Merging parties have again succeeded in “litigating the fix” to overcome antitrust agency objections to a merger. On November 10, 2025, U.S. District Judge Jeffrey Cummings of the Northern District of Illinois denied the attempt by the Federal Trade Commission (FTC) and the co-plaintiff states to block private equity firm GTCR BC Holdings LLC’s acquisition of Surmodics Inc. Ruling from the bench and with no written opinion forthcoming, the court held that the merging parties had rebutted the FTC’s case that the transaction would harm competition, finding that the proposed divestiture sufficed over the government’s objections that the remedy was a “smokescreen.”
Background
In the first merger challenge filed by the Trump FTC, the agency and the attorneys general of Illinois and Minnesota alleged that the proposed $627 million transaction would combine the nation’s two leading providers of outsourced hydrophilic coatings, Surmodics and GTCR-owned Biocoat Inc. The government alleged that the merger would give the merged firm a 60% U.S. market share and result in higher prices, lower quality, and reduced innovation.
While Surmodics and Biocoat both provide hydrophilic coatings—applied to medical devices such as catheters and guidewires to perform interventional procedures in the body—the parties argued that the government’s market definition was both unduly narrow in excluding medical device companies that applied coatings in-house and unduly broad in including the parties’ distinct thermal-cured coatings and UV-cured coatings in the same market.
The parties also argued that the alleged market shares did not reflect current competitive conditions, contending that the enforcers’ economic expert relied on backward-looking revenue information to calculate shares rather than the parties’ current share of business opportunities.
Most critically, shortly before trial, the parties proposed to divest parts of Biocoat’s coatings business to Integer Holdings, a medical device contract development and manufacturing company. Integer had no hydrophilic coatings business, having twice failed to develop one.
The government criticized the late-hour remedy offer as insufficient. The FTC argued that the partial divestiture of Biocoat assets did not represent a stand-alone business sufficient to restore competition and that Integer would have an incentive to prioritize applying hydrophilic coatings to its own products rather than competing for outsourced coatings business.
Court’s Decision
In denying the plaintiffs’ motion for a preliminary injunction to block the merger, the court agreed with the defendants that Integer was an “exceptionally well qualified divestiture buyer” and that the divestiture would allow Integer to “vigorously compete” in the market. Responding to concerns about Integer’s past failures to develop its own hydrophilic coatings business, the court said, “What that experience tells me is that Integer is interested in developing a hydrophilic coating business, and what it lacked in those two prior instances it will be getting, by virtue of this proposed divestiture.”
The court also found the analysis by the merging parties’ expert economist more persuasive. In particular, the court said that the defendant expert’s analysis of the parties’ market position, based on their share of recent FDA-approved medical devices using hydrophilic coatings (representing 27%, or considering the divestiture just 23%, of the market) was more persuasive than the government expert’s calculation based on prior-sales revenue.
Finally, the court granted the FTC’s request to extend a temporary restraining order preventing the deal from closing until November 17, giving the government additional time to decide whether to appeal. In a November 14 joint status report, the plaintiffs announced that they will not appeal the decision, allowing the parties to close the transaction.
Analysis and Takeaways
The GTCR/Surmodics case was the first merger challenge filed by the Trump 2.0 FTC and reflects the agency’s continued focus on antitrust enforcement in health care.
Filed by the FTC in March, the challenge was authorized on a bipartisan basis with the support of two Democratic commissioners (subsequently removed by the President). In their concurrence, the Democrats emphasized the importance of challenging private equity (PE) consolidation activity in health care. But neither the complaint nor the case focused on any particular theory of harm based on PE involvement in the deal, reflecting the current administration’s more agnostic view of private equity.
The GTCR/Surmodics decision is also the latest case in which merging parties successfully employed a litigating-the-fix strategy. Other recent examples include the mergers of Tempur Sealy/Mattress Firm, Microsoft/Activision, and ASSA ABLOY/Spectrum Brands.
Although the strategy has not always succeeded—and this case shows that antitrust agencies will challenge mergers when they do not believe a proposed remedy suffices—the risk that courts are more willing to accept such remedies may be one reason that the Trump FTC and Department of Justice appear more willing to consider remedies to resolve merger concerns without resorting to litigation.
Additionally, the judge’s reasoning appeared to imply that guaranteed success is not the relevant standard for assessing a remedy: “Whether [Integer] will succeed in effectively competing or not is something that we will see in the future, but I’m persuaded that Integer will vigorously attempt to compete in this space” and that it would mitigate the deal’s potential anticompetitive effects.
Parties seeking to resolve potential merger concerns through a remedy—whether negotiated with an antitrust agency or litigated—can maximize their likelihood of success by:
- Identifying a divestiture buyer with relevant industry experience and no overlapping business that would raise independent competition issues.
- Selecting a buyer with the financial resources and incentive to operate and invest in the divested business to ensure its ongoing competitiveness.
- Offering to divest a package of assets that, ideally, constitutes a stand-alone ongoing business, although that may not always be required, as this case shows.
- Ensuring the divestiture buyer presents a strong business plan and financial model.
If you have any questions, or would like additional information, please contact one of the attorneys on our Antitrust team.
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The authors would like to thank Stephen Foss for his contributions to this client advisory.