On May 26, Intelsat Ltd. announced that it received clearance from the Department of Justice for its $6.4 billion cash-and-debt deal to buy rival PanAmSat Holdings Corp. Under the terms, Intelsat would pay $25 in cash for each share of PanAmSat and assume about $3.2 billion in debt. The Bermuda-based satellite communications company said last August it would buy PanAmSat in a deal that would give the company nearly two dozen satellites above North America.
On May 26, the Senate approved by unanimous consent Robert McDowell's appointment as an FCC commissioner. The vote came after a tussle over a series of holds placed on his nomination in the past couple of months. McDowell's arrival will bring the Commission to a full slate of 5 members for the first time in more than year and give FCC Chairman Kevin Martin a Republican majority.
On May 23, the Department of Justice approved Precision Castparts Corp.'s $540 million cash acquisition of Special Metals Corp. Huntington, West Virginia based Special Metals is the world's biggest maker of nickel-based alloys and superalloys for forged products. Precision, based in Portland, Oregon, is one of Special Metals' customers and manufactures components for the aerospace, power and automotive markets. Precision aims to cut costs by bringing its alloy production in-house.
On May 23, Attachmate Corp. received clearance from the Department of Justice for its $495 million cash purchase of San Jose-based NetlQ Corp. The deal was announced in April. Seattle-based Attachmate is a privately held vendor of software used to link mainframes to PCs. The takeover removes ailing NetIQ from the ranks of publicly traded companies. NetlQ has struggled to integrate several acquisitions and faced mounting competition in the market for software used to manage corporate computer networks.
On May 23, the South Korean Fair Trade Commission ("KFTC") rejected an objection lodged by Microsoft in March over a ruling that the company should unbundle its media player and messaging service from Windows software, echoing a similar decision made by the European Commission in 2004 that it unbundled its media player and messaging program in its European software packages. In December 2005, the KFTC fined Microsoft approximately $34.3 million, the largest fine ever imposed on a foreign firm.
On May 22, it was announced that the government of New Zealand was reviewing the Commerce Act, which encompasses its antitrust laws that cover mergers and acquisitions in order to ensure that New Zealand companies would be able to compete globally. Commerce Minister Lianne Dalziel reportedly said that the government may consider granting increased powers to the Commerce Commission, which functions as the New Zealand antitrust regulator, to approve deals that could have a broader public benefit even if such deals reduce competition. Dalziel also told reporters that there were concerns within the New Zealand business community that businesses could not achieve significant scale to compete globally. The announcement was welcomed by economists and competition lawyers within the country.
FTC Releases Report on its “Investigation of Gasoline Price Manipulation and Post-Katrina Gasoline Price Increases”
On May 22, the Federal Trade Commission today issued a report entitled “Investigation of Gasoline Price Manipulation and Post-Katrina Gasoline Price Increases.” The report details the results of an intensive, Congressionally-mandated Commission investigation into whether gasoline prices nationwide were “artificially manipulated by reducing refinery capacity or by any other form of market manipulation or price gouging practices” and into gasoline pricing by refiners, large wholesalers, and retailers in the aftermath of Hurricane Katrina.
On May 22, it was reported that FCC Chairman Kevin Martin is putting pressure on senior agency staff to complete their review of the $17.6 billion carve-up of Adelphia Communications Corp. (“Adelphia”) by Comcast Corp. (“Comcast”) and Time Warner Inc. (“Time Warner”). According to sources close to the agency, Martin hopes to receive a draft of an order clearing the transaction, with some conditions, before the end of May. If Martin signs off, that order would then be distributed to the four other FCC commissioners. Martin expects his colleagues would approve the deal a few weeks later.
On May 17, the DOJ’s Antitrust Division granted early termination to Sprint Nextel’s acquisition of UbiquiTel, the exclusive provider of Sprint digital wireless mobility communications network products and services under the Sprint brand name to midsize markets in the Western and Midwestern United States. UbiquiTel and Sprint Nextel announced on April 20th that Sprint Nextel would acquire UbiquiTel for approximately $1.3 billion, including the assumption of approximately $300 million of net debt.
On May 16 and May 17, the Japanese Fair Trade Commission (FTC) raided approximately 20 contractors over bid-rigging allegations in projects ordered by the Japanese Defense Facilities Administration Agency as well as engineering and construction works at a U.S. military facility in Iwakuni, Yamaguchi Prefecture in conspiracy with officials of the Defense Facilities Administration Agency.
On May 16, the European Commission raided 20 gas companies across five countries following suspicions that the targeted firms restricted “access to pipeline and storage facilities” and engaged in certain “concerted practices between incumbents that can be described as market-sharing,” according to an EC spokesperson. Among the companies raided were Germany’s RWF, France’s Gaz de France, Austria’s OMV, and Belgium’s Fluxys. Companies in Italy were also raided.
On May 15, the DOJ announced that David L. Meyer has been appointed to serve as the Deputy Assistant Attorney General in charge of civil enforcement for the Division. Meyer will oversee three of the Division's civil sections. Previously, Meyer served the Antitrust Division as Special Assistant to Assistant Attorney General Charles F. Rule from 1987 to 1989. Meyer clerked for Judge Ralph K. Winter of the U.S. Court of Appeals for the Second Circuit from 1986 to 1987.
On May 12, the DOJ’s Antitrust Division announced that it reached a settlement agreement with Mittal Steel Company N.V. regarding its offer to acquire Arcelor S.A. The agreement would resolve potential antitrust concerns in the event that the Antitrust Division concludes the combination of Mittal and Arcelor raises anticompetitive concerns. Under the agreement, the DOJ will continue to investigate the competitive implications of the combination of Mittal and Arcelor -- the world's two largest steel producers. The agreement requires Mittal to divest Dofasco Inc., currently owned by Arcelor, to ThyssenKrupp AG in the event the DOJ determines the combination of Mittal and Arcelor is likely to result in a substantial lessening of competition. If Mittal acquires Arcelor but is unable to divest Dofasco, the agreement requires Mittal to divest certain alternative assets to a buyer acceptable to the DOJ. The DOJ has determined that the divestiture of either Dofasco or the alternative assets would address the potential competitive problem identified by the Antitrust Division.
On May 12, the DOJ told the U.S. District Court for the District of Columbia that it is necessary to extend the term of certain portions of the Microsoft final judgment by at least two years. The DOJ said that an extension is necessary due to Microsoft's difficulty in improving the technical documentation it provides to licensees. Section III.E of the final judgment requires that Microsoft make available to competing server software developers, on reasonable and non-discriminatory terms, certain technology used by Microsoft to make its server operating systems interoperate with client PCs running the Windows operating system. The DOJ has stated that its goal is to make the technical documentation being developed by Microsoft as consistent as possible under the final judgment in the United States and under the licensing program provided for by the decision of the European Commission.
On May 11, the DOJ cleared KLA-Tencor Corp.'s acquisition of ADE Corp. KLA supplies integrated circuit manufacturers with equipment to manage their chip wafer fabrication process while ADE makes technology to detect defects in semiconductor wafers and computer disks. The deal was announced shortly after KLA announced it abandoned plans to buy August Technology Corp.
On May 11, Italy’s antitrust authority ruled that Prime Minister Berlusconi did not violate conflict of interest rules when his government approved subsidies to Italians who purchase digital television decoders. While critics of the subsidies claimed that they favored Mediaset SPA, Berlusconi’s own television broadcasting empire, the antitrust authority found that the €10 million ($12.7 million) went to two of Italy’s 20 regions and were to pay for only certain types of decoders, meaning that the overall financial impact on the market was minimal. The European Commission is also investigating the matter due to concerns that the grants distort fair business competition because they are available only for traditional broadcast television and not satellite broadcasts.
On May 9, a judge with the U.S. Court of Appeals for the D.C. Circuit raised questions about EarthLink, Inc.'s (“EarthLink”) assertion that the FCC erred when it stopped requiring the Bell operating companies (“BOCs”) to make available unbundled network elements for the broadband market because there isn't any competition in the sector. The judge noted that telcos are not the leading provider of high-speed Internet services nationally. Judge David B. Sentelle asked EarthLink attorney Mark O'Connor how the Bells could be the dominant player in the market, as the Internet service provider charged, when they have less of the market than cable modem service providers.
On May 5, the Federal Trade Commission announced that at the conclusion of the International Competition Network “ICN” conference in Cape Town, South Africa, significant accomplishments were made, including the completion of a Merger Guidelines Workbook and a new agenda that includes a working group on unilateral conduct.
On May 2, AT&T Inc. (“AT&T”) and BellSouth Corp. (“BellSouth”) confirmed that the DOJ had issued a second request with respect to AT&T's nearly $90 billion acquisition of BellSouth. This transaction will make AT&T the dominant phone carrier in 22 states and comes on the heels of two other large telecom deals and amid growing concern about the impact of consolidation on control of America's rapidly growing broadband communications networks. Last year, regulators approved SBC Communications Inc.'s $16 billion merger with AT&T Corp., forming ATT Inc., and Verizon Communications Inc.'s $6.75 billion takeover of MCI Inc. The Federal Communications Commission also must approve the deal.
Speaking to the Tennessee Telecommunications Association on May 2, FCC Commissioner Deborah T. Tate said that any revamping of the 1996 Telecommunications Act should include language that permits the government to play a limited role in creating fair rules, while allowing the marketplace to drive industry development and innovation in such areas as broadband and advanced services. According to Tate, ensuring competition is an important goal for any telecom bill passed by Congress this year. While some regulation is necessary, it has to let companies “take into account their business plans and the economic realities they face” so they can operate their business, she said. “A light regulatory touch is particularly critical to encouraging the deployment and use of broadband.”