-
Northern District Of Illinois Denies FTC’s Request To Block GTCR Acquisition Of Surmodics
11/18/2025On November 10, 2025, U.S. District Judge Jeffrey Cummings of the Northern District of Illinois (“N.D. Ill.”) issued an oral decision declining to block GTCR BC LLC’s (“GTCR”) proposed $627 million acquisition of Surmodics, Inc. (“Surmodics”) after the Federal Trade Commission (“FTC”) and state regulators sought a preliminary injunction. Fed. Trade Comm’n v. GTCR BC Holdings, LLC et al, No. 1:25-cv-02391 (N.D. Ill. Nov. 10, 2025). The case marks the FTC’s first fully litigated merger challenge under the second Trump Administration. While there were several issues in dispute, the outcome largely turned on the sufficiency of a divestiture that was proposed as a fix to the FTC’s challenge.
The GTCR/Surmodics transaction involved the two largest suppliers of hydrophilic coatings for medical devices, such as catheters and surgical guidewires. GTCR is a Chicago-based private equity firm that owns a majority stake in Biocoat, Inc. (“Biocoat”), the nation’s second-largest supplier. In May 2024, GTCR announced its proposed acquisition of Surmodics, the nation’s largest supplier. The FTC challenged the transaction in March 2025, alleging it would substantially lessen competition in the market for outsourced hydrophilic coatings, lower quality and service levels, diminish innovation, and result in higher prices. On July 21, 2025, the FTC moved for a preliminary injunction under § 13(b) of the FTC Act, seeking to halt the merger pending an FTC administrative proceeding.
The FTC argued it was likely to succeed on the merits, and therefore entitled to an injunction, because the proposed acquisition would allow the merged Biocoat/Surmodics to command a 60% share of the market for outsourced hydrophilic coatings based on historic revenue data. According to the FTC, under United States v. Philadelphia Nat’l Bank, 374 U.S. 321, 363-64 (1963), and consistent with the Administration’s adoption of the 2023 Merger Guidelines, this fact alone established a presumption of illegality. The FTC further cited internal documents and competitor and customer testimony to contend that new competitors would be unlikely to enter the market due to significant entry barriers, such as specialized manufacturing requirements, millions of dollars in necessary research and development costs, and the need for a proven track record for product safety and efficacy.
On July 29, 2025, prior to the preliminary injunction hearing, GTCR and Surmodics executed a divestiture agreement with medical device manufacturer Integer Holdings Corp. (“Integer”) to address the FTC’s competitive concerns. Under the agreement, Integer would acquire several Biocoat coating products, a production facility, and a number of Biocoat’s employees and customer contracts. The FTC attacked the divestiture as an insufficient solution to the competitive harms of the merger. Among other issues, the FTC claimed that Integer, as a vertically integrated medical device company, would be incentivized to use the purchased assets for its own products and rather than compete aggressively in the marketplace for outsourced coatings, and thereby fail to offset the anticompetitive effects of the merger on third-parties seeking hydrophilic coatings.
In an oral decision denying plaintiffs’ motion for a preliminary injunction, the Court explained that defendants successfully rebutted the presumption that the transaction would substantially lessen competition in violation of Section 7 of the Clayton Act. First, the Court faulted the FTC’s reliance on legacy revenue data as a proxy for market share or an indicator of future competition. Because most medical device manufacturers select a device coating prior to receiving FDA approval and are unlikely to switch coatings between approval and going to market, the Court reasoned that revenues on past sales have little to no impact on whether the merged parties would reduce competition for future opportunities in the market for medical device coatings. Second, the Court questioned the FTC’s market definition insofar as the agency failed to adequately consider competition from device companies’ in-house coating capabilities by narrowly constraining the market to “outsourced” coatings. With respect to the proposed divestiture, the Court agreed with GTCR’s economic expert that Integer, as an “exceptionally well qualified divestiture buyer,” would “vigorously” attempt to compete in the U.S. market for outsourced hydrophilic coatings.
GTCR and Surmodics are prevented from closing the deal until November 17, 2025, to provide the FTC time to appeal. The FTC may also decide to let the transaction close, but proceed with its parallel administrative proceedings, which are scheduled to resume on February 2, 2026.
