By Diane Bartz
WASHINGTON (Reuters) - A federal judge has ruled that Germany's Evonik Industries AG's <EVKn.DE> proposed purchase of rival U.S. hydrogen peroxide maker PeroxyChem Holding Company is legal under antitrust law.
In a brief order issued late Friday, Judge Timothy Kelly said that he was denying the U.S. government's request for a preliminary injunction halting the $625 million deal.
The U.S. Federal Trade Commission had sued to stop the planned merger in August, citing concerns that it would lead to higher prices for hydrogen peroxide used as a bleaching agent or disinfectant.
"The court’s ruling is disappointing and we will be considering our options," said Ian Conner, director of the FTC's Bureau of Competition, in a statement.
Evonik declined comment.
The sale by group One Equity Partners, announced in late 2018, was aimed at giving Evonik above-average growth rates of around 6% in the hydrogen peroxide and peracetic acid markets.
Hydrogen peroxide is used primarily as a bleaching agent in the paper industry and also as a disinfectant for food processing or for wastewater treatment, the FTC said in its complaint.
The FTC had said the proposed acquisition would leave just one other hydrogen peroxide supplier in the Pacific Northwest. In the southern and central United States, four suppliers would remain after the merger but Evonik would control nearly half the production capacity, the FTC said in its complaint.
Since hydrogen peroxide is expensive to ship, companies tend to try to buy locally, the FTC said.
(Reporting by Diane Bartz; Additional reporting by Matthias Inverardi; Editing by Lisa Shumaker)