DOJ Tag Archives — Page 5 of 5 — Antitrust Lawyer Blog

May 7, 2015

Mergers That Diminish Innovation Present Deal Risk

On April 27, 2015, the Department of Justice’s (“DOJ”) Antitrust Division released a statement regarding Applied Materials Inc. (“AMAT”) and Tokyo Electron’s (“TEL”) joint announcement that they abandoned their merger. The Antitrust Division’s statement indicates that the transaction was blocked because the combination would have diminished innovation. In other words, the Antitrust Division was concerned about the potential loss of head to head competition in the development of future cutting edge semiconductor products and made no allegation that the combined firm would have monopolized any existing or actual product market. The Antitrust Division’s tough stance against AMAT indicates that it is willing to scrutinize and challenge deals that raise longer-term anticompetitive concerns related to future competition even if there is no past pricing evidence that may predict that the merger will result in higher prices regarding actual products.

Background

On September 24, 2013, AMAT and TEL announced a definitive agreement to merge via an all-stock combination, which valued the new combined company at approximately $29 billion. The companies claimed that securing regulatory clearances should not be a problem because their product offerings were highly complementary with few overlaps. Indeed, AMAT was strong in markets where Tokyo Electron was not and vice versa. In areas, where they directly competed, the combined shares were low. Nevertheless, the transaction would have combined AMAT, the largest semiconductor equipment supplier in the world, with TEL, the third largest equipment supplier.

March 22, 2015

DOJ Obtains Disgorgement of Profits for Illegally Consummated Merger

by Doyle, Barlow & Mazard PLLC

On March 16, 2015, the Department of Justice (“DOJ”) and New York State Attorney General announced that they reached a settlement with Coach USA Inc., City Sights LLC and their joint venture, Twin America LLC, to remedy competition concerns in the New York City hop-on, hop-off bus tour market. This case is noteworthy because it is the first time the DOJ’s Antitrust Division sought and obtained disgorgement in a consummated merger matter.

Background

In March of 2009, Twin America, LLC was formed by Coach USA, Inc. and City Sights, LLC. Coach USA and City Sights were operators of double-decker tour buses that had aggressively competed against each other to attract customers, which were and are for the most part, visitors/sightseers in New York city. Indeed, the Antitrust Division’s complaint alleged that prior to the formation of Twin America, LLC, Coach USA, the long-standing market leader through its “Gray Line New York” brand, and City Sights, a firm that launched the “City Sights NY” brand in 2005, accounted for approximately 99 percent of the hop-on, hop-off bus tour market in New York City. Between 2005 and early 2009, the two companies engaged in vigorous head-to-head competition on price and product offerings that directly benefited consumers.

December 11, 2014

DOJ’s Approval of Continental AG’s Acquisition of Veyance Requires Remedy of a Vertical Concern

by Doyle, Barlow & Mazard PLLC

On December 11, 2015, the Department of Justice (“DOJ”) approved Continental AG’s $1.8 billion acquisition of Veyance Technologies with conditions. The settlement agreements requires Continental to divest the North American commercial vehicle air springs business of Veyance and to waive an exclusivity requirement in its supply agreement to resolve a vertical antitrust concern.

The Antitrust Division was concerned that the merger of rivals in the supply of new and replacement air springs for commercial vehicles in North America would have eliminated one of only three significant suppliers of air springs. Commercial vehicle air springs are used in trucks, trailers and buses to provide stability to the suspension system, keep the tires in contact with the road and provide comfort and reduced driver fatigue in cabins and seats.

The Antitrust Division was concerned that the creation of a virtual duopoly would have facilitated anticompetitive coordination between the two remaining suppliers and risked price increases and reductions in the quality of service by limiting availability or delivery options to original equipment manufacturers. Similarly, the Antitrust Division was concerned that the proposed acquisition would have reduced the number of significant suppliers of replacement air springs to commercial vehicle owners, which likely would have lessened competition in the North American aftermarket for commercial vehicle air springs.

November 8, 2014

Antitrust Division Challenges Merger to Monopoly in Pre-Show Services and Cinema Advertising

by Doyle, Barlow & Mazard PLLC

On November 3, 2014, the Department of Justice’s Antitrust Division challenged National CineMedia, Inc.’s (“NCM”) proposed acquisition of Screenvision by filing a lawsuit in federal court. The transaction would have combined the only two significant cinema advertising networks in the United States.

Background

On May 5, 2014, NCM, Inc. entered into the Merger Agreement to acquire Screenvision for $375 million. NCM, Inc. is the managing member and owner of 45.8% of National CineMedia, LLC (“NCM”), the operator of the largest in-theatre digital media network in North America. Following the merger, NCM, Inc. was to evaluate whether to contribute the Screenvision assets to NCM LLC. Technically, it is not America’s largest cinema advertiser buying the industry’s second largest, but the largest member in the largest cinema advertiser making the purchase. It is a distinction without a difference because the bottom line is the deal would have combined the only two significant cinema advertising networks.

November 5, 2014

DOJ Blocks Software Merger

by Doyle, Barlow & Mazard PLLC

On November 5, 2014, the DOJ announced that Embarcadero Technologies Inc. and CA Inc. terminated Embarcadero’s proposed acquisition of CA Inc.’s ERwin data modeling product suite.

Background

In March of 2014, Embarcadero Technologies announced that it would acquire CA Inc.’s ERwin data modeling suite. Data modeling software is used to view and streamline enterprise data, centralize data management and reduce data redundancies.

November 1, 2014

DOJ CONTINUES TO PROSECUTE INVIDUALS WHO RIG BIDS AT REAL ESTATE FORECLOSURE AUCTIONS

by Doyle, Barlow & Mazard PLLC

The Department of Justice’s Antitrust Division continues to send a strong message to individuals engaged in conspiracies to rig public real estate foreclosure auctions through criminal enforcement. Punishing real estate investors engaged in illegal activity that harms struggling homeowners and financial institutions continues to be a priority for the Antirust Division.

Alabama Public Real Estate Auction Investigation

On October 31, 2014, the Antitrust Division announced that an Alabama real estate investor pleaded guilty for his role in a conspiracy to commit mail fraud related to public real estate foreclosure auctions held in southern Alabama.

October 30, 2014

DOJ Approves Broadcast Merger With Conditions

by Doyle, Barlow & Mazard PLLC

On October 30, 2014, the Antitrust Division filed a complaint along with a proposed settlement agreement that allows Media General Inc.’s acquisition of LIN Media, LLC for $1.5 billion to be consummated, as long as the parties divest certain broadcast stations.

Background

Media General’s local broadcast stations and LIN’s stations in various designated marketing areas (“DMA”) around the country compete head-to-head in the sale of broadcast television spot advertising. The Antitrust Division determined that Media General and LIN’s broadcast stations located in the Birmingham, Alabama, DMA; Savannah, Georgia, DMA; Mobile, Alabama/Pensacola, Florida DMA; Providence, Rhode Island/New Bedford, Massachusetts, DMA; and Green Bay/Appleton, Wisconsin, DMA competed head to head in the sale of broadcast television spot advertising to local and national advertisers.

October 10, 2014

DOJ Approves Cyber Security Data Sharing Platform

by Doyle, Barlow & Mazard PLLC

On October 2, 2014, the Department of Justice’s Antitrust Division announced through a business review letter CyperPoint International, LLC’s cyber intelligence data-sharing platform known as TruSTAR, as proposed, does not raise antitrust concerns that would warrant a challenge.

Background

Earlier this year, the DOJ and the Federal Trade Commission issued a joint policy statement recognizing that private entities may share cyber threat information without running afoul of the antitrust laws. In that policy statement, the agencies emphasized what competent antitrust counsel already knows — that the antitrust laws are not an impediment to legitimate private-sector initiatives to share specific information about cyber incidents and mitigation techniques to defend against cyber attacks.

April 1, 2012

Humana Settles With DOJ Regarding Arcadian

by Doyle, Barlow & Mazard PLLC

On March 27, 2012, the DOJ announced it would require Humana, a leading health insurer in the United States with 2010 revenues of approximately $33.6 billion, and Arcadian, which had approximately 62,000 MA members in 15 states and 2010 revenues of $622 million, to divest assets relating to Arcadian’s MA business in parts of five states in order for Humana to proceed with its acquisition of Arcadian. The DOJ required divestitures of health plans in 51 counties and parishes in Arizona, Arkansas, Louisiana, Oklahoma and Texas. The transaction, as originally proposed, likely would have resulted in higher prices, fewer choices and lower quality MA plans purchased by Medicare beneficiaries.

According to the DOJ, individuals eligible for Medicare, primarily senior citizens, may elect to enroll in a privately provided MA plan instead of traditional Medicare. In establishing the MA program, Congress intended that vigorous competition among private MA insurers would lead insurers to offer seniors a rich set of affordable benefits, provide a wide array of health-insurance choices, and be responsive to the demands of seniors. Approximately 71,000 people were enrolled in MA plans in 51 counties and parishes, accounting for more than $700 million in annual commerce.

The transaction as proposed would have eliminated competition between Humana and Arcadian, two of the few significant sellers of MA plans in 45 of the counties and parishes, allowing Humana to increase prices and reduce the quality of MA plans sold to seniors there. The original deal would have created a combined company controlling between 40% and 100% of the MA health insurance market in these counties and parishes.