Division Vigorously Enforcing Merger and Non-Merger Law
Under the leadership of Assistant Attorney General (AAG) Varney, the Antitrust Division continues its vigorous merger and civil non-merger enforcement. Merger challenges brought by the Division have maintained competition in markets that directly affect U.S. consumers, such as health care, ticketing services, and dairy, as well as in industries that serve vitally important functions in the United States, such as voting machines and semiconductors used in military and space programs.
The past year has seen a renewed focus on civil non-merger enforcement. AAG Varney’s withdrawal of the Section 2 Report on single firm conduct signaled a move toward a more vigorous examination of firms engaging in predatory or exclusionary behavior. Antitrust Division enforcement actions in the civil non-merger area protected consumers against the effects of illegal agreements in various industries.
After 2008–2009 Downturn, HSR Filings Begin to Increase
Pre-merger notifications under the Hart-Scott-Rodino (HSR) Act declined dramatically in fiscal year 2009, from 1,726 notifications in FY 2008 to 713 in FY 2009. Although not yet up to early 2008 levels, HSR filings have begun to increase, with a 79 percent increase in transactions filed between the first and second half of 2009.
The Antitrust Division’s merger enforcement has remained vigorous despite the drop in HSR filings. Since the last American Bar Association (ABA) Spring Meeting, the Division has filed eight merger enforcement actions; seven of which resulted in settlement, and one case, U.S. v. Dean Foods, remains in active litigation. Additionally, the Division successfully resolved two cases that were in active litigation at the time of the last ABA Spring Meeting, and parties either restructured or abandoned six other transactions in response to a Division investigation.
Antitrust Division Merger Challenges in Consumer Product Industries
Antitrust Division merger cases have directly benefitted millions of U.S. consumers. On January 25, 2010, the Antitrust Division, joined by 19 states, announced that it would require Ticketmaster Entertainment Inc., the world’s largest ticketing company, to license its ticketing software, divest ticketing assets, and subject itself to anti-retaliation provisions in order to proceed with its proposed merger with Live Nation Inc. The remedy, which is under Tunney Act review, will give concert venues more choice for their ticketing needs and will promote incentives for competitors to innovate and discount. In addition to the 19 states, the Division cooperated closely with the Canadian Competition Bureau, which obtained the same remedy.
January 25, 2010
Assistant Attorney General Christine Varney, Deputy Assistant Attorney General William Cavanaugh (right) and Chief Counsel for Competition Policy and Intergovernmental Relations Gene Kimmelman (left) discuss the Ticketmaster/Live Nation settlement with reporters.
Likewise, on January 22, the Division filed suit to undo the merger of Dean Foods and Foremost Dairy. The Division alleged that the merger reduced competition for milk sold to schools, grocers, and retailers in Illinois, Michigan, and Wisconsin, resulting in higher prices for consumers. Despite the difficulty of challenging consummated transactions, the Division continues to investigate and, where appropriate, seek enforcement actions against transactions not subject to reporting under the HSR Act. In March 2010, the Division announced it would require Election Systems & Software to divest voting equipment assets it had acquired in September 2009 from Premier Election Solutions in a non-reportable transaction. The merged firm provided more than 70 percent of the voting equipment systems used in the United States. In addition, the Division announced in August 2009 that it had obtained a settlement in its challenge to the consummated acquisition by Microsemi of Semicoa, requiring Microsemi to divest all the assets it had acquired. That merger would have created a monopoly in markets for certain types of semiconductor devices important for the defense industry.
Successful Cooperation with Other Enforcement Agencies
The Division worked closely with the Michigan Attorney General’s office in its investigation of Blue Cross Blue Shield of Michigan’s attempt to purchase Physicians Health Plan of Mid-Michigan. The companies abandoned that transaction after the Division informed them it would file a lawsuit to block the transaction. The Division also worked closely with the relevant states on the Ticketmaster/Live Nation transaction, as well as on the Dean/Foremost investigation and suit. The Division continues to coordinate with the federal agencies that regulate particular industries, including the Federal Communications Commission and the Federal Energy Regulatory Commission.
“Back to the Basics” on Civil Non-Merger Enforcement
Last May, AAG Varney announced that the Division would go “back to the basics” of Section 2 enforcement and would withdraw the Section 2 report that had been issued in September 2008. Concerned that the report increased the difficulty for government enforcers to successfully challenge illegal monopolization, AAG Varney emphasized the need for strong enforcement to prohibit predatory or unjustified acts by companies with market power. In addition to the public actions it has taken in the past year, the Division continues to investigate a variety of single-firm and concerted conduct that could violate the antitrust laws.
May 11, 2009
Vigorous Antitrust Enforcement in this Challenging Era - Remarks by Christine Varney as Prepared for the Center for American Progress
Successful Settlements in Non-Merger Actions
The Antitrust Division challenged several illegal agreements in the real estate and electricity markets. In May 2009, the Division obtained a favorable settlement with Consolidated Multiple Listing Service Inc. that requires it to change its rules to allow low-priced and innovative brokers to compete with traditional brokers in the Columbia, South Carolina area.
In February 2010, the Division obtained a settlement requiring KeySpan Corporation to disgorge $12 million in profits, marking the first time the Division has obtained a disgorgement remedy. KeySpan and a financial services company had entered into an agreement in January 2006 that gave KeySpan a financial interest in sales of electricity capacity by its largest competitor. The Division concluded that the agreement had likely resulted in higher retail electricity prices in New York City by eliminating KeySpan’s incentive to sell its own electricity capacity at lower prices.
The Division continues to vigorously enforce the requirements of the HSR Act. In January 2010, the Division required Smithfield Foods to pay civil penalties totaling $900,000 for its violations of the HSR Act’s premerger waiting period requirements.
In the coming year, the Division looks forward to continuing to use its many tools to protect consumers in important industries both from mergers that may substantially lessen competition and from conduct that prevents the competitive process from driving our economy forward.