On April 30, 2008, the FTC obtained a consent decree against Talx Corporation for violating Section 7 of the Clayton Act. With $270 million in revenue last year, Talx Corporation is the leading provider of outsourced unemployment compensation management (“UCM”) and outsourced verification of income and employment services (“VOIE”). In 2002, Talx was the leader in the VOIE market and began a series of acquisitions in the VOIE and UCM markets that gave Talx market power. The Complaint alleged relevant markets of VOIE and UCM services and simply alleged that the markets were “highly concentrated and the consummated acquisitions increased concentration substantially.” The Complaint also challeged Talx’ alliance agreements in which ADP, Convergys and Ceridian outsource their VOIE and UCM to Talx. Although the preferred remedy is divestiture, the Consent Decree governed only Talx’ future conduct. Among other things, Talx must waive enforcement of certain non-compete and non-solicitation agreements, allow customers to rescind certain types of agreements, not allocate or divide markets for UCM services or discourage suppliers to refrain from doing business with competitors in the UCM market and allow ADP to outsource UCM services to competitors. It appears that Talx avoided substantial exposure for consummating transactions that ultimately prove to harm competition. As examined at length “Buyer Beware: Consummating Non-HSR Reportable Transactions May Prove Costly In the End,” Antitrust Litigator (Winter 2007) (see link to article under articles tab), Talx could have been required to divest the assets at distressed prices and possibly been faced with exposure for civil damages. The press release and analysis to aid public comment are attached. Talx (Press Release)Talx (Analysis to Aid Public Comment)
May
06
Posted by : Matthew Wild | On : May 6, 2008
Category: Antitrust, Consent Decrees, FTC Actions, Mergers and Acquisitions, Relevant Markets, Section 7 (Clayton Act)
Tags:adp, ceridian, clayton act, convergys, ftc, matthew wild, section 7, talx, ucm, unemployment compensation management, verification of income and employment, voie
May
05
Posted by : Matthew Wild | On : May 5, 2008
Category: Antitrust, Consent Decrees, HSR Review, Mergers and Acquisitions, Relevant Markets, Section 7 (Clayton Act), U.S. Department of Justice (Antitrust Division)
Tags:acquisition, Antitrust, asheville, charlotte, clayton act, consolidated theaters, hhi, matthew wild, movies, raleigh, regal cinema
On April 30, 2008, the Antitrust Division conditioned its approval of an acquisition by Regal Cinemas, Inc. of Consolidated Theater Holdings GP on divestitures in Southern Charlotte, Northern and Southern Raleigh and Asheville. On January 14, 2008, Regal — with $2.6 billion in revenue last year — agreed to acquire Consolidated — with $144 million in revenue last year — for $210 million. The Antitrust Division alleged a product market of the exhibition of first-run commercial movies. With respect to the geographic markets, the Antitrust Division alleged that moviegoers in Southern Charlotte, Northern and Southern Raleigh and Asheville would be unlikely to travel a significant difference in response to a small but significant non-transitory increase in price. The relevant markets were highly concentrated with HHIs ranging from 6058 to 6523 and deltas exceeding 2,000 except for Southern Raleigh where the transaction would be a merger to monopoly. The Antitrust Division also alleged high entry barriers because the demographics of these geographic markets would not support the sunk costs associated with opening a new theater. Attached are the DOJ Press Release and Competitive Impact Statement. Regal (DOJ Press Release); Regal (Competitive Impact Statement)
Mar
10
Posted by : Matthew Wild | On : March 10, 2008
Category: Antitrust, Consent Decrees, HSR Review, Mergers and Acquisitions, Relevant Markets, Section 7 (Clayton Act), U.S. Department of Justice (Antitrust Division)
Tags:altivity, Antitrust, coated recycled boxboard, consent, crb, divestiture, graphic packaging, matthew wild, merger, U.S. Department of Justice
March 4, 2008. On July 10, 2007, Altivity Packaging LLC (“Altivity”) and Graphic Packaging International, Inc. (“Graphic”) announced their plans to merge in a transaction valued at $1.75 billion. Altivity and Graphic are the first and fourth largest manufacturers (respectively) of coated recycled boxboard (“CRB”) in the United States and Canada. Post-merger, the combined firm would control 42% of the CRB supply in North America. CRB is used to make products such as cereal boxes. The Antitrust Division also alleged high barriers to entry and expansion. Accordingly, the Antitrust Division required the parties to divest 11% of their capacity to a new entrant. The Antitrust Division was satisfied that such a divestiture would replace any loss in competition resulting from the merger. The DOJ Press Release and Competitive Impact Statement are attached. DOJ Press Release (Altivity); Competitive Impact Statement (Altivity) This has been a very active day for the Antitrust Division. Earlier in the day, the Antitrust Division challenged the Cookson/Foseco transaction.
Mar
05
Posted by : Matthew Wild | On : March 5, 2008
Category: Antitrust, Consent Decrees, HSR Review, Mergers and Acquisitions, Relevant Markets, Section 7 (Clayton Act), U.S. Department of Justice (Antitrust Division)
Tags:acquisition, Antitrust, carbon bonded ceramic products, casting, consent decree, Cookson, Department of Justice, divestiture, DOJ, Foseco, HSR, laddle shrouds, matthew wild, steelmaking, stopper rods
March 4, 2008. On October 11, 2007, Cookson Group plc — a U.K. company — entered into an agreement to purchase Foseco plc – a U.K. company — for about $1 billion. Both companies manufacture isotstatically press carbon ceramic products (“CBCs”) in North America and sell them throughout the United States. CBCs are used in the continuous casting steelmaking process. The parties’ 2006 CBC sales in the U.S. were $75 million and $4 million, respectively. The Antitrust Division alleged relevant product markets narrower than CBCs generally — namely, laddle shrouds and stopper rods. The Antitrust Division alleged a relevant geographic market of North America because foreign producers are at a competitive disadvantage. They have higher delivered costs and greater lead time. Rather than providing market share and HHI information for each relevant market, the Antitrust Division simply alleged that post-merger the parties would have a combined market share in the laddle shrouds and stopper rods markets of 75% and the markets would have an HHI of more than 6000 with a delta of 700. The Antitrust Division alleged high entry barriers because of the high costs of manufacturers of other CBCs to switch to the manufacture of laddle shrouds and stopper rods in response a small but significant non-transitory price increase. Accordingly, the Antitrust Division required divestiture of the overlapping assets. This action demonstrates the Antitrust Division’s vigilance in catching small competitive overlaps. Foseco had only $4 million in annual sales of CBCs in North America. Yet the Antitrust Division caught the potential competitive harm and required a remedy. The DOJ Press Release and Competitive Impact Statement are attached. DOJ Press Release (Cookson);Competitive Impact Statement (Cookson)
Feb
28
Posted by : Matthew Wild | On : February 28, 2008
Category: Antitrust, Consent Decrees, HSR Review, Mergers and Acquisitions, Relevant Markets, Section 7 (Clayton Act), U.S. Department of Justice (Antitrust Division)
Tags:acquisition, Antitrust, bain, consent, divestiture, partial ownership, private equity, radio, thomas lee, U.S. Department of Justice
February 13, 2008. On November 16, 2006, Bain Capital and Thomas H. Lee Partners (“THL”) entered into an agreement to purchase a 70% interest in Clear Channel Communications for $28 billion. By the time that the transaction was scheduled to close, Bain and THL also would have passive equity interests in two competing radio operators – Cumulus Media Partners (“CMP”) and Univision Communications. Notwithstanding that the equity interests would be passive and with respect to Univision would be only 14%, the Antitrust Division alleged that the overlap between these competitors would result in higher prices for radio advertising and Spanish-language radio advertising in the geographic markets in which they compete. Accordingly, the Antitrust Division conditioned approval of the transaction on divestiture of the competing assets. Attached is a more in depth discussion of the transaction and Antitrust Division’s competitive concerns. Discussion(Bain&THL/Clear Channel) The DOJ Press Release and Competitive Impact Statement also are attached. DOJ Press Release (Clear Channel); Competitive Impact Statement (Clear Channel)
Feb
25
Posted by : Matthew Wild | On : February 25, 2008
Category: Antitrust, Daubert, Relevant Markets, Rule of Reason, Section 1 (Sherman Act), Section 2 (Sherman Act), Twombly
Tags:Antitrust, Daubert, expert, inferences, Kentucky Speedway, monopolization, NASCAR, product market, sherman act, sports, summary judgment
January 7, 2008. In Kentucky Speedway, LLC v. Nat’l Ass’n of Stock Car Auto Racing, Inc., Civil Action No. 05-138 (WOB), 2008 WL 113987 (E.D.K.y. Jan. 7, 2008), the district court granted summary judgment dismissing plaintiff’s Section 1 and 2 claims. Kentucky Speedway sued because NASCAR refused to sponsor a NEXTEL race at its track. The Court considered it a “jilted distributor” case. It found that Kentucky Speedway failed to come forward with sufficient proof of relevant product market — an essential of element of both its Section 1 and 2 claims. It rejected the proposed relevant markets of a sanctioning market for the NEXTEL race and a hosting market for the same race. It granted NASCAR’s Daubert motion to exclude Kentucky Speedway’s expert because he did no study to determine the cross-elasticity of demand between NEXTEL races and other potential substitutes such as sporting events in general. Rather, Kentucky Speedway’s expert assumed only that a Bush NASCAR race event was a potential substitute.
Feb
21
Posted by : Matthew Wild | On : February 21, 2008
Category: Antitrust, Consent Decrees, EU Competition Commission, HSR Review, Intellectual Property, Mergers and Acquisitions, Relevant Markets, Section 7 (Clayton Act), U.S. Department of Justice (Antitrust Division)
Tags:, acquisitions, Antitrust, Antitrust Division, competition, competition commission, consent, Department of Justice, EU, fix-it-first, mergers, Reuters, Thomson
February 19, 2008. The Antitrust Division conditioned approval of Thomson Corporation’s $17 billion acquisition of Reuters Group PLC on divestitures of financial datasets and licensing of related intellectual property. Thomson and Reuters compete head-to-head in providing three types of financial data used by investment professional to make investment decision. The Antitrust Division analyzed three relevant product markets — fundamentals data, earning estimates data and aftermarket research reports. The parties combined market shares post-merger would have been more than 50 percent and up to 90 percent. The Antitrust Division required Thomson to sell the relevant datasets and license its relevant intellectual property to a suitable buyer. The consent agreement contains a hold separate provision but did not require the parties to “fix-it-first.” The DOJ and EU Competition Commission cooperated in their investigations. The EU required different remedies that had no bearing in the U.S. Attached are the Antitrust Division’s press release and Competitive Impact Statement. DOJ Press Release (Thomson) Competitive Impact Statement (Thomson)