Antitrust Outlook - Spring 2018

Author:Ms Elizabeth Prewitt, William J. Kolasky, Robert E. Bell and Michael E. Salzman
Profession:Hughes Hubbard & Reed LLP
 
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April 20, 2018 - As the calendar tells us it is spring, despite all contrary indications of ice and snow in the northern U.S. this April, we offer our outlook on the important developments and emerging trends in antitrust enforcement in the United States.

The Trump administration has been slow in making appointments to the two antitrust enforcement agencies, and there remain open leadership positions at both the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) that we expect to be filled in the coming months. Merger and cartel enforcement actions have declined, and merger reviews have on average lengthened from 2016 to 2017, but the DOJ has not shown any reluctance to take aggressive positions and push matters to litigation.

MERGERS

DOJ merger investigations leading to antitrust conduct investigations

The DOJ will not hesitate to pursue separate civil or criminal investigations where it uncovers anticompetitive conduct in the course of merger clearance investigations. A recent example of this can be seen in the DOJ's probe into the canned seafood industry that uncovered evidence of price-fixing during the review of a proposed merger, now abandoned, between Bumble Bee and Thai Union d/b/a Chicken of the Sea (the latter's U.S. subsidiary subsequently blew the whistle as the leniency applicant). As a result of this investigation, Bumble Bee and two of its executives pleaded guilty to a criminal price-fixing conspiracy, as did an executive from StarKist. Likewise, the DOJ's civil settlement of a "no poach" agreement among rail companies was the fruit of facts reportedly uncovered in the course of a merger investigation.

Reinvigoration of vertical merger challenges through litigation

The DOJ's suit to block the merger of AT&T and Time Warner marks the first time the DOJ has asked a court to block a vertical merger since 1977. Contrary to some accounts, however, it is not the only objection to vertical mergers in four decades. Since 2000, the DOJ and FTC have challenged 22 vertical mergers, with some investigations resulting in behavioral consent decrees and others in abandoned transactions. The DOJ's suit is consistent with statements of the Trump administration and with the DOJ's announced reluctance to entertain behavioral remedies.

The outcome of this trial now unfolding in district court in Washington, D.C., will likely also shed light on other contemplated vertical mergers, including two pending in health care: CVS Health Corporation's proposed acquisition of health insurer Aetna, announced...

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