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The first merger challenged by the FTC under the Trump Administration closed last week, following a court victory for PE acquiror GTCR. This Wilson Sonsini alert says the case is notable, even aside from being a first.

The case is an important example of parties successfully “litigating the fix” by defending a remedy proposal in litigation. The Trump Administration remains hostile to the practice, despite expressing renewed openness to resolving merger challenges without litigation through structural remedies. However, the agencies have stressed the importance of raising potential remedies early in the process, and in this case the parties did not identify a proposed divestiture until after the FTC filed its complaint. In addition, the parties proposed a partial divestiture of the overlapping business assets already owned by GTCR, while the FTC pressed for a full divestiture. This case underscores the importance of thinking strategically about the entire lifespan of a merger review in deciding whether and how to propose and stand on remedies.

The case involved PE firm GTCR’s second acquisition of a medical device coating manufacturer, and the FTC challenged the second acquisition since the two targets were the first and second largest suppliers in an already concentrated market.

The FTC filed a complaint in federal court in mid-April 2025 for a preliminary injunction to halt the deal until the completion of administrative litigation. According to GTCR’s opposition, they raised a remedy that would partially divest Biocoat’s hydrophilic coating assets in late April, expanded it in May 2025 to include a facility and employee divestiture following rejection of the initial proposal, and continued to develop it through evaluation of bidders and execution of a divestiture agreement with Integer, a contract manufacturing and development firm that had previously tried and failed to develop its own hydrophilic coatings products, thereafter. GTCR contended that the FTC “remained silent on the sufficiency” of the revised proposal and the executed agreement.

In its reply, the FTC contended that the proposed divestiture excluded key assets and personnel that Integer would need to compete, that license-back provisions would hinder Integer’s ability to differentiate, and that Integer’s previous failures to develop its own products made it ill positioned to compete going forward. The court urged the parties to consider settlement, instructing GTCR to review the FTC’s objections and submit proposals to allay them. But the parties were unable to reach accord, and the matter proceeded to a hearing on the FTC’s request for a preliminary injunction.

Earlier this month, the Federal District Court for the Northern District of Illinois denied the FTC’s request for a preliminary injunction because the FTC failed to show that the revised transaction might still substantially lessen competition. The FTC thereafter declined to appeal. The alert says:

The Trump Administration has hoped that its open position towards remedies would help to facilitate effective settlements [and] emphasized that parties should offer remedies as early as possible in the process to allow time to shape a mutually satisfactory settlement package. The policy appears to have had some success . . . However, merging parties have historically found success in “litigating the fix.” . . . [T]his case shows that the carrot offered by agencies may not be enough and that strategically delaying remedy proposals may be advantageous . . .

Because the FTC insisted on a full divestiture and elected not to engage in remedy negotiations beyond rejecting GTCR’s initial proposal, the parties were able to set the anchor point for the court’s evaluation of the post-merger world. The parties bolstered their case by taking the time to identify a divestiture buyer, fully executing an agreement, and developing substantial evidence of the buyer’s ability to compete effectively.

FTC Chairman Andrew Ferguson sees this as a problem for the FTC and its limited resources since “remedies offered after the conclusion of the HSR process incur significant costs for agencies and courts and may create bad incentives for merging parties” and has “promised to evaluate ways to avoid being forced to litigate the fix.”

– Meredith Ervine