Last month, the FTC released its long-awaited review of merger remedies imposed between 2006 – 2012. The Review was intended to be an update to the Commission’s 1999 Divestiture Study, which evaluated 35 horizontal merger orders issued between 1990 -1994 in a case study method. Again utilizing the case study method, the Commission’s 2017 Review analyzed 89 orders issued between 2006 – 2012 which imposed remedies to “fix” anticompetitive issues associated with the proposed (or, in a few instances, consummated) transaction. One major consideration was whether the changes made to merger remedy policies and practices as a result of the 1999 Study’s findings had been successful.
Overall, the FTC believes that its remedies have been working, and that the changes made to policy and procedure were beneficial. According to the 2017 Review, all remedies involving asset divestitures concerning ongoing businesses succeeded in maintaining or restoring competition in the relevant market within a relatively short period of time (two to three years). The buyers obtained the assets needed to effectively compete in the market, and customers confirmed that these buyers were in fact viable alternatives to the merged firm. In contrast, however, remedies involving “selected assets,” or more limited in scope, were not as successful and thus confirmed the Commission’s preference for divesting entire ongoing businesses. Of course, all of these findings should be taken with a grain of salt given that the FTC self-audited its remedies rather than leaving the task to an independent reviewer.
One of the more interesting findings from the 2017 Review was that, despite the Commissions’ efforts, buyers of divested assets remain skeptical about bringing post-purchase difficulties to FTC staff’s attention. As a former FTC staff attorney, I worked on divestures and related pre-merger remedies. While staff undertakes the difficult job of proposing and implementing remedies that appear pro-competitive at the time, it is a crystal ball gazing process to try to gauge what future market conditions may be. We were not always successful, and a key component in this is communication with the buyers and market participants.
In order to help ensure that divestitures and related remedies maintain the competitive balance, it is important for buyers and market participants to voice concerns to staff. And this is not just limited to concerns arising during the remedies phase; as a staff attorney, we welcomed input and guidance from market participants of all kinds regarding what sort of effects would likely occur should a transaction be allowed to close. The more information the FTC has, the better the chances are that it will pursue transactions likely to have anticompetitive effects, or impose remedies that will preserve competition. Understandably, reaching out to the FTC can seem daunting for a variety of reasons, not the least of which may be fear of retaliation by the merging parties. But engaging counsel experienced in working for and with the Commission to help navigate these waters will ensure that not only are the buyers’ or market participants’ concerns heard, but taken into account, and that the market will remain competitive.
Click here to review the complete report by the FTC.
To learn how MLF can help voice concerns to the FTC, contact us at: 1-888-557-2545 or visit us on the web at www.moginlaw.com.
Jodie Williams was a staff attorney in Mergers III of the Bureau of Competition in the FTC from 2005 – 2011, much of the time period encompassed by the 2017 Review. While there, she investigated and litigated numerous mergers and acquisitions in a wide array of industries, including oil and gas, home improvement products, and transportation, and helped devise divestitures and other remedies for certain of these transactions.
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