United States: January – March 2018 Update

One year into the Trump administration, the US antitrust agencies are finally starting to implement their enforcement policies. Most notably, trial began in the US Department of Justice's (DOJ) challenge of the AT&T/Time Warner merger, which is the Antitrust Division's first significant vertical challenge in several decades. Judge Richard J. Leon's opinion in that case could alter the outlook for several other vertical transactions pending before the agencies. While the DOJ was preparing for trial, the Federal Trade Commission (FTC) was preparing for a transition to five new commissioners, who were approved by the Senate in April. It remains unclear whether the new, Republican-led FTC will be more moderate in its enforcement efforts, similar to prior Republican administrations, or will follow in the footsteps of President Trump's DOJ, which has been surprisingly aggressive.

EU: January – March 2018 Update

The European Commission (EC) continued to be quite active in the first quarter of 2018, clearing five mergers. The most significant decision was the approval of a megamerger in the agrochemical sector—Bayer/Monsanto—where the parties submitted a remedy package that totalled over €6 billion. This remedy package included divestitures of research and development assets that addressed the EC's concerns about innovation, similar to the EC's Dow/DuPont clearance last year. In addition to Bayer/Monsanto, two other proposed acquisitions in the chemicals sectors fell through, most notably Celanese/Blackstone, due to excessive divestiture requests required by the Commission.

Snapshot of Events (Legislation/Agency Remarks/Speeches/News, etc.)

United States

  • FTC Bench Finally Filling Out

    President Trump nominated Rebecca Kelly Slaughter to fill the final vacancy on the FTC. Slaughter is the current chief counsel to Senator Chuck Schumer. She will serve the remainder of former Chairwoman Edith Ramirez's seven-year term, which ends in September 2022, and she will join Rohit Chopra as the second Democrat on the FTC. Chopra was previously nominated along with Joseph Simons, Noah Phillips and Christine Wilson—all four were unanimously confirmed by a Senate panel in February.

  • Size of Transaction Thresholds Updated for Premerger Notification

    The 2018 size-of-transaction threshold for reporting proposed mergers under Section 7A of the Clayton Act has been released. The adjusted threshold is $84.4 million, up nearly $4 million from last year. This threshold is revised annually based on changes in the gross national product.

  • DOJ Announces Modifications to Consent Decrees to Improve Enforcement Capabilities

    During a speech to the New York State Bar Association, Assistant Attorney General Makan Delrahim noted that three consent decrees filed in December contained "a set of procedural provisions designed to improve their function and enforceability." The most significant change lowers the DOJ's burden of proof for a violation of a consent decree from a clear and convincing evidence standard to a preponderance of the evidence standard. The DOJ will also require defendants to reimburse the DOJ for attorneys' fees and other costs in connection with a successful enforcement effort.

  • FTC Reaffirms Structural Relief as Preferred Remedy, Even for Vertical Mergers

    On January 10, Bruce Hoffman, the FTC's Acting Director of the Bureau of Competition, commented on vertical merger enforcement at the FTC. Hoffman noted that many people were surprised by the DOJ's challenge of AT&T/Time Warner, but reiterated that the FTC prefers structural remedies. Hoffman specifically stated that the FTC "start[s] by looking at structural remedies for most vertical mergers." It is only when the structural remedy is at odds with the "efficiencies that motivate the merger" that the FTC considers conduct remedies.

  • DOJ's Nigro Notes Divestitures of Stand-Alone Businesses Are Most Effective Structural Remedies

    On February 2, Deputy Assistant Attorney General Barry Nigro clarified that the DOJ not only prefers structural remedies over conduct remedies, but when there is a structural remedy, the DOJ prefers "a clean divestiture of a stand-alone business" rather than an "asset carve-out." According to the DOJ, these divestitures are more likely to create a successful, independent competitor post-closing.

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Antitrust M&A Snapshot – May 2018

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