Antitrust Lawyer Blog Commentary on Current Developments

Articles Tagged with upfront buyer

On April 3, 2017, the Department of Justice (“DOJ”) announced that that it forced Danone to divest its Stonyfield Farms business in order for Danone to proceed with its $12.5 billion acquisition of WhiteWave.

Prior to the merger, Danone did not produce or sell organic milk in the United States, however, it produced and sold organic yogurt through its United States subsidiary, Stonyfield Farms. WhiteWave produces and sells organic milk and yogurt in the United States.

According to the DOJ’s complaint, however, as a result of Danone’s long-term strategic partnership and supply and licensing agreements with CROPP Cooperative (“CROPP”), WhiteWave’s primary competitor, the proposed acquisition would have provided incentives and opportunities for cooperative behavior between the two leading purchasers of raw organic milk in the northeast (CROPP and WhiteWave”), which likely would have resulted in farmers receiving less favorable contract terms for the purchase of their raw organic milk.  So, the DOJ had buyer power concerns.

On May 13, 2016, the FTC approved a merger American Air Liquide Holdings, Inc. and Airgas, Inc. as long as the parties divest certain production and distribution assets to settle the FTC’s allegations that their proposed merger likely would have harmed competition and led to higher prices in several U.S. and regional markets.

Competitive Problem

According to the FTC’s complaint, the deal would eliminate direct competition between the two companies in certain markets that are already concentrated, increasing the likelihood that Air Liquide could unilaterally exercise market power.  The FTC’s complaint also alleged that the proposed acquisition would also make it more likely that remaining competitors, if any, could collude or coordinate their actions.  The FTC also alleged that entry was not likely happen quick enough to sufficiently counteract any anticompetitive price increases.  As a result, customers would likely pay higher prices for industrial gases in various regional and national markets within the United States.