The FTC’s Challenge to Verisk’s Acquisition of EagleView: Distinct Customers May Constitute a Distinct Relevant Market

Tuesday, February 10, 2015 - 10:51

On December 16, 2014, the Federal Trade Commission (“FTC”) issued an administrative complaint alleging that Verisk Analytics, Inc.’s proposed acquisition of EagleView Technology Corporation would violate the antitrust laws and create a virtual monopoly in rooftop aerial measurement services and reports (“Rooftop Aerial Measurement Products”) used for insurance purposes in the United States.[1] Almost immediately, Verisk and EagleView announced that they had mutually agreed to terminate the proposed transaction.[2] This recent FTC merger challenge underscores the importance of evaluating potential impacts on distinct classes of customers when analyzing a proposed merger or acquisition.


Approximately 35 percent of all real property insurance claims in the United States involve rooftop damage, typically caused by hail, wind, storms and other natural phenomena.[3] Rooftop Aerial Measurement Products utilize high-resolution aerial imagery and associated data to provide rooftop measurements and information to insurance carriers.[4] Insurance carriers use these products in conjunction with claims estimation software to determine the dimensions and other characteristics of a damaged rooftop, the price of materials and labor, and the estimated cost of replacement or repair.[5] According to the FTC, Rooftop Aerial Measurement Products are safer, more efficient and more accurate than manual measurements obtained in person by an insurance adjuster.[6]

EagleView launched its Rooftop Aerial Measurement Products in 2008 and quickly gained popularity with contractors, and later, insurance carriers.[7] EagleView’s sales grew rapidly, and by 2013, EagleView supplied 24 of the top 25 insurance carriers[8] and controlled 90 percent of the relevant market.[9]

Verisk, through its subsidiary Xactware, is the leading supplier of software used to estimate rooftop damage claims in the United States.[10] Two years ago, Verisk decided to launch its own Rooftop Aerial Measurement Products in direct competition with EagleView.[11] According to the FTC, Verisk has been the only company to win accounts at significant insurance carriers from EagleView.[12]

On January 14, 2014, Verisk agreed to acquire EagleView for $650 million.[13] The FTC investigated the proposed acquisition, and on September 29, 2014, the companies stated that they had extended their merger agreement through December 31, 2014, to work with the FTC to gain clearance.[14] Despite the companies’ apparent cooperation with the FTC to identify possible remedies that would allow the transaction to proceed, the FTC ultimately decided to issue an administrative complaint seeking to block the transaction and authorized FTC staff to seek a temporary restraining order and preliminary injunction to halt the acquisition pending the administrative proceeding.[15]

The FTC’s Complaint

In its complaint, the FTC alleged that the acquisition would “eliminate head-to-head-competition between the only two meaningful providers of Rooftop Aerial Measurement Products to U.S. insurance carriers.”[16] According to the FTC, although Verisk had only recently entered the market, insurance carriers already had benefited from competition between the two companies, including through lower prices.[17] In fact, Verisk’s sales strategy included discounting its Roof Insight product to win business from EagleView.[18] The FTC alleged that the acquisition would have eliminated the burgeoning competition between the two companies, raising the risk of higher prices for insurance carriers and consumers.[19]   

Notably, the FTC narrowly defined the relevant product market as the sale of Rooftop Aerial Measurement Products for insurance purposes, specifically excluding the sale of such products to contractors.[20] According to the FTC, contractors do not demand Rooftop Aerial Measurement Products with the speed, scale and seamless integration with claims estimation software that are required by insurance carriers.[21] The FTC’s complaint did note, however, that even if the relevant product market were broadened to include sales for non-insurance purposes, the post-merger market concentration levels would still render the transaction unlawful.[22]

The FTC did not believe that entry of new competitors would defeat the anticompetitive effects likely to result from the acquisition, relying on the fact that other providers of Rooftop Aerial Measurement Products had not gained traction with insurance carriers.[23] According to the FTC, successful entry would require deep relationships with insurance carriers, industry acceptance, integrated estimating software, and a nationwide library of aerial images.[24] Moreover, EagleView had continually used the threat of patent infringement litigation to deter entry since receiving its first patent in 2011.[25] Given these factors, the FTC did not view potential entry as timely, likely or sufficient to counter the acquisition’s likely anticompetitive effects.[26]

The Parties Abandon the Transaction

The same day that the FTC issued its complaint, the companies mutually agreed to terminate the proposed transaction. Chris Barrow, CEO of EagleView, stated that “[d]espite the best efforts of both EagleView and Verisk, the FTC has maintained its position that the merger would have a negative effect on the competitive landscape – a position EagleView fundamentally disagrees with and one that the company believes is unsubstantiated based on the facts as supported by the nearly 400,000 documents EagleView produced in response to FTC requests.”[27] Scott Stephenson, CEO of Verisk Analytics, Inc., similarly said that the companies “worked hard to come to a mutually agreeable solution with the FTC, but no agreement could be reached that was in the best interests of our shareholders.”[28] In response to the companies’ announcements, Deborah Feinstein, the FTC Bureau of Competition director stated: “The parties’ decision to abandon this transaction preserves competition in the U.S. market for rooftop aerial measurement products used by the insurance industry to assess property claims. A combination of the only two significant competitors in this market would have likely led to higher prices for both insurance companies and consumers.”[29]

Key Takeaway

The FTC may challenge a proposed transaction based upon the potential for anticompetitive effects on a particular class of customers, even if many other customers are not likely to be harmed.[30] Here, the FTC focused on the acquisition’s potential to cause price increases and other effects on insurance carriers, even though contractors also purchase and use the same products.[31] Markets defined around a subset of customers that could be profitably targeted for price increases are described as price discrimination markets.[32] Although the FTC’s complaint did not explicitly use this term, the underlying principle informed the FTC’s analysis, as it has in other merger cases, to define a narrow relevant market.[33]

Therefore, when evaluating antitrust risk for a proposed merger or acquisition, it is important to analyze whether identifiable subsets of customers may be harmed by the transaction, even if other categories of customers are unaffected.

* * *

This article is the second in a series of antitrust alerts authored by attorneys from Weil’s Antitrust team to be published in The Metropolitan Corporate Counsel. Currently, one additional article is planned, covering trade association compliance programs in light of recent case law. For continuous updates, please visit Weil’s Antitrust/Competition Perspectives.

[1] Press Release, U.S. Federal Trade Comm’n, FTC Challenges Verisk Analytics, Inc.’s Proposed Acquisition of EagleView Technology Corporation (Dec. 16, 2014), [hereinafter FTC Press Release].

[2] Press Release, Verisk Analytics, Inc., Verisk Analytics Ends Effort to Acquire EagleView Technology Corporation (Dec. 16. 2014), [hereinafter Verisk Press Release]; Press Release, EagleView Corp., EagleView Terminates Merger with Verisk (Dec. 22, 2014), [hereinafter EagleView Press Release]; see U.S. Federal Trade Comm’n, Statement of FTC Bureau of Competition Director Deborah Feinstein on Verisk’s Decision to Drop Its Proposed Acquisition of EagleView Technology Corporation (Dec. 17, 2014), [hereinafter FTC Statement].

[3] Complaint ¶¶ 2, 16, In the Matter of Verisk Analytics, Inc., Insurance Services Office, Inc., and EagleView Technology Corp., No. 9363 (Dec. 16, 2014), available at [hereinafter Verisk/EagleView Complaint].

[4] Verisk/EagleView Complaint ¶¶ 16–17.

[5] Id. ¶ 19.

[6] Id. ¶ 16.

[7] Id. ¶¶ 17–18.

[8] Id. ¶ 18.

[9] Id. ¶ 3.

[10] Id. ¶ 20.

[11] Id. ¶ 3.

[12] Id.

[13] Press Release, Verisk Analytics, Inc., Verisk Analytics, Inc., to Acquire EagleView Technology Corporation to Extend Its Analytic Capabilities in Aerial Imagery (Jan. 14, 2014),

[14] Press Release, EagleView Corp., Verisk Analytics, Inc., and EagleView Technology Corporation Update Status of EagleView Acquisition (Sept. 29, 2014),

[15] FTC Press Release.

[16] Verisk/EagleView Complaint ¶ 32.

[17] Id. ¶¶ 32, 38.

[18] Id. ¶ 39.

[19] FTC Press Release.

[20] Verisk/EagleView Complaint ¶¶ 23, 27.

[21] Id. ¶ 27.

[22] Id.

[23] Id. ¶¶ 3, 43. Indeed, Xactware possessed several advantages that allowed it to penetrate the relevant market quickly, including pre-existing relationships with insurance carriers and strong claims estimation software. See id. ¶ 35.

[24] Id. ¶¶ 24, 43.

[25] Id. ¶¶ 43–44.

[26] Id. ¶ 43.

[27] EagleView Press Release.

[28] Verisk Press Release.

[29] FTC Statement.

[30] See U.S. Dep’t of Justice and Federal Trade Comm’n, Horizontal Merger Guidelines § 4.1.4 (2010) (“If a hypothetical monopolist could profitably target a subset of customers for price increases, the Agencies may identify relevant markets defined around those targeted customers, to whom a hypothetical monopolist would profitably and separately impose at least a SSNIP.”); see also Herbert Hovenkamp, Federal Antitrust Policy: The Law Of Competition And Its Practice § 3.3 (4th ed. 2011) (“[O]ver a broad range of cases, product [market] definition depends on substitutability in consumers’ eyes, and since consumer utility cannot be measured by some easily identified criterion … the market definition question can become very difficult.”).

[31] See Verisk/EagleView Complaint ¶¶ 1, 27.

[32] Horizontal Merger Guidelines § 4.1.4 (2010).

[33] See Verisk/EagleView Complaint ¶ 27(“Insurance carriers’ requirements and preferences differ from the needs of contractors, who may also use rooftop aerial measurement services as an alternative to manual measurements.”); see also Federal Trade Comm’n v. Cardinal Health, Inc., 12 F. Supp. 2d 34, 48 (D.D.C. 1998) (finding that hospitals, independent pharmacies, and non-warehousing retail chains constituted a particular class of wholesale drug customers that would not switch to substitutes in the event of anti-competitive practices).

Benjamin Bauer is an associate in the Antitrust/Competition practice at Weil, Gotshal & Manges. 

Please email the author at with questions about this article.