Two news items caught my eye this morning. Emphasis mine.

First, Reuters reports that…

U.S. antitrust authorities said on Monday they had approved plans by McClatchy Co. to sell two California newspapers to Denver-based MediaNews Group Inc. as part of McClatchy’s larger purchase of Knight Ridder Inc.

Here is the DoJ press release, and what it said (of course), is that the Antitrust Division had “decided to close its investigation.” (To be fair, Reuters uses this language in the next paragraph of its story.)

In a similar vein, EasyBourse.com reports that…

NRDC Equity Partners LLC has received antitrust clearance from the Federal Trade Commission to acquire Lord & Taylor from Federated Department Stores Inc. (FD) for $1.2 billion in cash. The FTC said Monday that it granted early termination on Friday of the waiting period required under the Hart-Scott-Rodino antitrust law.

“Antitrust clearance”? Not in the U.S. That newspaper story, incidentally, goes on to state that

The Hart-Scott-Rodino law requires under certain circumstances that prospective acquirers of voting securities or assets apply for clearance from regulators.

I am inclined to forgive EasyBourse.com, since most of that webpage is in French. In Europe, of course, one does receive affirmative clearance from the EU Commission or the antitrust authorities of the member states. In the U.S., however, the best one can hope for is the expiration or early termination of the waiting period, and there is never an affirmative statement on which the merging parties can rely for the future. There have been deals in which an investigation was launched only weeks after the waiting period had terminated—a rare event, admittedly, but one that demonstrates a basic feature of U.S. antitrust enforcement (and administrative law in general): The government’s reluctance to bind itself to its decisions. In antitrust this means that the retroactive assessment of fines of $11,000/day, dating back to the closing, remains possible. Should there not be antitrust clearance for deals in the U.S.? If it turns out later that the deal was anticompetitive, the government’s ability to investigate and to enforce Section 7 would not be limited and clearances could be revoked (with prospective effect). But the burden should shift to the government to show that the original clearance was fraudulently obtained by the parties before fines could be levied.

ADDENDUM: I am adding my response to a comment here, because I don’t think I was clear enough in my post:

There are two issues at work here: First, I think FTC/DoJ should get one shot at Sec. 7 review, and after a merger has been cleared (and I feel that mergers schould be affirmatively cleared by the agencies), the parties should be able to rely the decision, unless they “fooled with the HSR filing requirements” and obtained clearance fraudulently. After clearance and closing, the agencies can of course review under Sections 1 or 2 (and FTC Act 5).

The second issue is the $11k/d fines. They apply only under HSR, of course. The issue here is that HSR filing requirements are vague, especially item 4(c). Also, there is no written intent requirement. If a person diligently searches but misses a 4(c), it is still subject to fines from the date of the filing obligation if, for example, that 4(c) document shows up two years later as part of a Second Request on a follow-on transaction. The agencies do not have to show intent. Section 7A(g)(1) mentions only the “failure to comply,” and contains no subjective element. (I realize, of course, that in practice agencies impose fines in egregious cases—but I would like to see the statute or at least rules explicitly limit fines to cases that deserve fines.)

Technorati Tags: antitrust, HSR, Clayton Act, fines, mergers, FTC, DOJ

Comment feed: RSS 2.0. You can leave a response, or trackback from your own site.