United States v. Baker Hughes, Inc. - 285 U.S. App. D.C. 222, 908 F.2d 981 (1990)

Rule:

A defendant seeking to rebut a presumption of anticompetitive effect must show that the prima facie case inaccurately predicts the relevant transaction's probable effect on future competition. A defendant can make the required showing by affirmatively showing why a given transaction is unlikely to substantially lessen competition, or by discrediting the data underlying the initial presumption in the government's favor.

Facts:

Appellee Oy Tampella AB, a Finnish corporation, through its subsidiary Tamrock AG, was manufacturing and selling hardrock hydraulic underground drilling rigs (HHUDRs) in the United States and throughout the world. Appellee Baker Hughes Inc., a corporation based in Houston, Texas, owned a French subsidiary, Eimco Secoma, S.A. (Secoma), that was similarly involved in the HHUDR industry. In 1989, Tamrock proposed to acquire Secoma. The United States challenged the proposed acquisition, charging that it would substantially lessen competition in the United States HHUDR market in violation of section 7 of the Clayton Act, 15 U.S.C. § 18. In 1990, the district court held a bench trial and issued a decision rejecting the government's request for a permanent injunction and dismissing the section 7 claim. The government appealed, arguing that the district court did not expressly state the legal standard it applied in its analysis of rebuttal evidence and failed to apply a sufficiently stringent standard.

Issue:

Did the district court err in rejecting the government's request for a permanent injunction and dismissing the section 7 claim? 

Answer:

No.

Conclusion:

On appeal, the court affirmed, holding that appellees had rebutted the presumption of anticompetitive effect based on a number of non-entry factors. First, the government’s proof of a prima facie case was flawed because the market share statistics of the domestic market were volatile and shifting. Secondly, the sophistication of HHUDR consumers was likely to promote competition. The court was satisfied that the appellees had proven that the government’s prima facie case inaccurately predicted the probable effect on future competition.