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The Federal Trade Commission has filed suit to block the merger of CCC Information Services Inc. and Mitchell International Inc., charging that the merger would hinder competition in the market for electronic systems used to estimate the cost of collision repairs, known as “estimatics,” and the market for software systems used to value passenger vehicles that have been totaled, known as total loss valuation (TLV) systems. The FTC’s administrative complaint alleges that the merger, which is valued at $1.4 billion, would harm insurers, repair shops and, ultimately, U.S. car owners by reducing from three to two the number of competitors in the two related businesses.

“These estimating and valuation solutions are key tools in the auto insurance and collision repair industries,” said Acting Bureau of Competition Director David P. Wales. “There is no doubt that this merger would reduce competition that benefits auto insurers and auto body shops and ultimately would lead to higher prices and less innovation for consumers.”

According to the FTC, the merger of CCC and Mitchell would eliminate head-to-head competition between the two companies and leave the combined company with a market share of far more than half of the sales of estimatics, and a market share of far more than half of the sales in the market for TLV systems, creating a likelihood of adverse unilateral effects. The merger also would facilitate coordination among the remaining two competitors, CCC/Mitchell and Audatex, the FTC states in its complaint.

Chicago-based CCC Information Services Inc., a subsidiary of CCC Holdings Inc., was founded in 1980 and has approximately 1,300 employees. The company sells its services to insurance companies, collision repair shops, and independent appraisers. Mitchell International Inc., primarily owned by Aurora Equity Fund III L.P., itself part of the Aurora Capital Group, was founded in 1946 in San Diego and has about 650 employees. The companies announced their planned merger on April 11, 2008. Each of the companies provides both estimatics and TLV systems.

Estimatics consists of a database of parts, parts prices, and repair times, along with software that accesses the database and calculates repair costs based on input information about vehicle damage. These systems allow insurance adjusters and collision repair shops to estimate repair costs faster and more accurately than previously had been possible decades ago when estimates were written manually.

A TLV system also consists of a database and software. But rather than parts and repair cost information, the database contains vehicle information on recent, actual vehicle sales in every locality in the United States. TLV systems allow insurers to quickly obtain valuations for cars totaled in collisions based on recent, actual, local market sales. These valuations allow insurers to present car owners with settlement offers that are accurate and comply with all states’ insurance regulations.

The markets for estimatics and TLV systems are already highly concentrated, according to the complaint filed by the FTC. A California-based company called Audatex is the only other significant competitor in both lines of business, the complaint states. CCC, Mitchell, and Audatex have long provided the estimatics market with solutions. Mitchell recently entered the TLV systems market with a new solution that has increased competition in that market, according to the complaint.

The Commission vote to issue the administrative complaint was 3-0, with Commissioner J. Thomas Rosch recused. The Commission also has authorized the staff to file a complaint in federal district court seeking a temporary restraining order and preliminary injunction to preserve the competitive status quo, pending an administrative trial on the merits.

Issuing a complaint is the first step in the administrative trial process. CCC and Mitchell will be offered FTC’s “Fast Track” administrative trial procedure. The Commissioners are committed, subject to the bounds of reasonableness and fairness, to a just and expeditious resolution of any potential appeal that may be taken to the full Commission. Should there be an appeal, the Commissioners commit to make every effort to issue an appellate decision no later than 90 days after receiving a notice of appeal if there is no cross-appeal, or 120 days if there is a cross-appeal.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to [email protected], or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. 081-0155)
(CCC-Mitchell.final.wpd)

Statement by David Wales, Acting Director of the FTC’s Bureau of Competition, on the United States Court of Appeals for the District of Columbia Circuit ruling on November 21, 2008, that denies Whole Foods Market, Inc.’s petition for rehearing en banc of the appellate court’s reversal of the District Court’s decision in the Whole Foods matter:

“We are quite pleased with the ruling on Friday by the appeals court reaffirming its decision to vacate the district court’s denial of the Commission’s application for an injunction against the acquisition of Wild Oats by Whole Foods. Importantly, the decision rendered by the majority of the appellate panel reaffirms that the proper role of the district court in considering whether to grant the Commission’s request for a preliminary injunction is limited to whether the case raises sufficiently serious and substantial issues so as to make them fair ground for litigation during the full trial on the merits in the administrative proceedings.

“Now that the appellate court has denied Whole Foods’ request for further review, we look forward to presenting our evidence as to why this merger is unlawful and should be undone at the plenary trial in a few months. We are also ready to address the public equities in further proceedings before the district court with the goal of preserving competition in the interim and ensuring that a meaningful remedy can be obtained.”

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to [email protected], or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(Docket No. 9324)
(Whole Foods Statement.final.wpd)

Statement by David Wales, Acting Director of the FTC’s Bureau of Competition, on the United States Court of Appeals for the District of Columbia Circuit ruling on November 21, 2008, that denies Whole Foods Market, Inc.’s petition for rehearing en banc of the appellate court’s reversal of the District Court’s decision in the Whole Foods matter:

“We are quite pleased with the ruling on Friday by the appeals court reaffirming its decision to vacate the district court’s denial of the Commission’s application for an injunction against the acquisition of Wild Oats by Whole Foods. Importantly, the decision rendered by the majority of the appellate panel reaffirms that the proper role of the district court in considering whether to grant the Commission’s request for a preliminary injunction is limited to whether the case raises sufficiently serious and substantial issues so as to make them fair ground for litigation during the full trial on the merits in the administrative proceedings.

“Now that the appellate court has denied Whole Foods’ request for further review, we look forward to presenting our evidence as to why this merger is unlawful and should be undone at the plenary trial in a few months. We are also ready to address the public equities in further proceedings before the district court with the goal of preserving competition in the interim and ensuring that a meaningful remedy can be obtained.”

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to [email protected], or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(Docket No. 9324)
(Whole Foods Statement.final.wpd)

The Federal Trade Commission today filed a petition for certiorari with the U.S. Supreme Court seeking review of the U.S. Court of Appeals for the District of Columbia Circuit’s April 22, 2008, decision in Rambus Inc. v. Federal Trade Commission.

According to the Commission’s complaint, Rambus engaged in deceptive conduct as a participant in a standard-setting organization (SSO) by withholding vital information about the patents it was seeking, misleading SSO members about its patent interests, and using information it got through its SSO participation, to secretly amend patent applications to ensure that ultimately it would obtain patent interests in industry standards for computer memory technologies. Following an administrative trial, the Commission found that such deception occurred, that it adversely affected competition in the standard-setting process, and that there was an adequate causal connection between the misconduct and Rambus’s achievement of monopoly power in four technology markets. Finding that Rambus’s conduct constituted unlawful monopolization under the standards of Section 2 of the Sherman Act, the Commission issued a cease and desist order under Section 5 of the FTC Act. On appeal, the Commission’s order was vacated by the D.C. Circuit. The Commission subsequently filed a petition for rehearing en banc, which the court denied, leading to the petition for certiorari filed with the U.S. Supreme Court today.

The Commission vote authorizing the Office of General Counsel to file the petition with the Supreme Court was 4-0. (FTC Docket No. D-9302; the staff contact is Leslie Rice Melman, Office of General Counsel, 202-326-2478; see related press release dated February 5, 2007, at http://www.ftc.gov/opa/2007/02/070502rambus.shtm.)

Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FYI 58.2008.wpd)