Last month, a representative of the Federal Trade Commission spoke at the ABA Antitrust Law Spring Meeting regarding the FTC’s continuing interest in scrutinizing consummated mergers for potential violations under Section 7 of the Clayton Act.  Within weeks of that presentation, the FTC has filed an administrative complaint challenging yet another consummated merger*, this time involving The Dun & Bradstreet Corporation’s February 2009 acquisition of Quality Education Data (”QED”).

In a complaint voted out by the Commission (4 to 1) on May 6, 2010, the FTC alleges that D&B acquisition of QED violated Section 7 of the Clayton Act and Section 5 of the FTC Act.  The Commission alleges that D&B’s company, Market Data Retrieval (”MDR”), holds over 90% of the kindergarten through twelfth grade educational marketing databases in the United States as a result of the merger.  The FTC’s complaint further alleges that MDR and QED “were the only two significant competitors in the K-12 data market” and that the acquisition substantially lessened competition by, among other things, “[r]educing the number of significant competitors from two to one, creating a virtual monopoly” and “allowing MDR, unconstrained by effective competition, to increase prices.”  Commenting on the filing, Richard Feinstein, Director of the FTC’s Bureau of Competition, stated in the accompanying press release: “When Dun & Bradstreet acquired QED, it bought its closest competitor and created a monopoly. That’s going to get the FTC’s attention every time.”  The complaint seeks divestiture of QED.

Despite its lack of detail, the complaint is notable as an indication that the FTC will challenge consummated mergers, even when the size of the transaction is relatively small.  Of course, whether the FTC prevails is another matter.  This merger was apparently consummated over fourteen months ago, and the complaint does not allege that despite the purported ”merger to monopoly,” that MDR had increased prices post acquisition or that pricing had in fact been adversely affected by any increase in market power.  In addition, although claiming that the merger reduced the number of “significant competitors,” at least two other firms that compete in the alleged market are noted in the complaint, but dismissed as “insignificant players.”  From the complaint, it appears that the FTC will contend that reputational issues pose significant barriers to entry and diminish the effectiveness of these two smaller firms as players in this alleged market.

Time will tell whether the FTC can make its case.  One thing is certain:  clearly this is not the last we will hear from the FTC when it comes to challenging consummated mergers.

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*Parker Poe Adams & Bernstein LLP is counsel to Polypore International, Inc. in a consummated merger challenge brought by the FTC. That matter was tried before Administrative Law Judge D. Michael Chappell last year. Eric Welsh was co-lead trial counsel.