## Facts

- The Federal Trade Commission (FTC) challenged a proposed joint venture (JV) between Peabody Energy Corp. and Arch Resources, Inc. combining major Southern Powder River Basin (SPRB) and Colorado thermal coal operations into a jointly controlled entity.
- The JV would consolidate five SPRB thermal coal mines and one Colorado thermal coal mine.
- The FTC alleged a relevant product market limited to SPRB thermal coal sold to electric generators and a relevant geographic market limited to the SPRB region.
- The FTC asserted many utilities are “locked in” to SPRB coal because plant design and permitting make switching to other coals costly and time-consuming.
- The FTC’s evidence indicated the JV would control roughly 65–70% of SPRB coal production and a higher share of low-cost capacity, and that the parties viewed each other as key SPRB competitors.
- Defendants argued coal competes strongly with natural gas and renewables, coal demand is declining, and the JV would yield efficiencies and lower costs.
- The FTC filed an administrative complaint under Clayton Act § 7 and FTC Act § 5 and sought a federal preliminary injunction under FTC Act § 13(b) to block closing pending administrative adjudication.

## Issues

1. Whether the FTC showed a relevant antitrust market limited to SPRB thermal coal for electricity generation, rather than a broader market including other fuels or other coal types.
2. Whether the FTC showed a likelihood that the JV would substantially lessen competition in the relevant market in violation of Clayton Act § 7.
3. Whether, considering likelihood of success and equities, a preliminary injunction should issue under FTC Act § 13(b) in the public interest.

## Decision

- The court granted the FTC’s motion for a preliminary injunction barring consummation of the JV pending completion of the administrative proceeding.
- The court found the FTC likely to succeed on the merits based on a cognizable SPRB coal market and a strong presumption of anticompetitive effects from extreme concentration and loss of head-to-head rivalry.
- The court held defendants’ reliance on interfuel competition, industry decline, and claimed efficiencies did not rebut the FTC’s prima facie showing.
- The court concluded the equities and public interest favored preserving the status quo because closing could cause difficult-to-undo structural and contractual changes.

## Legal Principles

- In an FTC Act § 13(b) merger injunction action, the court assesses the FTC’s likelihood of ultimate success and whether equitable considerations show an injunction serves the public interest.
- A relevant market may be defined as a narrower submarket when practical indicia (including customer behavior, product characteristics, and switching constraints) show distinct competitive conditions.
- High market shares and large increases in concentration can create a strong presumption that a transaction may substantially lessen competition under Clayton Act § 7.
- Evidence of competition from outside the proposed market may be considered but does not defeat a narrower market definition where significant within-market rivalry would be eliminated.
- Efficiencies claims must be merger-specific, verifiable, and sufficient to offset likely anticompetitive effects; speculative or non–consumer-passing efficiencies carry limited weight.

## Conclusion

The court preliminarily enjoined Peabody’s and Arch’s SPRB coal joint venture because the FTC showed a reasonable probability of proving a substantial lessening of competition in a properly defined SPRB coal market, and because the balance of equities favored preventing irreversible consolidation pending administrative review.


Fed. Trade Comm'n v. Peabody Energy Corp., 492 F. Supp. 3d 865 (E.D. Mo. 2020)