This excellent Practical Law article (click here) reviews 2013 federal merger enforcement actions brought by the Federal Trade Commission (“FTC”) and the Antitrust Division of the Department of Justice (“DOJ”). The article discusses mergers reviewed by either agency during the 2013 calendar year where the FTC or DOJ: (1) filed a complaint; (2) issued a consent decree; (3) released a decision to close an investigation; or (4) issued a press release regarding the parties' abandonment of a merger under review.
Highlights from the article include:
- The FTC had a total of 20 cases, which includes 3 litigated cases, 13 consent decrees, 3 decisions to close, and 1 abandoned deal. The DOJ caseload was much lighter and included 2 litigated cases, 3 consent decrees, 2 decisions to close, and no abandoned deals.
- During 2013, the FTC and DOJ continued to focus on consummated merger enforcement, which has been on the rise since the beginning of President Obama's administration. Most mergers that are reviewed after they close were exempt from Hart-Scott-Rodino (HSR) Act premerger filing requirements and, therefore, the parties may close without notifying the antitrust agencies about the deal. In calendar year 2013, the agencies challenged a total of seven consummated mergers, the vast majority of which were investigated by the FTC. The majority of these investigations involved
deals that were consummated over two years before the filing of a complaint by the agencies, and the deal values ranged from $5.5 million to $168 million.
- Not including the post-consummated enforcement activity, agency investigations delayed deal closings on average by about seven months. This number is determined by reviewing the time between the signing of the deal at issue and one of the following: (1) the filing of the complaint and proposed consent decree (which usually takes place on the same day); (2) issuing a decision to close; or (3) Abandoning of the deal.
- Out of the 27 mergers reviewed or challenged in 2013, only one was a vertical transaction, dealing with companies at different levels of the supply chain, rather than between horizontal competitors. The FTC reviewed deals in a wide variety of industries in 2013, including: healthcare; pharmaceuticals; oil and gas; aerospace and defense; retailers; manufacturing and machinery; and various service industries. The DOJ reviewed seven deals in 2013 in the following industries: telecommunications; media and entertainment; airlines; and service industries.
- Market shares and concentration levels remain factors to consider when analyzing a merger, as the antitrust agencies continue to review mergers that result in high market shares and highly concentrated markets under the Horizontal Merger Guidelines' thresholds. Additionally, 2013 merger enforcement shows that counsel should undertake a unilateral effects analysis when analyzing horizontal mergers, paying close attention to the level of competition between the merging parties even in markets with four or more remaining competitors.
- Unilateral effects analysis still rules the day. Of the 18 FTC and DOJ consent decrees filed in 2013: (a) Eleven dealt with a unilateral effects analysis only; (b) Five dealt with both a unilateral effects analysis and a coordinated effects analysis; and (3) Two dealt with a coordinated effects analysis only. Given that the majority of deals were analyzed under a unilateral effects analysis, it is not surprising that the agencies analyzed loss of head-to-head competition as a theory of competitive harm in 15 of the 18 consent decrees filed in 2013.
- The 2013 merger enforcement activity shows that the agencies are not bound by prior enforcement actions in the same industry if competition within the relevant markets has changed.