In February 2020, Arch Resources and Peabody Energy announced plans to combine their coal assets in Wyoming’s Southern Powder River Basin (SPRB) into a joint venture. The Federal Trade Commission sued to block the venture, and the court ultimately ruled in favor of the FTC. The court’s opinion found that SPRB coal was a relevant market, that the joint venture would significantly increase concentration in that market, and that the joint venture would substantially reduce competition in that market. Seventeen years earlier, the FTC had lost the Arch Coal Case, a transaction that would have combined four SPRB mines; in this case, the courts had the same findings about the market as in the 2020 case, but not about the competition.
In “The SPRB Coal Cases, Market Definition, and Analytical Durability,” Partner Nicholas Hill, Senior Economist Christian Salas, and Manager Aparna Sengupta review the courts’ approaches to relevant product markets in these two FTC merger challenges involving SPRB coal. The authors find that the two court decisions were consistent with each other and with the hypothetical monopolist test of the merger guidelines.