The U.S. Federal District Court in the District of Columbia granted the Federal Trade Commission’s (FTC) request for a preliminary injunction in the proposed merger between CCC Information Services Inc. and Mitchell International Inc., effectively putting a stop to the $1.4-billion merger pending the resolution of an FTC administrative trial.
The trial is slated to begin March 31.
“We are disappointed with the court’s decision to grant the preliminary injunction,” said Gitesh Ramamurthy, CEO and chairman of CCC. “Both CCC and Mitchell maintain our belief that the merger will deliver significant benefits to customers while maintaining an already competitive automotive claims marketplace. As agreed to with Mitchell, both companies intend to review the court’s decision in depth and together assess the appropriate next steps.”
Legal experts say that companies often abandon merger plans when the FTC is granted a preliminary injunction.
“There are a number of factors that both companies need to consider, including the interests of our customers, as we contemplate next steps,” said Alex Sun, president and CEO of Mitchell. “These deliberations are an obvious high priority for both organizations. We appreciate the patience and support of our many valued customers and employees and will be communicating our intentions as quickly as possible.”
The FTC filed a request with the federal court for a preliminary injunction against the merger in November 2008, 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 alleged that the merger 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.
“The court’s decision today was a triumph for consumers and reaffirms the vital role competition plays in our economy,” said David P. Wales, acting director of the FTC’s Bureau of Competition. “We brought this case because of the impressive body of evidence developed by staff demonstrating that the combination of these two competitors would substantially lessen competition, ultimately leading to higher prices and less innovation for consumers.”
To read more about the merger, click HERE.