Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Parties to non-reportable mergers encouraged to notify Antitrust Division, (Apr 28, 2014)

By Jeffrey May, J.D.

Noting that there is no "safe harbor" for non-reportable mergers and acquisitions, Leslie Overton, Deputy Assistant Attorney General for Civil Enforcement at the Department of Justice Antitrust Division, is encouraging parties to these combinations to consider approaching the agency before closing, if the deal raises potential antitrust concerns. In remarks, entitled "Non-reportable Transactions and Antitrust Enforcement," Overton told attendees of Loyola University Chicago School of Law’s 14th Annual Antitrust Colloquium, on April 25, of the benefits of self-reporting and "constructive engagement" with the agency in the event of an investigation.

Overton advised that potential antitrust issues raised by non-reportable transactions should be taken seriously. Close to 20 percent of all the merger investigations opened by the Antitrust Division between 2009 and 2013 involved transactions that were not reportable under the Hart-Scott-Rodino Antitrust Improvements Act.

"More than one in four of the division’s investigations into these non-reportable deals resulted in a challenge," Overton noted. "This record of careful scrutiny is warranted."

Overton pointed to some recent challenges to illustrate the Antitrust Division's vigilance. In particular, she highlighted the government's recently-settled case against Bazaarvoice over its consummated acquisition of PowerReviews and the impact on the market for online product ratings and reviews platforms.

In January, the federal district court in San Francisco held that Bazaarvoice's June 2012 acquisition of PowerReviews violated Sec. 7 of the Clayton Act. Overton noted that the decision confirms the government's view that "the well-established methodology for reviewing Section 7 claims applies with equal force in pre- and post-acquisition cases." Thus, the government need not offer proof of post-merger anticompetitive effects, since the merged firm may well be moderating its conduct in light of post-merger antitrust review. However, post-acquisition evidence of anticompetitive effects—such as price increases or output reductions—will be considered, since such evidence is not subject to the same concerns about manipulation. Significant weight also will be placed on the pre-merger business records of the merging parties as well as other industry participants, Overton added.

In light of the enforcement initiatives, Overton suggested that, when the Antitrust Division is investigating a pending merger that was not reportable, parties should work with the government on a mutually agreeable investigative plan. In addition to providing the Antitrust Division with reasonable time to investigate, the plan will provide the parties with predictability and the opportunity to provide evidence of any pro-competitive benefits. If a transaction is closed, a hold-separate or asset preservation agreement could be beneficial should a divestiture ultimately be required, Overton noted. Parties also were advised to avoid delay tactics and to think proactively about remedies.

Companies:

Bazaarvoice, Inc.

News: Antitrust AntitrustDivisionNews