## Facts

- Illinois Cereal Mills, Inc. (ICM) manufactured industrial dry corn at mills in Illinois and Indiana.
- Elders Grain, Inc. owned Lincoln Grain Company, which manufactured industrial dry corn at a mill in Kansas.
- ICM and Lincoln were, respectively, the second- and fifth-largest U.S. producers of industrial dry corn; after the acquisition, ICM’s share rose from about 23% to about 32% in a market with only a few significant producers.
- The FTC learned of the planned deal shortly before closing and notified the parties it intended to challenge the acquisition and seek rescission if consummated before an injunction could be obtained.
- The parties accelerated the closing and completed it on June 5, 1988; the FTC filed suit the next day.
- The FTC sought a preliminary injunction under FTC Act § 13(b) pending an FTC administrative proceeding alleging the acquisition violated Clayton Act § 7.
- After an evidentiary hearing, the district court issued a preliminary injunction ordering the transaction rescinded until completion of the FTC administrative proceeding.

## Issues

1. Whether the FTC made a sufficient preliminary showing that the acquisition may substantially lessen competition or tend to create a monopoly under Clayton Act § 7, including disputes over geographic market definition.
2. What standard governs preliminary relief under FTC Act § 13(b), including the required showing on likelihood of success and irreparable harm.
3. Whether a district court may order preliminary rescission of an already-consummated acquisition to preserve effective final relief in the pending administrative process.

## Decision

- The Seventh Circuit affirmed the preliminary injunction.
- The court held the FTC showed some likelihood of ultimate success on its Clayton Act § 7 claim, given the market’s concentration and the increased combined share.
- The court held § 13(b) permits preliminary relief on a showing, after weighing equities and likelihood of success, that relief is in the public interest.
- The court found no abuse of discretion in ordering temporary rescission to prevent integration from making later structural relief speculative or ineffective.

## Legal Principles

- Under FTC Act § 13(b), a court may grant preliminary injunctive relief when, weighing the equities and the FTC’s likelihood of ultimate success, the relief would be in the public interest.
- The FTC need not prove its case at the preliminary stage; “some likelihood” of success can suffice when equitable factors support relief.
- Preliminary-injunction analysis applies a sliding-scale relationship between likelihood of success and the degree of harm required to justify relief.
- A rescissory preliminary injunction may be appropriate where a merger has been consummated and continued integration threatens to defeat or seriously impair effective final relief, particularly in concentrated markets.

## Conclusion

The Seventh Circuit upheld a preliminary order unwinding a consummated acquisition, holding that § 13(b) authorizes temporary rescission when the FTC shows some likelihood of a § 7 violation and the balance of equities and public-interest concerns favor preserving the possibility of effective final relief.


Fed. Trade Comm'n v. Elders Grain, Inc., 868 F.2d 901 (7th Cir. 1989)