Thursday, March 12, 2009

Estimation, Loss Valuation Providers Abandon Merger After FTC Wins Preliminary Injunction

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

CCC Information Services Inc. and Mitchell International, Inc. have abandoned their plans to merge and become “the leading provider of information, work-flow management systems, and integrated software to insurance companies and collision repair facilities.”

The companies announced the joint decision on March 11, just two days after the federal district court in Washington, D.C. granted the Federal Trade Commission’s request for a preliminary injunction blocking the merger.

“In light of the court's decision, we have jointly decided to terminate the merger,” stated Githesh Ramamurthy, Chairman and CEO of CCC. “A year ago when we announced the transaction, our stated objective was to deliver greater innovation to our customers and partners. This theme has remained a constant and will continue to be at the forefront of our efforts.”

FTC Challenge

The FTC had sought temporary injunctive relief pending the outcome of administrative litigation challenging the merger, valued at $1.4 billion. The agency challenged the transaction on the ground that it would hinder competition in the two relevant markets: (1) electronic systems used to estimate the cost of collision repairs, known as "estimatics," and (2) software systems used to value passenger vehicles that have been totaled, known as total loss valuation (TLV) systems.

According to the FTC’s administrative complaint, dated November 25, 2008, the merger-to-duopoly would have harmed insurance companies, repair shops, and ultimately U.S. automobile owners.

Preliminary Injunction

On March 9, the federal district court in Washington, D.C. found that the FTC raised questions necessitating investigation through an adjudicatory hearing at the Commission and made a proper showing that issuance of a preliminary injunction was in the public interest. The court ordered the companies to refrain from taking any steps toward combining, pending outcome of the administrative proceeding.

The order was released on March 9; however, the underlying opinion remained under seal. The court has instructed the parties to identify any facts that should be redacted as sensitive business information no later than March 13.

The text of the FTC complaint appears at CCH Trade Regulation Reporter ¶16,221.

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