Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Increased merger activity drives enforcers’ agendas, (Apr 17, 2015)

By Jeffrey May, J.D.

The resurgence in merger activity was among the topics discussed at the annual “Enforcers Roundtable,” which wrapped up the American Bar Association Section of Antitrust Law Spring Meeting today in Washington, D.C. Officials from the U.S. Department of Justice, the FTC, the European Commission, and the United Kingdom’s Competition and Markets Authority, as well as a representative from the state attorneys general, provided updates on the latest enforcement actions at their respective agencies to the more than 3,000 attendees at the 63rd annual meeting.

With a flood of new deals, Bill Baer, Assistant Attorney General in charge of the Antitrust Division, warned merging parties that the Division will be “litigation ready” if it determines that an acquisition or merger is anticompetitive. In addition, he attempted to disabuse merging parties of the notion that their deal will be cleared simply because the last acquisition in the industry was approved. Concentration in the market from the earlier deals has to be taken into account. He pointed to the recent combination of American Airlines and US Airways. Had the case gone to trial, Baer said that the Antitrust Division was prepared to show that efficiencies claims made by parties to earlier mergers had not materialized.

Baer also warned corporate boards not to plan mergers that are "patently problematic." As an example, he noted the now-abandoned deal between cinema advertisers National CineMedia, Inc. (NCM) and Screenvision, LLC. The government had called the deal a merger-to-monopoly. Last month, the parties dropped the combination. Baer cited the proposal to merge the two companies an example of “an idea that should never have left a corporate boardroom.”

FTC Chairwoman Edith Ramirez agreed with Baer's advice. She discussed the agency's pending challenge to the combination of Sysco and US Foods. The agency is alleging that the deal would significantly reduce competition nationwide and in 32 local markets for broadline foodservice distribution services. Sysco had offered a proposed fix; however, it was not sufficient to satisfy the FTC's concerns, Ramirez noted. A hearing on a preliminary injunction to block the deal pending further review will be held in the next few weeks.

It's not just mega-mergers that catch the attention of enforcers, Ramirez warned. Smaller deals that may not get the headlines also create problems, she noted. One example identified by Ramirez was Verisk Analytics, Inc.'s planned acquisition of EagleView Technology Corporation. The parties ultimately abandoned the deal after the FTC issued an administrative complaint, alleging that the deal threatened to harm competition in the market for rooftop aerial measurement service used by insurers to assess claims.

California Senior Assistant Attorney General Kathleen Foote, representing the state enforcers on the panel, talked about the states' active role in merger enforcement alongside the federal enforcers. She noted that state attorney general offices around the country are helping to carry the burden on the Sysco/US Foods case. Foote also praised the State of Idaho for standing side-by-side with the FTC in a successful challenge to St. Luke’s Health System's acquisition of Saltzer Medical Group—the state's largest independent, multi-specialty physician practice. The Ninth Circuit recently upheld an order that the deal be unwind after a finding that the transaction violated Section 7 of the Clayton Act.

Margrethe Vestager, who took over as the new European Commission Competition Commissioner last November, said that she saw the return of merger activity as a welcome development because it signalled that the economy was improving. She also reiterated the other panlists' advice to merging parties that each deal is considered individually and that a transaction approved yesterday does not signal that another deal tomorrow will get the same result if the situation is different.

In closing remarks, Ramirez noted that the agencies “face incredibly complicated problems.” However, she assured attendees that the enforcers are “well placed” to handle these problems.

News: AcquisitionsMergers Antitrust AntitrustDivisionNews FederalTradeCommissionNews