Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Antitrust chief discusses importance of effective remedies, (Sep 25, 2013)

By Jeffrey May, J.D.

In his first opportunity after nine months on the job to deliver formal remarks as the Assistant Attorney General for Antitrust, William Baer discussed the importance of achieving effective outcomes in Antitrust Division enforcement actions. In remarks, entitled “Remedies Matter: The Importance of Achieving Effective Antitrust Outcomes,” delivered today at Georgetown University Law Center’s Seventh Annual Global Antitrust Enforcement Symposium, Baer proclaimed that remedies in antitrust actions must ensure competitive markets and deter illegal behavior going forward.

Merger remedies. In the merger area, a remedy should effectively resolve the competitive concerns identified and protect the competitive process, according to Baer. This sometimes means that a full-stop injunction is the only right law enforcement outcome, as with AT&T, Inc.’s proposed acquisition of T-Mobile USA, Inc. in 2011. Baer said that the Antitrust Division’s decision to block the transaction was “the right call.” There was no negotiated disposition that would work, and the parties ultimately decided to abandon the AT&T/T-Mobile merger.

Recent litigation in the merger area provides other examples of the Justice Department’s willingness to litigate. However, litigation is not the preferred option, Baer said.

Effective remedies can be achieved through settlement discussions. Merging parties should not wait until the 11th hour, however, to present a last, best offer in their negotiations with the Antitrust Division, Baer warned. “Early and constructive engagement with the division regarding remedies often allows the merging parties to close a transaction sooner and on terms they find palatable.”

Baer cited the proposed consent decree resolving a challenge to Anheuser-Busch InBev’s $20 billion acquisition of Grupo Modelo as an example of the Antitrust Division’s commitment to achieving effective and tailored merger remedies, and the time required to reach a procompetitive outcome. The initial fix proposed by the parties was perceived by the Justice Department as a “non-starter,” and the government filed suit. Ultimately, however, a settlement that effectively preserved competition was reached.

“The decree contains provisions that experience has taught us can be important to an effective merger remedy—including structural relief, an upfront buyer that we were able to vet fully before finalizing the settlement, a monitoring trustee, and conveyance of the intellectual property and know-how needed to ensure the buyer’s effectiveness,” said Baer.

The same principles apply for relief sought in challenges to consummated acquisitions and mergers, according to Baer. There are, of course, unique challenges where parties have already begun the integration of assets.

“We look to remedy an unlawful consummated deal in a fashion that restores a meaningful competitor and deprives the acquirer of unlawfully obtained market power,” Baer said. “An effective remedy may need to include assets beyond those previously held by the acquired firm.”

Civil non-merger remedies. As for relief in civil non-merger cases, Baer pointed to the injunctions obtained in the recent federal/state e-books price fixing case. Baer noted that the case against Apple for conspiring with publishers to fix e-book prices was the first civil conduct case that the Antitrust Division had tried to decision in some time. The settlements with the publishers that came before the trial against Apple brought competition back to the e-book market and benefitted consumers, in Baer’s view. The final judgment, which was imposed on Apple after it was found to have violated the antitrust laws, “stamps out any lingering effects of the conspiracy, prevents Apple and others from engaging in similar conduct in the future, and ensures that Apple put in place the training and internal compliance controls needed to avoid a recurrence.”

Baer noted that a key element of the injunction is the designation—over Apple’s strenuous objection—of an external compliance monitor. This relief was necessary, according to the antitrust chief, because “Apple’s senior executives and in-house counsel helped orchestrate the price-fixing scheme.”

Criminal enforcement remedies. It was pointed out that monitors have also been imposed as remedies in criminal enforcement actions. Following the successful prosecution of AU Optronics Corporation (AUO) for its role in a conspiracy to fix the price of liquid crystal display (LCD) panels, the trial court, at the Antitrust Division’s recommendation, imposed an order requiring the firm to retain an independent corporate monitor to develop and implement an effective antitrust compliance program. This condition of probation was imposed in addition a $500 million fine. The monitor was appropriate in this case, according to Baer, because “AUO’s standard operating procedure was collusion.”

In conclusion, Baer pledged that, during his tenure as Assistant Attorney General, “the Antitrust Division will continue to emphasize effective outcomes and be open to new ideas that remedy anticompetitive conduct and guard against any recurrence.”

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