Protecting the Pocketbook: The Antitrust Division Saves Hardworking Consumers Millions

Division Update Spring 2016

The Antitrust Division continued its aggressive efforts to protect competition for products and services that Americans rely on every day. The Division’s recent successes against Apple and the proposed GE-Electrolux appliances merger have captured a lot of the headlines, but over the course of the last year the Division has often intervened to protect American consumers. Three particularly important cases involved competition for broadband internet and video content; everyday supermarket staples; and personal loans often used to cover unexpected expenses and consolidate debts.

Comcast/Time Warner

Cables

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High-speed internet connections have changed the way Americans watch television by providing exciting new programming choices. The growth of streaming services, such as Netflix, Hulu, and Amazon Prime, along with innovation from existing networks like CBS and HBO, have allowed millions of consumers to “cut the cord” outright, or at least reduce their dependence on traditional cable and satellite providers. Consumers benefit from lower prices, new original programming, and access to vast libraries of older content.

In February 2014, Comcast—the nation’s largest cable and broadband internet provider—agreed to buy one of its largest competitors, Time Warner Cable, for $45.2 billion. This merger would have expanded Comcast’s U.S. video and broadband internet footprint to approximately 30 million homes.

After the merger, Comcast would have controlled the cable and internet connections to 30% of all pay TV households—including the majority of households in the largest cities most important to advertisers—and nearly 60% of U.S. high-speed broadband subscribers.

Working closely with our colleagues at the FCC, the Division examined the proposed merger and its effects on competition and innovation. Among other issues, the agencies considered whether the merger would allow Comcast to stifle competition from streaming services by creating an unavoidable gatekeeper between those companies and the millions of American consumers they are trying to reach.

After an extensive investigation, the Division concluded that allowing the merger to proceed would leave Comcast with too much control and with too few competitors, especially in light of Comcast’s incentive to reduce the competitive threat posed by streaming services.

Comcast and Time Warner abandoned their proposed merger in April 2015, after the Division informed them of its substantial concerns. As a result, millions of Americans can continue to benefit from choices enabled by broadband internet.

Chicken of the Sea/Bumble Bee

Cans

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Canned tuna has long been a staple of the American diet. In 2013 alone, Americans spent over $1.7 billion on canned tuna and millions more on cans of other specialty seafood varieties. Tuna provides an affordable source of protein to millions of Americans every day.

Three major brands have long competed to satisfy the American appetite for tuna: StarKist, Bumble Bee, and Chicken of the Sea. These three brands account for almost 80% of canned tuna sales in the U.S.

In late 2014, Chicken of the Sea’s owner reached an agreement to acquire Bumble Bee. The purchase would have combined the U.S.’s second and third largest canned tuna suppliers into a new, market-leading firm. That firm would have been left with only StarKist as a meaningful competitor.

In December 2015, the parties abandoned the proposed merger after the Division expressed concerns that further consolidation in an industry where market concentration was already high would likely result in higher prices for the millions of Americans who buy canned tuna and specialty seafood products each year.

Now, when they go to the supermarket, American consumers continue to have three meaningful choices for canned tuna.

Springleaf/OneMain

Cash

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Consumers with limited access to credit from traditional banks often rely on personal installment loans to pay for unexpected expenses or to consolidate their debts. These loans cater to subprime borrowers and are often the only alternative for Americans who cannot afford loans from more traditional banks.

In March 2015, Springleaf Holdings, Inc., announced that it planned to acquire its main rival, OneMain Financial Holdings, LLC, for $4.25 billion. The merger would join the two largest personal installment lenders in the U.S., resulting in a combined company with over 1,800 branches in 43 states.

During its review, the Division discovered that Springleaf and OneMain specialized in the same types of $3,000–$6,000 loans, targeted the same customer base, and often operated branches within blocks of one another. The Division concluded that the combination of Springleaf and OneMain would likely harm borrowers in and around 126 towns across Arizona, California, Colorado, Idaho, North Carolina, Ohio, Pennsylvania, Texas, Virginia, Washington, and West Virginia.

States Where the Combination of Springleaf and OneMain Would Likely Harm Borrowers

States Where the Combination of Springleaf and OneMain Would Likely Harm Borrowers

To protect consumers in these communities from higher prices and more onerous loan terms, the Division sued to block the proposed merger. At the same time, the Division filed a proposed settlement that, if approved by the court, would resolve the Division’s competitive concerns. The settlement required Springleaf to divest 127 branches in 11 states with over $600 million in loans to proceed with the acquisition.

These proposed divestitures will preserve competition in all 126 communities and ensure that borrowers with limited access to traditional loans continue to enjoy the benefits of competition when they shop for personal installment loans.

Updated March 31, 2017

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