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Battery Market Merger Violates Antitrust Law

(CN) - Polypore International's 2008 acquisition of rival Microporous violated antitrust laws, according to a ruling unsealed Monday. Chief Administrative Law Judge Michael Chappell said the buyout likely stifled competition and hiked prices in the market for battery separators.

Battery separators are placed between positively and negatively charged plates in batteries to prevent electrical short circuits.

In a 376-page order, Chappell said the acquisition -- which was carried out through Polypore's subsidiary, Daramic Acquisition Corp., and challenged by the Federal Trade Commission -- was anticompetitive in four battery separator markets in North America.

Judge Chappell ordered Polypore to divest Microporous to an FTC-approved buyer within six months of the order being finalized.

Chappell found that there was "reasonable probability" that the acquisition would reduce competition in four battery separator markets: car batteries, golf cart batteries, forklift and mine equipment batteries, and uninterruptible power supply (UPS) batteries, used in power outages.

Judge Chappell found that the acquisition "amounts to a merger to monopoly" in the deep-cycle and motive markets, and "removed Microporous as a competitive constraint" in the UPS market, "thereby cementing Daramic's monopoly in that market."

Chappell also ordered Polypore to remove competition-blocking measures from a 2001 agreement with a potential competitor, Hollingsworth & Vose, which sought to enter the market for polyethylene battery separators. Chappell ruled that the agreement was in restraint of trade.

However, the administrative law judge dismissed a monopoly claim, ruling that Polypore "had monopoly power or a dangerous probability of achieving monopoly power," but the specific alleged actions did not constitute illegal "exclusionary conduct."

Chappell further ordered Polypore to stop "inviting, entering into or attempting to enter into" any agreement with companies in the battery separator market.

"The purpose of the divestiture of Microporous," Chappell wrote, "is to create an independent, viable and effective competitor" in the markets Microporous was in before it merged with Polypore.

The initial decision will become the FTC's final decision within 30 days unless one of the parties appeals.

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