FTC files complaint to block joint venture between Peabody Energy and Arch Coal

FTC sues Beam Financial

The Federal Trade Commission (FTC) rejected the proposed joint venture between Peabody Energy (NYSE: BTU) and Arch Coal (NYSE: ARCH).

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On Wednesday, the FTC filed an administrative complaint challenging the proposed transaction, which would combine both companies’ Colorado assets and coal mining operations in the Southern Powder River Basin (SPRB) in northeastern Wyoming.

In the complaint, the Commission alleged that the deal will eliminate competition. Peabody and Arch are major competitors in the thermal coal market in the SPRB and the two largest coal mining companies in the United States.

“The Joint Venture would substantially lessen competition for the production and sale of SPRB coal by eliminating current head-to-head competition between Peabody and Arch, replacing that competition with a single producer with a greater incentive and ability to reduce output or increase prices, which would likely result in significant harm to SPRB coal customers,” according to the FTC in the lawsuit.