The federal antitrust agencies continue their emphasis on investigating, challenging, and unwinding consummated transactions that are not reportable under the Hart Scott Rodino (“HSR”) Act.
Most recently, on November 6, 2019, the Federal Trade Commission (“FTC”) issued an Opinion and Final Order in which the Commission upheld the Administrative Law Judge’s (“ALJ”) decision that Otto Bock HealthCare North America, Inc.’s (“Otto Bock”) acquisition of FIH Group Holdings, LLC (“Freedom”) was anticompetitive and that Otto Bock must divest Freedom’s entire business with the limited exceptions granted by the ALJ. The Commission’s order was approved by all five commissioners and continues the trend of unwinding consummated acquisitions that are deemed to be anticompetitive.
Indeed, corporate executives that enter into non-reportable acquisitions of their competitors must be aware that in some cases these deals entail significant antitrust risk. Just because the deal is not reportable under the HSR Act does not mean that the federal or state antitrust agencies won’t investigate, challenge, and unwind it. The FTC and DOJ have either completely unwound or forced partial divestitures in a number of small non-reportable deals including Magnesium Elektron/Revere Graphics, a $15 million deal; George’s/Tysons, a $3 million deal; Dun & Bradstreet’s $29 million deal; Charlotte Pipe/Star Pipe, a #19 million deal; Renown Health’s $3 and $4 million deals, BazaarVoice/Power Reviews; and the list goes on. In addition to forcing divestitures, the DOJ and the New York State Attorney General actually obtained disgorgement of profits in one non-reportable transaction. So, buyers must be aware of the risks of closing a non-reportable transaction that eliminates competition.