Antitrust

The Federal Trade Commission’s (FTC) latest loss in a “litigate-the-fix” merger challenge demonstrates that U.S. courts are more inclined to apply more forgiving standards than competition regulators when assessing merging parties’ proposed remedies in litigation. On November 10, 2025, Judge Cummings of the Northern District of Illinois refused to block GTCR BC Holdings, LLC from closing its acquisition of Surmodics Inc. In denying the FTC’s motion, the Court found that the deal that was challenged by the FTC would never happen because it was subsequently modified by GTCR to include a divestiture of Biocoat’s coatings business. This change, in the Court’s view, mitigated the alleged anti-competitive harm, even if it did not fully restore the market to its pre-merger state. The FTC did not appeal the decision, and has since dismissed its ancillary administrative complaint. While, in the future, the FTC may continue to demand fulsome remedies during investigation and settlement processes, FTC v. GTCR/Surmodics is the most recent in a series of cases raising the bar for the government to challenge a proposed merger remedy and litigate the fix.

The Parties’ Proposed Fix

After the FTC sued to challenge the transaction, GTCR proposed to divest Biocoat’s UV-cured hydrophilic coatings business and part of its currently marketed thermal-cured coatings lines, along with the corresponding FDA master files, to Integer Holdings Corp. The FTC declined to accept the proposed divestiture, arguing that the merged entity would retain “the things that make Biocoat and Surmodics competitively significant” and Integer therefore would lack the assets, facilities, and people needed to compete effectively. In addition, the FTC highlighted that i) the divestiture buyer would pay a fraction of Biocoat’s full value, ii) a license-back provision to Biocoat created too much long-term interdependency between the merging parties and the divestiture buyer, and iii) the divestiture buyer has previously tried, and failed, to enter the market and therefore was not in a position to successfully run the divested business. GTCR countered that the divested coatings only account for 10 percent of Biocoat’s revenue, which was reflected in the lower price, and Integer’s past failures gave it the experience and capability to successfully operate the divested assets.

The Court found the proposed divestiture was sufficient to neutralize the alleged harm and notably rejected the FTC’s all-or-nothing approach that claimed a fix must restore the market to its pre-merger state. GTCR emphasized, and the Court was persuaded, that once the divestiture agreement was executed, “there [was] no world in which the original transaction close[d] but Biocoat [did] not go through with the divestiture to Integer.” The Court was persuaded that Integer would operate on its own within six months, and that a bonus payment in the divestiture agreement sufficiently incentivized Biocoat to help stand up Integer as an independent competitor.

A Recent Trend In Litigate-The-Fix Cases

The Court’s reasoning extends the growing line of cases maintaining that the government must show the likely loss of competition from a merger is “substantial” after accounting for any remedies. As Judge Cummings explained, “defendants are only required to show that the proposed divestiture [] sufficiently mitigated the merger’s effect . . . . The defendants are not required to show that the divestiture would negate the anti-competitive effects of the merger entirely.” In addition, the Court required only a showing that the divestiture buyer would at least “attempt” to vigorously compete.

Other recent cases have articulated a similar standard for assessing the likely impact of a merger remedy. In FTC v. Illumina, the Sixth Circuit explained that adopting the FTC’s proposed “total negation” standard, which would have required that a remedy completely restore pre-merger levels of competition, flies in the face of the Clayton Act, Section 7, which only concerns itself with mergers “substantially” lessening competition. Subsequently, the court in FTC v. Tempur Sealy International, Inc. invoked Illumina in holding that a remedy “needn’t restore the premerger status quo or eliminate any and all anticompetitive harm; [the remedy] need only prevent substantial harm to competition.” Applying that standard, the Tempur Sealy court concluded that the defendant’s remedial commitments “resolves any lingering concern” that the transaction could substantially lessen competition. Likewise, the court in FTC v. Kroger cited the Illumina standard even though it ultimately concluded that the divestiture did not reverse the competitive harm. 

Key Takeaways

The GTCR/Surmodics case solidifies a growing trend of merger jurisprudence rejecting the proposition that a merger divestiture must fully restore a market to its precise pre-merger conditions. Instead, courts evaluate whether a divestiture plausibly, credibly, and sufficiently mitigates the alleged competitive harm.

Courts appear increasingly willing to credit incentives, agreements, and operational plans that reflect and reinforce commercial logic and are supported by the record. Courts are unlikely to invalidate a fix merely on theoretical concerns, giving merging parties room to develop practical and incentive-based remedies, even if they are imperfect, in order to secure U.S. antitrust clearance.

In practice, courts have generally credited remedies that demonstrate one or more of the following factors:

• Transition inducements: Deadline for the transition of assets from the divesting party to the divestiture buyer, which can be accompanied by incentives for more quickly or efficiently standing up the divestiture buyer.
• Independence: Following a transition period, clear separation between the divesting party and the divestiture buyer.
• Competitive incentives: Divestiture buyer’s interest in competing in the relevant market, which can be demonstrated through profit incentives, alignment with divestiture buyer’s existing business, past attempts to enter the relevant market, etc.
• Operational capability: Expertise, assets, personnel, IP, data, and/or execution capacity necessary for the divestiture buyer to operate as a viable standalone competitor.
• Financial strength: Divestiture buyer’s adequate balance-sheet capacity to support sustained operation and development, commercialization, or scale-up.
• Definitiveness: Specific and binding divestiture agreement—ideally fully negotiated and signed.
• Vertical supply commitments: Ongoing commitments to maintain supply or access, documented in offers and public statements, and barring residual foreclosure risks.

As courts continue to benchmark remedies against a transaction’s competitive effects, merging parties have a better opportunity to withstand government enforcement by building into their arguments that the merger does not lessen competition, even if the arrangements alone arguably fall short of restoring the market to its perfect pre-merger state.