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CCC and Mitchell to Contest FTC’s Decision to Block Merger

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CCC Information Services, Inc. and Mitchell International, Inc. announced that they will contest the action taken by the Federal Trade Commission (FTC) to block the merger of the two companies.

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"While we are disappointed and disagree with the FTC’s position, we intend to vigorously challenge the FTC in court," said Githesh Ramamurthy, CEO of CCC.

The Federal Trade Commission filed suit Nov. 25 to block the merger, charging that it would hinder competition in the market for electronic systems used to estimate the cost of collision repairs 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, body shops and,
ultimately, U.S. car owners by reducing from three to two the number of
competitors in the two related businesses.

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"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."

Alex Sun, president and CEO of Mitchell International, said, "The driving force behind the proposed merger is the many benefits and innovations it can deliver to our customers. Our industry is – and will remain – intensely competitive. This is something that continues to be one of its defining characteristics."
 
CCC and Mitchell believe the merger’s benefits would include:

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• An expanded communication network to deliver greater connectivity between insurers, repair facilities and other industry service providers and suppliers;

• Expanded research and development resources and a greater ability to enhance current products and services, deliver new technology-based claims solutions and provide faster time-to-market product delivery;

• An expanded sales and service organization, providing better customer service across North America;

• A larger, more comprehensive data warehouse that would improve the company’s ability to deliver industry insights through benchmarking, data analytics and predictive modeling.

The companies said they remain confident that the merger is "pro-competitive and ultimately will be recognized as such."

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.

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The merger also would facilitate coordination between the remaining two competitors, CCC/Mitchell and Audatex, the FTC states in its complaint.

The Commission will file a complaint in federal district court seeking a temporary restraining order to stop the merger pending an administrative trial. The hearing is set for March 31, 2009.

Chicago-based CCC Information Services Inc., a subsidiary of CCC Holdings Inc., was founded in 1980 and has approximately 1,300 employees.

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.

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Click HERE to read more about the merger.

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