On December 3, 2015, the Department of Justice announced that Thai Union Group P.C.L., owner of Tri-Union Seafoods LLC, doing business as Chicken of the Sea International, and Bumble Bee Foods LLC abandoned their deal after the DOJ informed the companies it had serious concerns that the proposed transaction would harm competition.
The DOJ said that Thai Union’s proposed acquisition of Bumble Bee would have combined the second and third largest sellers of shelf-stable tuna in the United States in a market long dominated by three major brands, as well as combined the first and second largest domestic sellers of other shelf-stable seafood products.
Bill Baer, head of the Antitrust Division, had some strong words saying that “consumers are better off without this deal.” He added that “our investigation convinced us – and the parties knew or should have known from the get go – that the market is not functioning competitively today, and further consolidation would only make things worse.”
Clearly, the DOJ’s tough stance against this merger demonstrates that it was willing to file a complaint to block the transaction. Merger enforcement continues to be a priority for the Antitrust Division, but does this support the notion that the DOJ is more aggressive and more willing to litigate anticomopetitive mergers than in the past? I don’t believe so. While we do not have a complaint to review because the parties walked away, it appears that the market for shelf stable seafood products is highly concentrated as the market is dominated by only three players. Therefore, the merger would have reduced competition from three competitors to two. Here, there was a structural presumption of harm. In such a situation, the DOJ is unlikely to approve a transaction without a credible defense. Moreover, recent merger enforcement efforts by the DOJ suggest that this transaction was dead on arrival yet the parties attempted to do this deal anyway. Because of the merger wave, companies are proposing more strategic deals that raise significant antitrust concerns. This appears to be another example of a situation where deal makers have become more aggressive and that the Antitrust Division was being put to the test. The Division, however, has shown again that it will not shy away from anticompetitive mergers.