Corporate & Securities Law

FTC Challenges Proposed Merger Between Firms that Provide Electronic Systems to Estmate the Cost of Collision Repairs

By Matthew S. Wild

On November 25, 2008, the FTC issued an administrative complaint challenging the proposed merger between CCC Information Services and Mitchell International.  The FTC alleges that “the merger would hinder competition in the market for electronic systems used to estimate the cost of collision repairs, known as ?estimatics,? and the market for software systems used to value passenger vehicles that have been totaled, known as total loss valuation (TLV) systems. The FTC?s administrative complaint alleges that the merger, which is valued at $1.4 billion, would harm insurers, repair shops and, ultimately, U.S. car owners by reducing from three to two the number of competitors in the two related businesses.”  FTC CCC-Mitchell Press Release  The FTC claims that with the existence of high barriers to entry, the merger would allow the combined firm to raise prices to its customers unilaterally as well as allow the remaining two firms to collude and raise prices.  Absent extraordinary circumstances, the agencies will challenge mergers to duopoly.  The posture of this challenge is interesting.  The FTC issued the administrative complaint and approved commencement of action in federal court to seek a temporary restraining order and preliminary injunction but has not commenced such an action.  The parties must have consented to delay closing or the HSR waiting must not have yet expired.  These actions are usually brought at the very end of the waiting period and parties do not routinely consent to delay their mergers.  It would be interesting to know what happened here.

Full post as published by Antitrust Commentary on November 30, 2008 (boomark / email).