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Articles Tagged with preliminary injunction

On September 5, 2018, Judge Trevor N. McFadden of the United States District Court for the District of Columbia granted the Federal Trade Commission’s request for a preliminary injunction preventing Tronox Ltd. (“Tronox”) from completing its proposed $2.4 billion acquisition of National Titanium Dioxide Company Ltd. (“Cristal”) until after a final ruling in the FTC’s administrative proceedings challenging the deal.  Federal Trade Commission v. Tronox Ltd. (D.D.C. Sept. 12, 2018).  It is a huge victory for the FTC.

Background

On February 21, 2017, Tronox inked a deal to buy Cristal for $1.67 billion and a 24% stake in the new entity. The transaction would have created the largest TiO2 company in the world, based on titanium chemical sales and nameplate capacity.

On March 13, 2015, the Federal Trade Commission (“FTC”) announced revisions to its rules regarding the FTC’s process of determining whether to continue on with an administrative challenge to a merger in the situation when it loses a preliminary injunction motion in federal court.

When the FTC seeks to challenge a transaction, the FTC generally seeks a preliminary injunction in federal court to prevent consummation of the transaction pending the outcome of an internal administrative trial.  If the injunction is implemented, it prevents the parties from integrating the assets until the conclusion of the administrative proceeding.  The preliminary injunction is important as it preserves the FTC’s ability to create an effective merger remedy in the event the FTC’s Administrative Law Judge (“ALJ”) finds that the merger violates the antitrust laws.

Under new changes to Commission Rule of Practice 3.26, if the FTC loses its request for an injunction, the pending administrative proceeding will be automatically withdrawn or stayed if the parties file a motion to have the administrative case withdrawn.  If all respondents move to have the administrative case withdrawn from adjudication, it will automatically be withdrawn two days after the motion is filed.  If any motion to dismiss the administrative complaint is filed, the administrative case will automatically be stayed until seven days after the Commission rules on the motion for dismissal.  All deadlines will be tolled for the amount of time the proceeding is stayed.  While the automatic withdrawal of the complaint and stay are characterized as new changes to FTC rules, the changes to Rule 3.26 actually reinstate the long standing practice of an automatic withdrawal from, or stay of, the administrative litigation that was in place until 2009.