Chicago Bridge & Iron Company N.v., a foreign corporation v. Federal Trade Commission

1
REVISED JULY 15, 2008
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
______________________
No. 05-60192
_____________________
CHICAGO BRIDGE & IRON COMPANY N.V., a foreign corporation, and
CHICAGO BRIDGE & IRON COMPANY
Petitioners-Appellants
v.
FEDERAL TRADE COMMISSION
Respondent-Appellee
________________________________________________
Petition For Review Of An Order
of the Federal Trade Commission
________________________________________________
Before REAVLEY, GARZA, and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:
The petition for panel rehearing is GRANTED. The prior opinion,
Chicago Bridge & Iron Co., N.V. v. FTC, 515 F.3d 447 (5th Cir. 2008), is
WITHDRAWN, and the following opinion is substituted:
Chicago Bridge and Iron Company, a Dutch corporation, and its United
States subsidiary, Chicago Bridge and Iron Company, (collectively, “petitioner”
or “CB&I”), petition for review of an order of the Federal Trade Commission
United States Court of Appeals
Fifth Circuit
F I L E D
July 2, 2008
Charles R. Fulbruge III
Clerk

-- 1 of 41 --

1 We use the term “Commission” to refer to the Commissioners at the Federal Trade
Commission that decided this case at the final administrative level. Its opinion at issue on
this appeal is Chicago Bridge & Iron Co., et al., 2005 WL 120878 (FTC), Docket No. 9300
(Jan. 6, 2005) (“Op.”). We use the term the “Government” to refer to complainant counsel
executing the Federal Trade Commission’s separate investigatory and enforcement
functions. In other words, the “Government” brings a complaint before the “Commission”
for adjudication. See 16 C.F.R. §§ 3.2, 3.11; see also Genuine Parts Co. v. FTC, 445 F.2d
1382, 1388 (5th Cir. 1971).
2
(“Commission”)1 to divest assets acquired from Pitt-Des Moines, Inc. (“PDM”),
a Pennsylvania corporation, used in the business of designing, engineering and
building field-erected cryogenic storage tanks. The Commission ruled that
CB&I’s acquisition of these assets on February 7, 2001 would likely result in a
substantial lessening of competition or tend to create a monopoly in the relevant
markets in violation of section seven of the Clayton Act, 15 U.S.C. § 18, and
section five of the Federal Trade Commission Act, 15 U.S.C. § 45. We DENY the
petition for review.
I.
Before the acquisition, both CB&I and PDM designed, engineered, and
constructed industrial storage tanks in the United States for liquified natural
gas (LNG), liquified petroleum gas (LPG), and liquid atmospheric gases, such as
nitrogen, oxygen, and argon (LIN/LOX), as well as thermal vacuum chambers
(TVCs) for testing aerospace satellites. The two firms were the dominant
suppliers of the products in these four relevant United States markets. Before
2001, they had a virtual duopoly in those markets. Between 1990 and 2001, they
were the only builders of LNG tanks in the United States. Between 1975 and the
acquisition, they were the only builders of LNG tanks for import terminals, and
they built all but 7 of the 95 peak-shaving LNG tanks constructed in the United
States. In the LPG tank market, between 1990 and the acquisition, all but two
of the 11 projects were awarded to CB&I and PDM. In the LIN/LOX tank

-- 2 of 41 --

2 On August 29, 2000, CB&I and PDM entered into a letter of intent for CB&I to
acquire the assets from PDM. On September 12, 2000, CB&I notified the U.S. Department
of Justice of the proposed acquisition per 15 U.S.C. § 18a, which requires notification for
certain large acquisitions of securities and assets. Under 15 U.S.C. § 18b, the parties were
required to wait thirty days before concluding the transaction. More than thirty days later,
but before executing the acquisition, the Commission notified CB&I that it had begun its
investigation. See 15 U.S.C. § 46; 16 C.F.R. § 2.1. CB&I initially agreed to delay executing
the merger to accommodate the Government’s investigation. Approximately four months
after the expiration of the 30-day statutory waiting period, on February 7, 2001, CB&I
concluded the deal and acquired PDM’s pertinent assets for approximately $84 million.
3
market, the only other significant competitor, Graver Tank, left the market in
2001, leaving CB&I as the dominant firm now in that market. In the TVC
market, CB&I and PDM were the only firms that had built any large, field-
erected TVCs in the United States since 1960.
On February 7, 2001, CB&I acquired all of PDM’s assets relating to these
four markets for approximately $84 million. Prior to the acquisition, the
Commission notified CB&I that it had significant antitrust concerns about the
acquisition and was conducting an investigation.2 On October, 2001, the
Commission issued an administrative complaint charging that CB&I’s
acquisition of those assets of its principal competitor, PDM, violated Section 7
of the Clayton Act, 15 U.S.C. § 18 and Section 5 of the Federal Trade
Commission (FTC) Act, 15 U.S.C. § 45. An Administrative Law Judge (ALJ)
held an evidentiary hearing, issued an Initial Decision (“I.D.”), concluding that
CB&I had violated both Acts and ordered a divestiture of the assets. After
briefing, argument and a de novo review of the record, the Commission issued
a final order affirming the ALJ’s determination of liability and issuing a
modified divestiture order.
In its order, the Commission adopted the ALJ’s decision with some
modifications. Noting that the relevant product and geographic markets are
undisputed, the Commission affirmed the ALJ’s determination that the

-- 3 of 41 --

4
acquisition’s effects must be assessed in each of the United States markets for
LNG, LPG, and LIN/LOX tanks, and for TVCs. Op., at 9. Finding that sales of
the relevant products had been sporadic, the ALJ rejected the traditional method
of measuring market concentration with the Herfindahl-Hirshmen Index (HHI)
on an annualized basis. Id., at 3. Nonetheless, based on the bidding history in
each market, the ALJ found that the acquisition resulted in an undue accretion
of market power in CB&I that could not be constrained by timely entry of new
competitors. Id. The Commission disagreed with the ALJ’s complete disregard
for the HHI, stating that, because CB&I and PDM had been the only competitors
in the relevant markets for the past two decades, it was appropriate to analyze
their sales data over an extended time frame. Id., at 18. Using the HHIs
accordingly, the Commission concluded that the resulting market concentration
established a prima facie case that the acquisition violates Section 7 of the
Clayton Act and Section 5 of the FTC Act. Op., at 18-20. Furthermore, the
Commission found an independent reason for a prima facie case of presumptive
illegality in the qualitative evidence showing that the acquisition left CB&I as
the only major player in each of the relevant markets, e.g., the views of
customers with first-hand knowledge that CB&I and PDM were the only LNG
tank suppliers and that the acquisition substantially harmed competition;
CB&I’s and PDM’s own documents confirmed that they focused almost
exclusively on each other in assessing competition and paid little or no attention
to other companies. Id., at 19-20.
The Commission also found that evidence of high entry barriers
necessarily strengthened the anti-competitive effects of the acquisition. Id., at
29. In addition to customer testimony and behavior in past LNG project awards,
the Commission cited reasons that entry into the relevant markets is

-- 4 of 41 --

3 The discussion here refers primarily to the LNG tanks, because both appellants
and appellee focus on the LNG market and extrapolate the general conclusions about the
LNG market to all markets.
5
exceedingly difficult and cannot be achieved in a timely fashion: the nickel-steel
composition in LNG tanks requires a specialized construction skill set; LNG
tanks require sophisticated engineering, trained supervisors, knowledge of local
labor markets, as well as specialized procedures and proprietary techniques.3
Id., at 30. Additionally, the FERC regulatory and approval process is
complicated and potentially time consuming; customers expect significant
experience in builders of LNG tanks that takes a number of years to gain. Op.,
at 53-56. Thus, the Commission concluded that CB&I’s long-standing dominance
in the relevant U.S. markets gives it a virtually insurmountable advantage over
newly entering competitors. Accordingly, the Commission decided that the entry
and expansion in the relevant markets are not likely to replace the competition
lost through the acquisition or to sufficiently constrain CB&I in a timely
manner. E.g., id., at 82.
CB&I did not contend that the acquisition would lead to enhanced
efficiencies benefitting competition. Rather, it argued that the evidence of high
market concentration and entry barriers was rebutted by evidence of recent
actual and potential entry into three of the four markets. On examining the
record evidence, however, the Commission affirmed the ALJ’s finding that the
purported new entry is insufficient to constrain CB&I post-acquisition. Id., at 82.
Three joint-ventures identified by CB&I as new entrants lacked sufficient
experience to compete effectively with CB&I. None had built an LNG tank in
the United States. At the time of trial, none had won a LNG tank bid post-
acquisition while CB&I had won six sole-source contracts during that period.
Customers with upcoming LNG projects were not aware of the alleged new

-- 5 of 41 --

4 On February 1, 2005, CB&I filed with the Commission a petition to reconsider in
light of further evidence of actual new entry of foreign competitors into the relevant
markets. On March 11, 2005, CB&I filed a petition for review of the December 21st Order
and Opinion with this court. See 15 U.S.C. § 45(c). On May 10, 2005, the Commission
denied the petition regarding actual new entry because CB&I had failed to show that any
new entry could counteract competition lost from CB&I’s acquisition of PDM. See Chicago
Bridge & Iron Co., et. al., 2005 WL 2329811, Docket No. 9300 (2005) (“R.O.”). On
December 15, 2005, CB&I filed a motion to adduce additional evidence, substantially
similar to new evidence submitted in the petition to reconsider below, with this court. We
denied this motion on April 13, 2005.
6
entrants. The Commission concluded that although the new entrants had taken
a step toward competing in the United States by partnering with United States
construction firms, they cannot likely restore the competition lost as a result of
CB&I’s acquisition of PDM’s relevant assets in the foreseeable future. Id., at 58.
The Commission ruled that CB&I’s acquisition of these assets would
likely result in a substantial lessening of competition in the relevant markets in
violation of section seven of the Clayton Act, 15 U.S.C. § 18, and section five of
the Federal Trade Commission Act, 15 U.S.C. § 45. Id., at 105. The Commission
expanded the divestiture remedy, ordering CB&I to divide its cryogenic business
into two separate entities (New CB&I and New PDM) equally capable of
competing in the four markets.4
CB&I contends that the Commission: (1) applied incorrect legal standards
in shifting burdens of proof and persuasion; (2) applied incorrect legal standards
related to the petitioner’s “actual and potential entry” defense; (3) found, without
substantial evidentiary support, that CB&I failed to rebut the Government’s
prima facie case; and (4) abused its discretion in its remedial order.
II.
This court reviews the Commission’s factual determinations under the
substantial evidence standard. 15 U.S.C. § 21(c); Jim Walter Corp. v. FTC, 625

-- 6 of 41 --

5 The appeal at issue primarily concerns section 7 of the Clayton Act as section 5 of
the FTC Act is, as the Commission determined and the parties do not contest, a derivative
violation that does not require independent analysis. See Op., at 5 n.23.
7
F.2d 676, 683 (5th Cir. 1980). “Substantial evidence is evidence that provides
a substantial basis of fact from which the fact in issue can be reasonably
inferred.” Diamond Drilling Co. v. Marshall, 577 F.2d 1003, 1006 (5th Cir.
1978). We review de novo all legal questions pertaining to Commission orders.
FTC v. Ind. Fed’n of Dentists, 476 U.S. 447, 454 (1986).
Section 7 of the Clayton Act prohibits acquisitions, including mergers
“where in any line of commerce or in any activity affecting commerce in any
section of the country, the effect of such acquisition may be substantially to
lessen competition, or to tend to create a monopoly.”5 15 U.S.C. § 18; see United
States v. Philadelphia Nat’l Bank, 374 U.S. 321, 355 (1963) (“The statutory test
is whether the effect of the merger may be substantially to lessen competition
in any line of commerce in any section of the country.”) (internal quotations
omitted); see also Brown Shoe Co. v. United States, 370 U.S. 294, 323, n.39
(1962) (“‘The use of these words (‘may be') means that the bill, if enacted, would
not apply to the mere possibility but only to the reasonable probability of the
prescribed (sic) effect * * *. The words ‘may be' have been in section 7 of the
Clayton Act since 1914. The concept of reasonable probability conveyed by these
words is a necessary element in any statute which seeks to arrest restraints of
trade in their incipiency and before they develop into full-fledged restraints
violative of the Sherman Act. A requirement of certainty and actuality of injury
to competition is incompatible with any effort to supplement the Sherman Act
by reaching incipient restraints.’”) (quoting S. Rep. No.1775, 81st Cong., 2d Sess.
6, U.S. Code Cong. and Adm. News 1950, p. 4298); see generally FTC v. H.J.
Heinz Co., 246 F.3d 708 (D.C. Cir. 2001) (citing H.R. Rep. No. 1142, at 18-19

-- 7 of 41 --

8
(1914)).
1. The Commission Correctly Applied the Legal Standards of Burdens of Proof
and Persuasion
CB&I first challenges the Commission's application of the legal standards
for production of evidence and persuasion.
The burden-shifting framework for deciding Clayton Act section 7 actions
first requires the Government to establish a prima facie case that an acquisition
is unlawful. See H.J. Heinz Co., 246 F.3d at 715 (citing United States v. Baker
Hughes, Inc., 908 F.2d 981, 982-83 (D.C. Cir. 1990)). Typically the Government
establishes a prima facie case by showing that the transaction in question will
significantly increase market concentration, thereby creating a presumption that
the transaction is likely to substantially lessen competition. Id. Once the
Government establishes the prima facie case, the respondent may rebut it by
producing evidence to cast doubt on the accuracy of the Government’s evidence
as predictive of future anti-competitive effects. Id. Finally, if the respondent
successfully rebuts the prima facie case, the burden of production shifts back to
the Government and merges with the ultimate burden of persuasion, which is
incumbent on the Government at all times. Baker Hughes, 908 F.2d at 982-83;
FTC v. Univ. Health, Inc., 938 F.2d 1206, 1219 (11th Cir. 1991); Kaiser
Aluminum & Chem. Corp. v. FTC, 652 F.2d 1324, 1340 (7th Cir. 1981).
CB&I contends that the Commission’s conclusion that CB&I failed to
rebut the government’s prima facie case was reached by erroneously subjecting
CB&I to a burden of persuasion rather than switching the burden of production
back to the Government after CB&I offered its rebuttal evidence. We disagree
and, instead, conclude that the Commission reasonably found that the evidence
produced by CB&I simply failed to rebut the Government’s prima facie case. As

-- 8 of 41 --

9
occurs in most cases, the Government introduced all of its evidence at once.
In addition to making a prima facie case based on concentration numbers and
a detailed examination of competitive conditions in each market, the
Government presented evidence that all relevant markets are difficult to enter.
The Government’s evidence not only established its prima facie case that CB&I’s
acquisition likely would have anti-competitive effects; it also served as a redoubt
against CB&I’s evidence that actual or potential entry of new competitors would
offset the merger’s substantial lessening of competition. The Commission
expressly decided that, based on the totality of the evidence, CB&I had not
rebutted the Government’s prima facie case. From our review of the record and
the Commission’s opinion, we conclude that the Commission’s decision is
supported by substantial evidence and that the Commission did not improperly
place the burden of persuasion upon CB&I.
CB&I primarily relies on Baker Hughes as the authority for the burden-
shifting framework within the anti-trust context. The Ninth and Eleventh
Circuits interpret Baker Hughes’ burden-shifting language as describing a
flexible framework rather than an air-tight rule. The Ninth Circuit in Olin
Corp. v. FTC distinguishes Baker Hughes by holding that the Commission does
not need to switch burdens back to the Government if the Government addresses
the respondent-company’s rebuttal evidence in its prima facie case; in other
words, based on an assessment of the rebuttal evidence in light of the prima
facie case, the Commission can determine that the respondent company’s
rebuttal does not satisfy its burden of production and therefore decline to switch
the burden of production back to the Government. 986 F.2d 1295, 1305 (9th Cir.
1993). The Ninth Circuit writes:
The clearest reason why Baker Hughes does not control here is that
the Commission responded to the Company’s rebuttal, whereas in

-- 9 of 41 --

6 CB&I misinterprets the last sentence to argue that the Eleventh Circuit’s flexible
reading of the burden-shifting framework applies only when time is of the essence. Without
any basis in the text, CB&I narrows the Eleventh Circuit’s opinion. Reading the passage as
a whole, the Eleventh Circuit considers the Baker Hughes framework as generally flexible
in practice for all situations, but only emphasizes the need for flexibility when time is of the
essence. See Univ. Health, 938 F.2d at 1219 n.25 (“This is particularly true when the
government seeks a temporary restraining order or, as here, a preliminary injunction and,
thus, time is of the essence.”) (emphasis added).
10
Baker Hughes the government did not. In the present case, the
Commission pointed to evidence indicating why Olin’s viability
argument should fail. The Commission is able to do this because it
is Olin’s burden to rebut a prima facie case of illegality.
Id. (citations omitted). We believe the same situation applies in this case. The
Government’s prima facie case addresses why the rebuttal evidence is not
sufficient and CB&I’s construal of the rebuttal evidence is not credible; therefore
the Commission can conclude CB&I’s burden of production on rebuttal is not
satisfied without having to formally switch the burden of production back to the
Government. The Eleventh Circuit in Univ. Health, Inc. approves Baker Hughes’
general framework but concludes, in accord with the Ninth Circuit, that, in
practice, evidence is often considered all at once and the burdens are often
analyzed together. 938 F.2d at 1218-19 & n.25. The Eleventh Circuit writes:
Conceptually, this shifting of the burdens of production, with the
ultimate burden of persuasion remaining always with the
government, conjures up images of a tennis match, where the
government serves up its prima facie case, the defendant returns
with evidence undermining the government's case, and then the
government must respond to win the point. In practice, however, the
government usually introduces all of its evidence at one time, and
the defendant responds in kind. This is particularly true when the
government seeks a temporary restraining order or, as here, a
preliminary injunction and, thus, time is of the essence.6
Id.; see also Baker Hughes, 908 F.2d at 991 (calling the “distinction between [the

-- 10 of 41 --

11
burden of production] and the ultimate burden of persuasion” “always an elusive
distinction.”); FTC v. Butterworth Health Corp., 121 F.3d 708, 1997 WL 420543,
*1 (6th Cir. Jul. 8, 1997) (unpublished) (calling Baker Hughes burden-shifting
framework “somewhat artificial.”). The Ninth and Eleventh Circuit
interpretations of the Baker Hughes burden-shifting framework accommodate
the practical difficulties in separating the burden to persuade and the burdens
to produce. The flexible approach allows the Commission to preserve the prima
facie presumption if the respondent, CB&I, fails to satisfy the burden of
production in light of contrary evidence in the prima facie case.
CB&I then challenges the order by contending the Commission imposed
an onerous burden of production that approximates a burden of persuasion. The
Commission must determine whether the defendant has come forward with
sufficient evidence to rebut the government’s prima facie case; but the
Government continues to bear the burden of persuasion even after it has made
out a prima facie case through statistical evidence; the defendant is not required
to present a defense upon which he bears the burden of proof in the sense of
ultimately persuading the trier of fact that he is entitled to relief. See Automatic
Canteen Co. of Am. v. FTC, 346 U.S. 61, 80-82 (1953); Vanity Fair Paper Mills,
Inc. v. FTC, 311 F.2d 480, 486 (2nd Cir. 1962); see also Kaiser Aluminum, 652
F.2d at 1340; cf. Fed. R. Evid. 301. The burden of production is “the obligation
to come forward with evidence of a litigant’s necessary propositions of fact.” El
v. Se. Penn. Transp. Auth. (SEPTA), 479 F.3d 232, 237 n.6 (3d Cir. 1997).
Under the burden of production, even if the respondent produces evidence, the
court must “credit[]” the evidence and the evidence must “justify” the rebuttal
arguments the respondent espouses. Baker Hughes, 908 F.2d at 992; see also id.
at 991 (noting the rebuttal evidence should “discredit[] the data underlying the

-- 11 of 41 --

12
initial presumption in the government’s favor”). In other words, the Commission
can judge whether the nexus between the rebuttal arguments and the proffered
evidence is plausible so as to satisfy the burden of production as a matter of law.
See, e.g., Olin Corp., 986 F.2d at 1303; Univ. Health, Inc., 938 F.2d at 1223-24.
We therefore read the Commission’s opinion as deciding whether respondent’s
rebuttal arguments and evidence plausibly and justifiably “show[ ] that the
market-share statistics give an inaccurate account of the acquisition’s possible
effect on competition in the relevant market” so as to satisfy its burden of
production as a matter of law. Cf. Id. at 1218. Under the flexible approach, the
Commission can decide this in light of any argument in the prima facie case that
may undermine the rebuttal evidence. Olin Corp., 986 F.2d at 1305.
Nevertheless, the Commission cannot impose too exacting a standard that
might approach a burden of persuasion, which would require a party to
“convince the factfinder at trial that a litigant’s necessary propositions of fact are
indeed true.” El, 479 F.3d at 237 n.6. However, the Commission has some
discretion to decide if the respondent’s proffered evidence justifies its arguments
in rebuttal. See, e.g., Olin Corp., 986 F.2d at 1305-06 (finding a rebuttal
argument “not plausible” in light of the proffered evidence); see also United
States v. Marine Bancorporation, 418 U.S. 602, 631 (1974) (“Appellees
introduced no significant evidence . . . .”) (emphasis added); FTC v. Staples, 970
F. Supp. 1066, 1083 (D. D.C. 1997) (“To meet [its] burden, the defendants must
show that the market-share statistics give an inaccurate prediction of the
proposed acquisition’s probable effect on competition.”). In addition, if a
Government’s prima facie case anticipates and addresses the respondent’s
rebuttal evidence, as in this case, the prima facie case is very compelling and
significantly strengthened. Op. at 49 (“Complainant Counsel have established

-- 12 of 41 --

7 The mere fact that the Commission used the word “persuasive” does not prevent
this court from independently examining the context of its conclusions and affirming the
judgment if it was indeed correct under the proper legal standards. Cf. Rebel Oil Co., Inc. v.
Atlantic Richfield Co., 51 F.3d 1421, 1435-36 (9th Cir. 1995) (engaging an independent
review of the evidence despite respondent’s claim that the trial court’s “persuasive”
language possibly implied an improper weighing of the evidence). In any event, CB&I
misconstrues the Commission’s use of the word “persuasive,” and its use does not suggest
any improper burden-shifting. The Commission did not use “persuasive” to compare
CB&I’s evidence to the prima facie evidence. Instead, in the instances cited by CB&I, (1)
the Commission describes CB&I’s arguments that certain conclusions should be inferred
from its evidence as “unpersuasive” and does not address the evidence itself, see, e.g., Op. at
61, Op. at 71, Op. at 91, R.O. at 9; and (2) the Commission describes a customer’s
statement as internally “unpersuasive,” because it contradicts the customer’s other
proffered evidence; again, this does not describe any comparison between CB&I’s evidence
13
a strong prima facie case.”). Under these conditions, the respondent’s burden of
production on rebuttal is also heightened. Baker Hughes, 908 F.2d at 991 (“The
more compelling the prima facie case, the more evidence the defendant must
present to rebut it successfully.”). By carefully examining the rebuttal evidence
in light of strong and relevant contrary evidence in the prima facie case, the
Commission did not unjustifiably impose a “heavy burden” on CB&I to “clearly”
disprove future anti-competitive effects. Baker Hughes, 908 F.2d at 991 (noting
that a burden to “clearly” disprove future anti-competitive effects is too onerous
a standard for judging the burden of production).
Analogous with the situations in Olin Corp. and Baker Hughes, the
Commission here never identified the exact standard used in assessing whether
the respondent’s rebuttal satisfied its burden of production in this case. Olin
Corp., 986 F.2d at 1305 n.11. Neither the Government nor the Commission
urges an unreasonable evidentiary burden on the respondents. The Commission
reasonably found, based on substantial evidence, that CB&I’s somewhat
ineffectual evidence did not rebut the Government’s stalwart prima facie case.
Id. at 1305; Automatic Canteen Co., 346 U.S. at 81-82. We, therefore, do not find
improper burden-shifting in this case.7 Based on the foregoing, the Commission

-- 13 of 41 --

and the prima facie case. See Op. at 65.
14
properly applied the correct legal standards in concluding that “[CB&I] [has] not
rebutted Complainant Counsel’s prima facie case.” Op., at 91.
2. The Commission Properly Analyzed the “Potential Entry” Defense and had
Substantial Evidence to Conclude that “Potential Entry” Evidence was
Insufficient to Rebut the Prima Facie Case
A. The Commission Applied the Correct Legal Standard For Analyzing the
“Potential Entry” Defense
CB&I also argues that the Commission addressed the incorrect analytical
question concerning the extent of potential entry necessary to counteract any
anti-competitive effects. CB&I argues that the correct legal standard should
have been: “if there was a supracompetitive price increase, entry would be
sufficient to counteract such an increase.” See, e.g., Cargill, Inc. v. Monfort of
Colorado, Inc., 479 U.S. 104, 119 n.15 (1986) (“In evaluating entry barriers in
the context of a predatory pricing claim, however, a court should focus on
whether significant entry barriers would exist after the merged firm had
eliminated some of its rivals, because at that point the remaining firms would
begin to charge supracompetitive prices, and the barriers that existed during
competitive conditions might well prove insignificant.”). Instead, according to
CB&I, the Commission considered only whether there was already entry
sufficient to constrain CB&I from raising prices. CB&I mischaracterizes the
Commission’s analysis. The Commission not only addressed whether existing
entry is sufficient to constrain CB&I from raising prices but also used existing
entry and the history of entry as evidence in determining whether future entry
would be able to counteract a merger’s anti-competitive effects, such as a
supracompetitive price increase. See United States v. General Dynamics Corp.,
415 U.S. 486, 501 (1974) (“Thus, companies that have controlled sufficiently

-- 14 of 41 --

15
large shares of a concentrated market are barred from merger by § 7 [of the
Clayton Act], not because of their past acts, but because their past performances
imply an ability to continue to dominate with at least equal vigor.”); see also
Brown Shoe Co., 370 U.S. at 322 n.38 (“[O]nly a further examination of the
particular market – its structure, history, and probable future – can provide the
appropriate setting for judging the probable anticompetitive effect of the
merger.”); FTC v. Nat’l Tea Co., 603 F.2d 694, 700 (8th Cir. 1979). In this case,
the Commission clearly concluded that:
The history of these markets reveals that they have not been
characterized by easy entry and expansion and have been
dominated by [CB&I and PDM] for decades . . . The evidence
strongly suggests that this dynamic would have continued absent
the merger, and [CB&I and PDM’s] own strategic planning
documents predicted that the merged firm would “dominate” the
relevant markets. Thus, to determine whether the entry [CB&I]
suggest[s] is likely to restore competition lost from the merger, [the
Commission] must determine whether a sea-change has occurred in
the markets so as to render inapplicable the competitive conditions
that have held for so long. Based on the evidence, [the Commission]
conclude[s] that such is not the case and that the entry and
expansion alleged by [CB&I and PDM] are not sufficient to
constrain CB&I’s conduct in the foreseeable future.
Op., at 9; see also Op., at 53 (“[The Commission] conclude[s] that these new
entrants do not confront CB&I with competition sufficient to constrain it from
raising prices.”). The Commission also clearly stated: “In light of these
assertedly low entry barriers, [CB&I] then argue[s] that potential entrants
either already constrain CB&I or can be expected to enter the market in the
event of anticompetitive price increased by CB&I . . . We . . . reject [CB&I’s]
arguments.” Op., at 83. Thus, the Commission concludes that if
supracompetitive pricing existed, the new entrants would be insufficient to
counteract it - the exact legal standard CB&I proposes.

-- 15 of 41 --

8 Entry barriers are “additional long-run costs that were not incurred by incumbent
firms but must be incurred by new entrants,” or “factors in the market that deter entry
while permitting incumbent firms to earn monopoly returns.” Los Angeles Land Co. v.
Brunswick Corp., 6 F.3d 1422, 1427-28 (9th Cir.1993) (internal quotations omitted); see
also Colorado Interstate Gas Co. v. Natural Gas Pipeline Co. Of Am., 885 F.2d 683, 696 n.21
(10th Cir. 1989) (“Barriers to entry are market characteristics which make it difficult or
time-consuming for new firms to enter a market.”).
16
B. There Is No Structural Change in the Markets to Indicate That the Potential
for Future Entry Would Be Any Greater than the Minimal Entry of the Past
CB&I also argues that the evidence of potential entry can be distinguished
from the history of actual entry because structural changes in the market create
a tendency toward stronger competition. See Baker Hughes, 908 F.2d at 986
(citing United States v. Int’l Harvester, 564 F.2d 769, 773-779 (7th Cir. 1977)).
As we stated in Fort Worth Nat’l Corp. v. Fed. Sav. & Loan Ins. Corp.:
. . . Congress provided [the Commission] authority for arresting
mergers at a time when the trend to a lessening of competition was
still in its incipiency. Application of this standard requires not
merely an appraisal of the immediate impact of the merger upon
competition, but a prediction of its impact upon competitive
conditions in the future.
469 F.2d 47, 60-61 (5th Cir. 1972) (internal citations and quotations omitted).
CB&I’s bald assertion does not rebut the Government’s strong prima facie
evidence. As we discuss later, the Government provides substantial evidence of
barriers to entry and substantial evidence that they will continue to exist in the
near future. Thus, the Commission relies on substantial evidence for its
prediction that no “sea change” in market structure distinguishes current
market conditions from the history of market conditions. Op. at 71. CB&I does
not provide sufficient evidence in its rebuttal that potential entrants will
overcome these entrenched barriers to entry8 and encourage stronger
competition even if there are supracompetitive prices. As the Commission

-- 16 of 41 --

9 CB&I also misconstrues the I.D. and the Commission opinion to argue that the
Commission ignored the ALJ’s finding of no supracompetitive price increases post-
acquisition. In fact, the ALJ only concluded that the Government did not prove nor was
required to prove supracompetitive prices existed post-acquisition. I.D., at 114. Neither
the ALJ nor the Commission directly ruled that there were no supracompetitive price
increases post-acquisition. See Op., at 91; I.D., at 114. In the pertinent part of the
opinion, the Commission rejected the Government’s proffered evidence of post-acquisition
price increases because while such evidence tends to show the acquisition would lead to
anti-competitive conditions, existing evidence was already sufficient to lead to that
conclusion. “Whether post-acquisition evidence is admissible depends on the nature of the
evidence.” Dailey v. Quality School Plan, Inc., 427 F.2d 1080, 1082 (5th Cir. 1970) (citing
FTC v. Procter & Gamble, 386 U.S. 568 (1967)); see id. at 576 (rejecting Court of Appeal’s
reliance on four years of post-merger data as “misapprehend[ing] the standards for its
review and the standards applicable in a [Section 7 of the Clayton Act] proceeding.”). We
read Dailey as providing the trial court discretion in deciding when to admit post-
acquisition evidence and Procter & Gamble as concluding that post-acquisition evidence is
17
concludes: “In short, the post-acquisition evidence in the LPG market
demonstrates no more than two minor competitors submitted bids after the
acquisition. We are not, however, persuaded that CB&I’s cost-cutting and
margin-shaving represent a ‘sea-change’ in the market sufficient to overcome the
contrary evidence.” Op., at 71.
The continued existence of high entry barriers distinguishes this case from
Stearns Airport Equipment Co., Inc. v. FMC Corp., 170 F.3d 518, 530 (5th Cir.
1999); in this case, the Government can point to viable specific barriers to
foreign firms that CB&I did not sufficiently rebut. These high barriers to entry
will prevent sufficient entry to counteract supracompetitive pricing. “Of course,
for a potential entrant or the threat of a potential entrant to act as a competitive
constraint on incumbent firms, entry -- at least for that firm -- must be easy.”
Baker Hughes, 908 F.2d, at 986. The Government in its prima facie case
identifies substantial evidence of “special industry conditions” that would block
and continue to block foreign entrants despite supracompetitive prices not found
in the FMC or Baker Hughes cases where barriers to entry were low. See FMC
Corp., 170 F.3d at 530.9

-- 17 of 41 --

not dispositive. The Commission thus did not abuse its discretion in so ruling. See In re
Plywood Antitrust Litigation, 655 F.2d 627, 637 (5th Cir. 1981).
18
C. The Commission’s Use of the Words “Parity” and “On Par” Does Not Imply The
Application of An Incorrect Legal Standard
CB&I also argues that the Commission burdened petitioner with a novel
and onerous entry standard, requiring new entrants to enter “on par” with CB&I
in order for entry to be sufficient to counteract the acquisition’s anti-competitive
effects. CB&I misconstrues the Commission’s opinion by interpreting the
Commission’s use of the words “on par” or “parity” out-of-context to mean the
Commission required new entrants to be “equal” to CB&I. See Op., at 54, 57, 58.
Instead, reading the use of “on par” or “parity” contextually, the Commission is
simply commenting on the high barriers of entry that prevent the new entrants
from ever competing with CB&I on “an equal footing.” Id. at 58 (“While new
suppliers appear to have gained or are seeking to gain a toehold in the market,
they are not on equal footing with CB&I, and their modest progress cannot
restore the vibrant competition that once existed.”); see also id. at 67. For
example, the Commission refers to the fact that United States customers would
not rate the new entrants as having a reputation on par with that of CB&I and
therefore would not treat them similarly; such an observation has nothing to do
with applying an onerous entry standard but is merely an observation
buttressing the conclusion that reputation is a potential barrier to entry. Op., at
54. We read the “equal footing” language to mean that new entrants would be
unable to compete at a level able to constrain CB&I’s price increases and not so
literally to mean that new entrants must be “equal” to CB&I in competitive
power.
Other courts have generally concluded that for entry to constrain
supracompetive prices, the entry has to be of a “sufficient scale” adequate to

-- 18 of 41 --

10 CB&I relies on Baker Hughes to argue that the very threat of entry from foreign
firms would constrain anti-competitive effects a fortiori such that it is not necessary that a
new entrant enter “on par.” See Baker Hughes, 908 F.2d at 988. Such reliance is misplaced.
First, Baker Hughes’ conclusion that a mere threat of entry is sufficient to constrain anti-
competitive effects has been criticized, and we will not adopt it here. See United States v.
United Tote, Inc., 768 F. Supp. 1064, 1081 (D. Del. 1991) (noting that interpreting Baker
Hughes as encouraging a lax standard is inconsistent with the critical examination of
potential entrant’s ability to restrain competition); see also 4 Phillip E. Areeda & Herbert
Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application ¶
941h (2d ed. 2000) (criticizing Baker Hughes’ lax standards that favor respondents)
(“Areeda & Hovenkamp”); Darren Bush & Salvatorre Massa, “Rethinking the Potential
Competition Doctrine,” 2004 WIS. L. REV. 1035, 1074-79 (2004). Morever, there is a high
threshold applied to assertions as to whether a company can be considered a potential
entrant for anti-trust purposes. See 2A Areeda & Hovenkamp, at ¶ 422 (“The more
concentrated the market and the greater the threat posted by the challenged practice, the
more convincing must be the evidence of likely, timely, and effective entry.”). The burden of
production must provide evidence that the likelihood of entry reaches a threshold ranging
from “reasonable probability” to “certainty.” CB&I's evidence does not approach either
threshold so as to rebut the prima facie case. See BOC Intern'l v. FTC, 557 F.2d 24, 28 n.7
(2d Cir. 1977); FTC v. Atlantic Richfield Co., 549 F.2d 289, 294-295 (4th Cir. 1977);
Mercantile Texas Corp. v. Board of Governors of Fed. Reserve Sys., 638 F.2d 1255, 1266 (5th
19
constrain prices and break entry barriers. See United States v. Visa USA, Inc.,
163 F. Supp. 2d 322, 342 (S.D. N.Y. 2001) (entry must be “timely, likely, and [of
a] sufficient scale to deter or counteract any anticompetitive restraints.”); Rebel
Oil, 51 F.3d at 1440 (“Barriers may still be ‘significant’ if the market is unable
to correct itself despite the entry of small rivals.”); Oahu Gas Serv., Inc. v. Pac.
Res., Inc., 838 F.2d 360, 367 (9th Cir. 1988 ); United States v. Falstaff Brewing
Corp., 410 U.S. 526, 531-32 (1973) (“The existence of an aggressive, well
equipped and well financed corporation engaged in the same or related lines of
commerce waiting anxiously to enter an oligopolistic market would be a
substantial incentive to competition which cannot be underestimated.”); see also
U.S. Dep’t of Justice and Fed. Trade Comm’n, 1992 Horizontal Merger
Guidelines, 57 Fed. Reg. 41552, 41561 (Sep. 10, 1992), at ¶ 3.0 (entry must be
“timely, likely, and sufficient in magnitude, character and scope to deter or
counteract the [anti]competitive effects of concern.”) (“Merger Guidelines”).10 We

-- 19 of 41 --

Cir. 1981). Therefore, the Commission had substantial evidence to conclude that CB&I
failed to rebut the prima facie case, because there is no such evidence that the threat of
potential entrants will constrain the acquisition’s anti-competitive effects.
20
read the Commission’s opinion to suggest that entry would not be at a sufficient
scale capable of competing with CB&I and piercing the barriers to entry. See
Op., at 67 (“The actual or potential entrants in this market also appear vastly
overmatched by CB&I”); Op., at 66 (“[T]he testimony of these customers . . . does
not demonstrate that they are adequate replacement for the competition that has
been lost.”) (emphasis added); Op., at 82 (“[E]ntry pointed to by [CB&I] is
insufficient to constrain CB&I post-acquisition.”) (emphasis added). Therefore,
the Commission applied the correct legal standard and rightfully concluded that
potential entrants would not be of a sufficient scale to compete on the same
playing field as CB&I and thus would be unable to constrain the likely anti-
competitive effects.
3. The Commission Relied On Substantial Evidence For Its Factual Findings
Under the “substantial evidence” standard, “[o]ur task is not to reweigh
the evidence but only to determine whether there is such relevant evidence that
a reasonable mind might accept as adequate to support a conclusion.” Gibson
v. FTC, 682 F.2d 554, 571 (5th Cir. 1982) (internal quotations and citations
omitted). Contrary to CB&I’s contentions, the Commission did not clearly
discount the merits of CB&I’s arguments and did not make “its decision before
it considered any contrary conclusion.” Schering-Plough Corp. v. FTC, 402 F.3d
1056, 1065 (11th Cir. 2005). In Schering-Plough Corp., the Commission
explicitly ignored obvious Eleventh Circuit precedent supporting the
respondent’s arguments. 402 F.3d at 1068 n.18. In this case, the Commission
did not ignore obvious precedent to reach an unjustified decision. The
Commission carefully examined and discussed CB&I’s various arguments. We

-- 20 of 41 --

21
therefore find CB&I’s attempt to analogize this case to Schering-Plough Corp.
is without merit.
In respect to its argument that the Commission did not rely on substantial
evidence for its factual findings, CB&I challenges the Commission’s opinion on
three grounds: (A) the Government’s proffered HHI statistics were misleading
predictors of probable future competitiveness in the markets; (B) the
Commission’s finding of “nearly insurmountable” entry barriers ignores rebuttal
evidence to the contrary; and (C) the Commission’s finding that CB&I’s
customers have no real alternatives to CB&I.
A. The Proffered HHIs Can Be Used As Indicators of Probable Future
Competitiveness
The HHIs are just one element in the Government’s strong prima facie
case. Market concentration figures should be examined in the context of the
entire prima facie case. See H.J. Heinz Co., 246 F.3d at 717-18. Here, the prima
facie case establishes without dispute that the two dominant, and often only,
players in these four domestic markets are merging. This indisputable fact
“bolster[s]” the Government’s market concentration figures. See id. Where the
post-merger HHI exceeds 1,800, and the merger produces an increase in the HHI
of more than 100 points, the merger guidelines create a presumption of adverse
competitive consequences. See Merger Guidelines, 57 Fed. Reg. 41558 at § 1.51;
see also United States v. Loew’s Inc., 882 F.2d 29, 32, n.2 (2d Cir. 1989); FTC v.
Cardinal Health, Inc., 12 F. Supp.2d 34, 53 (D. D.C. 1998). The increases in
HHIs in this case are extremely high. HHI increases of 2,635 for the LIN/LOX
tank market, 3,911 for the LPG tank market, 4,956 for the LNG tank market,
and 4,999 for the TVC tank market are predicted post-merger. An HHI of 10,000
denotes a complete monopoly. See 4 Areeda & Hovenkamp, at ¶ 931d3. Post-
acquisition HHIs for the four markets are: 5,845 for LIN/LOX, 8,380 for LPG,

-- 21 of 41 --

11 Merger Guidelines are often used as persuasive authority when deciding if a
particular acquisition violates anti-trust laws. See United States v. Kinder, 64 F.3d 757,
771 (2d Cir. 1995).
12 Long-term trends in HHI changes can be used to examine the structure of markets
and are used to determine the effect of mergers on the market. See State of N.Y. v. Kraft
Gen. Foods, Inc., 926 F.Supp. 321, 362 (S.D.N.Y. 1995). Here, the market trends in HHIs
provide substantial evidence that CB&I and PDM have been the dominant players in the
relevant markets and do not indicate any trend of reduced concentration; rather, a merger
accelerates the trend towards increased concentration, as its previous competitors have
dropped out of the relevant markets. Id.
22
and 10,000 for the LNG and TVC markets.
CB&I now urges us to disagree with the Commission’s rejection of the
ALJ’s conclusion that the HHIs were unreliable because the HHIs relied on
sporadic sales data, which would generate unreliable market share data. We
may scrutinize the HHI statistics more carefully when the Commission’s
conclusion differs from the ALJ, as in this case. See Schering-Plough, 402 F.3d
at 1062. The Commission agrees with the ALJ that the use of HHIs based
solely on sales from the 1996-2001 period is unreliable, and therefore extended
the sales data time period to a 11-year period, 1990-2001. When sales data are
sporadic, a longer historical perspective may be necessary. The Department of
Justice and Federal Trade Commission’s Merger Guidelines,11 which describe the
standards applied by the Government in exercising its prosecutorial discretion
in the anti-trust realm, note, “[t]ypically, annual data are used, but where
individual sales are large and infrequent so that annual data may be
unrepresentative, the [Department of Justice and the Commission] may measure
market shares over a longer period of time.” Merger Guidelines, 57 Fed. Reg. at
41557, at § 1.41; cf. 2A Areeda & Hovenkamp, at ¶ 535d (noting that averaging
over a significantly long period of time is a solution, albeit an imperfect solution,
to “lumpy” sales statistics.).12 Regardless, the Commission adequately explained
why it chose an extended period: (1) the extended period provided more data

-- 22 of 41 --

23
points, which averages out the year-to-year fluctuations and “chance outcomes”
and (2) CB&I presents no evidence that a structural change affected the market,
and thus the same market conditions persist in the 1996-2001 time-period as the
11-year period, except the 11-year period has additional data points. See Op., at
19; cf. KeySpan-Ravenswood, LLC v. F.E.R.C., 348 F.3d 1053, 1055-60 (D.C. Cir.
2003).
In any event, CB&I places too much weight on the HHIs as a dispositive
measure of market concentration when other indicators of the market structure
and history of the market clearly bolster what the HHIs already indicate - that
rivals are limited and CB&I and PDM are the only two firms with any market
power in these markets. See FTC v. Warner Communications, Inc., 742 F.2d
1156, 1163 n.1 (9th Cir. 1984 ) (concluding that concentration statistics merely
provide a “meaningful context within which to address the question of the
merger’s competitive effects.”) (citing Gen. Dynamics Corp., 415 U.S. at 498); see
also FTC v. PPG Inds., Inc., 798 F.2d 1500, 1503 (D.C. Cir. 1986) (noting that
the use of the HHIs “rests upon the theory, that, where rivals are few, firms will
be able to coordinate their behavior, either by overt collusion or implicit
understanding, in order to restrict output and achieve profits above competitive
levels.”). The Commission also provided evidence of high entry barriers and
customers’ perception of differences between CB&I and potential entrants. See
infra Section II.3.C.iii. These circumstances justify a conclusion of high market
concentration. See, e.g., R.J. Reynolds Tobacco Co. v. Cigarettes Cheaper!, 462
F.3d 690, 695 (7th Cir. 2006) (concluding that when the market is “concentrated
(the Herfindahl-Hirschmann Index exceeds 3,000),” “new entry is difficult if not
impossible,” and “customers perceive quality differences among brands,” a
finding of high market concentration is justified). We do not see a problem with
using the HHIs as part of this “totality of circumstances” that indicate this

-- 23 of 41 --

24
acquisition’s potential anti-competitive effects. See Baker Hughes, 908 F.2d at
984.
In addition to its challenge of the selection of the time period, CB&I also
argues that the “sporadic” nature of the sales data undermines all evidence of
market power. In Baker Hughes, 908 F.2d at 986, the D.C. Circuit did conclude
that a small number of sales of an esoteric product may suggest concentration
statistics are misleading. In Lockheed Martin Corp. v. Boeing Co., 390 F.
Supp.2d 1073, 1080 (M.D. Fla. 2005), the court dismissed monopolization claims
for the “heavy-lift satellite launch services for the government” market, because
the sales data was limited to two launch contracts. We agree that reliance on
very limited data, such as two data points may undermine an entire prima facie
case. However, we find this to be a very limited exception, such as the extreme
situation in Lockheed Martin, because the academic literature has not accepted
any broad conclusion that small markets are all per se problematic. See 4
Areeda & Hovenkamp, at ¶ 929; see also FTC v. Food Town Stores, 539 F.2d
1339, 1345 (4th Cir. 1976) (“The fact that the markets in which the firms
compete may be small is irrelevant under the Clayton Act, and does not affect
the legality of the merger.”).
In contrast, for three of the four markets here, the data underlying the
HHI for market concentration is not nearly as sparse as that in Lockheed
Martin. For the LNG market, from 1990 to the acquisition date, nine LNG tank
plants were awarded --- CB&I won five and PDM won four. I.D., at 65. Out of
all seventy-five LNG peak-shaving plants in the United States, CB&I and PDM
constructed all but six of them (the six were constructed by a now out-of-business
competitor). Id. at 64. For the LPG market, out of the eleven LPG tank projects
awarded in the United States between 1990 and 2001, CB&I won five and PDM
won four. Id., at 213. From 1990 to the Acquisition, 109 LIN/LOX tanks were

-- 24 of 41 --

25
constructed and CB&I and PDM built 72.8% of these tanks. Id. at 269. The
third major player, accounting for 23.3% of those tanks, went out of business in
2001. Id. at 270. This history provides substantial evidence for discerning a
trend towards increased market concentration. However, for the same reasons
as in Lockheed Martin, we conclude that the evidence in the TVC market is too
sparse and sporadic for that market’s HHI statistics to be a reliable factor.
Lockheed Martin, 390 F. Supp.2d, at 1080. The TVC market’s HHI statistic
relies on only one TVC tank project and another proposed project within the
eleven-year period. I.D., at 55. Even without the HHI, we find substantial
evidence, as did the ALJ, to support the Commission’s conclusion that the
acquisition has a pronounced anti-competitive effect in the TVC market
sufficient to establish the prima facie case. The Government produced evidence
that CB&I and PDM were the only two competitors in the market since 1960.
See, e.g., I.D. at 97. The Government also provided ample other evidence to
establish its strong prima facie case, such as customer testimony, history of the
market, and CB&I and PDM’s internal documents. See Op., at 28.
We find that the record contains substantial evidence to support the
Commission’s finding that the HHIs are not completely irrelevant in three of the
four markets. Instead of ignoring HHIs, we agree with the Commission that they
should be viewed with caution and within the larger picture of long-term trends
and market structure. See Brown Shoe, 370 U.S. at 322 n.38. Long-term trends
in the market and the Government’s other evidence favor what the HHIs also
indicate: the proposed merger will substantially lessen competition. Even
excluding the HHIs, the Government’s other evidence independently suffices to
establish a prima facie case in all markets, including the TVC market.
B. Merger Guidelines
CB&I also contends the Commission committed “reversible error” because

-- 25 of 41 --

13 Moreover, as we noted earlier in supra note 11, the Merger Guidelines are not
binding on the courts and the agency during adjudication but are only highly persuasive
authorities as a “benchmark of legality.” See United States v. Kinder, 64 F.3d 757, 771 &
n.22 (2d Cir. 1995) (“Although it is widely acknowledged that the Merger Guidelines do not
bind the judiciary in determining whether to sanction a corporate merger or acquisition for
anticompetitive effect, courts commonly cite them as a benchmark of legality.”). The
Merger Guidelines do not guide adjudicative decisions at the agency and court-level,
because they are merely enforcement policy statements that establish standards for
exercising prosecutorial discretion. Id.; see also Native Am. Arts, Inc. v. Waldron Corp., 399
F.3d 871, 874 (7th Cir. 2005); Merger Guidelines, 57 Fed. Reg. at 41553 § 0. Enforcement
policy is not binding on the agency and has no force of law. See Olin Corp., 986 F.2d at
1300 (“Certainly the [Merger] Guidelines are not binding on the courts . . . or, for that
matter, on the Commission.”) (emphasis added); Brock v. Cathedral Bluffs Shale Oil Co.,
796 F.2d 533, 538 (D.C. Cir. 1986); see also Nat’l Wrestling Coaches Ass’n v. Dep’t of Educ.,
383 F.3d 1047, 1048 (D.C. Cir. 2004); cf. Ash Grove Cement Co. v. F. T. C., 577 F.2d 1368,
1374 (9th Cir. 1978). CB&I’s citation to Nevins v. NLRB, 796 F.2d 14, 18 (2d Cir. 1986) is
inapposite. Nevins deals with guidelines concerning the adjudicatory function within the
NLRB context, but the Merger Guidelines deal with the enforcement function of the agency
and are explicitly denoted as non-binding. Enforcement, unlike adjudication, is also an
area the courts are “most reluctant to interfere.” See Brock, 796 F.2d at 538.
14 Even so, the Merger Guidelines delegate much discretion in the application of
these rules and reject a “mechanical application” of the Guidelines. Merger Guidelines, 57
Fed. Reg. at 41552. The Merger Guidelines urge the Commission to “apply [the Guidelines’]
26
the Commission failed to follow the Merger Guidelines, 57 Fed. Reg. at 4.1557
§ 1.41 n.15. CB&I argues the Commission, in contravention of the Merger
Guidelines, did not credit the field of potential entrants with an equal likelihood
to win bids but instead identified CB&I as a dominant player and a likely
winner in all bid competitions.
CB&I’s argument is without merit. CB&I misconstrues the language it
cites in the Merger Guidelines.13 The Merger Guidelines, 57 Fed. Reg. at 4.1557
§ 1.41 n.15, simply state: “[w]here all firms have, on a forward-looking basis, an
equal likelihood of securing sales, the [Department of Justice and the Federal
Trade Commission] will assign firms equal [market] shares.” Under this rule,
in order to apply an equal number of market shares to the field of competitors,
as CB&I urges, the competitors, on a forward-looking basis, must have “an equal
likelihood of securing sales.”14 The Commission relied on substantial and

-- 26 of 41 --

standards reasonably and flexibly to the particular facts and circumstances of each
proposed merger.” Id.
27
overwhelming evidence that there is no equal likelihood to secure bids given the
high entry barriers, i.e., because of CB&I’s reputation and control of skilled
crews. See infra Section II.3.C.iii.
C. Commission’s Rejection of Rebuttal Arguments, viz., Alleged Market Entry
and Low Entry Barriers, Is Supported by Substantial Evidence
i. Post-Acquisition Evidence Has Little Probative Weight if It Is
Manipulable, and Evidence in this Case Is Reasonably Viewed as
Manipulable.
We agree with CB&I that post-acquisition evidence may be useful in
determining the possibility that new entrants would counteract the anti-
competitive effects of an acquisition. “Whether post-acquisition evidence is
admissible depends on the nature of the evidence.” Dailey, 427 F.2d at 1082.
Nevertheless, there are significant reasons why post-acquisition evidence’s
probative value may be limited. The Supreme Court has so concluded by noting:
[T]he probative value of [post-acquisition] evidence was found to be
extremely limited, and judgments against the Government were in
each instance reversed in part because ‘too much weight’ had been
given to postacquisition events. The need for such a limitation is
obvious. If a demonstration that no anticompetitive effects had
occurred at the time of trial or of judgment constituted a permissible
defense to a § 7 divestiture suit, violators could stave off such
actions merely by refraining from aggressive or anticompetitive
behavior when such a suit was threatened or pending.
General Dynamics, 415 U.S. at 504-05; see also Alberta Gas Chemicals Ltd. v.
E.I. Du Pont de Nemours and Co., 826 F.2d 1235, 1244 (3d Cir. 1987). The
probative value of such evidence is deemed limited not just when evidence is
actually subject to manipulation, but rather is deemed of limited value whenever
such evidence could arguably be subject to manipulation. See Lektro-Vend Corp.

-- 27 of 41 --

15 Just allowing entrants to win bids does not guarantee the entrants would be able
to enter the market permanently, since winning a bid does not necessarily result in the
successful completion of the project especially in light of evidence that CB&I controls skilled
laborers necessary for success that other competitors do not have.
28
v. Vendo Co., 660 F.2d 225, 276 (7th Cir. 1981) (“The post-acquisition evidence
in this case is the type which cannot arguably have been subject to the
defendant’s deliberate manipulation, nor is it likely that the market was less
competitive after the acquisition than it would have been otherwise.”) (emphasis
added); Hosp. Corp. of Am. v. FTC, 807 F.2d 1381, 1384 (7th Cir. 1986)
(“Post-acquisition evidence that is subject to manipulation by the party seeking
to use it is entitled to little or no weight.”) (emphasis added). CB&I argues that
its post-acquisition evidence is probative, because there is no evidence CB&I
manipulated the evidence. We disagree. Any discussion concerning CB&I’s
alleged manipulation of post-acquisition evidence is irrelevant, because the
evidence’s probative weight is lessened if it is arguably subject to possible
manipulation. The Commission was correct to hold that evidence “subject to
manipulation” was the correct standard when deciding whether post-acquisition
evidence is probative. See Op., at 62 (“[T]he price reductions cited by the
Respondents occurred well after the Complaint in this case issued and are the
type of evidence that is wholly manipulable”). The post-acquisition evidence is
arguably manipulable because the existence of actual and potential entry
sufficient to constrain post-acquisition anti-competitive effects is based on the
purported success of these entrants in the bid markets. CB&I could refuse
to bid or negotiate with draconian terms in the immediate aftermath of the
acquisition so as to permit entrants to win a few bids so as to bolster the
market’s appearance of competitiveness.15
ii. Evidence of Actual Entry
Using post-acquisition evidence, CB&I argues that, post-acquisition,

-- 28 of 41 --

16 In addition, for the reasons we noted in Section II.3.C.i, supra, this post-
acquisition evidence is likely not very probative, because it can arguably be subject to
manipulation.
29
foreign competitors have made significant inroads into the four markets and won
several bids. Therefore, CB&I argues this rebuttal evidence shows how actual
entrants can constrain post-acquisition anti-competitive effects. However, the
Government contends this evidence of actual entry post-acquisition that CB&I
relies on in its brief is outside the administrative record and hence outside the
scope of our review. The evidence in question includes bidding on the Hackberry
Project past the preliminary stages (in fact, the brief quotes verbatim passages
from evidence attached to CB&I’s motion to adduce that we denied). The
evidence in question also includes the bids regarding the Cheniere Corpus
Christi and Sabine Pass and certain other outstanding bid competitions (Golden
Pass LNG and Washington Gas Co.). CB&I cites to its petition for
reconsideration filed with the Commission below when discussing this evidence.
Assuming arguendo that the evidence should be considered, it does not
alter or affect our decision.16 Only one piece of this evidence would possibly be
relevant to our decision, and this evidence of one successful entry by a foreign
company does not affect the substantial evidence upon which the Commission
based its decision and our decision to deny CB&I’s petition. CB&I’s prime
example of actual entry is Dynegy’s Hackberry project, which was awarded to a
foreign firm, Skanska, at the outset, but then awarded to another foreign firm,
IHI. CB&I argues that this is evidence that CB&I lost two chances to work on
the large Hackberry project. CB&I inaccurately characterizes the evidence. The
Commission noted that this evidence was for the whole LNG port, and there was
supposed to be a separate bid for the tank work as a sub-contract. R.O. at 12-
15. As for the Freeport LNG project, after learning that it was not awarded the

-- 29 of 41 --

30
entire project, CB&I withdrew from any participation in the project, which might
have yielded some tank work as a sub-contract. Id. at 15. The only bid possibly
lost on the merits was LNG tank work in the Sabine Pass Project. This single
instance is not enough to undermine the Commission’s conclusion that the
rebuttal evidence of actual entry was not sufficient. The evidence also shows
that CB&I was awarded three non-competitive sole-source contracts for LNG
tanks in addition to the five commitments before the record closed. R.O. at 17.
The proffered evidence tends to reflect that actual entry into LNG market was
marginal at best.
iii. CB&I Did Not Rebut Evidence of High Entry Barriers, so a
Potential Entry Theory Fails
In the alternative, if the post-acquisition evidence of actual entry is not
admitted, CB&I contends these large foreign firms are potential entrants that
may constrain the post-acquisition anti-competitive effects. CB&I’s argument
is without merit. A potential entrant’s ability to constrain market power is used
in contexts when there is an “ease of market entry.” See United States v. Marine
Bancorp, Inc., 418 U.S. 602, 628 (1974) (“[E]ase of entry on the part of the
acquiring firm is a central premise of the potential-competition doctrine.”); FMC
Corp., 170 F.3d at 530 (“If barriers in an industry are low, new entrants into the
industry will appear when the monopolist raises its prices.”). The mere
existence of potential entrants does not by itself rebut the anti-competitive
nature of an acquisition. The potential entry must face low enough barriers for
a threat of potential entry to be likely. Therefore assertions that potential entry
may meaningfully constrain market power turns on the existence of low or no
entry barriers. See Reazin v. Blue Cross & Blue Shield of Kansas, Inc., 899 F.2d
951, 974 (10th Cir. 1990) (“Thus, we agree with the district court that it properly
focused the jury’s attention on barriers to meaningful competition - competition

-- 30 of 41 --

31
which could inhibit anticompetitive conduct.”) (citing United States v. Waste
Mgmt., Inc., 743 F.2d 976, 983 (2d Cir.1984)); Yamaha Motor Co., Ltd. v. FTC,
657 F.2d 971, 977 (8th Cir. 1981) (noting that an “alleged potential entrant”
must have “a substantial likelihood of ultimately producing deconcentration of
that market or other significant procompetitive effects”) (quoting Marine
Bancorporation, 418 U.S. at 633).
We will, therefore, consider CB&I’s potential entry argument in concert
with evidence regarding the barriers to entry. CB&I contends the Commission’s
conclusion that CB&I failed to rebut the three main barriers to entry offered in
the Government’s prima facie case, (1) reputation/experience, (2) regulatory and
technical expertise, and (3) access to local labor and trained supervisors, is not
based on substantial evidence. Based on the substantial evidence standard, as
long as the Commission derives a “reasonable inference” from the evidence that
CB&I failed to rebut the prima facie case, we defer to the Commission’s findings.
See Gibson 682 F.2d at 569.
a. Reputation/Experience
We agree with CB&I that general reputation alone is not an effective
barrier to entry. Am. Prof’l Testing Serv., Inc. v. Harcourt Brace Jovanovich
Legal & Prof’l Publ’ns, Inc., 108 F.3d 1147, 1154 (9th Cir. 1997); see also FMC
Corp., 170 F.3d at 531 . However, unlike FMC Corp. and Am. Prof’l Testing
Serv., the Government presents something more than just generalized
reputation as a market entry barrier. Instead, what the Government presents
as “reputation” is CB&I’s reputation for particular industry-specific traits. See
Advo Inc. v. Philadelphia Newspapers, Inc., 51 F.3d 1191, 1202 & n.11 (3d Cir.
1995) (“[W]e do not question the judgment of other courts of appeals that in
other market contexts reputation is a significant barrier to entry.”) (citing
Thompson v. Metro. Multi-List, Inc., 934 F.2d 1566, 1577 (11th Cir. 1991); U.S.

-- 31 of 41 --

17 The Commission concluded that “[a]ll of the factors work together to help form
CB&I’s reputation for quality and reliability.” Op. at 58. Reputation here can be considered
an industry-specific “entrenched buyer preference[] for [an] established brand[]” built into
the industry-specific bid process. See, e.g., Am. Council for Certified Podiatric Physicians
and Surgeons v. Am. Board of Podiatric Surgery, Inc., 185 F.3d 606, 623 (6th Cir. 1999)
(“[E]stablishing credibility naturally seems to be a significant barrier to entry, particularly
for an enterprise that depends heavily upon reputation, such as certification of medical
specialists.”); Los Angeles Land Co. v. Brunswick Corp., 6 F.3d 1422, 1428 n.4 (9th Cir.
1993) (“The main sources of entry barriers are: . . . (3) entrenched buyer preferences for
32
Philips Corp. v. Windmere Corp., 861 F.2d 695, 703 (Fed. Cir. 1988)); see also
United Tote, 768 F. Supp. at 1075-76. Advo concludes that reputation evidence
could be considered a market barrier if there is some limiting principle. Id. at
1202. The Government presents its reputation evidence in a limited fashion;
“reputation” is considered in this case as a proxy for experience and success in
building LNG projects in the United States, foremost an understanding of
industry-specific U.S. regulations, labor force, and “cost-competitiveness.” CB&I
is therefore able to distinguish its brand within the industry as the foremost
(and now only) domestic expert. Compare Op., at 58, with Dimmitt Agri Indus.,
Inc. v. CPC Int’l, Inc., 679 F.2d 516, 529 n.12 (5th Cir. 1982) (“When a seller
possesses an overwhelmingly dominant share of the market, however, and
differentiates its product from others through a recognized and extensively
advertised brand name, thereby enabling the seller to control prices or
unreasonably restrict competition, then monopoly power may be found to exist.”)
(quoting Borden, Inc. v. FTC, 674 F.2d 498, 512 (6th Cir. 1982)). Therefore, the
Commission has substantial evidence for its determination that the reputation
for expertise and experience in building tank projects in the United States is a
barrier to entry, and thus the potential entrants’ international reputation
evidence offered in CB&I’s rebuttal is inapposite.
The Commission presented substantial evidence that domestic reputation
was critical to the bidding process in this industry, which CB&I failed to rebut.17

-- 32 of 41 --

established brands or company reputations.”) (emphasis added); cf. FMC Corp., 170 F.3d at
531 (“The question is not whether there are barriers to entry, but rather whether the
barriers in a particular industry are large enough to trigger judicial concern.”) (emphasis
added). District courts have also so held. See, e.g., Cardinal Health, Inc., 12 F. Supp. 2d at
57 (“The sheer economies of scale and strength of reputation that the Defendants already
have over these wholesalers serve as barriers to competitors as they attempt to grow
significantly in size.”); United States v. Franklin Elec. Co., Inc., 130 F. Supp.2d 1025, 1031-
032 (W.D. Wis. 2000); see generally United Tote, Inc., 768 F. Supp. at 1075, 1079-81 (“In
reality, the weight accorded to reputational barriers to entry will vary with the
circumstances of a given case.”).
33
The Commission showed that (a) the bidding evaluation process takes into
account the bidders’ experience and history with various projects, see Op. at 34;
(b) customers’ testimony acknowledging reputation, including domestic
reputation, as important for choosing bidders, see Op. at 38, and (c) the industry
requires highly sophisticated and specialized construction work and credits
reputation and an established brand name, because brand names have a track
record with highly specialized and skilled local crews, see Op. at 36. Therefore,
we find the Commission presented substantial evidence that reputation in this
specific industry context is a barrier to entry and that CB&I failed to rebut this
evidence.
b. Regulatory and Technical Experience
CB&I also challenges the Commission’s conclusion that regulatory
experience with the Federal Energy Regulatory Commission (“FERC”) is a
barrier to entry. Ability to do FERC work is a component of the bidding proposal
and CB&I, in its own advertising materials, advertises FERC’s familiarity with
and its respect for CB&I. Op. at 41 n.248. FERC expertise can be analogized to
other technical prerequisites to doing business in a market that are considered
barriers to entry. See United States v. Syufy Enters., 903 F.2d 659, 673 (9th
Cir.1990) (“It is well known that some of the most insuperable barriers in the
great race of competition are the result of government regulation.”); Rebel Oil,

-- 33 of 41 --

34
51 F.3d at 1439 (noting that one “main source[] of entry barriers” is “legal license
requirements.”); cf. Reazin v. Blue Cross & Blue Shield of Kan., 663 F. Supp.
1360, 1435-436 (D. Kan. 1987), aff’d, 899 F.2d 951 (10th Cir.), cert. denied, 497
U.S. 1005 (1990) (recognizing as an entry of barrier “the ‘clout’ with Kansas
hospitals, which defendant itself recognizes.”); United States v. Blue Bell, Inc.,
395 F.Supp. 538, 549 (M. D. Tenn. 1975) (recognizing familiarity with setting up
the business as a barrier to entry); Atl. Richfield Co., 439 F.2d at 295
(recognizing “technical expertise” as a barrier to entry). There is strong prima
facie evidence from one customer that a lack of FERC experience is a deal-
breaker and a reason to award CB&I sole-source contracts. Op., at 56-57.
While we agree with CB&I that owners are responsible for filing applications
and other outside consultants are available, the fact remains that as part of the
bidding process, customers select LNG tank builders depending on whether they
would be able to help with the highly technical application process as a
component of a whole LNG tank building project. CB&I does present evidence
that one foreign firm successfully guided a huge project towards FERC
compliance. We cannot conclude that this single instance is production of
sufficient evidence to rebut the Commission’s finding on this issue; however,
even if it were, it is not sufficient evidence to rebut the Commission’s general
conclusion that high entry barriers exist in these markets based on the findings
concerning the other two barriers.
c. The Control over the Specialized Labor Force
“Control of essential or superior resources” is a recognized barrier to entry.
Image Technical Serv., Inc. v. Eastman Kodak, Co., 125 F.3d 1195, 1208 (9th Cir.
1997). “Employee skill levels required for a firm to be successful” can be
considered a barrier to entry. See In Re IBM Peripheral EDP Devices Antitrust
Litig., 481 F. Supp. 965, 976 (N.D. Cal. 1979). Here, the Government presents

-- 34 of 41 --

35
specific evidence that employee skills in cryogenic tank construction is a limited
resource significantly captured by CB&I. See Op., at 37 & n.230. CB&I controls
highly specialized supervisory crews resulting in quicker turnaround
construction time and lower-priced bids. Id. CB&I has also developed
specialized and proprietary welding techniques and trained crews with those
techniques. Id. at 38. As the Commission notes, CB&I does not present
sufficient rebuttal evidence that potential entrants would be able to develop
comparable techniques and train sufficient numbers of supervisory personnel to
effectively compete.
We find that the Commission’s conclusion that CB&I’s evidence does not
rebut the strong prima facie case for at least two high entry barriers is a
reasonable inference from the evidence presented.
D. Rejection of Rebuttal Evidence that Sophisticated Customers Have
Meaningful Alternatives to CB&I is Supported by Substantial Evidence
In the proceedings below, CB&I argues that because customers in these
markets are large and sophisticated consumers, they would be able to constrain
the anti-competitive effects by altering the bid process and searching for
alternatives. Assuming arguendo the rebuttal evidence for CB&I’s
“sophisticated customer” defense is part of the administrative record, CB&I still
has not produced sufficient evidence to rebut the Government’s prima facie case
based on evidence that large and sophisticated customers continue to choose
CB&I for sole-source contracts without any bidding, and that CB&I has utilized
its market power to force sole-source contracts by choosing not to participate in
bidding. See R.O. at 17 & n.82. In other words, there is no history nor other
indication that customers who formerly relied on CB&I and PDM for tank
design, engineering, and construction services will undertake to perform them
on their own. The absence of such evidence, together with the lack of evidence

-- 35 of 41 --

36
of adequate entry of competitors, undermine the basic premise for this defense.
In this respect, this case is unlike Baker Hughes, which CB&I relies on heavily,
where there were ample available alternatives for customers in a market with
low entry barriers. 908 F.2d at 986 (internal citations omitted); id. at 987
(“Because the defendants also provided compelling evidence on ease of entry into
this market, we need not decide whether these findings, without more, are
sufficient to rebut the government’s prima facie case.”). In addition, unlike in
Baker Hughes, pricing data for the four markets are mostly confidential from
bid-to-bid, and thus buyers are generally unable to ascertain whether CB&I is
imposing supracompetitive prices on any particular bid weakening buyers’
ability to demand competitive prices. See United States v. Country Lake Foods,
Inc., 754 F. Supp. 669, 673 (D. Minn. 1990); Op., at 89-90. Therefore customers
have imperfect information and a weak bargaining position that is compounded
by the lack of meaningful alternatives. Certain powers held by the customer
that would favor a “sophisticated customer” defense are listed in United States
v. Archer-Daniels-Midland, Co., 781 F. Supp. 1400, 1417-418 (S.D. Iowa 1991).
Such powers are not present here. Under Archer-Daniels, the conditions include
the customers’ ability to:
(a) Refus[e] to reveal the prices quoted by other suppliers and the
price which a supplier must meet to obtain or retain business,
creating uncertainty among suppliers.
(b) Swing[ ] large volume back and forth among suppliers to show
each supplier that it better quote a lower price to obtain and keep
large volume sales.
(c) Delay[ ] agreement to a contract and refusing to purchase product until
a supplier accedes to acceptable terms.
(d) Hold[ ] out the threat of inducing a new entrant into HFCS production
and assuring the new entrant adequate volume and returns
Id. at 1418.
None of the factors apply to the present situation, in which: (a) Buyers

-- 36 of 41 --

37
cannot compare past bids not only because they are mostly confidential, but also
because each project is unique; (b) As we noted earlier, the market has had only
two dominant players, PDM and CB&I, so buyers cannot now swing back and
forth between competitors to lower bids post-acquisition; (c) Instances of CB&I
pressuring customers to offer sole-source contracts by withdrawing its bid and
CB&I’s success at obtaining sole-source contracts undermine any argument that
buyers have the ability to pressure CB&I in contract negotiations; and (d) No
buyer can assure that a new entrant has “adequate volume and returns” for
meaningful entry into the market as there is no evidence that buying power is
sufficiently concentrated.
In addition, courts have not considered the “sophisticated customer”
defense as itself independently adequate to rebut a prima facie case. “Although
the courts have not yet found that power buyers alone enable a defendant to
overcome the government’s presumption of anti-competitiveness, courts have
found that the existence of power buyers can be considered in their evaluation
of an anti-trust case, along with such other factors as the ease of entry and likely
efficiencies.” Cardinal Health, 12 F. Supp.2d at 58; see also 4 Areeda &
Hovenkamp, at ¶ 943c. Moreover, the economic argument for even partially
rebutting a presumptive case, because a market is dominated by large buyers,
is weak. See id. at ¶ 943 (concluding that “it would be inappropriate to give
formal recognition to buyer concentration and related factors in the ordinary run
of merger cases”). We therefore agree with the Commission that CB&I’s
evidence of sophisticated customers does not carry the burden for producing
evidence sufficient to rebut the Commission’s prima facie case.
4. The Commission Did Not Abuse Its Discretion In Issuing Its Remedy
Provisions
A. The Remedial Provisions Are Not Overbroad Nor Punitive

-- 37 of 41 --

18 CB&I cites to Reynolds Metals Co. v. FTC, 309 F.2d 223, 230-231 (D.C. Cir. 1962),
to suggest the Commission failed to distinguish between after-acquired properties and
before-acquired properties as in Reynolds. In Cascade Natural Gas Corp. v. El Paso
Natural Gas Co., 386 U.S. 129, 136-137 (1967), the Supreme Court assumed after-acquired
assets may be included in the divestiture order, though the Court in Cascade Natural Gas
remanded the case for an additional hearing on how assets should be divided. Here,
instead of a hearing, the Commission devolved authority to decide what assets will be
involved in the divestiture to CB&I and the monitor trustee. Permitting the respondent
and a trustee to decide, instead of holding another court hearing, is within the
Commission’s broad authority to fashion relief. The Commission’s remedy in this case is
also possibly a superior and more efficient method to resolve the issue.
38
CB&I argues that the Commission’s remedial provisions are overbroad and
punitive. We review the Commission’s remedial mandates for abuse of
discretion. Jacob Siegel Co. v. FTC, 327 U.S. 608, 611-612 (1946). “[A]ll doubts
as to the remedy are to be resolved in [the Commission's] favor.” United States
v. E.I. duPont de Nemours & Co., 366 U.S. 316, 334 (1961). The Commission is
“clothed with wide discretion in determining the type of order that is necessary
to bring an end to the unfair practices found to exist.” FTC v. Nat’l Lead Co.,
352 U.S. 419, 428 (1957). It has “wide latitude for judgment and the courts will
not interfere except where the remedy selected has no reasonable relation to the
unlawful practices found to exist.” Id. (internal quotations omitted).
In this case, the Commission ordered a divestiture of assets to create a
competitor, “new PDM,” capable of competing on an “equal footing.” See R.O.,
at 23. CB&I objects to this remedy, because it would require divestment of
PDM’s Water Division and potentially other assets.18 The Government argues
that though the assets are unrelated to the construction of cryogenic tanks, they
are necessary to enable the separate entity to compete with CB&I on an “equal
footing.” “Total divestiture is not necessarily inappropriate even though the
antitrust violation found relates to but one aspect of the company thus acquired,
especially where, as here, total divestiture is deemed necessary to restore

-- 38 of 41 --

39
effective competition.” OKC Corp. v. FTC, 455 F.2d 1159, 1163 (10th Cir. 1972).
Total divestiture here “does not appear to be a remedy that ‘has no reasonable
relation to the unlawful practices found to exist.’” Toys “R” Us, Inc. v. FTC, 221
F.3d 928, 940 (7th Cir. 2000) (quoting Seigel Co., 327 U.S. at 612-613). Here, the
violation is the acquisition of a previously viable and independent entity capable
of competing on an equal footing. The Commission’s divestiture of the water
plant division along with the cryogenic tank division is consistent with and
relevant to creating a viable competitor, because the water department provides
a consistent revenue stream to complement sporadic tank sales. Compare Olin
Corp., 986 F.2d at 1307, with Op. at 92, 96. We should be clear to note that the
order does not create, as CB&I so misconstrues, two competitors of “equal size.”
Instead, the remedy only mandates the entities be capable of competing for an
“equal share” of the market similar to the situation pre-acquisition. R.O. at 23.
Therefore, as the Commission concluded when the petitioner raised similar
arguments below, the new CB&I and new PDM consist of two competitors
capable of competing on an equal footing in the relevant businesses as was the
situation before the acquisition. R.O., at 23. This means the new PDM only has
to become an entity equally capable of competing in the future; the order does
not intend CB&I to be split into two equal halves. Id. Instead, the order
carefully devolves discretion to CB&I and a third-party monitor to determine
how assets must be divided to effectuate the order and its general remedial
purpose. Op. at 95 (“[W]e have included a provision that allows the exclusion of
the water assets if the acquirer and monitor trustee both find them
unnecessary.”). Accordingly, as we read the Commission’s order, CB&I and the
monitor are required to divest to the new separate entity no more nor less of the
former PDM assets as are necessary for the new separate entity to compete with
CB&I in the relevant markets on an equal footing. Construing the Commission's

-- 39 of 41 --

19 We also find the Commission’s detailed decisions in both its Opinion and Decision
on Petition for Reconsideration where remedy issues were discussed, see, e.g., R.O., at 23-
24, as providing adequate reasons justifying the remedy and its relationship with its
objectives. Unlike in United States v. Microsoft, 253 F.3d 34, 103 (D.C. Cir. 2001), which
remanded due to the lack of an adequate explanation for the remedy, the Commission
provided much more in form and substance than a “mere four paragraphs” to explain its
remedy.
40
order as having this meaning and intent, we conclude that the Commission did
not abuse its discretion, but instead fashioned a remedy reasonably calculated
to eliminate the anti-competitive effects of CB&I’s acquisition in violation of the
Clayton and FTC Acts.19
B. A Separate Evidentiary Hearing Was Not Required In This Case
Finally, the petitioner argues that a hearing was required for the remedy
phase of the proceedings separate from the liability phase. We disagree.
Generally, a hearing is required if, for example, new evidence was not presented
at trial or important factual issues were not resolved by the trier of fact in
respect to the remedy. See Microsoft, 253 F.3d at 101-102; Am. Can Co. v.
Mansukhani, 814 F.2d 421, 425 (7th Cir. 1987). We review the denial of an
evidentiary hearing under an abuse of discretion standard. Alberti v.
Klevenhagen, 46 F.3d 1347, 1358 (5th Cir. 1995). CB&I now proffers parts of the
trial transcripts as evidence that a new evidentiary hearing should be offered.
However, that evidence was considered by the Commission in fashioning the
remedy imposed. CB&I does not present any new evidence or factual issues
critical to the remedy phase not already considered by the trier of fact as a basis
for a possible evidentiary hearing. The long trial below offered opportunities for
both sides to extensively discuss the ramifications of possible remedies. See Op.
at 93-106. The ALJ and the Commission both considered a great amount of
evidence relating to the remedy before fashioning the remedial order. Id. There
is thus no new factual dispute warranting a remand for an evidentiary trial. Id.

-- 40 of 41 --

20 Even assuming CB&I was surprised by the extent of the remedy, surprise itself
does not merit reversal without allegations of prejudice. See Microsoft, 253 F.3d at 103; Eli
Lilly & Co. v. Generix Drug Sales, 460 F.2d 1096, 1106 (5th Cir. 1972) (“[S]urprise alone is
not a sufficient basis for appellate reversal; appellant must also show that the procedures
followed resulted in prejudice.”). CB&I does not present any argument “that the lack of
notice caused the complaining party to withhold certain proof which would show his
entitlement to relief on the merits,” thus we cannot reverse based on allegations of surprise
alone. Id.
41
CB&I also requests a remand, because it was allegedly “surprised” by the
extent of the remedy.20 CB&I misconstrues the Commission’s order, however,
in arguing that the extent of the remedy was a “surprise.” The remedy does not,
as CB&I contends, create two “equal” tank companies. The remedy, as we have
stated above, only requires the creation of two companies equally able to compete
for bids in the relevant markets. Any interpretation to the contrary misstates
the remedy. Moreover, this was clearly the contemplated relief from the very
beginning of the proceedings below. In its complaint, the Government gave
notice that the possible remedy in this case may include the “[r]eestablishment
by CB&I of two distinct and separate, viable and competing businesses . . . and
such other businesses as necessary to ensure each of their viability and
competitiveness . . . [and] [s]uch other or additional relief as is necessary to
ensure the creation of one or more viable competitive independent entities to
compete against CB&I in the manufacture and sale of any relevant product.”
For these reasons, we conclude that the Commission did not abuse its discretion
in denying CB&I’s request for a rehearing and an additional evidentiary hearing
on the remedy to be imposed in this case.
We therefore DENY the petition to review the Federal Trade Commission
order.

-- 41 of 41 --