Earlier today, DOJ approved the XM-Sirius merger.  The Washington Post reports:

The deal was approved without conditions despite opposition from consumer groups and an intense lobbying campaign by the land-based radio industry.

The combination still requires approval from the Federal Communications Commission, which prohibited a merger when it granted satellite radio operating licenses in 1997.

The Justice Department, in a statement explaining its decision, said the combination of the companies won’t hurt competition because the companies are not competing today. Customers must buy equipment that is exclusive to either XM or Sirius, and subscribers rarely switch providers.

“People just don’t do that,” said Assistant Attorney General Thomas Barnett, in a conference call with reporters.

The government also appeared to endorse the argument of the companies that they compete with other forms of audio entertainment, including “high-definition” radio, Internet-based radio stations and even devices like Apple Inc.’s iPod.

“The likely evolution of technology in the future, including the expected introduction in the next several years of mobile broadband Internet devices, made it even more unlikely that the transaction would harm consumers in the longer term,” the Justice Department said.

Update: The Department of Justice has released a statement on its website about the merger.

The FTC announced this morning that:

it will not seek to block Google Inc.’s proposed $3.1 billion acquisition of Internet advertising server DoubleClick Inc. In a 4-1 vote to close its eight-month investigation of the transaction, the Commission wrote in its majority statement that “after carefully reviewing the evidence, we have concluded that Google’s proposed acquisition of DoubleClick is unlikely to substantially lessen competition.”

The FTC has also posted online the statment of the Commission, the Dissenting Statement of Commissioner Harbour, the Concurring Statement of Commissioner Leibowitz, the Closing Letter to Counsel for Google Inc., and the Closing Letter to Counsel for Hellman & Friedman Capital Partners V, LP (i.e., DoubleClick).

The Washington Post reports:

Antitrust enforcers at the Federal Trade Commission squared off yesterday against lawyers for Austin-based Whole Foods in a second and final day of arguments before U.S. District Judge Paul Friedman. In the judge’s hands rests the fate of Whole Foods’ pending $565 million purchase of Boulder, Colo., rival Wild Oats. FTC lawyers sued in June to block the deal, arguing that it will lead to less competition in what they call “the premium and organic” supermarket sector. The FTC maintains that the purchase by Whole Foods will increase prices and reduce quality and service in as many as 25 markets across the United States, including Washington, because it expects the combined company to shutter several Wild Oats stores and back away from plans to open many new ones. “Consumers are unquestionably better off if there is vigorous competition,” FTC lawyer Michael J. Bloom told the judge. “This transaction deprives consumers of choice. That is unambiguously anticompetitive.” Company officials say the government’s analysis is “fatally flawed” and ignores efforts by such rivals as Safeway, Wegmans, Harris Teeter and Trader Joe’s to stock their shelves with high-quality vegetables, baked goods and prepared meals to meet growing consumer demand. Moreover, Whole Foods lawyers argue, the merger would not raise prices across the board because Wild Oats stores already charge more than their rivals. The deal “is not going to alter Whole Foods prices in any way,” company lawyer Paul T. Denis said yesterday. “Whole Foods prices are lower than Wild Oats prices.” The judge is expected to issue a ruling in the next few weeks. Based on turnout over two days of oral argument this week, the decision will be hotly anticipated. So many lawyers, market analysts and reporters stuffed the courtroom that officials opened an overflow room with an audio feed.

Check it out.

If your $58 million deal is closing tomorrow, I hope you didn’t file HSR notification… The adjusted thresholds, which were published last month, will be effective tomorrow and will apply to all deals closing on February 21 or later. The lowest notification threshold will be $59.8m.

$10 million is adjusted to $12 million; $50 million is adjusted to $59.8 million; $100 million is adjusted to $119.6 million; $110 million is adjusted to $131.5 million; $200 million is adjusted to $239.2 million; $500 million is adjusted to $597.9 million; and $1 billion is adjusted to $1,195.8 million.

Our earlier post about the threshold adjustment is here.

In an annual ritual, the FTC has announced the revised amounts for the thresholds under Section 7A Clayton Act and the HSR rules. The thresholds are indexed and revised each year. Here is a summary of the adjusted thresholds:

$10 million is adjusted to $12 million; $50 million is adjusted to $59.8 million; $100 million is adjusted to $119.6 million; $110 million  is adjusted to $131.5 million; $200 million is adjusted to $239.2 million; $500 million is adjusted to $597.9 million; and $1 billion is adjusted to $1,195.8 million.

The thresholds for the interlocking-directorates provision in Section 8 Clayton Act (remember Section 8?) were also adjusted: The new thresholds are $24,001,000 for Section 8(a)(1) and $2,400,100 for Section 8(a)(2)(A). Changes become effective 30 days after publication for HSR, and upon publication for Section 8. More information can be found on the FTC’s website.

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

Finally, after courts have accepted electronic filings for years, FTC and DOJ are now opening the HSR process to electronic filing. This is a significant step forward. But wait! It seems that you are out of luck if you are running Linux, OSX, Unix, or anything other than Microsoft Windows for that matter! Here is from the “Getting Started” page:

The following criteria must be met:

1. End User ECA Digital Certificate Installation Requirements:

• 300 MHz CPU, 128 Mb memory, and 100 MB disk storage.
• Microsoft Windows 2000/XP/ME.
• Internet connectivity using DSL, cable, or T1 (recommended). Windows 2000, Windows 2003 Enterprise , Windows ME, or Windows XP supported browser: Browser with 128-bit crypto and Javascript enabled Internet Explorer 5.01 sp2 or later, 5.5 sp2, 6 sp1.
• Internet Explorer 5.5, 6.x.
• Netscape Communicator 4.7x, 4.8, 7.x.

No Mozilla, no Safari, no Firefox, no Opera … sigh! As an astute observer on the ABA’s HSR mailing list observed: “Is irony even the word?”

Technorati Tags: HSR, Microsoft, FTC, DOJ

The FTC has recently reversed its position of requiring HSR filings for put/call combos. For starters, financial derivatives such as puts and calls are not considered “voting securities,” and thus don’t come under the HSR act. (Note that the exercise of the options may require a filing, because that’s when the acquiring person actually starts holding the underlying voting securities.) Combining a put and a call, however, has been treated as requiring notification, presumably because in that case, the acquiring person holds the economic equivalent of ownership minus the voting rights. That, according to the FTC’s prior position, was sufficient to confer beneficial ownership of the underlying shares to the acquiring person. The FTC has backed off from this unconvincing position. As Bruce Prager and I explained in an recent article in The Deal ($):

[I]n a recent staff interpretation, the FTC reversed its position on [the put/call] issue. Based on the new interpretation, put-call combos no longer require HSR notification. Acquiring the economic equivalent of share ownership (minus the voting rights) … should therefore be permissible in most circumstances. For hedge funds, this is big news. The FTC’s change of heart now permits swift and nonpublic put-call trades in and out of significant positions without having to involve the antitrust regulators. The change might also give hedge funds greater leeway in approaching a target company’s management with suggestions on how to improve stock performance. The narrowly construed “only for investment purposes” exemption is needed to avoid a filing requirement only if the fund will hold actual voting securities. But as long as the fund only has put-call option contracts with a third party at the time that it approaches the board of the (future) target company, no HSR limitations on shareholder activism apply. Only when the fund intends to exercise its option must it comply with the HSR filing requirements before acquiring the underlying voting securities.

Technorati Tags: HSR, put/call, antitrust

Another dispatch from the 54th Spring Meeting. In the well-attended session this afternoon entitled Hot Topics, the offically hot topics were announced. Empagran continues to be hot, but much cooler than it was, now that the DC Circuit seems to have set the tone with its “proximate cause” standard to govern the relation between foreign harm and U.S. domestic harm that plaintiffs must show in order to avail themselves of U.S. courts and U.S. treble damages awards. John Majoras (Jones Day) and Lee Freeman (Freeman, Freeman & Salzman) agreed that class actions are much harder to bring, perhaps impossible to bring, but disagreed on whether issues of administrability or doctrinal views are the reason. Martha Samuleson, an economic expert, spoke about the hot insurance class actions against contingent brokerage fees.

My favorite was the discussion of the recent Second-Request reforms, which the FTC recently announced. Mark Kovner (Kirkland & Ellis) made interesting points about the meaning of the reforms (on which DOJ has not commented), stressing in particular the different impact that such novelties as the formalized 35-custodians trade-off will have. For large companies, restricting the request to 35 custodians will be a real advantage, if it can be agreed on quickly, and if the price of delays at the backend is not too high. In order to get the restricted number of custodians, the company must agree to wait for thirty days after submitting data to certify compliance (thus extending the FTC’s review period to effectively sixty days), and must grant sixty days for discovery. That may be a tough question, since time is so important, particularly for the seller. If a seller is much smaller than the buyer, the limitation in the number of custodians might not be worth much to it, but delay is painful since it is the seller who has more at stake if the deal is significantly delayed or blocked. Mark raised the question about the statutory aims of the HSR Act, which specifically limited the agencies’ review period: Will that Congressional goal be undermined if the agencies routinely expect or even strong-arm the parties into extensions of time?

Other hot topics were the joint Commentary on the merger guidelines, and the Maytag clearance. Stay tuned.

Technorati Tags: Antitrust, HSR, Second Request, Empagran

The Business Journal reports that on Thursday, Imation Corp. said its $330 million cash “acquisition of Memorex International Inc. has received antitrust approval from federal regulators.  Oakdale-based Imation, which makes disks and tapes for data storage, said it still expects the transaction to close during the second quarter of 2006.”

Technorati Tags: Imation, memorex, HSR, data storage

According to Reuters, the HSR review period has expired for Bain Capital Partners’ $3 billion acquisition of Texas Instruments’ sensors and controls business.

The Seattle Times has an interesting article about Animal Science Products’ antitrust lawsuit against several Chinese companies and the relationship between antitrust and anti-dumping.

Finally, the American Antitrust Institute has this memo (.pdf) from Bert Foer about a January 19 meeting with the Antitrust Modernization Commission Chairperson Deb Garza, Commissioner John Shenefield, and Executive Director Andrew Heimert “to discuss several issues of concern to the American Antitrust Institute with regard to transparency and process at the Antitrust Modernization Commission.”

Technorati Tags: antitrust, HSR, Bain Capital Partners, Texas Instruments, Animal Science Products, anti-dumping, American Antitrust Institute, Antitrust Modernization Commission

Canfor Corp. - a Canadian softwood lumber company - recieved approval from the FTC for is $205 million dollar acquisition of New South Companies.  Reuters article here.

The HSR waiting period for ConocoPhillips’ $35 billion acquisition of Burlington Resources has expired according to this article.  The deal still requires Burlington Resources shareholder approval.

The FTC issued a press release today announcing reforms to the merger review process, affecting requests for additional information — so-called Second Requests. Here’s a taste:

“The reforms announced today will turn well-accepted best practices into formal components of the FTC’s merger review process,” Chairman Majoras said. “They are designed to facilitate rapid identification of the relevant issues, preparation of focused second requests, and the use of consistent investigation timetables.” The primary reforms to the merger review process establish presumptions that the FTC will: (1) limit the number of employees required to provide information in response to a second request, provided the party complies with specified conditions; (2) reduce the time period for which a party must provide documents in response to the second request; (3) allow a party to preserve far fewer backup tapes and produce documents on those tapes only when responsive documents are not available through more accessible sources; and (4) significantly reduce the amount of information parties must submit regarding documents they consider to be privileged.

Good news to those of us who fight our way through increasingly enormous Second Requests. The full text of the announcement is here. The reforms apply to all HSR filings submitted to the FTC on or after February 17, 2006. (The same day thresholds will increase.)