STERIS defeats FTC's attempt to block Synergy Health acquisition on antitrust grounds
Client(s) STERIS Corporation
In a rare litigation defeat against the Federal Trade Commission, Ohio based STERIS Corporation prevailed against an antitrust challenge brought in federal court by the FTC, which sought to block STERIS's proposed $1.9 billion acquisition of Synergy Health plc. Announced in October 2014, the transaction combining the two providers of infection prevention and other sterilization products and services was subject to regulatory approvals by the antitrust authorities in the United States and United Kingdom. Jones Day represented STERIS as lead antitrust litigation counsel and UK corporate and regulatory counsel.
Following an extended, multi-month investigation, the FTC brought suit to block the deal in May 2015, claiming the merger would violate the antitrust laws. The FTC contended the transaction would significantly reduce future competition in regional markets for sterilization of products using radiation -- that, but for the merger, Synergy would have entered the United States with X-ray sterilization technology, which presently is not offered commercially in this country. Instead of pursuing that entry plan, the FTC alleged, Synergy abandoned its U.S. X-ray entry plans solely due to the merger with STERIS. Under the FTC's theory, Synergy's abandonment of its plans deprived the U.S. contract sterilization market of "actual potential competition." At trial, STERIS and Synergy disputed the FTC's contentions, demonstrating that Synergy abandoned plans to enter the U.S. with X-ray sterilization due to a multitude of business factors, including a lack of customer commitment, uncertain technology, and increasing costs. The case was heard in August 2015 before U.S. District Judge Dan A. Polster in the U.S. District Court for the Northern District of Ohio during a three day evidentiary hearing.
In an opinion issued on September 24, 2015, the court concluded that the "evidence unequivocally show[ed]" Synergy was justified in terminating its X-ray project when it did, and the FTC failed to carry its burden. Having found that the FTC failed to show by a preponderance of the evidence it would likely succeed on the merits of its claim, the court denied the FTC's request for a preliminary injunction. On October 1, the FTC issued a statement that it had decided not to appeal the district court's decision. On October 30, the FTC issued an order dismissing its administrative complaint. On November 2, STERIS announced that it had completed its acquisition of Synergy.
FTC v. STERIS Corporation, et al., No. 1:15-cv-1080 (N.D. Ohio)
