After a slow start in getting Senate-confirmed appointees in place, both the Department of Justice's Antitrust Division and Federal Trade Commission finally got their full complement of senior leadership in place in September 2018. Chairman Joe Simons and Commissioner Christine Wilson returned to the FTC as commissioners after years of private practice, and other major Commission roles have been filled by FTC alumni. Similarly, the Antitrust Division leadership has a number of attorneys with prior government experience.
This seasoned leadership, however, has not made antitrust enforcement more predictable. This uncertainty is even more pronounced in "vertical" deals involving companies that are at different levels of the supply chain. Both FTC and DOJ spoke out early in the Trump administration against behavioral remedies which have been used in the past to mitigate risk of harm to competition from vertical deals.1
Absent imposing behavioral remedies like those in Comcast/ NBCU, the Division, for example challenged the proposed vertical transaction involving AT&T and Time Warner. This uncertainty is also present in horizontal deals involving direct competitors: some deals are getting inquiries where none were expected and some are being cleared when we expected inquiries.
On a more positive note, both the FTC and Antitrust Division have focused on process improvements. In response to increasing time, expense and burden of government antitrust investigations, both agencies have announced initiatives to speed up the review process for proposed mergers.2
Several major retail mergers made headlines in 2018 and provide lessons for merging parties in 2019.
- J.M. Smucker's attempted acquisition of the Wesson cooking oil brand from Conagra was abandoned by the parties after the FTC challenged the merger. The FTC alleged that the combined Smucker's, which already owns the Crisco brand, would control at least 70 percent of the market for branded canola and vegetable oils sold to grocery stores and other retailers. The FTC also alleged that Smucker's own documents showed that eliminating price competition between Wesson and Crisco was a central part of the rationale for the deal. Interestingly, the FTC did not include private label cooking oils in its relevant market definition despite the fact that private label products account for a majority of cooking oil sales to retail consumers. Three days after the FTC filed for a preliminary injunction, the parties abandoned the deal
- AT&T's acquisition of Time Warner was challenged by the Department of Justice in late 2017. After a full trial on the merits of the proposed acquisition, federal district court Judge Richard Leon approved the deal in June 2018 and the parties closed on the transaction soon thereafter. After initially saying that it would not challenge Judge Leon's decision, the DOJ appealed to the DC Circuit. AT&T has agreed to hold the Turner Networks (such as CNN, TNT, TBS and HLN) separate from the rest of its operations until February 28, 2019, and the parties have sought expedited treatment for the appeals process.
With two major mergers now facing additional scrutiny, 2019 is sure to bring additional drama to the antitrust landscape in the retail sector.
1 Asst. Att'y Gen. Makan Delrahim, Keynote Address at American Bar Association's Antitrust Fall Forum (Nov. 16, 2017) (noting a plan to "return to the preferred focus on structural relief to remedy mergers"; Bureau of Competition Acting Director D. Bruce Hoffman, "Vertical Merger Enforcement at the FTC," (Jan. 10, 2018) ("First and foremost, it's important to remember that the FTC prefers structural remedies to structural problems, even with vertical mergers.").
2 Asst. Att'y Gen. Makan Delrahim, "It Takes Two: Modernizing the Merger Review Process," Remarks Before the 2018 Global Antitrust Enforcement Symposium (Sept. 25, 2018); Bureau of Competition Director D. Bruce Hoffman, "Timing is everything: The Model Timing Agreement" (Aug. 7, 2018), available at https://www.ftc.gov/news-events/blogs/competition-matters/2018/08/ timing-everything-model-timing-agreement.
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