production of different rolled steel products); Rebel Oil, 51 F.3d at 1436 (swinging 

between offering full-service and self-serve gasoline); Virtual Maint., Inc. v. Prime Comput., 

Inc., 11 F.3d 660, 665 (6th Cir. 1993) (swinging between computer systems with and without 

software updates included); FTC v. Elders Grain, Inc., 868 F.2d 901, 907 (7th Cir. 1989) 

(swinging between variations of industrial dry corn); cf. FTC & DOJ Horizontal Merger 

Guidelines §§ 1.32–1.322 (1997) (describing similar parameters for defining aggregate product 

market based on supply side substitution). 

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Guidelines. The Court finds that the FTC has failed to meet its burden of showing that supplyside substitution across these three grades meets any of the three requirements. 

(A) Nearly Universal 

The Court cannot conclude, as the FTC urges, that swinging across these grades—while 

present to some degree—is “nearly universal” among the market participants. Merger 

Guidelines § 5.1 n.8. 

First, and most obviously, three of the five North American suppliers of hydrogen 

peroxide do not, at present, swing to the production of pre-electronics grade hydrogen peroxide: 

they simply do not produce that product. PeroxyChem and Solvay produce a purified hydrogen 

peroxide “feedstock” that is a precursor to their production of electronics grade hydrogen 

peroxide. Montag Hrg. Tr. 1528:1–5; Kramer Hrg. Tr. 1635:19–1636:7; Suter Hrg. Tr. 412:11–

17. But just because they further refine this feedstock to make electronics grade hydrogen 

peroxide does not mean it is pre-electronics grade for swinging purposes. In fact, PeroxyChem 

and Solvay do not market or sell their feedstock to customers as pre-electronics grade hydrogen 

peroxide. JX0001-004, Hancock Declaration ¶¶ 22–23; Montag Hrg. Tr. 1531:23–1532:1; Suter 

Hrg. Tr. 434:24–435:11. For that reason, they do not constrain the prices of pre-electronics 

grade hydrogen peroxide sold by Evonik and Arkema. 

 Radlinski Hrg. Tr. 572:4–6, 572:18–23. Swinging is not nearly universal 

between grades of hydrogen peroxide where a majority of suppliers do not swing into one of the 

three grades. 

Second, although all suppliers produce hydrogen peroxide for more than one end use, 

some do not swing into specialty grade hydrogen peroxides formulated for specific end uses. For 

example, Evonik does not sell an aseptic packaging product in the United States, and Nouryon 

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does not make one at all. Suter Hrg. Tr. 411:18–412:7; Corson Hrg. Tr. 597:14–22, 672:12–16; 

PX2187–040. The tin stabilizer in Evonik’s hydrogen peroxide prohibits it from marketing a 

chemical synthesis product and from obtaining EPA approval to market hydrogen peroxide 

biocide products. Corson Hrg. Tr. 666:6–667:16; DX0348; PX1522-001 to -002; PX1055-001. 

Some suppliers also do not swing into specialty grade hydrogen peroxide formulated for medical 

sterilization, contact lens solution production, and rocket propulsion. DPFFCL at 87 ¶ 234 

n.537. 

The FTC tries to waive away this evidence by arguing that specialty grade hydrogen 

peroxide formulated for those various end uses to which suppliers cannot swing comprises a 

small percentage “of all H2O2 in North America.” PPFFCL at 16 ¶ 50. But the FTC decided to 

include specialty grade hydrogen peroxide in its proposed product market, and this argument 

says nothing about the ability—or inability—of various suppliers to swing into different 

specialties. The FTC has not provided evidence, as it must to establish a product market based 

on swinging across grades, see Arch Coal, Inc., 329 F. Supp. 2d at 119, that shows the portion of 

the specialty grade market to which suppliers actually do swing.5

Finally, it bears noting that much of what the FTC characterizes as swinging in the 

hydrogen peroxide market is not the sort of activity that constrains prices in the way the Merger 

Guidelines appear to intend. This is so because over time suppliers are moving overwhelmingly 

 

5

 Defendants also argue that swinging is not nearly universal because the hydrogen peroxide 

manufacturing process limits suppliers from swinging 100 percent of their capacity to specialty 

or pre-electronics grade hydrogen peroxide. See DPFFCL at 25 ¶ 74; id. at 32 ¶ 87. While this 

may distinguish swinging in the hydrogen peroxide industry with swinging from the Fourdrenier 

paper machine, not all capacity necessarily needs to swing into a substitute market in order to 

constrain anticompetitive prices. To constrain prices for specialty or pre-electronics grade 

hydrogen peroxide, a minority of the overall hydrogen peroxide market, see Rothman Hrg. Tr. 

755:21–25, suppliers need only purify a fraction of their standard grade hydrogen peroxide. 

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in one direction toward higher purity products that are more profitable. In fact, Defendants’ 

expert, Dr. Nicholas Hill, persuasively testified that a supplier’s adjustments described above—

the “strategic decision to sell more of one of its products and less of another . . . in one 

direction”—is not swinging under the Guidelines. Hill Hearing Tr. 2078:7–10 (emphasis 

added). Rather, swinging “means to move back and forth producing those products”—like a 

swing. Id. 2077:24–2078:6. Dr. Hill’s prototypical swinging example is the Fourdrenier paper 

machine. Id. 2079:17–18. The machine shifts between producing containerboard for cardboard 

boxes and kraft paper for grocery bags. Id. 2079:6–2080:1. Of course, cardboard boxes and 

grocery bags are not demand substitutes, but based on the relative profitability of those two 

products at any given time, the supplier “swings” between the two “at the touch of a button.” Id. 

Dr. Hill’s conception of swinging “back and forth” is intuitive and tracks the few cases to 

recognize supply substitution; the Fourdrenier paper machine is like the retailer swinging 

between full-service and self-serve gasoline in Rebel Oil, 51 F.3d at 1436. 

 In contrast, the record suggests that the market for hydrogen peroxide reflects a long-term 

shift in production in one direction, toward high-purity, specialized products that are more 

profitable. See, e.g., JX0151-016 

id. -017 

 Rettig Hrg. Tr. 1047:10–15 (Evonik “focusing on specialty chemicals” because they 

“promise higher returns in terms of profitability.”). At the same time, suppliers are moving away 

from the shrinking pie that is the pulp and paper industry. As a result, these shifts in production 

are not as likely to constrain anticompetitive prices downward, for example, for standard grade 

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hydrogen peroxide, as would be the case if suppliers more commonly swung both back and forth 

between grades. 

 For these reasons, the record does not support the conclusion that swinging across 

standard, specialty, and pre-electronics grade hydrogen peroxide is nearly universal. 

(B) Easy 

Similarly, the Court cannot conclude that swinging across all these grades—while in 

some cases relatively simple—is generally “easy” for purposes of analyzing competition in the 

hydrogen peroxide market. 

The Merger Guidelines’ section that references swinging lacks a definition for “easy,” 

§ 5.1, but later on, the Guidelines describe “easy” entry into a market as “timely, likely, and 

sufficient in its magnitude, character, and scope to deter or counteract the competitive effects of 

concern,” § 9.6 These standards reflect why courts consider supply substitution in product 

market definition—to assess if suppliers can constrain anticompetitive prices. 

The record is clear that it is easy for some suppliers, merely as a matter of production 

mechanics, to swing some capacity up-grade or down-grade between standard, specialty, and—

for the two suppliers who currently market pre-electronics—pre-electronics grade hydrogen 

peroxide. Suter Hrg. Tr. 406:9–14; Myrick Hrg. Tr. 485:24–486:11; Radlinski Hrg. Tr. 539:16–

19; Hamann Hrg. Tr. 1322:3–19; Kramer Hrg. Tr. 1685:8–14, 1686:10–13, 1696:4–10, 1696:25–

1698:8. Evonik admitted as much to regulators before the FTC moved for a preliminary 

injunction. See PX0019-010 (“some” diversion from specialty to standard grade hydrogen 

 

6

 An earlier version of the Merger Guidelines—which does not use the word “easy” to describe 

product market definition by supply substitution—suggests that swinging into the “production 

and sale of the relevant product” must take place “within one year” in response to a SSNIP in the 

relevant product. Merger Guidelines § 1.321–1.322 (1997); see also id. § 1.321 n.14. 

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peroxide “could be easily and quickly accomplished at no significant cost”); PX1201-012 ( ). 

But in many other cases, the evidence is just as clear that it is not easy for a given 

supplier to swing into a given grade. Although suppliers can swing 100 percent of their capacity 

down-grade, Hill Hrg. Tr. 2165:22–2166:4, the manufacturing process limits how much can 

swing up-grade; a plant can only commit to percent of output to specialty grade hydrogen 

peroxide, and only percent of that specialty grade can be purified into pre-electronics grade, 

leaving around pounds of pre-electronics grade hydrogen peroxide for every 100 pounds of 

crude. ; ; 

; JX0151-015. As discussed above, this limitation does not necessarily stop 

suppliers from constraining prices across grades. That said, it does make it difficult 7

The FTC argues that it is easy for the three suppliers who do not market pre-electronics 

grade hydrogen peroxide to swing into that market. Indeed, some of Evonik’s submissions to 

regulators give the same impression: 

 PX0002-031; PX1201-012. And in 

general, the technology required to produce pre-electronics grade is not substantially different 

from the technology required to produce lower-grade hydrogen peroxide. See

; PX1387-010 to -017. 

 7

 See DPFFCL at 25–26 ¶¶ 72, 75. 

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But the reality is much more complicated. Producing pre-electronics grade hydrogen 

peroxide requires additional equipment, including a second reverse osmosis unit, additional 

testing (several times a day) to ensure the equipment is working, specially trained personnel, a 

specially equipped room and laboratory, and 

. Hamann Hrg. Tr. 1282:3–1286:16. Evonik has years of experience 

supplying pre-electronics grade hydrogen peroxide to MGC from its plant in Mobile, Alabama, 

and it still cost the company over more than to upgrade its Gibbons, 

Alberta, plant to supply the same product. See Costanzo Hrg. Tr. 1136:5–1137:3, 1144:11–

1145:9 ( ); Hamann Hrg. Tr. 1326:25–1327:14; PX0002-031. And all of 

that assumes the supplier even has the technical know-how to produce pre-electronics grade 

hydrogen peroxide, far from a given. Were a supplier like —which has never tried to 

produce pre-electronics grade, , likely because of the 

complexity and costs just described—to try to swing into that market, the effort would be 

anything but “timely, likely, [or] sufficient” to constrain prices. Merger Guidelines § 9. 

Counterintuitively, it is also not easy for PeroxyChem or Solvay—which make 

electronics grade hydrogen peroxide—to swing into pre-electronics grade, either. The FTC 

produced some evidence that PeroxyChem may be able to market its electronics feedstock as preelectronics grade hydrogen peroxide. But MGC—“the largest customer for pre-electronics[,] 

which buys on the order of 99 percent of pre-electronics that’s sold,” Hill Hrg. Tr. 2080:22–23; 

see also JX0001-001—has never approved feedstock as satisfactory 

pre-electronics grade hydrogen peroxide after years of trying on their part. See PPFFCL at 10–

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11 ¶¶ 32–33.8 It is exceedingly difficult for 

 pre-electronics hydrogen peroxide, PX0002-031, a product for which suppliers measure 

impurities in “parts per billion,” Hamann Hrg. Tr. 1281:13. See DPFFCL at 26–27, 29 ¶¶ 77–78, 

81. That includes PeroxyChem and Solvay, even though they sell electronics grade hydrogen 

peroxide, it is not easy for them to sell pre-electronics grade. A world-renowned baker may sell 

birthday cakes; it does not mean he can come close to swinging into the cake-mix market if Betty 

Crocker decides to raise prices. Mahr Hrg. Tr. 2327:13–16.9 

For these reasons, the Court cannot conclude that swinging across standard, specialty, 

and pre-electronics grade hydrogen peroxide is easy. 

(C) Profitable 

Finally, the FTC has not met its burden of showing that swinging between grades of 

hydrogen peroxide is likely to be profitable, because swinging down-grade is, in general, not 

profitable. See Merger Guidelines § 5.1. In other words, suppliers’ average profits increase so 

much up-grade that even if the price of standard grade or specialty grade increased by five or 

 

8

 An internal Evonik document could be construed to suggest that Evonik considers PeroxyChem 

and Solvay competitors for pre-electronics grade H2O2, see PPFFCL at 12 ¶ 35 (citing PX1156-

010), but the better reading of that chart is that it represents the entire electronics market, with 

Arkema and Evonik’s slices meant to signify the pre-electronics hydrogen peroxide they supply 

to MGC. See DPFFCL at 27 ¶ 79. 

9

 The parties also contest the difficulty of Evonik and PeroxyChem’s swinging between grades of 

hydrogen peroxide in a manner that does not necessarily bear on the market’s ability to constrain 

prices post-merger because it does not impact other suppliers’ ability to constrain a post-merger 

Evonik. It is difficult for Evonik to swing into tin-free hydrogen peroxide products and aseptic 

packaging, but PeroxyChem currently and easily swings into each of these end uses, see Montag 

Hrg. Tr. 1516:20–1517:19, 1522:9–25, and so will a post-merger Evonik. Similarly, it is 

difficult for PeroxyChem to swing into pre-electronics grade hydrogen peroxide, but Evonik 

already markets pre-electronics hydrogen peroxide, see JX0001-002. Evidence of 

PeroxyChem’s ability to break into that market is therefore only relevant to the extent that it 

reflects swinging difficulties faced by other suppliers 

 PPFFCL 

at 10–11 ¶¶ 32–33. 

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even ten percent, suppliers are unlikely to switch production down-grade from specialty or preelectronics grade hydrogen peroxide. 

For example, Evonik’s average profit margins per pound of hydrogen peroxide are about 

 cents for standard grade, cents for specialty grade ( percent higher than standard grade), 

and cents for pre-electronics grade ( percent higher than standard grade and percent 

higher than specialty grade). JX0066-043 fig. 10; Costanzo Hrg. Tr. 1143:5–1144:1, 1176:14–

19 (selling standard grade instead of pre-electronics “would be a disaster on the investment 

economics” and “the intent [is] to sell it as specialty”). Other suppliers’ margins similarly 

increase up-grade. See ; JX0151-022 (showing 

specialty grade with percent higher profit margin than standard grade, pre-electronics grade 

with percent higher than standard grade and percent higher than specialty grade); Lerner 

Hrg. Tr. 1377:9–20 (swinging production from specialty to standard grade hydrogen peroxide 

would be “economic suicide” and “make[] no commercial, business or any logical sense”). 

The FTC objects to using average profit margins to judge profitability. Its expert, Dr. 

Dov Rothman, found that some standard and specialty grade hydrogen peroxide products sell at a 

higher margin than some higher-grade products,10 likely because of regulatory or customer-

 

10 [F]or percent of Evonik’s volume of food grade hydrogen peroxide, Evonik’s 

per unit margin is higher than Evonik’s average per unit margin on pre-electronics 

grade; for percent of Evonik’s volume of cosmetics grade hydrogen 

peroxide, Evonik’s per unit margin is higher than Evonik’s average per unit 

margin on pre-electronics grade; for percent of Evonik’s volume of hydrogen 

peroxide for teeth whitening, Evonik’s per unit margin is higher than Evonik’s 

average per unit margin on pre-electronics grade. Furthermore, while food grade, 

cosmetics grade and hydrogen peroxide for teeth whitening are relatively low 

volume products for Evonik, for every 100 units of pre-electronics grade 

hydrogen peroxide that Evonik sells, it sells units of standard grade hydrogen 

peroxide at a per unit margin that is higher than its average per unit margin on 

pre-electronics grade. 

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focused specifications. There are three reasons why the Court cannot find that this evidence 

means that swinging down-grade is generally profitable, such that it is appropriate to lump 

standard, specialty, and pre-electronics grade hydrogen peroxide together in a single product 

market. 

First, the FTC has provided no data on what percentage of the standard and specialty 

grade markets are comprised of these supposed high-profit-margin products to which suppliers 

could swing. Second, this subset of high-margin standard and specialty grade products increases 

the average margins for those products, thereby masking what otherwise would be even starker

profitability differences between grades. Third—and key for assessing the ability of suppliers to 

constrain prices—if suppliers wanted to produce more higher-margin standard or specialty grade 

products, they would not do so by swinging down-grade from their profitable stock of specialty 

and pre-electronics grade hydrogen peroxide. They would instead try to convert their existing 

stock of lower-margin standard and specialty grade hydrogen peroxide to higher-margin 

products. Hill Hrg. Tr. 2083:2–21; see (if demand increased 

for standard grade hydrogen peroxide, “we would just supply them from our production of 

standard product,” not from pre-electronics grade product). This is consistent with suppliers’ 

long-term shift in production toward more profitable, specialized, and high-purity products 

described above. 

At closing argument, the FTC argued that swinging does not have to be profitable 

“between every combination of products” and that a “snapshot in time” of current contracts and 

profitability could be misleading. Rhilinger, Hrg. Tr. 2395:14–2396:7. The Court does not 

 

Rothman Rebuttal Rpt., PX7102-017; see also Rothman Hrg. Tr. 791:24–792:19. 

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mean to suggest that swinging must be profitable between every combination of products to meet 

this requirement. But here, there are consistent and significant profitability differences between 

selling standard, specialty, and pre-electronics grade hydrogen peroxide. And based on that 

record, including the overall trend in the market, the Court cannot conclude that in response to a 

SSNIP on standard or specialty grade hydrogen peroxide, suppliers would likely swing downgrade and constrain those prices; the profit margins are, in general, simply too much higher in 

higher grades. 

To be sure, these differences in profitability suggest that suppliers may constrain 

anticompetitive prices in specialty or pre-electronics grade by swinging up from lower-margin 

standard grade hydrogen peroxide. But as discussed above, suppliers do not swing up-grade 

nearly universally because it is not easy. See Hill Rpt., JX0066-043 (“The rewards to producing 

pre-electronics grade are already so high that firms that do not produce it likely do not do so for 

reasons that will not change in response to a small price increase.”). And all three swinging 

requirements must be met to aggregate grades of hydrogen peroxide in a relevant product 

market.11 

For all the above reasons, the FTC cannot combine standard, specialty, and preelectronics grades in a relevant product market to analyze the anticompetitive effects of the 

proposed merger. Therefore, the FTC’s proposed relevant product market does not support its 

prima facie case. 

 

11 The FTC also argues that its proposed market satisfies the hypothetical monopolist test 

because consumers would not substitute away from non-electronics hydrogen peroxide to other 

chemicals. See, e.g., PFFCL at 85 ¶ 25. That cannot save the FTC’s overbroad market. The 

hypothetical monopolist test “is designed to ensure that candidate markets are not overly 

narrow.” Merger Guidelines § 4; see also id. § 4.1.1 (test “does not lead to a single relevant 

market”). It says nothing about whether a market is overly broad. 

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ii. Alternative Product Markets 

Defendants argue that this failure means the Court need go no further: without a relevant 

product market, the FTC cannot succeed. See Mahr Hrg. Tr. 2401:22–2402:13. The FTC could 

have pleaded or argued for alternative markets, they say, but it did not, and “it’s not the Court’s 

job to go around and try to find that correct market.” Mahr Hrg. Tr. 2402:8–13 (cleaned up). 

And the FTC candidly recognizes that it has “not alleged in [the] complaint a market for 

standard-grade hydrogen peroxide or any other, sort of, combination of products.” Rhilinger 

Hrg. Tr. 2389:16–18; see Compl. ¶¶ 23–24 (“The relevant product market in which to assess the 

effects of the Acquisition is hydrogen peroxide,” excluding “electronics grade hydrogen 

peroxide.”). 

Defendants’ argument is not without support. The FTC has the burden to prove a 

relevant product market when it seeks a preliminary injunction, see Arch Coal, 329 F. Supp. 2d 

at 120, a point with which the FTC does not quibble, see Rhilinger Hrg. Tr. 2389:9–10 (“the case 

law says that we need to prove a relevant market in which we can show harm”). This is so 

because without a relevant product market, the FTC cannot show a likelihood of ultimate success 

on its claim under the Clayton Act. See 15 U.S.C. § 18 (prohibiting acquisitions whose “effect 

. . . may be substantially to lessen competition” in “any line of commerce”); Heinz, 246 F.3d at 

719 n.17 (“Courts interpret ‘line of commerce’ as synonymous with the relevant product 

market.”); see FTC v. Whole Foods Market, Inc., 548 F.3d 1028, 1036 (2008) (Brown, J.) 

(“market definition is . . . necessary in a § 7 case” (citing 15 U.S.C. § 18)).12 

 

12 The D.C. Circuit’s Whole Foods decision lacked a majority opinion. See Whole Foods, 548 

F.3d at 1051 n.1, 1061 n.8 (Kavanaugh, J., dissenting). Thus, in referring to one of the two 

concurring opinions or the dissent, the Court will indicate the name of the Judge whose opinion 

is cited. See id. at 1032 (Brown, J.); id. at 1041 (Tatel, J.); id. at 1051 (Kavanaugh, J., 

dissenting). 

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But just because the relevant product market is not “as broad[] as the Government 

chooses to define it,” the record may still contain evidence of an alternative relevant product 

market in which to analyze the merger’s competitive effects. Brown Shoe, 370 U.S. at 368 

(Harlan, J., dissenting in part, concurring in relevant part). “The duty rests with the District 

Court . . . to determine what is the appropriate market on an appraisal of the relevant economic 

considerations.” Id. And despite the FTC’s insistence that the relevant product market should 

not “be defined around individual grades of H2O2 or end uses,” Br. at 14, it has provided 

quantitative evidence of alleged anticompetitive harm in a narrower alternative market consisting 

solely of standard grade hydrogen peroxide in the Southern and Central United States. See

Rothman Rpt., JX0075-052 & n.159, -094 & n.324, -104 & n.350 (providing market 

concentration statistics, predicted first order approximation price effects, and merger simulation 

predicted price effects, assuming that PeroxyChem divests its Prince George facility to a new 

competitor). The parties also agree that hydrogen peroxide formulated for particular end uses 

could constitute separate product markets, see PPFFCL at 3, 5 ¶¶ 11, 15; DFFCL at 21–22 

¶¶ 62–63, though the FTC has not provided any specific data related to end uses with which to 

evaluate the merger. The Court thus proceeds to consider the evidence in the record as to 

whether either (1) standard grade hydrogen peroxide or (2) hydrogen peroxide formulated for 

specific end uses is a relevant product market for purposes of assessing the merger’s competitive 

effects.13

 

13 The record lacks evidence of market concentration statistics or other quantitative measures of 

anticompetitive effects for alternative specialty grade or pre-electronics grade hydrogen peroxide 

product markets. 

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(A) Standard Grade Hydrogen Peroxide 

Standard grade hydrogen peroxide serves various end uses, including the bleaching of 

pulp, paper, and textiles; it is also used in wastewater treatment and in the mining and oil and gas 

industries. Dumas Hrg. Tr. 235:1–3; Suter Hrg. Tr. 408:8–14; Costanzo Hrg. Tr. 1223:6–13; 

Montag Hrg. Tr. 1566:5–1567:2, 1600:23–1601:3. It is often referred to as a “commodity”—a 

product that can be used interchangeably among suppliers with ease, where they compete mainly 

on price. See PPFFCL at 34 ¶ 120; DPFFCL at 8 ¶ 15; JX0120-001; Anderson Hrg. Tr. 193:1–

18. However, this does not necessarily mean that all standard grade hydrogen peroxide, 

regardless of end use, constitutes a relevant product market. See Arch Coal, 329 F. Supp. 2d at 

120 (describing “the ‘narrowest market’ principle”). For that, there must be sufficient demandside substitution among standard grade products, or—as discussed above—supply-side 

substitution may suffice in the exceptional case if the Merger Guidelines’ swinging requirements 

are met. 

On the demand side,“[d]etermination of the competitive market for commodities depends 

on how different from one another are the offered commodities in character or use, how far 

buyers will go to substitute one commodity for another.” E. I. du Pont., 351 U.S. at 393; see 

Staples I, 970 F. Supp. at 1074. The FTC has not argued that there is demand-side 

substitutability across formulations of standard grade hydrogen peroxide.14 And perhaps for that 

 

14 While the FTC has consistently pleaded and argued for a product market consisting of nonelectronics grade hydrogen peroxide, Defendants contend that the FTC’s swinging theory only 

arose after it moved for a preliminary injunction: 

This supply side approach didn’t arise until Dr. Rothman’s report after the fact 

discovery was closed. There is no mention in the complaint of supply side factors 

informing product market definition, none. There’s no mention of the word 

“swing” or “shift” anywhere in the FTC’s complaint. They ask no discovery of 

any of the five suppliers leading up to -- in the discovery leading up to the 

hearing, anything about their ability to shift or swing. 

Mahr Hrg. Tr. 2321:8–15. 

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reason, there is no evidence in the record that buyers are likely “to substitute one commodity for 

another” in response to a SSNIP for a particular end use. Staples I, 970 F. Supp. at 1074. For 

example, if a customer for standard grade hydrogen peroxide used in in fracking—removing oil 

and gas from subterranean rocks and fissures—experienced a SSNIP, the record does not show 

that she is likely to instead purchase standard grade hydrogen peroxide intended for bleaching 

pulp and paper. While all standard grade hydrogen peroxide has a similar purity and chemical 

composition, its “character or use” appears sufficiently different across end uses. Id. To the 

extent the record contains evidence on this point at all, it suggests that customers primarily view 

standard grade hydrogen peroxide produced by different suppliers as interchangeable within—

but not between—end uses. See, e.g., Maeder Hrg. Tr. 170:16–172:5 (pulp and paper end use); 

Engram Hrg. Tr. 317:2–11, 361:21–362:24 (wastewater treatment end use); PPFFCL at 13 ¶ 42 

(oil and gas end use); PPFFCL at 4 ¶ 12 (“The precise combination of purity level, concentration, 

and stabilization package varies depending on the [end use] of H2O2, but within each [end use], 

H2O2 sold by each producer is very similar.”). Therefore, the different end-use products are not 

demand substitutes, and they cannot be aggregated into a single standard grade product market 

on that basis.15 

 The Court thus turns to the swinging exception to the usual demand-side rule. Merger 

Guidelines § 5.1; see Heinz, 246 F.3d at 718 (“The definition of product market focuses solely 

 

15 The Brown Shoe practical indicia also weigh against a standard grade market. The hydrogen 

peroxide industry recognizes “well-defined submarkets” by end use; end uses within standard 

grade, by their definition, have “peculiar characteristics and uses”; their customers tend to be 

different (save for distributors who re-sell hydrogen peroxide into various industries); and prices 

are distinct. Brown Shoe, 370 U.S. at 325; see, e.g., PPFFCL at 4 ¶ 12; Dumas Hrg. Tr. 235:1–3; 

PX2047-031 (standard grade hydrogen peroxide for mining sells at nearly 15 percent higher 

price than for pulp and paper bleaching); JX0083-065 to -118 (Evonik’s competitor details 

database). 

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on demand substitution factors.” (cleaned up)). Under the Merger Guidelines, swinging within 

standard grade hydrogen peroxide formulations must be nearly universal, easy, and profitable 

before those products may be aggregated into one market. See § 5.1 & n.8. 

The record is not totally clear on the ease and near universality of swinging between the 

various formulations of standard grade hydrogen peroxide. This is likely so because the FTC 

never proposed such a product market; it only argued these points to support swinging between 

standard, specialty, and pre-electronics grades. But the evidence suggests that as a practical 

matter, such swinging is possible and happens to some extent. See PPFFCL at 4 ¶ 12; PX1201-

012. Many of the obstacles to swinging between grades, explained above, do not apply to 

swinging between the various formulations of standard grade. And most suppliers already make 

the various formulations required for bleaching pulp, paper, and textiles; for treating wastewater; 

and for use in the mining and oil and gas industries. See JX0083-065 to -118 (Evonik’s 

competitor details database). 

The problem is the lack of record evidence on profitability. The Court cannot find that 

standard grade hydrogen peroxide is a relevant product market because the record lacks evidence 

that swinging between standard grade formulations is likely to be profitable. In fact, the limited 

evidence in the record suggests substantial differences in profitability across standard grade 

formulations. Dr. Rothman found that “for every 100 units of pre-electronics grade hydrogen 

peroxide that Evonik sells, it sells units of standard grade hydrogen peroxide at a per unit 

margin that is higher than its average per unit margin on pre-electronics grade,” Rothman 

Rebuttal Rpt., PX7102-017; see also Rothman Hrg. Tr. 791:24–792:19. The average profit 

margin for Evonik’s standard grade hydrogen peroxide is about cents, and the profit margin 

for its pre-electronics grade hydrogen peroxide is cents. JX0066-043 fig. 10. That means a 

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subset of standard grade hydrogen peroxide sells at a profit margin percent higher than the 

average for standard grade. And of course, that means that some standard grade hydrogen 

peroxide sells for even more than the percent higher profit margin than other standard grade 

formulations, like that for pulp and paper bleaching, which has some of the lowest margins. See, 

e.g., Anderson Hrg. Tr. 199:23–25; Lerner Hrg. Tr. 1379:13–24, 1381:6–18. Admittedly, the 

evidence in the record on this point is minimal.16 But it is the FTC’s burden to define the market 

and, if relying on supply-side substitutability, show that swinging is likely profitable. The 

evidence does not suggest that in response to a SSNIP of five percent in lower-profit standard 

grade hydrogen peroxide, suppliers likely would swing from higher-profit standard grade to 

constrain the price for the lower-profit formulation. 

And as described above, this shortcoming reflects a more fundamental issue with the 

FTC’s overall product market definition. To some degree, suppliers’ decisions to make different 

hydrogen peroxide products does not appear to represent swinging at all, because in general, it is 

only profitable to shift production in one direction to more specialized products that “are more 

stable in economic downturns” relative to pulp and paper products. Rettig Hrg. Tr. 1047:14–15; 

see, e.g., JX0151-016 to -017; Once that happens, there 

is no evidence that, in general, suppliers shift back, or that it would be profitable to do so in 

response to a SSNIP. In other words, this is not an industry of suppliers prepared to swing and 

constrain prices across lower-profit formulations, even within an alternative market for standard 

grade hydrogen peroxide. 

 

16 The record does include some evidence on pricing for standard grade, see, e.g., PX2047-031; 

Hill Rpt. JX0066-098 fig. 45, but the Court is unable to glean from that data the profit margins 

for each product, which is the relevant metric to assess whether suppliers are likely to swing. Cf. 

Rebel Oil, 51 F.3d at 1436 (“it is immaterial that . . . a price differential exists” between supplysubstitutable products). 

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(B) End Uses of Hydrogen Peroxide 

At this point, then, the FTC has not proven its proposed relevant product market for all 

non-electronics grade hydrogen peroxide. Neither has it shown, in the alternative, a relevant 

market for standard grade. Moving one last step narrower, the evidence in the record does

support a relevant product market for hydrogen peroxide based on traditional demand 

substitutability: hydrogen peroxide products formulated for different end uses, regardless of 

grade.17 

The record is reasonably clear that “within any given end-use for H2O2, the product 

offerings of the five H2O2 suppliers are largely undifferentiated.” PPFFCL at 33 ¶ 118. And in 

contrast, across end uses, customers do not find the products substitutable. For example, most 

suppliers make a specialty grade product used to preserve food packaged for sale known as 

aseptic packaging hydrogen peroxide. Customers for that product do not view standard grade 

hydrogen peroxide intended for pulp and paper bleaching as interchangeable with it. Similarly, 

there is no reason to suspect that, in response to a price increase, they would switch from 

hydrogen peroxide for aseptic packaging to that intended for bleaching. See Engram Hrg. Tr. 

364:7–13; Suter Hrg. Tr. 429:2–25; Montag Hrg. Tr. 1516:20–1518:6; Rhilinger Hrg. Tr. 

2272:11–13 (“Nobody here is arguing that you should bleach your hair or whiten your teeth or 

clean your cuts with [hydrogen peroxide for] rocket fuel.”). Each of these product markets for 

particular end uses are the “smallest relevant market[s] satisfying the hypothetical monopolist 

test.” Merger Guidelines § 4.1.1; see PPFFCL at 3, 5 ¶¶ 11, 15; DFFCL at 21–22 ¶¶ 62–63. 

Accordingly, hydrogen peroxide products formulated for the same end use satisfy a demand-side 

 

17

PX1201-012

 

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substitution approach to defining a relevant product market; analysis of the supply side is 

unnecessary. See Heinz, 246 F.3d at 718. 

b. The FTC’s Proposed Geographic Markets 

To establish a prima facie case by showing that the merger would cause a highly 

concentrated market, besides defining a relevant product market, the FTC must also demonstrate 

a relevant geographic market. Baker Hughes, 908 F.2d at 982. The FTC proposes two relevant 

geographic markets: (1) the Pacific Northwest, which includes Idaho, Oregon, Montana, 

Washington, and Wyoming in the United States and Alberta, British Columbia, Manitoba, and 

Saskatchewan in Canada; and (2) the Southern and Central United States, which includes 

Alabama, Arkansas, Arizona, California, Colorado, the District of Columbia, Delaware, Florida, 

Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, 

Missouri, Mississippi, North Carolina, North Dakota, Nebraska, New Mexico, Nevada, Ohio, 

Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin, and 

West Virginia. PPFFCL at 22–23, 25 ¶¶ 72, 78. 

As discussed below, any anticompetitive effects of the merger in the proposed Pacific 

Northwest geographic market are resolved by PeroxyChem’s proposed divestiture of its Prince 

George plant. And the FTC’s failure to show that non-electronics hydrogen peroxide is a 

relevant product market makes the proposed Southern and Central United States geographic 

market useless to the FTC in meeting its burden. 

i. The Pacific Northwest and the Prince George 

Divestiture 

Within days of the FTC moving for a preliminary injunction, Evonik and PeroxyChem 

agreed on a divestiture that threw a wrench in the FTC’s argument that their merger will 

substantially lessen competition in its proposed Pacific Northwest geographic market. 

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Defendants agreed that if their merger closes, Evonik will not acquire PeroxyChem’s only plant 

in that market, in Prince George, British Columbia. Instead, a new competitor, international 

chemical manufacturer UI, will purchase the plant for . Share Purchase Agreement, 

JX0147-017. Without analyzing the agreement with UI specifically, the FTC’s expert, Dr. 

Rothman, concluded that if PeroxyChem sells its Prince George plant to a new competitor that 

replaces PeroxyChem’s competitive intensity in the Pacific Northwest, competition will not be 

substantially lessened in that geographic market. Rothman Rpt., JX0075-052 n.156, -104 

nn.351–52; Rothman Hrg. Tr. 830:20–831:11.18 The Court therefore turns to that threshold 

question first. 

Defendants have the burden to show that a proposed divestiture will replace the merging 

firm’s competitive intensity. Aetna Inc., 240 F. Supp. 3d at 60. To evaluate whether a 

divestiture will do so, courts consider the likelihood of the divestiture; the experience of the 

divestiture buyer; the scope of the divestiture, the independence of the divestiture buyer from the 

merging seller, and the purchase price. Id. at 60–74; FTC v. Sysco Corp., 113 F. Supp. 3d 1, 72–

78 (D.D.C. 2015). The Court holds that Defendants have met their burden of showing that UI 

will replace PeroxyChem’s competitive intensity. 

(A) Likelihood of the Divestiture’s Closing 

For starters, the Prince George divestiture to UI is highly likely to occur. The parties to 

the divestiture, Evonik, PeroxyChem, and UI, have agreed to use all commercially reasonable 

efforts to ensure the closing conditions are satisfied; UI is capable of closing financially; it is 

excited to get “a really good business at a really good price”; and just days ago, the Canadian 

 

18 Dr. Rothman did not analyze what impact a divestiture to a new competitor would have on the 

likelihood of anticompetitive coordinated effects in the Pacific Northwest. Even so, there is no 

basis in the record to conclude that UI would be any more likely than PeroxyChem to coordinate 

with suppliers in the Pacific Northwest to substantially harm consumers. 

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Competition Bureau entered into a Consent Agreement with Evonik approving both its merger 

with PeroxyChem and the divestiture of the Prince George plant to UI. The Canadian authorities 

found that the divestiture eliminated what would otherwise have been a likely “substantial 

lessening of competition” in western Canada. Consent Agreement (Jan. 13, 2020), ECF No. 

141-1 at 1–2, 10, 12–13;19 see Cummins Hrg. Tr. 1743:21–25, 1744:8–1746:7, 1770:11–17; 

DX0142-006; DX0143-002; Share Purchase Agreement, JX0147-035, -038 to -041, -066. The 

record lacks any significant obstacles to closing. 

(B) UI’s Experience 

The record shows that UI has the experience necessary to compete effectively in the 

hydrogen peroxide industry. UI is an international supplier of organic peroxides and persulfates 

that operates plants around the world, including a hydrogen peroxide plant in Turkey that it 

bought in August 2019. PPFFCL at 65 ¶ 220; DPFFCL at 48 ¶ 127. Although it does not sell 

hydrogen peroxide in North America, UI has long been a customer for hydrogen peroxide, using 

it as a raw material in many of its products and serving many of the same customers that it would 

 

19 Under Fed. R. Civ. P. 201(b)(2) and (c)(2), the Court takes judicial notice of the following 

adjudicative fact apparent from the Consent Agreement signed January 13, 2020, by the 

Commissioner of Competition and Evonik: The Commissioner of Competition of the Canadian 

Competition Bureau has reached a Consent Agreement with Evonik to approve its merger with 

PeroxyChem and the divestiture of the Prince George plant to United Initiators. See Consent 

Agreement, ECF No. 141-1 at 1–2, 10, 12–13, 27; Defendants’ Request for Judicial Notice, ECF 

No. 141. The Commissioner found that UI satisfied these requirements: 

 Consent Agreement, ECF No. 141-1 at 10, 12–13. The Court 

takes judicial notice solely for the purpose of evaluating the likelihood of the divestiture’s 

closing; after Canadian regulatory approval, the divestiture is now more likely to do so. 

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serve as a hydrogen peroxide supplier. DPFFCL at 48 ¶ 128. At its three North American 

chemical plants, UI grapples with challenges much like those that hydrogen peroxide suppliers 

face, such as security of supply, inventory, tracking, forecasting, and distribution. Id. ¶ 129; 

Cummins Hrg. Tr. 1722:4–10. Jonathan Cummins—UI’s Vice President of Manufacturing for 

the Americas, who will oversee the Prince George plant if the divestiture closes—managed a 

hydrogen peroxide plant for Nouryon’s predecessor for seven years. DPFFCL at 49–50 ¶¶ 131, 

135; Cummins Hrg. Tr. 1722:11–21. That wealth of experience is an important component in 

helping UI replace PeroxyChem’s competitive intensity in the Pacific Northwest. 

(C) The Divestiture’s Scope 

The scope of the proposed divestiture is more than sufficient for UI to replace 

PeroxyChem in effectively running the Prince George plant. The employees running the Prince 

George plant’s day-to-day operations will continue to do so on UI’s behalf. DPFFCL at 50

¶ 135. UI will receive all tangible and intangible assets that it needs to compete—“key 

production, sales, market, and distribution assets, sales and marketing personnel, and intellectual 

property”—and PeroxyChem’s customers for the Prince George plant will become UI’s 

customers . Id. ¶ 134. 

The FTC challenges the divestiture’s scope on several grounds. It argues that UI is 

buying a “standalone plant” and not a “standalone business” in Prince George. See DPFFCL at 

50 ¶ 133; Rhilinger Hrg. Tr. 2427:14–22; Mahr Hrg. Tr. 2430:15–2431:3. It is true that 

Defendants technically only propose a divestiture of the Prince George plant, but the evidence 

shows that the plant “comes along with . . . everything else that’s needed to run a stand-alone 

business.” Mahr Hrg. Tr. 2431:1–3. UI will have the “personnel, customer lists, information 

systems, [and] intangible assets,” that will help to “effectively preserve the competition that 

would have been lost through the merger.” Aetna, 240 F. Supp. 3d at 60 (internal citation 

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omitted).20 In that sense, UI is buying something more like an ongoing business than a plant. 

And in a recent study of merger remedies, the FTC found that “all of the divestitures involving 

an ongoing business succeeded” in “clearing a high bar—maintaining competition in the relevant 

market.”21 

The FTC also points out that PeroxyChem recently lost its biggest customer served by the 

Prince George plant, Suncor. PPFFCL at 67 ¶ 229. But the Suncor issue speaks more to 

competition already lost by PeroxyChem, rather than to whether UI will “replace the competitive 

intensity lost as a result of the merger.” Sysco, 113 F. Supp. 3d at 74. Even setting that point 

aside, PeroxyChem showed at the evidentiary hearing that it has already exceeded internal 2020 

bidding projections for the Prince George plant by replacing more than half of the lost Suncor 

business. Lerner Hrg. Tr. 1394:21–1395:15; Cummins Hrg. Tr. 1760:22–1761:13. Since the 

hearing, PeroxyChem has had every incentive to continue these efforts, with the serious risk that 

this Court or the Canadian Competition Bureau would block the merger and the need for the 

divestiture to UI. Lerner Hrg. Tr. 1395:5–15. And if there were any remaining doubt about the 

Prince George plant’s sustainability, the divestiture agreement 

 

20

 See PPFFCL at 67–68 ¶ 230. Still, even without UI 

receiving all of Prince George’s “management infrastructure” from PeroxyChem’s Philadelphia 

headquarters, Aetna, 240 F. Supp. 3d at 60; see Lerner Hrg. Tr. 1360:11–12, UI is likely to 

replace PeroxyChem’s competitive intensity in the Pacific Northwest. See Montag Hrg. Tr. 

1553:4–7; Kramer Hrg. Tr. 1627:11–17. 

21 See FTC, The FTC’s Merger Remedies 2006–2012: A Report of the Bureaus of Competition 

and Economics, at 1 (Jan. 2017), https://www.ftc.gov/reports/ftcs-merger-remedies-2006-2012-

report-bureaus-competition-economics (cleaned up). 

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 PPFFCL 

at 69 ¶¶ 233–35. The FTC argues that these provisions are red flags raising “serious and 

substantial questions as to Prince George’s viability,” PPFFCL at 67 (cleaned up), but in fact, 

these provisions show that UI is set up to compete into the future.22 

(D) UI’s Independence 

Next, there is no reason to question whether UI will be an independent competitor in the 

Pacific Northwest. The FTC challenges UI’s independence because it has ongoing commercial 

relationships with Evonik and PeroxyChem as a customer for hydrogen peroxide, and UI leases 

the land for its Mobile, Alabama, plant from Evonik.23 PPFFCL at 70–71 ¶¶ 241–42. But 

Cummins credibly dispelled this notion of undue influence. Cummins Hrg. Tr. 1742:5–1743:7. 

The FTC also points out that when UI made its first offer to purchase the Prince George plant, it 

 PX1515-003. But that is just the nature 

of selling a business, which is never completely seamless. UI may not—in fact, it will not—

secure every customer it pursues when it takes over the Prince George plant. But the record does 

not cast doubt on UI’s ability to compete independently, given the protections in the divestiture 

agreement, UI’s experience, and the scope of the divestiture. In fact, Prince George is likely to 

be operating at capacity in 2020. See Cummins Hrg. Tr. 1753:5–21. 

 

22 See also Decision and Order, In re Linde AG, FTC Docket No. C-4660 at 15 (Feb. 26, 2019), 

https://www.ftc.gov/system/files/documents/cases/c4660_decision_and_ordermodified_ 

593725_public_redacted.pdf (showing similar non-solicitation provision in FTC consent decree 

to protect divestiture buyer). 

23 The FTC notes that Evonik can evict UI on short notice from this plant, PPFFCL at 70–71 

¶ 242, implying that Evonik could do so to strongarm UI into coordinating on price or declining 

to compete for certain customers. But there is no evidence in the record to suggest that the 

Evonik-UI lease is not beneficial to both parties, and Evonik has denied all such intentions. See 

Cummins Hrg. Tr. 1742:14–20. 

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(E) Purchase Price 

Finally, the proposed purchase price does not cast doubt on the viability of the Prince 

George plant if it is sold to UI. The FTC argues that the purchase price is cause for 

concern because it is far lower than other third-party valuations of the plant. PPFFCL at 71 

¶¶ 243–45. But there are a few explanations for the low price, none of which impact 

Defendants’ showing that they will compete effectively in the Pacific Northwest. 

First, to state the obvious, a potential buyer of an asset sold to facilitate a merger under 

scrutiny by two countries’ antitrust authorities has enormous leverage over the seller because it 

knows the seller must divest the asset quickly to proceed with the merger. DPFFCL at 52 ¶ 139. 

This short timeframe puts UI’s rushed and minimal due diligence into perspective as well, see

PPFFCL at 66–67 ¶¶ 223–28. Although most companies contemplating such a purchase would 

conduct more thorough diligence, the limited window for that diligence allowed UI to bargain 

for a lower price. See id.; PX1515-002 to -003 (

). In short, by bidding the lowest price possible, UI acted like any rational actor in this 

circumstance. Cummins Hrg. Tr. 1900:16–1901:10. 

Second, that UI has no presence in the Pacific Northwest provided Evonik an even 

stronger incentive to sell the Prince George plant to it, as opposed to a current hydrogen peroxide 

supplier in the market like which valued the plant at . See PPFFCL at 71–

72 ¶ 246. It stands to reason that Evonik’s merger with PeroxyChem would be more likely to 

survive antitrust scrutiny if it sold the Prince George plant to UI, since doing so would maintain 

the same number of competitors in the Pacific Northwest. 

The FTC suggests that the purchase price would allow UI to sell off the Prince 

George plant for parts or drive it into the ground and still turn a profit. See PPFFCL at 71 

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¶¶ 243–45. To the contrary, the evidence shows that UI is a good-faith purchaser that intends to 

compete effectively in the hydrogen peroxide market and grow the business, and it has strong 

incentives to do so.24 See, e.g., Cummins Hrg. Tr. 1742:17–1743:7, 1771:16–1773:17. UI’s 

purchase of another hydrogen peroxide plant in Turkey just last year, which it has maintained 

over the last six months, speaks to this good faith. DPFFCL at 48 ¶ 127. The FTC also makes 

much out of UI’s lack of specific plans for the Prince George plant, as if UI may decide to ignore 

the plant’s existing operating procedures and fire its employees. See PPFFCL at 69 ¶ 236. That 

seems highly doubtful. See DPFFCL at 50–51 ¶ 135. UI is buying a plant from PeroxyChem 

with all of the key assets and day-to-day operations in place; there was no obvious reason at the 

time of the evidentiary hearing for it to have developed its own specific plan. 

Ultimately, “antitrust deals in ‘probabilities, not certainties.’” Aetna, 240 F. Supp. 3d at 

60 (quoting Brown Shoe, 370 U.S. at 323). And Defendants’ burden is only to show that the 

divestiture will likely replace PeroxyChem’s competitive significance in the Pacific Northwest. 

Defendants have far exceeded that threshold. For these reasons, just as the Canadian 

Competition Bureau found when approving the UI divestiture with respect to western Canada, 

see Consent Agreement, ECF No. 141-1 at 10, 12–13,25 the Court finds that the merger is not 

likely to “substantially . . . lessen competition” in the FTC’s proposed Pacific Northwest market. 

 

24 UI’s good-faith desire to compete in the hydrogen peroxide industry is one of many features 

that distinguish it from the failed divestiture in Aetna, 240 F. Supp. 3d at 72. See id. at 62, 72–73 

(proposed divestiture buyer “repeatedly tried to enter” the market in the past and failed); id. at 

63, 65 (buyer would not acquire anything resembling a standalone business); id. at 65 (buyer 

showed substantial doubts about its own ability to succeed); id. at 72 (purchase price 1/10th of 

fair market value). 

25 But see ECF No. 142 at 3 n.2 (comparing standards for merger remedies in the United States 

and Canada). 

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15 U.S.C. § 18. As a result, that proposed geographic market cannot assist the FTC in showing 

its likelihood of success on the merits. 

ii. Southern and Central United States 

The FTC’s other proposed geographic market is the Southern and Central United States. 

As already noted, the FTC bears the burden to define a relevant geographic market, Cardinal 

Health, 12 F. Supp. 2d at 49, the region “in which the seller operates, and to which the purchaser 

can practically turn for supplies.” Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327 

(1961); see also Cardinal Health, 12 F. Supp. 2d at 49 (relevant geographic market is the area 

“to which consumers can practically turn for alternative sources of the product and in which the 

antitrust defendants face competition” (citation omitted)). As this definition suggests, a 

geographic market is dependent on a properly defined product market—no court can assess “the 

area of effective competition” for a product without defining the product itself. E. I. du Pont de 

Nemours, 353 U.S. at 593 (quoting Standard Oil, 337 U.S. at 299 n.5); Tampa Elec., 365 U.S. at 

328; see Merger Guidelines § 4.2 (“The [Government] applies the principles of [geographic] 

market definition described here . . . to define a relevant market with a geographic dimension as 

well as a product dimension.”); Merger Guidelines § 4.2.1 (“The hypothetical monopolist test 

requires that a hypothetical profit-maximizing firm that was the only present or future producer 

of the relevant product(s) located in the region would impose at least a SSNIP from at least one 

location . . . .”) (emphases added). 

Here, the Court has already explained that at least on the current record, the only relevant 

product markets are hydrogen peroxide products formulated for specific end uses. But the FTC 

argues that its proposed Southern and Central United States geographic market is the area of 

competition for all non-electronics hydrogen peroxide because, in its view, customers for that 

broader product market can choose from all five “freight-logical” hydrogen peroxide suppliers. 

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See PPFFCL at 21 ¶ 68; id. at 23 ¶ 74; id. at 26–27 ¶¶ 83–84, 87, 90, 93; id. at 28 ¶¶ 95, 99. 

Accordingly, then, the FTC relied on evidence that suppliers of all manner of hydrogen peroxide 

products bid and compete for customers across the purported “Southern and Central United 

States.” See, e.g., PPFFCL at 23–25 ¶¶ 74–77. Dr. Rothman also conducted the hypothetical 

monopolist test for “H2O2 sold to customers that are located in these states.” Id. ¶ 73. But none 

of that evidence or analysis is tailored to a relevant geographic market for each relevant product 

market—specific end uses of hydrogen peroxide. Because that evidence does not correspond to 

the relevant product markets, it is of little use to the FTC in meeting its burden of showing an 

undue concentration in a market for a particular product in a particular geographic area. 

 The FTC need look no further than its own challenge to the proposed merger in Sysco to 

see what is missing here. In Sysco, the FTC defined relevant product markets based on customer 

type: “broadline foodservice distribution” to local customers and “broadline foodservice 

distribution to national customers.” 113 F. Supp. 3d at 48–49. For the national product, as the 

name indicates, the FTC defined one relevant national geographic market. Id. at 49. But for the 

local product, the FTC defined 32 relevant local geographic markets where the merging firms 

have dominant market shares. Id. at 49, 52. Here, the FTC could have pleaded and argued a 

Southern and Central United States geographic market for its proposed non-electronics product 

market and also argued for alternative geographic markets corresponding to each end-use 

product market. But it did not. So the Court is left with product markets disconnected from any 

proposed geographic markets in which to analyze competition for those products. 

To be sure, a geographical market need not be defined by precise metes and bounds. 

Gen. Dynamics, 415 U.S. at 521. But the record contains substantial evidence suggesting that 

the Southern and Central United States would not be the relevant area of effective competition 

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for each end-use hydrogen peroxide product. For pulp and paper customers, for instance, 

because of the narrow profit margins, “it’d be cost prohibitive to ship hydrogen peroxide all the 

way across the country,” Anderson Hrg. Tr. 199:23–25 (cleaned up), whereas customers for 

specialty end uses like aseptic packaging or chemical synthesis may look to the entire United 

States for their hydrogen peroxide supply. See Lerner Hrg. Tr. 1379:13–24, 1381:6–18 (“freightlogical market for pulp and paper” much narrower than for “specialties,” where suppliers “have a 

much greater ability to ship those specialties literally anywhere on the land surface”); Hill Rpt., 

JX0066-028 fig. 4 (over percent of standard grade hydrogen peroxide in North America 

served by nearest plant); DPFFCL at 89 ¶ 239. Indeed, the parties agree that in some cases, “it is 

appropriate to define geographic markets in the hydrogen peroxide industry . . . as narrowly as 

individual customers.” DPFFCL at 38 ¶ 102; PFFCL at 21 ¶ 69. Or take the case of preelectronics grade hydrogen peroxide, an end use and therefore a relevant product market all its 

own. MGC, a customer in Arizona with plants opening soon in Oregon and Texas, “buys on the 

order of 99 percent of pre-electronics that’s sold,” Hill Hrg. Tr. 2080:22–23, which is shipped 

from . See Hancock Decl., 

JX0001-001 to -002; DPFFCL at 13 ¶ 35. It is therefore highly unlikely that the relevant 

geographic market for pre-electronics is just the Southern and Central United States. 

These examples merely illustrate why the Court cannot assume that the Southern and 

Central United States is a relevant geographic market, especially when the FTC has not pleaded 

or proved geographic markets that correspond to the relevant product markets, as it must. See 

Cardinal Health, 12 F. Supp. 2d at 49. The FTC’s failure to sufficiently define a relevant 

geographic market is another reason it has not met its burden here. Id.

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2. Market Concentration 

Because the FTC has failed to show a relevant product market with a corresponding 

relevant geographic market in which competition occurs, a discussion of the next step of its 

prima facie case—showing undue concentration in that market—is anticlimactic. The FTC has 

not met its burden under Baker Hughes to show undue concentration “in the market for a 

particular product in a particular geographic area.” 908 F.2d at 982. 

“Market concentration, or the lack thereof, is often measured by the Herfindahl–

Hirschman Index (HHI).”26 Heinz, 246 F.3d at 716. The FTC has not provided HHIs or other 

measurements for Evonik and PeroxyChem’s combined market share in any alternative market 

for a particular end use—the only relevant product markets with which to examine the merger’s 

competitive effects. That failure is dispositive. The Court is unaware of a single case in which a 

 

26 The HHI is calculated by squaring the market share of each firm in the market and 

adding up these squares (so, if there are three firms with market shares of 50%, 

30%, and 20%, the HHI would be 502 + 302 + 202 = 3,800). Squaring the 

individual market shares allocates proportionately greater weight to firms with 

larger shares, reflecting the larger threat to competitive behavior they 

pose. See Merger Guidelines § 5.3. For antitrust purposes, the FTC and the U.S. 

Department of Justice generally classify markets as “unconcentrated,” 

“moderately concentrated,” and “highly concentrated.” An unconcentrated 

market features an HHI of below 1,500. A moderately concentrated market has 

an HHI of between 1,500 and 2,500, while a highly concentrated market has an 

HHI that is greater than 2,500. Id.

Economists calculate the HHI score of an industry before and after the proposed 

merger. Transactions that result in an HHI increase of fewer than 100 points “are 

unlikely to have adverse competitive effects.” Id. In moderately concentrated 

markets, a transaction that increases the HHI by more than 100 points “potentially 

raise[s] significant competitive concerns and often warrant[s] scrutiny.” Id. 

Mergers “resulting in highly concentrated markets that involve an increase in the 

HHI of more than 200 points will be presumed to be likely to enhance market 

power.” Id. This presumption of anticompetitive effects “may be rebutted by 

persuasive evidence showing that the merger is unlikely to enhance market 

power.” Id. 

FTC v. Tronox Ltd., 332 F. Supp. 3d 187, 207 (D.D.C. 2018) 

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court has enjoined a merger, even at this preliminary stage, where the Government failed to show 

undue concentration in a relevant market as its prima facie case requires, almost always through 

an HHI or similar metric. Baker Hughes explicitly places that burden squarely on the FTC. 908 

F.2d at 982; see United States v. Anthem, Inc., 855 F.3d 345, 349, 353 (D.C. Cir. 2017) 

(government has the “burden to demonstrate a highly concentrated post-merger market”); Heinz, 

246 F.3d at 715; United States v. H & R Block, Inc., 833 F. Supp. 2d 36, 84 n.35 (D.D.C. 2011) 

(“The Court is not aware of any modern Section 7 case in which the court dispensed with the 

requirement to define a relevant product market.”). And a party’s failure to make out a prima 

facie case is generally considered a “fundamental defect” that dooms its case. See Rose v. 

Mitchell, 443 U.S. 545, 574 (1979) (“declin[ing] to overlook” party’s failure to “make out a 

prima facie case of discrimination” even where the opposing party conceded otherwise); 

Williams v. Boorstin, 663 F.2d 109, 118 (D.C. Cir. 1980) (“holding . . . no prima facie case” and 

reversing judgment finding a Title VII violation); Baker Hughes, 908 F.2d at 991 (“productionburden-shifting” framework for “discrimination suits under [T]itle VII” “similar” to Baker 

Hughes framework for Section 7). 

The FTC argues that no matter how the product markets are sliced, “the merger would be 

presumptively illegal in most, if not all, of such narrower markets.” Br. at 14. High 

concentrations in the Southern and Central United States in the overall standard and nonelectronics grade markets suggest that it is possible the FTC could avail itself of that 

presumption in some more narrowly defined market for a specific end-use product. See

Rothman Rpt., JX0075-052 to -053 & n.159; Rothman Rebuttal Rpt., PX7102-010. But those 

concentrations do not necessarily mean that is likely, given the issues discussed above with 

delineating relevant geographic markets that correspond to end-use product markets. At bottom, 

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the Court cannot rely on guesswork to get the FTC over the hump. “[A]ntitrust theory and 

speculation cannot trump facts, and even Section 13(b) cases must be resolved on the basis of the 

record evidence relating to the market and its probable future.” Arch Coal, 329 F. Supp. 2d at 

116–17. 

There are also practical reasons why the Court should not deem the FTC to have made 

out its prima facie case on this record, without an HHI calculated for a relevant product and 

geographic market that the Court has found viable. The rest of the Court’s analysis on the merits 

runs the risk of devolving into speculation. For example, the “more compelling the prima facie 

case, the more evidence the defendant must present to rebut it successfully.” See Baker Hughes, 

908 F.2d at 991; Arch Coal, 329 F. Supp. 2d at 129 (“Certainly less of a showing is required 

from defendants to rebut a less-than-compelling prima facie case.”). But if the Court has no 

direct measure of the strength of the FTC’s prima facie case connected to the relevant market, it 

cannot weigh whether the evidence offered by Defendants is enough to rebut that case. More 

generally, evaluating the persuasiveness of the additional evidence offered by Defendants in 

rebuttal, and by the FTC in support of its ultimate likelihood of success on the merits, becomes 

all but impossible. Some of that evidence might be relevant (and to some degree) to competition 

in that narrower relevant market, and some might not. The Court has little way of sorting all that 

out, when the parties have not tailored their presentations to the relevant market. And, it bears 

mentioning, even the “mere possibility” of a substantial lessening of competition is not enough 

to show a violation of the Clayton Act. Heinz, 246 F.3d at 713 (citation omitted); see also 

Staples I, 970 F. Supp. at 1072 (“It is not enough for the FTC to show merely that it has a ‘fair 

and tenable chance’ of ultimate success on the merits.”). 

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All of this is not to say that in a subsequent administrative proceeding, the FTC could not 

calculate HHIs connected to end-use-specific product markets and relevant geographic markets 

to make out its prima facie case. But the Court cannot say on this record—devoid of 

particularized data for those relevant markets—that there is a “reasonable probability” that 

Evonik and PeroxyChem’s merger would produce an undue concentration in a relevant market.27 

Heinz, 246 F.3d at 713 (citation omitted). Accordingly, the FTC has not met its burden of 

demonstrating a prima facie case. 

B. Defendants’ Rebuttal Evidence and the FTC’s Additional Evidence of 

Anticompetitive Harm 

Nonetheless, to provide as complete a review of the record as possible in this unusual 

circumstance, the Court will not stop there. The Supreme Court has stressed that courts must 

judge “the probable anticompetitive effects of the merger” “functionally” and based on “a further 

examination of the particular market—its structure, history and probable future.” Gen. 

Dynamics, 415 U.S. at 498 (quoting Brown Shoe, 370 U.S. at 321–22 & n.38) (cleaned up). Of 

course, in General Dynamics, the Court only conducted a further examination “of the particular 

market” after the Government met its prima facie burden, id. at 497–98, and the Court has 

concluded that the FTC has failed to meet that burden. But even assuming that the FTC had 

made out a prima facie case on this record, the Court could not conclude that it has shown a 

 

27 One judge has gone so far as to suggest that a plaintiff “may” prove a Section 7 violation even 

without meeting its prima facie burden under Baker Hughes to “defin[e] a market and show[] 

undue concentration in that market.” Whole Foods, 548 F.3d at 1036 (Brown, J.) (citing Baker 

Hughes, 908 F.2d at 982–83; United States v. El Paso Natural Gas Co., 376 U.S. 651, 660 

(1964)). Even if the FTC here could meet its prima facie burden without showing undue 

concentration in a relevant market—instead relying on other evidence of anticompetitive harm 

such as predicted price effects, e.g., Rothman Rpt., JX0075-094 & n.324, -097 to -099 & nn.334, 

339, 344; id. -104 to -106 & nn.350, 354, 356, 358—that record evidence would not make out a 

prima facie case for the reasons already described. The FTC’s threshold failure to define a 

relevant market hamstrings its ability to show (and the Court’s ability to evaluate) a likely and 

substantial lessening of competition. 

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likelihood of success based on Defendants’ rebuttal evidence and the FTC’s additional evidence 

of anticompetitive harm. 

In undertaking an evaluation of that evidence, the Court’s review is necessarily limited. 

As explained above, much of this additional evidence—especially the dueling quantitative 

models developed by Dr. Rothman and Dr. Hill—is grounded in the FTC’s proposed product and 

geographic markets, which the Court has rejected. The Court cannot know much about what, if 

anything, that evidence might mean for the effects of the proposed merger on different product 

and geographic markets.28 The Court notes only that Dr. Hill, who has testified on behalf of the 

FTC and against proposed mergers on several occasions, asserted based on his models that even 

in the market as conceived by the FTC, the merger would not result in a substantial reduction of 

competition. Dr. Rothman took the opposite view. 

That said, other evidence applies to how the industry operates as a whole and is therefore 

less dependent on the FTC’s proposed product and geographic market definitions. The Court 

does its best to assess that evidence below. And after doing so, it concludes that the current 

hydrogen peroxide industry is not particularly vulnerable to coordination, what vulnerability 

exists is not likely to increase as a result of the merger, and the evidence does not show a 

likelihood that the merger will cause substantial unilateral anticompetitive effects. 

There is no science to weighing the factors at play in an antitrust analysis. Only an 

examination of the real-world evidence—including ordinary course documents, bidding data, and 

 

28 The FTC introduced data on predicted first order approximation effects and merger simulation 

predicted price effects for an alternative standard grade hydrogen peroxide product market in the 

Southern and Central United States and in alternative geographic markets in the Southern, 

Central, and Western United States—none of which the FTC has shown are relevant markets. 

See Rothman Rpt., JX0075-094 & n.324, -097 to -099 & nn.334, 339, 344; id. -104 to -106 & 

nn.350, 354, 356, 358. 

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testimony from market participants—can supply an accurate picture of the industry and 

competitive dynamics.29 That picture in this case reveals that hydrogen peroxide prices are 

falling, and that competition is being promoted by blind bidding, sophisticated customers, and 

the customary use of large and long-term contracts. The Court concludes that the proposed 

merger is not likely to substantially change these market characteristics or substantially increase 

prices. 

1. The Market’s Vulnerability to Coordination 

“Merger law 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.” Heinz, 246 F.3d at 715 (internal quotations 

omitted). Coordination is conduct by firms that is profitable for each of them only if the others 

accommodate it. Merger Guidelines § 7. Tacit coordination, the FTC’s theory in this case, is 

enforced not by an explicit agreement, but by the “detection and punishment of deviations.” Id. 

Firms’ ability to coordinate “depends on the strength and predictability of rivals’ responses to a 

price change or other competitive initiative.” Id. Tacit coordination itself is not illegal; it is 

firms making “independent production decisions to maximize profits. But a core purpose of 

 

29 The Court admitted over 1,300 exhibits en masse at the beginning of the two-week evidentiary 

hearing. See Hrg. Tr. 155:20–157:5; Final Exhibit List, ECF No. 135-2; Joint Report on 

Defendants’ Outstanding Objections, ECF No. 139-1. But the Court did not accord all that 

evidence equal weight. When a party cited an exhibit in its proposed findings of fact and 

conclusions of law without laying a foundation for it at the hearing, or where it cited the 

deposition of a witness who did not testify at the hearing, the Court granted less weight to the 

evidence (and sometimes no weight). See, e.g., PPFFCL at 77 ¶ 263 (citing JX0021). That 

weight depended on several factors. See Minute Order of October 23, 2019 (denying 

Defendants’ request to exclude certain categories of evidence because the Federal Rules of 

Evidence do not apply to preliminary injunction hearings, but noting that the Court would accord 

weight to evidence depending on the manner in which it was presented, whether a foundation for 

it was laid, and whether the circumstances suggested its relevance and reliability). 

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antitrust law is to scrutinize mergers that may make it easier for firms to collectively reduce 

output, and indeed, to prevent mergers that are likely to do so.” FTC v. Tronox Ltd., 332 F. 

Supp. 3d 187, 208–09 (D.D.C. 2018); see Brooke Grp. Ltd. v. Brown & Williamson Tobacco 

Corp., 509 U.S. 209, 227 (1993). The Merger Guidelines advise that even where a market 

“shows signs of vulnerability to coordinated conduct,” before challenging a merger, the FTC 

must also “have a credible basis on which to conclude that the merger may enhance that 

vulnerability.” § 7.1. 

The FTC is right that some features of the hydrogen peroxide industry typically suggest 

vulnerability to coordination. There are few suppliers, only five in the FTC’s proposed product 

and geographic market. And fewer suppliers usually means that suppliers anticipate “stronger 

and faster” responses from their rivals, which diminishes the reward from attracting a 

competitor’s customers. Merger Guidelines § 7.2; see Rothman Hrg. Tr. 750:20–21 

(“maintaining discipline through deterrence is more straightforward when there are fewer 

firms”). Elasticity of demand in the hydrogen peroxide market is also extremely low, regardless 

of end use. PPFFCL at 32–33 ¶¶ 113–17. In other words, customers are unlikely to substitute 

away from hydrogen peroxide to a different chemical if suppliers coordinate to increase prices by 

a significant amount. Accordingly, the incentives for suppliers to coordinate are stronger. 

But taken together, the remaining evidence rebuts the notion that the current hydrogen 

peroxide market is vulnerable to coordination. 

First, blind bidding for hydrogen peroxide customers produces substantial cost savings 

for customers and “frustrate[s] coordination among producers.” Arch Coal, 329 F. Supp. 2d at 

144; see DPFFCL at 53–54, 66–67 ¶¶ 143–46, 173. In general, the bidding process in the 

industry works as follows: a customer publishes an RFP for a given location, specifying the 

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hydrogen peroxide product, volume, and contract duration sought; suppliers submit confidential 

bids; and then the customer typically lets one or more of the bidders know how competitive their 

bid is (without sharing specific prices) so that they will lower their bid price. See DPFFCL at 15 

¶¶ 42, 44; id. at 66–67 ¶ 173. This pitting of suppliers against each other lowers prices, even 

when there are only two competing suppliers, because suppliers generally do not know which 

other suppliers have placed bids. See id. at 67 ¶ 175. In this market, without specific knowledge 

of competing bids, suppliers are incentivized “to submit aggressive bids” because “cheating”—a 

departure from coordinated higher prices—“would not be detected until well after the fact, if 

ever, and any punishment would come well after the fact as well.” Arch Coal, 329 F. Supp. 2d at 

145. Accordingly, the average price of standard grade hydrogen peroxide in the Southern and 

Central United States, measured across all end uses, has decreased each of the last three years for 

three of the five hydrogen peroxide suppliers, Hill Rpt., JX0066-098 fig. 45, and prices have 

declined for much of the rest of the industry as well, id. -097 fig. 44; see also id. -099 fig. 46 

(annual customer savings from bidding competition for Southern and Central United States 

customers). 

Second, the use of large and long-term contracts in the hydrogen peroxide industry 

incentivizes firms to “deviate from the terms of coordination,” FTC v. CCC Holdings, 605 F. 

Supp. 2d 26, 64 (D.D.C. 2009) (internal quotation omitted), “even if they expect strong 

responses by rivals,” Merger Guidelines § 7.2, because the stakes are so high and there are fewer 

“opportunities for firms to punish one another.” Hill Hrg. Tr. 2059:14–15; see Arch Coal, 329 F. 

Supp. 2d at 145; DPFFCL at 69–70 ¶¶ 179–81. Customers for hydrogen peroxide are typically 

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large manufacturers who consume an enormous volume of hydrogen peroxide annually.30 

DPFFCL at 69 ¶ 180. Contracts for those customers come up for bidding at most once a year, 

and usually every other or third year. Id. at 69–70 ¶ 181. If a supplier loses out on too many 

contracts, it cannot just turn to a customer base outside North America or find other ways to 

increase demand; total volume in the hydrogen peroxide industry has remained relatively 

constant, so suppliers understand they are competing for a limited base of customers. See

PPFFCL at 32 ¶ 114. In this small and stagnant pond of customers, competition for the bigger 

fish is fierce. It is unlikely that suppliers would coordinate and decline to cast their rod for the 

chance to reel any one of them in. Indeed, the record shows that suppliers typically bid 

aggressively for those big contracts, as the Court discusses below when evaluating suppliers’ 

recognition of their interdependence. 

Third, even if suppliers did try to coordinate their bidding behavior to increase prices, the 

hydrogen peroxide industry is marked by sophisticated and powerful customers that are well 

equipped to defeat coordination. See Merger Guidelines § 8; Wilhelmsen, 341 F. Supp. 3d at 70; 

CCC Holdings, 605 F. Supp. 2d at 64 (“A sophisticated customer base makes price coordination 

more difficult.”). Many hydrogen peroxide customers have dedicated procurement personnel 

who are experienced at conducting RFPs, minimizing costs, and leveraging competing bids to 

secure the best contract terms. See DPFFCL at 70–71 ¶¶ 183–85. 

 

30 The FTC notes that some pulp and paper customers award business on a mill-by-mill basis, so 

those large-volume buyers do not “inherently impede coordinated conduct.” PPFFCL at 99 ¶ 80; 

see id. at 78 ¶ 268. Although this may mitigate the effect of large and long-term contracts 

somewhat, each of those mills are still purchasing high volumes of hydrogen peroxide, and 

competition is progressively stronger for this “shrinking pie” of pulp and paper customers. 

Rhilinger Hrg. Tr. 2414:18; see Hill Hrg. Tr. 2205:20–2206:4; JX0089-003 (almost 19 million 

pounds of hydrogen peroxide volume for pulp and paper mill). 

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Fourth, while previous collusion in an industry can give rise to a presumption that a 

market is vulnerable to coordination, that presumption does not hold if “competitive conditions 

in the market have since changed significantly.” Merger Guidelines § 7.2. Here, competitive 

conditions in the hydrogen peroxide industry have changed significantly since some suppliers 

engaged in price fixing nearly 20 years ago. See PPFFCL at 42–43 ¶ 143; DPFFCL at 72 ¶ 188. 

The FTC argues that because the industry products, plants, actors, and capacity are roughly the 

same now, nothing has changed. PPFFCL at 43–44 ¶¶ 144–48. But the very features of the 

industry that enabled suppliers to fix prices—public price announcements, swap agreements, and 

meet-or-release clauses, see DPFFCL at 73 ¶¶ 190–92—are largely nonexistent now, and there is 

no reason to think they are likely to return soon.31

 

31 For example, the record reflects only one public price announcement since 2016. See

PX2055-004; PPFFCL at 44 ¶ 149; DPFFCL at 73 ¶ 190. The FTC argues that 

attempted to raise prices in 2018, an allegation it first leveled after the hearing in its proposed 

findings of fact, PPFFCL at 44 ¶ 149 (citing JX0054 ; PX3028-

001), and without questioning the relevant witnesses about it at the evidentiary hearing: 

 Even so, it appears the attempted price increase was only communicated 

to customers, not to the public. See PX3028-001; Mahr Hrg. Tr. 2421:23–2422:3. In addition, 

when suppliers fixed prices two decades ago, they frequently reached swap agreements with each 

other. DPFFCL at 73 ¶ 191. A swap agreement occurs “when there’s a customer that’s 

relatively distant from its supplier, and that supplier makes a deal with a closer supplier to 

instead serve the customer on its behalf.” Hill Hrg. Tr. 2066:19–22. A swap agreement lessens 

the incentive to compete for customers in the first place because both parties to the swap benefit 

from a single customer. Id. 2065:22–2067:1. And finally, suppliers used to include meet-orrelease clauses in their customer contracts. DPFFCL at 73 ¶ 192. That clause allows a customer 

under contract who is offered a better price elsewhere to tell its current supplier, “[m]atch that 

price or I’m going to make the contract invalid and switch to the other supplier.” Id. 2065:18–

22. Meet-or-release clauses also lowered suppliers’ incentive to compete aggressively in the first 

place, and they served as “an early warning system for detecting deviations” from coordination. 

Id. 2065:23–2066:7. 

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There is mixed evidence in the record relating to other factors that courts consider to 

evaluate industry vulnerability to coordination. But on balance, the Court concludes that 

Defendants have the better argument in each case, or at least that the factor is essentially neutral. 

One factor is market transparency, on which coordination depends. A market is more 

vulnerable to coordination if (1) “the terms offered to customers are relatively transparent,” 

(2) there is “[p]rice transparency,” or (3) there is “transparency regarding the identities of the 

firms serving particular customers” (which can give rise to “customer or territorial allocation”). 

Merger Guidelines § 7.2. Here, the terms offered to customers in blind bids are opaque; aside 

from knowing the basic terms requested in an RFP, suppliers have little way of knowing what 

their competitors are offering. See DPFFCL at 66–67 ¶ 173. Price is also mostly opaque. 

Suppliers have information about general pricing trends in the industry and each other’s 

production costs, but systematic attempts by suppliers to track each other’s prices have largely 

failed. See DPFFCL at 66–68, 77–78 ¶¶ 173, 176–77, 201; PPFFCL at 36–38 ¶¶ 127–130, 132; 

Corson Hrg. Tr. 658:8–11 (“I know that the pricing information, we, kind of, stopped even trying 

to maintain that because there was never a consistency, nor is this information available.” 

(cleaned up)). On the other hand, suppliers gain a general idea of the relationships that develop 

between certain suppliers and certain customers from the bidding process and their conversations 

with customers. PPFFCL at 36–38 ¶¶ 130–31, 133. 

Another factor is product and pricing homogeneity; the more homogenous products and 

prices are, the more vulnerable the market is to coordination. CCC Holdings, 605 F. Supp. 2d at 

61. Although hydrogen peroxide products are relatively homogenous—within end uses, but not 

between them—pricing is heterogeneous and unpredictable for each product, largely due to the 

substantial role that freight plays into pricing decisions. See PPFFCL at 33–34 ¶¶ 118–20; 

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DPFFCL at 65 ¶ 170; Hill Rpt. JX0066-028 fig. 4; id. -098 fig. 45 (average standard grade price 

varies from 23 cents to 37 cents); id. -097 n.254 (standard grade hydrogen peroxide “typically 

has less variation in price within it than do other grades”). These variations in price make it 

difficult for suppliers to predict how consumers will react to their pricing decisions, which would 

facilitate coordination. 

In addition, plants operating at capacity can sometimes suggest a reduced incentive to 

compete for customers aggressively, because suppliers can only serve so many of them. See

PPFFCL at 39 ¶ 136; JX0032-086; PX2484-001; cf. DPFFCL at 55 ¶ 147 (Solvay undercut 

suppliers on price in 2017 after they expanded capacity). And the evidence here shows that 

hydrogen peroxide suppliers are operating their plants nearly at capacity. Even so, other features 

of the market—a significant portion of contracts up for bidding every year, large volume 

contracts, and the need to keep plants running at capacity due to the high fixed costs of running 

them—should still incentivize competition. See DPFFCL at 71 ¶ 184. Indeed, for those reasons, 

every bidding cycle is crucial for suppliers. See, e.g., id. at 70 ¶ 181; Corson Hrg. Tr. 652:14–19 

(“[T]he large volumes that come up . . . at the end of the year . . . expose us to a lot of risk as we 

plan our production; our terminals; our whole logistics network around those customers. So if 

there is a change, it affects us dramatically.”). 

Finally, a market is conducive to tacit coordination “where producers recognize their 

‘shared economic interests and their interdependence with respect to price and output 

decisions.’” Arch Coal, 329 F. Supp. 2d at 131 (quoting Brooke Group, 509 U.S. at 227)). The 

FTC’s theory of such coordination presupposes suppliers with an acute awareness of each other’s 

interdependence, withholding bids to avoid downward “price spirals” or retaliation from 

competitors. PPFFCL at 38–42 ¶¶ 134–41. But the evidence in the record on this point is mixed 

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at best. In most cases when suppliers expressed concern about retaliation from competitors, 

those same suppliers proceeded to ignore that risk and undercut their competitors on price 

anyway, in large part due to the large and long-term contracts at stake. See, e.g., PX1027-008 

(Evonik recognizing “Competitive Repercussions” of taking Suncor business from 

PeroxyChem); PPFFCL at 67 ¶ 229 (Evonik successfully bid on Suncor anyway); JX0112 

(supplier “bit off a little more than they expected . . . in retaliation for [Evonik] picking up . . . 

additional business”); PX2339-001 (“It’s really critical that we push for whatever extra share we 

can get at ”); PX1307; PX1440. 

Moreover, in the few instances when suppliers appeared to withhold bids after 

acknowledging the potential for retaliation, those decisions also reflected legitimate business 

considerations: for example, the supplier did not believe the contract at issue was large or long 

enough to justify offering a lower price, or the supplier recognized it was not likely to be 

competitive due to its location and the high cost of transporting hydrogen peroxide. DPFFCL at 

76 ¶ 198; see, e.g., Montag Hrg. Tr. 1569:2–1570:19; id. 1574:14–1576:5 (discussing PX2190-

001 and that PeroxyChem sought a long-term commitment to justify the investment necessary to 

serve the customer); PX1074; PX2337-001; PX2501-001. 

In summary, the evidence does not show that suppliers are coordinating in the hydrogen 

peroxide market to keep prices artificially high. As Defendants argued, “a market in which the 

prices are falling is one in which it’s very unlikely that coordination is happening among 

suppliers. If they are [coordinating], they’re doing a terrible, terrible job of it.” Mahr Hrg. Tr. 

2312:24–2313:2. Rather, despite the relatively few suppliers and low demand elasticity, 

suppliers appear to bid aggressively to win large and long-term contracts from sophisticated 

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customers. While the “structure and dynamics of the . . . market may permit coordination,” in 

this case they “do not make coordination likely.” Arch Coal, 329 F. Supp. 2d at 140. 

2. The Proposed Merger’s Effect on Coordination 

The Merger Guidelines advise that even where a market “shows signs of vulnerability to 

coordinated conduct,” before challenging a merger, the FTC must also “have a credible basis on 

which to conclude that the merger may enhance that vulnerability.” § 7.1. The proposed merger 

of Evonik and PeroxyChem is unlikely to do so. None of the above-described features of the 

industry currently inhibiting coordination in the hydrogen peroxide market are likely to change 

post-merger. DPFFCL at 78 ¶ 203. In other words, there is no reason to suspect that suppliers 

will not continue to participate in a blind bidding system for long-term and large contracts to win 

the business of sophisticated buyers. 

The biggest change the proposed merger would bring about is to reduce the number of 

suppliers who own plants in the Southern and Central United States from five to four. PPFFCL 

at 45 ¶ 151. That change relates directly to market concentration and the FTC’s prima facie case, 

and the Merger Guidelines suggest that the FTC must have an independent basis to conclude that 

a merger will increase the likelihood of coordination, apart from whatever evidence it offers to 

show undue market concentration. See § 7.1. In any event, there is no reason to think that 

reducing the number of hydrogen peroxide suppliers from five to four will likely lead to 

coordination. As described above, the industry is not especially vulnerable to it, and the record 

contains no evidence that suppliers are coordinating to raise prices or withhold supply in the 

FTC’s other proposed geographic market of the Pacific Northwest, in which only three suppliers 

operate. 

The FTC also argues that Evonik, which has historically maintained a “price over 

volume” strategy, will be a market leader post-merger that can more easily discipline 

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competitors. PPFFCL at 45–46 ¶ 154–57. Setting aside whether such market asymmetry in fact 

increases the likelihood of coordination, see Hill Rpt., JX0066-110 to -111, the FTC’s argument 

is speculative and inconsistent with the record. Evonik is already the market leader in the 

Southern and Central United States, Rothman Rpt., JX0075-168, and so the scenario the FTC 

anticipates should have already come to pass. In fact, the evidence suggests the opposite. 

Evonik has consistently undercut other suppliers in the bidding process, see, e.g., PPFFCL at 67 

¶ 229; JX0112. And market-wide prices are decreasing even with Evonik as the dominant 

player, see Hill Rpt., JX0066-097 to -099. 

Moreover, even if suppliers act contrary to that evidence and try to coordinate, Nouryon 

remains positioned to disrupt that behavior. “[C]ollective market power is diminished by the 

presence of other market participants with small market shares and little stake in the outcome 

resulting from the coordinated conduct, if these firms can rapidly expand their sales in the 

relevant market.” Merger Guidelines § 7.2. Nouryon is well situated to expand its hydrogen 

peroxide sales in the event of a price increase because it (1) is “the smallest of all of the 

competitors,” Radlinski Hrg. Tr. 538:15; (2) has won business from suppliers in the past, 

; and (3) has over pounds of excess capacity at its 

Columbus, Mississippi, plant with only an utilization rate, Radlinski Decl., JX0009-

002; Radlinski Hrg. Tr. 545:17–21; Hill Rpt. JX0066-109.32 

 

32 The FTC relies on a benign remark by Nouryon’s Paul Radlinski to argue that 

 PPFFCL at 54 ¶ 179. But Radlinski testified that 

Nouryon—

 Hrg. Tr. 545:22–546:16. , 

 See id. 545:17–21 

(

). 

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While “the risk that a merger will induce adverse coordinated effects may not be 

susceptible to quantification or detailed proof,” the FTC must still “have a credible basis on 

which to conclude that the merger may enhance that vulnerability.” Merger Guidelines § 7.1. It 

does not come close to meeting that standard. 

3. The Proposed Merger’s Unilateral Effects 

The FTC has also failed to show that the proposed merger is likely to have substantial 

unilateral effects. “A merger is likely to have unilateral anticompetitive effect if the acquiring 

firm will have the incentive to raise prices or reduce quality after the acquisition, independent of 

competitive responses from other firms.” H & R Block, 833 F. Supp. 2d at 81. In industries like 

hydrogen peroxide where buyers negotiate with sellers and play sellers off each other, 

“[a]nticompetitive unilateral effects . . . are likely in proportion to the frequency or probability 

with which, prior to the merger, one of the merging sellers had been the runner-up when the 

other won the business.” Merger Guidelines § 6.2. To be sure, the evidence suggests that 

Evonik and PeroxyChem compete head-to-head for some hydrogen peroxide customers, for some

end uses. See PPFFCL at 49–50 ¶ 167. As a result, the loss of PeroxyChem as a competitor may 

lead to a price increase for some customers. But the question for the Court is whether the 

proposed merger, as a whole, is likely to “substantially . . . lessen competition.” 15 U.S.C. § 18. 

The evidence does not show that to be so. 

A quantitative analysis of the unilateral effects, like market concentration, is impossible 

without data reflecting a properly defined relevant market, bounded by both product and 

geography. The FTC’s expert, Dr. Rothman, offered two economic models to illuminate the 

merger’s likely unilateral effects, the “GUPPI” and the “second-score procurement merger 

simulation model,” Rothman Rpt., JX0075-088, -100, both of which rely on markets the Court 

has rejected. The GUPPI model—which predicts “upward pricing pressure” or “the magnitude 

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of the changes in incentives to compete aggressively”—relies on market shares of those illdefined markets to measure customers’ preferences for Evonik or PeroxyChem.33

 Id. -089, -091. 

Likewise, Dr. Rothman’s second-score procurement merger simulation model—which 

“estimate[s] the likelihood that Evonik and PeroxyChem are the two-highest surplus bidders for 

customers”—relies on (1) “market shares,” and (2) transaction data aggregated “for all . . . nonelectronics hydrogen peroxide, as well as for . . . standard grade hydrogen peroxide only”, id. -

102, both of which are based on the FTC’s ill-conceived product and geographic markets. The 

model then predicts price increases for all non-electronics grade hydrogen peroxide—and for an 

alternative standard grade hydrogen peroxide product market—in the Southern and Central 

United States as well as in alternative geographic markets in the Southern, Central, and Western 

United States. Id. -103 to -106 & nn.349–50, 354, 356, 358. The problem is that the FTC has 

not shown that the model’s “inputs” or “outputs” are grounded in relevant product or geographic 

markets. The Court cannot assume that suppliers compete just as closely in smaller productgeography cross-sections of the market; in fact, in many situations, that is clearly not the case. 

And for these reasons, there is no basis for the Court to assume that the total predicted effect of 

the merger calculated by Dr. Rothman is merely the sum total of these smaller productgeography cross-sections. Because the Court has found the FTC’s proposed product and 

 

33 Even setting aside the GUPPI’s market-share input, the model is unreliable here because: 

(1) the Merger Guidelines only recommend using the GUPPI to predict upward pricing pressure 

for “differentiated products,” § 6.1, and the products here are homogenous within each relevant 

product market (hydrogen peroxide formulated for a specific end use), see Hill Rpt., JX0066-084 

to -085; (2) the GUPPI “assumes that customers have little or no bargaining power,” Rothman 

Rpt., JX0075-088, which is not the case with hydrogen peroxide customers; and (3) accurate 

GUPPI results “require[] precise information on pass-through behavior,” and Dr. Rothman 

provides no evidence to support his .8 pass-through rate of cost to price, see Hill Rpt., JX0066-

086 to -089. 

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geographic markets wanting, Dr. Rothman’s models are of little use to the FTC in showing likely 

unilateral effects of the merger. 

The remaining qualitative evidence in the record, to the extent that it is instructive given 

the lack of a properly defined market, suggests that the proposed merger is unlikely to cause 

unilateral effects that substantially lessen competition. This is so in large part because in 

general, Evonik and PeroxyChem are not close competitors. Evonik’s Mobile, Alabama plant 

and PeroxyChem’s Bayport, Texas plant—their two facilities in the Southern and Central United 

States—largely sell hydrogen peroxide intended for different end uses. Hill Rpt., JX0066-057; 

see DPFFCL at 86–88 ¶¶ 230–35. For example, about percent of Evonik’s production at 

Mobile is standard grade hydrogen peroxide sold to pulp and paper customers, while only about 

 percent of PeroxyChem’s Bayport production serves the pulp and paper industry, and that 

number is shrinking. See DPFFCL at 85, 88 ¶ 229, 235. Evonik and PeroxyChem also have 

different geographic focuses, largely because of the significant freight costs for the shipment of 

hydrogen peroxide and the location of their plants over 450 miles apart. See id. at 88–90 ¶¶ 236–

41. The closest possible market competitors for Evonik’s Mobile plant are Nouryon’s plant in 

Columbus, Mississippi, and Arkema’s plant in Memphis, Tennessee. Id. at 89 ¶ 240. The 

closest possible competitor for PeroxyChem’s Bayport plant is Solvay’s in Deer Park, Texas, 

fewer than 10 miles away. Id. 

After Evonik and PeroxyChem merge, those three competitors are well positioned to 

check Evonik during the bidding process. Executives for Nouryon, Arkema, and Solvay testified 

that because of the blind bidding system and the sophistication of their customers, they compete 

just as aggressively to win contracts no matter how many bidders are involved. See Radlinski 

Hrg. Tr. 574:18–25; Myrick Hrg. Tr. 507:17–508:6; Suter Hrg. Tr. 439:7–17. Nouryon’s Paul 

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Radlinski, General Manager for Bleaching Chemicals in North America, Europe, and Asia, has 

38 years of experience with Nouryon and its predecessor company. Hrg. Tr. 536:19–24. He 

explained at the evidentiary hearing that suppliers do not know “whether it’s one, two or three or 

four” suppliers bidding on a given customer. Id. 587:14–17. “So my assumption is it’s always 

four when we go in to bid. And if it’s only one there, the customer’s not going to tell us, [w]ell, 

you were the second of four bids. They’re going to say, [y]our bid was not the lowest bid. You 

need to sharpen your pencils and bring us back a new offer.” Id. 587:17–21. “We don’t have 

transparency,” so “it’s just as competitive with one other competitor as it is with three.” Id.

588:3, 588:9–11. Because blind bidding in the hydrogen peroxide is “all or nothing,” “to win the 

business, you have to beat everybody,” whether it is one or three competitors. Id. 588:17, 589:6. 

Finally, unlike many cases in which the FTC alleges that a proposed merger would be 

anticompetitive, the record contains no evidence that Evonik intends to raise prices post-merger. 

DPFFCL at 62–63 ¶¶ 162–63; cf., e.g., Tronox, 332 F. Supp. 3d at 208 (merging company 

planned to “slow down” or “manag[e]” production so that “prices will rise”); Wilhelmsen, 341 F. 

Supp. 3d at 63 (internal document noted that if merger closed, it would “increase our ability to 

charge far better prices”). Of course, such a smoking gun is not necessary for the FTC to meet 

its burden. But here, the evidence reflects a perfectly legitimate reason why Evonik and 

PeroxyChem would want to merge that has nothing to do with raising prices: the businesses 

complement each other. The Chairman of Resource Efficiency for Evonik, Claus Rettig, 

credibly testified that the reason the proposed merger is attractive to Evonik is that it wants to 

expand into the specialty grade hydrogen peroxide market on which PeroxyChem focuses. See

Rettig Hrg. Tr. 1047:13–17, 1053:1–9. Those specialty grade products “promise higher returns 

in terms of profitability” and “are more stable in economic downturns” relative to pulp and paper 

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products, id. 1047:14–15, particularly given the number of newsprint customers that have gone 

out of business. See Corson Hrg. Tr. 640:14–641:2, 651:18–21. 

Lacking a smoking gun, the FTC fires away with a few squirt guns: (1) a poorly informed 

third-party consultant’s report, based on transaction data only from , predicting a price 

increase, JX0140; see PPFFCL at 47–48 ¶ 161; DPFFCL at 62–63 ¶ 163; (2) a 2019 Evonik 

internal presentation with a demand curve reflecting that if Evonik chose to raise prices, its sales 

quantity would decrease, JX0129-037 to -038; see PPFFCL at 46 ¶ 156; DPFFCL at 77 ¶ 200; 

(3) emails exchanged between a competitor’s employees, shortly after Evonik and PeroxyChem 

announced the proposed merger, expressing hope that the industry’s falling prices would finally 

plateau;34 and (4) out-of-court declarations by customers reflecting “a truism of economics: a 

decrease in the number of suppliers may lead to a decrease in the level of competition in the 

market.” Arch Coal, 329 F. Supp. 2d at 146; see PPFFCL at 51 ¶ 170. But customers “do not, of 

course, have the expertise to state what will happen in the [hydrogen peroxide] market, and none 

have attempted to do so.” Arch Coal, 329 F. Supp. 2d at 146. These declarations are not enough 

to outweigh the overall trends in the hydrogen peroxide market reflected in the record: 

decreasing prices, aggressive competition for sophisticated customers with large and long-term 

contracts, and substantial cost savings from blind bidding. See DPFFCL at 57–62 ¶¶ 150–61.35

 

34 Defendants objected to the admission of these two exhibits, PX3000 and PX3020, emails 

exchanged by employees. See ECF No. 139-1. The Court overrules the objections and 

admits them, but gives them little weight. Documents such as these appear highly speculative, 

and because most of their authors did not testify, the Court has little basis to assess their 

reliability. Indeed, the FTC did not even bother to ask —the only author who did

testify—about them. See DPFFCL at 62 n.378. 

35 Defendants argue that efficiencies or “logistics savings” from their merger may reduce the 

price of hydrogen peroxide or offset any predicted price increase, DPFFCL at 96–97 ¶ 258, but 

those purported savings are unverifiable and did not weigh into the Court’s analysis. See

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As with the FTC’s shortcomings in showing undue concentration in a relevant market, 

the Court does not mean to suggest that in a later administrative proceeding, it would be 

impossible for the FTC to show coordinated or unilateral effects, based on a properly defined 

product and geographic market, that could call the merger into question. But it does not win the 

day on the record here. “Section 7 involves probabilities, not . . . possibilities,” Baker 

Hughes, 908 F.2d at 984, and on this record the Court cannot say it is probable that the merger 

will substantially harm competition. 

For all these reasons, the FTC has not met its burden of showing a likelihood of success 

on the merits. 

C. The Equities 

The Federal Trade Commission Act provides for a preliminary injunction to block a 

merger when “such action would be in the public interest,” after “weighing the equities and 

considering the Commission’s likelihood of ultimate success.” 15 U.S.C. § 53(b); see Heinz, 

246 F.3d at 726. “The primary public interest favoring preliminary injunctive relief in a Section 

13(b) case, which Congress specifically contemplated, is the effective enforcement of the 

antitrust laws. . . . Absent a likelihood of success on the merits, however, equities alone will not 

justify an injunction.” Arch Coal, 329 F. Supp. 2d at 159. 

The parties devote little discussion to the equities. They recognize that the propriety of a 

preliminary injunction typically rises and falls with the FTC’s likelihood of success on the merits 

and the public interest in enforcing antitrust laws. PPFFCL at 99–100 ¶ 81–82; DPFFCL at 100 

¶ 269. Even so, the FTC argues that without a preliminary injunction, Defendants can 

“‘scramble the eggs’—that is, combine their operations and make it difficult, if not impossible, 

 

PPFFCL at 76–77 ¶¶ 260–61; Aetna, 240 F. Supp. 3d at 94 (“the estimate of the predicted saving 

must be reasonable verifiable by an independent party”). 

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for competition to be restored to its previous state.” PPFFCL at 100 ¶ 82. For their part, 

Defendants represent that if the Court grants the FTC a preliminary injunction, “the final closing 

date will pass on February 3, 2020, and commercial imperatives will force the merging parties to 

terminate their merger agreement.” DPFFCL at 16 ¶ 45; see Mahr Hrg. Tr. 2439:4–5. But there 

is no need for the Court to resolve these competing equities. For all the reason explained above, 

the FTC has not carried its burden of showing that it is likely that the proposed merger will 

substantially lessen competition for a particular product in a particular geographic market. The 

Court must therefore deny its request for a preliminary injunction. 

Conclusion 

For all of the above reasons, the Court will deny the FTC’s Motion for Preliminary 

Injunction, ECF No. 3. A separate order will issue. 

/s/ Timothy J. Kelly 

TIMOTHY J. KELLY 

United States District Judge 

Date: January 24, 2020 

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IV. 
Notice of Electronic Service

I hereby certify that on February 11, 2020, I filed an electronic copy of the foregoing Respondents' Motion to

the Commission to Withdraw Matter from Adjudication, with:

D. Michael Chappell

Chief Administrative Law Judge

600 Pennsylvania Ave., NW

Suite 110

Washington, DC, 20580

Donald Clark

600 Pennsylvania Ave., NW

Suite 172

Washington, DC, 20580

I hereby certify that on February 11, 2020, I served via E-Service an electronic copy of the foregoing

Respondents' Motion to the Commission to Withdraw Matter from Adjudication, upon:

Amy Dobrzynski

Attorney

Federal Trade Commission

adobrzynski@ftc.gov

Complaint

Cecelia Waldeck

Attorney

Federal Trade Commission

cwaldeck@ftc.gov

Complaint

Daniel Matheson

Attorney

Federal Trade Commission

dmatheson@ftc.gov

Complaint

Dominic Vote

Attorney

Federal Trade Commission

dvote@ftc.gov

Complaint

Frances Anne Johnson

Attorney

Federal Trade Commission

fjohnson@ftc.gov

Complaint

James Rhilinger

Attorney

Federal Trade Commission

jrhilinger@ftc.gov

Complaint

Michael Blevins

Attorney

Federal Trade Commission

mblevins@ftc.gov
Complaint

Michael Lovinger

Attorney

Federal Trade Commission

mlovinger@ftc.gov

Complaint

Sean Hughto

Attorney

Federal Trade Commission

shughto@ftc.gov

Complaint

Stephen Santulli

Attorney

Federal Trade Commission

ssantulli@ftc.gov

Complaint

Steven Dahm

Attorney

Federal Trade Commission

sdahm@ftc.gov

Complaint

Eric Mahr

Partner

Freshfields Bruckhaus Deringer US LLP

eric.mahr@freshfields.com

Respondent

Andrew Ewalt

Partner

Freshfields Bruckhaus Deringer US LLP

andrew.ewalt@freshfields.com

Respondent

Justin Stewart-Teitelbaum

Counsel

Freshfields Bruckhaus Deringer US LLP

justin.s-t@freshfields.com

Respondent

Mike Cowie

Dechert LLP

mike.cowie@dechert.com

Respondent

James Fishkin

Partner

Dechert LLP

James.Fishkin@dechert.com

Respondent

Shari Ross Lahlou

Dechert LLP

shari.lahlou@dechert.com

Respondent
Brian Rafkin

Dechert LLP

brian.rafkin@dechert.com

Respondent

Anna Aryankalayil

Dechert LLP

anna.aryankalayil@dechert.com

Respondent

Blair Kuykendall

Dechert LLP

blair.kuykendall@dechert.com

Respondent

Laura Onken

Senior Associate

Freshfields Bruckhaus Deringer US LLP

laura.onken@freshfields.com

Respondent

Laura Onken

Attorney