                Case: 11-10375       Date Filed: 07/11/2012       Page: 1 of 22

                                                                                    [PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS

                            FOR THE ELEVENTH CIRCUIT
                             ________________________

                                     No. 11-10375
                               ________________________

                                    Agency No. FTC 9327

POLYPORE INTERNATIONAL, INC.,
a corporation,

                                                                                       Petitioner,

                                             versus

FEDERAL TRADE COMMISSION,

                                                                                    Respondent.

                               ________________________

                            Petition for Review of a Decision of
                              the Federal Trade Commission
                              _________________________

                                        (July 11, 2012)

Before EDMONDSON, ANDERSON, and FARRIS,* Circuit Judges.

ANDERSON, Circuit Judge:

       Polypore International appeals the Federal Trade Commission’s decision

       *
               Honorable Jerome Farris, United States Circuit Judge for the Ninth Circuit, sitting
by designation.
              Case: 11-10375     Date Filed: 07/11/2012    Page: 2 of 22

finding a violation of § 7 of the Clayton Act and ordering divestiture. The

Commission held that Polypore’s February 2008 acquisition of Microporous would

substantially lessen competition or tend to create a monopoly in relevant markets.

                    I. FACTS AND PROCEDURAL HISTORY

      Polypore and the acquired Microporous Products are producers of battery

separators. Battery separators are membranes installed between the positive and

negative plates in flooded lead-acid batteries to prevent short circuits and to

regulate the flow of electrical current between the plates. The manufacturers of

these separators make them for different types of batteries and their size and

thickness are adjusted accordingly. Different types of batteries also perform better

with separators made of different materials.

      Polypore, through its Daramic division, primarily manufactured pure

polyethylene (“PE”) separators for use in automotive and motive batteries.

Automotive batteries, also known as starter-lighter-ignition (“SLI”) batteries, are

used in cars, trucks, buses, boats, and jet skis, while motive batteries are used in

mobile industrial machines such as forklifts and mining equipment. Daramic also

produced separators for deep-cycle batteries, which are used in equipment that

requires a lower amperage over a longer period of time. Daramic had two

production plants in the United States and five overseas.

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      The much smaller Microporous (formerly known as Amerace) manufactured

pure rubber battery separators (called Flex-Sil) for use in deep-cycle batteries and a

line of rubberized PE-based separators (CellForce) for use in motive batteries.

Microporous did not yet actually sell in the SLI battery market although for several

years they had been investigating entry into that market. Microporous operated one

plant in Piney Flats, Tennessee, and constructed one in Feistritz, Austria, which

was not yet operational and was intended to serve European customers.

Microporous had also purchased equipment for another production line that the

parties refer to as the “line in boxes” and which constituted some of the acquired

assets.

      Microporous’s Flex-Sil product was recognized as being the industry

standard for deep-cycle batteries. Polypore introduced its Daramic HD product for

the deep-cycle market, which is made of latex-coated polyethylene. It is arguably

not as effective, and is used in low-end batteries. Despite a higher price,

Microporous’s Flex-Sil still controlled 90% of the market, while Daramic

controlled the remaining 10%. The market shares were the opposite in the motive

market, with Daramic owning 90% to Microporous’s 10%.

      The other company that produces battery separators in the United States is

Entek. Entek produces separators for SLI batteries but ceased producing separators

                                          3
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for motive batteries. Entek and Daramic alone competed in the SLI market, with

Entek controlling 52% of sales to Daramic’s 48%. One of the battery producers

testified, however, that Daramic and Entek did not behave as competitors. SLI

production accounts for three-quarters of all battery separator production. There

are numerous other separator producers in Europe and Asia but they do not sell to

North American battery makers.

       The Commission identified these three battery types1 as the relevant product

markets and North America as the geographic scope of each. Major customers for

the battery separators were Johnson Controls (“JCI”), the largest manufacturer of

SLI batteries; Exide, the global leader in motive power batteries; Trojan Battery

Company, the global leader in deep-cycle batteries and Microporous’s largest

customer; East Penn Battery; Crown Battery; EnerSys; Douglas Battery, which

makes motive and deep-cycle batteries; and U.S. Battery, which makes deep-cycle

batteries.

       In the early to mid 2000s, Microporous began testing the waters of the SLI

market. One of Daramic’s vice presidents, Tucker Roe, testified that its largest

customer, JCI, told him that Microporous was bidding on SLI contracts in 2003.



       1
              The ALJ identified a fourth battery type – the uninterruptible power source
(“UPS”) – but the Commission rejected that finding, and it is not at issue on appeal.

                                                4
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Daramic responded to this information by convincing JCI to enter into a long-term

supply contract by suggesting that it would cut off supply to JCI’s European

facilities if JCI declined Daramic’s long-term contract. Microporous in fact ran

sample SLI separators for JCI in 2003 and 2004, and obtained for its product the

status of “qualified” by JCI. For other reasons, however, JCI ultimately entered

into a contract with Entek. Microporous began talks in 2007 with Exide about

producing SLI separators for Exide’s North American and European markets, and

the two companies entered into memoranda of understanding in September 2007

and February 2008. Exide tested some of the sample separators that Microporous

created, and planned to purchase Microporous separators beginning in 2010.

Polypore was concerned about losing East Penn Battery to Microporous after it

learned of Microporous’s overtures in this area, and the Commission found that

Polypore made price concessions in order to retain East Penn’s business.

      Polypore internal memos reveal that it had developed the “MP Plan,” which

was a response to competition from Microporous. The MP Plan sought to secure

long-term contracts with customers that Polypore thought were in danger of

switching to Microporous. Internal memos reveal Polypore’s concern about losing

business to this “real threat.” Polypore’s 2008 budget projected that Daramic

would lose increasing amounts of business to Microporous and would be forced to

                                         5
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reduce prices if it did not acquire Microporous. Indeed, Daramic froze its 2009

prices because of fear about Microporous. One battery producer, EnerSys, used

Microporous’s prices in the motive market as leverage to bring down Daramic’s

prices, succeeding in that effort in 2004. Polypore was also concerned that it

would lose East Penn’s business if it did not act.

      The president of Daramic put Microporous on the top of his list of potential

acquisitions to “eliminate price competition.” The 2008 budget predicted that it

could increase the prices of CellForce and Microporous’s industrial products if it

did acquire Microporous. Microporous was in the process of expanding its

production capacity in both North America and Europe, constructing a new plant in

Feistritz, Austria, with two PE lines that could produce either motive or SLI battery

separators. Its plan was to shift production of its motive battery separators for

European customers to Austria so that it could increase that production for

domestic customers in the United States. A March 2005 memo from the Daramic

head of sales to the CEO warned that Microporous’s plans for expansion into a

second line would result in a loss of customers for Daramic. Through the next two

years, the threat of Microporous’s expansion was the subject of numerous

memoranda, and acquisition was discussed as a means to avoid costly competition.

       The Commission issued an administrative complaint on September 9, 2008.

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Specifically relevant to the issues in this appeal, the FTC charged that Polypore’s

acquisition of Microporous may substantially lessen competition or tend to create a

monopoly for several types of battery separators, in violation of § 7 of the Clayton

Act.2 After a four-week hearing, the ALJ issued an extensive opinion holding that

the acquisition was reasonably likely to substantially lessen competition in four

relevant markets. It ordered the divestiture of all acquired assets, including the

plant in Austria. Polypore appealed the decision to the Commission, which issued

a comprehensive opinion affirming the decision for three of the relevant markets –

SLI, motive, and deep-cycle – but not for the fourth, UPS batteries. Thus, it issued

a modified divestiture order. On appeal, Polypore argues that the Commission

erred when it employed the Philadelphia National3 presumption to find that

Polypore had illegally merged to a duopoly in the SLI market. It also asserts that

the Commission erred when it found one market for both Microporous’s and

Polypore’s deep-cycle battery separators, and that Entek would not enter the motive

battery separator market. Finally, Polypore challenges the Commission’s inclusion


       2
               The complaint also charged Polypore with entering into an unlawful joint
marketing agreement with Hollingsworth & Vose, in violation of § 5 of the FTC Act, and that
Daramic monopolized the alleged relevant markets, in violation of § 5, by executing contracts
with large customers that would preclude or deter Microporous from competing effectively. The
ALJ found against Polypore on the first count but against complaint counsel on the second.
Neither decision was appealed to the Commission.
       3
              United States v. Philadelphia National Bank, 374 U.S. 321, 83 S. Ct. 1715 (1963).

                                               7
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of Microporous’s Austrian plant in the divestiture order.



                           II. STANDARD OF REVIEW

      We review the Commission’s legal conclusions de novo. Schering-Plough

Corp. v. FTC, 402 F.3d 1056, 1063 (11th Cir. 2005). We also review the

application of the facts to the law de novo. FTC v. Ind. Fed’n of Dentists, 476 U.S.

447, 454, 106 S. Ct. 2009, 2016 (1986). Our review of the factual findings is

governed by 15 U.S.C. § 45(c), which provides that “[t]he findings of the

Commission as to the facts, if supported by evidence, shall be conclusive.” The

statute forbids a court to “make its own appraisal of the testimony, picking and

choosing for itself among uncertain and conflicting inferences.” FTC v. Algoma

Lumber Co., 291 U.S. 67, 73, 54 S. Ct. 315, 318 (1934). The court must accept the

Commission’s findings of fact if they are supported by “such relevant evidence as a

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

Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S. Ct. 456, 459 (1951) (quotation

marks omitted). We accord deference to the Commission’s chosen remedy for

violations of the Act. Jacob Siegel Co. v. FTC, 327 U.S. 608, 611, 66 S. Ct. 758,

760 (1946).




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                                 III. DISCUSSION

      A. SLI Separators

      Polypore argues that the Commission erred when it analyzed the acquisition

as a horizontal merger by treating Microporous as an actual competitor in the SLI

separator market rather than a potential competitor. By treating Microporous as an

actual competitor, Polypore also argues that the Commission improperly relied on

the presumption of liability found in Philadelphia National. Polypore argues that

the Commission should have used only the potential competition doctrine because

Microporous had not entered the SLI market at the time of the acquisition or in the

years beforehand.

      Section 7 of the Clayton Act prohibits acquisitions “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.” 15 U.S.C. § 18. Congress enacted § 7 to “arrest

anticompetitive tendencies in their ‘incipiency.’” United States v. Phila. Nat’l

Bank, 374 U.S. 321, 362, 83 S. Ct. 1715, 1741 (1963) (quoting Brown Shoe Co. v.

United States, 370 U.S. 294, 317, 322, 82 S. Ct. 1502, 1519-20, 1522 (1962)). In

Philadelphia National, the Supreme Court determined that the “intense

congressional concern” with economic concentration counseled against requiring

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“elaborate proof of market structure, market behavior, or probable anticompetitive

effects.” Id. at 363, 83 S. Ct. at 1741. Instead, the Court stated,

       a merger which produces a firm controlling an undue percentage share
       of the relevant market, and results in a significant increase in the
       concentration of firms in that market is so inherently likely to lessen
       competition substantially that it must be enjoined in the absence of
       evidence clearly showing that the merger is not likely to have such
       anticompetitive effects.

Id. This test, it reasoned, comported with economic theory because competition is

“greatest when there are many sellers, none of which has any significant market

share . . . .” Id. (quotation and citation omitted).4

       In United States v. El Paso Natural Gas Co., 376 U.S. 651, 84 S. Ct. 1044

(1964), the Supreme Court discussed a situation factually similar to the instant

case. El Paso involved the acquisition of a gas company that was deemed a threat

by one of its competitors, El Paso. A California utility had approached the

acquired company, Pacific Northwest, about supplying natural gas, and when they

reached a tentative agreement, El Paso responded by lowering its pricing and

offering a firm supply of gas – as opposed to the intermittent supply that it had

been providing – to the utility. Id. at 655, 84 S. Ct. at 1046. As a result, the

       4
               Once the Government makes a showing that the firm controls an undue
percentage share of the relevant market and the acquisition would cause a significant increase in
the concentration, the defendant must produce evidence that shows the market share statistics
inaccurately show the probable effect on competition. FTC v. Univ. Health, Inc., 938 F.2d 1206,
1218 (11th Cir. 1991).

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tentative agreement with Pacific Northwest was terminated. The Court held that

the acquired company was shown to have been a substantial factor in the California

market: “Though young, it was prospering and appeared strong enough to warrant

a ‘treaty’ with El Paso that protected El Paso’s California markets.” Id. at 659, 84

S. Ct. at 1048. The acquired company had not actually sold gas in the market but

the Court noted that § 7 of the Clayton Act was concerned with probabilities, not

certainties. Id. at 658, 84 S. Ct. at 1048. “Unsuccessful bidders are no less

competitors than the successful one.” Id. at 661, 84 S. Ct. at 1049. As the Court

noted, “[w]e would have to wear blinders not to see that the mere efforts of Pacific

Northwest to get into the California market, though unsuccessful, had a powerful

influence on El Paso’s business attitudes.” Id. at 659, 84 S. Ct. at 1048. It then

emphasized again that § 7 was intended to “arrest the trend toward concentration,

the tendency to monopoly, before the consumer’s alternatives disappeared.” Id. at

659, 84 S. Ct. at 1049. In a healthy, growing market, the fact that the acquired

company did not win a contract or had never sold in the market was not conclusive.

Id. at 660, 84 S. Ct. at 1049.

      Like the acquired company in El Paso that was already engaged in the

business of selling gas in other markets, Microporous was already making similar

separators. It would need only to retool a production line, and it had already

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purchased a new one that could produce the SLI separators. It had begun

discussions with several companies and had produced a sample product

satisfactorily for at least one large customer. It had even submitted quotes and

entered into memoranda of understanding with another large customer. Both

Polypore and El Paso certainly considered the companies that they acquired to be

competitive threats. Both companies lowered their prices and gave other

concessions in response to their customers’ dealings with the acquired companies.

Polypore began to discuss the possibility of acquiring Microporous to eliminate

competition and developed the MP Plan to remove Microporous as a competitive

threat not only in the deep-cycle market but also in the SLI market. As the Court

stated in El Paso, the Clayton Act is about probabilities and not certainties.

Polypore clearly viewed Microporous as a serious threat and sought to acquire it to

eliminate that threat.

       We conclude that the facts of the instant case are sufficiently similar to those

in El Paso such that it guides our decision in this case. In both cases, the pre-

acquisition relevant market was highly concentrated.5 In both cases, the acquisition

ensured a continuation of the high concentration and eliminated the decrease in


       5
               El Paso supplied more than 50% of the gas consumed in California and was the
only out-of-state provider. Here, Daramic controlled 48% of the SLI market to Entek’s 52%, and
one battery producer testified that the two did not act as competitors.

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concentration that would result from the acquired company’s entry into the market.

In both cases, the pre-acquisition market activity by the acquired company –

although resulting in no actual sales – had a substantial, actual pro-competitive

effect on the market.6 In both cases, the perception by the acquiring company of

the competitive threat posed by the acquired company provided additional evidence

of the acquired company’s competitive presence.7 Indeed, the instant case is

stronger for the government than was El Paso in that here, there was additional

evidence that Polypore increased SLI prices following the acquisition.

       As noted above, in concluding that the acquisition may substantially lessen

competition in the SLI market, the Commission applied the Philadelphia National

presumption. Polypore’s primary challenge to the Commission’s application of the

presumption is that the Commission erred by treating Microporous as an actual

competitor, rather than using the potential competitor analysis. Although we have

noted that the instant case seems very close in principle to El Paso, it is true that the


       6
                In El Paso, Pacific Northwest’s dealings with the utility customer caused El Paso
to depart from its previous offer of interruptible supply and offer the utility a long-term contract
for firm deliveries and at lower prices. In the instant case, Microporous’s dealings with East
Penn caused Polypore to make price concessions to East Penn. Similarly, Microporous’s
overture to JCI caused Polypore to seek a longer term contract.
       7
                See Graphic Prods. Distribs., Inc. v. Itek Corp., 717 F.2d 1560, 1573 (11th Cir.
1983) (“Evidence of intent is highly probative . . . ‘because knowledge of intent may help the
court to interpret the facts and to predict consequences.’”) (quoting Chi. Bd. of Trade v. United
States, 246 U.S. 231, 238, 38 S. Ct. 242, 244 (1918)).

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Supreme Court in that case did not expressly invoke the presumption, and

did not expressly label the acquired company as an actual competitor.8 However, a

later Supreme Court case did so. In United States v. Marine Bancorporation, 418

U.S. 602, 94 S. Ct. 2856 (1974), the Court stated that El Paso was an actual

competitor case, rather than a potential competitor case. Id. at 623, 94 S. Ct. at

2871. Thus, because El Paso was an actual competition case, because it is very

close in principle to this case, and because the actual competitor issue is Polypore’s

primary challenge in this regard,9 we see no error resulting from the Commission’s

application of the Philadelphia National presumption to find that Polypore had

illegally acquired Microporous, thus substantially lessening competition.10

       8
               Although El Paso did not use the term actual competitor, that meaning was clear.
The court held: “Unsuccessful bidders are no less competitors than the successful one.” 376 U.S.
at 661, 84 S. Ct. at 1049. It also noted that the acquired company’s efforts to win contracts,
“though unsuccessful, had a powerful influence” on El Paso. Id. at 659, 84 S. Ct. at 1048.
Similarly, Microporous was an unsuccessful bidder, and its efforts had an influence on the
market very similar to that in El Paso.
       9
               Polypore’s only other argument – that the acquisition here did not increase
concentration because Microporous had no actual pre-acquisition sales in the market – is
foreclosed by El Paso. Moreover, the acquisition here did increase concentration in that it
eliminated the pre-acquisition influence on the market exercised by Microporous. And, it
eliminated the competition in the market which Polypore itself contemplated in its MP Plan.
       10
                Our confidence that Microporous was an actual competitor is amply supported by
the Supreme Court decisions in El Paso and Marine Bancorporation. That conclusion, and the
applicability of the presumption, is also confirmed by the leading scholar:

       The acquisition by an already dominant firm of a new or nascent rival can be just as
       anticompetitive as a merger to monopoly. If the rival has already made its first sale in the
       monopolist’s market, the merger is clearly “horizontal.” If the rival has not yet made its

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       To overcome the Philadelphia National presumption, Polypore would need to

show that the merger to duopoly did not have an anticompetitive effect. This it

cannot do. The representative for Exide testified that prices for SLI separators are

less favorable than those submitted before the acquisition. Specifically, the

representative testified that it will “pay more, in the millions of dollars more” than

it did before the acquisition. Polypore has not pointed to any evidence that negates

this evidence of anticompetitve effect.11 Thus, we hold that the Commission




       first sale, the tendency is to call the acquisition a “potential competition” or non-
       horizontal merger. But the distinction between “actual” and “potential” competition is
       readily exaggerated. For example, a firm that submits bids against the dominant firm but
       loses is clearly an “actual” competitor, perhaps even forcing the dominant firm to lower
       its bid in the face of a rival bidder. But even the firm that is preparing to make its first
       bid or its first sale must be counted as an “actual” rival once the entry decision has been
       made.

       Acquisition of such a rival preserves the dominant firm’s status, at least until another
       nascent rival appears on the scene. In most such cases, we do not believe it is worthwhile
       to ascertain the number of rivals or the likelihood or time period in which another nascent
       rival will appear. The important point is that the acquisition eliminates an important
       route by which competition could have increased in the immediate future. It thus bears a
       very strong presumption of illegality that should rarely be defeated.

4 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 912a (3d ed. 2006).
       11
               Our careful review of the record persuades us that the several challenges to the
Commission’s findings of fact are wholly without merit – e.g., with respect to whether
Microporous’s dealings with JCI, Exide, and East Penn involved the SLI market; with respect to
whether Microporous’s board of directors was on board with the expansion plans of
management; with respect to the imminent capability of Microporous to supply the SLI market;
and with respect to whether before acquisition, Polypore did in fact act in procompetitive ways
(in the SLI market as well as the other two markets) in response to Microporous’s dealings in the
market.

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correctly found that the merger substantially lessened competition and violated § 7

of the Clayton Act.12



       B. Deep-Cycle Separators

       Polypore argues that its product and Microporous’s product for deep-cycle

batteries were not close competitive substitutes and so should not be considered

part of the same product market. Polypore cites United States Anchor

Manufacturing, Inc. v. Rule Industries, Inc., 7 F.3d 986, 995-99 (11th Cir. 1993),

where we held that if customers perceive a significant quality difference between

the products, especially where there is a wide disparity in price, the court will treat

the products as being in separate markets. Polypore argues that Microporous’s

pure rubber separators were recognized as being superior in deep-cycle

applications and that customers were willing to pay a premium for that superiority.

Daramic HD, the Polypore competitor to Microporous’s Flex-Sil, was only able to

gain a small portion of the deep-cycle market and was used exclusively in low-end

batteries. Polypore points to the fact that several of the battery makers had not



       12
              Because we conclude that this case is guided by El Paso, and because the
Commission properly applied the Philadelphia National presumption, we do not reach the
Commission’s alternative holding that the acquisition violated § 7 based on the potential
competitor doctrine.

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qualified Daramic HD for use and another exclusively used Microporous’s product.

Ninety percent of the market was in Microporous’s hands and accounted for most

of Microporous’s sales.

      “Defining a relevant product market is primarily a process of describing

those groups of producers which, because of the similarity of their products, have

the ability—actual or potential—to take significant amounts of business away from

each other.” U.S. Anchor, 7 F.3d at 995 (quotations and citations omitted). As

such, it is a factual question that we review for clear error. United States v.

Engelhard Corp., 126 F.3d 1302, 1305 (11th Cir. 1997). In U.S. Anchor, we

looked at the factors set forth in Brown Shoe Co. v. United States, 370 U.S. 294, 82

S. Ct. 1502 (1962):

      industry or public recognition of the submarket as a separate economic
      entity, the product’s peculiar characteristics and uses, unique
      production facilities, distinct customers, distinct prices, sensitivity to
      price changes, and specialized vendors . . . .

U.S. Anchor, 7 F.3d at 995 (quoting Brown Shoe, 370 U.S. at 325, 82 S. Ct. at

1523). “The boundaries of the product market are determined by ‘the reasonable

interchangeability of use . . . between the product itself and substitutes for it.’”

Engelhard, 126 F.3d at 1305 (quoting Brown Shoe, 370 U.S. at 325, 82 S. Ct. at

1523-24).



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      Here, the Commission based its finding on the switch of several battery

producers from Flex-Sil to Daramic HD. Daramic HD increased its share of the

market, at Flex-Sil’s expense, from 3.8% in 2005 to 10.6% in 2007. The

Commission specifically cited the switch by U.S. Battery and Exide, with the latter

using both Flex-Sil and Daramic HD in its golf cart batteries, which make up 80%

of its sales. Significantly, the Commission also pointed to the successful threat by

three companies to switch to Daramic HD to avoid a price increase by

Microporous. If the two brands were not interchangeable, the threat would not

have been successful. There is also evidence that Microporous considered the two

competitors: in its own pre-acquisition assessment of its value to Polypore,

Microporous noted that Polypore would gain complete control of the deep-cycle

separator market if the acquisition occurred.

      There is ample evidence to support the Commission’s finding that there was

only one market for deep-cycle battery separators. Several of the battery producers

used both products in their deep-cycle batteries and used the presence of Daramic

HD to bring down Microporous’s prices. While the industry recognized that Flex-

Sil, being a pure rubber separator, was superior, it was willing to substitute

Daramic HD when it could in order to keep prices lower. Thus, although there

were distinct prices, there were not distinct customers. The products were used for

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slightly different purposes – i.e., Flex-Sil was used in higher end batteries than

Daramic HD – but both were used in deep-cycle applications and both were made

in the same type of production facilities. Thus, under the Brown Shoe factors, we

conclude that the Commission did not err when it found that there existed only one

market.



          C. Motive Separators

          Polypore argues that the Commission erred in holding that Polypore had not

shown that Entek would enter the motive battery market and counteract the

anticompetitive effects of the merger to monopoly in that market. It points out that

motive battery separators are made from PE, the same substance used in SLI

separators. The only difference between the two types of separators is that motive

separators are generally larger and thicker. Accordingly, the only difference in the

production lines is larger rollers, which are easily switched out in a matter of hours.

Additionally, Polypore highlights the fact that Entek produced motive separators in

the 1990s, and expressed interest in resuming that role in 2006 when Daramic had a

strike.

          The Commission did not err when it held that Polypore had not shown that

Entek was a participant in the motive battery market or that it had plans to enter it.

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Although Entek was approached by both Exide and EnerSys, it failed to follow

through with those overtures. As of the time of the trial, in June 2009, Entek had

not even run any material for Exide. EnerSys repeatedly made overtures to Entek,

only to have it finally respond with an unsatisfactory quote. Polypore has not

pointed to any evidence that rebuts these findings.



      D. Divestiture

      Conceding that the Commission enjoys broad authority to craft a remedy,

Polypore argues that the divestiture order was too extensive because it included

Microporous’s Austrian plant. The Commission’s authority, it argues, must relate

logically to the harms identified by the Commission and the specific markets at

issue. Polypore notes that the Commission specifically limited the relevant markets

to North America and held that battery separator producers outside of North

America did not compete here. The Commission stated that its rationale for

including the Austrian plant was to allow the acquiring company to maintain

sufficient capacity at the Tennessee plant to compete effectively in North America.

But, Polypore asserts, the Commission had already determined that Microporous

was an effective and important competitor for North American customers from its

Tennessee plant alone. Additionally, Polypore posits, the evidence showed that

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there was excess production capacity at the Tennessee plant. Finally, Polypore

argues that the Commission did not explain why an Asian or European separator

manufacturer would not be fully satisfied with just the North American facility,

which would satisfy its need for a foothold in North America.

      The Commission has broad discretion in the formulating of a remedy for

unlawful practices. Jacob Siegel Co. v. FTC, 327 U.S. 608, 611, 66 S. Ct. 758, 760

(1946). Here, the Commission did not abuse its discretion when it ordered the

divestiture of the Austrian plant. The Commission reasoned that the Austrian plant

needed to be divested to restore the competition eliminated by the acquisition and

provide the acquirer with the ability to compete. Ford Motor Co. v. United States,

405 U.S. 562, 573, 92 S. Ct. 1142, 1149 (1972) (“The relief in an antitrust case

must be ‘effective to redress the violations’ and ‘to restore competition.’”)

(quoting United States v. E. I. Du Pont De Nemours & Co., 366 U.S. 316, 326, 81

S. Ct. 1243, 1250 (1961)). It found that when Microporous produced CellForce for

its foreign customers at its Tennessee plant, capacity constraints limited its ability

to compete for additional North American business. However, once the Feistritz

plant was constructed, Microporous was able to commit to additional North

American sales to customers. Additionally, the Commission reasoned that multiple

plants provide insurance against supply disruptions and provide the ability to

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supply local customers, which in turn made Microporous a more effective

competitor. These are all reasonable considerations such that we will not disturb

the order.13



                                      IV. CONCLUSION

       For the reasons stated above, we conclude that the Commission is due to be

affirmed. The Commission did not err when it treated the acquisition as a

horizontal merger, found that there was a single market for deep-cycle separators,

determined that Entek would not enter the motive market, and included

Microporous’s Austrian plant in its divestiture order.



       AFFIRMED.




       13
               Polypore argues in its reply brief that the divestiture order should have contained a
“safety valve,” like that found in Chicago Bridge & Iron Co. v. FTC, 534 F.3d 410 (5th Cir.
2008), which permitted the exclusion of certain assets in the divestiture order if the acquirer and
the monitor trustee both found them unnecessary. However, Polypore neither raised this issue
before the Commission nor in its initial brief so the issue is waived. See Norelus v. Denny’s,
Inc., 628 F.3d 1270, 1297 (11th Cir. 2010) (initial brief); Cotherman v. FTC, 417 F.2d 587, 591-
92 (5th Cir. 1969) (exhaustion before the FTC).

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