Full opinion text
MEMORANDUM OPINION BATES, District Judge. Coal is the primary fuel that produces electric power for residential and business consumers across the United States. It is mined in various regions across the country, in either surface or underground mining operations, after which the coal is transported by rail, truck or barge to electrical generating plants. One-third of the coal produced annually in the United States — over 360 million tons — is produced from large-scale surface mining operations in the Southern Powder River Basin (“SPRB”) region of Wyoming. Seven companies operate fourteen mines in the SPRB at this time. In May of 2003, Arch Coal, Inc. (“Arch”), the owner and operator of two SPRB mines (Black Thunder and Coal Creek) as well as other mining operations across the United States, and New Vulcan Coal Holdings, LLC (“New Vulcan”), the owner of two SPRB mines (North Rochelle and Buckskin), which it operates through its subsidiary Triton Coal Company, LLC (“Triton”), entered into a merger and purchase agreement under which Arch would acquire Triton and its two SPRB mines. HarWScotWRodino pre-merger notification was provided to the Federal Trade Commission (“FTC”), which in August 2003 requested additional information from Arch and New Vulcan. Arch subsequently informed the FTC that it intended to divest one of the acquired mines (Buckskin) to Peter Kiewit Sons, Inc. (“Kiewit”), a large company with some mining interests outside the SPRB, and in January 2004 a firm asset purchase agreement was entered by Arch and Kiewit. After a nine-month review, the FTC voted on March 30, 2004, to commence this action seeking to enjoin the proposed acquisition under Section 13(b) of the Federal Trade Commission Act, 15 U.S.C. § 53(b), as violative of Section 7 of the Clayton Act, 15 U.S.C. § 18. The FTC seeks to preliminarily enjoin Arch’s proposed acquisition of Triton until an administrative FTC proceeding challenging the transaction under Section 7 can be completed. A parallel suit was also filed on April 1, 2004, by the States of Missouri, Arkansas, Kansas, Illinois, Iowa, and Texas (the “States”) seeking both preliminary and permanent injunctive relief. The two actions were consolidated by this Court on April 21, 2004. The Court held a two-week trial commencing on June 28, 2004, during which it heard from more than twenty witnesses and received hundreds of exhibits, many of them lengthy, including deposition and affidavit testimony of several additional witnesses. The parties have submitted well over 700 pages of post-hearing proposed findings of fact and briefs. The Court has reviewed that substantial body of evidence and argument in assessing the FTC’s challenge to the proposed acquisition of the North Rochelle and Buckskin mines by Arch, and the simultaneous transfer of Buckskin to Kiewit, and the probable effect of those transactions on competition in the SPRB. The case is complex, and represents an attempt by the FTC to enjoin transactions that do not reduce the number of competitors and only modestly increase the concentration in what has been a very competitive market. Moreover, the case rests on a novel FTC theory of likely future “tacit coordination” among competu tors to restrict production, as opposed to direct coordination of prices. In the end, the Court concludes that the FTC and the States have not met their burden under Section 7 of the Clayton Act and (for the FTC) Section 13(b) of the FTC Act to show a likelihood that the challenged transactions will substantially lessen competition in the SPRB. The requested preliminary injunctive relief will therefore be denied. 1. APPLICABLE LAW Section 7 of the Clayton Act, 15 U.S.C. § 18, prohibits a merger between two companies “where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition ... may be substantially to lessen competition, or tend to create a monopoly.” The Supreme Court has observed that Section 7 “deals in probabilities, not certainties.” United States v. General Dynamics Corp., 415 U.S. 486, 505, 94 S.Ct. 1186, 39 L.Ed.2d 530 (1974); see also Brown Shoe Co. v. United States, 370 U.S. 294, 323, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962); United States v. El Paso Natural Gas Co., 376 U.S. 651, 658, 84 S.Ct. 1044, 12 L.Ed.2d 12 (1964). As defendants also correctly stress, however, “Section 7 deals in probabilities not ephemeral possibilities.” FTC v. Tenet Health Care Corp., 186 F.3d 1045, 1051 (8th Cir.1999). To warrant injunctive relief under the Clayton Act, the challenged acquisition must be likely substantially to lessen competition. Although certainty is not required, Section 7 does demand that a plaintiff demonstrate that the substantial lessening of competition will be “sufficiently probable and imminent” to warrant relief. United States v. Marine Bancorporation, 418 U.S. 602, 618, 94 S.Ct. 2856, 41 L.Ed.2d 978 (1974); see United States v. Baker Hughes, Inc., 908 F.2d 981, 984 (D.C.Cir.1990) (“Section 7 involves probabilities, not certainties or possibilities.”). Congress has empowered the Federal Trade Commission to seek preliminary injunctive relief preventing parties from consummating a merger until the F.TC has had an opportunity to adjudicate the merger’s legality. Section 13(b) of the FTC Act “provides for the grant of a preliminary injunction where such action would be in the public interest — as determined by a weighing of the equities and a consideration of the Commission’s likelihood of success on the merits.” FTC v. H.J. Heinz Co., 246 F.3d 708, 714 (D.C.Cir.2001); see 15 U.S.C. § 53(b). The FTC “is not required to prove, nor is the court required to find, that the proposed merger would in fact violate Section 7 of the Clayton Act.” FTC v. Staples, Inc., 970 F.Supp. 1066, 1070 (D.D.C.1997) (citations omitted); see FTC v. University Health, Inc., 938 F.2d 1206, 1218 (11th Cir.1991) (court’s task is to make preliminary assessment of impact on competition). Rather, the FTC “need only show that there is a ‘reasonable probability’ that the Acquisition may substantially lessen competition.” Staples, 970 F.Supp. at 1072. Proof of actual anti-competitive effects is not required; instead, the FTC must show “an appreciable danger” of future coordinated interaction based on a “predictive judgment.” Heinz, 246 F.3d at 719 (quoting Hosp. Corp. of Am. v. FTC, 807 F.2d 1381, 1389 (7th Cir.1986)). While proof of prior cooperative behavior is relevant, it is not a necessary element of likely future coordination in violation of Section 7. The FTC, then, must raise “questions going to the merits so serious, substantial, difficult and doubtful as to make them fair ground for thorough investigation, study, deliberation and determination by the FTC in the first instance and ultimately by the Court of Appeals.” Id. at 714-15 (citations omitted). Given the stakes, the FTC’s burden is not insubstantial, and “[a] showing of a fair or tenable chance of success on the merits will not suffice for injunctive relief.” Tenet Health Care, 186 F.3d at 1051; see Fruehauf Corp. v. FTC, 603 F.2d 345, 351 (2d Cir.1979) (“mere possibility” will not justify preliminary injunction). Because the public interest in effective enforcement of the antitrust laws is of primary importance, a showing of likely success on the merits will presumptively warrant an injunction. See Heinz, 246 F.3d at 726; University Health, 938 F.2d at 1225; Staples, 970 F.Supp. at 1091. Conversely, absent a likelihood of success on the merits, equities alone will not justify an injunction. See FTC v. PPG Indus., Inc., 798 F.2d 1500, 1508 (D.C.Cir.1986). This Circuit has articulated an analytical approach by which the FTC may establish a Section 7 violation. First, the FTC must show that the merger would produce a firm controlling an undue share of the relevant market and would result in a significant increase in the concentration of the market. Heinz, 246 F.3d at 715 (citations omitted). “Such a showing establishes a presumption that the merger will substantially lessen competition.” Id. (citing Baker Hughes, 908 F.2d at 982). Defendants can then rebut the presumption by producing evidence that market-share statistics produce an inaccurate account of the merger’s probable effects on competition in the relevant market. Id.; see also United States v. Citizens & S. Nat’l Bank, 422 U.S. 86, 120, 95 S.Ct. 2099, 45 L.Ed.2d 41 (1975). “If the defendant successfully rebuts the presumption [of illegality], the burden of producing additional evidence of anticompetitive effect shifts to the government, and merges with the ultimate burden of persuasion which remains with the government at all times.” Heinz, 246 F.3d at 715 (quoting Baker Hughes, 908 F.2d at 983). Accordingly, plaintiffs have the burden on every element of their Section 7 challenge, and a failure of proof in any respect will mean the transaction should not be enjoined. The Supreme Court has observed that “ ‘only examination of the particular market — its structure, history, and probable future — can provide the appropriate setting for judging the probable anticompetitive effects of the merger.’ ” General Dynamics, 415 U.S. at 498, 94 S.Ct. 1186 (quoting Brown Shoe, 370 U.S. at 322 n. 28, 82 S.Ct. 1502). Hence, antitrust theory and speculation cannot trump facts, and even Section 13(b) cases must be resolved on the basis of the record evidence relating to the market and its probable future. See Eastman Kodak Co. v. Image Technical Services, 504 U.S. 451, 460-67, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992); FTC v. Weyerhaeuser Co., 665 F.2d 1072, 1080 (D.C.Cir.1981) (“Hearings on preliminary injunctions [under Section 13(b) ] necessarily look to the future and decisions must rest on comparative, tentative assessments of the course of events if the injunction is issued, and if it is not.”); Verizon Communications, Inc. v. Law Offices of Curtis V. Trinko, 540 U.S. 398, 124 S.Ct. 872, 882, 157 L.Ed.2d 823 (2004) (focus on actual rather than theoretical guards against false condemnation that may chill conduct that antitrust laws are designed to protect). Analysis of the likely competitive effects of a merger requires determinations of (1) the relevant product market in which to assess the transaction, (2) the geographic market in which to assess the transaction, and (3) the transaction’s probable effect on competition in the relevant product and geographic markets. See Marine Bancorporation, 418 U.S. at 618-23, 94 S.Ct. 2856; General Dynamics, 415 U.S. at 510-11, 94 S.Ct. 1186. II. ANALYSIS A. The Coal Industry Coal is the base fuel for over fifty percent of the electricity generated in the United States. Bales Tr. (6/21 afternoon) at 33:7 — 8. It is mined from underground or surface mining operations, depending on the location and reserves, then delivered by truck, barge, or rail to generating sites where it is typically stored and then fed into boilers to generate electricity. Id. at 33:6-13. The coal available in the United States falls into three general categories: lignite, subbituminous, and bituminous. Subbituminous coal has a Btu content that typically ranges from 8000 to 9500 Btus per pound, and is principally located in Montana and Wyoming. It has become the fuel of choice for a large number of electric utility companies in the United States. Id. at 33:14-25. The Powder River Basin (“PRB”) refers to a large coal-bearing geological formation located in Montana and Wyoming. DX 9007 at 001. Coal in the Southern Powder River Basin (“SPRB”) of northeastern Wyoming is ’ located close to the surface, and can be mined by large-scale surface operations as opposed to underground mining techniques. Lang Tr. (6/24 afternoon) at 46:6-49:2; see DX 1024 at 24648; DX 9000. The estimated reserves of coal in the SPRB exceed 7.8 billion tons. DX 9005 at 002. Currently, approximately 360 million tons of coal are produced annually in the SPRB, which represents approximately one-third of the coal produced annually in the United States. FTC Compl. ¶ 13; States Compl. ¶ 15. SPRB coal is known for its low sulfur content. Bales Tr. (6/21 afternoon) at 35:7-9. Sulfur content first became a critical factor when the Clean Air Act was passed in 1970. Id. at 35:2-9. SPRB coal is the most economical source of fuel that complies with Clean Air Act sulfur limitations. Id. SPRB coal also has a moderately high heat content and low ash content. Heat content (measured in Btu) affects the amount of energy a user can extract from a unit of coal; ash content affects the grindability of the coal and the performance of air quality equipment, and thus customers prefer coal with low ash content. The SPRB provides a critical source of plentiful, inexpensive coal having a strong combination of these important characteristics. PX 0021 ¶ 8 (Rea Decl.); PX 0042 ¶¶ 4-11; PX 0012 ¶¶5, 11-15 (Panzarino Decl.); PX 0010 ¶¶ 3-7 (Flippin Decl.). Coal resources in the SPRB are controlled primarily by the federal government, and the vast majority of SPRB production is from lands subject to federal coal leases, with a small amount from state and private lands. DX 1024-24648. The SPRB mines can be divided into three tiers based on coal quality, heat content, and mine location. Bales Tr. (6/21 afternoon) at 40:1-41:2; PX 0312 at 018; DX 1024 at 24648. Tier 1 mines typically produce a high Btu (8600-8900) coal and include the Antelope, Black Thunder, Jacobs Ranch, North Antelope/Rochelle, and North Rochelle mines. Bales Tr. (6/21 afternoon) at 40:2-7; PX 0011 at 013-014; PX 0012 ¶ 5 (Panzarino Deck); DX 1024 at 24650. Tier 2 mines produce coals ranging from 8300 to 8550 Btu, and include Belle Ayr, Caballo/North Caballo, Coal Creek, and the Cordero Rojo complex. PX 0772 at 36, 66; PX 0011 at 013-014; PX 0012 ¶ 5 (Panzarino Decl.); DX 1024 at 24650. Tier 3 mines produce relatively low Btu coal (7900-8450) and include the Buckskin, Dry Fork, Eagle Butte, Fort Union, Rawhide, and Wyodak mines. PX 0011 at 013-014; PX 0012 ¶ 5 (Panzarino Decl.); DX 1024 at 24650. Seven companies currently operate the fourteen mines in the SPRB. DX 1024 at 24670. Four companies, each operating a Tier 1 mine, are considered the major producers of SPRB coal: Arch, Triton, Kennecott Energy Co. (“Kennecott”), and Peabody Holding Co. (“Peabody”). Arch operates the Black Thunder and Coal Creek mines; Triton operates the North Rochelle and Buckskin mines; Kennecott operates the Antelope, Jacobs Ranch and Cordero-Rojo mines; and Peabody operates the North Antelope/Rochelle, Caballo, and Rawhide mines. PX 5675 at 002. RAG American (“RAG”) is another significant producer in the SPRB, but it only operates mines in Tiers 2 and 3 (Belle Ayr and Eagle Butte). PX 3308 at 002. Two small mining entities, Western Fuels and Wyodak, generally do not compete for business in the region and, therefore, are not recognized by most customers as feasible supply alternatives to the five larger producers. PX 0010 ¶¶ 8-9 (Flippin Deck); PX 0042 ¶ 10 (Luksan Deck); PX 0022 ¶ 3 (Stolwyk Deck); PX 0012 ¶14 (Panzarino Deck). Virtually all SPRB coal is purchased by electric power companies for use in their coal-fired steam generating units. FTC Comph ¶ 13; States Compl. ¶ 15. There are approximately 150 generating plants that presently consume coal from the SPRB, DX 0086 ¶ 21, located throughout the United States ranging from Montana to Texas, and Washington to New York, DX 9007 at 004. SPRB coal is shipped via railroad for the most part, and the SPRB is served by two railroads: the Union Pacific (“UP”) and the Burlington Northern/Santa Fe (“BNSF”). Shalah Tr. (6/25 afternoon) at 28:13-18. The “joint line” is a railroad line that is jointly owned by BNSF and the UP. It is dispatched by the BNSF and serves the SPRB mines south of Gillette, Wyoming: Antelope, North Antelope/Rochelle, North Rochelle, Black Thunder, Jacobs Ranch, Coal Creek, Cordero-Rojo, Belle Ayr, and Caballo. Id. at 22:2-6. The “single line” is a railroad line owned and operated by the BNSF, which serves the mines north and east of Gillette: Buckskin, Eagle Butte, Dry-Fork, Fort Union, and Wyodak. Id. at 22:7-20. The SPRB is the fastest growing coal producing region in the United States, with demand projected to grow from a present level of over 360 million tons per year to over 500 million tons per year during the next ten years. PX 8605 at 005-006; DX 1024 at 24756. Industry analysts attribute the expectation for growth in demand for SPRB coal to low-cost production and compliance with recent environmental legislation. PX 0123 at 002-003. The SPRB coal industry has experienced some consolidation in recent years, as the number of SPRB producers has decreased. PX 8605 at 005-006. B. The Coal Market The definition of the relevant market is necessary to identify that area of trade within which a defendant allegedly has acquired or will acquire an illegal monopolistic or oligopolistic position. See Marine Bancorporation, 418 U.S. at 618, 94 S.Ct. 2856 (determination of relevant market “necessary predicate” to deciding whether Section 7 violation). A relevant market has two dimensions. First, the “relevant product market” identifies the product and services with which the defendants’ products compete. Second, the “relevant geographic market” identifies the geographic area in which the defendant competes in marketing its products or service. The FTC bears the burden of proof and persuasion in defining the relevant market. United States v. Sungard Data Sys., 172 F.Supp.2d 172, 182-83 (D.D.C.2001). 1. Relevant Product Market In determining relevant product markets, courts have traditionally emphasized two factors: “the reasonable interchangeability of use [by consumers] and the cross-elasticity of demand between the product itself and substitutes for it.” Brown Shoe, 370 U.S. at 325, 82 S.Ct. 1502; see also United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 395, 76 S.Ct. 994, 100 L.Ed. 1264 (1956). The general question is “whether two products can be used for the same purpose, and if so, whether and to what extent purchasers are willing to substitute one for the other.” Staples, 970 F.Supp. at 1074 (quoting Hayden Publ’g Co. v. Cox Broad. Corp., 730 F.2d 64, 70 n. 8 (2d Cir.1984)). Relevant markets will generally include producers who, given product similarity, have the ability to take significant business from each other. See SmithKline Corp. v. Eli Lilly & Co., 575 F.2d 1056, 1063 (3d Cir. 1978); Staples, 970 F.Supp. at 1075. Determining interchangeability is relatively straightforward. Courts compare the use or function of defendant’s product with other products, and assess “the degree to which buyers are willing to substitute those similar products for the [test] product.” Sungard Data, 172 F.Supp.2d at 182. If consumers can substitute the use of one for the other, then the products in question will be deemed “functionally interchangeable.” See, e.g., Staples, 970 F.Supp. at 1074 (finding that office supplies sold by an “office superstore” like Staples are functionally interchangeable with office supplies sold at “mass merchandisers” like Wal-Mart); E.I. du Pont de Nemours, 351 U.S. at 399, 76 S.Ct. 994 (recognizing “functional interchangeability” between cellophane and other flexible wrappings). Courts' will generally include functionally interchangeable products in the same product market unless factors other than use indicate that they are not actually part of the same market. See, e.g., United States v. Arch er-Daniels-Midland Co., 866 F.2d 242, 246 (8th Cir.1988) (even though beet sugars and high-fructose corn sugars were functionally interchangeable, they did not belong to the same product market because government price support for beet sugars meant that prices for corn sugars could be raised substantially without feeling the competitive impact of beet sugar prices). After finding interchangeability, courts look for cross-elasticity of demand. If a slight decrease in the price of product A causes a considerable number of customers of product B to switch to A, that would indicate that a cross-elasticity of demand exists between A and B and that they compete in the same product market. See E.I. du Pont de Nemours, 351 U.S. at 400, 76 S.Ct. 994. In defining relevant product markets, courts should “exclude any other product to which, within reasonable variations in price, only a limited number of buyers will turn.” Times-Picayune Publ’g Co. v. United States, 345 U.S. 594, 612 n. 31, 73 S.Ct. 872, 97 L.Ed. 1277 (1953). The FTC’s Horizontal Merger Guidelines set forth an analytical framework for considering the issues of interchangeability and cross-elasticity of demand by defining a product market as “a product or group of products such that a hypothetical profit-maximizing firm that was the only present and future seller of those products (‘monopolist’) likely would impose at least a ‘small but significant and nontransitory’ increase in price” (SSNIP). U.S. Dep’t of Justice & Fed’l Trade Comm’n, Horizontal Merger Guidelines § 1.11 (1992), as revised (1997) (hereinafter “Merger Guidelines § _”). In most contexts, the FTC considers a price increase of five percent to constitute a SSNIP. Id. Courts have also relied on several “practical indicia” to help identify the relevant product market. These indi-cia include: industry or public recognition of a submarket as a separate economic entity, the product’s peculiar characteristics and uses, unique production facilities, distinct customers, distinct prices, sensitivity to price changes, and specialized venders. Brown Shoe, 370 U.S. at 325, 82 S.Ct. 1502. Examination of such factors is helpful to augment the assessment of interchangeability and cross-elasticity of demand when determining the relevant product market. Relevant market analysis is based on the “narrowest market” principle. Guerin-Calvert Tr. (6/30 afternoon) at 44:5-7. The analysis begins by examining the most narrowly-defined product or group of products sold by the merging firms to ascertain if the evidence and data support the conclusion that this product or group of products constitutes a relevant market. If not, the analysis shifts to the next broadest product grouping to test whether that is a relevant market. This process continues until a relevant market is identified. Id. at 44:8-17. In a relevant market analysis, the hypothetical monopolist test is generally used to identify whether a small but significant price increase for the product tested would be profitable. Morris Tr. (6/23 afternoon) at 48:24^19:9; Guerin-Calvert Tr. (6/80 afternoon) at 44:24-45:11. The parties agree that SPRB coal is a relevant product market within which to examine the competitive effects of the proposed transactions. DFF 57; PFF 60. Plaintiffs’ expert concluded, after applying the hypothetical monopolist test, that the relevant market is no broader than SPRB coal. Morris Tr. (6/23 afternoon) at 43:11-25; Morris Tr. (6/24 morning) at 56. Plaintiffs also argue that 8800 Btu SPRB coal is a distinct and narrower relevant product market within which to assess the proposed transaction. Defendants’ expert, applying the same test, concluded that the relevant market is no narrower than SPRB coal. Guerin-Calvert Tr. (6/30 afternoon) at 40:13-15. However, defendants have not set forth a viable argument, supported by evidence, for consideration of all PRB coal as a broader relevant market. The Court, therefore, rejects the proposition that the entire PRB coal market is the relevant product market for analysis of the proposed transactions. With respect to plaintiffs’ contention that the relevant product market is narrower than SPRB coal, plaintiffs’ expert did state his belief that 8800 Btu SPRB coal is a distinct relevant market, but did so only very reluctantly when pressed by the Court. Dr. Morris first stated that he was unable “to state with a reasonable degree of certainty that 8800 Btu coal is a relevant antitrust market,” PX 4300 ¶ 39; Morris Tr. (6/23 afternoon) at 44:19-21, then testified that “the relevant market ... could be as narrow as 8800 Btu coal,” Morris Tr. (6/24 morning) at 56:9-15. Later, he opined that “8800 Btu coal is likely to be a relevant market,” and finally, when prompted by the Court, asserted that 8800 Btu coal is a separate relevant market. Id. at 57:16-58:7. Nonetheless, the clear impression left by Dr. Morris is that he is not entirely sure that 8800 Btu SPRB coal is a relevant product market, and that he would prefer to undertake further analysis before so concluding. The Court thus finds unconvincing his reluctant conclusion that 8800 Btu SPRB coal is a relevant product market. In order for 8800 Btu coal to be considered a separate relevant market, plaintiffs must show that 8800 Btu coal is not interchangeable with 8400 Btu coal. The testimony of Dr. Morris does not satisfy that burden, because he does not account for the substantial evidence regarding the purchasing practices of utilities, which establishes that 8800 and 8400 Btu coal are substitutable. In both trial testimony and depositions, virtually all the utilities acknowledged that they can and do purchase and consume both 8800 and 8400 Btu coal, and that they actively solicit and consider both in their coal bidding procedures. Guerin-Calvert Tr. (6/30 afternoon) at 57:18-58:5, 60:5-11; DX 0086 at ¶ 22; DX 2006 at ¶¶ 19-20; Holloway Tr. (6/22 afternoon closed) at 77:24-78:14 (OG & E’s facilities were designed to burn, and have burned coals ranging from 8400 to 8800 Btu); Freund Tr. (6/21 afternoon) at 80:25-81:2 (“Q: Are you able to burn both 8,400 and 8,800 SPRB coal at your facilities? A: Yes we are.”); Orme Tr. (6/22 morning) at 13:18-14:9; Kelly Tr. (6/22 morning) at 56:17-20; Herndon Tr. (6/22 afternoon) at 23:13-18; Carr Tr. (6/23 afternoon) at 10:17-20; Thede Dep. at 43:11-22; Rackers Dep. at 105:16-106:22; Flippin Dep. at 105:25-107:3 (LCRA has purchased both 8400 and 8800 coal in the past five years); McGowan Dep. at 155:3-10, 167:4-9, 180:21-24; Stolwyk Tr. (6/23 morning) at 67:20-24; DX 0919; DX 0920; DX 0921; DX 0926; Werner Tr. (6/23 morning) at 8:19-9:10, 26:9-11; Lapplan-der Tr. (7/7 morning) at 8:7-18; Stuehal Tr. (7/7 morning) at 67:21-22; DX 0919 at 0022359; DX 0853 at 0021480-504; DX 0951 at 0023232; DX 0953 at 0023389-90; DX 0955 at 0023399; DX 0897; DX 0898; DX 0899; DX 0716 at 0018525. Some customers did indicate that they prefer 8800 Btu coal to 8400 Btu coal, but the evidence also shows that customers having that preference nonetheless can use and have used other Btu coals, and benefit from the competition between 8800 and 8400 Btu coal. Kelly Tr. (6/22 morning) at 48:1-5, 62:10-13; Stuehal Tr. (7/7 morning) at 73:21-74:3 (the Nebraska Public Power District’s plant managers prefer 8800 Btu coal but purchase 8400 to 8800 Btu coal depending on which coal has the best evaluated price); Guerin-Calvert Tr. (6/30 afternoon) at 73:15-20. Plaintiffs do not dispute that for most SPRB customers “purchasing decisions [between 8800 Btu and 8400 Btu SPRB coal] are based on economics.” Bales Tr. (6/21 afternoon) at 42:17-43:21. The evidence also shows, however, that some customers can only purchase either 8800 or 8400 Btu SPRB coal, but not both, regardless of the economics. Rahm Tr. (6/21 morning) at 89:7-90:11; Orme Tr. (6/22 morning) at 7:11-20. The Supreme Court has stated that the “[djetermination of the competitive market for commodities depends on how different from one another are the offered commodities in character or use, how far buyers will go to substitute one commodity for another.” E.I. du Pont de Nemours, 351 U.S. at 393, 76 S.Ct. 994. In determining interchangeability, therefore, the Court must consider the degree to which buyers treat the products as interchangeable, but need not find that all buyers will substitute one commodity for another. Plaintiffs contend that defendants, in arguing against 8800 Btu coal as a relevant market, have failed to consider both the extent to which buyers are unwilling to substitute between 8800 and 8400 Btu coal and the extent of the price increase that would be necessary before significant substitution would occur. Pis. Post-Hearing Reply Br. at 20. The burden, however, is squarely on plaintiffs to establish that 8800 Btu coal is a separate relevant market. See Sungard Data, 172 F.Supp.2d at 182-83. Based on the reluctance of plaintiffs’ own expert to conclude that 8800 Btu SPRB coal is a separate relevant market, and the evidence of significant interchangeability between 8800 Btu and 8400 Btu coal, the Court declines to find that 8800 Btu coal is a separate relevant market. Both Dr. Morris and Ms. Guerin-Calvert concluded, after applying the hypothetical monopolist test and critical loss analysis, that SPRB coal is a relevant market. Plainly, SPRB coal is considered a unique and preferred product by customers. See Kelly Tr. (6/22 morning) at 41:21-25; Holloway Tr. (6/22 afternoon) at 76:1-7; Werner Tr. (6/22 afternoon) at 116:1-22. The Court therefore concludes that the relevant product market is no broader and no narrower than SPRB coal. Defendants’ half-hearted argument for a market of all PRB coal is totally unpersuasive, and plaintiffs have not carried their burden of establishing that 8800 Btu SPRB coal is a distinct relevant product market. 2. Relevant Geographic Market The relevant geographic market in which to examine the effects of a merger is “the region in which the seller operates, and to which the purchaser can practicably turn for supplies.” FTC v. Cardinal Health, Inc., 12 F.Supp.2d 34, 49 (D.D.C.1998) (citing Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 81 S.Ct. 623, 5 L.Ed.2d 580 (1961)). The Supreme Court has emphasized that the relevant geographic market must both “correspond to the commercial realities of the industry and be economically significant.” Brown Shoe, 370 U.S. at 336-37, 82 S.Ct. 1502 (internal citations omitted). The Merger Guidelines also provide guidance for determining the relevant geographic market. The geographic market should be delineated as “a region such that a hypothetical monopolist that was the only present or future producer of the relevant product at locations in that region would profitably impose at least a ‘small but significant and nontransitory’ increase in price, holding constant the terms of sale for all products produced elsewhere.” Merger Guidelines § 1.21. If buyers would respond to the SSNIP by shifting to products produced outside the proposed geographic market, and this shift were sufficient to render the SSNIP unprofitable, then the proposed geographic market would be too narrow. Id. As with the relevant product market, the relevant geographic market depends on interchangeability and cross-elasticity of demand. Here, however, because the relevant product market is defined in geographic terms as SPRB coal, which is produced and sold in that region, the product market and geographic market analysis are really the same. See Morris Tr. (6/23 afternoon) at 67:14-22. The parties agree that the relevant geographic market has the same scope as the relevant product market — the SPRB — and hence the Court concludes that the SPRB is the relevant geographic market. C. Market Concentration As recognized by the D.C. Circuit in Heinz, the theory of merger law is that in a market with few rivals, firms are able to coordinate behavior, “either by overt collusion or implicit understanding,” to restrict output and achieve anticompetitive profits. 246 F.3d at 715; see also PPG Indus., 798 F.2d at 1503. The FTC has the burden of showing that the challenged transactions will result in “undue concentration in the market.” Baker Hughes, 908 F.2d at 982. Increases in concentration exceeding certain levels raise a likelihood of “interdependent anticompetitive conduct.” Heinz, 246 F.3d at 715-16 (quoting General Dynamics, 415 U.S. at 497, 94 S.Ct. 1186). Market concentration is a function of the number of firms in a market and their respective market shares. Merger Guidelines § 1.5. Market shares are calculated by the Department of Justice and the FTC using the best indicator of firms’ future competitive significance. Dollar sales, shipments, and unit sales can be used to calculate market shares, depending on the nature of the firms and their products. Physical capacity or reserves generally will be used as an indicator of firms’ future competitive significance if these are the measures that most effectively distinguish those firms. Id. § 1.41. Assessing the coal industry in the late 1960’s, which was then dominated by long-term supply contracts, the Supreme Court in General Dynamics rejected statistical evidence of coal production as a valid measure of competitive power in the market: “A more significant indicator of a company’s power effectively to compete with other companies lies in the state of a company’s uncommitted reserves of .recoverable coal.” 415 U.S; at 502, 94 S.Ct. 1186. Other things being'equal, market concentration affects the likelihood that one firm, or a small group of firms, could successfully exercise market power. Merger Guidelines § 2.0. The Herfin-dahl-Hirschman Index- (“HHI”) of market concentration is used by the FTC to interpret market data. The HHI is calculated by summing the squares of the individual market shares of all the participants in the market. See Heinz, 246 F.3d at 716 n. 9. The spectrum of market concentration as measured by the HHI is divided into three regions. A market with an HHI of less than 1000 is “unconcentratéd,” a market with an HHI between 1000 and 1800 is “moderately concentrated,” and a market with an HHI above 1800 is “highly concentrated.” Merger Guidelines § 1.5. An increase in HHI of greater than 100 points in a post-merger moderately concentrated market potentially raises significant competitive concerns. Likewise, an increase in the HHI of 50 points or more in a post-merger highly concentrated market may raise significant competitive concerns. .It is presumed that mergers producing an increase in HHI of greater than 100 points in a highly concentrated market are -likely to create or enhance market power or facilitate its exercise. Merger Guidelines § 1.51; see generally Heinz, 246 F.3d at 716 & n. 9. Other things being equal, cases falling just above and just below a threshold present comparable competitive issues. Merger Guidelines § 1.5. If HHI figures are sufficiently large, they will establish a prima facie case of an anticompetitive merger. See Heinz, 246 F.3d at 716; Baker Hughes, 908 F.2d at 982-83 & n. 3. Thus, where the HHI calculation potentially raises significant competitive concerns or indicates a merger to be presumptively illegal, the factors set forth in Sections 2 through 5 of the Merger Guidelines become relevant in undertaking a more comprehensive and holistic assessment of whether the proposed merger is likely to create or enhance market power or facilitate its exercise. These factors broadly include: the potential adverse competitive -effects of a merger, entry analysis, efficiencies, and failure and exiting assets. 1. Competitors in the SPRB There are currently five significant producers of SPRB coal: Peabody, Kennecott, Arch, RAG, and Triton. PX 5675 at 1; PX 1040 at 1; Morris Tr. (6/23 afternoon) at 44:6-7; Morris Tr. (6/24 morning) at 16:12-15. Post-merger, there will still be five significant producers of SPRB coal, with Kiewit replacing Triton as an SPRB producing entity. The percentages of the firms’ market shares will change, to be sure, as Arch will acquire the North Rochelle mine and Kiewit will take over only Triton’s Buckskin mine. However, Arch will remain third among the five producers. PX 5675 at 3-4. Based on the HHI calculation for the current SPRB coal market, it is highly concentrated. Morris Tr. (6/23 morning) at 43:11-44:7, 67:23-68:9. Whether market concentration is measured in terms of practical capacity, loadout capacity, production, or reserves, the post-merger market remains highly concentrated. PX 5675 at 3. The post-merger increase in HHI ranges from 49 points to 224 points, depending on which measure is used to calculate market concentration. Set forth in the table below is an abridged summary of the different market concentration measurements derived from PX 5675 at 3, based on Arch’s acquisition of the North Rochelle mine and Kiewit’s acquisition of Buckskin: SPBB Coal Market Concentration (HHI) HHI_Practical Capacity Loadout Capacity Production Reserves Current Market_2152_2068_2201_2054 Post-Merger_2346_2292_2365_2103 Posb-Merger Increase_193_224_163_49 2. Proper Basis to Calculate Concentration Market shares are calculated by the Department of Justice and the FTC using the best indicator of firms’ future competitive significance. In General Dynamics, the Supreme Court stated that evidence of market shares and market concentration should provide a “proper picture of a company’s future ability to compete.” 415 U.S. at 501, 94 S.Ct. 1186. Defendants urge the Court to use reserves as the basis for calculating concentration, while the FTC argues that the Court should look to other factors as well, and to loadout capacity in particular, to measure concentration. Reserves are a valid measure of market concentration, albeit an imperfect one. According to defendants’ expert, the conclusion that recoverable reserves are the best measure of a producer’s future capability is consistent with the economic literature on exhaustible resources. Guerin-Calvert Tr. (6/30 afternoon) at 97:3-15. At current production rates, Triton’s North Rochelle mine, for example, has only seven-and-a-half years of reserves and has long-term contracts already in place that commit a significant percentage of the mine’s production over that period. Hake Tr. (6/29 closed) at 28:19-20; 29:2-8; DX 9005 at 002; DX 0274; DX 0281. The Supreme Court in General Dynamics rejected statistical evidence of coal production as a valid measure of competitive power in the market in favor of a company’s uncommitted reserves of recoverable coal. The Court reasoned that [t]he bulk of the coal produced is delivered under long-term requirement contracts, and such sales thus do not represent the exercise of competitive power but rather the obligation to fulfill previously negotiated contracts at a previously fixed price. The focus of competition in a given time frame is not on the disposition of coal already produced but on the procurement of new long-term supply contracts.... A more significant indicator of a company’s power effectively to compete with other companies lies in the state of a company’s uncommitted reserves of recoverable coal. 415 U.S. at 502, 94 S.Ct. 1186. Here, however, the reserves data defendants urge the Court to use include both committed and uncommitted reserves of coal. Closing Argument Tr. (7/20) at 37:17-21. Those are the reserves that plaintiffs present as well. Id. at 37:20-21. Furthermore, the long-term contracts under which coal was sold before 1974, when General Dynamics was decided, extended for many years and mines effectively could not obtain additional reserves. Morris Tr. (6/23 afternoon) at 74:23-75:8. The current contracting trend in the SPRB is towards contracts of shorter duration, PX 8623 at 001, often lasting three years or less, Morris Tr. (6/23 afternoon) at 75:9-10; PX 8611 at 021 ¶ 68 (Morris W.D.); see also Stuchal Tr. (7/7 morning) at 74:9-14, although they can also be longer. Rahm Tr. (6/21 afternoon) at 7:25-10:1 (Westar has supply agreements through 2020 for most of its coal and other supply agreements through 2007 and 2009); Kelly Tr. (6/22 morning) at 44:2-10; PX 8606 at 3-4; Lien Dep. at 195:1-14 (RAG has signed recent contracts of 2 to 3 year duration and utilities sometimes ask for longer terms); Herndon Tr. (6/22 afternoon) at 5:10-6:23, 42:21-43:5; PX 8604 at 3; Stuchal Tr. (7/7 morning) at 74:9-14 (NPPD’s typical coal purchase agreements are 3 to 5 years in length; NPPD has 9-year contracts currently). Contracts that last over three years, which still exist, often include re-opener clauses, PX 4613 at 003, 004-007; Guerin-Calvert Tr. (7/1) at 67:14-17, that allow a customer at certain points over the course of the contract period to solicit competing bids from other suppliers and afford the existing supplier an opportunity to match the competitor’s bid. Morris Tr. (6/24 morning) at 48:7-16. Furthermore, in the SPRB today, mines have the ability to acquire more reserves. Morris Tr. (6/23 afternoon) at 75:19-21; PX 8611 at 017 ¶ 57 (Morris W.D.). When SPRB mines need to acquire more reserves, they apply to the Bureau of Land Management (“BLM”) to lease additional reserves. Id. at 73:16-75:21. All the major mine owners in the SPRB today have applications (known as “LBAs”) pending with the BLM to acquire additional reserves. Id. at 75:15-18; see PX 8446; PX 8447. Today in the SPRB, mines can even make sales for periods beyond the life of the mine based on current reserves because they are able to acquire these additional reserves. Morris Tr. (6/24 morning) at 89:25-90:13. These considerations, in combination, undermine exclusive reliance on reserves to measure market concentration. Nevertheless, in other contexts the federal antitrust agencies still espouse the view that reserves provide the proper measure for determining concentration levels in the coal industry. See DX 0033 at 000295 (Federal Trade Commission Staff Report on the Structure of the Nation’s Coal Industry) (concluding that “a company’s holdings of coal reserves are an important indicator of its present and future competitive position, and coal reserve concentration ratios are a very important measure of market power”); DX 0034 (United States Department of Justice, Competition in the Coal Industry). In 1996, in connection with amendments to the HarNScott-Rodino Act, the FTC recognized that, in assessing acquisitions in the coal industry, concentration levels are impacted by firms’ reserves. See DX 0035 (commenting that “holdings of [coal] reserves ... are widely dispersed, and individual acquisitions have had minimal effect on concentration”). The FTC points out, however, that when using reserves to measure concentration, the DOJ has stated that a market share of 15 percent or more is prima facie inconsistent with the antitrust laws; Arch currently has 16 percent of SPRB reserves and acquiring North Rochelle would increase Arch’s SPRB reserves to almost 20 percent. See PX 8611-018 ¶ 59 (Morris W.D.). Notwithstanding the Supreme Court’s reliance on reserves in General Dynamics, exclusive reliance on that measure to determine market concentration in the SPRB today does not appear warranted. The present SPRB coal market is different from the relevant coal market in General Dynamics — particularly in the use of more short-term contracts. Moreover, the parties have presented statistics based on all reserves, but only uncommitted reserves were considered in General Dynamics and are particularly relevant to assessing future competitiveness. The greater availability of additional reserves through LBAs has also not been fully accounted for in the parties’ presentations based on present reserves. Hence, although the Court will look primarily to market concentration as measured by reserves, it will also consider other measures. Plaintiffs agree that it is appropriate to do so. See Closing Argument Tr. (7/20) 53:16-54:1. Those other measures can also be expected to provide some indication of the projected increase in market concentration resulting from the challenged transactions. Loadout capacity is a helpful measure of market concentration, but it is likewise imperfect. As discussed above, plaintiffs argue that loadout capacity is the most appropriate measure of future competitiveness and thus market concentration because expanding a mine’s capacity can be an expensive, slow, and difficult process. See PX 0347 at 002 (expanding Arch’s Black Thunder mine by an additional 10 million tons would cost $55 million and take two years); PX 8302 at 202:10-204:20 (Lien Dep.); PX 0016 at ¶ 10 (Conn Decl.) (to expand RAG’s Eagle Butte mine beyond its current capacity of 28 million tons would require the addition of another rail loop, the installation of crushers, conveyor, and silos and would cost approximately $45 to $50 million and take up to two years). But it has been demonstrated that loadout capacity can also be expanded fairly quickly and inexpensively. Arch steadily expanded Black Thunder’s capacity from 50 million to 70 million tons per year without any significant capital expenditure, Leer Tr. (6/28 morning) at 20:17-21:16; Lang Tr. (6/24 afternoon) at 60:17-62:10, and RAG expanded loadout capacity by 6 million tons between 2000 and 2002, DX 2006 at ¶ 25. Moreover, as a static measure that does not reflect future capacity, Gue-rin-Calvert Tr. (6/30 afternoon) at 93:12-95:3, loadout capacity does not take into account the constraints that limited reserves may place on a mine’s ability to compete in the future. For example, regardless of the loadout capacity at the North Rochelle mine, given the present rate of production, it currently has reserves of only approximately seven-and-a-half years, which will make North Rochelle less of a competitive player in the future unless it acquires additional reserves. Still, loadout capacity does provide some insight as to competitiveness, and thus is of some value in measuring market concentration. Production and practical capacity are less useful measures, although they can still be informative. Both are, like loadout capacity, static measures that are not stable predictors of a producer’s ability to deliver in the future in the form of sales or contracts. Guerin-Calvert Tr. (6/30 afternoon) at 88:7-21; Lang Tr. (6/24 afternoon) at 62:11-63:19. The Supreme Court specifically rejected past production figures as a measure of future ability to compete in General Dynamics: “[i]n a market where the availability and price of coal are set by long-term contracts rather than immediate or short-term purchases and sales, reserves rather than past production are the best measure of a company’s ability to compete.” 415 U.S. at 502, 94 S.Ct. 1186. And practical capacity is not generally as sound a predictor of future competitiveness in the SPRB coal market as is loadout capacity. Because these different measures of concentration are all informative to some degree, yet remain imperfect indicators of future ability to compete, the Court has considered all of the measures in assessing whether plaintiffs have established a prima facie case of an anticompetitive merger. See Heinz, 246 F.3d at 716; Baker Hughes, 908 F.2d at 982-83 & n. 3. Plaintiffs agree with that approach, see PFF ¶ 239, which is also consistent with the general admonition that all aspects of the relevant market should be examined to determine whether a proposed transaction is likely to produce any anticompetitive effects. 3. Post-Merger Increase in HHI The Court concludes, however, that reserves remain the best of these imperfect measures, and that using reserves as the primary tool to assess concentration and calculate post-merger increases in HHI is also consistent with the Supreme Court’s analysis in General Dynamics. The reserves data provided to the Court, see PX 5675 at 3, establish that the current market concentration (HHI) is 2054, and that post-merger it will be 2103, for an increase in HHI of 49. According to the Merger Guidelines, an increase in HHI of 50 points or more in a post-merger highly concentrated market raises “significant competitive concerns.” Merger Guidelines § 1.51(c). Although the HHI increase calculated on the basis of reserves is only 49, the Merger Guidelines state that: “the numerical divisions suggest greater precision than is possible with the available economic tools and information. Other things being equal, cases falling just above and just below a threshold present comparable competitive issues.” Id. § 1.5. Based on reserves, then, the proposed transaction may raise significant competitive concerns — although just barely. Loadout capacity is a novel but fairly logical basis for calculating market concentration and assessing future competitiveness because it does act as a constraint, although perhaps not as rigid a constraint as plaintiffs have asserted, on a coal company’s ability to compete for future contracts. The post-merger increase in HHI based on loadout capacity is 224. In a highly concentrated post-merger market, according to the Merger Guidelines, with an increase in HHI above 100 it is “presumed that ... [the merger is] likely to create or enhance market power or facilitate its exercise.” Id. § 1.51(c). The post-merger increases in HHI calculated based on production and practical capacity are 163 and 193 respectively, both of which also trigger a presumption of the likelihood of creating or enhancing market power or facilitating its exercise. The various measures of market concentration in the SPRB presented by the parties thus reflect an increase in HHI ranging from 49 to 224. Considering all these measures of market concentration, therefore, at a minimum the proposed transactions raise significant competitive concerns and if, as the Court believes may be appropriate, one departs from a strictly reserves-based approach adopted in General Dynamics because of changes that have occurred in the coal market over the last thirty years, then there may even be a presumption of an anticompetitive increase in market power. Ignoring altogether the other measures of market concentration in favor of an exclusively reserves-based assessment seems unwarranted. The FTC has, therefore, satisfied its prima facie case burden. Nevertheless, it is important to note that this case is not one in which the post-merger increase in HHI produces an overwhelming statistical case for the likely creation or enhancement of anticompetitive market power. Indeed, the single best available measure of market concentration — reserves—produces an increase in HHI of only 49, which is actually below the level for significant concern in the highly concentrated SPRB market. The measure plaintiffs urge — loadout capacity — only produces an HHI increase of 224. Such HHI increases are far below those typical of antitrust challenges brought by the FTC and DOJ. For example, in Heinz the HHI increase was 510 based on a pre-merger HHI of 4775. See 246 F.3d at 716. In Baker Hughes the HHI increase was 1425, from 2878 pre-merger to 4303 post-merger. See 908 F.2d at 983 n. 3. In Staples the average HHI increase in the several markets under consideration was 2715. See 970 F.Supp. at 1082. And in FTC v. Libbey, Inc., 211 F.Supp.2d 34, 51 (D.D.C.2002), the impact of the original merger agreement (used by the court for its analysis) was an HHI increase of 1052. All of these levels of HHI increase dwarf even the highest increase arguably present here. Indeed, between 1999 and 2003, only twenty-six merger challenges out of 1,263 (two percent) occurred in markets with comparable concentration levels to those argued here. See DX 0833 (Federal Trade Comm’n & United States Dep’t of Justice, Merger Challenges Data, Fiscal Years 1999-2003 (Dec. 18, 2003)). Thus, although the FTC has satisfied its prima facie case burden, the FTC’s prima facie case is not strong. Certainly less of a showing is required from defendants to rebut a less-than-compelling prima facie ease. See Heinz, 246 F.3d at 725; Baker Hughes, 908 F.2d at 991 C‘[t]he more compelling the prima facie case, the more evidence the defendant must present to rebut it successfully”). Even assuming that the FTC’s showing of an increase in HHI, and thus market concentration, warrants a presumption that the transactions will lessen competition, defendants have pointed out the shortcomings of statistics based on capacity or production, rather than on reserves, in providing the best assessment of the proposed merger’s likely future effect on competition. Defendants have, therefore, successfully rebutted the presumption that the merger will substantially lessen competition and the Court will proceed to examine the issue of the likely competitive effects of the proposed merger in the relevant market, for which plaintiffs bear the ultimate burden- of persuasion. Heinz, 246 F.3d at 715 (citing Baker Hughes, 908 F.2d at 983). As discussed below, an analysis of the SPRB market confirms that defendants have produced sufficient evidence to further rebut the FTC’s prima facie case and that, ultimately, plaintiffs have not carried their burden of persuasion. See Baker Hughes, 908 F.2d at 985 (rebuttal evidence may include factors relating to competition in relevant market and financial or market weakness of acquired company.) C. Likelihood of Coordinated Interaction In This Market In General Dynamics, the Supreme Court cautioned that, although significant, statistics concerning market share and concentration are “not conclusive indicators of anticompetitive effects.” 415 U.S. at 498, 94 S.Ct. 1186; see also Brown Shoe, 370 U.S. at 321-22, 82 S.Ct. 1502; Heinz, 246 F.3d at 717 n. 12. Indeed, this Circuit has cautioned against relying too heavily on a statistical case of market concentration alone, and that instead a broad analysis of the market to determine any effects on competition is required. “That the government can establish a prima facie case through evidence on only one factor, market concentration, does not negate the breadth of this analysis. Evidence of market concentration simply provides a convenient starting point for a broader inquiry into future competitiveness.” Baker Hughes, 908 F.2d at 984; see Merger Guidelines § 2.0. Judge Posner has described the need to examine the evidence relating to competition in the market as follows: ... the Supreme Court, echoed by the lower courts, has said repeatedly that the economic concept of competition, rather than any desire to preserve rivals as such, is the lodestar that shall guide the contemporary application of the antitrust laws .... Applied to cases brought under Section 7, this principle requires the district court ... to make a judgment whether the challenged acquisition is likely to hurt consumers, as by making it easier for the firms in the market to collude, expressly or tacitly, and thereby force price above or farther above the competitive level. Hosp. Corp. of Am., 807 F.2d at 1886. Plaintiffs may seek to show that a merger will diminish competition by showing that it will facilitate coordinated interaction. That is, in fact, the thrust of plaintiffs’ case here. The Merger Guidelines define coordinated interaction as “actions by a group of firms that are profitable for each of them only as a result of the accommodating ■ reactions of the others. This behavior includes tacit or express collusion, and may or may not be lawful in and of itself.” Merger Guidelines § 2.1; see also Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 227, 113 S.Ct. 2578, 125 L.Ed.2d 168 (1993) (tacit coordination is a “process, not in itself unlawful, by which firms in a concentrated market might in effect share monopoly power, setting their prices at a profit-maximizing, supracompetitive leve by recognizing their shared economic interests and their interdependence with respect to price and output decisions”). Indeed, antitrust policy seeks particularly to inhibit “the creation or reinforcement by merger of ... oligopolistic market structures in which tacit coordination can occur.” Heinz, 246 F.3d at 725 (quoting 4 Phillip E. Areeda, Herbert Hovenkamp & John L. Solow, Antitrust Law ¶ 901b2, at 9 (rev. ed.1998)). A market is conducive to tacit coordination, then, where producers recognize their “shared economic interests and their interdependence with respect to price and output decisions.” Brooke Group, 509 U.S. at 227, 113 S.Ct. 2578. Successful coordination requires two factors: (1) reaching terms of coordination that are profitable to the firms involved and (2) an ability to detect and punish deviations that would undermine the coordinated interaction. Merger Guidelines § 2.1. Coordination need not be complex or complete — “instead, the terms of coordination may be imperfect and incomplete ... and still result in significant competitive harm.” Id. at § 2.11. The Merger Guidelines provide, moreover, that the punishment of deviation will not always be direct and specific: “Credible punishment ... may not need to be any more complex than temporary abandonment of the terms of coordination by other firms in the market.” Id. at § 2.12. But “where detection or punishment is likely to be slow, incentives to deviate are enhanced and coordinated interaction is unlikely to be successful.” Id. 1. The FTC’s Novel Theory The FTC brings this action for a preliminary injunction under the theory that the mechanism of tacit coordination that is most strongly supported by the evidence is a form of output restriction in which the major coal producers in the SPRB market would constrain their production so that increases in supply would lag behind increases in demand, thereby creating an upward pressure on price. See, e.g., Pis. Post-Hearing Br. at 8. What this means is that the FTC must show projected future tacit coordination, which itself may not be illegal, which is speculative and difficult to prove, and for which there are few if any precedents. As defendants have noted, prior coordinated effects challenges to mergers based on alleged output coordination have invariably been accompanied by a coordinated effects theory grounded on price coordination. See, e.g., Univ. Health, 938 F.2d at 1219; FTC v. Elders Grain, Inc., 868 F.2d 901, 905-06 (7th Cir.1989); Hosp. Corp. of Am. v. FTC, 807 F.2d 1381, 1387 (7th Cir.1986); FTC v. Bass Bros. Enters., Inc., 1984-1 Trade Cas. (CCH) ¶ 66,041 at 68,-612, 1984 WL 355 (N.D.Ohio 1984). Similarly, although not a merger case, In re High Fructose Com Syrup, 295 F.3d 651 (7th Cir.2002), involved a coordinated effects theory where the product was highly standardized, completely fungible, and did not vary from producer to producer. See 295 F.3d at 656-57; In re High Fructose Corn Syrup, 156 F.Supp.2d 1017, 1021 (C.D.Ill.2001), rev’d mem., 295 F.3d 651 (7th Cir.2002), cert. denied, 537 U.S. 1188, 123 S.Ct. 1251, 154 L.Ed.2d 1019 (2003). There, coordination among producers needed to take account of only one fact— price — see 295 F.3d at 657, and price transparency was virtually complete, with producers publishing prices in advance of their becoming effective, see 156 F.Supp. at 1037. Deviations from coordination were immediately detectable, the other producers could quickly deprive the cheater of any benefit, and there was evidence of a history of anticompetitive behavior in the market. 295 F.3d at 666. As discussed further below, none of these factors is present here. SPRB coal has a wide range of heat level (8800 to 8400 Btu), quality (e.g., sulfur and ash content) and ultimately price, information regarding prices is far from transparent, there is no historical evidence of actual price or output coordination, and the SPRB market does not lend itself to ready detection and punishment of deviations from coordination. Moreover, the number of competitors in the SPRB pre- and post-merger remains the same. The novel approach taken by the FTC in this case makes its burden to establish anticompetitive effects in the post-merger SPRB market more difficult. In support of their case, plaintiffs cannot simply seek to show that the proposed transactions will decrease production in the SPRB market. As plaintiffs have noted, a coordinated restriction in production will not necessarily decrease total SPRB coal production, but ra