## Facts

- CCC Holdings Inc. (through CCC Information Services) and Aurora Equity Partners III, L.P. (majority owner of Mitchell International) planned a $1.4 billion “merger of equals” between CCC and Mitchell.
- CCC, Mitchell, and Audatex were the dominant U.S. suppliers of (1) automobile repair cost-estimating (“estimatics”) software and (2) total loss valuation (TLV) systems used in auto insurance claims.
- Pre-merger, the three firms collectively accounted for about 99% of the estimatics market and over 90% of the TLV market.
- Post-merger, the combined firm would have held roughly 70% of estimatics and 65% of TLV, leaving Audatex as the only significant remaining rival.
- The FTC issued an administrative complaint alleging the merger would violate Clayton Act § 7 and filed a district court action under FTC Act § 13(b) seeking a temporary restraining order and preliminary injunction pending administrative adjudication.
- Defendants argued that buyer power, potential entry, and efficiencies would prevent anticompetitive outcomes.

## Issues

1. Whether the FTC showed a proper relevant market definition for two U.S. product markets: (a) estimatics software and (b) TLV systems.
2. Whether the FTC demonstrated a likelihood of success on the merits that the merger may substantially lessen competition under Clayton Act § 7, including unilateral and coordinated effects, entry, buyer power, and claimed efficiencies.
3. Whether, under FTC Act § 13(b), the equities and public interest favored preliminary injunctive relief to preserve the status quo pending administrative proceedings.

## Decision

- The court granted the FTC’s motion for a preliminary injunction and enjoined consummation of the merger pending completion of the FTC’s administrative process.
- The court accepted two relevant product markets—estimatics software and TLV systems—with the United States as the geographic market.
- The court found the merger was a “3-to-2” consolidation in highly concentrated markets, supporting a presumption of competitive harm.
- The court credited evidence of substantial head-to-head competition between CCC and Mitchell and found likely unilateral effects, including higher prices and reduced service or innovation.
- The court also found the post-merger structure increased the risk of coordinated effects because only two major firms would remain and market characteristics (including transparency and switching costs) would make coordination more feasible.
- The court rejected defendants’ arguments that entry or buyer power would adequately constrain the combined firm.
- The court held defendants’ claimed efficiencies were inadequately substantiated and did not rebut the showing of likely harm.
- The balance of equities and public interest favored an injunction because post-merger integration would be difficult to unwind and would impair the FTC’s ability to obtain effective relief.

## Legal Principles

- Under FTC Act § 13(b), a court considers whether the FTC has raised serious and substantial questions on the merits and evaluates the likelihood of success and the equities, including the public interest in preserving effective antitrust remedies.
- A horizontal merger that significantly increases concentration, especially a “3-to-2” merger, can trigger a presumption that the transaction may substantially lessen competition under Clayton Act § 7.
- Evidence that merging firms are each other’s closest competitors supports a finding of likely unilateral effects (e.g., price increases or reduced non-price competition).
- Market conditions that reduce the number of major rivals and feature transparency and switching costs can support a finding of likely coordinated effects.
- Entry and buyer power rebuttal requires persuasive evidence that entry would be timely, likely, and sufficient, or that buyers can credibly defeat price increases through switching or sponsorship of alternatives.
- Efficiencies must be merger-specific, verifiable, and sufficient to outweigh likely anticompetitive effects; speculative or poorly documented efficiencies carry little weight at the preliminary injunction stage.

## Conclusion

The court preliminarily enjoined the CCC–Mitchell transaction because the FTC demonstrated a substantial likelihood that the merger would lessen competition in highly concentrated U.S. markets for estimatics and total loss valuation software, and because preserving the status quo best protected the public interest and the possibility of effective final relief.


Fed. Trade Comm'n v. CCC Holdings Inc., 605 F. Supp. 2d 26 (D.D.C. 2009)