Buyers Beware: D.C. Circuit Lowers the FTC Burden to Obtain Preliminary Injunction

A split panel of the D.C. circuit recently overturned a district court decision denying the Federal Trade Commission's (FTC's) request for a preliminary injunction (PI) to block the Whole Foods/Wild Oats merger. The panel's decision makes clear that, at least in the D.C. Circuit, the FTC need not establish that a merger is likely "substantially to lessen competition" in order to justify a PI while the FTC initiates and completes administrative litigation. In fact, the D.C. Circuit's opinion suggests that the FTC might be entitled to a PI without having to prove a "relevant market," making it substantially easier for the FTC to get a PI temporarily enjoining a merger. Although the decision relates only to the PI standard, and not to the FTC's ultimate burden of proving an antitrust violation, it has the practical effect of lowering the FTC's ultimate burden in most merger cases. After the FTC obtains its PI, in order for the merging parties to close, they must defeat the FTC in a lengthy administrative trial. Most merging parties cannot afford to wait for lengthy administrative litigation to run its course, so most mergers blocked at the PI stage are abandoned.

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