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Jun

20

Buyer Beware: Consummating Non-HSR Reportable Mergers May Prove Costly In The End

Posted by : Matthew Wild | On : June 20, 2014

Category: Antitrust, Government Investigations, Mergers and Acquisitions, U.S. Department of Justice (Antitrust Division)

A recent speech by Deputy Assistant Attorney General Leslie Overton emphasized the risk in consummating mergers that do not have to be reported under the HSR Act, but have (or may have) adverse effects on competition.  Ms. Overton emphasized that the Antitrust Division devotes substantial resources to, and challenges, non-reportable mergers.  The Antitrust Division learns about non-reportable mergers from a number of sources, including customers, industry contacts and trade publications.  A successful government challenge to a merger can have drastic consequences for the buyer.  The remedy is generally divestiture of key assets and not rescission.  The buyer may have paid substantial money for these assets, but will lose them without receiving much value.  In addition, any profits earned because of adverse effects of competition are subject to disgorgement.  And perhaps most significantly, the buyer and the seller can be sued for treble damages in class actions brought by injured customers.  In an article entitled Buyer Beware: Consummating Non-HSR Reportable Mergers May Prove Costly In The End, published by the ABA Antitrust Litigator, the author herein discusses these risks.  In sum, parties to non-reportable transactions face significant risks if they consummate an anti-competitive merger.

Author: Matthew S. Wild (Wild Law Group PLLC)

Aug

29

District of Columbia Sues ExxonMobil and Its DC Distributors, Seeking to End Their Exclusive-Supply Agreements and Lower Retail Gasoline Prices

Posted by : Matthew Wild | On : August 29, 2013

Category: Antitrust, Government Investigations, State Antitrust and Consumer Protection Claims, State Attorneys General

PRESS RELEASE:

“WASHINGTON, D.C. – The District of Columbia filed a lawsuit against ExxonMobil Oil Corporation and its gasoline distributors for Washington, D.C., to stop enforcement of exclusive-supply agreements that make one group of affiliated distributors the only suppliers of Exxon-branded gasoline in D.C., Attorney General Irvin B. Nathan announced today. The complaint, filed in D.C. Superior Court, alleges that the exclusive-supply agreements violate the District’s Retail Service Station Act.

The affiliated distributors – Capitol Petroleum Group, LLC, Anacostia Realty, LLC, and Springfield Petroleum Realty, LLC – are the exclusive gasoline suppliers for about 60% of the 107 gasoline stations in D.C., including all 31 Exxon stations, 19 of 20 Shell stations, all 12 Valero stations, and 3 unbranded stations.  The District’s lawsuit challenges agreements that make these affiliated distributors the exclusive suppliers of Exxon-branded gasoline for the 27 independently-operated Exxon stations in D.C., or about 25% of the gasoline stations in the city.

The exclusive-supply agreements, or earlier versions of them, were established by ExxonMobil and were transferred in 2009 to the affiliated distributors, along with ExxonMobil’s ownership of the 30 D.C. Exxon stations to which the agreements then pertained.  According to the District’s complaint, these supply agreements can now be enforced either by the affiliated distributors or by ExxonMobil through its separate agreements with other area distributors.

The District alleges that the exclusive-supply agreements allow the affiliated distributors to “set the wholesale prices paid for Exxon-branded gasoline in D.C., depriving D.C. residents . . . of the benefits of competition in the wholesale supply of Exxon-branded gasoline.”

“Under the District’s gasoline marketing law, a retail gasoline dealer is free to purchase a brand of gasoline from any supplier of the brand,” Attorney General Nathan said.  “Our suit seeks to end these unlawful supply restrictions, increase wholesale competition, and bring down retail prices at the pump.”

Jul

10

Apple Found Liable For Price Fixing of E-Books

Posted by : Matthew Wild | On : July 10, 2013

Category: Antitrust, Government Investigations, Section 1 (Sherman Act), State Attorneys General

Today, the United States District Court for the Southern District of New York held, “Plaintiffs have shown that Apple conspired to raise the retail price of e-books and that they are entitled to injunctive relief. A trial on damages will follow.”  The opinion appears here: Apple decision.

Author: Matthew S. Wild, Wild Law Group PLLC

Apr

11

Department of Justice Sues Apple and Publishers for Price-Fixing E-Books and Settles with Three Other Publishers

Posted by : Matthew Wild | On : April 11, 2012

Category: Antitrust, Consent Decrees, Government Investigations, Section 1 (Sherman Act), U.S. Department of Justice (Antitrust Division)

Today, the Antitrust Division sued Apple and a number of publishers for price fixing e-books.  The government alleges that Apple and the publishers agreed to use Apple as their agent – paying Apple a commission and allowing Apple to set the prices.  Apple set the prices at $9.99 with the support of the publishers.  The government alleges that this conduct constitutes price-fixing and is a per se violation of § 1 of the Sherman Act.  The action was brought in the United States District Court for the Southern District of New York where a related multi-district litigation class action is pending, brought  by direct purchasers.  Today, the government also filed a motion for approval of a settlement with three other publishers.  In addition to important reporting requirements, the proposed final judgment provides that “[f]or two years, Settling Defendants shall not restrict, limit, or impede an E-book Retailer’s ability to set, alter, or reduce the Retail Price of any E-book or to offer price discounts or any other form of promotions to encourage consumers to Purchase one or more E-books.”

The E-Books Complaint and E-Books Settlement are available here.

 

Jan

19

California Attorney General Halts Resale Price Maintenance

Posted by : Matthew Wild | On : January 19, 2011

Category: Antitrust, Consent Decrees, Government Investigations, Per Se Analysis, Resale Price Maintenance, Rule of Reason, State Antitrust and Consumer Protection Claims, State Attorneys General

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On January 11, 2011, Bioelements and the California Attorney General entered into a consent decree that enjoins Bioelements from entering into any agreements with retailers and distributors concerning what price they may charge for Bioelements’ products and to send notice to all retailers and distributors that any such polices are immediately rescinded.  The action was brought in California Superior Court under the Cartwright Act, which the California Attorney General has interpreted to provide per se treatment for resale price maintenance in contrast to Section 1 of the Sherman Act after Leegin.  See March 12, 2010 Post.  Notably, the injunction extends to all of Biolelements’ transactions even if they take place outside of California.  Bioelements also had to pay $51,000 in fines and expenses.  This action is a cautionary tale that companies cannot rely on Leegin that resale price maintenance will be subject to lenient rule of reason treatment.  A number of state attorneys general have brought resale price maintenance actions under their state laws and Maryland amended its antitrust law expressly to prohibit resale price maintenance.

Jan

14

AT&T Settles Civil Contempt Claim with the DOJ for $2 Million

Posted by : Matthew Wild | On : January 14, 2009

Category: Antitrust, Consent Decrees, Government Investigations, Mergers and Acquisitions, U.S. Department of Justice (Antitrust Division)

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AT&T settled a civil contempt claim with the DOJ in connection with its failure to comply with the divestiture requirements in a consent decree governing its acquisition of Dobson Communications Corporation.  In particular, AT&T failed to keep confidential customer information relating to the businesses that had to be divested.  The Antitrust Division’s press release appears below:

WASHINGTON — AT&T Inc. has agreed to pay more than $2 million as part of a civil settlement with the Department of Justice that resolves AT&T’s alleged violations of two court orders entered in connection with AT&T’s acquisition of Dobson Communications Corporation.

The Department today filed a petition in the U.S. District Court for the District of Columbia asking it to find AT&T in civil contempt of a 2008 consent decree and a related court order. At the same time, the Department filed a settlement agreement and order, subject to court approval, that would resolve the Department’s concerns. The payment to the United States includes reimbursement to the government for the cost of its investigation into AT&T’s alleged violations.

“It is imperative that companies fully abide by their court-ordered obligations in order for our settlements to be effective in preserving competition and protecting consumers,” said Deborah A. Garza, Acting Assistant Attorney General in charge of the Department’s Antitrust Division. “When companies fail to comply with a court order, the Antitrust Division will take swift and certain action to ensure that companies fulfill their responsibilities.”

Under the consent decree entered by the court in March 2008, AT&T was required to divest mobile wireless telecommunications businesses in three rural service areas (RSAs)  two in Kentucky and one in Oklahoma. Pending divestiture, a management trustee was appointed to oversee the businesses to be divested. Under the consent decree and a related court order, AT&T was required to take all steps necessary to ensure that the divested businesses were operated independently of AT&T and that AT&T did not influence how they were managed. AT&T was also required to take all reasonable efforts to preserve the confidentiality of information material to the operation of the divested businesses and not give unauthorized personnel access to such information.

According to the petition filed by the Department, AT&T failed to fulfill its obligations under the two court orders. The petition alleges that AT&T failed to separate confidential customer account information of the divested businesses from its own customer records and to take other actions needed to prevent unauthorized disclosure. Consequently, AT&T personnel obtained unauthorized access to the divested businesses’ competitively sensitive customer information and in some situations used it to solicit and win away the divested businesses’ customers. The petition further alleges that AT&T, without authorization by the management trustee, waived early termination fees for several customers of the divested businesses to facilitate switching their wireless service from the divested businesses to AT&T.

Dec

22

Investment Funds Fined for Violating HSR Pre-Merger Notification Requirements

Posted by : Matthew Wild | On : December 22, 2008

Category: Antitrust, Consent Decrees, Government Investigations, HSR Review, U.S. Department of Justice (Antitrust Division)

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Antitrust Division’s press release:

“WASHINGTON — Two related investment funds will pay civil penalties totaling $800,000 to settle charges that they violated premerger reporting requirements, the Department of Justice announced today.

The Department’s Antitrust Division, at the request of the Federal Trade Commission, filed a civil lawsuit today in U.S. District Court in Washington, D.C., against ESL Partners L.P. and ZAM Holdings L.P. for violating the notification requirements of the Hart-Scott-Rodino (HSR) Act of 1976. At the same time, the Department filed a proposed settlement that, if approved by the court, will settle the charges. Under the terms of the settlement, ESL Partners has agreed to pay $525,000, and ZAM Holdings $275,000, in civil penalties.

ESL Partners, based in Greenwich, Conn., and ZAM Holdings, based in New York City, are investment funds with holdings in numerous companies. The investment decisions for both ESL Partners and ZAM Holdings were made by RBS Partners, of Greenwich.

According to the complaint, ESL Partners and ZAM Holdings failed to comply with the antitrust premerger notification requirements of the HSR Act before acquiring voting securities of AutoZone Inc., based in Memphis, Tenn., in September and October of 2004. As a result of these acquisitions, ESL Partners and ZAM Holdings each held AutoZone voting securities valued in excess of the $50 million HSR reporting threshold then in effect. The complaint alleges that ESL Partners was in violation of the HSR Act from Sept. 28, 2004, through Feb. 28, 2005, and that ZAM Holdings was in violation from Oct. 12, 2004, through March 2, 2005.

The Hart-Scott-Rodino Act of 1976, an amendment to the Clayton Act, imposes notification and waiting period requirements on individuals and companies over a certain size before they consummate acquisitions resulting in holding stock or assets above a certain value. The violations occurred when the HSR reporting threshold was $50 million. Since March 2005, the threshold has been adjusted annually to reflect changes in gross national product.

The Act permits a federal court, in a lawsuit brought by the Department, to assess a civil penalty of up to $11,000 for each day a person or company is in violation.”

This action shows the agencies’ vigilance in enforcing compliance with the HSR Act.  Unwary investment funds can violate the HSR Act when they begin to engage in sizeable transactions.  They have done so on many occassions.  Unlike the securities laws with which they are generally familar, the HSR Act requires the filing before acquiring the outstanding securities.  It is thus important for investmnet funds to obtain antitrust compliance counseling.

Dec

08

Second New York Criminal Trial Begins Against Marsh Executives

Posted by : Matthew Wild | On : December 8, 2008

Category: Antitrust, Criminal, Government Investigations, New York Cases, State Antitrust and Consumer Protection Claims, State Attorneys General

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On December 2, 2008, three Marsh executives went on trial in the Supreme Court of the State of New York (New York County) on charges of violating the Donnelly Act in connection with bid rigging of insurance policies.  As you may recall (and discussed on the February 22, 2008 Post), two Marsh executives were convicted on Donnelly Act violations after a 10 month trial.  These cases have been brought by the New York Attorney General.  Marsh paid $850 million to settle and another Marsh executive pleaded guilty.

Nov

05

Google Abandons Deal with Yahoo in Response to Antitrust Concerns

Posted by : Matthew Wild | On : November 5, 2008

Category: Antitrust, Government Investigations, U.S. Department of Justice (Antitrust Division)

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On July 2, 2008, this blawg reported that the Antitrust Division issued civil investigative demands to investigate the potential competitive effects from an agreement between Google and Yahoo that would allow Google to post advertisements on Yahoo in exchange for part of the revenue.  Google announced today that it has withdrawn from the transaction in response to concerns from antitrust regulators.