2019. Peabody Energy Company and Arch Resources, Inc., are two titans in a now-dwindling industry. Peabody operates three mines in the Southern Powder River Basin (SPRB) in Wyoming, one of which is the largest coal mine globally. Arch also operates two mines in the SPRB.
The two companies operate the first- and second-most productive coal mines in the United States.
On June 19, 2019, Peabody and Arch announced a proposed joint venture to strengthen coal competitiveness against natural gas and renewables while creating value for customers and shareholders. The proposed JV, if consummated, would control up to 70 percent of all coal mined in the SPRB and would operate 5 of the top 10 most productive mines in the United States.
Eight months later—and three days before the deadline—the FTC initiated an administrative proceeding challenging the JV under Section 7 of the Clayton Act and Section 5 of the FTC Act. The FTC also filed a motion for preliminary injunction blocking the joint venture while the administrative proceeding went ahead. Although the litigation was delayed twice because of COVID-19, the court heard the case and issued a decision on the preliminary injunction in a record five months.
1. How is the relevant market determined?
2. What must the FTC prove to show a merger would lead to anticompetitive effects?